By Nazila Fathi
Monday, December 8, 2008
Tehran: Iran said Monday that it would not abandon its nuclear program and urged President-elect Barack Obama to change America's carrot-and-stick policy toward Iran, the official IRNA news agency reported.
Hassan Ghashghavi, the Foreign Ministry spokesman, said Monday that Iran, which has repeatedly refused to suspend uranium enrichment, would not change its nuclear policy. He added that Iran expected Obama to stick to his campaign promise to change the previous administration's policy.
"What Mr. Obama said is the same old carrot-and-stick approach," he said. "He must be able to change this policy based on his slogan of "change." The spokesman said that the carrot-and-stick approach "is a failed policy" and Iran expected Obama to change the "confrontational policy to one based on interaction."
"They have to recognize our legal rights and we are willing to engage in an interaction to resolve their concerns," he said. "We need to engage in progress and development," he added.
Ghashghavi's comments were a response to televised statement by President-elect Barack Obama, who said Sunday that he would pursue the carrot-and-stick approach toward Iran.
"In terms of carrots, we can provide the economic incentives that would be helpful to a country that despite being a net oil producer is under enormous strain, huge inflation, a lot employment problems," Obama said.
"But we also have to focus on the sticks," he said, adding that to force Iran to change its behavior it may be necessary to tighten economic sanctions. The United Nations Security Council has already imposed three sets of sanctions on Tehran for refusing to halt its enrichment program.
Western countries accuse Iran of having a clandestine weapons program under the guise of a civilian one. Enrichment is a process that can be used to make nuclear bombs if the uranium is enriched to high levels. Iran contends that its program is peaceful.
Monday, December 8, 2008
JERUSALEM: Israel postponed the release of 230 Palestinian prisoners until December 15, nearly a week later than planned, Israeli and Palestinian officials said Monday.
The prisoners make up only a fraction of the 11,000 Palestinians held by Israel. The release, described by Israel as a goodwill gesture to Palestinian President Mahmoud Abbas, had been scheduled for Tuesday to coincide with the Muslim holiday of Eid al-Adha.
"There was a request from the Palestinians for logistical reasons to postpone the release for just a few days, and we, of course, have agreed," said Mark Regev, spokesman to outgoing Israeli Prime Minister Ehud Olmert.
Regev would not specify what those reasons were. Abbas has been attending the haj pilgrimage in Mecca, Saudi Arabia.
Palestinian officials denied Abbas sought the delay. Abbas aide Saeb Erekat said it stemmed from "legal" procedures on the Israeli side.
Israel announced last month that it would free 250 prisoners, but a ministerial committee Sunday approved a list of only 230 names.
Olmert's office said the prisoners would come from the ranks of Abbas's Fatah secular faction and other non-Islamist groups.
Such releases are highly emotive for Palestinians, who regard prisoners as symbols of resistance to Israeli occupation.
Israel freed nearly 200 prisoners in August.
U.S.-sponsored peace talks between Olmert and Abbas, rejected by Hamas, the Islamist group that controls the Gaza Strip, have shown little sign of progress.
(Writing by Adam Entous; Editing by Keith Weir)
Monday, December 8, 2008
SULAIMANIYA, Iraq: Kurdish rebels in northern Iraq will halt attacks within Turkey in a week-long cease-fire in honour of Eid al-Adha, the Muslim holiday, an official said on Monday.
Ruz Walat, an official with the Kurdistan Workers Party (PKK), said the cease-fire for the separatist group, which has fought for years with Turkish forces in northern Iraq and southeastern Turkey, would last until Saturday.
"PKK fighters will stop attacks inside Turkey, but if the Turkish army does not respect the cease-fire then we will fight back," he added.
Turkish forces have routinely bombed and shelled remote PKK areas in the mountains of northern Iraq, from which rebels have launched attacks into Turkey.
The PKK, which the United States and European Union deem a terrorist organisation, claimed responsibility for detonating a section of the Kirkuk-Ceyhan oil pipeline between Iraq and Turkey last month.
Also last month, U.S., Turkish and Iraqi officials held talks in Baghdad on how to restrain PKK activities.
(Reporting by Sherko Raouf in Sulaimaniya; writing by Ahmed Rasheed and Missy Ryan in Baghdad; Editing by Charles Dick)
By Monica Davey
Monday, December 8, 2008
FARGO, North Dakota: Federal Customs and Border Protection authorities are preparing to launch unmanned aircraft patrols from this state, the first time such monitoring will occur along the northern border of the United States.
A Predator B aircraft that can fly at 260 miles an hour - it was delivered to Grand Forks on Saturday - will make runs along the northern edge of North Dakota using sensors that can provide video and detect heat and changes to landscape, customs officials said.
The plane, which is about 66 feet long, or 20 meters, weighs more than 10,000 pounds, or 4,500 kilograms. It can fly as high as 50,000 feet and can stay aloft for 18 hours. The first missions, designed to locate people crossing the border illegally or avoiding ports of entry, are expected to start next month.
Similar aircraft have patrolled the nation's southern border since 2005, where they have helped lead to the discovery of more than 18,000 pounds of marijuana and 4,000 illegal immigrants, a spokesman for the agency said.
John Stanton, executive director of the service's national air security operations, said the authorities decided to move to the northern border because enough aircraft had become available. (The base cost for the Predator is about $10 million.)
Along the entire northern border, customs and border officials make about 4,000 arrests and intercept about 40,000 pounds of illegal drugs each year.
For the moment, though, the flights from Grand Forks will remain mostly along the 300 miles of the upper edge of North Dakota and a slim part of Minnesota, Stanton said.
Asked whether he expected to uncover a significant problem with drugs, border crossings or terrorism in northern North Dakota, Stanton said no one was sure. "We hope to actually use this aircraft to measure that," he said. "You don't know what you don't know."
Some experts have questioned the safety of unmanned planes. In 2006, a Predator patrolling the southern border crashed near Nogales, Arizona. No one was hurt and no property was damaged. Investigators blamed human error; the pilot was at a control panel far from the plane.
Monday, December 8, 2008
By Inal Ersan
Hundreds of thousands of Muslim pilgrims stoned walls symbolising the devil in a narrow valley outside Mecca in Saudi Arabia on Monday at the most dangerous stage of the haj pilgrimage.
Pilgrims began three days of stoning and celebrated the first day of Eid al-Adha, commemorating the willingness of biblical patriarch Abraham to sacrifice his son for God.
"It took a long time since they made us go in one line, but it was easy to do," said Osama Khashaba, an Egyptian accountant, after throwing stones at the Jamarat Bridge in a ritual that represents rejection of temptation.
The bridge in the valley of Mena just outside Mecca has been the scene of a number of deadly stampedes. The last was in 2006 when 362 people were crushed to death in the worst haj tragedy since 1990.
Saudi authorities have made renovations to ease the flow of pilgrims at the bridge, adding an extra level so that they have four platforms from which to throw stones each day.
Authorities also appealed to pilgrims this year to throw their stones at any time of day rather than only in the afternoon, as Saudi clerics have often insisted in the past.
Saudi Arabia has not so far reported any glitches in the haj, a challenging logistical feat that has been marred in previous years by deadly fires, hotel collapses, police clashes with protesters and stampedes caused by overcrowding.
"Let's make the accidents at the stoning part of history, may it never return," Saudi television said in one programme.
Elaborate crowd control measures, involving security forces and a maze of paths marked by barriers, guided pilgrims to the three spots by the bridge in the Mena valley where they threw stones they had collected overnight at a spot called Muzdalifa.
"This crowdedness is really scary," said Umm Mohammad, a Syrian pilgrim. "God willing no one will be hurt."
The government has also been tougher this year in preventing Saudis and foreign residents taking part without official haj permits. Saudi media put the pilgrim total at a relatively low 2.4 million people, including a record 1.72 million from abroad -- a sign that the crackdown has worked.
Many pilgrims returned to the Grand Mosque in Mecca after the first round of stoning rituals late on Sunday.
They crowded into the mosque in the early hours of the morning and into the day, circling the Kaaba, a cube-shaped structure towards which Muslims around the world turn in prayer.
Afterwards men had their heads shaved, according to the rules of haj. "It will take three minutes a head," said a man ushering people into a busy barbershop near the mosque.
The haj retraces the path of Prophet Mohammad 14 centuries ago after he removed pagan idols from Mecca, his birthplace, and years after he started calling people to the new faith, which is now embraced by more than one billion people worldwide.
On Sunday, pilgrims spent the day in prayer at Arafat 15 km (10 miles) east of Mecca at the climax of haj, a duty for every able-bodied Muslim once in a lifetime and one of the largest manifestations of religious devotion in the world today.
Although there have been no disasters, the Saudi authorities were not able to stop political activities that pilgrims had been called on to avoid.
Iranian television showed Iranian pilgrims on Sunday chanting "Death to America" and "Death to Israel."
Ayatollah Mohammad Mohammadi Reyshahri, head of Iran's haj mission, said Islam was now resurgent, despite some Muslims' despair "in the face of Western civilisation's onslaught."
(Editing by Diana Abdallah)
Plunging shipping costs send grains globetrotting
By Lisa ShumakerReuters
Monday, December 8, 2008
CHICAGO: Ocean shipping costs have plunged to 22-year lows, skewing global grain-trading patterns to the point where hog farmers in the United States are importing wheat from Britain and Japan has shunned American corn in favor of supplies from Ukraine.
In some countries, it is now less costly to ship grain thousands of kilometers across the ocean rather than move supplies hundreds of kilometers by barge or railroad cars. But the phenomenon should be short-lived and the United States should remain the world's top exporter of corn, wheat and soybeans, according to specialists in the sector.
"It has opened up opportunities that perhaps wouldn't have been conceivable before and one-off trades may well happen, but it is not really changing the grain flows," said David Doyle, head of wheat at Openfield, a farmers' cooperative in England.
Ocean freight rates reached a record high in May and have since fallen more than 90 percent in a few months to as little as $10 a ton to most destinations.
"Ocean shipping costs are so low that it would be cheaper for south Indian buyers to import Russian wheat than move wheat from north India by train," said one European trader who was not authorized to speak to the news media.
The consensus is that the current low freight rates will not last beyond the next 12 months. Prices will have to rise for shipping companies to remain in business and trading patterns will return to normal.
"It's the anomaly of the excess supply of grain available and the low freight," said John Kruse, managing director at Global Insight. "The U.S. is usually the most cost-effective producer of corn. I see it more as a temporary phenomenon versus a major shift in trading patterns."
Collapsing ocean shipping costs have leveled the playing field for wheat exporters, which now compete solely on the price of the grain.
Russia and Ukraine have been able to make sales far beyond their traditional markets in Europe and the Middle East, reaching out to Asia, European traders said.
In a recent and closely followed international tender for wheat shipped to Egypt, U.S. wheat freight was $11 per ton, an insignificant difference from Russian freight at $12. French and German wheat were also offered at $11-$12 per ton to Egypt.
"Ship owners are giving away bulk carriers at operating costs just to generate cash flow and to pay crews' wages," said another European trader who was also not authorized to speak to the news media. "This will expand the selling range of U.S., Argentine and Australian wheat in the Middle East market if they can compete against the Russians on prices."
Though the export season in the Black Sea region is quickly closing, the low freight rates will allow countries like Argentina and Australia to be more competitive. "It is happening all because of the freight rates," Vijay Iyengar, managing director of Agrocorp International, grain trader in Singapore. "I think it will go on for a longer period as the freight market doesn't show any signs of improving."
WTO may call meeting on Doha pact
Monday, December 8, 2008
GENEVA: Pascal Lamy, the director general of the World Trade Organization, is urging member nations to show flexibility and narrow their remaining differences as he weighs whether to call a meeting to reach a new trade deal.
Mediators of the WTO's core talks on agriculture and industrial goods have issued new negotiating texts that could serve as blueprints for possible deals, or modalities, as the WTO called them, in the seven-year-old Doha round.
"With these revised texts we are closer to our goal of clinching modalities in agriculture and industry, a stepping stone toward the conclusion of the Doha round," Lamy said in a statement. "This is not the time for unrealistic demands. Nor is it the time for inflexible stances. This is the time for collective moves toward global solutions."
If a meeting is to take place, Lamy has indicated it would probably be around next weekend, meaning he would have to decide by Monday whether to go ahead.
Leaders of the Group of 20 countries called last month for the outline of a deal in the Doha talks by the end of this year to counter the worst economic crisis since the 1930s.
The revised negotiating drafts make it clear that big gaps remain on several sticky issues, so that any meeting this month would not be guaranteed success.
The talks were begun in Doha, the Qatari capital, in late 2001 to liberalize trade in goods from food to clothing and cars as well as services like banking and telecommunications, while helping developing countries export their way out of poverty.
But a deal has proved elusive as rich and poor countries and exporters and importers squabbled over the need to create new business opportunities while protecting sensitive industries and farm sectors.
Australia, Brazil and the European Union are pushing hard for a meeting and a deal. But the United States and India have shown recently that they are more skeptical.
New Zealand's ambassador to the WTO, Crawford Falconer, who chairs the farm talks, and his Swiss counterpart, Luzius Wasescha, who mediates industry, relied on compromises from a meeting of ministers in July to draft the latest proposals on overall cuts in agricultural subsidies and in farm and industrial tariffs.
Those would see the limit for EU farm subsidies fall by 80 percent, while the ceiling on U.S. farm subsidies would drop 70 percent to $14.5 billion - still above current outlays of about $7 billion, but well below the current ceiling of $48.2 billion.
Industrial tariffs in developed countries would be capped at 8 percent, while in developing countries subject to tariff cuts the ceiling would average 11 percent to 12 percent, with a maximum of 25 percent.
And in an "anti-concentration clause," developing countries would not be able to use waivers to shield entire industrial sectors from lower duties - a key U.S. and EU concern.
But Falconer said that more work needed to be done on a safeguard to protect farmers in poor countries from a surge in imports through a temporary rise in tariffs - the issue on which the July talks foundered.
India wants a mechanism to protect the livelihoods of its 600 million subsistence farmers from the uncertainties of volatile world markets flooded with subsidized produce from rich countries. But the United States and developing country exporters like Uruguay fear that such a safeguard could be abused to choke off the normal growth in agricultural trade.
The dispute centers on what increase in imports would be needed to trigger the safeguard, in what conditions tariffs could rise over current "pre-Doha" levels, and how quickly an increase could be reimposed after it was lifted.
In industry, Wasescha says more work is needed on proposals to eliminate tariffs in individual sectors like chemicals.
The United States is insisting these sector deals should be part of an agreement, as it sees them offering the best chances for new export opportunities. But emerging countries like China insist that sector deals must be voluntary.
Fat's in the fire for Ireland over pork scandal
The Associated Press
Monday, December 8, 2008
DUBLIN: Oil that ended up in animal feed could force Ireland to destroy 100,000 pigs, food safety officials said Monday as the European Union advised that nations did not need to ban Irish pork imports.
The Food Safety Authority of Ireland has traced the problem to machine oil added to foodstuffs at one small animal-food maker in southeast Ireland. The maker, Millstream Power Recycling, supplied the oil-tainted feed to 10 pig farms in Ireland and nine in Northern Ireland.
The government revealed the potential threat to health Saturday and ordered the recall or destruction of all Irish pork products produced since Sept. 1. It now faces an uphill struggle to restore international confidence in an industry worth more than €450 million annually, or $570 million.
But the Agriculture Department's chief veterinary adviser, Paddy Rogan, said the oil-tainted product never went to the vast majority of Ireland's approximately 500 pig farms. He said slaughtering and processing of meat from many farms could resume Monday - to be accompanied by specially designed labels "so the consumer will be absolutely crystal clear that this is safe Irish product."
While such moves could minimize the damage to sales in Ireland itself, the country faces a harder time persuading customers overseas to resume accepting Irish sausages, ham, bacon and pork-based ingredients so quickly. Rogan said about 25 other countries could have received Irish pork with the contamination problem.
Japan, Singapore and South Korea announced Monday that they were suspending imports of Irish pork indefinitely. But the 27-nation European Union said in Brussels that no nation needed to ban Irish imports of pork, citing Ireland's strong actions and the low risk from short-term consumption of the toxins in question.
To that end, many nations in Europe and Asia scrambled to determine whether any Irish pork goods were on their store shelves and remove them. Germany, the No. 2 importer of Irish pork behind Britain, said it had received 2.4 tons of Irish pork since Sept. 1, largely in the form of unprocessed meat, and had found Irish-sourced pork in products at five supermarkets.
Only a radical move will save the bluefin tuna
Monday, December 8, 2008
Late last month in Marrakesh, Morocco, the international commission that sets fishing limits for tuna approved an annual quota of 22,000 tons of bluefin from the eastern Atlantic and Mediterranean. This is less than the 30,000 tons previously allowed but far more than recommended by scientists advising the commission, who asked for a limit somewhere between 8,000 and 15,000 tons.
Under this new quota, there is a real danger that fishermen will catch most of the existing bluefin tuna within a very few years, causing a catastrophic collapse of the species. That is the conclusion of a new report by scientists studying bluefin populations in the waters governed by the tuna commission. They predict that the bluefin population in 2011 will be 75 percent lower than it was in 2005 and that current quotas will "allow the fishery to capture legally all of the adult fish."
Bluefin fishing is a billion-dollar industry driven by a fervent global appetite for tuna. The European members of the commission clearly wanted to do everything they could to support the commercial interests of French, Italian and Spanish fishermen. But this new quota completely ignores the scientific reality of already-decimated tuna populations.
What the fishermen - and the politicians who represent them - don't acknowledge is that this new quota will ensure their own extinction too.
Preserving the species they fish for will require sharply reduced quotas or, better, a moratorium on tuna fishing. It is a radical move, but only a radical move will save the bluefin and the industry.
IW: I've worked it out now, thanks to an article in yesterday's IHT. It isn't ENVIRONMENT, it's Nature and Development (N'nD)
"Made in China" label battered by product scandals
Monday, December 8, 2008
By Ben Blanchard
Milk, toothpaste, cough syrup, pet food, eels, blood thinner, car parts, pork, eggs, honey, chicken, dumplings, cooking oil and rice -- if you can fake it or taint it, you can almost guarantee it's happened in China.
A string of product safety scandals, including contaminated infant formula that is believed to have killed six babies and sickened thousands of others, have rocked the faith of shoppers, making them wary of buying products made in China despite the often cheaper price tag.
"I was physically disgusted when I saw it on the TV," said Sally Villegas, a mother of two in Australia, referring to the melamine-tainted infant formula scandal that came to light in September.
"If I'm shopping and I pick up a product made in China, yes I would put it back."
The melamine scandal was the latest in a string of recent high-profile safety problems that included lead paint on toy cars and contaminated Chinese-made blood thinner heparin which was blamed for fatalities in the United States and Germany and prompted a global recall early this year.
After each scandal, Beijing seemed to have the same response: launching a crackdown, destroying tainted goods on television, jailing a few officials and saying they "pay great attention" to the problem.
Trouble is, for all the government's efforts and exhortations, the scandals keep happening, and will likely keep on happening, due to lax rule enforcement, fragmented industries, widespread poverty and the sheer size of China, analysts say.
"I'm sure that there will be more. It's a near certainty. Not only in the fields that we've seen already, but in other ones," said Duncan Innes-Ker, a China analyst at the Economist Intelligence Unit in Beijing.
"China faces a lot of problems because it is developing into a big but very poor economy, and obviously you can't have Western-style safety mechanisms in an economy where half the population doesn't earn much more than a couple of dollars a day," he added.
CHINESE PRODUCTS SHUNNED
Jin Biao, vice president of Inner Mongolia Yili Industrial Group, one of China's largest dairy producers, admitted the melamine problem had dented the country's already badly tattered reputation overseas.
"The contamination was our management problem. We must first resolve it without trying to pass the blame on to the farmers, or to society, or the country," he told Reuters.
Yili was named as one of 22 companies found to have produced drinking milk contaminated with melamine, though after thorough inspections China now insists the problem has been effectively removed from the dairy industry.
Melamine, a chemical used to make plastics, was added to infant formula to cheat quality control tests on protein levels. The scandal led to bans around the world on food containing Chinese dairy products.
The United States last month issued an import alert for Chinese-made food products, calling for foods to be stopped at the border unless importers can certify that they are either free of dairy goods or free of melamine.
"I think it's evident to the Chinese that when there's a quality problem, it does more than just hurt that industry segment," U.S. Health Secretary Mike Leavitt said on a recent visit to Shanghai. "It damages the entire made-in-China brand."
The U.S. move prompted an angry reaction from China, which called it "unilateral" and expressed "deep regret."
But consumers are already voting with their wallets.
Following the melamine problem, Taiwan supermarkets for example reported soaring sales from goods clearly marked as being "made in Taiwan," stressing that they did not come from across the strait and were therefore trustworthy and top notch.
It is not a simple matter just to boycott all Chinese goods, said Matthew Crabbe, managing director of research firm Access Asia.
"I don't think really people understand how much is actually made in China," he said.
Moving production to some other low-cost country would also not solve the problem, Crabbe added.
"They'd just have the same problems over again. They'd go to Bangladesh or somewhere, and then they'd have exactly the same problems yet again. It's the quality control."
The challenges posed by China's poverty are exacerbated by corruption and the autonomy carved out by local governments, many of them hundreds of kilometres from officials in Beijing trying to rehabilitate the country's reputation.
