Monday, December 15, 2008
VIENNA, Virginia: This is the article I never intended to write. For former CIA officers, the tipping point between debate-generating critique and "if they had only listened to me" pontification is easy to cross, and I had hoped to avoid the latter by simply refraining from attempts at the former. So let's be clear, I am not claiming to have been prescient. It took more than three years outside the agency for me to truly understand its problems and to see a possible solution.
To start with the bottom line, the CIA's human spy business is not answering the hardest questions. How can I know this, three years out of touch with the secret stuff? The answer is simple: because Osama bin Laden is still the head of Al Qaeda. And no one has been held accountable for failing to catch him.
By the evening of Sept. 11, 2001, every serving CIA officer - indeed, every American - knew that the agency had one prime mission: "Get him!" But, after more than seven years and billions of dollars, we have failed. I recognize much has been done to damage Al Qaeda but, make no mistake, no amount of "rendition" of bin Laden lieutenants can mask our failure to bring to justice the man who ordered 9/11.
There are other failures too, less dramatic perhaps but of even greater consequence. The clandestine creep of nuclear know-how threatens to put the worst weapons into the worst hands. If North Korea or Iran, or Shangri-La for that matter, claims the right to develop a nuclear fist, our intelligence services should know every detail about that program. Yet we collectively fail over and over again when North Korea tests a missile or nuclear reactor construction in the eastern Syrian desert come as a surprise. If the CIA's human spy arm was operating as a private business, it would be running at a loss. Think Detroit, not 007.
Why? First, the agency is simply too insular. It does not sufficiently tap into the expertise that exists across the breadth of America. The human spy components of the CIA live in a cocoon of secrecy that breeds distrust of outsiders. This is one reason very few officers have BlackBerrys. Despite their reputation as plugged-in experts on other countries, many CIA officers do not even have Internet access at their desks. Worse yet, they don't think they need it.
Second, the CIA has a terrible problem with quality control. When I was still there, for example, CIA spies reported on several occasions that Al Qaeda had plans to attack American military bases overseas - in countries that a quick Web search would have shown had no such bases. Quantity outweighed quality as folks in the spy business focused not on accuracy or impact, but on increasing amounts of product.
And that brings us to perhaps the most numbing factor, the lack of performance accountability. In my years in the agency, I cannot recall a single case where anyone was fired for failing to perform. I cannot even remember anyone being demoted. There is no job-threatening penalty for mediocrity. Think of this on Jan. 20, when we're likely to see bin Laden sending an inauguration greeting to the new president.
So let me float a proposal borrowed from the business world. If you want to find answers to the hardest questions, why not reach broadly into the expertise of the country and assemble the best spy team possible?
On Shangri-La's nuclear ambitions, it would probably mean including a few engineers who build our own bombs. They could make sure you understand the missing parts of the puzzle and how those parts may be hidden. You'd also want successful entrepreneurs who know how to make deals in Shangri-La and can point you to others who deal there more often.
It goes further. Good freelance reporters know how to find sources. The expertise of academia could be balanced with a seasoned detective or tough prosecutor adept at turning a crook. The more military the topic, the more military folks you would want on its pursuit. The spy business simply isn't that difficult. It is creativity, judgment and the ability to reach a goal on time that are hard to teach.
The agency would not lure these outside experts with a career or give them ranks or titles. That only breeds the ladder-climbing trap that sees newly minted CIA managers, six months into their assignments, planning how they might climb that next rung. Rather, the agency could compile advisory teams of accomplished Americans for a fixed period of service and then let them return to their respective fields. Their incentive would be the chance to make a real difference, with maybe a decent payment at the end if the project is a success.
Yes, there are some obstacles here. Using "normal" citizens in a covert role could require giving them legal protections that may not exist right now. Getting consensus among policymakers and Congress, and isolating the hard questions from the headlines of the day, will be a difficult challenge. And, more insidiously, wounded institutional pride at the CIA could generate bureaucratic knife-fighting by employees who would rather see the quest fail than give credit to "amateur" operators. The safe bet is that none of this will ever happen.
But is it not worth trying? It would certainly be worth breaking some existing rules if we could really assemble a better spying apparatus from the best parts America has to offer. We couldn't do much worse.
Art Brown, a 25-year veteran of the CIA, was the head of the Asia division of the agency's clandestine service from 2003 to 2005.
It's interesting how little play the Bush shoe throwing incident on Sunday was given in Monday's IHT. They just didn't get it. Yet by Tuesday the IHT has caught up. Blind leading the blind.
And now we've gone through another Obama Cycle: Obama and Race, Obama and Hope, Obama and Change and now Obama and Questions. The honeymoon is over.
Today I exceeded my web storage capacity with Google. For about €14 I purchased 10 GB for one year's storage. I think I'll buy Google shares after all.
They tell me in 24hrs I'll be able to upload more photos.
Photos that were not uploaded were:
By Scott Timberg
Monday, December 15, 2008
BERKELEY, California: Sometimes a book, or an idea, can be obscure and widely influential at the same time. That's the case with "Ecotopia," a 1970s cult novel, originally self-published by its author, Ernest Callenbach, that has seeped into the American groundwater without becoming well known.
The novel, now being rediscovered, speaks to our ecological present: in the flush of a financial crisis, the Pacific Northwest secedes from the United States, and its citizens establish a sustainable economy, a cross between Scandinavian socialism and Northern California back-to-the-landism, with the custom — years before the environmental writer Michael Pollan began his campaign — to eat local.
White bicycles sit in public places, to be borrowed at will. A creek runs down Market Street in San Francisco. Strange receptacles called "recycle bins" sit on trains, along with "hanging ferns and small plants." A female president, more Hillary Clinton than Sarah Palin, rules this nation, from Northern California up through Oregon and Washington.
" 'Ecotopia' became almost immediately absorbed into the popular culture," said Scott Slovic, a professor at the University of Nevada, Reno, and a pioneer of the growing literature-and-the-environment movement. "You hear people talking about the idea of Ecotopia, or about the Northwest as Ecotopia. But a lot of them don't know where the term came from."
In the '70s, the book, with a blurb from Ralph Nader, was a hit, selling 400,000 or so copies in the United States, and more worldwide. But by the raging '80s, the novel, along with the Whole Earth catalogue, seemed like a good candidate for a '70s time capsule — a dusty curio without much lasting impact.
Yet today, "Ecotopia" is increasingly assigned in college courses on the environment, sociology and urban planning, and its cult following has begun to reach an unlikely readership: Callenbach, who lives in Berkeley, California, and calls himself a "fringe, '60s person," has been finding himself invited to speak at many small religious colleges. This month, the book's publisher, Bantam, is reissuing it.
"For a while it seemed sort of antique to people," said Callenbach, a balding and eerily fit man of 79, sitting in his backyard, which he was converting into a preserve for native plants. "They said the book is 'very Berkeley' and all that. But now that you go out into America and young society, it apparently doesn't seem that weird to them at all."
When he began working on his novel, Callenbach was a middle-aged editor of science books at the University of California Press. His marriage was crumbling, and he despaired over what he saw as an endangered environment. He spent three years writing the book, sending each chapter to scientists to make sure the science held up. Then the real work began.
"It was rejected by every significant publisher in New York," Callenbach said. "Some said it didn't have enough sex and violence, or that they couldn't tell if it were a novel or a tract. Somebody said the ecology trend was over. This was New York, circa 1974. I was on the point of burning it."
But he cobbled together money from friends — "I think they wrote me checks out of pity for my poor, about-to-be-divorced state" — and printed 2,500 copies. The first printing sold, as did the next, and after an excerpt in Harper's Weekly, Bantam decided to publish "Ecotopia."
The author now calls it "a lucky little book."
But not a classic book, the kind taught along with Herman Melville in American literature classes. Set at what seems to be the turn of the 21st century, and told through the columns and diaries of a reporter from the fictional New York Times-Post, the novel is not especially literary. Its characters are flat; its prose — well, call it utilitarian. And the plot, in which the narrator drops his skepticism and settles into Ecotopian life, thanks in part to a love interest, lacks sophistication. And yet the book has managed to find its place in the here and now.
Alan Weisman, author of last year's acclaimed "The World Without Us," a nonfiction chronicle of the planet after the departure of the human race, said the book was ahead of its time. Environmental writing in the early '70s was not especially concerned with shortage and sustainability, he said. "A lot of it was about preserving beautiful areas and beautiful species."
In fact, like other important environmental books, the novel's impact may be lasting. Writing has a special place in the environmental movement — "a literature with measurable effects," wrote Bill McKibben, in the introduction to "American Earth: Environmental Writing Since Thoreau," a new anthology. John Muir's essays and books about the Sierra Nevada gave the country national parks, just as Bob Marshall's writings about forestry led to the Wilderness Act, which has protected millions of acres of federal land.
So what has "Ecotopia" given us?
A great deal, thinks Professor Slovic of the University of Nevada, including the bioregionalism movement, which considers each part of the country as having a distinct ecological character to be cultivated. The green movement's focus on local foods and products, and its emphasis on energy reduction also have roots in "Ecotopia," he said. In fact, much of Portland, Oregon, with its public transport, slow-growth planning and eat-local restaurants, can seem like Ecotopia made reality.
"People may look at it and say, 'These are familiar ideas,' " Professor Slovic said, "not even quite realizing that Callenbach launched much of our thinking about these things. We've absorbed it through osmosis."
Daniel Brayton, who teaches English and environmental literature at Middlebury College in Vermont, plans to teach "Ecotopia" in his utopian fiction class. He sees the book's genius as its "big-picture environmental thinking," successfully predicting the big issues of today. "Callenbach got that right," he said. "He's looking at the total physical health of the social body."
"Ecotopia" has its critics. Feminists attacked it for its ritual war games, in which men don spears to work off their "natural" aggression, dragging women into the woods to celebrate. ( Callenbach said he was influenced by the anthropologist Margaret Mead, and her idea that the sexes express aggression differently.)
Some were made uncomfortable by the way black people were excluded from Ecotopian society: most live in Soul City, which is less affluent and green than the rest of Callenbach's world. The author said he was reflecting black nationalist ideas of the time, as well as an early '70s skepticism about integration. "I probably would write it quite differently at this point," he said.
Brayton of Middlebury sees "a deep conservatism to the book," where categories like race and gender are unalterable. "In academia we call that essentialism."
Over the years, Callenbach's readership has changed, as hippies and New Agers have been joined by churchgoers. The author often visits St. Mary's College of California, a Catholic school near Oakland. "Ecotopia" is required freshman reading at the Presbyterian-affiliated Muskingum College in rural Ohio. And it's part of the curriculum at the University of San Francisco, a Jesuit institution.
Callenbach hopes the book will resonate among the greening edges of an evangelical movement. But the novel's relatively free sex and liberal politics may limit that readership. Susanna Hecht, a professor of urban planning at the University of California, Los Angeles, sees it as a counterpoint to Thoreau's more austere "Walden."
" 'Walden' is very Protestant," she said. "This is pagan, with a Zen relationship to nature."
But to Callenbach and many of his fans, "Ecotopia" is a blueprint for the future.
"It is so hard to imagine anything fundamentally different from what we have now," he said. "But without these alternate visions, we get stuck on dead center."
"And we'd better get ready," he added. "We need to know where we'd like to go."
By Annie Osborn
Monday, December 15, 2008
BEIJING: I came to China expecting to find what the Western media has been harping on for ages: a stifling political climate, even more stifling pollution and indescribable poverty. But though I looked hard for proof of what I'd read, I finally had to conclude that Beijing is not that scary. Of course, China has human rights and pollution problems, but life here isn't just a series of catastrophes.
I am awed by Beijing's skyscrapers that hold their noses up too high to see the pickup-sticks mess of hutongs and razed areas that barely come up to their second levels.
Beijing is gray, but there is an eerily colorful combination of old-fashioned neon lights that start to glow as the day dies and the garish, outdated Olympic propaganda banners. On the sidewalks, a few elderly men and women wearing simple button-down Cultural Revolution jackets brush shoulders with clumps of teenagers with spiky blue hair, piercings and designer (or counterfeit) jeans. Vendors sell open-fire popcorn beneath colorful, curvy, glassy architecture.
All of this is part of a new Beijing, and to see it grow and change every day is exciting for me, not frightening.
My Chinese host family and I talk about sensitive issues (Tibet, Taiwan, the dairy scandal) at dinner in our 12th-floor apartment. The living room looks out over the western side of the city; my host parents' room is partitioned off from the living room. My Chinese sister's room is plastered all over with David Beckham posters. My bedroom is all white except for my bed, which has a big pink spread covered in pictures of the animé heroine "Princess Rose."
My house is nothing like the courtyard homes with no plumbing or heat in which some of my classmates live; nor is it one of the shoddy, teetering high-rises to which so many former courtyard-home dwellers have been relocated. It is neither the worst place to live in Beijing nor the best.
A few weeks after I moved in, I listened to my Chinese host family's description of the dairy scandal. When my Chinese mother described the scandal over noodles and stewed asparagus, she did not directly blame the government; rather, she said that the small farmers hadn't been paid enough by the companies buying their milk, and so they had tainted their products with melamine to make more money. "Everything else," she said, "came from that."
Recently, the economic crisis usurped the dairy scandal. The view is that this isn't America's fault or the government's fault; it's a misfortune that must be faced while going about life normally. In middle-class China, a layoff means it's time for a new job. A stock market crash means it's time to reinvest. Besides, recessions and depressions are part of life, and Chinese people have all seen worse. "What goes up must come down," my Chinese mother reminded me.
On a drive to Hebei province with my host family one day, the pollution rendered visibility so bad that traffic was stopped for hours, and the highway became a ghostly, never-ending parking lot. But what fascinated me wasn't the gauzy sky. On one side of the highway were ancient, forgotten graves crumbling among the tall, slender trees of a newly planted orchard.
Across the road, willows shook their seaweed tresses over a trickling, dirty river. Everyone got out of their cars and walked around, chatting with strangers or surreptitiously snapping pictures of the 6-foot-tall foreigner in their midst (me). There was more to see than unclean air.
Part of what makes me hopeful in China is that people make the best of situations. A dairy scandal with disastrous health repercussions is also an opportunity to rethink the way farmers work, or to reassess a family's diet so that it's not only safer but also healthier. A bulldozed historical district can become a new arts center. My Chinese family isn't passive or apathetic, but optimistic. Everything else comes from that.
Annie Osborn, a junior at Boston Latin School, is studying with School Year Abroad in Beijing.
Reuters
Monday, December 15, 2008
CAIRO: A 16-year-old girl died of the deadly H5N1 strain of bird flu Monday, the 23rd fatality and 51st case of the disease among humans in Egypt, state news agency MENA said.
Samiha Salem from a village in the central Egyptian province of Asyut caught the disease after exposure to sick household poultry, MENA quoted a health ministry official as saying.
The official said Salem began suffering symptoms a week ago, after two of the household ducks died and the remainder of the flock was slaughtered in the house.
Salem was subsequently admitted to hospital with a high fever, vomiting and diarrhoea, and then transferred to intensive care. She was treated with the antiviral drug tamiflu, but suffered a pulmonary infection and respiratory failure, and died Monday.
Her death is the first bird flu fatality in Egypt since April, and the first of the current winter season. The virus, which first appeared in Egypt in February 2006, tends to be less active in summer.
About 5 million households in Egypt depend on poultry as a main source of food and income, and the government has said this makes it unlikely the disease can be eradicated despite a large-scale poultry vaccination program.
Experts fear the H5N1 virus might mutate or combine with the highly contagious seasonal influenza virus and spark a pandemic that could kill millions of people. Since the virus resurfaced in Asia in 2003, it has killed more than 200 people in a dozen countries, the World Health Organisation (WHO) says.
Egypt has been the worst-hit country outside Asia.
(Writing by Aziz El-Kaissouni; Editing by Louise Ireland)
Monday, December 15, 2008
Researchers have been trying for more than 70 years to develop a vaccine against the elusive malaria parasite without notable success. Two studies conducted in East Africa suggest that they are finally closing in on their goal. The Bill and Melinda Gates Foundation deserves credit for enabling this research to go forward when the drug manufacturer was unwilling, on its own, to take the financial risk to try to develop a vaccine.
The new studies showed that the most advanced candidate vaccine, made by GlaxoSmithKline, cut illnesses in infants and young children by more than half and could safely be given with other childhood vaccines that are already routinely administered throughout Africa. The results were published in The New England Journal of Medicine, along with an editorial that called the vaccine's performance a "hopeful beginning" toward prevention of the disease.
There is no guarantee of success. The studies were carried out in areas with relatively low transmission of malaria; no one knows if the vaccine will work as well where malaria is more rampant. And the vaccine must still undergo much larger trials next year.
Even a vaccine that is partially effective could save hundreds of thousands of lives a year. It would bolster the gains already being made by insecticide-treated bed nets that prevent mosquitoes from spreading the parasite and by malaria pills to treat sick patients.
That the candidate vaccine has gotten this far is a tribute to the power of charitable contributions to generate and sustain industrial interest. Glaxo had been funding development of a vaccine aimed at military personnel and travelers, but was unwilling to undertake pediatric studies without a financial partner. That's when the Gates Foundation came to the rescue. It has pumped in $107.6 million so far. Glaxo says it has spent about $300 million and expects to invest $50 million to $100 million more to complete the project. If all goes well, the vaccine could be submitted for regulatory approval in 2011.
By Meraiah Foley
Tuesday, December 16, 2008
SYDNEY, Australia: Australia announced plans Monday to reduce its greenhouse gas emissions by 5 to 15 percent by 2020, angering environmental groups that had lobbied for much deeper cuts.
In a policy statement, the government said the final target would depend on whether developed and developing nations, including major emitters like China and India, could agree to binding reductions under a new United Nations climate treaty next year.
If the world acts together to forge deep cuts, Australia will reduce its emissions by 15 percent of its 2000 levels over 10 years starting in 2010. If there is no agreement, Australia will cut emissions by 5 percent over the same period.
No matter what the short-term target is, the government said it was committed to reducing emissions by 60 percent from 2000 levels by 2050.
"There are many obstacles to achieving a strong international agreement by the end of the next negotiating round," the report said. "However, the least responsible path that Australia could take would be to do nothing while we wait to see how the rest of the world acts."
The announcement drew sharp criticism from nearly all of Australia's major environmental groups, which had been pushing for a short-term cut of at least 25 percent.
"This is a complete failure of a system," Christine Milne, a senator with the small Greens Party, told the national broadcaster. "Five percent is a global embarrassment; 15 percent is way below even the minimum the rest of the world wants to see," she said, pointing to the European Union's recent announcement that it would reduce emissions by at least 20 percent of 1990 levels by 2020.
Prime Minister Kevin Rudd, who made signing the Kyoto Protocol on climate change his first act after sweeping to power last year on a platform of reducing Australia's emissions, said the targets were both responsible and appropriate to the times.
"They deliver necessary reform to tackle the long-term challenge of climate change, while supporting our economy and securing jobs during this global recession," Rudd told the National Press Club in the capital, Canberra, after his speech was interrupted by a pro-environment heckler who was led from the room by security staff members.
Without the targets announced Monday, Rudd said Australia's emissions would grow by about 20 percent over the two decades to 2020. Despite the criticism, the government has said the 5-to-15-percent target places Australia among the world's leaders on climate change.
Because of Australia's fast-growing population — mostly from immigration — the policy paper projected that even a 5 percent cut in emissions would represent a 27 percent reduction in Australia's per capita emissions from 2000 to 2020. By contrast, the European Union's minimum target would result in a reduction of 24 percent per person, the government said.
The targets announced Monday are part of a broader emissions trading program the government hopes to have in place by July 1, 2010. But Rudd must present his plans to Parliament, where his center-left Labor Party controls the House but not the Senate.
Spurred by business groups who say it would slow economic growth in already precarious times, the opposition Liberal Party and two independent senators have said they will push to delay carrying out the plan unless significant changes are made. More Articles in World »
Monday, December 15, 2008
SYDNEY: The "lucky country" has always been burdened by the "tyranny of distance." Thus it is taking time for the news to arrive that - for the time being - luck has run out.
Difficult times may lie ahead, something that is likely to frustrate Australia's ambition to become a global exemplar on climate change rather than the laggard it currently is, with one of the highest carbon emissions per capita in the world.
There is recognition here as elsewhere that stocks and the Australian dollar are down and unemployment and home foreclosures are rising, despite government efforts to boost the economy through infrastructure projects and drastic cuts in interest rates and taxes.
The workaholic Labor prime minister, Kevin Rudd, now in office for one year, is just the man to devise multiple initiatives to counter the global slump.
But what does not seem to have sunk in here is that, after a decade of favorable external circumstances, the shocks may go deeper than elsewhere in the developed world, let alone among the country's industrializing Asian neighbors. Rudd's initiatives may well fall on stony ground for the simple reason that Australia has had it too good for too long and that a decade of high economic performance has been due more to good luck than good management.
The impression given by media commentators here is that Australia will continue to do better than most of the Western world. The common view is that Asia in general and China in particular will ensure that the dip in demand for Australia's raw materials will be short-lived.
The government's very low debt levels give it plenty of leeway to run big deficits to offset falls in exports and investment. Its central bank is highly regarded, and though Australian banks have plenty of local bad debt, they have generally avoided the worst of the financial contagion in the West. Debt accumulation here partly reflects strong investment, not just consumption.
All this is true enough, but there is a darker story. Australian household debt relative to the size of the economy is among the highest in the world thanks mainly to a decade of rising property prices. This would not matter too much, given the low level of government debt, if Australians owed the money to one another, as is the case with Japan. But on a per capita basis Australia has quietly become the most heavily indebted major country in the developed world. Net foreign debt now amounts to $650 billion Australian dollars. Some of this is in Australian currency, whose high yield long made it attractive to Asian investors. But half is in foreign currency, so the farther the Australian dollar depreciates - and it is down 30 percent in the past four months - the bigger the burden on local borrowers and financial institutions.
This debt has mostly been accumulated over a decade in which Australia enjoyed an almost unprecedented, 40 percent leap in trade - the relative prices of imports and exports. This was due first to a decline in manufactured imports prices from China and elsewhere in Asia after 1998, and over the past five years to the rise in commodity prices, which peaked in mid-2008. Despite this windfall, Australia has been running an annual current account deficit of 4 to 5 percent of GDP - bigger than that of the United States.
The outlook now is for a commodity price downturn that could last five years, if past cycles are a judge. Meanwhile, Australia must pay more for manufactured goods from Asia, where currencies have been appreciating.
The true horror of Australia's external deficit will become clearer when prices of iron ore, coal and other raw materials negotiated during the boom fall closer to current spot levels, and when tighter global money exposes the cost of servicing foreign liabilities - currently about 4 percent of GDP.
Indeed, although its currency has fallen sharply, Australia can count itself lucky that it has not had the panicky flight seen in South Korea, a country with fewer debts and vastly greater foreign exchange reserves. In the future, Australia may have to decide whether to accept a lower standard of living, or sell more of its mines and farms to China.
For sure, the downturn in commodity prices may be short-lived. China's demand for materials may offset increases in supply. The terms of trade may not fall as fast as they rose. But be sure that it is these external factors, not Rudd's initiatives, that will drive the economy in the medium term.
Meanwhile expect a less confident Australia, dependent on coal for exports and power generation, to lag Europe and the United States in emission reductions.
By Paul Taylor
Monday, December 15, 2008
BRUSSELS: He wasn't present and he isn't even in office yet, but Barack Obama was the elephant in the room at the European Union summit meeting last week on economic recovery and climate change.
The 27 EU leaders knew they needed strong agreements to reduce greenhouse gas emissions and give their recession-hit economies a big fiscal stimulus to make themselves credible partners for the U.S. president-elect.
Europe's green deal had to be bigger, bolder and more ambitious to avoid being dwarfed when Obama announces his own clean energy program at his inauguration next month.
After the EU agreed on rules to cut carbon dioxide emissions by 20 percent by 2020, draw 20 percent of its energy from renewable sources and reduce energy consumption by 20 percent, the European Commission president, José Manuel Barroso, adapted Obama's campaign slogan to drive home the point.
"Our message to our global partners is 'yes, you can,"' he declared. "Yes, you can do what we are doing." He said the EU was asking Obama "to join Europe and with us lead the world."
President Nicolas Sarkozy of France, at the end of an energetic six-month presidency of the EU, proclaimed: "No other continent in the world is setting itself such binding limits as the measures we have just adopted."
Behind their hubris lay worries that the charismatic new U.S. president could grab the mantle of green leadership from Europe, even though the goal he has outlined so far is more modest: to stabilize U.S. carbon emissions by 2020.
"The risk is that the Europeans could be upstaged by Obama acting more radically than Europe," said Antonio Missiroli of the European Policy Center, a research firm.
There is also the perennial fear that Europe may not figure very high on Obama's radar screen and that he may care more about relations with emerging Asian economic powerhouses than with the EU.
"For Obama's agenda, Europe is neither very relevant nor an obstruction," Missiroli. "It doesn't tip the balance."
Sarkozy warned that Europe would look ridiculous if it abandoned its green ambitions just when the United States had elected a president who had made climate change a priority.
Officials in Brussels are talking enthusiastically of linking the European emissions-trading project with a future U.S. system to help create a global carbon market.
They may be in for a cold shower, given the likely resistance in the U.S. Congress to any binding cuts in carbon emissions.
Indeed, EU and U.S. officials are pessimistic about the chances of an international agreement in December 2009, when the United Nations will organize talks on a climate pact to replace the Kyoto Protocol, which Washington never ratified.
Some European leaders argued that the EU must take the lead precisely because of the problems Obama would face at home.
"An EU agreement will support President Obama, who will have great difficulty getting an agreement on a system of emissions trading," Chancellor Angela Merkel of Germany told her fellow leaders, according to an official record.
On the economy, too, Barroso argued that Europe and the United States should coordinate their recovery programs.
Yet the main European powers remain divided on the response to the recession, despite agreeing on paper to a program calling for a stimulus of about 1.5 percentage points of gross domestic product.
Obama has indicated that he is considering a far bigger fiscal jolt to the economy, given the scale of the U.S. recession.
The German finance minister, Peer Steinbrück, has branded Britain's sweeping cut in sales tax "crass Keynesianism," and all EU countries have rejected any across-the-board cut in the value-added tax.
On both climate change and the economy, Europe hopes to find a more cooperative partner in Obama, but perhaps with a degree of self-delusion about his interest in European solutions.
Reuters
Monday, December 15, 2008
By MacDonald Dzirutwe
Zimbabwe has accused Botswana of training opposition insurgents to oust President Robert Mugabe, state media said on Monday, increasing tensions between the neighbours and adding to doubts over a power-sharing deal.
The United Nations said the death toll had risen to nearly 1,000 from a cholera epidemic that has put Zimbabwe under new pressure from Western countries.
Botswana's President Ian Khama is one of few African leaders to publicly criticise Mugabe. He has called for new elections after Mugabe and opposition leader Morgan Tsvangirai reached deadlock over posts in a shared administration.
Justice Minister Patrick Chinamasa told the official Herald newspaper the government had evidence Botswana was giving military training to members of Tsvangirai's opposition Movement for Democratic Change (MDC) as part of a plot to remove Mugabe.
Botswana's foreign ministry said in a statement that Zimbabwe had failed to produce any tangible facts to support the allegations. Zimbabwe's opposition dismissed the accusations.
The justice minister said: "Botswana has availed its territory, material and logistical support to MDC-T for the recruitment and military training of youths for the eventual destabilisation of the country with a view of effecting illegal regime change.
"We now have evidence that while they (MDC) were talking peace they have been preparing for war and insurgency, as well as soliciting the West to invade our country on the pretext of things like cholera."
A cholera epidemic and Zimbabwe's economic meltdown have drawn new calls from Mugabe's Western foes for the resignation of the 84-year-old leader, who has ruled since independence in 1980.
In Geneva, the United Nations said on Monday the death toll from cholera had risen to 978. The U.N. Office for the Coordination of Humanitarian Affairs said the number of suspected cases stood at 18,413.
Prospects for rescuing Zimbabwe appear slim while Mugabe and Tsvangirai remain deadlocked over their September 15 power-sharing deal.
NEW ELECTION?
State media said at the weekend that Zimbabwe might be forced to hold a new election if a constitutional bill to set up the new government failed to get through parliament, where Mugabe's ZANU-PF party lost its majority in March.
The MDC said it was ready to take part in any new election, but only if held under international supervision. Tsvangirai beat Mugabe in the first round of a presidential vote but withdrew from a run-off, citing attacks on his supporters.
Opposition spokesman Nelson Chamisa dismissed Chinamasa's charges that the MDC was preparing an insurgency, saying Mugabe was trying to distract attention from growing foreign pressure and looking for an excuse to crack down on the opposition.
"How do you overthrow a non existing government?" Chamisa said. "They are setting the stage for an unprecedented onslaught on the opposition. Each time ZANU-PF is cornered they come up with all sorts of concoctions and fabrications."
Mugabe's government says the cholera outbreak is a calculated attack by former colonial ruler Britain and the United States, describing it as "biological warfare" to create an excuse to mobilise military action against Zimbabwe.
Chinamasa said the evidence against Botswana was now being handled by the Southern African Development Community regional group, which has been trying to push Mugabe and Tsvangirai to implement their September 15 power-sharing deal.
By Jad Mouawad
Monday, December 15, 2008
NEW YORK: With the economy in the throes of a global recession, oil producers are facing the toughest business environment in 25 years.
Oil demand is set to decline this year and next, the first drop since the energy shocks of the early 1980s. As economic growth slows down sharply, oil prices have collapsed from their summer peaks in record time.
The stunning speed of the downturn has fast become a nightmare for producers, who face shrinking revenue next year. Oil has lost 70 percent of its value, or $100 a barrel, since July and many analysts forecast further declines as the global economy worsens.
The OPEC cartel is meeting Wednesday in the coastal city of Oran, Algeria, to try to stem the drop in prices. Chakib Khelil, OPEC's president and the Algerian oil minister, suggested last week that producers would make "a severe production cut to stabilize the oil market."
Many analysts expect the cartel, which accounts for about 40 percent of the world's oil exports, to cut production by about 1.5 million barrels a day.
The problem is that OPEC's actions so far have had little effect on the market. Members of the Organization of Petroleum Exporting Countries have already met three times since September, and agreed to trim their output by two million barrels a day, to no avail. Since the last time OPEC promised to cut production, the price of oil has dropped by 30 percent.
With demand falling rapidly, there are few reasons to expect the drop in prices to slow down. Oil futures in New York closed at $46.28 a barrel on Friday, after touching a low of $40 a barrel earlier this month. That is down from a peak above $147 a barrel in July.
With stagnating growth next year, global consumption could fall by 1.3 million barrels a day, or 1.5 percent, in 2009, according to Deutsche Bank. Many analysts now expect oil prices to reach $30 a barrel next year if the slowdown spreads to China, which is increasingly likely.
"With demand uncertain, the ball remains in OPEC's court," analysts at Raymond James, a brokerage firm, wrote in a market commentary last week. "Short of dramatic action by the group, crude has few near-term catalysts."
The OPEC meeting in Algeria will also feature a proposal by Russia, which is not a member, to reduce its own output along with OPEC.
Russian officials have been cozying up to the oil cartel in recent months as the drop in prices stings the country's petroleum-dependent economy. Last week, President Dmitri Medvedev signaled that Russia wanted closer cooperation with OPEC, and did not rule out joining the group.
But Russia's proposal is unlikely to weigh much on the market. Some analysts see the move as window dressing for the fact that Russian production will drop this year because of the government's restrictive policies, insufficient investments and hefty export taxes.
Part of the problem for OPEC is that producers simply cannot reduce their production fast enough to match the drop in consumption.
OPEC has found it much easier to keep discipline within its ranks when prices rise than when they fall. To prevent their revenues from falling too quickly, some producers have failed to trim their production as much as they promised.
Estimates of how much OPEC is currently pumping vary, as the cartel does not supply production numbers. Petrologistics, a consulting firm that tracks the movement of oil tankers, estimates that producers have reduced their output by about a million barrels a day in November.
Platts, an authoritative energy publication, estimated that OPEC's overall output dropped by 880,000 barrels a day in November, following the cartel's last agreement to curb production. That is still 852,000 barrels a day above the group's latest quota.
There is also some uncertainty about the level of Saudi production.