A culture of covering-up bad news, or delaying reporting problems to higher-ups, only adds to the challenge.
The city government of Shijiazhuang, home to the Sanlu company that was at the centre of the melamine scandal, initially failed to report the problem, fearing perhaps it could have wrecked the happy image being portrayed for the Beijing Olympics.
This attitude is changing though, observers said.
Anthony Hazzard, the World Health Organisation's Manila-based regional adviser on food safety, said he was heartened by the way China had begun sharing information following the melamine scandal.
"That there is an openness and sharing of information will strengthen confidence," he told reporters in Beijing.
"Of course, confidence at the moment is battered. But the only way to rebuild confidence is to put in place an effective food control system from the farm to the table, and we hope that they do that."
Still, it is probably only a matter of time before the next scandal unfolds in a country where even drugs are fair game for the unscrupulous seeking to make a fast buck.
"Next would probably be the fake pharmaceuticals industry, the herbal pills sector," said Access Asia's Crabbe. "God knows what goes into those things, and what regulation there is, if any, of that industry."
(Additional reporting by Emma Graham-Harrison in Beijing, Rujun Shen in Shanghai and Pauline Askin in Sydney; Editing by Megan Goldin)
Whistleblowers sent to mental ward, Chinese paper says
By Andrew Jacobs
Monday, December 8, 2008
BEIJING: Local officials in Shandong Province have apparently found a cost-effective way to deal with gadflies, whistleblowers and all manner of muckraking citizens who dare to challenge the authorities: dispatch them to the local psychiatric hospital.
According to an investigative report published Monday by a state-owned newspaper, public security officials in Xintai city have been institutionalizing residents who persist in their personal campaigns to expose corruption or to protest the unfair seizure of their property. Some people said they were committed up to two years, and several of those interviewed said they had been forced to consume psychiatric medication.
The article, in The Beijing News, said most inmates had been released after they agreed to give up their causes.
Sun Fawu, 57, a farmer seeking compensation for land spoiled by a coal mining operation, said he was seized by the local authorities on his way to petition the central government in Beijing and brought to the Xintai Mental Health Center in October.
During a 20-day stay, he said he was tied to a bed, forced to take pills and given injections that made him numb and woozy. When he told the doctor he was a petitioner, not mentally ill, the doctor reportedly said, "I don't care if you're sick or not. As long as you are sent by the township government, I'll treat you as a mental patient."
In an interview with the paper, the hospital's director, Wu Yuzhu, acknowledged that some of the 18 patients brought there by the police in recent years were not deranged, but he had no choice but to take them in. "The hospital also had its misgivings," he said.
Although China is not known for the kind of systematic abuse of psychiatry that occurred in the Soviet Union, human rights advocates say forced institutionalizations are not uncommon in smaller cities. Robin Munro, the research director of China Labour Bulletin, a rights organization in Hong Kong, said such "an kang" wards - Chinese for peace and health - are a convenient and effective means of dealing with pesky dissidents.
In recent years practitioners of Falun Gong, the banned spiritual movement, have complained of coerced hospitalizations and one of China's best-known dissidents, Wang Wanxing, spent 13 years in a police-run psychiatric facility under conditions he later described as abusive.
In one recent, well-publicized case, Wang Jingmei , the mother of a man convicted of killing six policemen in Shanghai, was held incommunicado at a mental hospital for five months and only released last Sunday, the day before her son was executed.
The Beijing News story about the hospitalizations in Xintai was notable for the traction it gained in China's constrained state-run media. Such Communist Party stalwarts as People's Daily and the Xinhua news agency republished the story, and it was picked up by scores of Web sites. At the country's most popular portal, Sina.com, it ranked the fifth most-viewed news headline and readers posted more than 20,000 comments by evening. The indignation expressed was universal, with many clamoring for the dismissal of those involved. "They're no different than animals," read one post. "No, they're worse."
Reached by phone on Monday, a hospital employee said Wu, the hospital director who voiced his misgivings to The Beijing News, was unavailable. The employee, Hu Peng, said local government officials had taken him away for "a meeting" earlier in the day and had also looked through patient records.
Although Hu said the hospital was not authorized to diagnose patients, he nonetheless defended the hospitalizations, saying that all the patients delivered by the Public Security Bureau were certifiably ill. "We definitely would not accept those without mental problems," he said.
Back at junk value, recyclables are piling up
By Matt Richtel and Kate Galbraith
Monday, December 8, 2008
Trash has crashed.
The economic downturn has decimated the U.S. market for recycled materials like cardboard, plastic, newspaper and metals. Across the country, this junk is accumulating by the ton in the yards and warehouses of recycling contractors, which are unable to find buyers or are unwilling to sell at rock-bottom prices.
Ordinarily the material would be turned into products like car parts, book covers and boxes for electronics. But with the slump in the scrap market, a trickle is starting to head for landfills instead of a second life.
"It's awful," said Briana Sternberg, education and outreach coordinator for Sedona Recycles, a nonprofit group in Arizona that recently stopped taking certain types of cardboard, like old cereal, rice and pasta boxes. There is no market for these, and the organization's quarter-acre yard is already packed fence to fence.
"Either it goes to landfill or it begins to cost us money," Sternberg said.
In West Virginia, an official of Kanawha County, which includes Charleston, the state capital, has called on residents to stockpile their own plastic and metals, which the county mostly stopped taking on Friday. In eastern Pennsylvania, the small town of Frackville recently suspended its recycling program when it became cheaper to dump than to recycle. In Montana, a recycler near Yellowstone National Park no longer takes anything but cardboard.
There are no signs yet of a nationwide abandonment of recycling programs. But industry executives say that after years of growth, the whole system is facing an abrupt slowdown.
Many large recyclers now say they are accumulating tons of material, either because they have contracts with big cities to continue to take the scrap or because they are banking on a price rebound in the next six months to a year.
"We're warehousing it and warehousing it and warehousing it," said Johnny Gold, senior vice president at the Newark Group, a company that has 13 recycling plants across the country. Gold said the industry had seen downturns before but not like this. "We never saw this coming."
The precipitous drop in prices for recyclables makes the stock market's performance seem almost enviable.
On the West Coast, for example, mixed paper is selling for $20 to $25 a ton, down from $105 in October, according to Official Board Markets, a newsletter that tracks paper prices. And recyclers say tin is worth about $5 a ton, down from $327 earlier this year. There is greater domestic demand for glass, so its price has not fallen as much.
This is a cyclical industry that has seen price swings before. The scrap market in general is closely tied to economic conditions because demand for some recyclables tracks closely with markets for new products. Cardboard, for instance, turns into the boxes that package electronics, rubber goes to shoe soles, and metal is made into auto parts.
One reason prices slid so rapidly this time is that demand from China, the biggest export market for recyclables from the United States, quickly dried up as the global economy slowed. China's influence is so great that in recent years recyclables have been worth much less in areas of the United States that lack easy access to ports that can ship there.
The downturn offers some insight into the forces behind the recycling boom of recent years. Environmentally conscious consumers have been able to pat themselves on the back and feel good about sorting their recycling and putting it on the curb. But most recycling programs have been driven as much by raw economics as by activism.
Cities and their contractors made recycling easy in part because there was money to be made. Businesses, too — like grocery chains and other retailers — have profited by recycling thousands of tons of materials like cardboard each month.
But the drop in prices has made the profits shrink, or even disappear, undermining one rationale for recycling programs and their costly infrastructure.
"Before, you could be green by being greedy," said Jim Wilcox, a professor at the Haas School of Business at the University of California, Berkeley. "Now you've really got to rely more on your notions of civic participation."
The impact of the downturn on individual recycling efforts varies. Most cities are keeping their recycling programs, in some cases because they are required by law, but also because the economics, while they have soured, still favor recycling over landfills.
In New York City, for instance, the city is getting paid $10 for a ton of paper, down from $50 or more before October, but it has no plans to cease recycling, said Robert Lange, the city's recycling director. In Boston, one of the hardest-hit markets, prices are down to $5 a ton, and the city expects it will soon have to pay to unload its paper. But city officials said that would still be better than paying $80 a ton to put it in a landfill.
Some small towns are refusing to recycle some material, particularly the less lucrative plastics and metals, and experts say more are likely to do so if the price slump persists.
Businesses and institutions face their own challenges and decisions. Harvard, for instance, sends mixed recyclables — including soda bottles and student newspapers — to a nearby recycling center that used to pay $10 a ton. In November, Harvard received two letters from the recycler, the first saying it would begin charging $10 a ton and the second saying the price had risen to $20.
"I haven't checked my mail today, but I hope there isn't another one in there," said Rob Gogan, the recycling and waste manager for the university's facilities division. He said he did not mind paying as long as the price was less than $87 a ton, the cost for trash disposal.
The collapse of the market is slowing the momentum of recycling overall, said Mark Arzoumanian, editor in chief of Official Board Markets. He said the problem would hurt individual recycling businesses, but also major retailers, like Wal-Mart Stores, that profit by selling refuse.
Arzoumanian said paper mills in China and the United States that had signed contracts requiring them to buy recycled paper were seeking wiggle room, invoking clauses that cover extraordinary circumstances. "They are declaring 'force majeure,' which is a phrase I'd never thought I'd hear in paper recycling," he said.
Arzoumanian and others said mills were also starting to become pickier about what they take in, rejecting cardboard and other products that they say are "contaminated" by plastic ties or other material.
The situation has also been rough on junk poachers — people who made a profitable trade of picking off cardboard and other refuse from bins before the recycling trucks could get to it. Those poachers have shut their operations, said Michael Sangiacomo, chief executive of Norcal Waste Systems, a recycling and garbage company that serves Northern California.
"I knew it was really bad a few weeks ago when our guys showed up and the corrugated cardboard was still there," he said. "People started calling, saying 'You didn't pick up our cardboard,' and I said, 'We haven't picked up your cardboard for years.' "
The recycling slump has even provoked a protest of sorts. At Ruthlawn Elementary School in South Charleston, West Virginia, second-graders who began recycling at the school in September were told that the program might be discontinued. They chose to forgo recess and instead use the time to write letters to the governor and mayor, imploring them to keep recycling, Rachel Fisk, their teacher, said.
The students' pleas seem to have been heard; the city plans to start trucking the recyclables to Kentucky.
"They were telling them, 'We really don't care what you say about the economy. If you don't recycle, our planet will be dirty,' " Fisk said.
Island's battles over land use halt development
By Dan Barry
Monday, December 8, 2008
MAUNALOA, Hawaii: Scattered along the western stretch of the island of Molokai are the deserted structures of a vanquished people.
This building with the title-free marquee was once a movie theater.
That building, a luxurious lodge with a cow-ranch motif.
Farther on, past the swimming pool now filled with sand, are the skeletal frames of what were known as tentalows. People once came from far away, paying handsomely too, for the chance to sleep behind canvas drapes, the Pacific within sight, the night stars almost within reach.
These structures stand as eerie remnants of a years-long battle waged over the future of this island, an oasis of 7,500 with no traffic lights and no buildings taller than a coconut tree; with the state's highest unemployment and highest percentage of Native Hawaiians; with a sweet way of saying you are welcome to visit as long as you understand its ways.
On one side of the fight were the off-island owners of Molokai Ranch, a sprawl of property covering a third of Molokai's 260 square miles, or 670 square kilometers. They worked for years with some community members on a broad development proposal that included lots of jobs, the reopening of a closed hotel, the unheard-of donation of 26,000 acres, or 10,520 hectares, for conservation. And this:
The building of 200 luxury homes along a gorgeous oceanfront spot called La'au Point. The development, the owners said, was necessary to help pay for parts of the tantalizing plan.
A 2006 marketing report described how "an unspoiled oceanfront" would attract people of means: "For the ocean-view lots, this would generally require a net worth of at least $1 million, and for the oceanfront properties the market for real estate at La'au Point comes from the premium pentamillionaire ($5 million) market and above."
Opposing the plan was a majority of the Molokai community, including many who took pride in the island's long resistance to anything that might somehow make it less Hawaiian. The La'au Point proposal gave breath to their rallying cry of "Keep Molokai Molokai." The property is sacred, they said, its crabs and limpets vital to their subsistence. It should be shared by the people who live on Molokai, not owned by people who do not.
"We're just caretakers," said Walter Ritte, 64, a veteran warrior against anything he thinks might despoil Molokai. "That comes from our culture. The resources come first, and man comes second."
So began the Battle of Molokai Ranch. At stake: "pono" - the Hawaiian concept for what is honorable, righteous, in balance.
The matter of balance has loomed over Molokai Ranch ever since some businessmen bought the property more than a century ago. Over the years, local people needed the jobs created by the various uses of the property - to raise livestock, grow crops, even serve as a wildlife park - but they also resented the dominance of the ranch over land and culture.
Owners came and went, parcels were bought and sold, development battles were won and lost. In the 1970s, protesters managed to thwart a plan to develop ranch land into a Honolulu suburb, with airport. But in the 1990s they failed to block the ranch's razing of historic homes in this old pineapple plantation town of Maunaloa, as well as the rising of the Molokai Ranch Lodge, a 22-room luxury hotel featuring the island's only elevator.
The ranch's current owners, Molokai Properties, a subsidiary of GuocoLeisure of Singapore, set out to improve its image. When dozens of jobs were lost in 2001 with the closing of the Kaluakoi Hotel, a few miles away, they bought the property, reopened the adjacent golf course and intimated that they would someday do the same with the hotel. They also invited the community to help shape a development plan for the ranch property, which was hemorrhaging millions of dollars a year.
Ultimately, the "Community Based Master Land Use Plan," with its sly appropriation of "community," was developed, earning the endorsement of several elected officials, including the governor of Hawaii, Linda Lingle.
Thousands of acres of land to be donated. The resurrection of the Kaluakoi Hotel. The continuing operation of the Molokai Ranch Lodge, the golf course and other businesses. And that 200-lot luxury subdivision on 500 acres down at La'au Point.
"It wasn't going to be perfect; we all knew that," said John Sabas, 61, who grew up on Molokai and worked for a while as the ranch's communications manager. "But it would set us on a path of providing a sustainable future for the island."
Others, though, chose the path of resistance. Some distrusted yet more outsiders promising a better future. Others feared disturbance of the holy compact between the land and its people.
Asserting their own claim to the word "community," they supplemented the local flora with colorful signs saying "Save La'au" and "La'au Sacred." They staged an occupation at La'au Point. In dozens of meetings and hearings they challenged every aspect of the plan, every comma - especially its proposed use of the island's precious water supply.
Many feared that a subdivision at La'au Point would change more than the shoreline. "If you have a lot of wealthy people moving in, who don't fathom life without a Starbucks, that starts to change the culture," explained Karen Holt, 56, an opposition leader and director of the Molokai Community Service Center. "Don't just come and make it a pentamillionaire's estate."
In late March, the battle abruptly ended. Molokai Ranch, which was losing an estimated $300,000 a month, announced that it was shutting everything down: the hotel, the tentalows, the movie theater, the golf course, the development plans. More than 100 jobs lost, just like that.
In explaining the decision to "mothball" the ranch, its chief executive, Peter Nicholas, said, "Unacceptable delays caused by continued opposition to every aspect of the master plan means we are unable to fund continued normal company operations."
Today, nearly nine months later, the Kaluakoi Hotel remains deserted, the ocean view from its Ohia Lodge enjoyed by no one. A few miles away, glorious spider webs stretch undisturbed on the grounds of the closed Molokai Ranch Lodge. The quiet in western Molokai seems both natural and unnatural.
The ranch's owners, who apparently anticipated the current economic free fall, have not revealed their plans for the third of Molokai they own. "At this time we simply are putting the past behind us and are moving forward," a spokesman said by e-mail, though he did not say what "moving forward" means.
Here on the island, words said in the past still sting for some, but are forgiven or forgotten by others. Ritte and Sabas, who as younger men fought together against other development plans for Molokai, spoke to each other the other day. Each still maintains that his was the just cause.
Some, including Ritte and Holt, harbor dreams of buying Molokai Ranch and restoring much of the land as a low dryland forest, which they say would replenish the water supply and ultimately make Molokai more self-sufficient. A wind-farm company has already promised to chip in $50 million, though several times that would be needed.
But no one knows whether the ranch would even sell to its adversaries. And there is another challenge: achieving this elusive thing called pono.
A lifestyle distinct: The muxe of Mexico
By Marc Lacey
Monday, December 8, 2008
MEXICO CITY: Mexico can be intolerant of homosexuality; it can also be quite liberal. Gay-bashing incidents are not uncommon in the countryside, where many Mexicans consider homosexuality a sin. In Mexico City, meanwhile, same-sex domestic partnerships are legally recognized — and often celebrated lavishly in government offices as if they were marriages.
But nowhere are attitudes toward sex and gender quite as elastic as in the far reaches of the southern state of Oaxaca. There, in the indigenous communities around the town of Juchitán, the world is not divided simply into gay and straight. The local Zapotec people have made room for a third category, which they call "muxes" (pronounced MOO-shays) — men who consider themselves women and live in a socially sanctioned netherworld between the two genders.
"Muxe" is a Zapotec word derived from the Spanish "mujer," or woman; it is reserved for males who, from boyhood, have felt themselves drawn to living as a woman, anticipating roles set out for them by the community.
Anthropologists trace the acceptance of people of mixed gender to pre-Colombian Mexico, pointing to accounts of cross-dressing Aztec priests and Mayan gods who were male and female at the same time. Spanish colonizers wiped out most of those attitudes in the 1500s by forcing conversion to Catholicism. But mixed-gender identities managed to survive in the area around Juchitán, a place so traditional that many people speak ancient Zapotec instead of Spanish.
Not all muxes express their identities the same way. Some dress as women and take hormones to change their bodies. Others favor male clothes. What they share is that the community accepts them; many in it believe that muxes have special intellectual and artistic gifts.
Every November, muxes inundate the town for a grand ball that attracts local men, women and children as well as outsiders. A queen is selected; the mayor crowns her. "I don't care what people say," said Sebastian Sarmienta, the boyfriend of a muxe, Ninel Castillejo García. "There are some people who get uncomfortable. I don't see a problem. What is so bad about it?"
Muxes are found in all walks of life in Juchitán, but most take on traditional female roles — selling in the market, embroidering traditional garments, cooking at home. Some also become sex workers, selling their services to men.
Acceptance of a child who feels he is a muxe is not unanimous; some parents force such children to fend for themselves. But the far more common sentiment appears to be that of a woman who takes care of her grandson, Carmelo, 13.
"It is how God sent him," she said.
IBM and Harvard tap computer power for green energy
Monday, December 8, 2008
NEW YORK: Scientists at Harvard University and IBM are hoping to harness the power of a million idle computers to develop a new, less expensive form of solar power that could transform the way green energy is generated.
Researchers have begun the effort using the World Community Grid. The grid is sponsored by IBM and taps into volunteers' computers around the world to run calculations on a myriad of compounds, potentially shortening a program that could take as long as 22 years but as few as just 22.
The Harvard scientists are hoping that the program will allow it to discover a combination of organic materials that can be used to manufacture plastic solar cells that are less expensive and more flexible than the silicon-based ones typically used to turn sunlight into electricity.
The technology could be used to coat windows, make backpacks or line blankets to produce electricity from the sun's rays.
Technology to make the plastic cells already exists, but they are not yet efficient enough to be rolled out in commercial products.
"It is not now cost efficient, although the materials are cheap because it's plastic," said Alan Aspuru-Guzik, a chemistry researcher at Harvard University.
The most efficient silicon-based photovoltaic solar cells convert about 20 percent of the sunlight that strikes them into electricity.
For now, the organic cells can turn only about 5 percent of the sunlight into power - half the level needed to make the low-cost cells a viable energy source.
The researchers plan to publish results of the work once they have discovered a possible combination of compounds.
IBM developed the World Community Grid to advance research of humanitarian projects, like fighting cancer, dengue fever and AIDS.
The World Community Grid connects computers in homes or offices through the Internet with program on each machine to run calculations that feed back to the database.
"It's a way for people that have computers to do some good for the world," said Joe Jasinski, an engineer with IBM.
With more than a million volunteers linked to the World Community Grid, IBM has said that created a network with a calculating capability that would rank it among the world's 10 most-powerful supercomputers.
Members of the grid download software to their personal computers that run the calculations as a screensaver program on the machine when it is turned on but not in use.
IBM includes security software to protect the participants' computers.
Such virtual networks are also in place to crunch data for other projects, like the SETI Institute's effort to sift through radio telescope signals for signs of other life in the universe.
The key to the Caucasus
By Stanley A. Weiss
Monday, December 8, 2008
BAKU, Azerbaijan: 'Welcome to Houston on the Caspian," said Anne Derse, the U.S. ambassador to this booming, oil-rich nation, as our delegation of American business executives arrived on the final leg of a visit to Georgia, Armenia and Azerbaijan.
After days of discussion with political, military and business leaders across the region - including a talk with President Ilham Aliyev of Azerbaijan, whose office overlooks the Caspian Sea, home to perhaps a quarter of the world's new oil production - it all seemed obvious. As one U.S. diplomat put it, Azerbaijan "is central to all we're trying to do in this part of the world."
Azerbaijan is the indispensable link to reducing European energy dependence on Moscow, with the only pipelines exporting Caspian oil and gas that bypass Russia altogether, with routes through Georgia and Turkey.