The cartel's top producer reduced its output by 500,000 barrels a day, bringing down its daily production to 8.9 million barrels a day, from 9.4 million barrels a day in October, according to the survey by Platts. That would mean the kingdom is pumping 400,000 barrels a day more than its official quota of 8.477 million barrels a day.
Uncertainty and a lack of proper data led the producers to defer a decision to cut production when they met in Cairo on Nov. 29. It takes about four to six weeks for any decision by OPEC to translate into lower imports for consumers.
But while the market doubts the determination of producers, the Saudi oil minister, Ali al-Naimi, indicated last week that the kingdom was pumping 8.5 million barrels a day in November, a drop of 1.2 million barrels a day from its August peak production level. The announcement helped oil prices rebound last week.
Most OPEC members want to see prices rise from their current levels.
According to the Middle East Economic Survey, most producers have drawn budgets for 2009 that assume oil prices will be above $50 a barrel. Even Saudi Arabia has recently pointed out that it considered $75 a barrel to be a "fair price."
Members of the cartel know they cannot get to such prices anytime soon. The best the group can do is set the stage for a recovery in prices when the global economy eventually improves.
"There is going to be a lot of pressure on the OPEC ministers to defend prices," said Geoff Porter, an analyst at the Eurasia Group in New York. "OPEC has to strike the balance between an aggressive cut which will slow down the price fall, but it can't be so aggressive that it erodes their credibility if the members do not comply. They can't push too hard and have their members not respond."
By Brian Knowlton
Monday, December 15, 2008
President-elect Barack Obama was planning Monday to name an energy and environmental team that advocacy groups praised as showing seriousness about conservation and global warming. But the economic crisis will make the changes Obama has promised more painful to pursue, and falling oil prices have lessened the sense of urgency.
On a busy day at the Chicago hotel that has become Obama's transition office, he also met in the morning with his top national security advisers to talk about Iraq and Afghanistan.
The energy and environmental team Obama was expected to announce has been warmly received by environmentalists and others.
It reportedly includes Steven Chu, a Nobel Prize-winning physicist, for energy secretary; Lisa Jackson, a New Jersey environmental official, as head of the Environmental Protection Agency; Carol Browner, a former EPA head, as the top White House official on energy and the environment; and Nancy Sutley, a Los Angeles environmental official, to direct the White House Council on Environmental Quality.
Frances Beinecke, president of the Natural Resources Defense Council, praised the choices, saying in a statement: "Mr. Obama is putting words into action that he will move toward clean-energy solutions, take on global warming and jump-start the economy. These are individuals who will restore scientific integrity to the federal government, protect public health and defend our country's natural resources."
Last week, after a meeting with former Vice President Al Gore, Obama called the fight against global warming "a matter of urgency and national security."
He has vowed to push the matter aggressively, urging consumers and employers to use less energy and reduce greenhouse-gas emissions, while providing subsidies for the development of alternative energy sources.
But that will not be easy. Imposing a so-called carbon tax on companies - penalizing the worst polluters to reward the energy-efficient - will be particularly painful, adding to the cost of business for many companies already hard-hit by recession.
At the same time, the dramatic drop in oil and gasoline prices - pump prices are less than half what they were as recently as July - has lessened the sense of urgency for environmental change that was felt just months ago.
But a trend toward the increased use of mass transit has continued. And in Washington during the week surrounding Obama's inauguration on Jan. 20, transit will be tested as it rarely has been.
With projections that anywhere from two million to four million people will descend on the city for the inauguration of the country's first black president, transit officials said the area's roadways and transit systems will stretched, The Washington Post reported.
With waits for the subway system predicted to be hours-long - conceivably as long as eight hours immediately after the inaugural ceremony, when many roads will be blocked off - residents are being urged to stay home, if possible, or walk.
In a gesture seemingly meant to show confidence in mass transit while creating an image with historic resonance, Obama plans to arrive in the city on Jan. 17 by train. He and his family will board the train in Philadelphia, pick up Vice President-elect Joe Biden and his family in Wilmington, Delaware, then stop in Baltimore before ending the trip in Washington that evening.
"As part of the most open and accessible inauguration in history, we hope to include as many Americans as possible who wish to participate, but can't be in Washington," said Emmett Beliveau, the head of the inaugural committee. "These events will allow us to do that while honoring the rich history and tradition of previous inaugural journeys."
Across the country Monday, presidential electors gathered in state capitals to cast their votes in a largely ceremonial but constitutionally required procedure that formalizes a newly elected president's victory.
Barring the unexpected, Obama should receive 365 electoral votes to John McCain's 173 - not a blowout like the 500-plus votes received by Franklin Roosevelt in 1936, Richard Nixon in 1972 or Ronald Reagan in 1984, but also nothing like the 271 electoral votes George W. Bush received in 2000, one more than needed for election. The Obama numbers assume there will be no "faithless electors" - those who, as occasionally happens, decline to follow the will of the voters in their states
By Seth Mydans
Monday, December 15, 2008
RENOKENONGO, Indonesia: Her children insist, so every week or two Lilik Kamina takes them back to their abandoned village to look at the mud.
"Hey, Mom, there's our house, there's the mango tree," she said they shout. But there is nothing to see, only an ocean of mud that has buried this village and a dozen more over the past two and a half years.
The mud erupted here during exploratory drilling for natural gas, and it has grown to be one of the largest mud volcanoes ever to have affected a populated area.
Unlike other disasters that torment Indonesia - earthquakes, volcanoes, tsunamis - this one continues with no end in sight, and experts say the flow could continue for many years or decades.
The steaming mud keeps bubbling up from under ground, spreading across the countryside, driving people from their homes, burying fields and factories and forcing the relocation of roads, bridges, a railroad line and a major gas pipeline.
As the earth disgorges the mud and the lake grows, the land is sinking by as much as 13 meters, or 42 feet, a year and could subside to depths of more than 140 meters just one hour's drive from Indonesia's second largest city, Surabaya, according to Richard Davies, a geologist at Durham University in Britain who specializes in mud volcanoes.
Siti Maimunah, an environmental advocate, said people who live nearby have begun getting sick, with about 46,000 visiting clinics with respiratory problems since the mud eruption.
Siti, who is national coordinator for the Mining Advocacy Network of Indonesia, said the gas that emerges with the mud is toxic and possibly carcinogenic. "We worry that in the next 5 to 10 years people will face a second disaster with health problems," she said.
Various attempts to stem the flow have failed over the years. These have included a scheme to drop hundreds of giant concrete balls into the mouth of the eruption; they simply disappeared without effect. A project to divert some of the mud into the nearby Porong River has raised fears that the buildup of silt on the riverbed could cause severe flooding, possibly in Surabaya itself.
The continuing disaster has become an embarrassment to President Susilo Bambang Yudhoyono, who faces a new election next year, with groups of displaced people demonstrating in the distant capital, Jakarta.
Lapindo Brantas, the energy company that was doing the drilling, is indirectly owned by the family of one of Indonesia's richest and most influential men, Aburizal Bakrie, who is a major financial backer of Yudhoyono and serves in his cabinet as coordinating minister for the people's welfare.
The victims say compensation has been slow, with only a portion of promised funds delivered to them. Some 60,000 people have fled their homes and many, like Lilik, now live in nearby shelters and in a marketplace as refugees.
This is a particularly forlorn class of displaced people who mostly fend for themselves because, as victims of what is being called a man-made disaster, they receive little assistance from the government or from international aid agencies.
"So we live without hope," said Ali Mursjid, 25, who was in college studying to be a teacher before the mud volcano made him a pauper. "Nobody is willing to help us."
His village, Besuki, was only partly buried in mud, and it is a ghost town of empty houses and hard, cracked mud where children fly kites and shout to hear their voices echo.
This was a prosperous middle-class village, Mursjid said, where families like his hired laborers to work their fields. Now, he said, he and other residents had been reduced to begging.
"I felt so humiliated and embarrassed," Mursjid said. "But I had to beg because none of us had any food to eat. We took turns begging and shared the money."
The steaming mud erupted from the ground on May 29, 2006, as Lapindo, the energy company, was drilling near the industrial district of Sidoarjo. Its tunnel pierced a pressurized aquifer some 3,000 meters underground.
Experts on mud volcanoes say it was the drilling and inadequate safeguards in the bore hole that triggered the eruption of water, gas and mud that continues to flow, at about 100,000 cubic meters, or 3.5 million cubic feet, a day.
Lapindo insists that it was itself a victim, blaming vibrations from a major earthquake that struck two days earlier with an epicenter 300 kilometers, or 190 miles, away.
After listening to new evidence about the eruption, a conference in October of 74 petroleum geologists in Cape Town concluded that the drilling was the cause.
"There is no question, the pressures in the well went way beyond what it could tolerate - and it triggered the mud volcano," said Susila Lusiaga, a drilling engineer who was part of the Indonesian investigation team, according to a report on the conference by Durham University.
The debate over responsibility has severely limited the payments, said Elfian Effendi, executive director of Greenomics Indonesia, an environmental advocacy group.
After paying out 20 percent of a promised compensation package, Lapindo agreed this month to begin monthly payments equal to $2,500 to 8,000 families it said were eligible. But as part of the Bakrie holdings, Lapindo has been severely affected by the current economic downturn, and some experts question whether the full amount will ever be paid.
Since the first eruption in May 2006, there have been more than 90 others, most of them small but some explosive, said Jim Schiller, a political scientist at Flinders University in Adelaide, Australia, who has published a study of the disaster.
He described what he called the horror-movie progress of the mud, which continues to burst from the ground at unexpected times and places. "I've got pictures of them popping up in people's living rooms," he said.
The village of Renokenongo was buried during the biggest of these eruptions, in November 2007, when the weight of sinking earth burst a major natural-gas pipeline, killing 13 workers and sending a fireball into the sky.
"It was so big and so tall that I couldn't believe it was just fire," said Sukono, 40, who owned land and livestock and rented out farm machinery but now is jobless. "I thought it was the end of the world. It was so bright I thought the sun was rising in the west."
In the year since then, said Sukono, who has only one name, he and his family had struggled to accept the obliteration of their home and village. Their past is buried in the mud, and their future seems empty.
"My sons are traumatized," he said. "They say, 'Can't we live like we used to, like normal people?' My older boy asks, 'If things keep on like this, what will happen to my dreams?'
"I answer that I am optimistic," he said. "As a parent I have to be optimistic. I tell him I will help him achieve his dreams. But for me, I don't know."
Lilik, 30, who teaches kindergarten, said the visits to the levee by her former village calm her children, Icha Noviyanti, 11, and Fiqhi Izzudin, 5.
"People say its not a good idea to take the children there, but I think the opposite," she said. "I think it's very important for them to see their home and express their anger. They throw rocks at the mud and shout, 'Lapindo!"'
By Bill Vlasic
Monday, December 15, 2008
DETROIT: The threat of bankruptcy is evident every night at General Motors headquarters, when the lights are turned out early and the escalators and nearly all the elevators are shut down to save money.
Even though GM is rapidly running out of cash, the company's top sales executive recently asked that elevators to his 39th-floor offices keep running so his staff could keep working.
"This cost-cutting has touched every aspect of the company," said Mark LaNeve, head of GM's North American sales and marketing. "But my people are working until 8 p.m. and need the elevators to stay on."
As GM and Chrysler await word from the White House about emergency financial assistance, the two troubled automakers are cutting costs furiously to stretch what is left of their cash reserves.
Both companies, as well as the Ford Motor Company, have already eliminated tens of thousands of jobs and reduced overhead costs by billions of dollars in the last few years.
But as sales continue to plummet because of the weakening economy and the credit crisis, they are scrutinizing every budget line for potential savings.
Chrysler has closed cafeterias in some of its plants, as well as the executive dining room at headquarters. GM is stocking office supply cabinets with cheaper pencils, turning down the heat in plants, and trimming back its inventory of replacement parts for factory equipment.
"It's like an individual who has lost his job," said Ron Harbour, a manufacturing consultant who for years has advised Detroit's Big Three on how to streamline their plant operations. "If you absolutely don't need it, it's getting cut."
Even the industry's usually fancy coming-out party for new models — the annual North American International Auto Show in Detroit next month — will be a no-frills affair.
Last year, Chrysler's show-stealing stunt was a cattle drive through city streets to garner publicity for its new pickup truck.
There will be no theatrics this year, and Chrysler has even canceled its tradition of offering free food and drinks to hordes of executives and journalists in a Detroit firehouse near the auto show.
"We're going to have to tell them, 'Sorry guys, you're going to have to buy your own drinks and dinner,' " said Chrysler's vice chairman, Thomas LaSorda.
Time is running short for GM and Chrysler. Last week, their desperate bid for $14 billion in federal loans died in the Senate.
President George W. Bush has indicated that help could be forthcoming from the $700 billion financial rescue fund, and executives of both companies were in discussions over the weekend with White House officials on a bailout plan, according to several people with knowledge of the talks.
A White House spokeswoman, Dana Perino, said Sunday that any action on the auto bailout would have to wait until the president returns from a trip to Iraq.
Both GM and Chrysler have said they will run out of cash by the end of the year. Without federal aid, the companies are in danger of not paying suppliers for parts already delivered, which could start a wave of failures in the nation's vast network of parts manufacturers.
Both companies have said that filing for bankruptcy is a last resort and that they will continue to cut costs at every opportunity.
Last month, an additional 5,000 white-collar jobs were eliminated through buyouts at Chrysler, bringing to 32,000 the number of jobs cut at the company in the last three years.
"We must eliminate every unnecessary cost in every aspect of our business," Chrysler's chairman, Robert Nardelli, told employees by e-mail on Friday. "While a bridge loan is critical to manage through this financial crisis, we must continue to manage the factors under our control."
GM said Friday that it would idle 20 of its North American factories in the first quarter to reduce vehicle production drastically.
But companies are also making scores of cost cuts behind the scenes.
At GM, that means stocking offices with regular pencils instead of mechanical ones, holding dealer meetings on the phone rather than in person, and canceling sponsorships of charity golf tournaments and high-profile events like the Academy Awards.
LaNeve said his staff had shrunk in the last decade from 7,000 employees to 1,300, including a 25 percent reduction in the past year.
"It fries me to hear people say we aren't getting lean," he said. "I tell you, my people are working like dogs."
GM and Chrysler have slowed down or suspended work on a number of new vehicle programs and sliced their capital budgets.
LaSorda said that Chrysler had cut $2.4 billion in fixed costs this year, bringing such spending to $11.6 billion a year. "Next year, we'll be in the $10 billion range," he said.
Some of the cutbacks are sizable, like the planned shutdown on Dec. 31 of its underused SUV factory in Newark, Delaware Others are incremental, like not removing snow from the top floor of the parking deck at Chrysler headquarters, or substituting lunch wagons for cafeterias at assembly plants.
"Closing the cafeteria down in a plant can save $250,000 a year," he said. He said that with fewer employees, Chrysler does not need the spaces on the top floor of its parking garage.
During Congressional hearings on a proposed Detroit bailout, several lawmakers criticized the Big Three for not addressing their cost problems for decades.
All told, GM, Ford and Chrysler have cut more than 150,000 jobs in the United States since 2006. Still, the companies have stepped up their efforts this year because of the sharp decline in revenue amid a 16 percent decline in industry sales.
The head of Ford's Americas division, Mark Fields, holds a weekly meeting with senior executives to review every expense request of $10,000 or more.
"We look at things we never used to," Fields said.
One example he cited was eliminating daily cleanup crews for offices at Ford's headquarters in Dearborn, Michigan "Is it really important that we walk in our offices and there aren't fingerprint marks on the desk?" he said. "Now we clean them once a week."
Ford is not asking for immediate government assistance because it has a line of credit with private lenders it can tap into for some time.
But at GM and Chrysler, the cash cushion is virtually gone. GM has probably fallen perilously close to the $10 billion it needs to have on hand to pay its suppliers and make payrolls and interest payments.
To extend its cash — even by a few more days — the company is reducing its inventories of parts like axles, fenders and steering gears to bare minimums.
It has also begun a program called "share the spare," in which a group of nearby factories stock a single replacement part for production machines like conveyor belts.
By idling 20 of its factories in the first quarter, GM will also save on heating bills, maintenance crews and waste disposal.
Two days before Christmas, the entire company will begin its regular two-week holiday shutdown for all of its plants, offices and parts depots.
Some of the plants have scheduled downtime after the holidays as well. And if a bailout is not forthcoming from Washington, the lights might not come back on for some time, if it all.
The Associated Press
Tuesday, December 16, 2008
The Toyota Motor Corporation is delaying the start of production at its plant in Blue Springs, Mississippi, indefinitely as it copes with the downturn in the auto industry.
The plant was scheduled to begin production in 2010 and make the Prius hybrid.
Mike Goss, a spokesman for Toyota's United States arm, said Monday that the plant's construction was about 90 percent complete and that Toyota would finish the building. Installation of the factory's equipment and machinery, however, is being postponed indefinitely.
About 100 people hired to oversee construction and install human resources plans at the plant will not lose their jobs but will be assigned other duties, Goss said.
Although Toyota's sales in the United States have held up better than those of its Detroit-based counterparts, sales have declined steeply throughout the industry, which Goss said forced Toyota to delay the plant's opening.
By John Vinocur
Monday, December 15, 2008
PARIS: If you live in Europe and your president, or people speaking in his name, are talking up preparation "without delay" of an unprecedented European Union-Russia economic and security zone, would you think that might wind up big news in the local papers?
Or if, in the same breath, that presidential voice says it has won the battle for European leadership over Angela Merkel of Germany and, to boot, has made confidential military cooperation agreements with Britain that include nuclear weapons?
Funny thing how those assertions were presented to readers in France as nothing especially remarkable.
It's not that there's anything wrong with the alertness of editors here. Rather, the discretion (Page 10 or Page 6 placement concerning the clippings I'm looking at now) reflects the caution these days that meets much of what Nicolas Sarkozy says about the world.
The circumstances last week involved Sarkozy or whoever was authorized to speak for him (psst, you can bet the farm and the shack at the shore it was Sarko) attempting to recast him as a second-term Master of the Universe in 2009, regardless of his exit Dec. 31 from the EU presidency. Top-notch reporters from publications like Le Figaro and Le Monde were asked in to listen.
The result, from a collage of the newspapers' accounts, was another burst of the kind of language that makes the French president's critics say he is vain and erratic, bordering on the irresponsible; or his advocates seek to define him as dynamic, constantly inventive, and the only politician saving Europe from what Sarkozy calls "deathly boredom."
This time out, even through the light journalistic fog of imprecise attribution (akin to "the White House thinks" or "Downing Street believes"), Sarkozy outdid himself.
He proposed setting up, immediately, "a common economic space" between the EU and Russia that, protected by its own "security space," including Ukraine and Turkey, would effectively keep Turkey out of EU membership.
Don't mind the Russians, the presidential voice urged. And perhaps finding something reassuring in the falling value of the ruble and the Kremlin's dramatically diminished energy revenues, said, "a country suffering from so many serious problems could not throw itself at territorial conquests."
The contradictions were extraordinary. Only the week before, in Helsinki, Western countries meeting with Russian leaders effectively vetoed a plan, promoted by Sarkozy with Moscow's support, to hold a summit meeting in Paris in June on a "new security architecture for Europe." It had been widely dismissed as a plan to water down NATO.
Last Tuesday, Sarkozy's new line, accepting Russian opposition to Ukraine's possible entry into NATO, was, "If the Warsaw Pact existed and was installing missiles in Belgium, don't you think we'd support the pro-French part of Belgium?"
What missiles? None are planned for Ukraine. And, for that matter, what EU-Russian economic and security space?
A diplomat in Brussels, who tracks such concerns, said he never heard of it and, if past performance was a guide, tended to regard the proposal as another case of "throwing spaghetti against a wall and seeing if any sticks."
As for Merkel, Le Monde's version of the briefing said, "The Élysée considers that Mr. Sarkozy won the battle for leadership of Europe over Merkel. Abandoning the idea of a directorate of big countries, Mr. Sarkozy believes he brought over Greece, Portugal, the Netherlands, as well as Spain and Belgium, to his side, and in the process, reversed the balance of power."
Voilà. France 5, Germany 0. A perfect way to reassure the Germans on Sarkozy's calculability! Not to mention guaranteeing himself Eastern Europe's support for his 2009 game plan as antagonist to the Czech Republic's pro-American instincts when it assumes the EU presidency on Jan. 1.
The danger doesn't come from Russian arms, Karel Schwarzenberg, the Czech foreign minister, said last week in remarks that could have been aimed at Sarkozy. "The danger is that the Russians don't accept the idea that we don't belong to their empire anymore. For them, everything has to be done with their permission. This is not a Soviet territory. You can't stop reminding them."
Then there's Britain. Le Monde's account reported "confidential agreements have been made to deepen military, notably nuclear, cooperation."
In Brussels, the dubious diplomat said, "this might come as a surprise to the British." If not, a party to a secret deal talking about it for publication could end up as an embarrassment for Gordon Brown.
Sarkozy certainly could not be doing Brown any domestic political favors either by lamenting, as reported, the poor state of the pound. Or by predicting, "London will finish up by adopting the common currency."
Indeed, that was exactly what a Sarkozy friend had told him would not be the most helpful thing for Gordon's new best friend to say.
Soon enough, according to some Europeans, Germans in particular, the Sarkozy fantasy and free-fire zone will reach its limits.
The demarcation would be Barack Obama's entry in the White House, bearing issues like Iran, Afghanistan, and France's capacity to function as a team player in the context of its return to NATO's unified command in April.
It's then that the rules allowing Sarkozy's seemingly boundless capacity to move from old friend to new, from passionate old position (as a would-be Atlanticist) to eager new standpoint (as a Gaullist reborn) grow very much tougher.
Obama will have too little time to waste - and too much power, credibility and persuasiveness - not to ask Sarkozy if he wants to risk a return to French irrelevance by promoting his own importance with a policy hodgepodge he and France can't deliver.
French editors seem to be the first to have understood.
By Jessica Michault
Monday, December 15, 2008
PARIS: The fashion world gathered around 44 designer Christmas trees at the annual "Les Sapins de Noël des Créateurs" charity auction in Paris last week.
From Louis Vuitton's golden metal cone forged out of hundreds of LV emblems to Stella McCartney's eco-friendly tiers of cardboard disks and Jérôme Dreyfuss's stripped metal umbrellas stacked one on top the other and adorned with multicolored plastic bags, the "trees" came in all shapes, sizes and styles.
It was the first time that top name artists in the world of design had contributed to the auction. Designs by Norman Foster (which netted €8,500 or about $11,000), India Mahdavi (€8,000) and Jacques Rougerie (€5,100) were among the big bids. But it was the white column of circling shapes from Zaha Hadid that was the top seller of the night at €46,000. For art dealers and collectors at the event, it was a rare opportunity to acquire pieces by artists at a fraction of the price of their other work.
A total of €101,000 was raised for the Sol En Si charity organization that helps children and families living with AIDS. The fashion journalist Marie-Christiane Marek, who started the charity auction 13 years ago, said that the money would be used to create a residence in Togo for children orphaned by the disease. But as the total started to climb, more than tripling the sum raised last year, the charity will be able to build much more than originally planned.
No live Christmas tree was used in any of the designs, making all of the "trees" sustainable luxuries. Perhaps their only drawback is that they just might outshine all the presents tucked below their branches.
By Suzy Menkes
Monday, December 15, 2008
PARIS: Pierre Bergé sits four square on a leopard print sofa - a Picasso to his right and a Léger above his head - with the same pugnacious look as the bulldog, Moujik, who is sniffing round the late Yves Saint Laurent's apartment.
"Fashion has no connection with art - the entire idea of discourse between art and fashion has been invented," says Bergé, who spent 50 years with Saint Laurent acquiring fine art and supporting high fashion.
"I never thought that fashion was an art - not at all, but I think it requires an artist to do fashion," says Bergé. He might have added that it takes two artistic souls to juxtapose works of art, creating a home where each object seems to be in conversation with the other.
But these exceptional cultural dialogues are now over. After the death of Saint Laurent last summer, everything is to go under the hammer in February: Brancusi and Braque; Matisse and Mondrian; the gold and silver objects standing sentinel on a Jean-Michel Frank table; the Italian rococo chairs circling an Art Deco marble dining room table; and the 15 sinuous bronze mirrors created by François-Xavier and Claude Lalanne for the music room.
Until the auction, to be held by Christie's in February at the Grand Palais in Paris, with the support of Pierre Bergé Associés, collectors are flocking to see these extraordinary artworks that span so harmoniously historical periods and geographical continents.
Bergé is clear and concise about the diverse objects and how they are displayed, with only a masterpiece quality uniting them.
"Everyone can be an art collector, but you don't always have the same result," says Bergé. "Yves and I wanted a collection that was demanding. We did not buy art before we had money, except for the African bird." (He was referring to a carved wooden totem facing the windows of the long drawing room.)
"Our first object was in 1965 - a Brancusi sculpture - very expensive at the time," says the creative entrepreneur, talking about the abstract wood carving. He explained how the two partners worked with a pair of galleries in a period when you could still buy museum-quality modern art.
To sit in Saint Laurent's drawing room, the sun slanting over the Goya that the designer loved too much to loan to Madrid's Prado museum ("I had to have a photograph made for him to look at," says Bergé) is to witness a home of pure refinement.
Some art objects had emotional connections to their life as a couple: the lions - in silver or bronze, crouching and rampant - that Bergé gave to Yves on his birthdays, "because he was a Leo." Or there were memories of the early days, when Saint Laurent could still go out unrecognized, yelling at Bergé to slam on the car brakes because he had spotted "something marvelous" in an antique store on the Rue Bonaparte. The couple had taken a nearby apartment at No. 55 Rue de Babylone in 1972. What they found were copper and lacquer vases by Jean Dunand from the Art Deco period that was only just coming back into fashion.
Early Modernism forms the soul of the style at this duplex apartment. The sale in 1972 of the collection of the Belle Epoque couturier Jacques Doucet set the tone for the daring choices, which include a dragon-decorated 1920s armchair by Eileen Gray.
"A collection is like a dinner table. It is about who is invited, but also who is not there," says Bergé. "We would have liked to have Barnett Newman, Bacon and perhaps Pollock. But we were not didactic. We wanted objects that talk to each other. And we did our collection with a lot of passion, but with certitude."
The concept of an artistic faceoff, now a staple of museum shows, was born in the hôtel particulier of Vicomtesse Marie-Laure de Noailles. Bergé, 78, who first visited the mansion in his early 20s, talks about the "audacity of the mix" in the art.
Memories of an Edward Burne-Jones tapestry at the top of the grand staircase at the de Noailles residence translates in the YSL apartment as a Burne-Jones "Adoration of the Magi," executed in 1904, its fiery, russet Pre-Raphaelite colors burning brightly in the light and airy library downstairs. There, the framed "family" photographs on the bleached book shelves gaze out at the ancient Roman Minotaur sculpture in the garden.
Even without Moujik wandering the rooms, the apartment has a homey feel. At the bottom of the stairs, beside a pair of Chippendale chairs, an artistic medley is showcased in the "cabinets de curiosité," built by Jacques Grange, a close friend and interior designer. The contents include a cluster of cameos, rock crystals, agate chalices and ivory carvings.
Why disperse this magnificent collection? Bergé, who has supported the fight against AIDS for 25 years, hopes that the estimated €200 million to €300 million can be used to fund scientific research and to focus immediately on the AIDS crisis in Africa. After signing a PACS, the French civil union agreement, Bergé inherited the art in Saint Laurent's apartment and in his own neighboring home and decided that both collections should be sold.
In spite of Bergé's disclaimers, isn't there a genuine connection to the art in the haute couture archives, held at the Fondation Pierre Bergé/Yves Saint Laurent?
"Yves never had any pretension to be an artist. He called himself an 'artisan poétique,"' said Bergé, claiming that the geometric YSL Mondrian collection of 1965 had nothing to do with the color-block Piet Mondrian painting that the couple bought a decade later.
The first exhibition shown at the Fondation in 2004 told a different story. "Yves Saint Laurent: Dialogue with Art" took a strong position about fashion and art, the catalogue claiming that "only a translucent membrane separates and unites the bold renewal of forms at work in these two separate worlds."
Saint Laurent, while prizing the metallic breastplates created by the Lalannes for a midnight blue crepe dress he designed in 1969, had no doubt which artist had given him the most fun.
"It was Andy [Warhol], he was part of a whole universe that existed in 1966," said the designer at the show's opening. "He was a marvelous person, inspiring in everything he did. He had a magic when he and his clique came here from New York and we went out together."
The Warhol four-in-one images of Saint Laurent and of Moujik, as well as YSL Pop art dresses, were testaments to the links between artist and couturier. And no one could doubt the connection between the Braque-inspired dresses with winged bodices, the peasant blouses taken from a Matisse painting and the luscious embroidered jackets channeling Bonnard's grapes and Van Gogh's irises.
"But I never compared myself with these artists - that would be pretentious," said Saint Laurent. "I just tried to be an artist in my own métier."
Review ordered of Guantanamo UK torture case
Reuters
Monday, December 15, 2008
By James Vicini
The U.S. Supreme Court on Monday granted an appeal by four former Guantanamo prisoners and ordered further review of their lawsuit against top Pentagon officials for torture and religious abuse.
The justices set aside a U.S. appeals court ruling that dismissed the lawsuit by the four British citizens over their treatment at the U.S. military base at Guantanamo Bay in Cuba on the grounds they have no right to sue.
The Supreme Court sent the case back to the appeals court for further consideration in view of the high court's ruling in June that Guantanamo prisoners have the legal right to challenge their continued confinement before federal judges in Washington, D.C.
The four men -- Shafiq Rasul, Asif Iqbal, Rhuhel Ahmed and Jamal al-Harith -- were captured in late 2001 in Afghanistan and were transferred to Guantanamo in early 2002. Released in March of 2004, they were returned to Britain.
Their lawsuit named then-Defence Secretary Donald Rumsfeld and 10 military commanders. They claimed they were subjected to various forms of torture, harassed as they practiced their religion and forced to shave their religious beards.
In one instance, a guard threw a Koran in a toilet bucket, according to the lawsuit. They claimed violations of a U.S. religious rights law, the Geneva Conventions and the U.S. Constitution.
"This case presents the question of whether senior officials of the United States government can be held accountable ... for ordering the religious humiliation and torture of Guantanamo detainees," their lawyers said in the appeal to the Supreme Court.
"This case presents the opportunity to recognise and enforce rights that are at least as basic and essential to human autonomy -- the right to worship and the right not to be tortured," they said.
U.S. President-elect Barack Obama has promised to close the prison camp after he takes office in January. There are about 250 detainees at Guantanamo, which was set up in January 2002 to hold terrorism suspects captured after the September 11 attacks on the United States by al Qaeda militants.
Most have been held for years without being charged and many of the prisoners have complained of abuse.
In dismissing the lawsuit by the four Muslims, the appeals court cited a lack of jurisdiction over the claims, ruled the defendants enjoyed qualified immunity for acts taken within the scope of their government jobs and held the religious right law did not apply to the detainees.
The three-judge panel ruled the prisoners were not covered by the Religious Freedom Restoration Act because they "are aliens and were located outside sovereign United States territory" at the time of the alleged violations.
The Bush administration urged the Supreme Court to reject the appeal on the grounds that the appeals court's decision was correct.
"The court of appeals reasonably concluded that military detainees could not impose personal monetary liability on the nation's military commanders for overseas conditions of confinement during a time of war," Justice Department attorneys said.
The Supreme Court's action in reinstating the lawsuit was at least a temporary setback for the government.
(Editing by David Alexander and David Wiessler)
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Cheney want Guantanamo open until terror war ends
Reuters
Tuesday, December 16, 2008
WASHINGTON: Vice President Dick Cheney said on Monday the military prison at Guantanamo Bay could not be responsibly closed until the U.S. war on terror is over and he defended the practice of subjecting detainees to simulated drowning during questioning.
Cheney, in an interview with ABC News, said he was aware of the interrogation tactics used again Khalid Sheikh Mohammed, the alleged mastermind of the September 11 attacks, including the practice of waterboarding, which simulates drowning.
Asked if he thought, in hindsight, any of the tactics went too far, Cheney said, "I don't." Questioned about whether he thought the reported use of waterboarding on Mohammed was appropriate, Cheney replied, "I do."
The vice president was asked when the United States could responsibly close the U.S. prison at Guantanamo Bay, Cuba, which was set up to hold detainees in President George W. Bush's war on terror launched after September 11.
"Well, I think that that would come with the end of the war on terror," Cheney said, adding no one knows when that might be.
"In previous wars, we've always exercised the right to capture the enemy and then hold them until the end of the conflict.
"The same basic principle ought to apply here in terms of our right to capture the enemy and hold them," Cheney said, noting that in many cases the captives' home countries did not want them back and no other nation was willing to take them.
The vice president said Bush and many other people would like to close Guantanamo Bay but other issues had to be addressed first.
"That includes, what are you going to do with the prisoners held in Guantanamo? And nobody yet has solved that problem," Cheney said.
The United States is holding about 250 prisoners at Guantanamo and has released or transferred out another 520.
In another interview with conservative radio host Rush Limbaugh, Cheney said Guantanamo "has been very well run" and the incoming administration of President-elect Barack Obama would have a difficult time closing it.
"Once you go out and capture a bunch of terrorists, as we did in Afghanistan and elsewhere, then you've got to have some place to put them," he said. "If you bring them here to the U.S. and put them in our local court system, then they are entitled to all kinds of rights that we extend only to American citizens. Remember, these are unlawful combatants.
"Guantanamo has been very, very valuable," he said. "And I think they (the Obama administration) will discover that trying to close it is a very hard proposition."
(Editing by Bill Trott)
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Pakistan won't let Britain question suspects
Reuters
Monday, December 15, 2008
By Kamran Haider
Pakistan will not allow foreign investigators to interrogate Islamist militants detained over last month's attacks in the Indian city of Mumbai, Prime Minister Yousaf Raza Gilani said on Monday.
Prime Minister Gordon Brown said in Islamabad on Sunday he had asked India and Pakistan for permission for British police to question suspects arrested in both countries in connection with the Mumbai assault.
Gilani told parliament he had turned down Brown's request.
"I want to assure you that when I met the British prime minister yesterday, he asked if ... we would allow them to investigate those people. I said 'we won't allow it'," he said.
"It is our country and our laws will be implemented. We'll follow our laws."
The British foreign office did not comment directly on Gilani's remarks, but issued a statement which said: "We will continue to offer what support we can including police expertise, but will not impose it."
India, backed by the United States, has called on Pakistan to crack down on Pakistan-based militant groups after the attacks, in which 179 people were killed during a three-day siege in India's financial heart.
A British national and two people with dual British-Indian nationality were killed in Mumbai.
New Delhi blames Lashkar-e-Taiba (LeT), a militant group it says was set up by Pakistan to fight Indian rule in the disputed Kashmir region, for the Mumbai attacks.
Islamabad has blamed "non-state actors" and vowed to cooperate with investigations, but has repeatedly said anyone caught in Pakistan would be tried in Pakistan.
Pakistan also says India has yet to share evidence from the attacks.
CRACKDOWN
Pakistan has cracked down on suspected Islamists since the Mumbai attacks, detaining scores of people, many of them members of the Jamaat-ud-Dawa, an Islamist charity that India says is a front for the LeT.
A committee of the U.N. Security Council last week added the charity to a list of people and groups facing sanctions for ties to al Qaeda or the Taliban.
Gilani said the clampdown on the charity had been carried out because of the U.N. decision and authorities would take control of the group's projects to ensure they were continued for the benefit of the people.
Pakistan has frozen accounts of Jamaat-ud-Dawa and has detained some of its leaders.
Gilani said Pakistan was a responsible nuclear-armed country and would act to stop terrorism.
"I assure the world through this platform that we'll not allow Pakistani territory to be used for terrorism. We condemn terrorism wherever it is," he said.
Brown said he had asked Indian Prime Minister Manmohan Singh if he would allow British police, "if they chose to do so," to interview the lone surviving gunman held after the attacks, identified as Mohammad Ajmal Kasab.
He said he had asked Pakistani President Asif Ali Zardari if British police could interview suspects held in Pakistan.
British government sources said British detectives were seeking more information on how Lashkar worked or information they could cross-reference with other intelligence, rather than any intention to launch a separate prosecution.
(Additional reporting by Avril Ormsby; Editing by Robert Birsel and Dean Yates)
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Mystery grows over general's slaying in Pakistan
Reuters
Monday, December 15, 2008
ISLAMABAD: Pakistani newspapers gave prominent coverage on Monday to a British media report that a retired general gunned down in Islamabad last month planned to blow the whistle on fellow generals' dealings with the Taliban.
Jang, Pakistan's biggest selling Urdu-language newspaper, ran a story on its front page headlined: "Gen. Alavi was against pacts with Taliban, Musharraf had sacked him."
The reports in Jang and other Pakistani dailies were based on a story published in the Sunday Times, and written by Carey Schofield. (http://www.timesonline.co.uk/tol/news/world/asia/article5337881.ece) Major-General Amir Faisal Alavi, a brother-in-law of Nobel prize-winning British novelist V.S. Naipaul, was shot dead along with his driver on the outskirts of the capital on November 19.
Suspicion initially fell on Islamist militants linked to al Qaeda and the Taliban, but an investigation by police and intelligence agencies has yet to come up with hard evidence.
"The investigation is going on but so far there has been no progress. We could not identify the murderers or the motive," said Sajid Kiyani, superintendent of police in Islamabad.
Schofield says Alavi, who had commanded the elite Special Services Group, gave her a copy of a letter he had had sent to army chief General Ashfaq Kayani in which he named two generals whose conspiracy resulted in his premature retirement more than two years ago.
Western and Pakistani analysts have long harboured suspicion that Pakistan has played a double game by supporting Taliban factions in the years since 2001, despite the heavy casualties suffered by its security forces fighting militants in the tribal region bordering Afghanistan.
EXPECTED TO BE SILENCED
A copy of the letter, dated July 21, 2008, with the names of the two generals blacked out, was reproduced on the Sunday Times website.
In the letter, Alavi asked Kayani to open an inquiry into the reason for his retirement and disciplinary action against the generals who had plotted against him.
He also asked for a military decoration and a post-retirement job that he believed would help restore his honour.
The British journalist said Alavi gave her a copy of the letter four days before he was killed, and had asked her to publish it in the event of his death.
She said Alavi expected to be killed as he had not received any response to his letter.
Alavi believed he had been forced out of the army because he had become openly critical of deals between Pakistani generals and the Taliban.
There is no mention of support for the Taliban in the letter, just a veiled reference that the purpose of the plot against him "by these General officers was to hide their own involvement in a matter they knew I was privy to."
Alavi wrote that he would "furnish all relevant proof/information" to an inquiry.
Reuters made several attempts to reach a Pakistani military spokesman for comment on the Sunday Times reports.
The Sunday Times report said Alavi mentioned a deal between a general and Baitullah Mehsud, who declared himself leader of the Pakistani Taliban late last year, to stop attacks on the army.
The military did reach a deal with militant tribesmen, including Mehsud, in the South Waziristan region in February, 2005. There were media reports at the time that the army had paid militants to stop attacking them.
Mehsud's group was blamed for many of the suicide attacks on security forces and Pakistani cities in last year, including one that killed former prime minister Benazir Bhutto, the late wife of President Asif Ali Zardari.
(Reporting by Simon Cameron-Moore and Kamran Haider; Editing by David Fox)
*************
Shoe insult against Bush resounds in Arab world
By Timothy Williams and Sharon Otterman
Monday, December 15, 2008
BAGHDAD: A day after an Iraqi television journalist threw his shoes at President George W. Bush at a news conference here Sunday, his act of defiance toward the American commander in chief reverberated throughout Iraq and across the Arab world.
In Sadr City, the sprawling Baghdad suburb that has seen some of the most intense fighting between insurgents and U.S. soldiers since the 2003 invasion, thousands of people marched in his defense. In Syria, he was hailed as a hero. In Libya, he was given an award for courage.
Throughout much of the Arab world Monday, the shoe-throwing incident generated front-page headlines and continuing television news coverage. A thinly veiled glee could be discerned in much of the reporting, especially in the places where anti-American sentiment runs deepest.
Muntader al-Zaidi, 29, the correspondent for an independent Iraqi television station who threw his black dress shoes at Bush, remained in Iraqi custody Monday.
While he has not been formally charged, Iraqi officials said he faced up to seven years in prison for committing an act of aggression against a visiting head of state.
Hitting someone with a shoe is a deep insult in the Arab world, signifying that the person being struck is as low as the dirt underneath the sole of a shoe. Compounding the insult were Zaidi's words as he hurled his footwear: "This is a gift from the Iraqis; this is the farewell kiss, you dog!" While calling someone a dog is universally harsh, among Arabs, who traditionally consider dogs unclean, those words were an even stronger slight.
The incident has been a source of embarrassment for the government of Prime Minister Nuri Kamal al-Maliki, who, in a statement Monday, called the shoe throwing a "a shameful savage act" and demanded a public apology from Al Baghdadia, the independent satellite channel that employs Zaidi.
"The act damaged the reputation of the Iraqi journalists and journalism in general," the statement said.
As of Monday night, no apology from the station was forthcoming. Instead, the network posted an image of Zaidi in the corner of the screen for much of the day. Telephone callers were invited to phone in their opinions, and the vast majority said they approved of his actions.
Opponents of the continued American presence in Iraq turned Zaidi's detention Monday into a rallying cry. Support for the detained journalist crossed religious, ethnic and class lines in Iraq - vaulting him to near folk-hero status.
"I swear by God that all Iraqis with their different nationalities are glad about this act," said Yaareb Yousif Matti, a 45-year-old teacher from Mosul, a northern city that has is contested by Arabs, Kurds and Turkmen.
In Samarra, one of the centers of the Sunni insurgency against American forces, Zaidi received nearly unanimous approval from people interviewed Monday.
"Although that action was not expressed in a civilized manner, it showed the Iraqis' feelings, which oppose American occupation," said Qutaiba Rajaa, a 58-year-old physician.
In Sadr City, thousands of marchers Monday called for an immediate U.S. withdrawal from Iraq. The demonstrators burned American flags and waved shoes in a show of support for Zaidi.
In Najaf, several hundred people gathered on a central square to protest Bush's visit Sunday to Iraq, and demonstrators threw their shoes at a passing U.S. military convoy.
But praise for Zaidi was not universal. His action ran counter to deeply held Iraqi traditions of hospitality toward guests, even if they are enemies. And those who have cooperated or welcomed the American presence in Iraq were far more apt to side with the government in their condemnation.
Ahmad Abu Risha, head of the Awakening Council in Anbar Province, a group of local tribal leaders that started a wave of popular opposition against Qaeda fighters in Iraq, said that he condemned what happened "because the American president is the guest of all Iraqis. The Iraqi government has to choose good journalists to attend such conferences."
Kamal Wahbi, a 49-year-old engineer in the Kurdish city of Sulaimaniya, where pro-American sentiment is strong, said: "This is unsuitable action by an Iraqi journalist. His action served terrorism and radical national extremism. I think he could send the same message by asking Bush embarrassing questions."
Witnesses said that Zaidi had been severely beaten by security officers Sunday after being tackled at the news conference and dragged out. One of his brothers, Maythem al-Zaidi, said Monday that the family had not heard from Zaidi since his arrest, and that a police officer who picked up Zaidi's cellphone late Sunday had threatened the family.
It was unclear whether Zaidi had planned his actions beforehand, or whether - as his brother said - he had become infuriated by Bush's words of farewell to Iraqis and made a spontaneous decision to insult him.
Saif al-Deen, 25, an editor at the Baghdadia television network in Cairo, said Zaidi had been planning some sort of protest against Bush for nearly a year.
"I remember at the end of 2007, he told me, 'You will see how I will take revenge on the criminal Bush in my personal way about the crimes that he has committed against innocent Iraqi people,"' Deen said. He said he tried to talk his friend out of doing anything at the time, but that "he insisted he would do it."
Around the Arab world, the shoe throwing became the topic of the moment. In Syria, Zaidi's face was broadcast on the state television network, with Syrians calling in throughout the day to share their admiration for his gesture. Lawyers volunteered to represent him by the dozen.
In Lebanon, reactions varied by political affiliation, but curiosity about the episode was universal. An American visitor to a school in Beirut's southern suburb, where the Shiite militant group Hezbollah is popular, was besieged with questions from teachers and students alike, who wanted to know what Americans thought about the insult.
"It's the talk of the city," said Ibrahim Mousawi, a Beirut-based journalist and political analyst affiliated with Hezbollah. "Everyone is proud of this man, and they're saying he did it in our name."
In Libya, Zaidi was given a bravery award Monday by a charity group chaired by a daughter of the Libyan leader, Muammar el-Qaddafi, Reuters reported.
The charity group, Wa Attassimou, also urged the Iraqi government to release Zaidi.
"Wa Atassimou group has taken the decision to give Muntader al-Zaidi the courage award," the group said in a statement, "because what he did represents a victory for human rights across the world."
********************
For journalist who threw shoes at Bush, anger ran deep
By Riyadh Muhammad
Monday, December 15, 2008
BAGHDAD: The brother of Muntader al-Zaidi, the Iraqi journalist who threw his shoes at President George W. Bush during a joint press conference on Sunday with Iraqi Prime Minister Nuri al-Maliki, said Monday that he was "proud of his brother - as all Iraqis would be."
Muntader al-Zaidi remains in Iraqi custody. When his brother, Maythem al-Zaidi, 28, called his cell phone at midnight, a man claiming to be one of the prime minister's bodyguards answered. Maythem al-Zaidi said that the bodyguard threatened, "that they will get us all."
Hitting someone with a shoe is a particularly strong rebuke in Iraqi culture. Although the president was uninjured, the incident overshadowed media coverage of the trip in the Arab world. And it has transformed Muntader al-Zaidi into a symbolic figure in the debate about the American military's presence in Iraq.
Maythem al-Zaidi said his brother had not planned to throw his shoes prior to Sunday. "He was provoked when Mr. Bush said this is his farewell gift to the Iraqi people," he said. A colleague of Muntader al-Zaidi's at al-Baghdadiya satellite channel, however, said the correspondent had been "planning for this from a long time. He told me that his dream is to hit Bush with shoes," said the man, who would not give his name.
Muntader al-Zaidi appears to have a long-standing dislike of the U.S. presence in Iraq. He used to finish his reports by saying he was in "the occupied Baghdad." His brother said that he hates the occupation so strongly that he canceled his wedding, saying: "I will marry when the occupation is over."
The correspondent for Al Baghdadiya, an independent Iraqi television station, had previously been detained in November 2007 for two weeks by "a particular party" - his brother did not reveal whether American or Iraqi - after videotaping the scene of an improvised explosive device that targeted an American Humvee. He was held again two months later for several hours by the American army without charges, his brother said. Other reports said he had been kidnapped by Shiite militants.
Muntader al-Zaidi was the head of the student union under Saddam Hussein and he earned a diploma as a mechanic from a technical institute before becoming a journalist. He worked at al-Qasim al-Mushterek newspaper, an Iraqi daily founded after the 2003 invasion, then he joined al-Diyar satellite channel, an Iraqi channel founded after the war. Two years later, he joined al-Baghdadiya satellite channel, another Iraqi channel, which is based in Cairo.
Maythem al-Zaidi contacted a judge to ask him if what his brother did is a crime under Iraqi law. The judge told him that he might serve two years in prison or pay a fine for insulting a president of foreign country unless Bush withdrew the case. "If they manage to imprison Muntader, there are millions of him all over Iraq and the Arab world," Maythem al-Zaidi said.
Maythem al-Zaidi said has been contacted from about 100 Iraqi and foreign lawyers offering their services free of charge - including Saddam Hussein's lawyer Khalil al-Dulaymi. When asked if he would accept Dulaymi's services, he replied, "Why not, we are all Iraqis."
The Rusafa office of Moktada al-Sadr organized a demonstration in Sadr City to support the shoe thrower. Across Iraq, everyone seems to have an opinion about the case.
According to his brother, Muntader al-Zaidi is "a calm man." Both of his parents are dead, and he has 10 other siblings. Maythem al-Zaidi said that his brother is politically independent, but several people who know him mentioned that he was a Baathist who turned into a Sadrist after the war.
Meanwhile, al-Baghdadiya satellite channel's Baghdad bureau chief is not responding to reporters to comment on the incident and he prevented all his staff of doing so.
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Shoe-throwing reporter is talk of Iraq
Reuters
Monday, December 15, 2008
By Waleed Ibrahim
The Iraqi journalist who threw his shoes at U.S. President George W. Bush has become the talk of Iraq, hailed by marchers as a national hero but blasted by the government as a barbarian.
The little-known Shi'ite reporter, said to have harboured anger against Bush for the thousands of Iraqis who died after the 2003 U.S.-led invasion, had previously made headlines only once, when he was briefly kidnapped by gunmen in 2007.
TV reporter Muntazer al-Zaidi remained in detention on Monday, accused by the Iraqi government of a "barbaric act." He would be sent for trial on charges of insulting the Iraqi state, said the prime minister's media adviser, Yasin Majeed.
His employer, independent al-Baghdadiya television, demanded his release and demonstrators rallied for him in Baghdad's Sadr City, in the southern Shi'ite stronghold of Basra and in the holy city of Najaf, where some threw shoes at a U.S. convoy.
"Thanks be to God, Muntazer's act fills Iraqi hearts with pride," his brother, Udai al-Zaidi, told Reuters Television.
"I'm sure many Iraqis want to do what Muntazer did. Muntazer used to say all the orphans whose fathers were killed are because of Bush."
Zaidi shouted "this is a goodbye kiss from the Iraqi people, dog," at Bush in a news conference he held with Prime Minister Nuri al-Maliki during a farewell visit to Baghdad Sunday.
The journalist then flung one shoe at Bush, forcing him to duck, followed by another, which sailed over Bush's head and slammed into the wall behind him. Throwing shoes at someone is the worst possible insult in the Arab world.
Zaidi was dragged struggling and screaming from the room by security guards and could be heard shouting outside while the news conference continued after momentary mayhem.
'BARBARIC'
The government said Zaidi had carried out "a barbaric and ignominious act" that was not fitting of the media's role and demanded an apology from his television station.
Al-Baghdadiya television played endless patriotic music, with Zaidi's face plastered across the screen.
A newscaster solemnly read out a statement calling for his release, "in accordance with the democratic era and the freedom of expression that Iraqis were promised by U.S. authorities."
It said that any harsh measures taken against the reporter would be reminders of the "dictatorial era."
The Iraqi Journalists' Syndicate said Zaidi's "far from professional" and irresponsible conduct had placed it in an "embarrassing and critical" situation. Nevertheless, it called on Maliki to release him for humanitarian reasons.
"It was the throw of the century. I believe Bush deserves what happened to him because he has not kept his promises to Iraqis," said Baghdad resident Abu Hussein, 48.
Parliamentary reaction was mixed, with some saying Zaidi chose the wrong venue for his protest. Others cheered.
"Al-Zaidi's shoe is the most famous shoe in the whole world," said Fawzi Akram, a Turkman lawmaker loyal to anti-American Shi'ite cleric Moqtada al-Sadr.
A Libyan charity group chaired by leader Muammar Gaddafi's daughter, Aicha Gaddafi, gave Zaidi an award for bravery.
Zaidi, now in his late 20s, spent more than two days blindfolded, after armed men kidnapped him in November 2007. He said at the time that the kidnappers had beaten him until he lost consciousness, and used his necktie to blindfold him.
He never learned the identity of the kidnappers, who questioned him about his work but did not demand a ransom.
Colleagues say Zaidi resented Bush, blaming him for the bloodshed that ravaged Iraq. It did not appear that he had lost any close family members during the sectarian killings and insurgency, which in recent months have finally begun to wane.
(Additional reporting by Haidar Kadhim and Wissam Mohammed; Writing by Michael Christie; Editing by Dominic Evans)
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Nine Iraqi policemen killed in suicide attack
Reuters
Monday, December 15, 2008
BAGHDAD: Nine policemen were killed and 31 wounded when a suicide bomber drove a car full of explosives at their checkpoint west of Baghdad on Monday, as attacks resumed after a period of uncommon calm, a police source said.
He said most of the wounded were policemen. The attack took place in the Khan Dhari area on the western outskirts of the Iraqi capital.
Another police source put the death toll at three, with 30 wounded.
Violence has dropped sharply in Iraq over the past year, but car bombs, roadside bombs and other attacks remain common.
Last week a suicide bomber killed 50 people in a crowded restaurant near the northern city of Kirkuk.
The Kirkuk suicide bombing marred what had otherwise been an unusually peaceful week in Iraq after the years of sectarian bloodshed and insurgent violence that followed the 2003 U.S.-led invasion.
The religious holiday of Eid al-Adha saw tens of thousands of people emerge from sandbagged homes in Baghdad and take to the city's parks and fair grounds.
(Writing by Aseel Kami, editing by Michael Christie)
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Bush makes surprise visit to Afghanistan
By Steven Lee Myers
Monday, December 15, 2008
KABUL, Afghanistan: President George W. Bush made a surprise visit to Afghanistan on Monday morning and asserted that the United States would not walk away from the conflict here despite rising violence and instability.
Air Force One arrived in the predawn darkness, five-and-a-half hours after leaving Iraq, and the details of the Afghanistan trip were shrouded in even greater secrecy than the first stop in Baghdad. En route, Bush said that he wanted to pledge that the United States would not relent in the effort to strengthen Afghanistan, even as he steps down in 36 days.
Asked how the military operation here would change as his administration — and that of President-elect Barack Obama — prepared to send additional forces to the country to shore up a increasingly difficult and dangerous situation in Afghanistan, he said:
"It's the same mission we had before: to have this young democracy to develop the institutions so it can survive on its own, not to repeat the mistakes of the 1980s, which is to achieve an objective and leave, and to deny a safe haven for Al Qaeda."
Bush's visit to Afghanistan was only his second; the first was in March 2006. His visit on Sunday to Iraq, by contrast, was his fourth. While security has improved greatly in Iraq, it has worsened in Afghanistan, something that Bush attributed to "a quiet surge" of American and NATO forces over the last year that had resulted in increased engagement with Taliban and Qaeda fighters.
That has led to a series of high-level policy reviews and visits by American officials — the chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, the Secretary of Defense, Robert Gates, and now Bush, in the last week alone.
"If I remember violence went up when we went to Iraq with more troops," he said. "So the objective is to provide enough security so that a political system can provide a stable platform for, you know, economic viability, good education, good health care."
The administration has already signaled an increase in troop levels: the American commander here, General David McKiernan, has said as many as 20,000 more could be needed, bringing the total American force here to more than 50,000. Bush did not in any way acknowledge a chief criticism of his administration: that the war in Iraq had distracted the administration from the war in Afghanistan.
"This is a country significantly larger than Iraq, and significantly poorer; the infrastructure is difficult," he said. "Nevertheless, the mission is essential. We cannot, you know, achieve our objective of removing — the safe havens, kicking out Taliban — and say, 'O.K., now let's leave.' "
Journalists traveling with Bush were allowed to tell one superior and their spouses about only the first leg of the trip, but not about the visit to Afghanistan, reflecting a higher degree of concern for security. Air Force One landed with its lights off.
Bush was expected to meet with American troops and Afghan leaders later during the trip. Speaking to hundreds of cheering and whooping American troops after deplaning, Bush rallied them for what he warned would be "a difficult and long effort."
"We want to do the hard work now," he said.
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Bush talks with Karzai on Afghan visit
Reuters
Monday, December 15, 2008
By Matt Spetalnick
President George W. Bush told Afghan President Hamid Karzai on Monday the United States would stand by the war-torn country despite a transition of power at the White House.
Moving from one war zone to another, Bush flew secretly from Baghdad to Kabul, landing under cover of darkness for talks with Karzai and meetings with U.S. troops spearheading the fight against a resurgent Taliban.
"I told the president you can count on the United States. Just like you've been able to count on this administration, you will be able to count on the next administration as well," Bush told a news conference in the Afghan capital alongside Karzai.
On a farewell visit to Baghdad on Sunday, meant to mark greater security in Iraq after years of bloodshed, an Iraqi reporter called Bush a "dog" and threw his shoes at him.
After Air Force One touched down at Bagram air base outside Kabul under heavy security, Bush strode across the tarmac and into a giant tent where hundreds of troops greeted him with raucous cheers as he thanked them for their service.
"I am confident we will succeed in Afghanistan because our cause is just," he told them.
Bush, who has already ordered a troop increase in Afghanistan, appeared to lend tacit support to President-elect Barack Obama's pledge to increase troop levels even more after he takes office on January 20.
"I want him to succeed, I want him to do well," Bush said of Obama. "I'd expect you'll see more U.S. troops here as quickly as possible in parts of the country that are being challenged by the Taliban."
Obama has promised to make Afghanistan a higher priority, saying the Bush administration has been too distracted by the unpopular Iraq war to pay Afghanistan the attention it deserves.
But Bush said much progress had been made in Afghanistan since U.S. and Afghan forces toppled the Taliban in 2001 for sheltering al Qaeda leaders behind the September 11 attacks and said dozens of roads, schools and hospitals had been built.
But an Afghan reporter challenged Bush, saying the United States had failed to make good on promises to bring security.
"I respectfully disagree with you," Bush replied. "I just cited the progress. It's undeniable. I never said the Taliban was eliminated, I said they were removed from power. They are lethal and they are tough."
Bush was due to leave Afghanistan after his visit of several hours, but his next destination was not announced.
COOPERATE WITH PAKISTAN
Bush also said it was important for the United States to keep working with Pakistan to pressure militants along its border with Afghanistan. Osama bin Laden and his top lieutenants in al Qaeda are believed to be hiding out in the remote, lawless region.
"If Pakistan is a place from which people feel comfortable attacking infrastructure, citizens, troops, it's going to make it difficult to succeed in Afghanistan," Bush said. "The more we can get Pakistan and Afghanistan to cooperate, the easier it will be to enforce that part of the border regions."
Bush was making his second trip to Afghanistan since 2001.
Some 65,000 foreign troops are in Afghanistan, including 32,000 from the United States, struggling to combat worsening insurgent violence that has sparked alarm in Western capitals.
"No question that violence is up," Bush said. "But one reason why the violence is up is we're now putting troops in places where there hadn't been troops."
U.S. Army Gen. David McKiernan, commander of NATO forces and U.S. troops in Afghanistan, has requested four more combat brigades and support units -- a total of more than 20,000 troops.
One of those brigades is scheduled to deploy in January.
Washington's ability to send more forces to Afghanistan depends largely on being able to pull some of its nearly 150,000 troops out of Iraq, where security has improved sharply, but commanders caution the situation remains fragile.
Some NATO partners have resisted Washington's push for higher troop levels in Afghanistan causing friction within the alliance.
"The mission is essential. We cannot achieve our objective of removing al Qaeda safe havens by kicking out Talibans and saying 'OK, now let's leave," Bush said.
Asked if Pakistan was doing its part in its border areas, Bush said Pakistani President Asif Ali Zardari was determined.
"He said so publicly and he said privately. He looked at me in the eye and said 'you don't need to talk to me about extremist violence. After all my wife got killed by extremists'."
Karzai said the Afghan people would not allow the United States and the international community to abandon them "before we are really on our feet or we are strong enough to defend our country and have a good economy," and then joked, "and before they have taken from President Bush and his administration billions and billions of more dollars."
"You better hurry up," Bush replied.
(Additional reporting by Golnar Motevalli; Editing by Bill Tarrant)
*********************
Iraqi justice system falls short, rights group says
By Campbell Robertson
Monday, December 15, 2008
BAGHDAD: Iraq's central criminal court, the country's chief judicial institution, has fallen short of international and Iraqi constitutional standards of due process and has failed to provide "basic assurances of fairness," according to a report released Monday by Human Rights Watch.
The report portrays a system under which defendants are often abused in custody and held for months or even years before being referred to a judge. When cases are heard, the defendants are often left without adequate defense counsel to answer charges, which are frequently based on secret informants, coerced confessions and flimsy evidence, the report found. Juvenile detainees are often held with adults, it found, despite an Iraqi law ordering them to be held separately.
The court was created in 2003 by the United States-led coalition provisional authority to hear cases of serious offenses, including terrorism. The systemic failures of the court are in part due to an overwhelming caseload, the result in part of widespread arrests in 2007 as part of the surge operations in Baghdad, the report said.
The court also hears cases of detainees in American custody who are referred to an Iraqi judge. While the report criticizes the coalition for referring only a small fraction of the thousands detained, the backlog hampering the court is expected to get worse after Jan. 1, when, under the terms of the Iraqi-American security agreement, the Americans begin releasing or transferring all detainees into Iraqi custody.
At that point, detainees will be turned over to the Iraqi authorities within 24 hours, and their cases will be governed by Iraqi criminal law.
"I think the new caseload will probably make it even worse," said Joseph Logan, a researcher in the Middle East and North Africa division for Human Rights Watch and the main author of the report. "A dramatic increase in the number of cases funneled into the Iraqi system is going to create a strain at every point."
Human Rights Watch investigators were allowed to attend a series of investigative hearings and trial sessions at two branches of the court in Baghdad in May; they also were allowed to examine court documents and interview detainees, judges and lawyers.
At the hearings attended by Human Wrights Watch, judges often dismissed cases for failing to meet basic standards of proof. But, while judges did recognize the shortcomings, the high number of dismissed cases — often after a defendant had been in detention for months — only underscores how broken the system is, Logan said.
Iraqi law is still heavily focused on confession and testimony. Forensic evidence is rare and, because of the security situation, testimony often comes from secret informants. But though there are opportunities to challenge the reliance on secret testimony, the report cites a number of cases in which court-appointed defense lawyers either failed to appear or said nothing during proceedings.
A defense lawyer who often works at the central criminal court in Baghdad said cases were often assigned with little or no time for preparation.
"They call the lawyer as the trial is beginning or about to begin and tell him, 'This is the case and you are the defense lawyer,' " the lawyer, Mohammed al-Faisal, said. "In such a situation, the lawyer does not have enough time to prepare the case or study it. The court does not give either the lawyers nor the accused their rights in this matter.
Adding that he often comes across defendants who report being abused while in detention, Faisal said, "There are too many violations."
The criminal court had no immediate comment about the report.
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Israel bars critical UN human rights official
By Isabel Kershner
Monday, December 15, 2008
JERUSALEM: Israel on Monday turned away Richard Falk, the United Nations Human Rights Council special rapporteur for the Palestinian territories, saying he was "unwelcome."
Falk, an American, arrived in Israel on Sunday. He was held at the airport and placed on the first available flight back to Geneva, his point of departure. A spokesman for the Foreign Ministry said Falk had been informed in advance that his entry would be barred.
A professor of international law at Princeton University, Falk has long raised hackles here for what are seen as hostile and unpalatable views.
He has compared Israel's treatment of the Palestinians to Nazi atrocities and has called for more serious examination of the conspiracy theories surrounding the terrorist attacks of Sept. 11, 2001. Pointing to discrepancies between the official and other versions of events, he has written that "only willful ignorance can maintain that the 9/11 narrative should be treated as a closed book."
In his capacity as UN rapporteur, Falk issued a statement this month describing Israel's embargo on Hamas-controlled Gaza as a "crime against humanity," while making only cursory reference to Hamas rocket attacks against Israel. Israeli officials expressed outrage.
When he was appointed by the Human Rights Council last spring, the Israeli representative said it was "impossible to believe that out of a list of 184 potential candidates," the members had made "the best possible choice for the post."
The U.S. and Canadian representatives also expressed concerns about Falk's possible bias. The Palestinian representative said it was ironic that Israel was "campaigning against a Jewish professor" and called the nomination "a victory for good sense and human rights."
Israel objects to the mandate of the special rapporteur on grounds that it ignores all human rights violations by Palestinians, either against Israelis or against other Palestinians. More specifically, it objects to Falk.
A statement issued Monday by the Foreign Ministry noted that in the past three years, Israel had "welcomed" visits by seven special rapporteurs of the Human Rights Council and two other senior UN representatives. In Falk's case, it continued, his "vehement publications" made it "hard to square his appointment" with the council's own requirements, which call for envoys to be impartial and objective. The council's own procedures require its envoys to operate with the consent of the state concerned.
Regardless of Falk's views, some Israelis questioned the wisdom of banning him, noting that it would hardly make his reports more sympathetic.