Without Azerbaijan, there will never be what the U.S. energy secretary Samuel Bodman calls "a new generation of export routes" bypassing Russia. Known as the "southern corridor," it includes plans by Kazakhstan and Turkmenistan to ship oil and gas by barge across the Caspian to Baku, as well as the EU's long-planned Nabucco gas pipeline from Turkey to Europe.
Aliyev stresses that, unlike President Mikheil Saakashvili of Georgia, he will not taunt the Russian bear, continuing instead to walk a fine line between East and West. This policy includes allowing his military to train with NATO, but not rushing to become a NATO member.
Aliyev insists that "time is up" for the return of the Azerbaijani territory of Nagorno-Karabakh - the Armenian-majority region occupied by Armenia, with Russian support, since the war over the area in the early 1990s. Still, he seems determined not to give Moscow a pretext to intervene, as it did with its invasion of Georgia this summer.
Azerbaijan - like Turkey, with which it shares deep ethnic and linguistic ties - is one the world's most secularized Muslim countries, with a strict separation between mosque and state. Moreover, the nearly 20 million ethnic Azeris living in neighboring Iran - about a quarter of Iran's population - are culturally closer to their brethren in Baku than their Persian rulers in Tehran. Azerbaijan also draws the ayatollahs' ire as one of the few Muslim nations with diplomatic ties with Israel.
Yet for all its strategic significance - and its support for the U.S. war on terrorism, including sending troops to Afghanistan and Iraq - Azerbaijan remains the neglected stepchild of U.S. Caucasus policy. Despite Saakashvili's miscalculations with Russia, Georgia remains the darling of the West, garnering another $1 billion in post-war aid from the U.S. atop the nearly $2 billion Washington has bestowed over the years. The powerful Armenian-American lobby has not only secured some $2 billion for Armenia to date, it has succeeded in limiting U.S. aid to Azerbaijan because of the dispute over Nagorno-Karabakh.
To be sure, this country is no democracy; the 46-year-old Aliyev learned well from his authoritarian father, who ruled Azerbaijan both as a Soviet Republic and after independence. Indeed, not long before our delegation arrived, Aliyev claimed re-election with 89 percent of the vote.
But if Azerbaijan is "central" to everything Washington is trying to accomplish in the Caucasus, then Azerbaijan should be at the forefront of U.S. Caucasus policy. To help Azerbaijan - and the region - realize its full economic potential, the incoming Obama administration should make a major push to resolve Nagorno-Karabakh, which - as one development official here tells me - "is the main issue that prevents regional integration."
A breakthrough is possible. Every member of the so-called Minsk Group charged with resolving the conflict - Azerbaijan, Armenia, Russia, several European countries and the U.S. - have powerful incentives for compromise.
Aliyev wants Nagorno-Karabakh back, but understands that Moscow won't allow him to take it by force. Landlocked, impoverished Armenia desperately wants Azerbaijan and Turkey to end a 16-year economic blockade of its borders. Turkey wants to improve relations with Armenia. Europe wants to avert another crisis that would complicate plans for its Nabucco pipeline. And with new competing diplomatic initiatives, Turkey and Russia clearly want to play a leadership role in the region.
This "frozen conflict" will not thaw easily. But through a gradual process backed by the major powers, the Caucasus countries could finally focus on economic cooperation rather than military confrontation. And the trade routes of the old Silk Road could become a new energy corridor of the 21st century.
Stanley A. Weiss is founding chairman of Business Executives for National Security, a nonpartisan organization based in Washington.
Brown and Sarkozy: A potential power duo
By John Vinocur
Monday, December 8, 2008
If you believe in the attraction of opposites and trust among ambitious men, the new closeness between Gordon Brown and Nicolas Sarkozy could be a good thing for Europe.
If you weigh instead the fragility of politicians in a time of world economic upheaval and the deep contradictions of interests and instincts in France and Britain - ever hear of dirigistes or euroscepticism? - then you may cross off this 2008 rapprochement as another of the dalliances that have dotted the relationship over the last 40 years.
Right now, the positive take has a lot going for it:
It says that a Sarkozy-Brown meeting Monday, without Angela Merkel but including the European Commission president, José Manuel Barroso, signifies a capacity to seek urgent solutions for the global recession that go beyond old European confrontations between interventionist and laissez-faire policies.
It argues that Europe's ability to act is not automatically shackled by a Germany whose current indecisiveness and relative unpredictability means it could tell its European partners just six weeks ago it had too little confidence in them to put cash into a common bailout fund.
And it demonstrates real determination (although with significant variations in tone and degree) to make better financial market regulation on the world scale a fact in 2009.
All this, with Sarkozy still holding the European Union's rotating presidency and with Brown to serve as chairman of the G-7 and G-20 economic groupings next year, is intended to look like strong leadership.
And it almost does - but, as noted in conversations in different European capitals, with the caveats, limits and potential for breakdowns of a state-to-state relationship that is extremely personalized.
Generally, Sarkozy overwhelms people or is quickly bored with them. In Gordon Brown's case, he found a former finance minister like himself, who has been quicker and more fluently analytical in articulating remedies for aspects of the financial meltdown.
According to the British side, Sarkozy "doesn't try to bulldozer him. He doesn't defer, but he listens. He basically said to Brown, 'You design the policy. I'll find the right words and contribute leadership."'
The French line is, "Everything is easy in dealing with the English. Things are intuitive. There's a psychological compatibility."
Which, deciphered, shouts out what's already obvious: Sarkozy finds Brown easier work than Merkel.
What's not so plain is that Sarkozy sees in Brown a colleague who recognized his central role in bringing about the first expanded G-20 meeting in Washington last month. It was clearly a major initiative, providing for the entry of China, India, Brazil and Saudi Arabia into global economic decision-making.
Can that be taken to mean Brown will preserve Sarkozy's mark on a bit of history - no small change for the self-involved French president - and keep him downstage center as a partner when the crisis group meets again, probably in April?
Call it a French assumption. But that is where the fragility of personalized diplomacy enters.
Here is a British version of this precariousness: Brown, I was told, "believes we are in the first crisis of the globalized age. He is interested in being the first person to find its answer."
The prime minister's response excludes an anti-capitalist "corralling of the Anglo-Saxon Wild West."
"What Sarkozy doesn't really seem to get," this British account says, "is that we're not for tearing up the system and shooting all the people in the hedge funds. We're not going to destroy vitality and energy. We want to regulate the system better, not destroy it."
Take that as meaning Britain favors modifications in market regulation, but no essential changes in its free-trade views or acceptance of the more heavily bridled capitalism Sarkozy wants. For the French themselves, the truth in the long run says German notions of economics and financial policy are probably closer to their own than Britain's are.
Tack on years of precedent and a list of current differences, and you can come out with an inconclusive projection - assuming Germany's return to greater coherence following elections next year - about the durability of this sunny French-British interval.
The Georges Pompidou-Edward Heath friendship of the 1970s had no real successor. Margaret Thatcher got interested in more European integration in the '80s, but without much of a French response. Jacques Chirac, en route to the presidency in the mid-'90s, spoke of Britain as France's new frontier, minus any visible follow-up.
Even the Francophile Tony Blair, with an open path to European leadership as EU president in 2005, backed off because it hardly seemed to enchant British public opinion.
But this moment - the world trudging into a recession with blackened perspectives - has its own new parameters for change.
Ironically, it is now Sarkozy who is the supplicant in the old cross-Channel relationship. His leverage with Germany seemingly suspended, his EU presidency at an end on Jan. 1, it is Sarkozy who has sought a place next to the Americanophile Brown in Europe's class picture.
These days, Sarkozy would take great precautions to avoid any reference to Britain possibly adopting the euro for fear of irritating Brown and jostling theiralliance de circonstance.
Yet Britain, comfortably and just short of explicitly, reached beyond stimulus packages and tax incentives to say no last week to Sarkozy's call (in support of Russian urging) for a summit next summer on a new European security architecture.
It's clearly a time that encourages bursts of frankness. Barack Obama's inauguration Jan. 20 magnifies that potential.
Under the circumstances, who's to say that Gordon Brown won't tell Sarkozy that sending more French troops to Afghanistan, where Britons are dying and Obama wants help, is a very good way to cement the relationships he needs most in the new year?
EU approves French bank rescue plan
Monday, December 8, 2008
BRUSSELS: The European Commission on Monday approved a French plan to rescue its banks and said that it expected to sign off on similar agreements involving Germany, Austria and other countries in the coming days, signaling an end to a standoff with national governments.
The approval came as Denmark became the most recent country to announce a bank support plan aimed at allaying the worst global credit crunch since the Great Depression, but said it was not considering any move to nationalize financial institutions.
The European Union competition commissioner, Neelie Kroes, said she had not compromised strict EU aid rules under political pressure. She said that France had tightened the terms under which banks must pay back aid and that Germany still needed to make "minor changes" in its plan.
"You will see that as far as state aid rules are concerned, no concessions have been made," she said.
The commission also said it expected to ease rules soon for state aid in general, notably by increasing the threshold under which it had to be notified of such plans.
A major point of contention has been the rate at which fundamentally healthy banks caught up in the credit crunch would be made to pay for any state aid.
The commission is demanding higher rates than those proposed by national governments.
Details of the agreement with Paris showed a compromise after weeks of haggling over the terms of the support. The commission said that the repayment rate would be fixed for the first five years and variable after that.
"The remuneration, which will average about 8 percent, will reflect the degree of solvency of each beneficiary bank," the commission said.
Eight percent was in line with the rate sought by Paris. In return, the commission said, France offered improved incentives for the early repayment of state capital and extra safeguards to ensure that bank lending went to the real economy.
Kroes said the plan dovetailed with commission guidelines under which state capital injections should be priced at central bank base rates plus a premium reflecting the riskiness of each case. German and Austrian plans should be approved shortly, she said.
In Copenhagen, authorities said that they would step in after the central bank governor, Nils Bernstein, warned that some banks were finding it almost impossible to obtain new financing because of the turmoil on international markets.
"The government is looking into how a capital injection from the state can strengthen the capital base of Danish financial institutions," the minister of economic and business affairs, Lene Espersen, said at a banking conference.
French economy surpassing U.K., report finds
Monday, December 8, 2008
PARIS: The financial crisis is recasting the league table of economies, with Britain sliding behind its European neighbors and China gaining on its richer rivals, the Center for Economics and Business Research said in a study released Monday.
A recession and a decline in the pound's value pushed Britain's gross domestic product below France's this year and it will be passed by Italy in 2009, the CEBR said in the report. China has overtaken Germany and will top Japan in 2010 to become the world's second-largest economy behind the United States, it said.
"The recession associated with the credit crunch will change the position of many countries in the world's GDP league table," the London-based CEBR said in the report.
The study shows how countries that ran up debts during expansion, like Britain, will now suffer, while emerging-market economies will wield increasingly more power in the global economy as they develop. Governments from the Group of 7 nations are under pressure to broaden their membership to reflect the changing shape of the world economy.
Brazil will rise to eighth-biggest economy from 10th by 2010 and India to 10th from 12th, the CEBR said. Canada will drop to 13th from ninth in the same period as its currency falls, it said.
The CEBR also said the British and Italian economies would suffer the deepest downturns with 18 quarters of GDP below its previous peaks. Spain's slump will last 16 quarters and Japan's 11 quarters. The United States will rebound after nine quarters. China will not suffer a single quarter of contracting growth, the report said.
Mugabe 'must go,' Sarkozy says
By Stephen Castle
Monday, December 8, 2008
BRUSSELS: With cholera spreading and the Zimbabwean economy in crisis, President Nicolas Sarkozy of France joined calls for the leader of Zimbabwe, President Robert Mugabe, to step down as the European Union extended its travel ban on government officials in Harare.
The move by Sarkozy, echoed by the EU foreign policy chief, Javier Solana, marked a significant increase in European pressure on a Zimbabwean leader who has so far proved immune to efforts to unseat him.
At a meeting in Brussels, Bernard Kouchner, the foreign minister of France, which holds the EU presidency, said that 11 more Zimbabwean officials had been added to the EU visa-ban list that already includes the president. The total on the list now stands at 160 officials, Kouchner said. An EU spokesman later put the new total at 178.
"President Mugabe must go," Sarkozy said in Paris. "It is time to say to Mr. Mugabe: 'You have taken your people hostage, the inhabitants of Zimbabwe have the right to freedom, security and respect."'
But many policymakers said that only a withdrawal of support by Zimbabwe's southern African neighbors will have any practical impact on Mugabe's grip on power.
Although the cholera epidemic has killed at least 575 people, infected thousands and spread to South Africa, Mozambique, Botswana and Zambia, there is still no sign of a tougher line from influential countries in the region.
In Brussels, David Miliband, the British foreign secretary, welcomed the more aggressive EU stance. "There is real unity," he said, "about the fact that, while cholera has got the headlines, the real disease at the heart of Zimbabwe is the misrule of the Mugabe regime."
Miliband said there was a growing view that Zimbabwe's problems now pose a threat to regional stability. That could be significant because, when Britain sought to take the Zimbabwe issue to the United Nations Security Council in July, it was rebuffed by Russia and China.
Both countries were reluctant to see internal - rather than international - issues debated there.
Miliband hinted that another attempt may be made to raise the matter at the Security Council. He said British officials were in the "foothills of the discussion" to overcome resistance.
The Zimbabwean information minister, Sikhanyiso Ndlovu, said Mugabe was constitutionally elected and rejected such demands.
"No foreign leader, regardless of how powerful they are, has the right to call on him to step down on their whim," Ndlovu said, Reuters reported.
One EU diplomat, who requested anonymity because he was not authorized to speak publicly, said ministers had changed their tone, with none now arguing that engagement and negotiation with Mugabe needed to be given more time.
"Here in the EU," he said, "we have had it with Mugabe but there is some frustration because it is so difficult to see how we can change the situation."
The foreign minister of Luxembourg, Jean Asselborn, said that the EU was too far from Zimbabwe to exert genuine pressure on Mugabe and that southern African nations needed to act.
In September, after disputed elections, Mugabe and the main opposition leader, Morgan Tsvangirai, agreed to share power, though they have been unable to agree on the allocation of cabinet posts.Nations split on Congo force
EU countries were divided Monday over whether to send an EU peacekeeping force to eastern Congo after UN officials appealed for more troops, The Associated Press reported from Brussels.
The Belgian foreign minister, Karel De Gucht, urged the 27-nation bloc to send a temporary "bridging force" to aid the 17,000-strong UN force in Congo amid a worsening humanitarian crisis. The UN Security Council has authorized an additional 3,000 troops to support forces in eastern Congo, but it will take time to organize the deployment of the new troops.
"It is urgent that we take a decision on a bridging force," De Gucht said. "It will take four to six months before the additional troops for Monuc arrive and the humanitarian situation is dramatic." He was using the French acronym for the peacekeeping force.
Belgium has been the most outspoken European country in appealing for help for Congo, its former colony.
De Gucht said the EU could send up to two of its elite 1,500-strong "battle groups," but Germany and Britain are against sending an EU force.
Years of sporadic fighting in eastern Congo intensified in August. An estimated 250,000 people have fled to escape clashes between the army and rebels.
Muslim soldiers' tombs desecrated in France
The Associated Press
Monday, December 8, 2008
PARIS: Vandals desecrated at least 500 tombs of Muslim soldiers in northern France on Monday — an act President Nicolas Sarkozy denounced as "repugnant racism."
The desecration near the town of Arras appeared timed with the start of Eid al-Adha, the most important holiday in the Muslim calendar.
The administration for the Pas-de-Calais region said the damaged tombs were in the Muslim section of the Notre-Dame-de-Lorette cemetery, a well-groomed burial ground for World War I soldiers. Some had swastikas scrawled on the tombstone, others had lettering whose meaning was unclear.
There are 576 graves in the Muslim section of the cemetery, where more than 30,000 soldiers are buried.
Sarkozy, in a statement, said the "abject and revolting act" equates with "repugnant racism against France's Muslim community" and insults the memory of all World War I combatants.
It was the third time the Muslim section of the cemetery has been targeted. Last April, 148 tombs were desecrated, and a year before that 52 headstones and an ossuary were vandalized.
The French Council for the Muslim Faith, a group representing France's numerous Muslim groups, decried "these odious, revolting and scandalous acts" and said it expected authorities to find out who carried out the attack.
Interior Minister Michele Alliot-Marie said police were investigating the incident.
Sarkozy leads EU push to cut nuclear weapons
By Steven Erlanger
Monday, December 8, 2008
PARIS: The European Union is attempting to revive a movement to reduce the number of nuclear weapons in the world, proposing a global ban on nuclear testing and a moratorium on production of all fissile material, according to a letter from the French president, Nicolas Sarkozy, made public Monday.
France, a nuclear power, holds the European Union presidency until the end of the year, so Sarkozy wrote to the UN secretary general, Ban Ki Moon, in the name of the European Union.
"We are convinced of the necessity to work for general disarmament," Sarkozy wrote in the two-page letter, dated Dec. 5. "The United Nations has an important role to play in the debate on disarmament. Europe wants to play an important role."
There are an estimated 20,000 or more nuclear weapons around the world, and there is a new interest in reviving efforts to sharply reduce their number in a post-Cold War world where smaller, less stable countries are thought to be pursuing nuclear weapons, and where nuclear terrorism is a concern.
President-elect Barack Obama promised in his campaign to make "the goal of eliminating all nuclear weapons a central element in our nuclear policy."
The growing debate over the Iranian nuclear program is an important backdrop to the European effort, French officials said. Iran has refused to stop uranium enrichment despite UN sanctions. Iran says its enrichment program is only for peaceful nuclear power; no Western government believes that to be true, given the size and nature of the Iranian program, and there is a consensus among intelligence agencies that Iran is likely to have enough enriched material for a nuclear weapon by the end of 2009.
The EU is also proposing "the opening of consultations on a treaty forbidding short- and medium-range surface-to-surface missiles," which is highly unlikely because of their increasing use in conventional warfare.
The proposals include the universal ratification of the comprehensive test ban treaty, the dismantling of nuclear bomb test sites and a universal inspection regime, and urges further progress in talks between the United States and Russia on a follow-on treaty to the 1991 Strategic Arms Reduction Treaty.
France says arrests new ETA military leader
Monday, December 8, 2008
PARIS: French police have arrested three suspected members of the Basque separatist organisation ETA including one who is believed to be the new military leader of the group, the French government said on Monday.
The man suspected of being ETA's previous military chief, who was wanted in connection with the bombing of Madrid airport in 2006, was arrested in France last month.
"Interior Minister Michele Alliot-Marie ... congratulates the police ... who arrested three members of the Basque terrorist organisation ETA, including one who has already been identified as Balak, the presumed successor to Txeroki as the military head of ETA," Alliot-Marie's office said in a statement.
Balak is the name used by French police for the suspect named by Spanish authorities as Aitzol Iriondo. The three were armed but arrested peacefully near Bagneres-de-Bigorre in southwestern France. They have been transferred to Bayonne.
Txeroki (Cherokee) is the alias for Garikoitz Aspiazu Rubina who was arrested near the Spanish border last month.
Spanish Interior Minister Alfredo Perez Rubalcaba told a news conference in Madrid that Iriondo, 31, was "in all probability" responsible for the killing of two Spanish undercover policemen in the French seaside town of Capbreton in December 2007.
Rubalcaba added that the other two arrested men were believed to be Eneko Zarrabeitia and Aitor Artetxe, who had fled to France to avoid capture. He said police would continue to track down other ETA members.
"I don't know if any terrorist is now thinking of replacing Aitzol Iriondo. What I can guarantee is that we will be looking for him as of right now, and so on, until it is over," he said.
Txeroki was also suspected in the Capbreton case but French police are no longer investigating him in connection with the incident but are pursuing him for leading a terrorist organisation.
Monday's arrests follow the December 3 fatal shooting of a 71-year-old businessman in the Basque town of Azpeitia, which the Spanish government blamed on ETA.
Rubalcaba said that "it is not risky to say" that either Txeroki or Iriondo was responsible for the killing.
Spanish authorities say ETA has been reduced to a relatively small number of fighters after a series of arrests of senior figures. But it has continued to carry out regular bombings.
ETA began its violent campaign for the independence of traditional Basque territories in northern Spain and southwest France in the late years of the dictatorship of Francisco Franco in the 1960s, and has killed more than 800 people in four decades.
(Reporting by Anna Willard and Gerard Bon in Paris, Nichols Fichot in Toulouse, Claude Canellas in Bordeaux and Martin Roberts and Emma Pinedo in Madrid; editing by Tim Pearce and Sophie Hares)
Hopes low for French Socialists hurt by infighting
Monday, December 8, 2008
By Estelle Shirbon
French voters have little faith that the opposition Socialist Party will overcome months of bitter infighting to find a winning strategy against President Nicolas Sarkozy, an opinion poll showed on Monday.
An interminable leadership contest saw Martine Aubry, author of the 35-hour working week law, snatch a razor-thin victory over failed presidential candidate Segolene Royal, but Aubry's first act as party leader failed to heal the wounds.
She presented a party executive at the weekend that included none of Royal's allies despite the fact that the two women won an almost equal share of party members' votes. Aubry won by a margin of 102 votes out of 134,800 cast.
A Viavoice poll for left-wing newspaper Liberation found that 63 percent of voters expected Aubry and Royal to continue to put personal interests ahead of the good of the party. Only 25 percent thought they would take the party forward together.
The poll will make depressing reading for the Socialists, paralysed by their divisions since Sarkozy soundly beat Royal in May 2007. Almost unopposed, Sarkozy has launched ambitious reforms and cultivated a high profile on the world stage.
In the latest of an endless series of vitriolic exchanges, Aubry and Royal blamed each other for the failure to generate a unified executive. Aubry said Royal had declined to join, while Royal said she and her allies had been offered only crumbs.
"Martine Aubry has just taken responsibility for deeply dividing the party," said Royal's right-hand man Vincent Peillon on LCI television on Monday.
But it appeared that even those sympathetic to the Socialists were losing interest in these details.
"Who, Martine Aubry or Segolene Royal, was responsible for the failure of the reunification? It doesn't matter. The net result is, again, a divided and ineffective Socialist Party," Liberation said in its Monday editorial.
The resentment created by Royal's exclusion from Aubry's team raises the spectre of yet more acrimony when the Socialists choose their candidate for the next presidential poll, in 2012. Royal has already signalled her interest.
Aubry's executive team includes an equal number of women and men, a few members of ethnic minorities and several youth leaders, in line with her promises to rejuvenate the party and make it more representative of modern French society.
However, most of the key posts were given to so-called party "elephants," or influential veterans, from rival Socialist factions who united around Aubry, the daughter of former European Commission President Jacques Delors and a former labour minister, only to defeat Royal.
(Editing by Charles Dick)
James Carroll: Surviving winter
Monday, December 8, 2008
Now begin the darkest days of the year. This phenomenon of the revolutions of the Earth has long defined one pole of the human psyche. For the next two weeks, the days shorten, the nights grow longer, and the eyes of all people lift to see what's coming.
Now is when American theaters should mount "Waiting for Godot," or "Waiting for Lefty," bringing alive the national melodrama, which could be called, "Waiting for Barack." In fact, it is appropriate to these weeks that America's election euphoria has given way to the low-key stasis of, as we say, an administration-in-waiting.
Of course, what America overwhelmingly awaits is the economy's recovery, a hope that has been magically tied to the coming presidential inauguration.
Waiting is normally the most passive of experiences, yet in these weeks ahead of the comeback of the sun, waiting is positively exhausting. The seasonal observances - whether religious feasts, the festivals of light, the parties, or only shopping - all give expression to a fundamental longing, which in turns reveals the built-in contradiction of awareness.
On the Christian calendar, this is the time of Advent, which means coming. The genius of the sacramental imagination is to recognize in the givens of nature signals of the transcendent, and so the birth of the Lord was located at the winter solstice so that the lengthening of days could be seen as an emblem of the coming of the absent God, also known as Light of Light. But Christianity was merely lifting themes that adhere in the broad perceptions of the planet's cosmic dance.
Before God's presence can be felt, God's absence must be reckoned with, and absence is the first present of December.
"Oh come, oh come, Emmanuel," Christians sing, picking up on Isaiah's prophecy, but primordial longing for what does not yet exist is the point.
What does the season's shopping frenzy reveal, even in an economy when shopping makes little sense?
Humans are conceived with a constitutional inability to be satisfied with the present moment ("conceived," as the tradition says, "in original sin"). That in-built dissatisfaction is so efficiently appealed to by ideas of acquisition and consumption that an entire financial system has been constructed around it. The darkest days of the year, when the unconscious is most at the mercy of longing, inevitably trigger the commercial mechanism of desire. Shoppers are after not what they buy, but the pure effervescence of buying. That lightheadedness substitutes for light, but it is fleeting. Capitalism is founded on an illusion. It is not only the delayed pain of the credit card bill that comes later, but the inevitable regret when, once home, the purchase disappoints. Is it possible that the present economic crisis is a final reckoning with the lie that happiness can be purchased?
Curious, isn't it, that depression is the word for both economic collapse and nervous breakdown. Of the latter, they say that depression is a three-part disease: Thanksgiving, Christmas, and New Year's. Our bad luck this year is that the economic and emotional letdowns have arrived together, perfectly timed for an epidemic of the solstice blues, which are sometimes diagnosed as seasonal affective disorder. Poignantly known as SAD, that condition is directly tied to the absence of light, and the provision of light is its treatment. But perhaps darkness is less the source of our anguish than the medium in which it is most painfully felt.
Memory and expectation define the days of December - nostalgia for holidays of yore, the letter to Santa - because the past and the future are the unpolluted zones of consciousness. The present is always less than we imagine it could be, and that aspect of awareness most profoundly shapes the human condition.
I began by saying that darkness defines one pole of the psyche. Darkness is not its axis: there is something else. The double-mindedness that insists in the time of long nights that long days are surely coming back is itself the antidote. Humans cannot have the experience that something is missing without supplying it through an unwilled act of imagination. That is why, finally, longing and desire weigh so much more than nostalgia and regret. To want, in the true economy, is already to have. What we know of the light, we learn in the dark.
IW: For the first time this year, Kaplan's piece below seems to indicate that opinion formers, over 7 years since 9/11, are beginning to understand what this blog has tried to show during one year - that there are no vertical silos, but continuums that cirlce the world, not just streching from the Med to Burma, but running west to from Israel, to Gitmo, Mexico and the Philipinnes, round and round. Everything is related.
The other Middle East
By Robert D. Kaplan
Monday, December 8, 2008
WASHINGTON: The divisions we split the world into during the Cold War have at long last crumbled thanks to the Mumbai terrorist attacks.
No longer will we view South Asia as a region distinct from the Middle East. Now there is only one long continuum stretching from the Mediterranean to the jungles of Burma, with every crisis from the Israeli-Palestinian dispute in the west to the Hindu-Muslim dispute in the east interlocked with the one next door.
Yet this elongated Greater Near East does not signify something new but something old.
For significant parts of medieval and early modern history, Delhi was under the same sovereignty as Kabul, yet under a different one from Bangalore. From the 16th to the 18th centuries, the Mughal Dynasty, created by Muslims from Central Asia, governed a sprawling empire encompassing northern and central India, almost all of Pakistan and much of Afghanistan - even as Hindu Maratha warriors in India's south held out against Mughal armies. India's whole history - what has created its rich syncretic civilization of Turko-Persian gems like the Taj Mahal and the elaborate Hindu temples of Orissa - is a story of waves of Muslim invaders in turn killing, interacting with and ultimately being influenced by indigenous Hindus. There is even a name for the kind of enchanting architecture that punctuates India and blends Islamic and Hindu styles: Indo-Saracenic, a reference to the Saracens, the term by which Arabs were known to Europeans of the Middle Ages.
Hindu-Muslim relations have historically been tense. Remember that the 1947 partition of the subcontinent uprooted at least 15 million people and led to the violent deaths of around half a million. Given this record, the relatively peaceful relations between the majority Hindus and India's 150 million Muslims has been testimony to India's successful experiment in democracy. Democracy has so far kept the lid on an ethnic and religious divide that, while its roots run centuries back, has in recent years essentially become a reinvented modern hostility.
The culprit has been globalization. The secular Indian nationalism of Jawaharlal Nehru's Congress Party, built around a rejection of Western colonialism, is more and more a thing of the past. As the dynamic Indian economy merges with that of the wider world, Hindus and Muslims have begun separate searches for roots to anchor them inside a bland global civilization. Mass communications have produced a severe Hinduism from a host of local variants, even as the country's economically disenfranchised Muslims are increasingly part of an Islamic world community.
The Muslim reaction to this Hindu nationalism has been less anger and violence than simple psychological withdrawal: into beards, skullcaps and burqas in some cases; self-segregating into Muslim ghettos in others.
The terrorist attacks in Mumbai had a number of aims, one of which was to set a fuse to this tense intercommunal standoff. The jihadists not only want to destroy Pakistan, they want to destroy India as well. India is everything they hate: Hindu, vibrantly free and democratic, increasingly pro-American, and militarily cozy with Israel. For Washington, this is no simple matter of defending Pakistan against chaos by moving troops from Iraq to Afghanistan. It is a whole region we are dealing with. Thus for the jihadists, the concept of a 9/11-scale attack on India was brilliant.
Just as the chaos in Iraq through early 2007 threatened the post-Ottoman state system from Lebanon to Iran, creeping anarchy in Pakistan undermines not only Afghanistan but also the whole Indian subcontinent. The existence of terrorist outfits like Lashkar-e-Taiba that have links with the Pakistani security apparatus but are outside the control of Pakistan's own civilian authorities is the very definition of chaos.
A collapsing Pakistan, and with it the loss of any real border separating India from Afghanistan, is India's worst nightmare. It brings us back toward the borders of the Mughal world, but not in a peaceful way. Indeed, the route that intelligence agencies feel was taken by the fishing boat hijacked by the terrorists - from Porbandar in India's Gujarat state, then north to Karachi in Pakistan, and then south to Mumbai - follows centuries-old Indian Ocean trade routes.
The jihadist attack on India's financial center not only damages Indian-Pakistani relations, but makes Pakistan's new civilian government - which has genuinely tried to improve ties with India - look utterly pathetic. Thus, the attack weakens both countries. Any understanding over Kashmir, the disputed Muslim-majority territory claimed by Pakistan, is now further than ever from materializing, with mass violence there a distinct possibility.
This, in turn, reduces the chance of an Indian-Pakistani rapprochement on Afghanistan, whose government Pakistan seeks to undermine and India sends millions of dollars in aid to help prop up.
The Pakistani security services want a radical Islamized Afghanistan as a strategic rear base against India, while India wants a moderate, secular Afghanistan as a weapon against Pakistan.
Pakistan is not only chaotic but dangerously lonely. Islam has not proved effective in bringing together its regionally based ethnic groups, and thus a resort to a fierce ideology as a unifying device among fundamentalist Muslims has been the country's signal tragedy.
Meanwhile, Pakistan's military suspects that Washington will desert their nation the moment the leadership of Al Qaeda is killed or captured.
Making matters worse, every time the United States launches an air attack into Pakistan from Afghanistan, it further destabilizes the Pakistani state. That is why the Mumbai attacks bring true joy to the most dangerous elements of the Pakistani security establishment: The tragedy has caused the world to focus on India's weaknesses - most of all, the constant threat of caste and tribal violence - that have been obscured by its economic success. See, many Pakistanis are saying, your beloved India is not so stable either.
This is nonsense, of course. India, with all its troubles, is far more stable than Pakistan. Every day that goes by without riots in India is a defeat for the Mumbai terrorists. Indeed, India's own Muslims have demonstrated against the attacks.
But India, not just Pakistan, desperately needs help. Just as solving or at least neutralizing the Israeli-Palestinian dispute is a requirement for reducing radicalism and Iranian influence throughout the Levant, the same is true of the Indian-Pakistani dispute at the other end of the Greater Middle East. Our notion of the "peace process" is antiquated and needs expanding. We need a second special negotiator for the Middle East, a skilled diplomat shuttling regularly among New Delhi, Islamabad and Kabul. (There has been some speculation, in fact, that Barack Obama is considering Richard Holbrooke, the former UN ambassador, for just such a job.)
The Middle East is back to where it was centuries ago, not because of ancient hatreds but because of globalization. Instead of bold lines on a map we have a child's messy finger painting. Our best strategy is, as difficult and trite as it sounds, to be at all places at once, Not with troops, necessarily, but with every bit of energy and constant attention that our entire national security apparatus - and those of our allies - can bring to bear.
Robert D. Kaplan is a national correspondent for The Atlantic and a senior fellow at the Center for a New American Security.
Troops and separatists clash in southern Philippines
By Carlos H. Conde
Monday, December 8, 2008
MANILA: As many as five marines and five Muslim separatist rebels were killed during intense fighting in the southern Philippines, military officials said Monday. They said an undetermined number of government troops and rebels were also wounded.
The fighting began Sunday and continued Monday morning in the two Muslim-dominated provinces of Sulu and Basian, islands that the government had earlier declared to be free from terrorists and Islamic extremists after a U.S.-supported counterterrorism campaign that began in 2002.
Officials said Monday that the number of those killed could sharply increase, particularly on the side of the Moro Islamic Liberation Front, a Muslim separatist group.
"We are now on a defensive stance," said an army spokeswoman, Lieutenant Steffani Cacho. She said the government was mainly going after members of the Abu Sayyaf and "rogue elements" of the Moro Islamic Liberation Front, the separatist group. She said a recent spate of kidnappings in the region prompted the military operation.
Cacho said that the marines were killed in a firefight in the town of Al-Barka in Basilan Province, a former stronghold of the Abu Sayyaf. In July last year, 14 marines were also killed in the same town after a firefight, 10 of whom were beheaded.
Cacho said the rebels had sought cover in some of the villages. It was not clear whether those wounded, estimated to be more than 50, were mainly rebels or included villagers.
But Mohagher Iqbal, the front's chief negotiator, said the offensives aimed at the separatists, not the Abu Sayyaf.
"The military is making it more difficult for the peace process to continue," he said. He criticized what he called a "devious campaign" to link the front with the Abu Sayyaf, a terrorist group notorious for kidnapping and beheading its victims.
Peace talks collapsed two months ago after the government backed out of an agreement to provide the Muslim rebels with their own territory. The Philippine Supreme Court later ruled that the agreement was unconstitutional.
Since then, fighting has been occurring between the front and the military, displacing more than 300,000 Filipinos from their homes. This prompted third-party observers to appeal to both sides to resume negotiations.
"An immediate cessation of the hostilities is of the utmost urgency, not only to re-launch the peace process, but to allow relief efforts and rehabilitation" of the refugees, the Organization of the Islamic Conference said last week.
The military had earlier said that it would not stop with the offensive.
"Our objective is clear: to get them, specifically their leaders," Lieutenant Colonel Ernesteo Torres, an army spokesman, said last month, referring to the Abu Sayyaf and the Islamic front.
Despite efforts to flush the Abu Sayyaf from the southern Philippines, it continues to remain the country's biggest terrorism threat. Last month, President Gloria Macapagal Arroyo had to cancel a trip to the south after the terrorists shot at a convoy of vehicles with American soldiers on it.
U.S. troops have been stationed in the region since 2002, helping in humanitarian programs and in counterterrorism training for Philippine soldiers.
Pakistan raids group linked to Mumbai attacks
By Jane Perlez, Eric Schmitt and Mark Mazzetti
Monday, December 8, 2008
ISLAMABAD, Pakistan: In an operation that appeared to be Pakistan's first concrete response to demands by India and the United States that it take action against the militants suspected of orchestrating the Mumbai attacks, Pakistan has raided a camp run by a "banned" militant group and arrested a number of suspects, according to a Pakistani official and an American military official.
The attack appeared to be on a camp run by Lashkar-e-Taiba, a Pakistani militant group that long focused on the disputed territory of Kashmir and that has been accused by India of being in control of the attackers in Mumbai as they terrorized the city during a three-day siege last month in which 163 people were killed.
The U.S. intelligence and counterterrorism officials say Lashkar has quietly gained strength in recent years with the help of Pakistan's main spy service, assistance that has allowed the group to train and raise money while other militants have been under siege.
A spokesman for Lashkar said Monday that Pakistani security forces had started a crackdown on his group in Muzaffarabad, the capital of Pakistani-administered Kashmir, but did not say anything specific about who or how many people had been detained. The Pakistan government has not provided details of the military raid.
U.S. officials said that there was no hard evidence to link the Pakistani spy service, the Directorate for Inter-Services Intelligence, or ISI, to the Mumbai attacks. But the ISI has shared intelligence with Lashkar and provided protection for it, the officials said, and investigators are focusing on one Lashkar leader who they believe is a main liaison with the spy service and the mastermind of the attacks.
As a result of the assault on Mumbai, India's financial center, U.S. counterterrorism and military officials said they were reassessing their view of Lashkar and believe it to be more capable and a greater threat than they had recognized.
"People are having to go back and re-look at all the connections," said one U.S. counterterrorism official, who was among several officials who spoke on condition of anonymity because the investigation was still in progress.
Pakistani officials have denied any government connection to the attacks in late November.
While Al Qaeda has provided financing and other support to Lashkar in the past, the links between the two groups remain murky.
Senior Qaeda figures have used Lashkar safe houses as hide-outs, but Lashkar has not merged its operations with Al Qaeda or adopted the Qaeda brand, as did an Algerian terrorist group that changed its name to Al Qaeda in Islamic Maghreb, U.S. officials said.
Unlike Osama bin Laden and his lieutenants, who have been forced to retreat to mountain redoubts in western Pakistan's tribal areas, Lashkar commanders have been able to operate more or less in the open. They do so behind the public face of a popular charity, with the implicit support of official Pakistani patrons, U.S. officials said.
Indian and U.S. officials said they believed that one senior Lashkar commander in particular, Zarrar Shah, was one of the group's primary liaisons to the ISI. Investigators in India also are examining whether Shah, a communications specialist, helped plan and carry out the attacks in Mumbai.
"He's a central character in this plot," one U.S. official said.
On Monday, in the first hours after news of the raid emerged on Pakistani television and in news agencies, a senior Pakistani security official, speaking on condition of anonymity, said that a man suspected of being the mastermind of the Mumbai attacks had been arrested. But the same official said later that even though about a dozen people had been arrested in the raid at the camp, the suspect, Zaki ur-Rehman Lakhvi, had not been arrested.
Lakhvi has been accused by Indian officials of being in control of the attackers in Mumbai. Indian and Western investigators said he commanded the attack and then kept in communication with the gunmen by cell and satellite phone as they rounded up guests in two hotels, killing some of them. Lakhvi is an operational leader of Lashkar-e-Taiba.
For years, U.S. intelligence analysts have described Lashkar as a group with deadly, yet limited, ambitions in South Asia. But terrorism experts said it clearly had been inspired by the success that Al Qaeda experienced in rallying supporters for a global jihad.
"This is a group that years ago evolved from having a local and parochial agenda and bought into Al Qaeda's vision," said Bruce Hoffman, a professor and terrorism expert at Georgetown University who has closely followed Lashkar for several years.
Lashkar-e-Taiba, which means "army of the pure," was founded more than 20 years ago with the help of Pakistani intelligence officers as a proxy force to challenge Indian control of Muslim-dominated Kashmir.
Indian officials have implicated Lashkar operatives in a July 2006 attack on commuter trains in Mumbai and in a December 2001 attack against Parliament. But in recent years, Lashkar fighters have turned up on the battlefields of Afghanistan and Iraq, fighting and killing Americans, senior U.S. military officials have said.
While European and Middle Eastern governments - as well as the United States - crack down on Al Qaeda's finances, Lashkar still has a flourishing fund-raising organization in South Asia and the Gulf region, including Saudi Arabia, counterterrorism officials say. The group primarily uses its charity wing, Jamaat-ud-Dawa, to raise money, ostensibly for causes in Pakistan.
The Mumbai attacks, which included foreigners among its targets, seemed to fit the group's evolving emphasis and determination to elevate its profile in the global jihadi constellation.
Lashkar also has a history of using local extremist groups for knowledge and tactics in its operations. Investigators in Mumbai are following leads suggesting that Lashkar used the Students' Islamic Movement of India, a fundamentalist group that advocates establishing an Islamic state in India, for early reconnaissance and logistical help.
An Indian man arrested in connection with the attacks, Fahim Ahmad Ansari, had been described beforehand by Indian newspaper reports as a former member of the Students' Islamic Movement who met with Lashkar operatives in Dubai in 2003.
U.S. officials said investigators were looking closely at the likelihood that the attackers had some kind of local support in Mumbai.
Hoffman said that Lashkar had developed particularly sophisticated Internet operations, and that intelligence officials believed the group had forged ties with regional terrorist organizations like Jemaah Islamiyah in Indonesia by assisting them with their own Internet strategies.
Although the government of Pakistan officially banned Lashkar in 2002, U.S. officials say that the group has maintained close ties to the Pakistani intelligence service even since that date. U.S. spy agencies have documented regular meetings between the ISI and Lashkar operatives, in which the two organizations have shared intelligence about Indian operations in Kashmir.
"It goes beyond information sharing to include some funding and training," said a U.S. official who follows the group closely. "And these are not rogue ISI elements. What's going on is done in a fairly disciplined way."
Still, officials in Washington said they had yet to unearth any direct link between the Pakistan spy agency and the most recent attacks in Mumbai.
"I don't think that there is compelling evidence of involvement of Pakistani officials," Secretary of State Condoleezza Rice said on CNN's "Late Edition With Wolf Blitzer" on Sunday. "But I do think that Pakistan has a responsibility to act."
She said evidence showed "that the terrorists did use territory in Pakistan."
A U.S. counterterrorism official said: "It's one thing to say the ISI is tied to Lashkar and quite another to say the ISI was behind the Mumbai attacks. The evidence at this point doesn't get you there."
Moreover, some terrorism analysts said that Lashkar's dependence on its original sponsors had lessened in recent years.
With wealthy donors in no short supply, an established recruiting pipeline and a series of training camps, Lashkar "has outgrown ISI's support," said Urmila Venugopalan, a South Asia analyst for Jane's Information Group.
The protection that Lashkar operatives enjoy inside Pakistan has allowed the group to thrive at the same time that Al Qaeda's leaders have been forced to hide in caves and occasionally transmit messages to one another using donkey couriers.
Eric Schmitt and Mark Mazzetti reported from Washington, Jane Perlez and Salman Masood from Islamabad and Yusuf Jameel from Srinagar, Kashmir. Reporting was contributed by Waqar Gillani in Lahore and Margot Williams in New York.