Jessica Montell, the executive director of Btselem, an Israeli group that monitors human rights in the occupied territories, said that even if Israel had "legitimate concerns about Professor Falk's mandate," barring his entry was "an act unbefitting of democracy."
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OPINION
'Terror' is the enemy
By Philip Bobbitt
Monday, December 15, 2008
Generals are not the only ones who prepare to fight the previous war. Our experience with 20th-century nation-based terrorists - the IRA in Ireland, the PKK in the Kurdish areas of Turkey, ETA in Spain's Basque country, the FLN in Algeria and others - still dominates much of our thinking about how to deal with 21st-century global terrorists.
Indeed, the lack of new concepts may well be as deadly to our national security as any lack of vaccines.
New approaches to dealing with global terrorism must first be integrated into our foreign security policies generally. Allies in Europe must be reassured that the United States will not violate the human rights accords to which we are a party. America must also devise a policy that aligns the interests of Afghanistan, India and Pakistan while isolating the terrorists that threaten them all. We must seek common ground against our universal threats - global terrorists and pirates, the proliferation of nuclear and biological weapons and civilian catastrophes - even if, in other contexts, these nations are our adversaries.
The "war on terror" is not a nonsensical public relations slogan, however unwelcome this conclusion may be to Pentagon planners or civil liberties advocates. The notion of such a war puzzles us - who would sign the peace treaty? - because we are so trapped in 20th-century expectations about warfare. But success in war does not always mean the capitulation of an enemy government; rather, it varies with the war aim.
In a war against terror, the aim is not the conquest of territory or the advancement of ideology, but the protection of civilians. We are fighting a war on terror, not just terrorists. That is evident from the list of targets in the attacks in Mumbai, India, in which national liberation terrorists from Kashmir were apparently the outsourced operational arm of a global network with far more ambitious, and more anti-Western, objectives. The Mumbai terrorists did not even bother to issue demands; what they sought was terror itself.
Pakistan is not just India's or Afghanistan's problem. "Homeland security" is a dangerous solecism when we are fighting a global adversary. If terror is our adversary, then our own health system, for example, is only as secure as the most vulnerable health system overseas that might spawn an epidemic that could quickly reach our shores.
We must use available international institutions - like the International Criminal Court, to which pirates and other terrorists could be rendered - whenever possible. Yet we must not shrink from augmenting them, for example, by creating a global body similar to NATO including other democracies, by enlarging the United Nations Security Council to include other great states, and by giving new security responsibilities to the Group of Eight.
Our legislators need more foresight, stockpiling laws for emergencies just as we stockpile vaccines. Perhaps the most obvious would be a provision to replace members of Congress who might be killed or disabled in such numbers that the House of Representatives itself is unable to act. This could easily have occurred on 9/11 if the fourth plane had struck the Capitol, which would have plunged the country into months of martial law.
Finally, the Obama administration can have no higher priority than forging links with the private sector to protect what has become the electronic foundation for contemporary life. Unless the government can persuade private companies to harden themselves to cyber-attacks, the deregulated and fragmented owners of our digital backbone will inevitably underfinance such protection.
This last observation points to the interrelation between the three arenas of the war on terror: 21st-century terrorists, the commodification of weapons of mass destruction, and the increasing vulnerability of highly developed nations like our own. Educating our public about this new tripartite threat will place enormous demands on our leadership.
Preventing any attacks on the United States since 9/11 is something for which the Bush administration must be given credit, but credit must also go to the American public, which decisively rejected offshore penal colonies, spurious rationalizations for warfare, secret torture chambers and contempt for the constitutional and international laws that would forbid such practices. Indeed, by selecting a former law professor as its new president, the country has thoroughly dismissed the notion that law is an obstacle rather than a guide to achieving security.
Philip Bobbitt, a law professor at Columbia and the author of "Terror and Consent: The Wars for the 21st Century," is a former senior director at the National Security Council.
*****************
Britain sends 300 fresh troops to Afghanistan
The Associated Press
Monday, December 15, 2008
LONDON: Britain has sent 300 extra troops to Afghanistan and has pledged $10 million to ensure that next year's presidential elections in Afghanistan are free and fair, Prime Minister Gordon Brown said Monday.
Brown, who Afghanistan, India and Pakistan over the weekend, told Parliament that additional U.K. troops have been sent to southern Afghanistan to reinforce soldiers fighting the a resurgent Taliban.
He said the troops, sent from a British base in Cyprus, will remain in place until at least August.
Brown did not say whether Britain will send large numbers of extra troops to Afghanistan next year. The United States plans to send around 20,000 additional soldiers to try to stem terrorism and to provide security during the presidential election campaign.
With the additional troops, Britain has 8,300 soldiers based in Afghanistan, mainly in the southern Helmand province.
Brown said that, if President-elect Barack Obama requests help from allies, other NATO members must agree to share a greater burden of fighting.
"It is vital that all members of the coalition contribute fairly," Brown said. He said NATO members would discuss the issue further at an April summit.
Four British marines were killed in two attacks in Helmand on Friday, bringing Britain's death toll to 132 since 2001.
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Suspected U.S. missile strike kills two in Pakistan
Reuters
Monday, December 15, 2008
PESHAWAR, Pakistan: A suspected U.S. drone aircraft fired a missile into a house in Pakistan's North Waziristan region on the Afghan border on Monday, killing two people, Pakistani security agency officials said.
U.S. forces in Afghanistan, frustrated by a spreading Taliban insurgency that is getting support from militant enclaves in northwest Pakistan, have stepped up strikes by pilotless drones despite Pakistani objections.
There was no immediate information about the identity of the two people killed in the strike in the village of Tabi, 5 km (3 miles) east of the region's main town of Miranshah, the two security agency officials said.
North Waziristan is a known al Qaeda and Taliban stronghold.
U.S. forces have carried out nearly 30 air strikes in Pakistan this year, according to a Reuters tally, more than half of them since the beginning of September.
The attacks have killed more than 220 people, including foreign militants, according to reports from Pakistani intelligence agents, district government officials and residents.
The United States and Afghanistan have long pressed Pakistan to do more to eliminate the militant sanctuaries in remote ethnic Pashtun areas that no government has ever controlled.
Pakistan, under fresh international pressure to eliminate militants after last month's assault on the Indian city of Mumbai, says the U.S. strikes violate its sovereignty and undermine efforts to fight militancy by inflaming public anger.
India has blamed Lashkar-e-Taiba, a militant group it says was set up by Pakistan to fight Indian rule in the disputed Kashmir region, for the Mumbai attacks.
(Reporting by Alamgir Bitani; Editing by Robert Birsel and Michael Roddy)
********************
3 Germans kidnapped in southern Yemen
The Associated Press
Monday, December 15, 2008
SAN'A, Yemen: Tribesmen kidnapped a German aid worker and her parents in southern Yemen on Monday and were holding them hostage, demanding the government release imprisoned clan members, Yemeni officials and a tribe leader said.
The aid worker, who is based in Yemen, and her visiting mother and father were snatched by Bani Dhabyan tribesmen in Dhamar province, located about 65 miles south of the capital, San'a, a Yemeni security official said.
A Bani Dhabyan clan leader confirmed members of his tribe had kidnapped the Germans and warned the government against using force to free them. He said the Germans were the tribe's "guests" and would not be harmed.
The clan leader spoke to The Associated Press by telephone but would not give his name, fearing government reprisals. He would not provide further details but said he was not directly involved in the kidnapping and was trying to mediate.
The security official said the kidnappers were demanding the release of two tribesmen detained four months ago in connection with another kidnapping case.
The government sent troops to the area and detained several tribesmen for questioning, said the official, who spoke on condition of anonymity because he was not authorized to talk to the media.
In Berlin, German Foreign Ministry spokesman Jens Ploetner said the three Germans were missing, and "we must assume based on current information that the three were kidnapped." He said Berlin was "working to clarify the situation" but would give no further details.
The German and Yemeni officials did not identify the captives.
Tribesmen in Yemen frequently take foreign tourists hostage to pressure the government on a range of demands, from freeing jailed clan members to improving roads, hospitals and schools in their area. In the majority of cases, the hostages are freed unharmed.
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Christian missionaries stir unease in north Africa
Reuters
Monday, December 15, 2008
By Tom Pfeiffer
A new breed of undercover Christian missionary is turning to Muslim north Africa in the search for new converts, alarming Islamic leaders who say they prey on the weak and threaten public order.
Missionary groups say the number of Moroccan Christians has grown to 1,500 from 100 in a decade and that Algerian Christians number several thousand, although no official figures exist.
They say their message is reaching thousands more, thanks partly to satellite TV and the internet.
The Koran states no-one can be forced to follow one religion, but many Muslims believe that to abandon Islam is to shun family, tribe and nation and bring shame upon relatives.
"Many Muslims told me 'If I find you I will kill you'," said Amin, a young man from northern Morocco who did not want to give his full name for fear of reprisals.
Amin said he became aware of Jesus Christ after dreaming that a figure dressed in a white robe approached him in a forest and handed him a Bible.
"When I told my father I had become a Christian he just stared at me without speaking. Then he said: 'From now on, you are not my son. Go to those people, let them feed you and give you a home -- we'll see who cares for you'," said Amin.
He left town, stopped his studies and now lives from translation work offered by a Christian missionary group.
Mission groups in North Africa range from broad alliances such as Partners International and Cooperative Baptist Fellowship to small Baptist and Pentecostal churches based in the Americas and Europe, according to their Web sites.
Their activity is growing as churches turn their focus to places where the Christian message is rarely heard, said Dana Robert, world Christianity professor at Boston University.
"With the internet and the increase in travel, you have a democratisation of missions where anyone who feels like it can go anywhere they want," said Robert. "The new breed of missionary doesn't have the same historical training as the older established denominations, nor necessarily the cultural training, so there's a bull-in-a-china-shop effect."
PERSECUTION, EXPLOITATION
Converts recount stories of persecution as evidence of the risks they run. These are impossible to verify, but one said he heard a newly converted Moroccan was thrown from a balcony in a shopping mall by two acquaintances, leaving him paralysed.
Another said people of a town in eastern Morocco threatened to decapitate a convert unless he renounced his faith.
Islamic leaders say missionaries exploit people with a weak understanding of their religion, target the poor and the sick and try to win over north Africa's Berbers by telling them Islam was imposed on them by Arabs.
"These are unethical methods," said Mohammed Yssef, general secretary of the Superior Council of Ulemas, Morocco's highest religious authority. "Islam is the religion of God. It is neither Arab nor Berber.
"When people respond positively (to missionaries), it is when they don't have their full freedom," said Yssef. "Once they recover their normal health and situation, they recover their ability to decide."
The missionaries deny exploiting the weak. They say their clandestine status means they have to set up businesses or language schools at which converts are sometimes employed.
"Three years ago I began praying about parts of the world that had not taken up the Gospel," said Tyler, a member of an Ohio Baptist church who set up Project North Africa in Morocco. He said that his work could be disrupted if he gave his surname.
"The goal is to give a clear presentation of the Gospel and address things people might have been told -- for example that the Bible is corrupt or that we worship three gods."
He said he was preparing the ground for colleagues, mostly from South America, who would learn Morocco's dialect and seek to set up small businesses to fund the group's evangelical work.
The convert Amin said hundreds of Moroccan Christians gather every year in Sale near the capital Rabat to celebrate Christmas, protected by police. But the meeting is an exception and indigenous Christians say they worship alone and in secret.
FAILURE
Christian communities existed in north Africa until Arabs arrived from the east from the eighth century, and most of the local population adopted Islam.
Attempts to re-Christianise the area were a failure that came to be symbolised by Frenchman Charles de Foucault, who tried to establish a Christian community in the Algerian desert.
His example of abject poverty failed to inspire the local Tuareg to convert, and Muslim insurgents shot him dead in 1916.
French settlers built striking churches in Casablanca, Rabat, Algiers and Tunis to symbolise their imperial "civilising mission" but congregations dispersed after independence.
Morocco's government says it practises religious tolerance but the Christian presence is low-key. St. Peter's Cathedral in Rabat does not ring its bells and churchgoers are all foreign.
Moroccan Christians worshipping there would risk arrest and Archbishop Vincent Landel told Reuters he would not baptise a Moroccan convert as it is against the law.
He said U.S.-funded missionaries had made life harder for the Roman Catholic church in north Africa.
"It upsets everything because all these evangelical converts lack restraint and discretion -- they do any old thing," he said. "And to Muslims there's no difference between a Catholic, an evangelist or a Protestant, so in their minds the head of all the Christians must be the Catholic Archbishop."
"ONE WAY TO HEAVEN"
Outside the cities, the visible Christian presence is limited to small communities from Roman Catholic orders who lead charitable work including medical and wealth-creating projects, but avoid preaching.
They rely on smooth relations with the authorities, but in Algeria the climate has soured in recent months after a series of trials against local Protestants accused of proselytism.
The constitution of Algeria, the birthplace of St. Augustine, a Berber, allows freedom of conscience but a 2006 law strictly regulates how religions can be practised and forbids attempts to convert Muslims.
"We shouldn't kill one another in the name of religion," Algerian Religious Affairs Minister Bouabdellah Ghlamallah told Liberte newspaper. "That people come from the U.S. and France to spread ideas contrary to national unity, that's the danger."
A Christian community that employs 70 women making embroidered Berber ceremonial clothes in Algeria's restive region of Kabylie works towards cohabitation among religions.
"We are in the service of beauty which is a quality of God, and that is also mentioned in the Koran," said Sister Elizabeth Herkommer, who runs the project.
Missionaries like Tyler take a more radical line.
"If there is just one way to heaven, it is my responsibility to show it," he said. "If you had the cure to the AIDS virus, would you not want to take it to the people?"
(Additional reporting by Algiers and Tunis bureaux; Editing by Tom Heneghan and Sara Ledwith)
******************
Brown urges Obama to press on Mideast
Reuters
Monday, December 15, 2008
By Matt Falloon and Carolyn Cohn
U.S. President-elect Barack Obama must make the Middle East peace process an urgent priority, Prime Minister Gordon Brown said on Monday.
The outgoing Bush administration had wanted an agreement on Palestinian statehood by the end of this year, but a lack of progress has left hopes pinned on a fresh approach from Obama when he takes office in January.
"The 22 Arab states calling on President-elect Obama to prioritise achieving a comprehensive plan is a very important development indeed," Brown told reporters after talks with Palestinian Prime Minister Salam Fayyad.
"We are very much of the same view... We are working hard to ensure that progress is possible during 2009."
The 22-member Arab League wrote to Obama about the issue last week, and the quartet of Middle East peace negotiators -- the United States, United Nations, European Union and Russia -- is due to meet at the United Nations on Monday.
Brown, who is scheduled to hold talks with Israeli Prime Minister Ehud Olmert on Tuesday, repeated his call for the withdrawal of Israeli settlements from occupied land and a freeze on settlement expansion.
"We have consistently called for Israel to dismantle settlements," Brown said. "Everybody now sees the contours of what a two-state solution would look like ... One of the blockages to that is clearly the settlement issue."
"I hope in the coming days we can move further and faster towards the peace settlement that everyone wants to see happen."
Olmert, who will remain as interim prime minister until a new election is held on February 10, has tried to clamp down on illegal settlement outposts, but around 300,000 Israeli settlers remain among 3 million Palestinians in the occupied West Bank.
HEALING THE RIFT
Fayyad, whose Western-backed government is based in the West Bank, said his administration was making every effort to heal its rift with Hamas, the Islamist Palestinian movement which controls the Gaza Strip and is expanding in the West Bank.
"Everything that can be done should be done in order to reunite the country," he said. "It is an absolute requirement for there to be reunification of our country for there to be reconciliation."
Attempts by Palestinian President Mahmoud Abbas to reunite the factions in the West Bank and Gaza and form a unity government have failed despite more than two years of talks.
At a Palestinian investment conference later on Monday, Fayyad also said economic help would not bring peace on its own.
"Ours is a political conflict and it requires a political solution," Fayyad told the conference. "Focussing on so-called economic peace instead of actual peace simply will not cut it."
The leader of Israel's right-wing Likud party Benjamin Netanyahu, tipped for victory February's election, is proposing to focus peace efforts on bolstering the Palestinians' frail economy rather than on an imminent statehood deal.
Brown told the conference Britain would provide the Palestinians with $240 million (159 million pounds) over three years in help.
At a similar investment conference in May in the West Bank city of Bethlehem, foreign investors, many from Gulf countries, pledged to pump $1.4 billion into Palestinian businesses.
However, oil prices have dropped sharply and much of the world has fallen into recession since then.
(editing by Kate Kelland and Dominic Evans)
****************
Powers press Israel to ease Gaza cash crunch
Reuters
Monday, December 15, 2008
JERUSALEM: Middle East envoy Tony Blair, the International Monetary Fund and the World Bank issued a joint appeal to Israel on Monday to lift restrictions on the transfer of cash to banks in the Hamas-ruled Gaza Strip.
They said the Israeli restrictions were undermining the Palestinian banking sector, making it harder for Gazans to cover basic needs and weakening the Western-backed government of Palestinian President Mahmoud Abbas.
Israel allowed armoured trucks carrying 100 million shekels (17.2 million pounds) into the impoverished coastal enclave last Thursday to partially ease a severe cash shortage.
But the sum fell far short of the 250 million shekels that Abbas' government, headed by Prime Minister Salam Fayyad, said was needed to pay its 77,000 workers in the Gaza Strip, which Hamas Islamists seized by force in June 2007 from secular Fatah forces loyal to Abbas.
In a letter to Israeli Prime Minister Ehud Olmert, Blair, IMF Managing Director Dominique Strauss-Kahn and World Bank President Robert Zoellick said current restrictions on the regular entry of shekels could boost the role of the black market at the expense of the regulated banking system.
Compounding the problem, Israeli commercial banks have decided to sever ties with their Palestinian counterparts, citing the government's designation of Gaza as a "hostile" territory following Hamas' takeover.
"The aggregate and, no doubt, unintended result of these policies is to weaken the institutions of Prime Minister Fayyad's government in Gaza," they wrote in the letter, dated December 12 and released on Monday.
Israel said it was doing its part.
"Israel will continue to act in order to maintain a routine transfer of the required banknotes into the Gaza Strip," said Mark Regev, Olmert's spokesman.
Citing a severe shortage of cash, Gaza banks shut their doors earlier this month. Western officials said Fayyad's inability to pay salaries in the Gaza Strip in full and on time would undercut Abbas in his power struggle with Hamas.
In contrast to Fayyad, Hamas has largely been able to pay salaries to its own workforce in the coastal territory, Palestinian and Western officials say.
Blair represents the Quartet of Middle East mediators -- the United States, the European Union, Russia and the United Nations.
Defence Minister Ehud Barak approved the transfer of the 100 million shekels following a request from Israel's central bank, which said it did not want to be responsible for the possible collapse of the Palestinian banking system.
Barak's decision was denounced by some fellow Israeli cabinet ministers, who asserted the cash should be withheld to increase pressure on Hamas to free a captive Israeli soldier.
In addition to banknotes, Israel has tightened restrictions on the flow of goods to the Gaza Strip in a bid to weaken Hamas.
(Reporting by Adam Entous; Editing by Katie Nguyen)
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Joint Chiefs chairman must adapt to a new boss
By Elisabeth Bumiller
Monday, December 15, 2008
WASHINGTON: As President-elect Barack Obama convened the first meeting of his national security advisers on Monday, there was just one person at the table that the new president did not choose to have there: Admiral Mike Mullen, the chairman of the Joint Chiefs of Staff.
Mullen, who was selected by Defense Secretary Robert M. Gates for a two-year term, has been on the job for a year. Come January, he will face perhaps the biggest challenge of his career — pivoting from one commander-in-chief to another, in the middle of two wars. Friends describe him as an even-tempered, intellectually curious and politically astute presence who sees the world beyond the immediate battles of the Pentagon and White House — all skills they say will serve him well in the new administration.
"He's not a jumper or a screamer, he looks at things to make them better for the long term," said Admiral Dennis Blair, a retired Pacific Fleet commander who is expected to be named by Obama as director of national intelligence. "He's an incredible networker, too."
In the last year, Mullen has sought advice from the retired generals who revolted against former Defense Secretary Donald Rumsfeld, reached out to the former army chief who was vilified for saying more troops were needed in Iraq and invited to dinner prominent Democrats like Gregory Craig, Obama's choice for White House counsel. His efforts may have been an attempt to soothe the military after the cataclysmic Rumsfeld, or an anticipation of a change of administration — or both.
Mullen, the son of a former Hollywood press agent whose clients included Anthony Quinn and Julie Andrews, has a world view that friends say is closer to that of Obama than to Bush.
He was initially opposed to the Bush administration's troop escalation, or "surge," has long been in favor of diplomacy with Iran and considers Pakistan — where he traveled in early December to press military leaders to crack down on the terrorist group behind the Mumbai attacks — one of the most dangerous countries in the world. As the man in charge of training and equipping the military, Mullen's desire to ease the strain on forces fighting on two fronts may well dovetail with Obama's desire to draw down American troops in Iraq.
In short, Mullen, 62, could be more influential in an Obama administration than he has been in the Bush administration, where he has been overshadowed by the success and showmanship of General David H. Petraeus, the commander of United States forces in the Middle East and the former top commander in Iraq. Friends say that Mullen sees an opportunity to assert himself in the traditional role of chairman, as the president's top military adviser, particularly if General Petraeus, who joined his fortunes with President George W. Bush to sell and oversee the surge, no longer has a direct line to the Oval Office.
So far, Obama has not met with Petraeus, who is based at the headquarters of the United States Central Command in Tampa; Obama has met with Mullen and Defense Secretary Robert Gates, whom the president-elect has asked to stay on in the job.
"I'm encouraged by the fact that he said he's going to listen to his military commanders," Mullen said in a telephone interview this week, recounting a meeting he had with Obama in Chicago on Nov. 21. Mullen declined to discuss the substance of the conversation other than to say "it was a good initial meeting — we talked about a lot of things." He discounted any concern on the part of senior commanders that Obama had not served in the military.
"By and large, I've found that those who really care about us and learn about us and are supportive of the military, having served in the military isn't a requirement," Mullen said.
In preparation for his new commander-in-chief, Mullen is overseeing the final stages of a comprehensive military strategy review of the border region between Afghanistan and Pakistan — one of four such studies in the government — to guide Obama in his first days as president. More quietly, he has also had initial conversations with his top commanders about potential changes in the "don't ask, don't tell" law that allows gay men and lesbians to serve in the military as long as they keep their sexual orientation secret.
Obama has taken a strong stand against the law as a moral issue, although his team has signaled that he will not push for repeal in the early months of his administration to avoid the kind of blowup that engulfed President Bill Clinton when he sought to lift an outright ban on gay men and lesbians in the military in his first days in office. (In a cautionary tale for Mullen, that 1993 storm raged in part because General Colin Powell, who was the holdover chairman of the Joint Chiefs from the first Bush administration, publicly disagreed with what became a Clinton compromise solution of "don't ask, don't tell.")
Fifteen years later, Obama is of the view that "don't ask, don't tell" is long out of date and that it is time for gay men and lesbians to serve openly. "The president-elect's been pretty clear that he wants to address this issue," Mullen said in the interview. "And so I am certainly mindful that at some point in time it could come." A friend of Mullen said that he had begun to think about practical implications like housing, but Mullen said there had been no formal planning or task forces on the issue.
In the meantime, Mullen's supporters say that he is very different from his two predecessors, General Richard Myers and General Peter Pace, who were sometimes derided by critics within the military as "Stepford generals" because of their acquiescence to Rumsfeld.
"He's not dogmatic or doctrinaire, and he's also not a lap dog," said Lieutenant General Gregory Newbold of the Marine Corps, who retired in 2002 after objecting to Rumsfeld's plans for a small Iraq invasion force and then aired his views in Time magazine as part of what became known as a "revolt of the generals" against Rumsfeld in 2006.
Newbold is now consulted by Mullen, as is General Anthony C. Zinni, who led the United States Central Command in the 1990s and was another retired general who called for Rumsfeld to step down.
"Under Myers and Pace, nobody wanted to talk to me, but I've heard from Mullen a lot," Zinni said.
Mullen's Hollywood past would not seem to suggest a future as the nation's top military officer — his father was also the press agent to Ann-Margret, Peter Graves and Dyan Cannon — but in the interview he said that his family taught him the importance of communications and the Fourth Estate, and that it was by and large a stable life of Catholic schools and relatively modest means. As the oldest of five children, Mullen needed a scholarship for college, and he got one when he was recruited to play basketball for the Naval Academy at Annapolis.
To the amazement of his family, he took to the life instantly. "I got there and met the best people I've ever been around in my life," Mullen said. Among his acquaintances in the class of 1968 were Blair; Senator Jim Webb, Democrat of Virginia; and Oliver North, the Reagan-era official who secretly sold weapons to Iran to support the anti-Marxist rebels of Nicaragua.
These days Mullen throws regular dinners at his 19th-century home on a small naval compound near the State Department, where the walls are not hung with medals but framed show bills from nearly every Broadway show that he and his wife have attended. Recent guests have included Brent Scowcroft, the national security adviser to the first President Bush who enraged the second when he publicly warned against war with Iraq. Scowcroft is now advising Obama.
Mullen has also reached out in recent weeks to retired General Eric K. Shinseki, who was reviled by the Bush administration for saying publicly on the eve of the Iraq war that far more troops would be needed than had been committed by Rumsfeld's Pentagon. Shinseki has since been named secretary of Veterans Affairs by Obama.
So how hard is it to change commanders in chief in the middle of two wars? "Not that hard," said Blair. "I think people way overestimate that."
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The bars of central Cairo: Echoes of a bygone era
By Paul Schemm and Sebastian Abbot
The Associated Press
Monday, December 15, 2008
CAIRO: Armed with a bottle of Egyptian brandy and a bowl of steaming chickpeas, Hatem Fouad keeps watch each night over a historic slice of Cairo that is in danger of dying: the bars that once flourished amid the sweeping boulevards and graceful roundabouts of the city's European-style city center.
The former police officer is part of a cadre of older Egyptian men who frequent drinking holes and belly dancing cabarets chronicled by the Nobel Prize-winning author Naguib Mahfouz in the 1940s and popular with Cairo's artists and intellectuals until the late 1970s.
Many of these establishments have fallen into disrepair and disrepute as Egyptians grow more observant of Islam, with its prohibition on alcohol, and the country's elite migrates away from the traffic-choked streets of the now crumbling central city.
"They were part of an Egypt that doesn't exist anymore," said Alaa al-Aswany, who immortalized the remnants of the Cairo bar scene in his best-selling 2002 novel "The Yacoubian Building." He was talking about the heyday of the bar and nightclub era - when anyone from King Farouk, Egypt's last monarch, to the British playwright-composer Noel Coward, might show up in a Cairo club.
"This Egypt was very liberal, very tolerant," he said. "You had the bars, you had the synagogues, you had the churches, you had the mosques. Everyone was absolutely allowed to practice religion, to go and drink or whatever."
Cairo at the time was filled not just with Egyptians, but with Jews from various Middle East countries, Greeks, Italians and other Europeans who frequented the bars and restaurants sprinkled among the downtown's ornate belle epoque buildings. Mahfouz's novels describe the wealthy patronizing these establishments and the denizens of Cairo's medieval back alleys sometimes venturing into the brightly lighted downtown for a drink.
The 1952 ouster of Farouk and the nationalization of businesses chased away many of the Europeans. Then, in the 1980s, millions of Egyptians returned from working in the oil fields of Saudi Arabia with both money and the kingdom's strict interpretation of Islam.
They formed a new Egyptian middle class that had little interest in spending the night drinking Egypt's Stella beer and Bolonachi brandy in places like Bar Massoud, a hole in the wall on a busy street in the Bulaq neighborhood of central Cairo.
"There used to be seven bars in this area. Now there are only two. It's because everything is forbidden now," said Magdy Michel, who owns Bar Massoud and, like most of Cairo's bar operators, is Christian.
As middle- and lower-class Egyptians increasingly turned toward Islam, the elite migrated to trendy bars in wealthier Cairo neighborhoods.
"The rich people and the high-ranking people in the regime, when they drink they don't go to the downtown bars, so they don't need these bars," said Aswany, the author.
He added that to assuage Islamic fundamentalists, the Egyptian government has made it difficult for bars to get or renew liquor licenses. Central Cairo bar owners also say they face pressure from police officers demanding bribes and threatening to arrest customers.
"We get harassed by the lower-ranking police officers," said Michel at Bar Massoud. "Corruption is everywhere."
Fouad, the former police officer, said he had to talk to "some friends" to avoid trouble with the law at his favorite drinking spot, the Gemayka - pronounced like the Caribbean island. "The police don't bother us here," he declared.
Many downtown bars like Bar Massoud and the Gemayka have a speakeasy feel, with men drinking and trading jokes behind windowless, nondescript facades meant to avoid scrutiny from the street outside.
The barmen work hard to make sure their customers keep coming. They scurry about offering complimentary fava and lupin beans, cucumbers and occasionally yogurt to coat the stomach. Vendors wander in throughout the night hawking newspapers, peanuts and even full meals.
In some bars, the entertainment is firmly traditional, featuring recordings by the legendary Arab diva Umm Kalthum, whose music transfixed the Middle East for four decades until her death in 1975. The mournful nostalgia of her hourlong ballads fits well with a scene that feels as though it is living on borrowed time.
In most bars, though, satellite television has made its inroads, and the customers watch bad Hollywood action movies with Arabic subtitles.
It is a far cry from the 1940s, when central Cairo's greatest attraction was cabarets where the Middle East's best belly dancers shimmied their hips. Now the top dancers are often from Brazil or Russia and tend to appear at the city's five-star hotels, hastening the decline of the old venues downtown.
One exception is the Shahrazad, a belly dance club under ceilings nine meters, or 30 feet, high, with velvet curtains and large Arabian Nights-style murals that were recently renovated by Egypt's largest alcoholic beverage company - part of an effort to restore downtown establishments to their former glory. The company also produced a map of central city bars and cabarets in an attempt to attract young Egyptians and foreigners.
"If we can bring tourists and foreigners back to downtown, I think it is good for Egypt," said Philippe Saintigny, head of marketing at Al Ahram Beverages, which produces Stella beer - a brand founded in 1897 and now produced under the guidance of the Heineken brewery of the Netherlands.
One downtown bar, Hurriya, has managed through the years to attract both Egyptians and foreigners, especially students from The American University in Cairo.
Saintigny pointed to Hurriya - Arabic for "freedom" - as proof that "trendy people" can be lured to the city center. He said his company was motivated by the need to develop its business in a country where the more liberal outlook of the past often is forgotten.
"We know in this country that you have pressure against alcohol," he said. "So we want to show that Stella is part of the heritage of this country also."
Book Review: 'Panic'
Reviewed by Janet Maslin
Monday, December 15, 2008
Panic The Story of Modern Financial Insanity By Michael Lewis 391 pages. W.W. Norton & Co. $27.95.
"Panic" is packaged to look like Michael Lewis's own 21-year chronicle of financial hysteria, beginning with the crash of October 1987.
This book does cover that terrain. But it is an anthology of work by Lewis and many others rather than a single narrative, and in some ways that structure is liberating. By drawing on pre-existing journalism, Lewis, a contributing writer to The New York Times Magazine, need not feign naiveté to capture the conditions leading up to this and each successive money meltdown. Nor need he pretend to be surprised at the paucity of useful lessons that these crises have brought.
Though he only edited "Panic" (a book whose full proceeds will go to the nonprofit teaching and publishing organization 826 National and to the Greater New Orleans Foundation), Lewis has thoroughly invested himself in presenting its stories. Some of his own work is excerpted here. And he has written illuminating introductions to the book's separate sections. Each section traces the arc of a single panic, with some (the collapse of the Thai baht in 1997) less fathomable than others (the late 1990s boom and bust of the Internet, culminating in the dot-com cataclysms of 2000).
The range of "Panic" incorporates both fatuous, blue-sky feature writing ("If you do this carefully, it's like picking money off trees," says a screenwriter turned investor, in the summer of 1987) and densely theoretical analysis. This book includes a glossary of finance-related alphabet soup (M-LEC, LIBOR, CDO, SIV) and terms like tranche, quant and the Phillips curve.