UK health service wants no products of child labor
The Associated Press
Monday, December 8, 2008
LONDON: Britain's state-funded health service on Monday published plans to ensure hospitals know where their surgical instruments are coming from, after acknowledging that some may be produced by child laborers in Pakistan.
Many of the scalpels and forceps used in Britain, the U.S. and other Western countries are manufactured in the Pakistani city of Sialkot, which has more than 2,000 instrument makers.
Surgical instruments are among Pakistan's major exports, but labor activists say many are made in tiny workshops by child laborers who earn just a few dollars (euros) a month.
The proposed National Health Service guidelines call on hospitals to introduce "ethical procurement" policies and to consider labor standards when they are buying goods.
Research published in June found there was a "significant risk" some health service goods and services came from places where labor standards had been abused. The report said it was ironic that "the labor standards in the supply chains of products procured by the NHS to administer health care in the U.K. may be unnecessarily damaging the health of workers in those supply chains."
UNICEF, the U.N.'s children's agency, estimates there are 3.6 million working boys and girls under age 14 in Pakistan, mostly engaged in carpet weaving, brick making, agriculture and deep sea fishing.
Various U.N.-backed initiatives try to encourage them to go to school part-time, and the Sialkot surgical-supply industry insists most manufacturers do not exploit their workers.
The issue gained attention in Britain after a London surgeon, Mahmood Bhutta, wrote about it in the British Medical Journal two years ago. Bhutta said surgical instruments should be bound by the same fair trade standards as coffee or bananas.
Health Minister Ben Bradshaw said Britain's health service spent 20 billion pounds ($30 billion) a year on goods and services, and was "in a strong position to influence improvement in labor standards across health care supply chains."
A consultation on the guidelines runs until April. They could take effect by mid-2009 but would be voluntary.
Why the terrorists hate India
By Patrick French
Monday, December 8, 2008
LONDON: As an open, diverse and at times chaotic democracy, India has long been a target for terrorism. From the assassination of Mohandas Gandhi in 1948 to the recent attacks in Mumbai, it has faced attempts to change its national character by force. None has yet succeeded. Despite its manifest social failings, India remains the developing world's most successful experiment in free, plural, large-scale political collaboration.
The Mumbai attacks were transformative, because in them, unlike previous outrages in India, the rich were caught: not only Western visitors but also Indian bankers, business owners and socialites. This had symbolic power, as the terrorists knew it would.
However, I recently saw a televised forum in which members of the public vented their fury against India's politicians for their failure to act, and it soon became apparent the victims were poor as well as rich. One survivor, Shameem Khan - instantly identifiable by his name and his embroidered cap as a Muslim - told how six members of his extended family had been shot and killed. Still in shock, he said: "A calamity has fallen on my house. What shall I do?" His neighbors had helped pay for the funeral. Like most of India's 150 million Muslims, Khan is staunchly patriotic. The city's Muslim Council refused to let the terrorists be buried in its graveyards.
When these well-planned attacks unfolded, it was clear that they almost certainly originated from Pakistan. Yet the reaction of the world's news media was to rely on the outmoded idea of Pakistan-India hyphenation - as if a thriving and prosperous democracy must be compared only with an imploded state that is having to be bailed out by the International Monetary Fund. Was Pakistan to blame, asked many pundits, or was India at fault because of its treatment of minority groups?
The terrorists themselves offered little explanation, and made no clear demands. Yet even as the siege continued, commentators were making chilling deductions on their behalf: Their actions were because of American foreign policy, or Afghanistan, or the harassment of Indian Muslims. Personal moral responsibility was removed from the players in the atrocity. When officials said the killers came from the Pakistani terrorist group Lashkar-e-Taiba, it was taken as proof that India's misdeeds in the Kashmir Valley were the cause.
These misdeeds are real, as are India's other social and political failings. But there is no sane reason to think Lashkar-e-Taiba would shut down if the situation in Kashmir improved. Its literature is much concerned with establishing a caliphate in Central Asia, and murdering those who insult the Prophet.
Its leader, Hafiz Saeed, who lives on a large estate outside Lahore bought with Saudi money, goes about his business with minimal interference from the Pakistani government.
Lashkar-e-Taiba is part of the International Islamic Front for Jihad Against Jews and Crusaders (the Qaeda franchise). Saeed's hatreds are catholic - his bugbears include Hindus, Shiites and women who wear bikinis. He regards democracy as "a Jewish and Christian import from Europe," and considers suicide attacks to be in accordance with Islam. He has a wider strategy: "At this time our contest is Kashmir. Let's see when the time comes. Our struggle with the Jews is always there."
As he told his followers in Karachi at a rally in 2000: "There can't be any peace while India remains intact. Cut them, cut them - cut them so much that they kneel before you and ask for mercy."
In short, he has an explicit political desire to create a state of war between the religious communities in India and beyond.
Like other exponents of Islamist extremism, he has a view of the world that does not tolerate doubt or ambiguity: His opponents are guilty, and must be killed. I have met other radicals like Saeed, men who live in a dimension of absolute certainty and have contempt for the moral relativism of those who seek to excuse them. To achieve their ends, it is necessary to indoctrinate boys in the hatred of Hindus, Americans and Jews, and dispatch them on suicide missions. It is unlikely that any of the militants who were sent from Karachi to Mumbai - young men from poor rural backgrounds whose families were paid for their sacrifice - had ever met a Jew before they tortured and killed Rabbi Gavriel Holtzberg and his wife, Rivka, at the Mumbai Jewish center.
America's so-called war on terror has been, in many respects, a catastrophe. In Pakistan, it has been chronically mishandled, leading to the radicalization of areas in the north that were previously peaceful. Yet links between the military, the intelligence services and the jihadis have remained intact: Lashkar-e-Taiba is merely one of a number of extremist organizations that continues to function.
The prime solution to the current crisis is to force the closing of terrorist training outfits in Pakistan, and apply the law to those who organize and finance operations like the Mumbai massacres. Hafiz Saeed and other suspects should be sent to India to stand trial. The remark by Pakistan's president, Asif Ali Zardari that he did not think the terrorists came from Pakistan would be funny if it were not tragic.
The United States gives around $1 billion a year in military aid to Islamabad; that is leverage. It does the people of Pakistan no favors for Washington to allow their leaders to continue with the strategy of perpetual diversion, asking India to be patient while denying the true nature of the immediate terrorist threat. I received this e-mail message recently from a friend in Karachi: "Nowhere can get more depressing than Pakistan these days - barring some African failed states and Afghanistan."
Patrick French is the author, most recently, of "The World Is What It Is: The Authorized Biography of V. S. Naipaul."
Turmoil in India to drive fund houses' joint ventures
By Nishant Kumar and Jeffrey Hodgson
Monday, December 8, 2008
MUMBAI: Global financial turmoil and recent attacks in Mumbai will likely spur foreign fund houses still looking to enter the market in India to hedge their risks with local partnerships rather than going it alone.
Factors like high brand building costs and knowledge of local issues have already driven most international players to favor joint ventures over so-called greenfield operations, those that are starting from scratch, as they seek to tap the relatively fast-growing and savings-rich Indian economy.
The requirement that foreign fund houses put up $50 million in capital for a wholly owned operation, compared with a tenth of that or less for a joint venture, is also seen as fueling the trend as Western money managers seek to preserve cash.
Vivek Prasad, a partner at Price Waterhouse in Mumbai, said: "There is liquidity crunch, so people would rather partner than commit that much of their resources. If you can still get a share of India pie with $5 million as opposed to $50 million, that's a no-brainer."
Even before the attacks on the Indian financial capital, in which 163 people died along with nine suspected terrorists, foreign firms eyeing the country's 35-member fund industry had to weigh the impact of a drop of more than 50 percent this year in its once high-flying stocks.
But industry watchers said this has actually helped to spur interest among some international money managers, who had balked at paying the high prices demanded after a bull market helped industry assets quadruple from 2002 to 2007.
Last month, Religare Enterprises agreed to buy Lotus Mutual Fund from the Singapore state investor Temasek and Sabre Capital Worldwide, a firm based in London, for about 1 percent to 2 percent of assets under management, according to media reports.
By comparison, Infrastructure Development Finance agreed to buy Standard Chartered's Indian fund unit for about 6 percent of assets in March. And a year ago, Eton Park, a hedge fund, paid about 13 percent of assets for a piece of Reliance Capital's fund arm.
Rajan Ghotgalkar, the India country head of the U.S. firm Principal Financial Group, said to Reuters last month that it was looking to acquire a fund firm to expand its existing operation. It has a fund venture with Punjab National Bank and Vijaya Bank.
"Valuations have moderated," Ghotgalkar said. "It's a better time to buy now."
Marna Whittington, the chief operating officer of Allianz Global Investors, a unit of the insurer Allianz SE, also said to Reuters recently that Allianz Global is actively pursuing a joint fund venture in India. Allianz SE operates a life insurer in partnership with Bajaj Auto.
While the Indian economy is slowing, with many economists forecasting a growth rate around 7 percent this fiscal year, this is still far better than the contraction many Western economies are facing.
A savings rate of more than 32 percent, much of which is in low-yielding bank deposits, an emerging middle class and the world's second largest population also make the market a powerful long-term lure to international fund management firms.
Prasad of Price Waterhouse said that even weighed against the recent attacks, few firms could pass up India's market potential.
"I am sure some of these people would have taken the next flight home," he said. "But I do not think, and I have spoken to a number of clients, it is going to defer their India plans."
Unlike China, which requires foreign fund houses to form joint ventures and caps ownership at 49 percent, India allows stand-alone operations, a route favored by the global fund giant Fidelity and Mirae Asset of South Korea.
But with the exception of the Indian arm of Franklin Resources, which operated as a joint venture till 2006, all of India's top 10 players are homegrown or partnerships. They include ventures co-owned by Standard Life, Prudential and Sun Life Financial.
Joint ventures and local firms like Reliance Capital, whose fund unit is the industry leader, each controlled about 43 percent of the market.
By comparison, 10 foreign players including Fidelity had just a 14 percent share at the end of November compared with 18 percent a year ago.
"India continues to be a very good market for the asset management players," said Ashvin Parekh, national leader of financial services at Ernst & Young. "If they do take good Indian partners with either reach or customer base or with good brand name, they will be better off."
Congress party surprises in Indian state elections
Monday, December 8, 2008
India's governing party won two state elections and was leading in a third Monday, defying predictions of a political battering after an economic slowdown and the militant attacks on Mumbai.
Counting went on for five state elections, mostly in central and west India, with final results due by late Monday.
The votes come before national elections in the first half of 2009 that will pit a coalition led by the governing Congress party against an opposition alliance led by the Hindu-nationalist Bharatiya Janata Party, or BJP.
Congress held on to Delhi. Meanwhile, the BJP conceded control of the western state of Rajasthan. Incumbents traditionally fare badly in Indian elections.
Congress also had an unassailable lead in the remote and small northeastern state of Mizoram, where it was fighting a regional party. The BJP has a similarly commanding lead in Madhya Pradesh and looked close to returning to power in Chhattisgarh.
The outcome is a boost for Congress, which has suffered a string of state election defeats against the BJP in the last year amid rising inflation and perceived weak leadership.
"This is the beginning of the decline of the BJP," said a Congress spokesman, Veerappa Moily.
It is also a setback for the BJP, which had hoped its policy of criticizing Congress for being soft on terrorism would reap political dividends.
"The BJP's terror plank hasn't worked. People have started to see through it. Ironically it backfired after the most horrific terror attacks," said a political analyst, Amulya Ganguli, referring to the attacks last month in Mumbai that killed at least 171 people.
Criticism of the government for security lapses appeared to have little impact on voters. The BJP had taken out front-page advertisements criticizing Congress as unable to defend the nation.
Suspects in 9/11 plot attempt to plead guilty
By William Glaberson
Monday, December 8, 2008
GUANTÁNAMO BAY, Cuba: All five of the Guantánamo prisoners charged with planning and coordinating the Sept. 11 attacks have asked a military judge to accept their confessions in full.
The request appeared to be intended to cut short any effort to try them, and to challenge the U.S. government to put them to death. But the military judge in the case, Colonel Steven Henley of the army, indicated that he would not accept guilty pleas from the men right away, and that formal proceedings to do so may be a while off.
At the start of what had been expected to be routine proceedings Monday, Henley disclosed that he had received a written statement from the five men. The statement said the five planned to stop filing written motions and instead "to announce our confessions to plea in full."
Henley began methodically questioning each of the five men to determine if they agreed with the joint statement, which was written after lengthy meetings among them that military officials had permitted in recent months. The statement was submitted Nov. 4, but the judge said he did not read it until Sunday because he was not at the secure facility here before then, and he cannot examine classified materials related to the detainee cases anywhere else.
As he questioned one of the men, Khalid Shaikh Mohammed, who has described himself as the mastermind of the 2001 attacks, Henley asked whether Mohammed was prepared to enter pleas to the charges against him today. "Yes," Mohammed answered brusquely.
"We don't want to waste our time with motions," Mohammed said. "All of you are paid by the U.S. government. I'm not trusting any American."
Another of the prisoners, Ramzi bin al-Shibh, told the judge, "We the brothers, all of us, would like to submit our confession." Shibh is charged with being the primary contact with the Sept. 11 hijackers.
Military prosecutors have sought the death penalty against all five men.
Henley directed the prosecutors to provide him with a legal brief on whether the Military Commissions Act, which governs the proceedings here, would permit the imposition of the death penalty without a vote of the military panel that hears cases here, much as a jury votes on cases in civilian court.
Because the proceedings this week were to consider legal motions to be decided by the judge alone, there was no panel present Monday.
In addition, the question of whether two of the five men are mentally competent to represent themselves arose again in the hearing.
Those two prisoners are represented by lawyers appointed by the court, who have raised the competency issue. The other three, including Mohammed, are representing themselves, with advice from civilian and military lawyers.
The judge ruled that he would permit the three men who represent themselves to withdraw all legal motions filed on their behalf, which would set the stage for a guilty plea. But he said that the two whose competency is in question, Shibh and Mustafa al-Hawsawi, would not be permitted to make decisions about their cases Monday. "That may happen at some point in the future," Henley said.
He directed the two men's appointed lawyers to proceed in arguing a series of legal motions that had been on the commission's agenda. After a recess, the commission was to reconvene at 1 p.m.
The judge also indicated at the hearing that even if he agreed to accept the pleas, from some or all of the five men, he would hold a later session to examine the full facts behind the detainees' decisions to plead guilty.
The unusual events were not a complete surprise. There had been indications for months that the prisoners were resisting working with the military lawyers assigned to represent them. In addition, a move to cut short the proceedings had been seen by some lawyers working in the system here as a way Mohammed and the other men could draw maximum public attention to their cases and, potentially, to make statements about their political views without the government having the opportunity to detail their acts, including the specifics of the plot that caused the deaths of nearly 3,000 people, in court.
The American political calendar may also be a factor. President-elect Barack Obama has said he planned to close down the Cuban camp and the military commissions that have been used by the Bush administration and to direct that many prisoners now held in Guantánamo Bay be prosecuted instead in the civilian American legal system.
If that happens in the first days of the Obama administration, the Monday proceedings will have been the prisoners' last opportunity to challenge the widely criticized system here with guilty pleas that could yield them the opportunity for what they see as martyrdom.
Tortured justice in America
Monday, December 8, 2008
America's courts continue to grapple with the abuses committed by President Bush's administration in the name of fighting terrorism.
The extent of the damage to American liberties, and how lasting it will be, will be told in part by the outcome of two cases that are to be heard by the federal courts.
On Friday, the Supreme Court agreed to hear a case that turns on Bush's claim that he can order people living in the United States to be detained by the military indefinitely without charges. The case involves Ali al-Marri, a citizen of Qatar who was in the United States legally. He was declared an enemy combatant in mid-2003 and has been held in a U.S. Navy brig since then.
The detention was upheld by an appeals court panel, which should be quickly and definitively reversed by the Supreme Court. This intolerable reading of the law would leave a president free to suspend the rights of anyone, including American citizens.
The other, equally notorious case is being heard on Tuesday by the 2nd U.S. Circuit Court of Appeals, in Manhattan. It involves Maher Arar, a Syrian-born Canadian with no ties to terrorism who became a victim of the Bush team's lawless policy of "extraordinary rendition" - the outsourcing of interrogations to foreign governments known to torture prisoners.
Arar's ordeal began in 2002, when he was seized by federal agents as he tried to change planes on his way home to Canada from a family vacation. After being held incommunicado in solitary confinement and subjected to harsh interrogation without proper access to a lawyer, he was "rendered" to Syria, where he was tortured. He was locked up for almost a year in a dank underground cell the size of a grave before he was finally let go.
The Canadian government later declared that it had provided erroneous information about Arar to the American authorities. It apologized to him in 2007 and agreed to pay him $10 million.
Last June, the Homeland Security Department's inspector general, Richard Skinner, and its former inspector general, Clark Ervin, said at a congressional hearing that U.S. officials may have violated federal criminal laws in sending Arar to Syria, knowing he was likely to be tortured.
Yet that same month, a three-judge federal appeals panel dismissed Arar's civil rights lawsuit on flimsy national security grounds and, absurdly, his failure to seek court review of his rendition within the time period specified in immigration law. In essence, the 2-to-1 ruling rewarded the administration's egregiously bad behavior in denying Arar's initial requests to see a lawyer, and then lying to his attorney about his whereabouts, which obstructed his access to the courts.
In addition, by treating this as an immigration case, the ruling overlooked reality. The salient issue is the improper and unconstitutional tactics used by U.S. officials to obtain information they wrongly thought Arar possessed. That point was emphasized by Judge Robert Sack in his cogent dissenting opinion from the first appeals court ruling.
We took it as an encouraging sign when the appellate court took the rare step of scheduling Tuesday's rehearing before its entire bench before an appeal was filed. A decision allowing Arar's case to proceed would recognize the court's essential role in protecting constitutional rights. It also would firmly reject the Bush administration's seamy efforts to frustrate accountability for executive branch excesses.
The Obama administration will then have to decide whether to defend the indefensible when the case comes to trial. That will provide an interesting test of the new Justice Department's commitment to due process.
Indictments unsealed in Blackwater shootings
By Ginger Thompson
Monday, December 8, 2008
WASHINGTON: In the first public airing of a case that remains the source of international outrage, the Justice Department on Monday unsealed indictments here against five guards working for the private security firm Blackwater Worldwide, accusing them of manslaughter and misuse of their firearms for the 2007 shooting in a Baghdad traffic circle that killed 17 Iraqi civilians.
Prosecutors also announced that one guard, Jeremy Ridgeway, 35, of California, has pleaded guilty to two counts of manslaughter. Court documents said Ridgeway told investigators that he and the other guards improperly used deadly force against drivers and pedestrians who "posed no threat to the convoy" of Blackwater contractors.
The documents said, "When defendant Ridgeway fired his assault rifle into the Kia sedan and the white Chevrolet Celebrity, he acted knowingly, unlawfully and purposefully, and not by accident, inadvertence or mistake, or with any legal excuse or justification."
Meanwhile, the five others, all of them decorated veterans who had previously served the United States in trouble spots around the world, surrendered together at a federal courthouse in Salt Lake City, Utah, where their attorneys accused the government of overstepping their authority and of tarnishing their clients' records of honorable service.
Mark Hulkower, an attorney for one of the defendants, said the men surrendered in Utah, a relatively conservative, pro-military area, because they hoped to find a jury pool where "people are more sympathetic to the experiences of coming under enemy fire."
Legal experts characterized the move as a long shot, but said it suggested that the defendants were trying to fend off the prosecution on technical grounds before an examination of the events at the center of the case.
Laws covering the actions of private contractors remain both unclear and untested, legal experts said.
Prosecutors said charges against the contractors were filed under the Military Extraterritorial Jurisdiction Act, which has been used to prosecute military personnel for crimes committed abroad.
In 2004, the law was amended to cover personnel whose work provides support to military personnel overseas. Prosecutors said they would argue that the amendment covers security contractors working for the State Department in Iraq. The government will apparently argue in court that because Iraq is a war zone, Blackwater's diplomatic security work might have been handled by the U.S. military if it had not been outsourced to contractors.
The indictments are the culmination of a series of multi-pronged investigations that were started Sept. 16, 2007, when a Blackwater convoy opened fire in the busy Nisour Square in Baghdad. The guards told investigators they believed they were under attack. Investigators found no evidence of the guards' accounts.
Joseph Persichini Jr., the assistant director in charge of the FBI's Washington field office, said that the Blackwater shooting case was one of the most difficult investigations ever conducted by the Federal Bureau of Investigation. A team of 10 special agents deployed to Iraq for four weeks, with four follow-up trips to the country. More than 250 interviews of witnesses were conducted, and 200 pieces of physical evidence have been gathered for the trial, he said.
Jeffrey Taylor, U.S. attorney for the District of Columbia, said at a news conference Monday at the Justice Department that the government believed it had answers to the questions of jurisdiction and venue that are expected to be raised by the defense.
He also said that the government "takes no pleasure" in prosecuting those who help defend their fellow Americans overseas, but that the shootings in Nisour Square represented a blatant disregard for human life of non-Americans.
"We honor the brave service of the many U.S. contractors who are employed to support the mission of our armed forces in extremely difficult circumstances," Taylor said. "Today, we honor that service by holding accountable the very few individuals who abused that employment by committing some very serious crimes against dozens of innocent civilians."
Life, liberty and GPS: What technology means in Egypt
By Noam Cohen
Monday, December 8, 2008
Among international outrages, depriving citizens of personalized maps seems far down on the list.
Still, that was the condition put on the introduction of Apple's 3G iPhone in Egypt. The government demanded that Apple disable the phone's global-positioning system, arguing that GPS was a military prerogative.
The company apparently complied, most likely taking a cue from the telecommunication companies that sell the phone there, said Ahmed Gabr, who runs a blog in Egypt, gadgetsarabia.com, and wrote about the iPhone's release there. "The point is that using a GPS unit you can get accurate coordinates of any place, and thus military bases and so on could be easily tagged," he wrote in an e-mail message.
I met Gabr last summer in Alexandria, Egypt, at the worldwide conference for Wikipedia. He was typical of the young Egyptians in attendance - hungry for new technology, hopeful about what it would mean for their country.
As much as any country, however, Egypt illustrates the push-me-pull-you nature of technology under a government that is wary of it.
Young people flock to Facebook, in a way I never could have imagined.
In the largest Arab country in the world, Facebook was a way for the educated elite to reach out to one another and to those who had left the country for an even more elite education.
Andrew Bossone, an American in Cairo who writes about technology, said that despite its expense, the iPhone in Egypt was "really popular - everyone knows the iPhone." In addition to editing a technology magazine, he teaches at the American University in Cairo. "One of my students who comes from a wealthy family has the iPhone, and one of my designers, who is not rich, bought it on credit," he said.
Bossone said he thought the government would relent on issues like GPS because it would side with business even at the expense of security concerns.
"The economy is itself a security issue," he said. "The slower the economy grows, the more people become discontented, and that is a security issue."
But thus far, each time technology has promised to help introduce democracy to the country, the young peoples' hopes have been dashed. A movement for political reform that used Facebook to organize protests over the spring was shut down. The authorities cracked down, jailing many of its organizers. In the last few weeks, a blogger affiliated with the radical group the Muslim Brotherhood was arrested for his writings, according to the Arabic Network for Human Rights. Another blogger is being held in a military camp, the group says.
It is enough to make one wonder if new technologies - the personal computer, the Web, the smartphone - will help set us free or merely give us that illusion.
Apple modified its phone without any public acknowledgment. In a series of e-mail exchanges and brief telephone conversations, an Apple spokeswoman detailed the success of the iPhone rollout around the world - a total of 13 million phones shipped since it was introduced in June 2007, and more than 200 million applications downloaded.
But she did not address how the iPhone came to be disabled or whether Apple had a policy it followed in modifying its products to meet the demands of governments worldwide.
This issue remains acutely relevant as Apple negotiates the introduction of the iPhone to China, whose estimated 500 million users make it the big kahuna of cellphone markets. Some reports say that in addition to issues like revenue sharing, there has been talk about modifying the phone so as not to use the 3G network or offer Wi-Fi capability.
Gabr described in his e-mail message what he considered to be the faulty rationale for the policy in Egypt.
"From a technical point of view, this is totally pointless because Google Maps works flawlessly here - you can even get a clear snap (with accurate coordinates) of places you're not supposed to see."
As an aside, he said that months ago he "bought an American iPhone 3G via eBay" with full functionality. "Cheaper, earlier and without compromise," he wrote, signing his note with a self-satisfied smiley-face emoticon.
I must admit, I didn't exactly think that the right to GPS was one of the basic freedoms. But Arvind Ganesan, director of the business and human rights program of Human Rights Watch, placed the issue in a larger context.
First, he described freedom of information as part of the broader, better known, freedom of expression. Transparency about the government's budget, for example, can be crucial to eliminating corruption and instituting democratic reforms.
Second, he argued that it was important for technology companies to set principles and follow them. "Here is the big question for Apple: Is this an ad hoc approach, or is there a fundamental policy, balancing the freedom of expression and information with the demands of the government?"
It is easy to get swept up in the utopianism embedded in new technologies. That we will be more politically engaged because of the organizing and fund-raising tools of social networking; that we will think greater thoughts now that anyone can have access to nearly everything ever written; that our tribal hatreds will melt away as the world recognizes that we are all connected.
Even those like Ganesan, who see technology abused, are cautiously hopeful. "Technologies do not hold people accountable. They give people the tools to hold people accountable." But he added: "We believe as a human rights group that the Internet can have an opening and transforming effect."
When Human Rights Watch was founded in 1978, he said, people were "smuggling letters by hand from the Soviet Union - that was how the world found out about a dissident." Today, there is a range of tools for spreading the word, from blogs to e-mail to YouTube videos.
"We may not know what the maximum impact of openness is," he said. "But we do know that in the most closed places the worst things happen."
Congressional panel wants inquiry into wiretapping of Muslim scholar
By Eric Lichtblau and James Risen
Monday, December 8, 2008
WASHINGTON: A U.S. congressional oversight panel plans to ask the National Security Agency to start an investigation into new evidence that the agency illegally wiretapped a Muslim scholar in Northern Virginia and concealed the eavesdropping during a 2005 trial in which the scholar was convicted on terrorism charges.
Representative Rush Holt, the New Jersey Democrat who is chairman of the Select Intelligence Oversight Panel, said in an interview that he planned to ask the inspector general of the NSA to open what would be the first formal investigation by the agency into whether its eavesdropping program had improperly interfered with the right to a fair trial in the United States.
Holt said he was responding to new evidence presented to him and other congressional leaders by the Muslim scholar's lawyer indicating that the Bush administration had tried to hide the full extent of the government's illegal spying in the criminal case.
If the NSA inspector general begins an inquiry, analysts said, that could also signal a new willingness by the agency, under a new administration, to examine its own operations in the eavesdropping program.
President-elect Barack Obama was a critic of the Bush administration's domestic spying program while he was in the Senate and on the campaign trail, and specialists on intelligence matters are waiting to see whether he takes action early in his administration to rein in the program.
"I find the allegations troubling," Holt said. His select intelligence panel was created last year by the speaker of the House of Representatives, Nancy Pelosi, Democrat of California, in response to the Sept. 11 Commission's recommendations to provide more comprehensive congressional oversight of the intelligence community.
The scholar, Ali al-Timimi, once a spiritual leader in Northern Virginia and described by prosecutors as a "rock star" in the Islamic fundamentalist world, is now serving a life sentence in prison after he was convicted in 2005 on charges of inciting his Muslim followers to commit acts of violence overseas.
Prosecutors described Timimi as the spiritual mentor of a group of young men in Northern Virginia who were convicted of giving material support in Kashmir to Lashkar-e-Taiba, the Kashmiri separatist group blamed by India for the recent attacks in Mumbai.
Several of the Northern Virginia men received paramilitary training in Pakistan, apparently at the urging of Timimi, but there was no evidence that they had taken part in any terrorist attacks.
Lawyers for Timimi maintain that the NSA, without acquiring court-approved warrants, used the eavesdropping operation approved by President George W. Bush weeks after the attacks of Sept. 11, 2001, to tap Timimi's communications. They say that the interceptions might include evidence that would point to his innocence in what they regard as a free-speech case. They also charge that the government has intentionally withheld that material despite repeated requests.
The Justice Department has denied that it had any other evidence of eavesdropping against Timimi other than what it turned over to his lawyers. But the federal judge in the case, Leonie Brinkema in Alexandria, Virginia, has expressed increasing annoyance over persistent questions about the NSA's possible role.
In an unsealed transcript of an October closed-court hearing in the case, the judge stated that she believed that the government appeared to have committed violations of national rules governing evidence and discovery. She also ordered the government to search for further evidence of its use of secret surveillance operations against Timimi.
A review of the public court file in Timimi's case, which includes the titles of classified filings, also strongly indicates that the court has received evidence that the NSA was used to intercept conversations between Timimi and Suliman al-Buthe, a Saudi fundamentalist suspected of having ties to terrorists.
At Timimi's trial, prosecutors presented evidence that in a telephone conversation with Buthe, Timimi had celebrated the 2003 destruction of the space shuttle Columbia. But the government has never publicly acknowledged that it used the NSA program to intercept conversations between the two men.
In a letter sent Thursday to Holt and other members of the congressional intelligence committees, Jonathan Turley, a lawyer for Timimi, said that a classified filing given to the judge, Brinkema, had "revealed that some of the interceptions (that were specifically sought) did in fact exist."
Lebanon losing battle to keep the lights on
Monday, December 8, 2008
By Alistair Lyon, Special Correspondent
A candle flickering in her darkened home, Fouada Hawi rails against the daily 10-hour power cuts that Lebanon's ailing electricity utility inflicts on her.
"It's unbearable," said the headscarved mother. "No one has money to buy fuel for generators, so you have to live by candle light. You have to put up with everything in this country, you work and you are patient, but nothing changes."
Many developing countries have power problems, but Lebanon's go beyond mere technical issues, a World Bank report issued this year suggests, pointing to corruption and vested interests.
It says the electricity sector's woes are typical of countries where "there are multiple beneficiaries of the dysfunctional status quo ... ranging from corruption in payments flows or procurement, to buying of voters through free electricity, to profiteering from energy shortages."
Hawi, 33, lives with her husband and child in Ouzai, just south of Beirut -- where luckier residents have still had to endure three hours without power a day for the last two years.
Anger over the blackouts turned violent in January when army troops shot dead eight protesters in the mainly Shi'ite southern suburbs, fuelling wider political turmoil.
Tensions have calmed since rival factions reached a deal on a national unity government in May, but the chronic malaise gripping the electricity sector is not so readily cured.
Nor can the drain on the public purse be easily plugged. Subsidies cost the equivalent of 4 percent of Lebanon's Gross Domestic Product last year, the World Bank estimates.
Lebanon built two gas-fired power plants in 1996, but they still lack a gas supply and run on expensive diesel instead. Older turbines use the costliest grade of fuel oil.
State-owned Electricity du Liban (EdL) can meet only two-thirds of peak demand. More than a third of the power it does generate gets lost in distribution or is not paid for.
How to overhaul a utility whose 2,000 staff have an average age of 58, whose tariffs were fixed in 1996 when oil cost $21 a barrel, and whose last audited accounts were issued in 2004?
TOO MANY COOKS?
Lebanon's fiendishly intricate sectarian power-sharing system makes consensus on reform elusive, and dozens of reports proposing solutions for the problems are gathering dust.
The latest energy minister to try his hand acknowledges the scale of the task.
"Today we are able to generate about 1,500 megawatts and our peak requirement is estimated at 2,200, so we have a deficit of around 700," Alain Tabourian told Reuters. "That's why we see a lot of power cuts, especially in summer."
Back-up generators used by shops, homes and factories hammer in the streets of Beirut during outages -- which cost business around $400 million (271 million pounds) last year, according to the World Bank.
Tangled overhead cables reveal illicit links to unmetered supplies. Public sector consumers like ministries, the army, police and hospitals are all supposed to get billed. Few pay.
Subsidising EdL cost the government $1.2 billion in the first 10 months of 2008, or more than 15 percent of its spending and a fifth of its revenue, Finance Ministry figures show.
The bill for imported fuel surged mainly because world oil prices spiked to nearly $150 a barrel in July before collapsing.
But Lebanon, with a $44.5 billion public debt -- among the world's biggest at 170 percent of GDP -- can ill afford such costs, let alone the investments to expand capacity.
Existing power stations are obsolete, poorly maintained or unsuited to the fuel available, Tabourian said.
Initially Syria was to supply natural gas for the two modern combined-cycle gas turbine units, but now has a shortfall itself, so Lebanon turned to Egypt. After successive delays, the Egyptians are promising the first deliveries in January.
"Unfortunately they cut the amount in half compared to what we originally agreed," Tabourian said. "That means only one of the two turbines in one plant will be able to run on gas."
"REAL WORD IS THEFT"
Tabourian put technical losses in the distribution system at about 15 percent, or double those typical of a well-run network.
"Non-technical losses -- the real word is theft -- have gone up to around 22 percent," he said, blaming Lebanon's political upheavals for the reversal of a trend which had curbed these to 17 percent from a crippling 40 percent in 2000-2002.
The ministry is considering how to restructure the outdated electricity tariff, without too much pain for poorer consumers -- although even they might pay up if EdL's service improved.
"Let them ration or raise the bills a bit, but give us electricity," pleaded Hawi at her home in Ouzai. "People can't live a normal life. School-kids can't study by candle light."
Albert Khoury, deputy general manager of a private power distribution concession in Aley, east of Beirut, blamed EdL's management. "Every area in Lebanon would pay if we had clean power and reliable billing and collection."
Computerisation at EdL is incomplete. Anyone trying to do business at its Beirut headquarters must navigate a maze of desks where clerks shuffle records in dusty ledgers and files.
EdL's chairman, Kamal Hayek, declined to be interviewed.
Tabourian said the widely discussed option of privatising EdL was out of reach for now: "First it needs to be corporatised so it can operate on commercial rules, so it can hire and fire."
He saw private-public partnerships as the way to combine the public sector's ability to raise affordable financing with the private sector's skills at building and operating projects.
Tabourian aims to put in place a strategic power plan for the next 25 years -- a tall order since the government will only last until a parliamentary election next May or June.
Such a master plan would set policy on the future energy mix -- coal, natural gas, liquefied natural gas and renewables all have their advocates alongside the fuel oil and diesel now used.
But long-term investments need consistent political support.
"Unfortunately what we have seen is successive governments often re-examining issues and taking a different tack," said Simon Stolp, a World Bank expert. "What they really need to do is set in train a course of action and pursue it to the end."
Khoury champions a bigger private sector role and more emphasis on renewables like solar and wind power.
"I hope the government will listen to us," he said. "But they need to listen more to the people who get six-hour power cuts a day, who cannot warm their water or light their homes.
"Unfortunately because of the lack of good services in Lebanon, we tend to consider that 24-hour electricity is a luxury. This is quite sad. It is our right."
(Editing by Sara Ledwith)
NATO says no Afghan winter lull in fight with Taliban
Monday, December 8, 2008
By Jonathon Burch
NATO forces said on Monday they would not let up the fight against Taliban insurgents during the Afghan winter and coordinated operations with the Pakistani army would likely hamper the militants' traditional rest from combat.
Violence rose in eastern Afghanistan in the spring and summer this year as ceasefires between Pakistan and militants on its side of the border gave insurgents more freedom to attack international forces on the Afghan side.
But as those peace deals have broken down and the Pakistani army has gone on the offensive, NATO-led forces see the winter months as an opportunity to apply pressure on the militants.
U.S. troops from the 101st Airborne, which specialises in helicopter air assaults, have already stepped up operations against insurgent positions before the winter fully sets in, their deputy commander told Reuters on Monday.
"Usually here, because of the weather, people hibernate. But now because we're the 101st Airborne Division and we have the mobility, we plan on going after those sanctuaries (in Afghanistan) where the enemy may be trying to wait out the winter," U.S. Brigadier General James McConville said.
"The bottom line is, we do not want the enemy to be allowed to rest in Afghanistan during the winter," he said.
But while many Taliban fighters stay in Afghanistan, many others make their way to Pakistan to sit out the cold months.
Even though heavy snows and poor visibility hamper the use of air power, particularly helicopters, as in previous years, NATO's International Security Assistance Force (ISAF) sees the winter as an opportunity to strike militarily and forge ahead with development projects to try to win hearts and minds.
"SQUEEZING A JELLYFISH"
But when ISAF has launched offensives near the border in the past, the Taliban and their allies have simply slipped over the into Pakistan and where the Pakistani army has pushed into its border tribal regions, militants have crossed into Afghanistan.
"It was like squeezing a jellyfish; it would poke out somewhere else," said U.S. Navy Captain Benjamin Brink, in charge of a joint intelligence operations centre between ISAF, Afghanistan and Pakistan.
What is new this year though is the better levels of cooperation between ISAF, the Afghan and the Pakistani military culminating in a coordinated operation in Kunar province of northeast Afghanistan and Pakistan's adjacent Bajaur district begun on November 4.
"The Pakistanis are forcing them towards the border and we are blocking the border," Brink told Reuters.
"The Pakistanis tell us they see a decrease in movement across the border in their direction...and we suspect it's down the other way as well because we are performing blocking operations along the passes and we will continue to do that through the winter," Brink said.
The Pakistani military says it has killed more than 1,000 militants in Bajaur alone and there are other smaller operations going on in other parts of the tribal region.
As the winter progresses, the Pakistani operations are due to sweep south along the border and ISAF is preparing similar blocking moves, Brink said.
While the military plans may be in place, much depends on the fragile diplomatic thaw between Afghanistan and the new civilian government in Pakistan, and also on Pakistan's ability to fight militants in its border regions and at the same time deal with tension with rival India in the aftermath of the Mumbai attacks.
In Washington, the Pentagon said attacks by Pakistani militants on supply convoys have had an insignificant effect on U.S. and NATO forces in Afghanistan.
"While some of our equipment has been interrupted in these cross-border movements, we've still been able to resupply U.S. forces in Afghanistan without any impact on their operations," spokesman Bryan Whitman said.
The route from Peshawar through the Khyber Pass to the border town of Torkham is the most important supply line for U.S. and NATO forces fighting the Taliban insurgency .
(Additional reporting and writing by Jon Hemming; Editing by Angus MacSwan)
Taliban said in 72 percent of Afghanistan
Monday, December 8, 2008
By Jon Hemming
The Taliban hold a permanent presence in 72 percent of Afghanistan, a think-tank said on Monday, but NATO and the Afghan government rejected the report, saying its figures were not credible.
The findings by the International Council on Security and Development (ICOS) come in the wake of a series of critical reports on Western-led military and development efforts to put an end to the seven-year Taliban insurgency in Afghanistan.
The U.S. government is conducting a wide-ranging review of strategy aimed at countering the Taliban guerrilla and bombing campaign which analysts agree has grown in both scale and scope in the last year.
But while the trends in the ICOS report reflected prevailing sentiment on Afghanistan, many of its findings appeared flawed and contained some glaring errors, security analysts said.
"The Taliban now has a permanent presence in 72 percent of the country," ICOS, formerly known as the Senlis Council, said in the report, adding that the figure had risen from 54 percent last year.
ICOS is an independent think-tank and research organisation based in Brazil that has researchers in the region.
The report defines a permanent presence as an average of one or more insurgent attacks per week over the entire year.
According to ICOS, a "permanent presence" then would include many areas of the country where the Taliban traditionally launch a large number of attacks in the spring and summer "fighting season," before melting away during the harsh winter months.
"We don't see the figures in this report as being credible at all," said NATO spokesman James Appathurai. "The Taliban are only present in the south and east which is already less than 50 percent of the country."
The Afghan government also rejected the report and said "in addition to the questionable methodology of the report and its conceptual confusion, the report has misinterpreted the sporadic, terrorising and media-oriented activities of the Taliban."
CLOSING ON KABUL?
At least 4,000 people have been killed in fighting in Afghanistan this year, around a third of them civilians, according to United Nations figures.
In the traditional Taliban heartlands of the mainly ethnic Pashtun south and east, NATO-led and U.S.-led coalition forces are engaged in daily clashes with militants fighting to overthrow the Afghan government and drive out foreign troops.
But the insurgents generally shy away from massed attacks against Afghan and international troops, preferring "shoot and scoot" ambushes, backed by roadside and suicide bomb attacks.
The Taliban, said Appathurai, "don't control any areas where Afghan and international forces are present. Whenever Afghan or international forces patrol into an area they simply run away."
"So the idea that the Taliban control large swathes of the country is simply impossible," Appathurai said.
ICOS said the Taliban are "closing a noose" around the Afghan capital, Kabul, "establishing bases close to the city from which to launch attacks ... Using these bases, the Taliban and insurgent attacks in Kabul have increased dramatically."
While the Taliban have built up a presence in provinces just to the south, west and east of Kabul in the last year, the number of insurgent attacks inside the city has actually gone down this year, the U.N. says.
That is largely due to a much stronger and highly visible police presence in the city in response to a series of high-profile suicide attacks in Kabul last year.
ICOS said Kabul was "virtually Taliban-free a year ago" and said in the city there were "no police checkpoints at night and few in the day."
An ICOS map of Kabul also showed the area occupied by the U.S. embassy, the sprawling NATO headquarters and the Afghan presidential palace as one of "high Taliban/criminal activity."
(Additional reporting by Golnar Motevalli; Editing by Paul Tait)
Obama strives to strike the right inaugural tone
By Katharine Q. Seelye
Monday, December 8, 2008
WASHINGTON: President-elect Barack Obama has ordered his first new tuxedo in 15 years for his inaugural celebration. And he has invited the marching band from Punahou School, his high school in Hawaii, to join the parade. More than 1,400 bands have applied; only a few dozen will be chosen.
Plans for Obama's inauguration Jan. 20 are slowly taking shape.
But how do you achieve the right tone without appearing insensitive at a time of deepening unemployment and financial crisis?
As excitement builds, inaugural planners are considering having Obama and Vice President-elect Joseph Biden Jr. take part in some community service in Washington. If Obama and Biden pitch in, they would probably call upon people around the country to do the same in their own towns, which could help mitigate any criticism of the inaugural celebrations.