Most of the book is quick, simple and straightforward. If "Panic" does not offer much in the way of long-range wisdom or prevention strategies, it's loaded with spooky nostalgia and mordant humor. It harks back to the days when the Dow Jones industrial average's surge past the 2,500 mark was "now so high that investors sometimes get a kind of queasy altitude sickness," as Stephen Koepp put it in Time magazine. It quotes quaint talk of "the rush to commercialize the global computing web known as the Internet" (Laurence Zuckerman in The New York Times). It nods to the flashy excesses of James Cayne, the soon-to-be-Ozymandian chief executive of now-devastated Bear Stearns.
Through all this, "Panic" provides a full range of gaffes, goofs and gotchas, and a spirit of schadenfreude. Its governing principle: The best diversion from one's own mistakes is to read about everyone else's.
"A Brand-New Kind of Crash" is the book's opening section, complete with one especially ominous warning. "The crash of 1987 marks the beginning of the Age of Financial Unreason, when panic became just another, quotidian aspect of financial life," Lewis writes. "At the time, to a lot of people, it felt like the end of something. In retrospect it appears to be more of a beginning."
The specific triggers of this event, like portfolio insurance, are duly taken into account. What interests Lewis just as much are the sound effects ("I-yi-yi-yi-yi," moans one woman looking at an electronic stock ticker, as reported in The New York Times), the anachronisms (General Motors stock is considered "the bluest of the blue" and a safe haven from turbulence) and the impact on individuals. Today, Faith Popcorn's 1987 prediction that compulsive yuppie spenders will become compulsive nonspenders ("one house, one car, one raincoat") still seems to apply.
"Foreigners Gone Wild" would be this book's flattest section were it not for an excerpt from "How the Eggheads Cracked," Lewis's Tom Wolfe-ish 1999 story in The New York Times Magazine of the hedge fund Long-Term Capital Management, describing the post-Salomon Brothers life of the firm's "young professors," whose bodies were "merely life-support systems for their brains, which were in turn extensions of their computers." His measure of this particular crisis is its way of flummoxing such heretofore dauntless guys.
"The New New Panic" describes the wild ups and downs of the Internet joy ride. This section is most frightening in showing what a single piece of doomsday journalism (Jack Willoughby's "Burning Up" in Barron's) could do to investors' expectations. It is most outlandish in describing, in "Fumble.com" from Salon, how dot-com advertising gravitated to the Super Bowl - with ad rates so high that it was possible for a start-up to squander more than half its seed money "in less time than it takes to soft-boil an egg."
The scariest part of "Panic" is "The People's Panic," about the subprime mortgage collapse. Fortunately, Lewis has the wit to open this section with Dave Barry's views on how to get rich in real estate: "You don't have to take any risk, or work hard, or even have a central nervous system. That's how profitable real estate is!"
When this book went to press, one big firm had collapsed, five chief executives had been fired, and 50,000 Wall Street jobs had been lost. Events have gotten way ahead of "Panic" since then. But early warnings are here. Freddie Mac and Fannie Mae are doing fine, because if they weren't, we'd be facing "some economic scenario that is probably as severe as, if not worse than, the Great Depression," Freddie's chief economist tells The New Yorker in 2002.
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EDITORIAL
Some questions for Timothy Geithner
Monday, December 15, 2008
Timothy Geithner, President-elect Barack Obama's choice for Treasury secretary, has some explaining to do.
As president of the Federal Reserve Bank of New York, Geithner was a key decision maker in September when the government let Lehman Brothers fail and then, two days later, bailed out the insurer American International Group for $85 billion.
Those decisions proved cataclysmic. The markets and the economy have yet to recover from Lehman's failure. The bailout of AIG dealt a further blow to the Fed's credibility - and, by extension, Geithner's - because it was an abrupt reversal from the no-new-bailouts stance that had applied to Lehman and, initially, to AIG. Together, the decisions showed that several months into the financial crisis, officials lacked the information and the insight to correctly call the shots.
Making matters worse, the Fed and the Treasury have changed their story about how the calamity unfolded. No one expects a perfect performance in the thick of a crisis. But an after-the-fact revision of what happened at best raises questions and worse, looks like an attempt to dodge accountability.
In testimony before Congress on Sept. 24, about a week after Lehman's collapse, Federal Reserve Chairman Ben Bernanke said that the failure of Lehman posed risks but that the firm's troubles had been well known for some time and investors recognized that bankruptcy was a significant possibility. Bernanke said Lehman's default, "while perhaps manageable in itself," combined with the "unexpectedly rapid collapse of AIG" to create a global financial tempest. In other words, Bernanke, Geithner and Treasury Secretary Henry Paulson believed the system was stable enough to withstand Lehman's downfall.
The story changed as they were proved wrong and as the government's obligations to prop up the financial system rose precipitously. In a speech on Dec. 1, Bernanke said "legal constraints" prevented the Fed from rescuing Lehman, making a bankruptcy "unavoidable." Translation: Not our fault!
The law allows the Fed to make emergency loans when the financial system is in danger, provided that the lending is "indorsed or otherwise secured" to its satisfaction. The Fed has accepted all manner of dubious assets in exchange for its various loans as the crisis has deepened. In a speech on Oct. 15 and in his Dec. 1 speech, however, Bernanke said Lehman's collateral was insufficient. Secretary Paulson also invoked a lack-of-legal-authority argument in a speech last month to explain Lehman's demise. Why didn't they say so at the time?
The burden is on Geithner to clear up the matter. If legal constraints precluded a Fed intervention in Lehman, why weren't they mentioned at the time? Did Fed officials consider asking Congress for the necessary authority? There was plenty of time to do so because, as Bernanke noted last September, the collapse of Lehman was a long time coming.
The revised version of the story sidesteps questions about whether the bailout of AIG - arranged by Geithner - was influenced by the specific needs of some of the insurer's counterparties, like Goldman Sachs.
Geithner should be asked at his confirmation hearing to explain which firms were threatened by an AIG collapse, in what amounts and how those entanglements justify an ongoing bailout. Geithner must also explain how such entanglements came to be the norm on his watch. His answers will help shed light on whether he is sufficiently distant from Wall Street to reform a system that has proved catastrophically unstable.
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From Paris to Tokyo, more Madoff victims emerge
By Jon Menon and Charles Penty
Bloomberg News
Monday, December 15, 2008
MADRID: More banks, from Paris to Tokyo to Madrid, emerged Monday as victims of Bernard Madoff's alleged Ponzi scheme.
BNP Paribas, the biggest French bank, said Sunday that it has as much as €350 million, or $472 million, at risk from Madoff's investment advisory business. Nomura Holdings of Japan has ¥27.5 billion, or $302 million, at risk from Madoff's funds, while Banco Bilbao Vizcaya Argentaria of Spain may face up to €300 million in losses.
Madoff, 70, was arrested by federal prosecutors Thursday and charged with operating what he told his sons was a long-running Ponzi scheme in the New York-based firm's business advising rich people, hedge funds and institutions. He told senior employees that the firm was insolvent and "had been for years," prosecutors said in the criminal complaint.
"A frothy market encourages slack oversight," said Peter Hahn, a fellow of finance at London's Cass Business School. "Whenever something like this happens, everyone who has been hit will comb through their investments."
The Madoff collapse comes as banks and investment companies are reeling from falling asset prices and sputtering economies after the U.S. subprime mortgage market crash. Financial firms have reported almost $1 trillion of credit losses and writedowns since the start of 2007, data compiled by Bloomberg show.
Madoff, who had advised the U.S. Securities and Exchange Commission on how to regulate markets, described his investment management operations as "one big lie," prosecutors said. Investors have disclosed about $24 billion of investments in Madoff's funds, according to data compiled by Bloomberg.
Ira Sorkin, a lawyer at Dickstein Shapiro in New York representing Madoff, did not reply to a phone call and e-mail seeking comment. Sorkin said on Saturday that the situation was "a tragedy."
BNP Paribas fell as much as 9.8 percent in Paris trading after reporting its Madoff exposure and suffering a setback in its plan to buy the Belgian operations of Fortis. The Brussels Court of Appeals ruled Friday that the sale of Fortis assets must be put to investors for a vote before Feb. 12. The court decision complicates BNP Paribas's plan to complete the purchase quickly and preserve Fortis's customer base.
BBVA, the Spanish lender, said it may face losses from the hedging of structured products linked to Madoff. BBVA acted for other financial institutions and investors to set up products linked to third-party funds that had invested in Madoff Investment Securities, the Bilbao, Spain-based lender said in a filing Monday to market regulators in Madrid. BBVA has no direct investments in Madoff.
Banco Santander, a Spanish rival, said Sunday that its hedge fund unit invested €2.33 billion of client funds with Madoff. The bank's Optimal Investment Services unit placed money with Madoff through its Optimal Strategic U.S. Equity fund, the Spanish lender said.
"It's not Santander's own money, and they're not to blame, but of course it will be taken as something negative," said Alberto Espelosin, a manager at Ibercaja Gestion.
Santander dropped as much as 4.9 percent in Madrid trading Monday. Santander, based in the Spanish city of the same name, lost 53 percent of its market value this year. BBVA advanced 4 cents, or 0.5 percent, to €8.36.
Royal Bank of Scotland could lose as much as £400 million, or $601 million, on investments linked to Madoff. The bank, 58 percent owned by the government, said it had "exposure" through trading and collateralized lending to funds of hedge funds invested with Madoff.
Natixis, based in Paris, said Monday that it has as much as €450 million of client funds invested with Madoff.
Man Group, Europe's largest publicly traded hedge-fund company, has about $360 million invested directly or indirectly in funds linked to Madoff. The investments in two Madoff funds represent 0.5 percent of Man's total assets under management, the London-based company said.
HSBC Holdings, Europe's largest bank by market value, may have about $1 billion at stake, The Financial Times said, citing people close to the situation. Brendan McNamara, a spokesman for HSBC, declined to comment on the matter.
The list of victims of the alleged scheme may also include the real-estate magnate Mortimer Zuckerman, the foundation of the Nobel laureate Elie Wiesel, Senator Frank Lautenberg and a charity of the movie director Steven Spielberg, The Wall Street Journal reported, without saying where it got the information.
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U.S. prosecutors try to determine the extent of a trader's vast losses
By Diana B. Henriques and Alex Berenson
Monday, December 15, 2008
NEW YORK: The epicenter of what may be the largest Ponzi scheme in history was the 17th floor of the Lipstick Building, an oval red-granite building rising 34 floors above Third Avenue in the Midtown business district here.
A busy stock-trading operation occupied the 19th floor, and computers and paperwork filled the 18th floor of Bernard L. Madoff Investment Securities.
But the 17th floor was Bernard Madoff's sanctum, occupied by fewer than two dozen staff members and rarely visited by other employees. They called it the "hedge fund" floor, but U.S. prosecutors now say the work Madoff did there was actually a fraud scheme whose losses Madoff himself has estimated at $50 billion.
The tally of reported losses climbed through the weekend to nearly $20 billion, with a giant Spanish bank, Banco Santander, saying Sunday that clients of one of its Swiss subsidiaries had lost $3 billion.
On Monday, HSBC Holdings, the global bank based in Britain, said it had $1 billion at risk after providing financing to funds that invested with Madoff.
A major Swiss bank, Union Bancaire Privée, indicated Monday that it also had hundreds of millions of dollars in client assets under management at Madoff's failed firm.
The list of prominent victims grew as well. According to a person with direct knowledge of the business of the real estate and publishing magnate Mort Zuckerman, he is on a list of victims that already included the owners of the New York Mets baseball team, a former owner of the Philadelphia Eagles of the National Football League and the chairman of GMAC, the U.S. consumer financing giant.
Some of the biggest losers were members of the Palm Beach Country Club in Florida, where many of Madoff's wealthy clients were recruited.
And the 17th floor of his building is now an occupied zone, as investigators and forensic auditors try to piece together what Madoff did with the billions of dollars entrusted to him by individuals, banks and hedge funds.
So far, only Madoff, the firm's founder, has been arrested in the scandal. He is free on a $10 million bond and cannot travel far outside the New York area.
But a question still dominates the investigation: How could one person have pulled off such a far-reaching, long-running fraud, carrying out all the practical chores the scheme required, like producing monthly statements, annual tax statements, trade confirmations and bank transfers?
Firms managing money on Madoff's scale would typically have hundreds of people involved in these administrative tasks. Prosecutors say he claims to have acted entirely alone.
"Our task is to find the records and follow the money," said Alexander Vasilescu, a lawyer in the New York office of the U.S. Securities and Exchange Commission.
So far, he said, investigators could not shed much light on the fraud or its scale. "We do not dispute his number - we just have not calculated how he made it," he said.
Scrutiny is also falling on the many banks and money managers who helped steer clients to Madoff and now say they are among his victims.
While many investors were friends or met Madoff at country clubs or on charitable boards, even more had entrusted their money to professional advisory firms that, in turn, handed it on to Madoff for a fee.
Investors are now questioning whether these paid advisers were diligent enough in investigating Madoff to ensure that their money was safe. Where those advisers work for big institutions like Banco Santander, investors will most likely look to them, rather than to the remnants of Madoff's firm, for restitution.
Royal Bank of Scotland said Monday that it could lose as much as £400 million, or about $613 million, from trading and collateralized lending linked to the Madoff funds.
Man Group, based in London, said its institutional fund of funds business had about $360 million invested in two Madoff funds.
Nomura Holdings, the biggest investment firm in Japan, said Monday that it had ¥27.5 billion, or $303 million, in exposure but that the effect on its capital would be limited.
And Nordea Bank, the Nordic region's largest lender, said it had invested €48 million, or $66 million, in Madoff's Fairfield Sentry fund.
Losses of this scale simply do not seem to fit into the intimate business that Madoff operated.
With just more than 200 employees, it was tight-knit and friendly, according to current and former employees. Madoff, 70, was gregarious and empathetic, known for visiting sick employees at the hospital and hosting warmly generous staff parties.
By the elevated standards of Wall Street, the Madoff firm did not pay exceptionally well, but it was loyal to employees even in bad times.
Madoff's family filled the senior positions, but his was not the only family at the firm - generations of employees had worked for Madoff and invested their savings there.
Even before Madoff's funds collapsed, some employees were mystified by the 17th floor. In recent regulatory filings, Madoff claimed to manage $17 billion for clients - a number that would normally occupy far more than the 20 or so who worked on 17.
One Madoff employee said he and other workers assumed that Madoff must have had a separate office elsewhere to oversee his client accounts.
Nevertheless, Madoff attracted and held the trust of companies that prided themselves on their diligent investigation of investment managers.
One of them was Walter Noel Jr., who struck up a business relationship with Madoff 20 years ago that helped earn his investment firm, Fairfield Greenwich Group, millions of dollars in fees. Indeed, over time, one of Fairfield's strongest selling points for its largest fund was its access to Madoff.
But now, Noel and Fairfield are the biggest known losers in the scandal, facing potential losses of $7.5 billion, more than half its assets.
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Collateralized loans, without the collateral
breakingviews.com
Monday, December 15, 2008
Two types of institutions have lost money as part of Bernard Madoff's alleged $50 billion scam: those who invested with him, and those who lent money to those investors. The folly of the lenders is, in some ways, even more breathtaking than that of the investors.
The likes of BNP Paribas, HSBC and Royal Bank of Scotland are nursing losses after providing supposedly collateralized loans to Madoff "feeder" funds. How these feeder funds operated is slightly murky. Although they weren't technically part of Madoff's operation, he was their investment manager.
The feeder funds leveraged themselves with money from banks so that they could juice up the returns they offered their clients. Banks looked at the apparently steady returns produced by these feeders and, when they extended loans, were prepared to take only modest haircuts - some observers think as little as 10 percent - on the supposed collateral. If all the assets have vanished, as now seems possible, it's not just investors who will be wiped out. There will be no collateral for the banks, either.
Banks' shareholders will be asking how on earth this happened. The answer seems to be that the collateral the banks thought they had didn't exist. The banks thought the feeder funds had all sort of liquid securities. But this was a fiction.
One might have thought that the banks would have checked to make sure the collateral was there - or at least insisted that there was a proper custodian to watch over it. But in at least one case, breakingviews has learned, the "subcustodian" - the entity contracted by the main custodian to watch over the collateral - was none other than Madoff himself.
How the banks made such an elementary error is a mystery. But one clue may come from the fact that none of the banks so far revealed as wearing the dunce's hat is big in prime brokerage - and therefore may not have known what it was doing. - Hugo Dixon and George Hay
THE ATTRACTION OF CON STORIES
Bernard Madoff may go down as one of the biggest stock market fraudsters ever. But even if the losses from the New York fund manager's alleged Ponzi scheme reach $50 billion - Madoff's own estimate - he will remain a bit player in the ongoing market collapse.
The capitalization of the world's stock markets has declined by $26 trillion since July, according to the World Federation of Exchanges. To that destruction of value, $50 billion adds an almost trivial 0.2 percent.
But not all $50 billion sums are alike. For Lehman Brothers, which once had that much market capitalization, the sum supported a balance sheet many times larger. For Madoff, the effect of the loss will be magnified in a different way - by wounding the trust on which financial markets are built. Too many Madoffs and the whole financial world would collapse.
Still, Madoff's purported wicked ways haven't garnered so much attention only because his practices could set an ominous precedent. There is something enthralling about stories of confidence men - those rare criminals who simultaneously inspire and betray trust - that can enthrall both unwary and otherwise sage investors.
The psychological drama of con men has entranced many writers: Herman Melville, Charles Dickens, Thomas Mann, John le Carré. The authors, like the dupes, have often been seduced by the fraudsters' almost magnificent ability to take advantage of human weakness.
In retrospect, Madoff looks anything but magnificent - more like a schemer, or perhaps a foolish man caught up in a fast-expanding web of lies. But for many years, he was able to charm many rich people who should have known better.
That ability - and the caliber of the victims - means that Madoff's bit part in the financial crisis could easily translate into a major motion picture. A clever director will give the audience the satisfaction of seeing the villain unmasked and punished. But the film is likely to linger on the years of dishonest glory. Deception is dangerous, but it comes with a certain glamour. - Edward Hadas
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Factbox: Who was exposed to Madoff?
Reuters
Monday, December 15, 2008
Investors around the world have scrambled since Friday to assess potential losses from an alleged $50 billion fraud by Bernard Madoff, the prominent Wall Street trader arrested last week.
Following are some of the companies from outside the United States with exposure:
HSBC has potential exposure of about $1.5 billion, the Financial Times reported, citing unnamed people close to the situation. The exposure is from loans it provided to institutional clients, mainly hedge funds of funds, that wanted to invest with Madoff, the FT reported.
GRUPO SANTANDER, the largest Spanish bank, said its investment fund Optimal has a €2.33 billion, or $3.05 billion, exposure to Madoff Securities.
MAN GROUP said it is exposed through RMF, its institutional fund of funds business, which has approximately $360 million invested in two funds that are directly or indirectly sub-advised by Madoff Securities.
BBVA, the No.2 bank in Spain, said its international operation has about €30 million in exposure to Madoff and it sees a maximum potential loss from Madoff-linked investments of €300 million.
ASCOT PARTNERS According to a Wall Street Journal report, the fund where the former GMAC chairman Jacob Ezra Merkin is a money manager has an exposure of $1.8 billion.
ACCESS INTERNATIONAL ADVISORS According to a report by Bloomberg, Access has an exposure of $1.4 billion.
AXA, the French insurer, said it has negligible exposure to Madoff, well below €100 million.
BARCLAYS Any exposure for the British bank Barclays to Madoff would be "minimal", a person familiar with the matter said, but Barclays declined to comment.
UNION BANCAIRE PRIVÉE, a Swiss bank that invests in funds of hedge funds, has lost about 1 billion Swiss francs, or $850 million, according to Le Temps, citing unnamed bankers.
ROYAL BANK OF SCOTLAND said it had exposure through trading and collateralized lending to funds of hedge funds invested with Madoff, with a potential loss of around £400 million, or $597.9 million.
NATIXIS, the French investment bank, said it could have a €450 million indirect exposure to Madoff
BNP PARIBAS, the French bank said, it has a potential €350 million, or $464.3 million, exposure.
REICHMUTH, a Swiss private bank, said its fund of funds Reichmuth Matterhorn had an exposure to investments linked to Madoff that amounted to about $325 million.
NOMURA said it had a ¥27.5 billion, or $303 million, exposure related to Madoff, but the impact on its capital would be limited.
UNICREDIT, the Italian bank, said its own exposure was around €75 million, while in its Pioneer Investments unit, some funds were exposed to Madoff "indirectly through feeder funds."
SOCIÉTÉ GÉNÉRALE of France said its exposure was negligible, below €10 million.
MAXAM CAPITAL MANAGEMENT, a fund, has lost about $280 million on funds invested with Madoff, according to a Wall Street Journal report.
EIM GROUP, a fund of hedge funds, said it has a $230 million exposure, Le Temps reported.
FAIRFIELD SENTRY, a $7.3 billion hedge fund run by Walter Noel's Fairfield Greenwich Group, had accounts with Madoff Investment Securities.
KINGATE GLOBAL FUND, the $2.8 billion hedge fund run by Kingate Management had invested in Madoff Investment Securities.
UBS, the Swiss investment bank has a limited and insignificant counterparty exposure, its spokesman told Reuters.
BENEDICT HENTSCH, a Swiss private bank, said its exposure to products linked to Madoff amounted to 56 million francs or less than 5 percent of assets under management.
BRAMDEAN ALTERNATIVES, a British asset manager, said almost 10 percent of its holdings were exposed to Madoff.
BANESTO of Spain said it had insignificant exposure, but declined to disclose the size.
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Siemens to pay $1.3 billion in fines
By Carter Dougherty
Monday, December 15, 2008
FRANKFURT: Siemens, the German engineering conglomerate, closed the book Monday on wide-ranging criminal investigations in the United States and Germany by agreeing to pay a record $1.34 billion in fines to settle bribery allegations.
In Washington, Siemens's general counsel, Peter Solmssen, signed an $800 million settlement with the U.S. Department of Justice and the Securities and Exchange Commission to end an inquiry into possible violations of the Foreign Corrupt Practices Act. The fine is, by a colossal margin, the largest ever imposed under the U.S. antibribery legislation, now 31 years old.
Munich prosecutors, whose trailblazing work revealed the outlines of a major system of slush funds and illegal payments, also announced a deal with Siemens that would cost the company €395 million, or $540 million.
While the company itself is now in the clear, the German authorities are still looking into potential wrongdoing by former Siemens employees that could result in criminal charges.
Crucially, Siemens avoided either a guilty plea or a conviction for bribery, allowing it to maintain its status as a "responsible contractor" with the U.S. Defense Logistics Agency. Without this benchmark certification, Siemens could have been excluded from public procurement contracts in the United States and elsewhere. German authorities are preparing a similar certification.
The fine in the United States was nearly 17 times more than the next-largest imposed for overseas commercial bribery. Yet it still represents victory for Siemens, because it is far below what might have been levied under the U.S. Justice Department's guidelines.
With $1.36 billion identified as potentially corrupt payments worldwide, a fine of up to $2.7 billion would have been possible. But the U.S. authorities said in court papers filed in Washington that they were impressed by the company's efforts to identify wrongdoing and prevent new occurrences.
"Compared to other cases that have been brought, we have been dealt with very fairly," Solmssen said by telephone.
Shares of Siemens, based in the southern German city of Munich, initially rallied on the news, which was lower than what investors had anticipated as settlement talks entered their final phase this autumn.
"Before Siemens started giving hints, we would have expected much more," said Roland Pitz, an analyst at UniCredit in Munich. "The employees must be celebrating."
Gerhard Cromme, the Siemens chairman who had to juggle the sudden departure of a chief executive as a result of the crisis, and a two-year distraction from its core business of manufacturing energy, medical and other industrial equipment, allowed himself just a few smiles as he announced the deals in Munich.
"Siemens is closing a painful chapter in its history," Cromme said at a news conference.
The U.S. deal includes a $350 million payment to the Securities and Exchange Commission to settle alleged accounting rule violations, which Siemens neither admitted nor denied. Siemens falls under U.S. jurisdiction because its shares are listed in New York.
Siemens pleaded guilty to circumventing and failing to maintain adequate internal controls, a requirement of the antibribery law, and will pay $450 million to the U.S. Justice Department. Three Siemens subsidiaries also pleaded guilty to more specific charges.
The Siemens approach was also striking for its alacrity. The Baker Hughes settlement took five years, but Siemens, determined to end a persistent distraction to a new management team, pulled it off in less than two.
Munich prosecutors are still investigating former Siemens employees, and say they have not ruled out criminal charges. So far, they have leveled only minor charges of failing to effectively supervise the company against two former chief executives, Heinrich von Pierer and Klaus Kleinfeld, which could result at most in fines.
"This investigation will continue as planned and might take considerable time," Christian Schmidt-Sommerfeld, the lead Munich prosecutor, said in a statement Monday.
But the company itself is no longer in danger of being charged. "We have wrapped up all of the potential claims against Siemens arising out of the alleged conduct in both countries," Solmssen said.
Michael Hershman, a co-founder of the global antibribery group Transparency International, said that the Siemens fines, though lower than what could have been imposed, obscure other damage to the company, notably to its battered reputation.
"This has been an extraordinarily expensive lesson for Siemens," said Hershman, a consultant who helped revamp Siemens's ethics rules after the scandal broke. "I'm not disturbed it was not higher, because the cumulative costs were much higher."
The next-highest fine imposed by U.S. authorities for bribery was $48 million, paid by the oil field services company Baker Hughes in 2007.
Siemens' stock closed down 30 cents at €47.15 in Frankfurt on Monday. On the New York Stock Exchange, where Siemens is also listed, Siemens was up 51 cents, or 0.80 percent, at $64.43 in afternoon trading.
As is typical of foreign bribery settlements in the United States, Siemens agreed to pay for a four-year monitoring scheme that will produce reports for U.S. authorities on the company's progress in keeping to new ethics rules.
But for the first time, the U.S. agencies agreed that a non-American, the former German finance minister Theo Waigel, would lead the effort. The U.S. law firm of Gibson, Dunn & Crutcher will assist him, Solmssen said.
Hershman, the consultant, said Waigel's appointment could encourage European investigators, who have generally lagged behind their U.S. counterparts in prosecuting commercial bribery, to employ the same tactic.
"Putting yourself in the shoes of a European corporation, it seems to me they would accept the notion of a monitor if it is someone who understands the local legal system and operations," Hershman said.
But the monitoring does put pressure on Siemens, which harvested accolades for setting up an extensive compliance system, to keep up the pace. Solmssen said Siemens would do so by negotiating "integrity pacts" with competitors, which allow them to trade information on possible corruption in their fields.
Although Siemens is suffering under the global economic downturn, there has been no evidence that changing business practices has hurt their bottom line.
"We have to continue to make it clear from the most senior levels of management that we are committed to compliance and doing clean business everyday," Solmssen said.
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Illinois governor says he has no plans to resign
By Susan Saulny
Monday, December 15, 2008
CHICAGO: Talk about mixed messages.
Not long after the Illinois attorney general, Lisa Madigan, told a national television audience that Governor Rod Blagojevich of Illinois was thinking of possibly resigning here on Monday, the governor's spokesman broke some news of his own.
Not only was Blagojevich not resigning, the spokesman, Lucio Guerrero, said, but he was planning to go to work on Monday and study a few bills that might at some point require either his signature or veto — including one that will be hammered out in a special legislative session in Springfield that would strip him of his coveted appointment power over President-elect Barack Obama's vacated Senate seat.
"He has no plans of resigning today or tomorrow," Guerrero said on Sunday. "He still signs bills as governor, and he wants to see details."
The empty Senate seat is at the heart of a sprawling criminal case against Blagojevich, a 52-year-old Democrat who was arrested Tuesday on charges that he schemed to trade Obama's old seat for money and favors.
Madigan is a longtime rival of Blagojevich who has expressed interest in the past of one day being governor herself, and she has requested that the State Supreme Court declare the governor unfit for office. Madigan acknowledged on CBS's morning news show, "Face the Nation," that her assertion was based on "rumors in the media." But not before they set off a firestorm of speculation.
Her spokeswoman, Robyn Ziegler, said of her remarks after the television appearance: "She has no inside information about anything."
The rumor began swirling here over the weekend after The Chicago Sun-Times published an article saying that someone close to the governor said he might make a decision about resignation as early as Monday.
Guerrero denied it then and now.
The back-and-forth over such a serious case has become more like comedy. The governor's every move is scrutinized — Where is his car parked? Why is he making strange faces on his porch? — in an effort to predict the future of state government. In the absence of any official statements or appearances by Blagojevich, the public and journalists are making do with what little they have.
"It's like tail-chasing," said Cindi Canary, director of the Illinois Campaign for Political Reform. "Part of it is that there are so many unprecedenteds at the same time. So everybody's playing with a rule book they've never seen before, and at the center of all this is a governor who is not known for rational behavior. So any story just suddenly becomes like sky-writing. 'Oh, he's leaving! Oh, he's staying!'
"Really, nobody knows what the next step is," she said, adding that it may well be resignation on Monday.
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Caroline Kennedy to seek Hillary Clinton's Senate seat
By Nicholas Confessore
Monday, December 15, 2008
Caroline Kennedy, the daughter of an American political dynasty, has decided to pursue the United States Senate seat being vacated by Senator Hillary Rodham Clinton of New York, a person told of her decision said on Monday.
The decision came after a series of deeply personal and political conversations, in which Kennedy, whom friends describe as unflashy but determined, wrestled with whether to give up what has been a lifetime of avoiding the spotlight.
Kennedy will ask Governor David Paterson of New York to consider her for the appointment, according to the person told of her decision. The governor was traveling to Utica Monday and could not immediately be reached for comment.
If appointed, Kennedy would fill the seat once held by her uncle, Robert F. Kennedy.
Kennedy has been making calls this morning to alert political figures to her interest.
Kennedy's decision is likely to have a major impact on the governor's considerations as he mulls who should succeed Clinton. Already, some other Democrats have pointedly questioned her credentials for the job. United States Representative Gary Ackerman, a New York Democrat, said last week that he did not know what Kennedy's qualifications were, "except that she has name recognition — but so does J. Lo."
Others, including Mayor Michael Bloomberg have praised her abilities.
Kennedy first telephoned the governor on Dec. 3 to inquire about the job, but Paterson described that conversation as "informational" and said it was clear that Kennedy had not decided whether she wanted to pursue the position.
But since then, she has begun reaching out to key political figures in New York, including Sheldon Silver, the speaker of the State Assembly, and Thomas DiNapoli, the state comptroller. She has also hired Knickerbocker SKD, a prominent political consulting firm headed by Josh Isay, a former chief of staff to Senator Charles Schumer, to advise her.
Kennedy's family members, especially her cousin, Robert Kennedy Jr., have urged her to seek the post.
Clinton has said that she would not vacate the Senate seat until she was confirmed as President-elect Barack Obama's secretary of state, which is expected to occur in January or February, and the governor has said that he would wait until then to make the appointment. But he has also said that he might make his selection known before then, to allow whomever is chosen to prepare for the new role.
Kennedy, 51, a resident of Manhattan's Upper East Side, took an unusually public role in Obama's campaign, and the two became friends. Obama appointed Kennedy to the panel that vetted potential vice-presidential candidates for him.
Before that, Kennedy had devoted much of her time to charitable works and institutions linked to her family, like the John F. Kennedy Library Foundation, of which she is president.
Others likely to be considered for the Senate seat are members of Congress including Kirsten Gillibrand, a rising star in the Democratic party who represents an upstate district; Thomas Suozzi, the Nassau County chief executive and a former candidate for governor; and the New York State attorney general, Andrew Cuomo.
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U.S. Supreme Court allows suits over cigarette marketing
By David Stout
Monday, December 15, 2008
WASHINGTON: Tobacco companies suffered a defeat in the Supreme Court on Monday when the justices ruled that the companies can be sued by smokers who contend they were deceived by advertisements promoting "light" cigarettes.
In its 5-to-4 ruling, the court did not state that such advertising is, in fact, misleading. Rather, it concluded that lawsuits accusing the cigarette-makers of fraudulent conduct can proceed.
The ruling was a victory for a group of plaintiffs from Maine whose suit accused the tobacco companies of violating the Maine Unfair Trade Practices Act by fraudulently advertising that their "light" cigarettes delivered far less tar and nicotine than regular brands.