"What we are looking to achieve is a tone that is hopeful," said Linda Douglass, a spokeswoman for Obama's inaugural committee.
Some old Washington hands say the staging should not necessarily be elaborate, but it should be festive.
"We need it," said Letitia Baldrige, White House social secretary to Jacqueline Kennedy and long-time arbiter of taste in Washington. "It's a great historical moment."
The swearing-in of the first black president will be a historic occasion and one that many in the country are anticipating with exceptional pride. Washington is expecting at least 1.5 million people, which would make it the biggest inauguration ever. For the first time, the full length of the National Mall will be opened to accommodate the crowd.
But with increasing numbers of people out of work and American soldiers enmeshed in two wars, inaugural planners face the task of balancing respect for the mood of the country while still celebrating Obama's achievement.
"You want the appropriate symbolism that goes with the inauguration of a new president," said the historian Robert Dallek. "Obama impresses me as a very intelligent politician who has been so in tune with the mood of the country that I can't imagine he would be so ham-handed as to be unmindful of this, but it would be a gross error to have some kind of huge celebration that seems profligate."
One option under consideration, officials said, is for Obama to participate in a national day of community service the day before the inauguration.
And one guidepost in terms of atmosphere is Obama's rally on election night in Grant Park in Chicago - celebratory but serious, striking in its simplicity, where Obama tried to raise hopes, but not expectations.
"The road ahead will be long," Obama said that night before a crowd of 200,000. "Our climb will be steep. We may not get there in one year or even one term. But America, I have never been more hopeful than I am tonight that we will get there."
Obama formed his inauguration committee only recently and it has yet to establish a schedule for the day or reveal what events it may be planning after the swearing-in ceremony, which takes place just before noon on the West Front of the Capitol.
Much of the day is pro forma, but presidents like to tailor the details on everything from which marching bands join the parade to which inaugural balls will be designated as official. And all will be dissected for meaning.
The Obama sense of stagecraft came in for rare criticism during the Democratic National Convention in Denver, when a set of Greek columns dominated the stage at Invesco Field. Obama himself said he was uncomfortable with it, and Republicans took the opportunity to portray Obama as more show than substance, with a healthy ego to boot.
Robert Schmuhl, who teaches American Studies at Notre Dame University and wrote "Statecraft and Stagecraft," said that while the inaugural planners had to walk a fine line, the act of ushering in the first black president would be so dramatic in itself that little extra fanfare would be necessary.
"You don't need to import artificial Greek columns to heighten the drama," he said.
There will be inaugural balls, but it is not clear how many will be official. That number has been rising over the last decades, with Bill Clinton topping out at 14 in 1997; George W. Bush scaled back to nine in 2005, but his was still the most expensive inauguration, costing $42.3 million in private funds.
At the same time, dozens of unofficial balls and parties are being planned all over town. They are beyond the control of the Obama team and probably will be less restrained, especially since the District of Columbia is keeping its bars open until 5 a.m. for four nights.
It is those galas where the words lavish and raucous will almost certainly apply. One, hosted by the Creative Coalition and seeking corporate sponsorships of up to $150,000, will feature Elvis Costello. Another, hosted by Impact Film Fund at the Fur nightclub and seeking sponsorships of $100,000, is headlined by Kanye West.
Obama is starting to put his own touches on the day. His new tuxedo is from Hart Schaffner Marx, a Chicago menswear firm that uses union labor, said Bruce Raynor, president of Unite Here, which represents apparel workers. The news was first reported by WWD, a fashion-industry trade journal.
William Kristol: Small isn't beautiful
Monday, December 8, 2008
President-elect Barack Obama and a Democratic Congress are about to serve up a supersized helping of big-government liberalism. Conservatives will be inclined to oppose much of what Obama and his party cook up. And, I believe, rightly so.
But conservatives should think twice before charging into battle against Obama under the banner of "small-government conservatism." It's a banner many Republicans and conservatives have rediscovered since the election and have been waving around energetically. Jeb Bush, now considering a Senate run in 2010, even went so far as to tell Politico last month, "There should not be such a thing as a big-government Republican."
Really? Jeb Bush was a successful and popular conservative governor of Florida, with tax cuts, policy reforms and privatizations of government services to show for his time in office. Still, in his two terms state spending increased more than 50 percent - a rate faster than inflation plus population growth. It turns out, in the real world of Republican governance, that there aren't a whole lot of small-government Republicans.
Five Republicans have won the presidency since 1932: Dwight Eisenhower, Richard Nixon, Ronald Reagan and the two George Bushes. Only Reagan was even close to being a small-government conservative. And he campaigned in 1980 more as a tax-cutter and national-defense-builder-upper, and less as a small-government enthusiast in the mold of the man he had supported - and who had lost - in 1964, Barry Goldwater. And Reagan's record as governor and president wasn't a particularly government-slashing one.
Even the Republican Party's 1994 Contract With America made only vague promises to eliminate the budget deficit, and proposed no specific cuts in government programs. It focused far more on crime, taxes, welfare reform and government reform. Indeed, the "Republican Revolution" of 1995 imploded primarily because of the Republican Congress' one major small-government-type initiative - the attempt to "cut" (i.e., restrain the growth of) Medicare. George W. Bush seemed to learn the lesson. Prior to his re-election, he proposed and signed into law popular (and, it turned out, successful) legislation, opposed by small-government conservatives, adding a prescription drug benefit to Medicare.
So talk of small government may be music to conservative ears, but it's not to the public as a whole. This isn't to say the public is fond of big-government liberalism. It's just that what's politically vulnerable about big-government liberalism is more the liberalism than the big government. (Besides, the public knows that government's not going to shrink much no matter who's in power.)
Now it's true that the size of the government and the modern liberal agenda are connected. It's also true that modern conservatism has to include a strong commitment to limited (though energetic) government and to constitutional (though not necessarily small or weak) government. Still, there's a difference between a conservatism that is concerned with limited and constitutional government and one that focuses on simply opposing big government.
So: If you're a small-government conservative, you'll tend to oppose the bailouts, period. If you more or less accept big government, you'll be open to the government's stepping in to save the financial system, or the auto industry. But you'll tend to favor those policies - universal tax cuts, offering everyone a chance to refinance his mortgage, relieving auto makers of burdensome regulations - that, consistent with conservative principles, don't reward irresponsible behavior and don't politicize markets.
Similarly, if you're against big government, you'll oppose a huge public works stimulus package. If you think some government action is inevitable, you might instead point out that the most unambiguous public good is national defense. You might then suggest spending a good chunk of the stimulus on national security - directing dollars to much-needed and underfunded defense procurement rather than to fanciful green technologies, making sure funds are available for the needed expansion of the U.S. Army and Marines before rushing to create make-work civilian jobs. Obama wants to spend much of the stimulus on transportation infrastructure and schools. Fine, but lots of schools and airports seem to me to have been refurbished more recently and more generously than military bases I've visited.
I can't help but admire some of my fellow conservatives' loyalty to the small-government cause. It reminds me of the nobility of Tennyson's Light Brigade, as it charges into battle: "Theirs but to do and die." Maybe it would be better, though, first to reason why.
Most of us are 'mutts'
By Ernest Hebert
Monday, December 8, 2008
When President-elect Barack Obama talked about what kind of dog to get for his daughters, one of the possibilities was, "A mutt like me."
Obama's words threw me into the past. I was thinking about something my mother smacked me with on her death bed. I'll get to that in a minute.
I grew up in Keene, New Hampshire, with a French-Canadian background. I didn't even speak English until I was 5, after I started kindergarten.
In the summer of 1958 when I turned 17, I worked at my father's factory. For fun, my dad learned from his co-workers to count to 10 in German, Lithuanian, Polish, Greek and Italian. He taught them to count to 10 in French. It wasn't France French exactly, more like New England Franco-American patois - uh, duh, twah, caht, saynk, siss, set, wit, nuf, dziss.
If your people were not recent immigrants, you were a Yankee. Nobody identified themselves strictly as American. In print one might be referred to as, say, a Polish-American. In vernacular conversation, you were Polish. And, of course, there were ethnic and racial slurs best not repeated here. In polite company, black people were negroes. I remember only one negro man in Keene - George Miller, manager of the Latchis Theatre. In those days, young boys addressed men as Mister, but we called George Miller George. He's long since departed, and I hope wherever he wound up they're calling him Mr. Miller.
Hebert is one of the oldest North American names from Old Europe. My ancestors arrived from France in Acadia, what is now Nova Scotia, in 1632. Though the Heberts have been in North America ever since, I grew up believing I was French. It was the same with my friends. My pal Billy Sullivan was Irish, though neither he nor his immediate relatives had been to Ireland. Your last name gave you your identity.
I thought of myself as 100 percent French until my teens when I learned that my great-grandfather on my mother's side had landed in Canada via Italy. Then my father told me that one of his grandparents was English. O.K., so now I was French, English, and Italian.
Years later, my distant cousin Connie Hamel Hebert did a genealogy of the Heberts. Among the French names I came across a Cormac MacDonald, a Scotsman. My mother dropped the big bomb on her death bed. Her grandmother was a Native American.
She was ashamed of her mixed heritage, but in the end she felt the need to purge herself by confessing to me, her eldest son. So here I am Mom - French, Italian, Scottish, English, Native and who knows what else. In my heart I'm American as apple pie, pizza, tacos and Big Macs.
For a while I thought the old prejudices had disappeared, that the succeeding generations could call themselves Americans without hesitation. I was wrong.
When I directed a Dartmouth College foreign studies program at a university in Scotland, some students referred to themselves by their ancestral roots, sometimes with "American" tagged onto the end of a hyphen, sometimes not. I also taught Scottish students. They had no identity problems. They were always Scots.
Recently, one of my students at Dartmouth, a young woman with a Jewish father and a Chinese mother, wrote about going to a Chinese restaurant with the Chinese side of her family. The server brought her a knife and fork and everyone else chopsticks.
The experience was a punch to her solar plexus. Like many young people, she felt she had to choose which part of herself to identify with.
I want to tell my student to get over it. Most of us in America, like the newly elected president, are mutts of one kind or another, but I doubt we're ready to accept a mutt president and a mutt identity for ourselves.
Barack Obama will always be known as the first black president, not black-white president. In my own mind and in the minds of my acquaintances, I'll always be French. Que Dieu benisse l'Amerique.
Ernest Hebert is a professor of English at Dartmouth College and the author of 10 books.
World's oldest profession, too, feels crisis
By Dan Bilefsky
Monday, December 8, 2008
PRAGUE: On a recent night at Big Sister, which calls itself the world's biggest Internet brothel, a middle-aged man selected a prostitute from an electronic menu on a flat-screen television, pressing his index finger against it to review the age, hair color, weight and languages spoken by the women on offer.
Once he had chosen an 18-year-old brunette, he put on a mandatory burgundy terry cloth robe and proceeded to one of the brothel's luridly-lit theme rooms, an Alpine suite decorated with foam rubber mountains covered with fake snow.
Nearby, in the brothel's cramped control room, two young technicians used joysticks to control the dozens of hidden cameras that would film his performance and stream it, live, on Big Sister's Internet site.
Sex is free at Big Sister, but that is not cheap enough for some men. Customers get the cut rate in return for signing a release form that allows the brothel to film their sexual exploits.
Even with this financial incentive, Big Sister's marketing manager, Carl Borowitz, 26, a Moravian computer engineer, lamented that the global financial crisis had diminished the number of sex tourists in Prague.
"Sex is a steady demand, because everyone needs it, and it used to be taboo, which made a service like ours all the more attractive," said Borowitz, who looks more like Harry Potter than a Czech Larry Flynt. "But the problem today is that there is too much competition, too many free pornography sites and people are thinking twice before making impulse purchases, including paying for sex."
Big Sister is not the only brothel suffering the effects of a battered global economy. While the world's oldest profession may also be one of its most recession-proof businesses, brothel owners in Europe and the United States say belt-tightening caused by the global financial crisis is undermining a once-lucrative industry.
Egbert Krumeich, manager of Artemis, the largest brothel in Berlin, said that the recession had helped dent revenue by 20 percent in November, which is usually peak season for the sex trade. Meanwhile, in Reno, Nevada, the multimillion-dollar Mustang Ranch recently laid off 30 percent of its staff, citing a decline in high-spending clients.
Big Sister is not struggling as much as some of its more traditional rivals; its revenue is largely derived from the €30, or $40 monthly fee each of the company's 10,000 clients pay to gain access to its Web site.
But Borowitz said Big Sister hoped to offset a 15 percent drop in revenue over the past quarter by expanding into the United States. Big Sister also produces cable TV shows that air on Sky Italia and Television X in Britain, as well as DVDs like "World Cup Love Truck" and "Extremely Perverted."
Ester, an 18-year-old prostitute at Big Sister who declined to give her last name, said that big-spending clients had diminished, but noted that she was still earning nearly €3,000 a month, enough to pay rent and to pay for her favorite Louis Vuitton purses.
"The reason I do this is for the money," she said, after gyrating half-naked around a pole. Being filmed, she added, made her feel more like an actress than a sex object.
In the Czech Republic, where prostitution operates in a gray zone but is largely tolerated, the sex industry is big business, generating nearly €400 million in annual revenues, 60 percent of which is derived from foreign visitors, according to Mag Consulting, a tourism research company in Prague that also studies the sex industry.
Since the fall of Communism in 1989, the Czech Republic has become a major transit and destination country for women and girls trafficked from countries farther east, including Ukraine, Russia, Belarus and Moldova, the police say. Czechs and those transiting the country are most often sent to Western Europe or the United States.
Since 1989, tens of thousands of sex tourists have streamed into Prague, the pristinely beautiful Czech capital, drawn by inexpensive erotic services, an atmosphere of anonymity for customers and a liberal population tolerant of adultery.
Mag Consulting said 14 percent of Czech men admit to having had sex with prostitutes, compared with an EU-wide average of 10 percent.
Dozens of cheap flights to Prague have also ensured a steady flow of bachelor parties from across Europe. In 2005, an average of 30 flights arrived in Prague every day from Britain alone, a figure that analysts said has dropped by a third.
Jaromir Beranek, the director of Mag, said that when Germany and Britain - the two countries that send the most tourists to Prague - began to stagnate, sexual tourism suffered too.
The strength of the Czech crown against the euro, lower spending power and competition from even lower-cost sex capitals like Riga, Latvia, and Krakow, Poland, were threatening one of the country's most thriving sectors, he said. "If you ski and there is no snow, you stay home. The same applies to sex."
Many Czechs are more than happy to see Prague shrug off its reputation as one of the world's top-20 sex destinations, but some in the hotel industry are so alarmed by the drop in tourists that they are lobbying the government to legalize the trade, in hope that it will help lure more clients.
Jiri Gajdosik, the manager of Le Palais, one of Prague's top hotels, argues that regulating prostitution would help attract business by making prostitution safer. "We must ensure that the city loses its bad reputation of a city where foreigners are afraid that they will be robbed," he said in an interview with Hospodarske noviny, a Czech financial daily.
While some critics have warned that legalization would effectively transform the Czech state into the country's biggest pimp, the government is considering whether to emulate the Netherlands and Germany by regulating prostitution, just as it would any other industry. It is considering passing legislation by the end of this year that would require the Czech Republic's estimated 10,000 prostitutes to register with the local authorities.
Dzamila Stehlikova, the Green Party minister for minorities and human rights who is shepherding the bill through Parliament, said that forcing the business out into the open would make it harder for human traffickers to thrive, while also helping to assure mandatory health check-ups for prostitutes. Other advocates argue that legalization would generate millions of euros in tax revenue from an industry that now largely operates underground.
Not everyone is enthusiastic, including the prostitutes themselves, who warn that being issued prostitution identification cards would further stigmatize them.
Hana Malinova, director of Bliss Without Risk, a prostitution outreach group, said she feared the current credit crunch was pushing more poor women into prostitution, since they could make more money selling their bodies - about €120 for a half-hour session at some upmarket sex clubs in Prague - than flipping burgers at McDonalds.
Even with the economic downturn, she added, prostitution was far more resilient than other industries, though the downturn was discouraging adultery.
"An Austrian farmer from a remote area who is not married will still cross the border to the Czech Republic looking for sex," Malinova said. "On the other hand, the recession is helping to keep husbands at home who might otherwise be cheating on their wives."
Near the border with Germany, in towns in northern Bohemia that were long blighted by a daily influx of sex tourists seeking cheap thrills, many are rejoicing in the decline.
Only a few years ago, the town of Dubi was so overrun by prostitution that a nearby orphanage was opened to provide refuge for dozens of unwanted babies of prostitutes and their German clients. Sex could be purchased for as little as €5 - the price of a hamburger in nearby Dresden - drawing a daily influx of more than 1,000 sex tourists.
The more than three dozen brothels that once operated in Dubi have been winnowed down to four, with several of the former brothels having transformed into goulash restaurants or golf clubs.
Petr Pipal, the conservative mayor of Dubi whose zero-tolerance policy is largely responsible for the change, said that installing surveillance cameras and police officers at the entrance of brothels had deterred sex tourists by depriving them of their anonymity. Rising prices for sexual services and the global financial crisis, he added, were also helping to tame demand.
"Two or three years ago, we would get 1,000 men coming here for sex on a Friday night, which is a lot for a town of 8,000 people," Pipal said from police headquarters, where members of the anti-prostitution squad sat in a surveillance room, controlling outdoor cameras filming 13 now mostly deserted streets.
"The one good thing about the economic crisis is that it is helping to keep sex tourists away."
Even brothels in areas of the Czech capital most popular with tourists complain that they are suffering from economic hardship. On a recent night near Wenceslas Square in Prague, dozens of young men outside a row of neon-lit sex clubs beckoned tourists with offers of complimentary alcohol and racy strip shows.
Inside Darling, a giant multifloor cabaret famous for cancan shows modeled on the Moulin Rouge in Paris, scantily clad young women stripped on a stage surrounded by leopard skin couches, flashing disco balls and French impressionist paintings of naked women.
Suzana Brezinova, the club's marketing director, said sex tourism to Prague had been hit because prices had risen nearly to the levels of Rome. But she added that some high-spending businessmen still came to Darling to shrug off the economic doldrums, thinking nothing of splurging €1200 for a night of sexual pleasure and escapism.
"People have less money," she said. "But hard times also mean that people want to be cheered up."
Jan Krcmar contributed reporting from Prague and Victor Homola from Berlin.
Agreement near on bailout for U.S. automakers
By David M. Herszenhorn and Jackie Calmes
Monday, December 8, 2008
WASHINGTON: An agreement between the White House and Democrats in Congress on the shape of a rescue plan for the U.S. auto industry appears to be close, the chief spokeswoman for President George W. Bush said Monday.
"I think it's very likely," the spokeswoman, Dana Perino, said when asked whether an agreement might be reached before the end of the day. "We've made a lot of progress on Friday."
The Democrats have been drafting legislation for tight government control of the crippled industry.
While the form of oversight was still under discussion, including the powers of a potential "car czar" to oversee the rescue package, the talks between the White House and Congress made clear the extent to which the auto companies would have to submit to substantial government supervision in order to receive a taxpayer-financed bailout.
"Our idea was one person that would serve as an adviser, somebody appointed by the president," Perino said. "Of course, when you're working on a negotiation, you talk to them about their ideas, as well; we'll see what they come back with. But our concern right now is on the process, because we haven't seen the legislation, so we can't give you any more details."
Whatever oversight entity is created, it would direct the drastic reorganization plans that the auto companies have said they were willing to undertake in exchange for billions of dollars in short-term government loans to keep them in business, a senior congressional aide said.
A main factor complicating the deliberations was the imminent transition between the Bush administration and that of President-elect Barack Obama, set to take office Jan. 20.
The discussions of how strong a hand the government should take with the auto industry came as congressional and White House negotiators sought to put the final touches on emergency bridge loans of about $15 billion to keep General Motors, Chrysler and Ford Motor afloat.
The final legislation is also expected to impose stringent taxpayer protections, including stock warrants that would give the government an equity stake in the three companies, new limits on executive pay and a ban on stock dividends while the loans are outstanding.
One proposal would require the auto companies to seek government approval for any business transaction of $25 million or more.
Once a bill offering aid to the industry is completed by congressional Democrats and the White House, it would still need the approval of some Senate Republicans.
Senator Carl Levin, Democrat of Michigan, one of the auto industry's biggest supporters, said Sunday that it was uncertain whether the plan would win the 60 votes needed to advance in the Senate.
Obama, whose transition team has been involved in the talks, made starkly clear during an interview and at a brief news conference Sunday that any aid to the Big Three auto companies should not come without significant concessions.
"They're going to have to restructure," Obama said during an interview on the "Meet the Press" television program.
"And all their stakeholders are going to have restructure. Labor, management, shareholders, creditors - everybody is going to recognize that they have - they do not have a sustainable business model right now, and if they expect taxpayers to help in that adjustment process, then they can't keep on putting off the kinds of changes that they, frankly, should have made 20 or 30 years ago."
Still, the bill seemed likely to stop short of authorizing the broad powers that some lawmakers had urged to allow what could have amounted to an out-of-court bankruptcy proceeding, in which the creditors of the automakers could be forced to accept reduced payments, labor contracts could be rewritten and executives could be summarily dismissed.
Senator Christopher Dodd, a Democrat of Connecticut who is chairman of the Senate Banking Committee, which is drafting the legislation, called for the dismissal or resignation of Rick Wagoner, the chief executive of GM, which is the most imperiled automaker.