The plaintiffs contend that the tobacco companies knew that habitual smokers who turned to "light" cigarettes would typically inhale more deeply to make up for the feeling they missed from the old-fashioned unfiltered cigarettes. The suit was filed as a class-action claim on behalf of all smokers of Marlboro Lights or Cambridge Lights cigarettes, made by Philip Morris.
The defendants, Altria and its Philip Morris USA unit, tried to get the suit thrown out by relying on the federal Cigarette Labeling and Advertising Act, which states that "no requirement or prohibition based on smoking and health shall be imposed under state law with respect to the advertising or promotion" of cigarettes that follow federal labeling requirements.
A federal district court sided with the tobacco companies, finding that the federal labeling act pre-empted the state law. But the United States Court of Appeals for the First Circuit reversed the district court, concluding that the federal labeling act "neither expressly nor impliedly pre-empts" the smokers' fraud claim.
"The merits of the dispute are not before us," Justice John Paul Stevens wrote at the beginning of the majority decision, which was joined by Justices Anthony M. Kennedy, David H. Souter, Ruth Bader Ginsburg and Stephen Breyer.
To win their suit, the decision emphasized, the complaining smokers still have to prove that the companies' "use of 'light' and 'lowered tar' descriptors in fact violated the state deceptive practices statute." But even though not ruling on the merits of such suits, the Supreme Court delivered a victory to smokers who claim to be aggrieved.
Justice Clarence Thomas wrote a dissent asserting that, contrary to the majority's interpretation of the law and events, the smokers' claims under state law ought to be "expressly pre-empted" by the federal labeling act. Chief Justice John G. Roberts Jr. and Justices Antonin Scalia and Samuel Alito Jr. joined the dissent.
Altria contended that it could still prevail in lawsuits accusing it of fraud. "We continue to view these cases as manageable, and the company will assert many of the strong defenses used successfully in the past to defend us against this very type of lawsuit," Murray Garnick, the company's senior vice president and associate general counsel, told The Associated Press.
But a lawyer for the plaintiffs had another perspective. "Had the court gone the other way, it would have been open season for the tobacco companies to continue to perpetrate fraud on the tobacco-consuming public," David Frederick, who represented the Maine smokers, told the AP
The American Heart Association said it was pleased with the ruling. "Smokers who have been deceived by Big Tobacco's dubious marketing practices are now in a better position to hold the industry accountable," M. Cass Wheeler, chief executive of the association, said in a statement.
The majority ruling went against a recent trend of court rulings limiting state regulation of business and deferring to federal power. Justice Stevens noted that "we have long recognized that state laws that conflict with laws are 'without effect.' " On the other hand, he observed, when Congress enacts a law whose language can be interpreted more than one way, courts normally accept the reading that goes against pre-emption. More Articles in Washington »
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COLUMNIST
Paul Krugman: European crass warfare
Monday, December 15, 2008
So here's the situation: The economy is facing its worst slump in decades. The usual response to an economic downturn, cutting interest rates, isn't working. Large-scale government aid looks like the only way to end the economic nosedive.
But there's a problem: Conservative politicians, clinging to an out-of-date ideology - and, perhaps, betting (wrongly) that their constituents are relatively well positioned to ride out the storm - are standing in the way of action.
No, I'm not talking about Bob Corker, the senator from Nissan - I mean Tennessee - and his fellow Republicans, who torpedoed last week's attempt to buy some time for the U.S. auto industry. (Why was the plan blocked? An e-mail message circulated among Senate Republicans declared that denying the auto industry a loan was an opportunity for Republicans to "take their first shot against organized labor.")
I am, instead, talking about Angela Merkel, the German chancellor, and her economic officials, who have become the biggest obstacles to a much-needed European rescue plan.
The European economic mess isn't getting very much attention here in the U.S., because we're understandably focused on our own problems. But the world's other economic superpower - America and the European Union have roughly the same GDP - is arguably in as much trouble as we Americans are.
The most acute problems are on Europe's periphery, where many smaller economies are experiencing crises strongly reminiscent of past crises in Latin America and Asia: Latvia is the new Argentina; Ukraine is the new Indonesia. But the pain has also reached the big economies of Western Europe: Britain, France, Italy and, the biggest of all, Germany.
As in the United States, monetary policy - cutting interest rates in an effort to perk up the economy - is rapidly reaching its limit. That leaves, as the only way to avert the worst slump since the Great Depression, the aggressive use of fiscal policy: increasing spending or cutting taxes to boost demand. Right now everyone sees the need for a large, pan-European fiscal stimulus.
Everyone, that is, except the Germans. Merkel has become Frau Nein: If there is to be a rescue of the European economy, she wants no part of it, telling a party meeting that "we're not going to participate in this senseless race for billions."
Last week Peer Steinbrück, Merkel's finance minister, went even further. Not content with refusing to develop a serious stimulus plan for his own country, he denounced the plans of other European nations. He accused Britain, in particular, of engaging in "crass Keynesianism."
Germany's leaders seem to believe that their own economy is in good shape and in no need of major help. They're almost certainly wrong about that. The really bad thing, however, isn't their misjudgment of their own situation; it's the way Germany's opposition is preventing a common European approach to the economic crisis.
To understand the problem, think of what would happen if, say, New Jersey were to attempt to boost its economy through tax cuts or public works, without this state-level stimulus being part of a nationwide program. Clearly, much of the stimulus would "leak" away to neighboring states, so that New Jersey would end up with all of the debt while other states got many if not most of the jobs.
Individual European countries are in much the same situation. Any one government acting unilaterally faces the strong possibility that it will run up a lot of debt without creating much domestic employment.
For the European economy as a whole, however, this kind of leakage is much less of a problem: Two-thirds of the average EU member's imports come from other European nations, so that the Continent as a whole is no more import-dependent than the U.S. This means that a coordinated stimulus effort, in which each country counts on its neighbors to match its own efforts, would offer much more bang for the euro than individual, uncoordinated efforts.
But you can't have a coordinated European effort if Europe's biggest economy not only refuses to go along, but heaps scorn on its neighbors' attempts to contain the crisis.
Germany's big Nein won't last forever. Last week Ifo, a highly respected research institute, warned that Germany will soon be facing its worst economic crisis since the 1940s. If and when this happens, Merkel and her ministers will surely reconsider their position.
But in Europe, as in the United States, the issue is time. Across the world, economies are sinking fast, while we wait for someone, anyone, to offer an effective policy response. How much damage will be done before that response finally comes?
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NZ regulator to prosecute airlines for price fixing
Reuters
Monday, December 15, 2008
WELLINGTON: New Zealand's competition watchdog is to take legal action against 13 airlines and seven individuals for alleged price fixing and cartel behaviour in the air freight market, a charge denied by the national carrier Air New Zealand .
The Commerce Commission said the airlines had colluded to raise the price of air freight by imposing fuel surcharges for more than nine years.
Air New Zealand's general counsel John Blair said it has been co-operating with the regulator's investigation, but it found no basis for the charges, and the commission has repeatedly refused to share its evidence with the largely state-owned airline.
"This is clearly an approach designed to justify their existence and seems more about grandstanding than about getting to the bottom of the allegations," Blair said in a statement.
Air New Zealand would vigorously defend the case, Blair said.
The commission said the alleged price fixing would have caused more harm to New Zealand because of the country's distance from its markets.
"It will have resulted in increased costs for exporters and importers and higher overall prices for many consumer goods," said Commission chair Paula Rebstock.
The airlines to be prosecuted are: Air New Zealand ; British Airways ; Cargolux International; Cathay Pacific ; Emirates ; Garuda International; Japan Airlines ; Korean Airlines ; Malaysian Airline Systems ; Qantas ; Singapore Airlines ; Thai Airlines ; and, United Airlines .
Shares in Air New Zealand, about 76-percent owned by the government, last traded unchanged at NZ$0.84. The stock has lost 56 percent so far this year, compared with a 33.4 percent drop in the benchmark top-50 index.
New Zealand's international air cargo market is worth around NZ$400 million (146.7 million), and during the time of the alleged offences, airlines would have earned about $2.9 billion.
The Commission has already prosecuted three airlines for not co-operating with its investigation, with a court decision due in January.
Competition authorities around the world including those in the European Union, United States and Australia have taken action against airlines for price fixing in the air freight market.
Last week, a court in Australia ordered Qantas to pay A$20 million for price fixing on cargo charges between 2002 and 2006.
(Reporting by Gyles Beckford; Editing by Valerie Lee)
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The U.S. railroad disability board that couldn't say no
By Walt Bogdanich and Nicholas Phillips
Monday, December 15, 2008
After learning that most of her career employees were retiring early and getting disability payments, the Long Island Rail Road's president, Helena Williams, set out in October to learn more about the obscure federal agency in Chicago that was dispensing the money, a quarter of a billion dollars since 2000.
But when Williams asked to attend the next meeting of the agency — the federal Railroad Retirement Board, rail workers' version of Social Security — she got a surprise.
The board, with about $34 billion in assets, had not met formally in nearly two years, and no new meeting was scheduled. The three board members, all full-time presidential appointees, rarely met even in private, employees of the agency say.
Operating out of public view, with little scrutiny from Congress and even from its former inspector general, the retirement board has become the agency that cannot say no, last year approving virtually every single disability application it received — almost 98 percent. It did not matter where rail employees lived or where they worked.
An examination of the board by The New York Times, including dozens of interviews and a review of government records, found a disability program plagued by labor-management infighting, weak standards and a failure to use tests that could better weed out specious disability claims.
Since its inception, the board has been so riven with conflicts that it took a half century to update what were supposed to be temporary disability standards, leaving in place until 1998 archaic diagnostic terms like "cretinism," "imbecility" and "middle-class moronism." Simply having a "repugnant" scar could qualify someone as disabled.
The board's newer standards have not made much of a difference. Nor has the $10 million the board has spent over the last five years on physician consultants to help evaluate applicants; the approval rate has actually risen since 1965, when it was 96 percent.
"It doesn't require a lot of evidence," said Dr. Erlinda Berendi, a private contractor who reviews some of the board's occupational disability decisions.
The program's troubled history includes its former inspector general, William Doyle III, who chose to investigate waste, fraud and abuse from his home in Florida, 1,100 miles from the board's Chicago headquarters, records show. In the early 1990s, Doyle received thousands of dollars in awards from board members he was supposed to monitor — two are still in office — a practice that has since been outlawed. He later settled accusations of expense account fraud, agreeing to pay the federal government $35,000.
If Doyle's tenure was unusual, the way he ended his career was not: He retired on a disability, records show.
"I found that there had been little oversight of the activities of the board members or the entire agency," said the current inspector general, Martin Dickman, who investigated Doyle and wrote a report on what he found. "I admit that I had not anticipated the strange circumstances with which I was to be confronted."
The board has failed to heed several of Dickman's proposals to make the board work better, including that every disability applicant undergo two medical screenings, rather than one.
Investigations Under Way
More than a half-dozen state and federal agencies are now investigating the retirement board's disability payments to former LIRR employees. In September, two days after The Times published the results of an eight-month investigation that documented those disability payments, federal agents raided the board's Long Island office.
The LIRR's disability rate, which since 2000 has ranged between 93 percent and 97 percent for retired career employees, is three to four times that of the average railroad. Workers at other railroads get disabilities just as easily, but they file for them less often because, unlike LIRR employees, they can't retire early with a private pension plan to supplement their disability pay.
The disability program is one of a range of benefits provided by the retirement board, which also include survivor, unemployment and sickness payments. Workers and their employers pay taxes to support the board.
Labor officials defend the disability program, saying that any possible problems affect only the LIRR, and that changing the overall program would diminish protection for workers in a still-dangerous occupation.
"It is a program that works," said James Brunkenhoefer, national legislative director for the United Transportation Union. "If labor and management put the money in the pot and we decide how our money is distributed, and the only role government plays is to be the holder of that money — what is the problem?"
Rail industry officials say the entire program needs fixing. "The fact that we continue to have a 98 percent grant rate evidences the fact that it is difficult to weed out people who try to game the system," said Jerome Kever, management's representative on the three-member board, each of whom makes about $150,000.
The labor representative, V.M. Speakman Jr., considered the board's most influential member, declined to be interviewed in person or by telephone. Aides said he was unavailable or out of the office.
Upon further checking, The Times learned that Speakman usually does not work from the retirement board's office. In e-mail exchanges, Speakman who, records show, lives in the Chicago area, declined to say how many days this year he worked at headquarters. He added, "Inasmuch as I telecommute, my primary office is my home and is fully equipped to handle all agency business."
As a presidential appointee, Speakman said, he is on duty at all times.. "I am fully engaged in all issues related to the Railroad Retirement Board," he said.
Speakman and Kever, the longest serving board members in the agency's history, were first appointed by former President George Bush in 1992. Michael S. Schwartz, the board's public representative and its chairman, was appointed by the current President George W. Bush in 2003.
Schwartz said the current controversy over disabilities is unfortunate, because the board spends most of its resources smoothly administering other services for its 600,000 beneficiaries.
The board has sought to portray the cost of occupational disability as an internal matter. In a statement, it pointed to its financing from the taxes on all railroad employees and companies.
But that is only part of the story.
The board automatically re-evaluates all occupationally disabled workers to see whether they qualify for total disability. In most cases, the board concludes that they do, entitling them to early Medicare coverage and lower taxes. What's more, under a 1951 law, the burden of paying most of these benefits has shifted to Social Security. Of the $3.6 billion that Social Security transferred last year to the retirement board, $418 million was for disability payments.
At Social Security, which offers total disability benefits to nonrailroad workers, the approval rate is 55 percent. The retirement board's rate is 70 percent.
The board has never studied why these grant rates are different. But Steven Bartholow, a board lawyer, said Social Security reviews about a third of those cases and reached a different decision on just 4 percent in 2006 and 2007.
Setting Standards
The retirement board, while accustomed to disagreements, had never seen anything like it.
In December 1996, outside its headquarters, just steps from the elegant shops lining Michigan Avenue's Magnificent Mile, rail workers were picketing over the board's attempt to toughen disability standards. "Don't Steal from the Cripple," one sign read.
Inside the wood-paneled boardroom on the eighth floor, protesters turned up the heat. "Stop the charade," they chanted over and over, becoming so loud that board members had trouble communicating.
The board was about to make one of the most important decisions in the disability program's 50-year history: establishing permanent standards for the first time. Congress had created the occupational disability program in 1946, when railroad work was particularly hazardous and injured employees found that they had no marketable skills outside the industry.
Speakman objected bitterly to what was taking place, saying the board had not fully vetted the proposed changes. He believed they needed updating, but with union members benefiting from the old rules, Speakman had not led the fight for changes.
That was left to the rail industry, which had to find workers to replace those who retired early. "You can't just walk off the street and become a railroader," said Bonnie Huneke, Union Pacific's general director of disability prevention and management. "It's a unique job and takes a pretty substantial amount of training."
Railroad officials complained that disability benefits were given for medical conditions regardless of whether they actually impaired one's ability to work.
The conditions themselves were often vague. A worker, for example, could be considered disabled with "moderately severe antisocial ideas." What constituted an antisocial idea was open to interpretation.
Over the years, a succession of efforts to change those guidelines had failed. The board, meanwhile, had continued to award disability benefits — with predictable results. In 1984, the General Accounting Office said it sampled total disability awards and found that the board had erred in 21 percent of the cases.
Six years later, a federal commission studying the board's solvency recommended that new employees be placed under Social Security and private pension plans, and that occupational disability benefits be limited to 24 months.
Those recommendations were quickly discarded after the board solved its money problems by raising taxes on workers and employers.
To resolve the five-decade standoff, management hired a consulting firm, which in 1993 recommended discarding the old rules and having examiners focus more on whether specific physical ailments impaired one's ability to perform specific jobs.
This proposal eventually led to the protests at the retirement board.
"This office will not participate in such actions, and we'll remove ourselves from the premises," Speakman announced. "Let's go." And he walked out. Afterward, Kever and the board's consumer member and chairman at the time, Glen Bower, voted for the changes.
A national rail strike was averted when both sides agreed to negotiate further. A compromise was reached in July 1997, and the old standards were finally updated early the next year.
As it turned out, the new standards had little effect on the board's grant rate. A 2000 internal audit by two doctors, one appointed by management, the other by labor, found that as many as 20 percent of the disability awards were unjustified.
The board tinkered with the process again and settled on a procedure: An applicant's own doctor submits a physical evaluation but makes no decision on whether the worker is occupationally disabled. Claims examiners look at the quality of those evaluations and assess how ailments might affect one's ability to perform certain tasks.
Examiners can request a physical evaluation by an independent doctor, but that occurs in fewer than 30 percent of the cases, a board official said.
For quality control, Berendi, the contractor working for the board, samples 120 occupational disability cases a year. Her company, Consultative Examinations, also filed more than 6,000 case reviews of workers being considered for a total disability, according to board officials.
Despite all this, the board's grant rate hardly budged. A second audit was released this past June.
"I didn't realize how few were rejected until I did the audit," said Dr. Natalie Hartenbaum, one of two doctors hired to review a sample of 100 cases. All but one were approved, she said, and that denial was reversed once missing information was provided.
The labor-appointed doctor found that the medical evidence always supported the examiners' decision. Hartenbaum disagreed, saying she could find no evidence that the board even used a highly regarded test, called a functional capacity evaluation.
Dr. Robert McLellan, a specialist in occupational health at the Dartmouth Hitchcock Medical Center, called the test "a very important tool to better assess someone's work capacity," adding: "We do it commonly."
Berendi, who has the authority to order a functional capacity evaluation, agreed that it is helpful. "They can actually look at what the patient can or cannot do, rather than speculate," she said. Should the right situation arise, Berendi said, she would ask for the test even though it is expensive.
So how many tests did Berendi order last year? Zero.
And of the 120 cases she reviewed last year, how many disability decisions did she disagree with? According to board officials: zero.
Proposing Changes
Since taking over as inspector general in the mid-1990s, Dickman has made a number of recommendations aimed at improving the agency's operations. He has proposed that Social Security assume part of the agency's duties and that a chief executive replace the three-member board because it is inefficient and subject to internal conflicts. The board has rebuffed him each time.
Congress has not been much help. "It might be the only program that two congressional committees have fought over who would have to deal with it," said David Lucci, a former legislative counsel for the board. "There's no glory in that work," he said, adding, "It presents some hard problems just like Social Security does, and the population is very vocal."
The agency has remained a relatively low priority in Congress. The House Transportation and Infrastructure Committee, whose jurisdiction includes the board, said in 2003 that it "applauds the RRB's improvement efforts" and supports its current structure "so that rail beneficiaries will continue to receive excellent customer service." In the last couple of years, a committee staff member said, the panel focused on more pressing issues: Amtrak and rail safety.
The rail unions, which have remained powerful even as the nation's labor movement has ebbed, have aggressively defended their interests at the retirement board. Management has largely avoided a showdown, choosing to spend its political capital in other areas, including contract issues, according to current and former board officials.
"The unions have been successful not only in getting a separate system, but keeping it," said William Kaufman, a former director of retirement claims for the board.
Robert Jungbauer, a labor lawyer in Minneapolis, says that rail workers need a federal disability program, and he points to a congressional hearing last year that examined unreported injuries in the industry.
"Management wants to understate and underreport the injuries to the government," he said. "I would rather see an engineer on pain pills drive golf balls than drive a locomotive."
Williams, the LIRR president, believes that a lack of accountability is a problem for the board. "I was certainly surprised and concerned to learn that they had not met in almost two years," she said. "I'm not familiar with government boards or agencies that don't meet on a regular basis."
Board members say they communicate electronically, making frequent meetings unnecessary.
Speakman, the labor representative since 1992, would not grant an interview to The Times because, he said in a statement, his words would distract officials from dealing with "the Long Island Rail Road issue."
The Academy of Rail Labor Attorneys also encouraged members not to publicly discuss the disability controversy.
Some policy analysts say that with the changing nature of railroad work, the board has outlived its purpose.
"That board should not exist," said Richard Parker, an economist who teaches at the Kennedy School of Government at Harvard. Parker said there was nothing structurally unique about the rail industry that merited a system separate from Social Security.
"They succeeded in creating this board," he said, "that has essentially been self-recreating for no good purpose other than bureaucratic entropy."
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Wall Street stumbles as data remain bleak
U.S.industrial production drops 0.6%
Data suggest more pain to come in Asia
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With rates falling, Fed seeks new tools to fight recession
By Edmund L. Andrews
Monday, December 15, 2008
WASHINGTON: Having printed more than $1 trillion in new money since September, yet still failing to stop the U.S. economy from sinking, the Federal Reserve is expected to enter a new era of cheap money this week.
On Tuesday, policy makers are expected to lower their target for the overnight federal funds rate to 0.5 percent, a record low.
In itself, analysts said, the decision will be anticlimactic. Because demand for interbank loans has been so low, the actual Fed rate has been close to zero for a month. The real change will be in how the Fed tries to fight the recession from here on.
After Tuesday, the Fed will have to resort to mostly untested tools for promoting growth, because it cannot reduce its benchmark interest rate below zero. Its goal will be to drive down borrowing costs wherever credit markets remain paralyzed. But the approach is much more complicated than raising or lowering a single rate, and it could have unintended consequences.
Analysts say the current recession, which began a year ago, is all but certain to break the postwar record for duration, 16 months. But it could also set a record for depth.
The economy has already lost two million jobs this year. Analysts predict the unemployment rate, at 6.5 percent, could hit 9 percent by the end of next year.
The Fed must now turn to an approach called "quantitative easing," because it involves injecting money into the economy rather than aiming at an interest rate. The Fed has almost no experience with this approach.
"This is a whole new world," said Richard Berner, chief economist at Morgan Stanley. "You don't have a whole lot of historical precedent for knowing how this is going to work and what the unintended consequences could be."
The risks include provoking inflation or yet another speculative bubble. Economists generally agree that the Fed's long stretch of easy money from 2001 through 2004 contributed to the bubble in housing prices and the surge in reckless lending.
For now, neither Fed officials nor most private economists see evidence of inflation or a bubble. If anything, forecasters are worried about the kind of deflation Japan experienced in the 1990s.
Indeed, the Japanese central bank used quantitative easing for years when Japan was mired in chronic price deflation and had reduced its benchmark interest rate to zero. The results were not good, and it took Japan nearly a decade to break out of the mire.
Although Fed officials have denied it, they actually began a form of quantitative easing months ago. Since the financial crisis erupted in August 2007, the Fed has created a raft of new lending programs that have lent hundreds of billions of dollars to banks, Wall Street firms and money market funds.
Until three months ago, the Fed financed that lending with its existing reserves, mostly Treasury securities. Because it was simply exchanging its cash or Treasuries for hard-to-sell securities, the programs did not increase the total amount of money in the financial system.
But since September, when the Fed started to run low on Treasuries, it has been creating new money at a blistering pace. As a result, the Fed's "balance sheet" has ballooned to just over $2 trillion last week from about $900 billion in September.
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After a day of quiet, riots resume in Athens
The Associated Press
Monday, December 15, 2008
ATHENS: Youths protested outside the main police headquarters of the capital Monday, pelting riot police officers with flour and other objects to protest the shooting death of a teenager. Riot forces responded with tear gas.
An estimated 2,000 youths at the rally blocked one of the main avenues of Athens, chanted slogans and set fire to trash bins before dispersing. Two demonstrators were arrested.
Students also staged peaceful blockades of several other busy roads Monday in the capital and protested at the main court complex, where five people arrested during riots last week were to appear before an examining magistrate. Riot police officers guarded the complex and no disturbances were reported.
Greece has experienced the worst riots in decades after a 15-year-old boy died Dec. 6 in a police shooting. The riots quickly spread from Athens to more than a dozen cities. For a week, youths smashed and burned stores and cars, and hurled gasoline bombs and rocks at riot forces, who responded with stun grenades and large amounts of tear gas.
Dozens of people were hurt in the rioting, while hundreds of shops were damaged or looted and more than 200 people arrested. The policeman accused of killing the teenager has been charged with murder and is being held pending trial.
But the protests are widening focus from anger at the police to a general show of anger at the increasingly unpopular conservative government and the economic hardships faced by many Greeks.
The opposition Socialist leader, George Papandreou, on Monday repeated calls for early elections.
"The government cannot deal with this crisis," he said. "It cannot protect people - their rights or property - and it cannot identify with the anxiety felt by the younger generation."
Prime Minister Kostas Karamanlis, whose party has only a single-seat majority in Parliament, has repeatedly rejected demands that he resign and call early elections, saying the country needs a steady hand in a time of crisis.
Sunday was the first trouble-free day since the killing of the teenager, but some groups, mostly leftist students, have vowed to keep up the protests until the government addresses their concerns.
Protesters have called for riot police officers to be removed from the streets, for the police to be disarmed and for growing social inequality to be resolved.
COLUMNIST
Thomas L. Friedman: Cars, Kabul and banks
Monday, December 15, 2008
If there is anything I've learned as a reporter, it's that when you get away from "the thing itself" - the core truth about a situation - you get into trouble. Barack Obama will have to make three mammoth decisions after he takes the oath of office - on cars, Kabul and banks - and we have to hope that he bases those decisions on the things themselves, the core truths about each. Because many people will be trying to throw fairy dust in his eyes.
The first issue will be whether to bail out Detroit. What is the core truth about Detroit? Auto executives will tell you that it's the credit crisis, health care, retirement costs and unions. Sure, those are real. But the core truth is that for way too long Detroit made too many cars that too many people did not want to buy. As even General Motors conceded in its apology ad last week: "At times we violated your trust by letting our quality fall below industry standards and our designs become lackluster." Walk through any college campus today. You don't see a lot of Buicks.
Over the years, Detroit bosses kept repeating: "We have to make the cars people want." That's why they're in trouble. Their job is to make the cars people don't know they want but will buy like crazy when they see them. I would have been happy with my Sony Walkman had Apple not invented the iPod. Now I can't live without my iPod. I didn't know I wanted it, but Apple did. Same with my Toyota hybrid.
The auto consultant John Casesa once noted that Detroit's management has gone from visionaries to operators to caretakers. I would say that they have now gone from caretakers to undertakers. If they are ready to bring in some visionaries and totally restructure - inside or outside of bankruptcy - so they can make money selling cars that people will want to buy, then I say help them. I'd hate to see the Detroit auto industry go under. But if all we are doing is prolonging auto undertakers, then we have to let nature take its course.
After Detroit, Obama will be asked to bail out Afghanistan. Watch out. The tide has turned against America there because too many Afghans don't want to buy U.S. politics, or, more precisely, the politics of America's ally, the corrupt government of President Hamid Karzai. That is "the thing itself."
The main reason America's Iraq bailout - aka "the surge" - has had a positive effect is that Iraqis voted with their own guns and their own lives, taking on both Al Qaeda and pro-Iranian Shiite militants. Iraq has avoided bankruptcy for the moment - a total meltdown - because enough Iraqis wanted what we Americans were selling: freedom from extremists. That is the thing itself, and right now I'm not seeing enough of that thing in Afghanistan. Beware of a Kabul bailout.
But maybe the most flagrant area where we continue to avoid looking at "the thing itself" is with our banks. What we are dealing with there is the effect of a credit bubble that began in the late-1980s with the advent of global securitization - the chopping up and bundling into bonds of everything from home mortgages to student loans to airplane leases, and then selling them around the world.
When you take this much leverage and this much globalization and this much complexity and start it in America, and then blow it up, you have a nuclear financial explosion. The deflating of this credit bubble is so wealth-destroying that even the most prudent banks have been ravaged by it.
What to do? The smartest people I know in banking are praying that Obama's Treasury Department will tackle "the thing itself." That is, do a real analysis of what the major banks are worth in a worst-case scenario. Then determine if, on that basis, they have viable, survivable equity-to-asset ratios.
Those that do should get more government investment. Those that are close should be forced to find new investors and merge. And those not viable should be shut down and have their bad assets bought by a government-owned body (which would sell them over time) and their deposits shifted to healthy banks to make those banks even healthier. Some experts believe we still need to close 1,000 banks.
This process will be painful, but probably by the end of a year the market will clear, investors will come in, and the surviving banks will be ready to lend to each other and you and me. The "thing itself" here is that banks still don't want to lend because they still don't know the true value of their own balance sheets, let alone anyone else's.
The market has to clear. We can do it painfully and quickly, as we did with the dot-coms, or we can be Japan and drag it out.
So whether its cars, Kabul or banks, we have to stop wishing for the worlds we want and start dealing with the things themselves. If Obama does, his first year will be excruciatingly painful, but he could have three years after that to be creative. If he doesn't, I fear that cars, Kabul and banks will dog his whole presidency.
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OPINION
Obama's first trip
By Michael Fullilove
Monday, December 15, 2008
WASHINGTON: During the presidential campaign, Barack Obama promised that in the first 100 days of his administration he would "travel to a major Islamic forum and deliver an address to redefine our struggle."
Egypt, Turkey and Qatar have been suggested as possible sites for such a speech. But the best candidate is the country in which Obama lived as a child: Indonesia.
Choosing Indonesia would throw light on the diversity and richness of Islam, which is not, contrary to lingering perceptions, practiced solely by Arabs or only in the Middle East. Indonesia, home to the world's largest Muslim population, does a reasonable job of managing its considerable religious heterogeneity. An Indonesian setting would help Obama to reframe the debate in the West about Islam and terrorism.
Indonesians have been both victims and perpetrators of terrorist attacks, including the deadly Bali bombings. The government in Jakarta is an important partner in the effort against terrorism.
Selecting Indonesia would demonstrate that Obama takes democracy seriously, given that Indonesia is the third-largest democracy in the world. It would show that President George W. Bush's misshapen democratization agenda has not turned his successor into an icy realist.
Reminding the world of Obama's origins could help counter anti-Americanism. Who would have thought the United States would elect a president with memories of wandering barefoot through rice paddies and "the muezzin's call at night"?
Finally, picking Indonesia would indicate that Obama is serious about rebalancing America's foreign policy. It would show that he understands the shift of global power eastward, and telegraph that Washington is finally going to take Indonesia - the linchpin of Southeast Asia - seriously.
Obama was criticized in the campaign as offering speeches rather than solutions. But there is no better way to make an argument than with a speech - and for this speech, there is no better place to make that argument than Indonesia.
Michael Fullilove, the program director for global issues at the Lowy Institute in Sydney, Australia, is a visiting fellow at the Brookings Institution in Washington.
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Obama seems to take soft line on lobbying by appointees' spouses
By Charlie Savage and David D. Kirkpatrick
Monday, December 15, 2008
WASHINGTON: Linda Daschle is one of the most important aviation lobbyists in town. Daschle is also the wife of Tom Daschle, whom President-elect Barack Obama has chosen to be the next secretary of health and human services.
Tom Downey is the founder and chairman of a lobbying firm with dozens of clients, including several with interests in energy policy. Downey is also the husband of Carol Browner, Obama's likely choice to be the next White House energy czar.
Obama's selection of Daschle and Browner to high-level positions illustrates a potential loophole in his pledge to keep special interests at a distance.
The ethics code that Obama imposed on his transition team takes a hard line against lobbyists. People are disqualified from working on any matters they lobbied about within the past year, and currently registered federal lobbyists are barred from playing a significant role - regardless of the issues they lobby about.
But Obama's embrace of Daschle and his presumed choice of Browner suggest that he will take a softer line on lobbying by the spouses of the officials he puts into his administration.
In a town where influencing the government is a main industry, Thomas Susman, an expert on ethics rules who is also a lobbyist for the American Bar Association, said issues surrounding spousal lobbying presented a particular ethical challenge.
"On the one hand," Susman said, "you say a spouse shouldn't be disenfranchised from his or her professional activities because his or her spouse goes into government. But it does seem to me that a spouse ought not be allowed to lobby an agency or on issues under the control of the spouse in government."
In the presidential campaign, Obama railed against influence-peddling in Washington and pledged to hold his administration to a higher standard.
"Your voices should speak louder than the whispers of lobbyists," Obama told a crowd in Green Bay, Wisconsin, in September.
Stephanie Cutter, the transition spokeswoman, said Obama's team was writing "ethics rules for an Obama administration that will meet every commitment made during the campaign."
"To prevent conflicts of interests," she added, "administration officials will recuse themselves from any issue involving a spouse, and spouses will be banned from lobbying relevant agencies."
In a bid to avoid conflicts, Linda Daschle has announced that she will leave her lobbying firm - where colleagues represent health care clients - and plans to start her own practice, which will not accept clients with interests in health care policy. Downey has not disclosed his plans, but Cutter said if Browner became energy czar, Downey's firm would no longer accept energy or environment-related work.
Joan Claybrook, the president of Public Citizen, a government watchdog group, said it would be going too far to require spouses of administration officials to give up their careers and "go do something else, like home-decorating."
The business dealings of family members created a headache for Obama's team even before the election.
After Obama selected Senator Joseph Biden Jr. as his vice-presidential nominee, Republicans pounced on the fact that Biden's son, R. Hunter Biden, was a lobbyist. He quit his firm in September.
Obama's selection of Senator Hillary Rodham Clinton to be secretary of state raised related issues. Since leaving the White House, her husband, former President Bill Clinton, has collected tens of millions of dollars in speaking fees and donations to his presidential library and charitable foundation, including from foreign governments.
As a condition of his wife's selection, Clinton agreed to disclose the identity of donors, to take no new donations from foreign governments and to let the administration review his speaking schedule.
The working relationship between the Daschles, who married in 1984, has come under scrutiny before. After three people died in the 1994 crash of a small plane operated by a friend of Tom Daschle, he was accused of helping his friend's firm evade oversight, and his wife was accused of helping her husband hide his efforts.
Both Tom Daschle, who was then the top Senate Democrat, and his wife, who then worked for the Federal Aviation Administration, were cleared of wrongdoing.
Daschle has been a lobbyist since 1997. Some early clients had an interest in health policy, like the drug maker Amgen and the tobacco giant Philip Morris. In recent years she has mainly represented aviation companies like Boeing and Lockheed Martin.
Browner, a former administrator of the Environmental Protection Agency, is a principal at the Albright Group, an international consulting firm. She married Downey in 2007.
Downey later founded a lobbying firm whose past clients included energy companies like Chevron and Standard Renewable Energy Group, several foreign countries, and the Albright Group. In 2006, the couple worked together on issues related to a Dubai company's purchase of a U.S. port operator.
His firm's current clients include the government-backed mortgage giant Fannie Mae, as well as Securing America's Future Energy, a nonprofit that advocates reducing dependence on foreign oil.
John Broder contributed reporting.
World's friendliest countries for expats
By David SuttonForbes.com
Monday, December 15, 2008
The country that once welcomed the tired, poor, huddled masses is now asking for a little reciprocation. And Canada, Germany and Australia are heeding the call.
In Pictures: World's friendliest countries
They top a list of the countries most welcoming to expats. There, relocators have a relatively easy time befriending locals, joining a local community group and learning the local language.
Canada is the most welcoming; almost 95 percent of respondents to HSBC Bank International's Expat Exploreer Survey, released last week, said they have made friends with locals. In Germany, 92 percent were so lucky and in Australia 91 percent befriended those living there. The United Arab Emirates was found to be the most difficult for expats; only 54 percent of those surveyed said they'd made friends with locals.
Behind The Numbers
The study surveyed 2,155 expats in 48 countries, spanning four continents, between February and April 2008. Respondents rated their country in four categories: ability to befriend locals, number that joined a community group, number that learned the language and percentage that bought property.
"We conducted this survey to better understand expatriate needs and get insight into the emotions of expats. The banking business is all about trust, especially with the recent credit crisis," says Martin Spurling, CEO of HSBC Bank International and Head of HSBC Global Offshore. "We want them to build a relationship with their wealth manager regardless of where they travel."
For Americans, traveling abroad to start over is becoming increasingly common. America used to have it all: good jobs, booming economy, skyrocketing stock market and plentiful housing. What a difference a year can make. The boom has gone bust and people are now heading for the exits en masse - with an eye abroad.
It's no wonder they find Canada so welcoming. It has an accessible language, diverse culture and low levels of government corruption, says Patricia Linderman, editor of "Tales from a Small Planet," an online newsletter for expats.
It also has other expats. This is important, Linderman says, since even the most gracious locals already have busy, established lives and can be unwilling to put in the effort to befriend someone they know could leave within several years.
"I'm not suggesting that it's good to live in an 'expat ghetto'. It's immensely rewarding to live among local people and make friends with them," she says.
Linderman says other expats are important because they share similar needs like making friends and adjusting to life in a new country. They also understand the frustrations daily life brings.
"A significant expat community," she says, "also means that there will be at least one truly international school, expat support groups and amenities like English-language bookstores."
Team Work
Joining a recreational sports team or community group can help speed integration. Almost half of respondents reported taking this action, with Germany leading the pack at 65 percent. Churches, organizations and schools provide good places to forge friendships with people who possess common interests and beliefs.
"When I was an expat in Hong Kong, I became a member of the local football club and found it was a fantastic way of meeting like-minded people," says Paul Fay, head of marketing and communication at HSBC Bank International, of his expat experience in Hong Kong. "Particularly in Asia joining these clubs works to your advantage."
Australia scored high in friendliness but ranked last when it came to joining a group. That's because expats in Australia tend to be younger, with 51 percent in the 18-34 age group, and may not need organized groups to facilitate meeting new people.
Groupthink is less of an issue in Germany, since meeting people there is relatively easy.
"I'm not surprised that Germany is a popular choice whether you are going for a short-term cultural experience or a long-term job assignment," says Robin Pascoe of expatexpert.com, a Web site for families living and working abroad. "Germany has fantastic international schools for the kids of expats."
Germany is also considered middle-of-the-road culturally, according to Neil Payne, who works for Kwintessential, a translation services company in the U.K. Anyone you stop on the street can talk to you in English, he says. What's more, "working conditions are also very well respected and there is a nice delineation for work life and social life, which we don't have in England."
China, India and United Arab Emirates scored low overall because cultural differences from the West made integration difficult.
This doesn't surprise Payne.
"Our experience is that people do struggle and find it hard to adapt," he says. "It's the psychological difference: so far removed from what Western expats are used to."
In Pictures: World's friendliest countries
Still, says Fay, don't eliminate a country simply because of a language barrier.
"Cantonese and Mandarin can be very challenging for Western expatriates," he says, "though for those who are resilient and do invest, it can be an incredible experience."
Goldman is expected to report an end to profitable run
By Ben White
Monday, December 15, 2008
Goldman Sachs, long the envy of Wall Street, has not reported a loss since the stock market crashed in 1929. But the panic of 2008 is about to put an end to its long, profitable run.
After dodging the kind of losses that crushed rivals when the financial crisis first erupted, Goldman is now expected to join the swelling ranks of Wall Street's losers. Analysts expect the bank to post a quarterly loss of about $2 billion, or $5 a share, on Tuesday.
Like most banks, Goldman is suffering as its investments plunge in value. But a loss for Goldman — a firm at once admired and loathed by its rivals — would punctuate a year of grim news for the financial industry and underscore how even the mightiest in the industry have fallen.
"I think if there is one message to be taken away from what is likely to be the worst quarter in Goldman Sachs's history, it is that no one is immune," said Michael Mayo, an analyst at Deutsche Bank.
Goldman is beginning what is expected to be yet another round of weak earnings from major financial companies. Morgan Stanley, Goldman's perennial rival, is expected to report a quarterly loss of about 37 cents a share, or $400 million, on Wednesday.
Senior executives at both Goldman and Morgan recently said they would forgo bonuses this year in light of the troubles in the industry. Both firms have accepted billions of dollars from the government as part of an industrywide rescue.
But both of these banks, longtime leaders in traditional Wall Street businesses like advising, mergers and acquisitions and underwriting securities, are in the midst of a painful transition. Many wonder if they will ever recapture their former glory, or at least their former profits.
Confronting uncertain futures, both firms took the radical step in September of transforming themselves into traditional bank holding companies. While that move gave them access to emergency financing from the Federal Reserve, it also restricted their ability to use leverage, or borrowed money, to stoke profits.
Both banks are reducing the size of their balance sheets by selling assets and raising new funds. Goldman is likely to have reduced the size of its balance sheet to $700 billion or $800 billion from $1 trillion in its most recent quarter. But analysts say Goldman will have to shrink even further or make a significant acquisition to bring in new cash.
"I have a more important issue than the loss in the quarter. And that is, how do you fund the balance sheet going forward?" said Glenn Schorr, an analyst at UBS. "Who is going to give you unsecured debt and at what price? I think they might need to either continue to shrink the balance sheet or buy a bank or an asset manager. Or else they are just hoping the respirators the government has them on are good enough and will be around long enough to help them make it through."
Goldman has looked at nearly every bank in the country, but found none it could buy at a palatable price without getting saddled with bad assets, according to people close to the matter. It has rejected the idea of a deal with Citigroup given the deep problems plaguing that financial giant.
Goldman would be more inclined to buy a bank that manages money for large institutions, corporations and affluent individuals like State Street, Northern Trust or Bank of New York Mellon. All those banks, however, trade at higher stock market multiples (share price compared with earnings) than Goldman, making a purchase difficult.
Goldman shares, which closed Friday at $67.74, are down nearly 70 percent this year. The brief rally that ensued after Warren Buffett sank $5 billion into Goldman as a vote of confidence in September has largely evaporated.
Goldman has also had to deal lately with the kind of relentless rumors that swirled around Bear Stearns before its emergency sale in March, and that dogged Lehman Brothers before its bankruptcy in September, though Goldman is far healthier than either of those investment banks were at the time.
Wall Street has buzzed that Goldman might embark on a new round of jobs cuts, on top of the 10 percent reduction it has announced. Goldman employed 32,569 people at the end of the third quarter.
Executives at the company have steadfastly denied the speculation, attributing it to uninformed outsiders as well as to internal grousing by employees just learning they were part of the 10 percent cut. Even so, many analysts say Goldman will have to reduce its payrolls further.
Strains are clearly showing. Goldman recently said it might require employees to work longer in order to receive full retirement benefits. The move could reduce costs, but it would cause people to remain at the bank longer rather than reducing head count.
Instead, Goldman is likely to continue taking advantage of government programs like the Federal Deposit Insurance Corporation's offer of three-year guarantees on senior unsecured debt issued by qualifying banks, while trying to increase deposits by corporations and affluent individuals to shore up its balance sheet.
Goldman executives also argue that their markdowns on equity holdings do not amount to write-offs and that the values will recover over time. Jeff Harte, an analyst at Sandler O'Neill & Partners, said the markdowns would be, in a way, reassuring.
"You almost think, given what equity markets did this quarter, that they better have these losses or you would lose faith in how they mark their assets. Lehman avoided a lot of losses, and you always wondered how they did it," he said.
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Fannie Mae acts to protect renters from eviction
By Charles Duhigg
Monday, December 15, 2008
In a move that could provide relief to thousands of renters who face eviction in the United States but draw the U.S. government even deeper into the housing market, the loan giant Fannie Mae has said that it will sign new leases with renters living in foreclosed properties owned by the company.
The announcement Sunday is the first countrywide effort to provide widespread relief to renters ensnared by the unfolding mortgage crisis, and it will effectively transform Fannie Mae - a government-controlled mortgage finance company - into a national landlord. It could also increase pressure on private lenders to establish similar programs and on lawmakers to pass renter-relief measures.
"There are renters all around the country who have been holding up their end of the bargain and paying their rent faithfully, but the landlord got into trouble, and so the renter is now unfairly facing eviction," said John Taylor, president of the National Community Reinvestment Coalition, a consumer advocacy group. "It's really good news that Fannie Mae is doing this. Now the question is whether private sector will follow suit."
In recent months, skyrocketing foreclosure rates have exposed as many as 70,000 renters to evictions, even though many never missed rent payments, according to analysts who track housing data. In many U.S. cities and states, renters can be evicted after their home goes into foreclosure, regardless of how long their lease stretches into the future.
Many financial institutions - including JPMorgan Chase and Bank of America - have policies to evict renters after foreclosure, company representatives said.
Fannie Mae's initiative is expected to initially benefit as many as 4,000 renters living in foreclosed homes owned by the company. Fannie Mae has traditionally only bought and sold mortgages. But when a loan held by the company goes into foreclosure, Fannie Mae gains ownership of the underlying property until it is resold to new investors.
Fannie Mae owned 67,500 properties in foreclosure at the end of September, according to the company's most recent filings. Most of those were owner-occupied. Under the new policy, former owners will most likely not be eligible to rent homes they lost in foreclosure.
Last month, both Fannie Mae and Freddie Mac, the other government-controlled mortgage giant, temporarily suspended foreclosures and evictions until early January. Fannie Mae will now offer renters in foreclosed properties month-to-month leases until the property is resold. A company representative said program details were still being worked out.
"While it may be sometimes tougher for us to sell a property when people are in it, we understand that lots of people are in tough situations right now," said Chuck Greener, a Fannie Mae spokesman. "If a renter wants to stay in their home, we'll make that happen. And if they want to move out, in many cases we'll help them pay for the move."
A spokesman for Freddie Mac said the company was looking at a number of options, including a program similar to Fannie Mae's, but that no decisions had been made.
The companies' regulator, James Lockhart of the Federal Housing Finance Authority, issued a statement Sunday saying that he expected both companies to quickly update their policies regarding renters living in foreclosed properties. Both Fannie Mae and Freddie Mac were taken over by Lockhart's agency this year and now operate in a conservatorship.
****************
Chartists see a late 2009 recovery
By Atul PrakashReuters
Monday, December 15, 2008
LONDON: European shares will decline again next year and, although there will probably be less volatility, it could be late 2009 before a sustained recovery starts, according to analysts who use technical charts to predict behavior of the markets.
These so-called chartists say the technical picture looks quite similar to the Great Depression, which led to deflation and a surge in unemployment. But if the market does start recovering late next year, then 2010 could see a bull market.
Most European share indexes are expected to witness similar trends, with the FTSE 100 expected to fall about 25 percent to a bottom some time next year, after slipping 35 percent so far in 2008.
Germany main index, which dropped more than 40 percent in 2008, has potential to fall another 20 to 25 percent more in 2009 before bouncing back, they said.
"This tremendous 'double top' on ultra-long-term charts suggests an absolutely massive bubble, which forms from 1987 to date and is still not been unwound completely," said Nicole Elliott, a technical analyst with Mizuho Securities. "It's an unstable investment environment. We have still got more of that to come."
A double top occurs when prices form two distinct peaks on a chart. A double top is only complete when prices decline below the lowest low - the valley floor - of the pattern.
Chartists provide a view based on patterns in the graphs of securities or indexes - looking at measures such as relative strength and moving averages along with chart patterns such as flags and double tops.
Some technical analysts said the cycles of long-term charts showed that the downtrend will not be complete until the start of 2010, suggesting 2009 would be a difficult period for equities but moves would be smaller and slower than seen since May 2008.
"Most of the cycles are pointing higher in 2010, which means that we should have a probability to see a bull market in 2010," said Michael Risner, head of equities technical analysis at UBS Investment Bank. "Would that be a strong bull market? I don't believe so. The bull market from 2003 and 2007 was one of the longest bull markets and the likelihood to see the same again in 2010 is quite low."
Some chartists say the market might experience a "mean reversion bounce" in the first quarter of 2009 as from a historical perspective, the market is aggressively oversold. But the rally could be short-lived and markets might slip again.
Mean reversion theory suggests that stock prices eventually move back toward the mean or average, which could be the historical average of the price or any other relevant average.
"A retest of the bottom of the bear market in 2003 is possible, and if that breaks then the market is in real serious trouble," said Cliff Green, an independent analyst, referring to a low of around 3,280 points seen by the FTSE 100 index in early 2003. "We are not out of the woods yet."
Technical analysts also say stock indexes were biased toward the upside because of the way they are constituted.
A company that performs badly eventually gets booted out of the index and replaced by a growing company, marginally improving the performance of the benchmark.
Phil Roberts, a technical analyst at Barclays Capital, said that a recovery in the stock markets could be visible in the second half of next year but that 2009 would not see as severe a downturn as 2008.
"But it's going to take a little while to get going," Roberts said. "It's going to be a struggle next year."
He also said a combination of momentum and other chart indicators suggested hat the moves were part of a large corrective process that has been in play for some time.
Chartists said the global scale of the current economic crisis and its breadth made it unprecedented. But the destruction of wealth was comparable to the Great Depression.
"From a technical point of view, it's pretty much a copy-paste of the market behavior in 1930s," said Risner, the UBS analyst. "We are in a deflationary down-spiral at the moment. The authorities have to manage the swing in the financial systems away from deflation to inflation. And if we get that turn - and we should get that turn next year - we will see a rally in the financial markets."
By Patricia Leigh Brown
Monday, December 15, 2008
In the early mornings, when the ocean is enveloped in fog and the scent of wild iris hangs in the air, the possibility for solitude can be found on a wind-tossed path. Deer eyes stare from slender meadow grasses, and a curve in the trail along the headlands can unexpectedly yield a squadron of pelicans zooming skyward on ocean thermals.
At Sea Ranch — even the name has an aura — it is possible at once to lose and to find yourself on a path, following it past tumbledown picket fences to a driftwood throne on a secluded beach. When the architects Charles W. Moore, Joseph Esherick, William Turnbull, Donlyn Lyndon, and Richard Whitaker and the landscape architect Lawrence Halprin conceived this place along a mystical 10-mile stretch of California coast in the early 1960s, they courted the wind. They measured it, observed the way its salty gusts sculptured the cypress trees.
Eventually, they would tame the wind in architecture, its force poetically echoed in the angled plank roofs and slanted towers of the original building, Condominium One, an austere Shaker-like ode to nature's power and the first of many groundbreaking structures at Sea Ranch.
The wind still holds sway at this once-idealistic second-home community, where man and nature are engaged in an intricate dance. Sea Ranch has achieved a sort of a cult status among architecture mavens, who house-gawk rather than bird-watch, bearing a glossy tome by Lyndon, a spiritual dean of Sea Ranch, as a guide. They come to see a style forged by A-list architects (shed roofs to deflect the wind, windows punched through redwood boards) but perhaps more than that, to pay tribute to a big idea: the then-radical notion, influenced by Halprin's experience on a kibbutz, of open land held in common and houses designed in deference to nature.
Since moving to the Bay Area nine years ago, my family and I have rented numerous houses at Sea Ranch, a place that for me has become the psychic equivalent of a tubercular Victorian's healing in a sanitarium. Over the years, I have gotten to know Halprin's landscape intimately, savoring the way the trails lead to salty cliffs alive with nesting cormorants and into dark, enchanted forests straight out of the Brothers Grimm.
Like many, I fantasized about what it might be like to experience some of Sea Ranch's most iconic houses, the ones designed by the guys who dreamed up the place before the sad arrival of what might be called Sea Ranch sprawl. This past summer, I finally got my wish, indulging in architectural promiscuity by renting Moore's fabled Unit 9 in Condominium One, a complex now on the National Register of Historic Places; an Obie Bowman-designed Walk-in Cabin; a Binker Barn designed by Turnbull; and, as the drum-rolling crescendo, or so I thought, one of the original Esherick houses tucked into a now-fetishized cypress hedgerow.
The timing was fortuitous: the Sea Ranch Lodge, the community's dated, killer-view hotel, is about to be Post Ranch-ified, as Passport Resorts, whose principals created the Post Ranch Inn in Big Sur and other high-end lodges, proceeds with an expansion. The company envisions a luxurious watering hole with 15 or so house-size cottages serviced by motorized carts spilling down 52 acres of now-pristine meadow.
They will by necessity be marketing seclusion. Just getting to Sea Ranch, about two and a half hours from San Francisco, requires negotiating a stomach-churning, acrophobia-inducing sliver of Highway 1. The payoff is a relatively undiscovered, unspoiled swath of California coast — bordering Sonoma and Mendocino Counties and nicknamed Mendonoma — that mercifully has yet to be mythologized à la Mendocino village or Big Sur.
CHARLES MOORE called Sea Ranch his "Mother Earth." All I could think of when I stepped into Unit 9 was that the little rat had kept the best place for himself.
I had this revelation while sipping coffee from a vintage Vignelli-designed mug in Moore's kitchen — a riot of painted checkerboards overseen by a textile of frisky Indian goddesses. A misty cauldron of waves was churning madly against the cliffs that Condominium One, widely considered to be one of the most influential buildings of the 1960s, seems precariously perched upon. My teenage son, Gabe, and his two pals were still asleep, white iPod wires in their ears, visions of a winged cow, a wooden dinosaur, a shadow puppet, toy blocks spelling out M-O-O-R-E and a fragment of a Corinthian column dancing on wooden beams over their heads.
A restless global wanderer and voluminous author who collected university appointments the way he did Oaxacan clay pigs (Yale, UCLA, Berkeley, etc.), Moore, who died in 1993, possessed an infinite capacity for joy that was expressed in his architecture. "I think that fairy tales have a great deal to teach us architects," he once wrote. The way that most magical adventures, he observed, "end in time for tea seems to me worth careful looking into."
His twinkly view of the universe lives on in Unit 9, which has been delightfully frozen in amber by his family, who still own it, down to the papier-mâché ponies and abalone shells inserted into the 14th-century tile ceiling fragment on the wall. It thus has become a shrine for architects, whose rhapsodies fill the guest register.
Hovering gluttonously over the ocean, the condo was Moore's salon-by-the-sea, filled with students and a blizzard of manuscripts. Today, it is a powerful argument for the afterlife, an indoor fairy tale with a four-poster bedroom loft held up by logs, creating a cozy shelter underneath. For Gabe and his friends, Pete and Gabe D., a cadre of teenage Coppolas equipped with a digital movie camera who had resoundingly rejected Moore's leftover jigsaw puzzles of Queen Elizabeth in Parliament and the Tokyo subway system, it was the perfect place to plot a literal cliffhanger.
My most vivid memory of Moore, whom I interviewed six years before his death, involved the spectacle of the architect as human periscope, swimming in the pool around midnight at his compound in Austin, Texas, and clutching a flashlight aimed at the water so that he'd be able to spot wayward tarantulas.
Puttering around the kitchen the morning of my visit, admiring Moore's global tchotchkes, I realized things were getting weird. "Where does Charles keep the vacuum cleaner?" I muttered to myself. "I wonder if Charles has a steamer."
I knew Moore had worked his magic when I found Gabe sprawled on the turquoise cushions of the saddlebag — a trademark Moore feature in which windows project out of the main space — gazing at the horizon. "Hey, Mom," he wondered. "If you went straight across the ocean, where would you be?"
Daydreaming is the emotional agenda at Sea Ranch. It's a place to watch a hummingbird with your coffee or to observe a deer grazing improbably on a sloping grass-covered green roof.
It is a place to drink too much wine while being transfixed by harbor seals with your college roommate and then being unable to find your way home in the foggy dark. The possibility for both discovery and community undergirds Sea Ranch, an early example of ecological planning that, for better and worse, spawned suburban wannabes across the country. The founding ideal, shaped by Halprin and his all-star cast, was that 10 stupendous miles of California coast were something to be shared rather than subdivided.
The early architecture was communal and modest, with houses clustered perpendicular to the ocean so that everyone would have a view, leaving the meadows open and held in common. Houses were sited to settle into the landscape, like quail nesting. "This wasn't a place to show off your architecture," said Whitaker, now a 79-year-old renegade. "Buildings were meant to be like geodes, ordinary rocks on the outside with the inside going gangbusters."
Too much of that philosophy has bitten the proverbial dust, a long, bloody tale of politics, real estate, public access to the coast and the sad disconnect between taste and money. Today there are essentially two Sea Ranches: The southern portion, planned by Halprin et al.; and the later more suburbanized north, with cul-de-sacs and palazzos along the bluffs.
But plenty of the genuine item survives, including the Moonraker Athletic Center, one of three recreation centers with pool, tennis court and family sauna (this is California after all). Along with miles of hiking, biking and horse trails and a Scottish-style golf course, the centers are major perks for renters, who must dangle passes from their rearview mirrors. Moonraker is a stark, weathered cathedral of chlorine, all but buried in an earthen berm.
AT the Obie Bowman Walk-in Cabin I rented, the first challenge was finding the door. Spatial organization has never been my forte. Anxiety mounting, I finally spied a padlock attached to a sliding barn wall. Eventually, I realized it was the door. Architects! I cursed.
The conceit of the Walk-in Cabins, a remote gathering of 15 troll-like dwellings in a kingdom of redwoods in the hills above Highway 1, is that no cars are allowed. They are left about a quarter-mile down a dirt road, which sounds romantic until you realize that your garbage has to walk out the same way.
Make no mistake. Sea Ranch is not pussyfooter terrain. I was reminded of this fact when, traveling solo this time and relieved at having found the front door, I perused the welcoming material: a form to fill out should I spot a mountain lion, with blank spaces for size, color, tail and attitude.
Bowman, who still works in Healdsburg, was a shopping center designer in Los Angeles when he took a trip up the coast and discovered Sea Ranch. After the Walk-ins were completed in 1972, he remarked that the spartan cabins, recipients of umpteen design awards, were about the size of the restrooms in his shopping centers.
In contrast to the Moore condo, with its drama-queen ocean views, the Walk-ins are about quietude, the light feathering through the redwoods. With its compact loft bed, wood stove and twee kitchen, it all felt a bit like inhabiting a lifestyle magazine edited by the redwood-dwelling activist Julia Butterfly Hill.
One of the pleasures of a rental, of course, is imagining the real owners (the tip-off here may have been the stuffed gnome in a basket). Exhausted, I hiked down to the ocean, where the harbor seals were sunning on the rocks like old couples by the pool in Miami Beach. They seemed to have the right idea. So I hiked back up to the cabin and promptly collapsed on the deck into savasana, the yoga corpse pose. I let the breeze, sun and scent of pines lull me before soaking in the hot tub (life is tough at Sea Ranch).
The only sign of fellow humans in the dense thicket were scattered lights at dusk — the home fires burning in our little warren of Prius-driving hobbits.
EVERY visit to Sea Ranch has a mood. I have watched migrating gray whales breach the surface from Walk-On Beach, experienced a near-tsunami with pelting rain followed by brilliant sun at Christmas. During abalone season, when divers routinely lose their lives (three so far at Sea Ranch this year), bulbous wet-suited figures with inner tubes around their waists scramble down rocks to plunge into the churning kelp-ridden abyss.
Like the weather, houses set a tone. And it was an exhilarating one in Barn Dance, one of 17 Binker Barns designed by William Turnbull, who died in 1997 and designed the houses to be replicated around Sea Ranch. As soon as my husband, Roger, and I opened the wooden door — artfully carved in quilt-like patterns — we knew we'd hit pay dirt.
The house is poetry in wood, a beautifully fashioned breakfront in architecture. Built like a barn, with plank walls and crisscrossing beams with exposed bolts, it felt like a totally chic abstraction of Nebraska, with an airy central space soaring to the roof and a staircase winding up to an interior bridge leading to the bedrooms. The dining area and kitchen had me convinced I could cook like Thomas Keller. They were enfolded in lustrous Douglas fir, with light streaming ethereally through clerestory windows.
Roger promptly deposited himself on a lounge chair beside the fireplace, becoming positively ecstatic when he discovered the owner's voluminous CD collection, including the obscure "Veedon Fleece"*/ by Van Morrison, with whom he is obsessed. Shortly thereafter he proclaimed, "I want to live in a Turnbull house!"
Warmed by radiant-heat floors, I cracked open the guest register, in which the owners had charmingly chronicled their own escapades, including a week of nonstop rain in which they hunted for mushrooms and watched bygone episodes of "The West Wing."
Gualala, a village nearby, offers escape valves for the stir-crazy: a couple of excellent restaurants; a fine-foods store, a bookstore, a first-rate crafts gallery and even an au courant design store, Placewares (Mendocino and the Anderson Valley wineries are a curvy hour-and-a-half drive away).
The most popular hangout at Sea Ranch is the Twofish Baking Company, which has morphed into an ad hoc community center for the growing number of full-timers, many of them aerobic grandparents.
But there remains a psychic divide between people who are drawn to Sea Ranch for its history and those who regard it as a generic seaside resort. The impending transformation of the lodge is causing some fear and loathing. "A highly processed destination resort, with all sorts of pleasure amenities, will bring people with different expectations and a less deep commitment to the place," said Kenneth Wachter, a demography professor at Berkeley who was walking his poodle not far from the house he and his wife bought on their honeymoon 26 years ago.
Arguably, Sea Ranch's most hallowed ground are the Hedgerow Houses, a group of genteel rustic shacks that Joseph Esherick tucked inconspicuously into a row of wind-blown cypress trees not far from Black Point Beach.
Along with Condominium One, they define the Sea Ranch style. Esherick, a master craftsman of space who died in 1998, used to say that "the ideal kind of building is one you don't see."
For renters, the prime Hedgerow House is the one that Esherick designed for himself, a sophisticated cottage with ship-like woodwork that seems to all but disappear into the meadow grasses.
A mere 875 square feet, the house is made from inexpensive materials though its spatial arrangements are quite complex. Ironically perhaps, the current owner, Jim Friedman, builds $10 million to $20 million 20,000-square-foot houses for a living. "The Esherick house has taught me that really great architecture doesn't require gilding a lily," he said.
Sadly, the house was already spoken for, so the rental agency, Sea Ranch Escape, suggested an alternative Hedgerow House also designed by Esherick.
So it was a crushing blow to open the door and find pickled woodwork, wall-to-wall carpeting and Venetian blinds — a Motel Esherick. Trying to cheer me up, Roger gamely kept chanting "location, location, location."
Nevertheless, I began to suspect that our abode wasn't even an Esherick because the conventional arrangement of spaces was so un-Esherick-like. Several days later, a Deep Throat with access to the historic files confirmed that the house was designed in the manner of Esherick by Van Norten Logan, a little-known architect turned land investor.
It was then that I felt the palpable presence of the ghost of Joe Esherick returning to my beloved Sea Ranch.
"Never trust a real estate agent," he whispered.
IF YOU GO
In the Zen sense, it's hard to go wrong with any house at Sea Ranch (just don't forget to bring your own sheets and towels). The nicest agency to deal with is Ocean View Properties (707-884-3538; www.oceanviewprop.com; $200 to $250 a night for William Turnbull's Barn Dance). Rams Head Realty rents a number of homes at Sea Ranch, including the Redwood Cottage Walk-in Cabin (800-785-3455; www.ramshead.com; $342 for two nights). Sea Ranch Escape (707-785-2426; www.searanchescape.com) has the largest collection of prime rentals by classic architects, including Unit 9 ($468 to $525 for two nights ) and the real Esherick house ($761 for two nights).
Sea Ranch 101: "The Sea Ranch" by Donlyn Lyndon and Jim Alinder (Princeton Architectural, 2004); "The Sea Ranch ... Diary of an Idea" by Lawrence Halprin (Spacemaker, 2002); "The Place of Houses" by Charles Moore, Gerald Allen and Donlyn Lyndon (University of California, 1974); "William Turnbull: Buildings in the Landscape" (William Stout, 2000); "Appropriate: The Houses of Joseph Esherick" by Marc Treib (William Stout, 2008). The Sea Ranch Association Web site (www.tsra.org) is also an excellent resource.
By Carlos H. Conde
Monday, December 15, 2008
MANILA: At least 23 people died and an additional 33 were missing after an overloaded passenger ferry capsized off a northern Philippine province, the coast guard said Monday.
The authorities said they had recovered 23 victims who had drowned after huge waves overturned the Maejan, an interisland ferry carrying 102 passengers, just 50 meters, or 165 feet, off the shoreline of Cagayan Province north of Manila on Sunday morning. Most of the survivors managed to swim to shore.
Officials said the area of the tragedy is known for its big waves and strong current. The Associated Press quoted Joseph Llopis, the mayor of Calayan Island, the origin of the ferry, as saying that hours before the ferry capsized, "three children fell into the sea as the vessel was lashed by huge waves." One of the dead was a 1-year-old child.
Llopis said many of the victims were traveling to the mainland to buy food for Christmas. "There'll be no festive mood. Many of the dead were breadwinners," Llopis said, according to The Associated Press.
The coast guard, in a statement, said the Maejan was buffeted by "big waves and strong current until it was dragged and capsized." The local police said that the ferry was entering the mouth of the Cagayan River when it capsized. Rescue boats and small planes had been dispatched to look for survivors.
Vice Admiral Wilfredo Tamayo, chief of the Philippine Coast Guard, said the Maejan was authorized to carry only 50 passengers and that, according to him, criminal charges would be filed against its owners for overloading the ferry.
Accidents at sea are common in the Philippines, particularly toward the end of the year, when the monsoon season peaks.
Last month, a passenger ferry capsized in the central Philippines after being struck by strong winds. More than 40 people were killed.
In June, the Princess of the Stars, a passenger ship with 850 passengers and crew, sank in the central Philippines after being lashed by Typhoon Fengshen. Only 57 people survived; the authorities are still trying to recover bodies.
The world's worst sea disaster since World War II occurred also in the central Philippines, in December 1987, when the passenger ship Dona Paz collided with an oil tanker, killing more than 4,300 people.
Apart from negligence and the unsafe state of many passenger vessels, storms and typhoons play a crucial role in these tragedies. About 20 storms and typhoons batter the Philippines every year.
On Monday, officials said a tropical storm was nearing the country and threatens to turn into a typhoon in the following days.
Reuters
Monday, December 15, 2008
BERLIN: German police have arrested two suspects over the stabbing of a German police chief and are investigating several other people active in the neo-Nazi scene, prosecutors said on Monday.
Alois Mannichl, 52, police chief in the southern city of Passau, was seriously injured when he was stabbed in front of his home on Saturday. Police said the attacker made threats with language used by far-right supporters.
"Mr Mannichl's description fits the two (arrested people). We're now investigating them," prosecutor Helmut Wachl was quoted as saying by Passauer Neue Presse daily.
The stabbing of Mannichal, who had taken a firm stand against far-right supporters in recent years, shocked many in Germany.
"This is an escalation of violence to a level we haven't seen in the right-wing extremist scene ... in decades," said Bavarian Interior Minister Joachim Herrmann, adding Mannichl had been a target of far-right hostilities in past months.
Politicians from across the political spectrum condemned the attack, with some calling for tougher sanctions on neo-Nazi crime and others saying Germany should reconsider a ban on the far-right National Democratic Party (NPD).
Right-wing parties including the NPD, which Germany's Office for the Pretotection of the Constitution describes as racist and anti-Semitic, have made gains in local elections, particularly in regions with high unemployment.
Germany's top policeman said in August German neo-Nazis appeared to have made a tactical shift and were increasingly turning to violence.
Media said Mannichl's attacker had rung his victim's doorbell and told him: "Greetings from the national resistance, you left-wing police pig. You're not going to trample on our comrades' graves any more."
He then rammed a knife into his body, reports said.
A few months ago, Mannichl had ordered the arrest of several neo-Nazis after individuals tried to place a flag with a swastika onto the coffin of a far-right activist at his funeral, media have reported.
Although Nazi symbols, such as swastikas, are banned in Germany, parties like the NPD can get public funding because they are legitimate political parties.
(Reporting by Kerstin Gehmlich; editing by Ralph Boulton)
Reuters
Monday, December 15, 2008
By James Kilner
A Moscow court jailed a group of skinheads on Monday for murdering 20 migrants in a racist killing spree, part of a wave of violence against immigrants in Russia.
Attacks on migrant workers have risen this year and political analysts fear the global economic crisis, which is hitting Russia hard, may aggravate the problem.
Led by a student of religious icon painting, the seven teenaged skinheads killed the migrants and tried to murder 12 others between August 2006 and October 2007.
"Even in Russia, this was an extraordinary attack because of the number of crimes committed," said Alexander Verkhovsky from the SOVA Centre, which tracks racism in Russia.
Television pictures from the court showed the group's members with close-cropped hair standing behind a glass wall grinning and smiling.
The judge sentenced them to between six years' imprisonment and 20 years' hard labour.
Resentment towards migrants, mainly from the former Soviet states in Central Asia and the Caucasus, has grown among the margins of Russian society since the break-up of the Soviet Union in 1991.
Now analysts worry that that global economic crisis which has halted a decade-long economic boom in Russia may boost frustration against migrants further.
"Of course there is a high chance that attacks on migrants will increase, partly because there will be more migrants here looking for work and partly because the press has been telling people that immigrants are taking their jobs," said Gavhar Djuraeva, from the group Migrants and the Law.
While pledging to fight racism, Prime Minister Vladimir Putin said immigrant quotas should be halved, a slogan pro-Kremlin youth groups have since echoed in protests.
Last week, Tajikistan made a formal complaint to the Russian government after the severed head of a Tajik worker was found near Moscow. A nationalist group said it had beheaded the worker in retaliation for the rape of a Russian girl.
Many of the estimated 10 million migrants work on construction sites, in markets and as road sweepers in Russia and attacks on them have already risen this year, according to figures from the organisation Moscow Human Rights Bureau.
Its figures show that from January to October, 113 migrants were killed in racist attacks and 340 were injured -- up from 74 dead and 320 injured for the whole of 2007.
Verkhovsky from the SOVA Centre said there was a difference between a surge in attacks by racists, who often film the events on their mobile phones to boast of their exploits, and by people blaming immigrants for the economic slowdown.
"More people may support nationalist groups because of the economic crisis but they are unlikely to participate in violent attacks," he said.
(Editing by Andrew Dobbie)
By Robbie Brown
Monday, December 15, 2008
ATLANTA: As Georgia faces a potential $2 billion budget deficit, a state senator has created a stir with a plan for reducing education spending: merge two historically black universities in Albany and Savannah with nearby mostly white institutions.
The proposal was made this month by Seth Harp, a Republican who is the chairman of the State Senate Higher Education Committee, and quickly drew condemnation from many black educators, politicians and alumni.
But supporters say the plan would not only save millions of dollars but also reduce racial segregation in state-run universities.
"Institutions supported by taxpayers should be diverse, educating men and women of all colors and creeds," wrote Cynthia Tucker, the Pulitzer Prize-winning editorial page editor of The Atlanta Journal-Constitution, who is black. "There is no longer good reason for public colleges that are all-white or all-black."
The plan appears unlikely to be adopted by the Georgia Board of Regents, in part because of the vocal opposition from black educators.
"Historically black institutions play a vital role in the community, the state and the nation," said Dwayne Ashley, the president of the Thurgood Marshall Scholarship Fund, which supports black colleges. "They provide educations to a number of young men and women who might not otherwise attend college."
Research suggests that black students often perform better academically at historically black universities. These institutions, which are legally required to admit students of all races, achieve graduation rates similar to mostly white universities, even though they often admit students with less preparation, said Marybeth Gasman of the University of Pennsylvania, an expert in black higher education.
Harp's plan would merge the historically black Savannah State University with Armstrong Atlantic State University, and the historically black Albany State University with Darton College. In both cases the black schools would keep their names.
"When you look at Savannah and Albany, those communities really need only one school each," Harp said. "The fact that two of these schools are historically black has less to do with my proposal than the economics."
But he added, "We really need to close the chapter of segregated schools and create a unified system."
The Board of Regents is not seriously considering the plan, said John Millsaps, a spokesman for the board. "It's not really on the radar screen," he said. "There's not a lot of traction. It's mainly a proposal by one individual."
But that did not stop an outpouring of opposition. Alumni and faculty members of the black universities sent letters of protest to the governor, and Ruby Sales, the founder of SpiritHouse Project, a social justice organization, drafted a petition to save the black schools.
"This proposal would continue a long history of white officials implementing an economic plan that disintegrates institutions in the black community," Sales said. "Black educational history has been decimated under these types of desegregation plans."
Harp's proposal is not without precedent. During desegregation, white and black schools were routinely merged, including the landmark 1979 union between the historically white University of Tennessee campus in Nashville and the black Tennessee State University.
But Peter Sireno, the president of Darton College, said in a statement that the school was "surprised by the idea suggested by Senator Harp."
"It is my understanding that discussion of institutional mergers is not on the Board of Regents' agenda at this time," Sireno said. "If and when it is on the agenda, we will address it at that time."
By Richard Pérez-Peña
Monday, December 15, 2008
SAN JOSE, California: Dean Singleton expanded his newspaper empire at the worst possible time, in the worst part of the United States he could have chosen, and he has been paying the price ever since in plummeting advertising and shrinking papers. Yet somehow, even in today's adverse climate, he professes optimism.
In 2006 and 2007, as prices for newspapers were peaking, Singleton's company, MediaNews Group, bought this city's daily, The San Jose Mercury News, and more than 30 smaller San Francisco Bay Area papers. He gambled his company on California just as the bottom was about to fall out for newspapers, especially here.
"In retrospect, the timing was not good," said Singleton, the chief executive and vice chairman and a major shareholder in the company, which is privately held. "But in our business, you buy newspapers when they're for sale. If we could have foreseen the current economic downturn in the state, it might have changed our views, but we couldn't foresee that."
The news about his industry seems to get worse by the day. Last week, Tribune Co. filed for bankruptcy protection.
And Moody's Investors Service said MediaNews was approaching the point where its debt, almost $1 billion, would be nine times its annual earnings before interest, taxes, depreciation and amortization - technically putting the company in default.
MediaNews's credit rating is far below investment grade, indicating a high risk of actual default, but Singleton insisted that the debt was manageable. He said MediaNews's primary lender, Hearst, was also a major shareholder, with a significant interest in keeping MediaNews afloat.
"I don't see any other large newspaper company in danger of following Tribune," which was much more leveraged than its peers, Singleton said.
In a rare burst of good news for him, new industry miseries could work to his benefit - outside California - by weakening or eliminating competitors to two of his newspapers, The Denver Post in Colorado and The Pioneer Press in Minnesota. In the first case, E.W. Scripps Co. recently put The Rocky Mountain News up for sale and said the paper might close; in the second, The Star Tribune, which has defaulted on its debts, said it needed to cut $30 million in costs and win concessions from its unions.
MediaNews had a lot of company in buying newspapers just as revenue began to collapse, for prices that, even then, analysts warned were inflated. McClatchy bought Knight Ridder; Tribune Co. bought all its own stock to go private; separate private investors bought The Star Tribune and The Philadelphia Inquirer; and there were many smaller deals. All those buyers are suffering now, and newspapers cannot find buyers even at a fraction of the prices offered two years ago.
Despite the risks, Singleton contends that in the long run, California - particularly the Bay Area - is the place to be.
"I have no doubt that The Mercury News's revenue base will perform better when things turn around than almost any newspaper in the country," he said.
Others are not so sure. "The Bay Area has been the canary in the newspaper coal mine, and that was recognized a long time ago by a lot of people," said Ken Doctor, a newspaper analyst at the firm Outsell. "The impact of the Internet has been heavier here and earlier here than anywhere else in the country."
Sites like Craigslist and eBay, which have long fueled the migration of advertising to the Internet, began in the Bay Area, and are more entrenched here than in any other part of the United States.
Already known for squeezing costs as hard as anyone in the industry, Singleton and his team have been cutting spending at a furious pace, trying to keep pace with tumbling revenue.
His detractors among analysts and journalists concede that in this market, any owner would have to make deep cuts. But they say he was already inclined to a slash-and-burn approach that is little more than a prescription for having the newspapers do steadily less, and do it less well.
"There's no newspaper in the country that I know of that's not suffering," said John McManus, a journalism professor at San Jose State University. "But Dean Singleton has hollowed out the Mercury News."
MediaNews, a national chain based in Denver, has been concentrating on California since the 1990s. It built two extensive networks, in the Bay Area and in Southern California, with dozens of small suburban papers and a few larger ones like The Oakland Tribune and The Los Angeles Daily News.
But a complex set of deals in 2006 and 2007 greatly increased the company's California presence. They gave Singleton control of his two largest California papers, The San Jose Mercury News and the nearby Contra Costa Times; a string of small daily and weekly Bay Area papers; and The Daily Breeze, near Los Angeles.
Singleton, 57, has assembled what was intended as his greatest achievement, an arc of papers around the Bay, dominating most of the region, with the Hearst's troubled San Francisco Chronicle in the middle. It allowed the first large-scale application of his belief that pooling resources - including journalists - among several newspapers in the same region would cut costs.
Many functions have been consolidated, like printing five newspapers at the San Jose plant. But the question now is whether the savings are enough to avert debt default or a fire sale of assets.
"We do make money, but I couldn't get into how much," said Mac Tully, publisher of the Mercury News. "We're revenue-challenged, no question." Singleton said much the same about the company as a whole.
The company does not publicly report financial data, but MediaNews executives acknowledge that its revenue, like the entire industry's, had fallen sharply. Last summer, the company negotiated new terms with its creditors and paid down some debts.
"We still have more leverage than we wish we had," Singleton said, referring to the company's debt. "I don't know if we bought enough room for the long term or not, but we certainly believe we did."
By David Carr
Monday, December 15, 2008
For the past few years, newspapers have been smacked around for lacking relevance, but the industry has finally found a compelling spokesman: Rod Blagojevich, the governor of Illinois.
According to the criminal complaint filed by the U.S. attorney, Blagojevich, while allegedly trying to set a price for a U.S. Senate seat, also spent a significant amount of time going after the press, especially The Chicago Tribune, whose editorial page had been calling for his impeachment.
The governor, a Democrat, said he would withhold financial assistance from the paper's owner, Tribune, in its effort to sell Wrigley Field, a baseball stadium in Chicago, unless the newspaper got rid of the editorial writers. "Our recommendation is fire all those (expletive) people, get 'em the (expletive) out of there and get us some editorial support," he told his chief of staff, John Harris.
Who says the modern American newspaper doesn't matter?
There is no evidence that Sam Zell, the chief executive of Tribune, or any of his colleagues followed through on Blagojevich's demand for retribution. Gerould Kern, editor of The Chicago Tribune, said Sunday, "Since I have been editor, I have not been pressured in any way on our coverage of the governor, our editorial page positions or the staffing of our editorial board." Tribune has acknowledged that it received a subpoena but declined to comment further.
In a city and state where corruption is knit into the political fabric, a solvent daily newspaper would seem to be a civic necessity.
But if another governor goes bad in Illinois - a likely circumstance, given the current investigation and the fact that the last governor, George Ryan, is serving six and a half years on corruption charges - what if the local paper were too diminished to do the job?
It is not an implausible scenario. Last week, it was reported that the two daily newspapers in Detroit, a city whose politicians have been known to get their hands in the till as soon as voters pulled the lever, will cease home delivery on most days of the week and print a pared-down version for newsstands those days, with cuts in staff to match.
And on Dec. 8, the day before Blagojevich and Harris were arrested, Tribune, which has almost $13 billion in debt, filed for bankruptcy protection. It was less than a year after Zell, a man with a fondness for distressed assets, took control of the Tribune chain - which owned 11 other newspapers, including The Los Angeles Times, and 23 television stations - in a deal structured around an employee stock ownership plan that involved $8 billion in new debt.
Things have not gone as planned since then. The worst ad recession since the Great Depression, combined with that crushing debt, has compelled the company to sell assets - Newsday, a daily newspaper on Long Island, New York, was sold last spring for $650 million - and cut staff.
The Chicago Tribune newsroom, which had a staff of 670 in 2005, has gone through several rounds of cutbacks and buyouts that has left the newsroom with 480 employees.
Some of the losses have been dear. This summer, Maurice Possley, a Pulitzer Prize-winning reporter on criminal justice, left, in part because he didn't believe the newspaper was still interested in the kind of investigative stories he worked on.
In November, John Crewdson, another Pulitzer-winning reporter, was laid off from the newspaper's Washington bureau. Two of the newspaper's five staff members who covered state government are now gone. Ann Marie Lipinski, the newspaper's editor and a longtime supporter of The Chicago Tribune's aggressive brand of journalism, left last summer, and in September, a redesign with fewer articles arrayed over less space was put in place.
Almost since the day Blagojevich took office, The Chicago Tribune has shown readers that the governor's primary interest was not always the public interest. And the paper's reporting helped expose the outside clout of Antoin Rezko, the convicted fixer with ties to both Blagojevich and President-elect Barack Obama.
Although much of the current investigation is being led by the office of the U.S. attorney, Patrick Fitzgerald, the newspaper did its own work, including pointing out that the governor's wife, Patti, had received more than $700,000 in real estate commissions, with much of the money coming from people who did business with the state. In the indictment, she also pays tribute to the newspaper's effectiveness, shouting in the background as her husband talked about Tribune, which also owns the Chicago Cubs baseball team. "Hold up that (expletive) Cubs (expletive)," she said. "(Expletive) them."
It is the highest sort of compliment, if rather profane.
This week, the paper continued to work every angle on the Blagojevich investigation, and follow some of their own. But some people at the newspaper, and those who have left, wonder whether The Chicago Tribune's commitment to covering corruption is sustainable.
"I couldn't be prouder of the people that are there and the job that they have done," said David Jackson, an investigative reporter who worked on the Rezko coverage and is now on a Nieman Fellowship at Harvard. "But both as a citizen and a journalist, you have to wonder whether the paper will have the resources moving forward to continue to do that work. I am worried that the paper will be so diminished under Zell that it won't be able to play that role."
Crewdson was not so concerned. In an e-mail message, he said the financial condition of his former newspaper would not "have kept Fitzgerald from finding out what he wanted to know and going wherever he wanted to go."
Financial problems aside, Zell has publicly ridiculed the focus on long-term investigative projects, once telling an investors' conference in New York, "I haven't figured out how to cash in a Pulitzer Prize."
Kern, the current editor, said that if anything, the past week confirmed that The Chicago Tribune had the conviction and muscle to cover its backyard aggressively.
"This was an extraordinary week for The Chicago Tribune," he said. "On Monday, the company filed for bankruptcy protection, and on Tuesday, this huge story broke. There are two messages there. One, that the business model has to be reinvented and two, the importance of doing public service reporting. In the future, we will be doing fewer things and doing them better, and this kind of reporting will be a pillar of what we continue to do."
Possley, who left the newspaper last summer, said he was encouraged that someone, at least the current governor of Illinois, felt that the biggest daily in Chicago was important, however reduced its circumstance.
"What The Tribune was doing with its reporting and on its opinion page was clearly a source of deep concern to Blagojevich and in a sense, you love to see that," he said. "You have to worry when they start not to care. Then they begin to act as if they are in a vacuum, and that won't be good for anyone."
By Monica Davey
Monday, December 15, 2008
CHICAGO:
Governor Rod Blagojevich is a polished speaker who can win over elderly women at luncheons in southern Illinois with his earnest attention, and eloquently recite historical anecdotes from the lives of the leaders he says he most admires - Theodore Roosevelt, Abraham Lincoln, Robert F. Kennedy, Alexander Hamilton, Ronald Reagan.
And yet, Blagojevich, 52, rarely turns up for work at his official state office in Chicago, former employees say, is unapologetically late to almost everything, and can treat employees with disdain, cursing and erupting in fury for failings as mundane as neglecting to have at hand at all times his preferred black Paul Mitchell hairbrush.
He calls the brush "the football," an allusion to the "nuclear football," or the bomb codes never to be out of reach of a president.
In 1996, a Democrat who shared a campaign office with Blagojevich, John Fritchey was told that his stepfather had suffered a serious stroke. He walked over to Blagojevich, who was making fund-raising calls, and shared the news.
"He proceeded to tell me that he was sorry, and then, in the next breath, he asked me if I could talk to my family about contributing money to his campaign," recalled Fritchey, a state representative and a critic of the governor. "To do that, and in such a nonchalant manner, didn't strike me as something a normal person would do."
Yet even political figures like Fritchey say they were stunned by his arrest last week on charges of conspiracy and soliciting bribes.
Many who know the governor well say that as Blagojevich's famed fund-raising capability has shrunk in recent months and, as his legal bills have mounted after years of federal investigation, he seems to have transformed from what Fritchey considered callous into something closer to panicked or delusional.
"It's hard to imagine what could have been going through his head for this to reach such a brazen point," Fritchey said. "The irony is, had he simply delivered on the promises on which he campaigned rather than pursuing his belief that success would come through an abundance of fund-raising, his path might look like he wanted it to."
Now, officials at all levels are calling for his resignation or impeachment. And the public image he had cultivated as an agent of change in Illinois has been subsumed by the stories about his conduct in private. Today, he barely has an ally in sight.
Neither Blagojevich's spokesman nor his lawyer, who has said that Blagojevich feels that he is innocent of the charges against him, would consent to be interviewed.
Whatever else may have come apart within Blagojevich in recent months, one quality, unabashed ambition, has been a constant, his colleagues and his critics say. Even with approval ratings that had sunk to 13 percent as details of the federal investigation into his administration had seeped out over the past three years, Blagojevich, incredulous prosecutors say, still spoke in his recorded conversations in the past six weeks of the possibility of remaking his political future and running for president, perhaps in 2016.
Blagojevich rose to power from unlikely roots. His father was a steelworker from Serbia and his mother collected tickets for the Chicago Transit Authority.
He graduated from Northwestern University, and received his law degree from Pepperdine University, working to help pay for it.
Back in Chicago, he worked briefly as an assistant prosecutor. But Blagojevich's political career may have been sealed the day he met his future wife, Patti Mell, at a fund-raiser in 1988 for her father, Richard Mell, a ward chief on the Northwest Side and a powerful alderman for more than three decades. Three years later, he was doing precinct work for Mell. Not long after, Mell suggested he run for state representative - with the help of Mell's vast ward operation.
Blagojevich spent four years in the state House, six years in the U.S. House of Representatives, and then, in 2002, he ran for governor.
The moment could not have been more welcoming for a Democrat. Governor George Ryan, who was by then engulfed in a corruption scandal, did not run for re-election, and the Republican who did had a long record of public service but an unfortunate last name: Ryan.
Blagojevich focused his campaign on pledges of reform and clean government, and won. Once in office, even amid accusations of campaign donations being exchanged for state jobs, Blagojevich continued to promote himself as a lonely fighter against the gargantuan pressures of lobbyists and lawmakers - pressing for tougher ethics laws, appointing inspectors general and sending state employees to "ethics training."
Before the cameras, Blagojevich was a cheery presence - the No. 1 Cubs fan, an Elvis buff, an avid runner who jogged through the annual twilight parade before the State Fair, darting back and forth to shake as many hands as he could find.
Behind the scenes, though, members of Blagojevich's staff saw a different man: one who was deeply concerned about his appearance (particularly his signature black hair, which he ignored suggestions to change) and who usually worked from his home or his North Side campaign office and could often be seen, mid- or late-morning, making a run of 6 miles, or 10 kilometers, trailed by his security team.
"God forbid you make a mistake," said one longtime former employee. In December 2003, the employee recalled, Blagojevich flew into a rage because he thought he was late for a holiday tree-lighting ceremony in Springfield, and his two young daughters - who were visiting with Santa Claus in the parlor of the Governor's Mansion - did not have their shoes on yet. "You're trying to sabotage my career!" the employee recalled Blagojevich screaming at staff members, as he charged into the parlor. "You're the worst!"
At Christmastime in 2004, a nasty spat cropped up between Blagojevich and Mell and the fallout stretched well beyond the family, offering some of the clearest public hints of Blagojevich's coming troubles.
Blagojevich shut down a landfill operated by a relative of Mell, saying it was taking types of waste it was not licensed to accept.
Mell accused Blagojevich of shutting the facility as a personal vendetta against him, and then accused his top fund-raiser of trading appointments to state commissions and boards for campaign donations, just the image Blagojevich had been trying to avoid.
After his arrest Tuesday, Blagojevich met with almost no one, other than lawyers and ministers. In 2005, not long after his spat with his father-in-law was made public, setting off more corruption investigations, Blagojevich reflected on his work and said it had changed him in a way.
"What I've discovered since I've been governor is that there's a certain loneliness to this job," he said in an interview. "There's a loneliness and a certain sadness because you have to isolate yourself to some extent. There are so many people who want so many different things from you."
By Richard Pérez-Peña
Monday, December 15, 2008
Politico, the upstart news source from Washington, and Reuters, the venerable wire service, have joined forces to offer articles to newspapers and sell advertising on the papers' Web sites, the latest step in the rising competition among electronic news media to fill the void left by the shrinking print business.
Politico recently began offering papers a limited number of free articles, and beginning this week the papers that sign onto that service, the Politico Network, will also see the stream of daily output from Reuters and choose up to 10 articles and 10 photographs each day to use in print or on the Web.
Politico would gain the right to sell ads on the newspapers' Web pages containing the Politico and Reuters articles - though not the printed pages - and would share the revenue with the papers.
At the same time, Reuters, which also has an editorial partnership with the International Herald Tribune, will begin carrying most of Politico's work on its news wires.
"Admittedly, this is an experiment," said Jim VandeHei, executive editor of Politico. "But we're sure there's a need."
At the same time, CNN is trying to build a wire service for print media to compete with the dominant player in that field, The Associated Press, and news services focused on finance, like Bloomberg News and Dow Jones Newswires, are expanding their coverage of general-interest news. Meanwhile, newspapers face new competition from Web-based local news operations that are springing up.
The new service would be free for six months, and the partners could charge for the Reuters content after that.
But until then, Politico would offer Reuters a foot in the door at a large number of U.S. news operations, said Christoph Pleitgen, the managing director of Reuters News Agency, which is based in London.
He said his service had just 15 newspaper clients in the United States, compared with more than 1,400 for The Associated Press. The Politico Network, introduced in September, already has more than 60 newspapers and more than 40 broadcasters as clients.
"If we can, through this, engage with potential clients we don't have a relationship with, that's fantastic," he said. "There absolutely is an untapped market."
Politico, created less than two years ago, hired a staff that included well-known newspaper and magazine journalists and quickly grew into one of the most popular U.S. sources of news on Washington and the political campaigns, with more than three million unique visitors each month.
A mostly online operation that also has a small-circulation newspaper, Politico is owned by Allbritton Communications, which has a chain of television stations.
Like The Associated Press, Reuters is a global news service, founded in the mid-19th century, with thousands of journalists, but Reuters is not a serious competitor for U.S. clients. It is especially strong in business and international coverage, but it has a fraction of The AP's resources in the United States, where it does not cover local news, an AP staple.
Politico's informed political coverage, sometimes spiced with attitude from its writers, complements Reuters' sober style and Washington coverage that often reads as if written for a non-U.S. audience. And as other news organizations shrink or abandon their Washington bureaus, Politico is expanding from a staff of about 85 people before the election to an expected 105 to 110 in the next few months.
Politico is pitching its network to newspapers as an important new revenue stream, but it remains to be seen how well it can deliver on that promise. A paper can agree to use up to five Politico articles a week and receive 50 percent of the ad revenue that Politico sells on those Web pages; or up to 10 articles a week, and receive 40 percent; or up to 15 articles, and receive 30 percent.
Newspapers fare best when they can sell their online ad space themselves, but they typically sell less than half that space. They turn the rest over to ad networks, which pay the papers a small fraction - often less than 5 percent - of what papers earn on their own.
Roy Schwartz, Politico's vice president for business development and marketing, said it could get much higher rates than the networks by offering a specific, generally upscale audience, rather than the scattershot approach of the networks. Where a large paper might get $20 for every thousand readers for an ad, he said, "we're targeting $10," he said, with up to half that amount going to the paper. By comparison, the same paper might get $1 or less from an ad network.
Although the Politico Network is three months old, it has barely begun selling ads on newspaper sites. And with the U.S. economy in recession, the ad market is contracting, even online.
"We're confident there's a market," Schwartz said. "We'll find out."
Reuters
Monday, December 15, 2008
By Emma Graham-Harrison and Yu Le
A Chinese newspaper reporter investigating a suspicious real estate deal has not been seen since hotel security tapes showed five men pushing him into a car two weeks ago, his son and a newspaper said on Monday.
The case appears to be the second in recent weeks involving journalists who colleagues said were targeted for probing graft in a part of north China rich in both coal and corruption claims.
Guan Jian, reporter for the small Network News (Wangluo Bao) paper, was seized from a hotel lobby in north China's Shanxi province on December 1 and forced into a waiting four-wheel drive.
Video footage from the Jinjiang Inn, published in the Beijing News, showed Guan in the lobby when the men arrived. He has not contacted his family since, his son told Reuters.
"His friends couldn't reach him, his colleagues couldn't either. At first we thought he had just gone on a reporting trip, but then after several days when he still wasn't in touch, we got worried," Guan Yufei said in a phone interview.
He travelled to Shanxi to look for his father, who was in the provincial capital, Taiyuan, investigating claims of illegal land-use by a real estate company with official connections.
The younger Guan came back with only tapes of the apparent kidnapping, but said he was hopeful his father was still alive.
"We have basically confirmed that he has not had a 'mishap'," Guan told Reuters. He declined to say more for fear of jeopardising the search for his father.
The Network News held a meeting to discuss Guan's disappearance and decided the best course of action was to work with local police to try to find him, a colleague told Reuters.
Police in Taiyuan told Reuters that they were investigating the case, but declined to comment further.
RISKS TO JOURNALISTS
Guan's disappearance highlights the danger to reporters probing corruption in a country where officials are often close to business while also wielding power over police and courts.
Killings of reporters are virtually unheard of, but beatings, detentions and arrests are a risk for those who take on the powerful.
Guan's case follows the controversial arrest of a reporter from powerful state broadcaster China Central Television who was seized from her home in Beijing earlier this month by Shanxi prosecutors who claimed she took bribes.
The television reporter, Li Min, was investigating the prosecutors for a story when they travelled to Beijing to seize her, Chinese media said.
Provincial officials are not always able to extend their local power to control journalists in Beijing, whose employers often have government connections of their own.
A lawyer working for Li's family said that she appeared to be the victim of a "terrifying" abuse of power to silence her work.
"This is a crude trampling on citizens' constitutional rights to exercise oversight and criticise (officials)," the lawyer, Zhou Ze, said in a written statement.
A communist official from northeastern Liaoning province was sacked at the start of this year after he accused a journalist in Beijing of libelling him and ordered police to arrest her.
(Editing by Nick Macfie)
Bloomberg News
Monday, December 15, 2008
LONDON: Prime Minister Gordon Brown on Monday increased the amount that the British government would make available for lending to first-time home buyers by a third in an effort to help the struggling construction industry.
The increase, which brings the amount to £400 million, or about $600 million, was announced as the chancellor of the Exchequer, Alistair Darling, was seeking the support of the biggest British banks for a £1 billion mortgage program aimed at preventing home repossessions.
Darling and Business Secretary Peter Mandelson are to meet chief executives from leading banks at the Treasury on Tuesday to discuss measures to increase lending to homeowners, small companies and consumers. Darling also published details Monday on how the mortgage package would work.
The money will be lent to first-time home buyers interest free for five years and can be used as a deposit for up to a third of the price of a house. The plan will be offered on selected unsold properties on developers' books.
The government said in September that it would lend £300 million for the program. With house prices falling and expected to fall further next year, buyers taking advantage of the offer risk owing more than the immediate value of their property.
"It's clear that the long-term demand for housing remains high," said Michael Ellam, a spokesman for Brown. "It's for individuals to decide from their own circumstances what to do."
The group meeting on Tuesday, known as the Lending Panel, will begin work on solutions to unclog lending channels. "We are going to do more in the next few days," Brown said in Parliament. "We want to do everything we can to move the economy forward."
The mortgage guarantee is meant to provide households with confidence that they will not lose their homes even if they become unemployed.
Under the plan, the Treasury will guarantee payments to banks, allowing homeowners who would normally have been refused a payment holiday to defer "a proportion" of payments by up to two years. Darling now wants a concrete commitment from the eight largest British lenders, who account for 70 percent of mortgages, to sign up to the plan.
The measures follow Brown's announcement of a £50 billion program to bolster the capital of British banks and other initiatives to revive lending to businesses and consumers. The government is frustrated that banks continue to ration credit even as cash from the rescue package begins to flow.Aid plan lifts Irish banks
The promise of a bailout valued at €10 billion, or $13.6 billion, breathed some life into battered Irish bank stocks on Monday, but mounting criticism over a lack of detail from the government limited the stocks' gains, Reuters reported from Dublin.
The government said Sunday that it would bolster bank capital by tapping funds set aside during the economic boom to cover future state pension obligations. Finance Minister Brian Lenihan said he would meet with banks over the next few days and expected to deliver definite proposals by early January.
Reuters
Monday, December 15, 2008
LONDON: Royal Bank of Scotland Group said on Monday it had exposure through trading and collateralised lending to funds of hedge funds invested with Bernard L Madoff Investment Securities.
* If as a result of the alleged fraud the value of the assets of these hedge funds is nil, RBS's potential loss could amount to approximately 400 million pounds
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