"I think you've got to consider new leadership," Dodd said Sunday in an interview on the "Face the Nation" television program. "If you're going to really restructure this, you've got to bring in a new team to do this, in my view."
Asked specifically about Wagoner, Dodd said: "I think he has to move on."
A GM spokesman, Steve Harris, said that the company was grateful for Dodd's assistance and that it was willing to accept tough oversight, but that it retained confidence in Wagoner.
"We appreciate Senator Dodd's support in trying to provide some assistance for the industry, but General Motors' employees, dealers, suppliers and the GM board of directors feel strongly that Rick Wagoner is the right person to continue the transformation of the company that he began and has presented plans to Congress to continue and accelerate," Harris said.
All of the proposals made clear that congressional Democrats and the White House, furious over the need for another huge corporate bailout, intended to make the automakers pay a price far greater than the 5 percent interest on the emergency loans.
Congressional Democrats said that if any of the companies failed to meet government requirements by the end of March, the emergency loans could be called in for immediate repayment.
At the news conference in Chicago, Obama affirmed his position that it would be unacceptable to allow the auto industry to collapse.
But using somewhat tougher language than he had before, he said it made "no sense for us to shovel more money into the problem" if the companies were unwilling to reorganize.
The Bush White House, in its proposal for an auto rescue plan, called for the creation of a "financial viability adviser" within the Commerce Department charged with negotiating a "long-term financial viability plan" for each of the auto companies.
If such a viability plan could not be negotiated, the White House proposal called for allowing the adviser to mandate one.
Democrats were weighing counterproposals calling for the creation of a full oversight board, made up of the secretaries of the departments of commerce, energy, labor, transportation and of the Treasury, and the administrator of the Environmental Protection Agency.
Many lawmakers in both parties say they are troubled by the Bush administration's handling of the $700 billion rescue of the financial system, which Congress approved in October.
Several lawmakers said they did not want to be pressured again into spending billions of taxpayer dollars to rescue private companies.
"I think Congress is tired of being stampeded," Senator Jeff Sessions, Republican of Alabama, said on "Face the Nation."
"We haven't even seen a bill yet," he said. "So I think there's still a lot of skepticism out there."
Senator Richard Shelby of Alabama, the senior Republican on the banking committee, on "Fox News Sunday" urged his Republican colleagues to block an automative bailout bill through the use of a filibuster.
"I think this is a bridge loan to nowhere," he said.
As lawmakers grappled with ways to aid the auto industry. Obama cautioned on "Meet the Press" that it was critical to think about both short- and long-term solutions to the nation's economic woes. "Things are going to get worse before they get better," Obama said.
Saving Detroit - but at what price?
By Bill Vlasic
Monday, December 8, 2008
DETROIT: So what would it cost to fix the Big Three automakers?
Now that Congress has signaled its willingness to help the ailing car companies with short-term loans, that question has gained new urgency, particularly for Barack Obama, who will inherit the crisis in Detroit when he takes office on Jan. 20 as president.
The ultimate price tag for a new and improved U.S. auto industry may be as unfathomable as questions about the potential harm to the economy if any of the companies were allowed to collapse.
But estimates of the final bill are rising rapidly, particularly as the economy weakens and car sales keep falling.
A comprehensive bailout for General Motors, Ford Motor and Chrysler could cost as much as $125 billion, and even the companies themselves are hard pressed to dispute that figure.
Mark Zandi, chief economist of Moody's Economy.com, testified before Congress last week that the Big Three's request for $34 billion in loans "will not be sufficient for them to avoid bankruptcy at some point in the next two years." He said $75 billion to $125 billion would be needed to pay for a full-scale reorganization of the automakers.
Lawmakers have indicated they may give GM and Chrysler about $15 billion in emergency aid to keep them in business until the spring, when the Obama administration and the new Congress, which is sworn in Jan. 6, can draft a longer-term rescue plan.
Through four hearings on Capitol Hill, the chief executives of GM, Ford and Chrysler have tried to reassure lawmakers that all they need is temporary assistance until the sick economy and the depressed auto market recover.
GM's chairman and chief executive, Rick Wagoner, tried to assure Congress last week that GM could be profitable again with $18 billion in U.S. loans and an aggressive reorganization plan.
"Our plan is far-reaching and extensive," Wagoner said. "It is a different way of thinking and our team is committed to achieving it."
Still, there are many variables that could derail the Big Three's recovery plans.
Despite an infusion of $700 billion into financial institutions, there are few signs that car loans are becoming more available to consumers - a critical component in any rebound in vehicle sales, which have fallen to their lowest level in 25 years in the United States.
Important foreign markets in Europe and Asia are also deteriorating, further reducing revenues at GM and Ford.
And Detroit is also facing huge bills - interest payments on their enormous debt loads, large contributions to health care trusts for retired hourly workers as well as tens of billions of dollars in expenses to meet stringent new government fuel-economy requirements.
The magnitude of the companies' obligations left some lawmakers groping for answers during the testimony of the Big Three executives.
"Do we know what we're doing? Do we know what we're trying to achieve?" asked Representative Peter King, Republican of New York. "If I was reasonably convinced that the money was going to work, I would support it."
After losing tens of billions of dollars in recent years, Detroit's credibility has evaporated among investors and analysts who have seen a series of reorganization efforts and new products fail to produce a lasting turnaround.
The fact that the companies first asked for $25 billion in mid-November, then upped the ante to $34 billion two weeks later, hardly gave lawmakers confidence in the automakers' plans.
"I don't want to send you home again because it's going to get more expensive in another two weeks," Representative Gary Ackerman, Democrat of New York, said at one hearing.
Because it is the biggest and most troubled of the automakers, GM generated the most skepticism with its plan. The company says that it needs $10 billion to get through March, another $2 billion for the remainder of 2009, and a $6 billion line of credit beyond that.
But this is a company that has lost $20 billion so far this year, spent $2 billion a month in cash since July, and consistently missed its sales targets and financial benchmarks.
GM has already cut its U.S. work force in half in the past three years. Yet its latest reorganization plan calls for downsizing its brands and dealerships and cutting another 30,000 jobs - without addressing how it would generate new revenue.
Because GM also has more than $60 billion in debt outstanding and a bill for $21 billion in retiree health care benefits coming due, experts cannot see how it will survive with temporary government loans.
"Even with the most generous assumptions as to operating results and carefully adhering to GM's proposed restructuring, GM is still a highly distressed company and likely to go bankrupt, probably within in one year," said Edward Altman, a professor at the Stern School of Business at New York University.
Despite the willingness of the United Automobile Workers to make concessions on job security and health care payments, GM desperately needs its bondholders and other creditors to allow it to revamp its debt payments.
GM could accomplish those ends if it sought bankruptcy protection, but the company maintains steadfastly that such a filing would ruin its already shaky reputation among consumers.
In a bankruptcy proceeding, the UAW would be in jeopardy of losing its $28-an-hour wage scale and its long-term health care benefits. The union president, Ron Gettelfinger, argued during the hearings that Congress should appoint a trustee or oversight committee with authority to force concessions from GM's debtors.
"What Congress can and should do is put in place a process that would require all the stakeholders to participate outside of bankruptcy," Gettelfinger said.
But an appointed "car czar" would hardly have the same legal authority as a bankruptcy judge to demand that bondholders, for example, take equity in exchange for reducing their debt.
The situations at Ford and Chrysler are a little different, but both companies still have large obligations to debtors and union health care trusts.
While Obama has repeatedly said that bankruptcy is not preferable for the companies, several lawmakers see it as the only viable way for the Big Three to get a fresh start as smaller, less-indebted entities.
$17 billion auto bailout, or repeat of Lehman?
By Steven Greenhouse
Monday, December 8, 2008
NEW YORK: In the days before Lehman Brothers was allowed to fail, U.S. Treasury officials made it clear that they did not think the investment bank's collapse would have a major ripple effect.
And in recent weeks, in congressional hearing rooms and at water coolers across the country, a lot of people have been saying the same thing about Detroit's beleaguered automakers.
What Lehman's failure shows, supporters of the Big Three bailout contend, is that there can be unanticipated consequences of allowing a major company to go under, and the full extent of the risks becomes clear only after the fact - when it can be too late to contain the fallout.
Over the weekend, congressional leaders and the Bush administration provisionally agreed to a bailout in which about $17 billion in taxpayer money would be used to keep General Motors and Chrysler afloat. Ford, meanwhile, says it does not need immediate federal aid.
But some lawmakers and economists continue to argue that General Motors and Chrysler are too far gone to be saved and that trying to bail them out amounts to throwing away taxpayer dollars. Moreover, those lawmakers warn that rushing to the rescue with U.S. government money will reward the automakers for years of poor management and myopic decisions.
Back in September, Treasury officials similarly argued that bailing out Lehman would have wrongly rewarded it for its excessive risk-taking, and thereby would have given the U.S. financial sector a green light for future bad behavior.
Seeing how Lehman's collapse shocked the stock and credit markets, Robert Barbera, chief economist at ITG, an investment firm, cautioned that not bailing out the Big Three could prove short-sighted.
"It's very different from Lehman because you don't have the systemic financial system risk, but it would be equally stupid," he said. "If Congress allows the auto companies to fail and with the effect that this would have on sales and production, what this means to the real economy will have instantaneous and brutal effects on the stock market."
In other words, Barbera warned that opposition to lending either the $17 billion agreed to - or the $34 billion that the car companies originally requested - could result in the stock markets' plunging by hundreds of billions of dollars. And that does not include the billions of dollars in unemployment insurance benefits and pension bailouts that would be required to assist not just the displaced autoworkers, but also the many other workers, like truck drivers and waitresses, whose jobs depend on the Big Three.
"There will be tremendous regret if we don't help them avoid bankruptcy in the next few weeks or months," said Mark Zandi, chief economist with Moody's Economy.com. "If they go into bankruptcy now, they'll go into liquidation, and there will be the loss of hundreds of thousands, if not a million, jobs - on top of the four or five million we're going to lose. That will add almost a point to unemployment by itself."
At a House committee hearing on Friday on Detroit's woes, Edward Altman, a professor of finance at New York University, recommended that the automakers enter bankruptcy reorganization. Through such a move, he said, the automakers could sharply cut their costs by negotiating deals with their creditors, dealers and labor unions.
Many supporters of a bailout say filing for bankruptcy reorganization could quickly lead to liquidation because car buyers might lose faith in the companies and worry that their auto warranties would not be honored.
Altman said large-scale debtor-in-possession lending - either by the federal government or banks that would have priority over other creditors - could help keep the automakers operating (and guaranteeing their warranties) as they reorganize and reduce costs on the way to regaining their competitiveness.
He said a revamping, helped by such financing under the bankruptcy laws, could actually reassure the stock market that "the damage can be minimized with a large debtor-in-possession financing" because "there will be more assurance that GM will be around for a long time."
Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee, which held the hearing Friday, warned against a wholesale liquidation, saying it would jeopardize three million jobs. Yet he also opposed a U.S. bailout "because it's just taking money and putting it into an inefficient operation, and that money will be simply washed down the drain."
Bachus voiced confidence that bankruptcy filings by one or more auto companies would not cause markets to plunge. "I think a restructuring plan done with the protection of certain benefits of bankruptcy might be positively perceived," he said.
But Barbera warned against overconfidence, saying Treasury officials thought they would carefully exact only a pound of flesh from Wall Street by letting Lehman fail, helping teach other investment banks not to take excessive risks.
"But," he said, "it turned out not to be a pound of flesh that was taken. It was a ton."
Economic signals point to long, deep recession
By Michael M. Grynbaum
Monday, December 8, 2008
NEW YORK: Despite months of rescue efforts, hundreds of billions of dollars in government spending and an avant-garde apparatus of financial tools, the U.S. economy has only worsened, and at a faster rate than nearly anyone predicted.
This recession, which officially began in December 2007, now appears virtually certain to be the longest downturn - and possibly most severe - since the end of World War II, as evidenced last week by a demoralizing series of grim reports on jobs, sales and public confidence.
The reports signaled that even after 11 months - more than the entire length of the last two downturns - this recession has only now entered its fiercest phase, and economists say the pain will not end soon.
"For the average American, it's going to be devastating for the next six to 12 months," said Bernard Baumohl, chief global economist at the Economic Outlook Group, a research and forecasting firm. "I have not seen anything particularly hopeful right now, which tells me we have a ways to go."
In an appearance Sunday on the television program "Meet the Press," President-elect Barack Obama promised a stimulus plan "large enough to get the economy moving," but conceded that "things are going to get worse before they get better."
Some analysts had hoped that the worst was over after October's market shocks, which made consumers skittish and choked off credit.
Instead, Americans retrenched even further in November, sending sales at U.S. retailers tumbling to the weakest level in more than 35 years and leading the U.S. automakers to record their worst sales in a quarter-century. Manufacturers have not seen conditions this bad since 1982.
The decline in spending is likely to continue, depriving the economy of its primary growth engine, as layoffs continue to mount.
More than half a million Americans, from financial analysts to factory workers, lost their jobs in November alone. Rarely has a labor downturn affected such a broad swath of income levels.
Most frightening of all is that the worst job losses may be yet to come. If history is any guide, millions more Americans could lose their jobs before businesses start to expand again.
The worst jolts to the labor market tend to be only the precursor of six months or more of additional layoffs. Employment suffered a major contraction in December 1981 and January 1982, and workers did not see a stable market for about 10 months, including another big round of layoffs in July 1982.
A similar pattern occurred in the other great postwar recession, in 1974, when several months of a stagnant labor market were followed by a violent contraction over the new year. After the worst month, December 1974, the job market took about six more months to stabilize.
So in the best case - where November's 533,000 lost jobs signals the bottom of the labor market contraction - workers could face six more months or so of hard times.
"We'll be lucky if the unemployment rate is below double digits by the end of next year," said Jared Bernstein, who has been chosen as the chief economic adviser to Vice President-elect Joseph Biden. "Even if the economy improves, the growth won't be enough to rehire laid-off workers, much less absorb those coming into the labor force."
There is no guarantee, of course, that November's numbers will be the worst of the current round of layoffs.
Now that the full magnitude of the financial crisis is apparent, companies are tightening their belts further. Just last week, AT&T, CreditSuisse, DuPont and Viacom announced deep cuts. Dow Chemical said Monday that it would cut 5,000 jobs. Layoffs are expected in the financial and automotive industries after the new year.
"This current environment requires action, and that's what we're doing," said Mohammed Nakhooda, a spokesman for Nortel Networks, the telecommunications equipment maker, which has lost business this fall from large corporate clients cutting costs.
Nortel, based in Toronto, said it would cut about 1,300 jobs, or 5 percent of its work force, including some at its U.S. operations. It will also begin a hiring freeze and cut back on employee travel.
"It's tough, but it's necessary," Nakhooda said. "The business environment has obviously changed pretty drastically over a short period of time."
Some economists predict that the U.S. economy could lose as many jobs in the first six months of 2009 as the entirety of 2008. Nearly two million jobs have been lost since the start of the recession last year, two-thirds of them since September. Still, some forecasters say the pessimistic talk may be overblown, and possibly a problem in itself.
"The numbers are giving us a darker view than is actually the case," said Chris Varvares, president of Macroeconomic Advisors, a research firm, adding that some of the economic indicators that have been flashing red are based on subjective surveys of businesses and households.
"There is such a thing as self-fulfilling prophecy," he said.
Even Americans who are lucky enough to still collect a paycheck are likely to save more, cut back on luxury items and restaurants, and channel more of their income into savings accounts for college and retirement.
"Even Americans who still have a job are looking around and saying, 'Well, you know, how much longer?"' said Joshua Shapiro, chief domestic economist at MFR, a research firm.
All of this is likely to make many people hesitant to invest any money they do have. Many Americans chose to save over the last two decades by investing in stocks and real estate. Now, a more conservative approach may return, analysts said - the equivalent of hiding money under the mattress.
"It is quite conceivable - many would say probable - that the severe asset price collapses that have occurred in both equity and real estate will prompt a lasting increase in the desired saving rate, at least on the part of many consumers," Ed McKelvey, a Goldman Sachs economist, wrote in a note last week.
Those who benefit from the downturn could be those still willing to take a trip to the shopping mall, where they will find deep discounts on a range of products. First-time home buyers may also find deals, as long as they can obtain a mortgage - no easy task in a time of tight credit.
Many economists pointed to government stimulus as the way out of the economic mess, and they applauded the U.S. government's announcement that it might try to drive down interest rates on mortgages to 4.5 percent, about one percentage point lower than current rates.
A major stimulus package is also expected to be announced in January or February, soon after Obama takes office. Economists hope that the package will create jobs and stimulate spending, and many predict that economic growth will improve slightly after this quarter with the government help.
In an address taped for broadcast Saturday morning on radio and YouTube, Obama committed to the largest public works program since the creation of the interstate highway system a half century ago. "We need action - and action now," he said.
Still, analysts said government assistance would probably not result in a full recovery by May, 16 months into the recession. That would match the record for the longest postwar recession, set in 1975 and reached again in 1982.
"Up until mid-September, a plausible scenario was that it would be a short and shallow recession," said Edward Yardeni, an investment strategist. "After mid-September, it became quite obvious that that was wishful thinking."
European leaders call for closer cooperation on economic crisis
Tribune Co. files for bankruptcy protection
Luxe is losing its edge
By Nelson D. Schwartz
Monday, December 8, 2008
ROME: With a world-weary sigh, Francesco Trapani slips off his $10,000 steel and white-gold Bulgari watch, revealing the band's dull underside. Bulgari once polished it to a fine gleam to match the shiny exterior.
The change is a subtle one, but it captures the cost-consciousness that the first recession in luxury-goods sales in nearly 20 years has forced on companies like Bulgari, Burberry, Cartier, Montblanc and other top designers, a modification of their traditional focus on glamour and glitter.
The challenge is as delicate as polishing one of Bulgari's hallmark gems. In Bulgari's case, if Trapani, the company's chief executive, cuts too deeply, he risks harming the brand's image of opulence and exclusivity, carefully honed over decades and reinforced by stars like Nicole Kidman, Charlize Theron and Scarlett Johansson, wearing Bulgari on red carpets at Cannes or the Oscars.
"Instead of talking about stars and spending, you think about cutting costs," Trapani said during an interview in his office overlooking the Tiber. "Luxury is not immune."
Economizing does not come naturally to Trapani, 51. He is a skilled yachtsman whose wife is a princess from Liechtenstein. Until now, his claim to fame was transforming Bulgari from a handful of boutiques founded by his great-grandfather into a worldwide luxury powerhouse.
But with the company's profit plunging 44 percent in the most recent quarter, and its stock suddenly tarnished, he has no choice. Shares closed Thursday at 4.76 euros, less than half what they were a year ago.
Since the 1990s, sales of luxury goods have exploded, along with the growth of a well-heeled new global elite, turning once little-known European brands into giants and transforming chic addresses like Fifth Avenue, Bond Street and the Champs-Élysées into veritable open-air malls for the upper middle class.
Few brands epitomized this trend better than Bulgari, which has grown to 259 stores from just 5 when Trapani took over as chief executive in 1984. Demand for Bulgari's bold combinations of sapphires, diamonds and emeralds seemed insatiable as sales boomed worldwide, lifting the company's revenue to more than 1.1 billion euros, or $1.41 billion.
Even as Wall Street collapsed this fall, Trapani presided over the star-studded opening of the flagship Bulgari store in Paris, and the debut of its first company-owned boutique in the Middle East, with separate parties for men and women in Qatar.
Now, reality has caught up with Bulgari and the rest of the industry. Sales at the 125-year-old jeweler rose an anemic 2 percent in the third quarter. Analysts are pessimistic about a recovery in its current fourth quarter, a period that is responsible for an outsize portion of the company's annual results. And demand for luxury goods is expected to drop by 3 to 7 percent next year, according to a recent study by Bain & Company, the first time the sector has recorded an annual sales decrease since Bain began tracking it in the early 1990s.
There is no sign of a pre-Christmas rush at Bulgari's boutique on the Via Condotti, where Richard Burton once bought diamonds for Elizabeth Taylor, and where unique pieces start at 70,000 euros, or $88,900.
"It's not politically correct to show off in this environment," said Claudia D'Arpizio, a partner at Bain who specializes in luxury goods. "Even if they're not affected in terms of purchasing power, consumers feel it's ethical to spend less. They don't want the additional piece of jewelry."
In response to the times, Trapani has embarked on broad cost-cutting that includes shelving plans for new stores, except in locations where leases have already been signed.
Burberry has announced a similar initiative, while Richemont, the owner of Cartier and Montblanc, is limiting openings to a few fast-growing markets in the Middle East and Asia.
"Past slowdowns were more regional in nature and people could perceive the end game," Angela Ahrendts, Burberry's chief executive, said in an interview. "This is global. We were with an investor last week who has had to rerun his worst-case scenario five times in the last five months, and we're still not there yet."
Bulgari is also renegotiating existing leases with landlords to save on rent, Trapani said, and even pressing suppliers for better deals on diamonds, sapphires and other precious stones that are the raw material of its most expensive creations.
Then there are slight adjustments — like the unpolished watch band — that may save only a few euros an item but add up at a company that sells thousands of timepieces annually, most priced from $4,000 to $32,000. Or introducing lower-cost boxes and bottles for Bulgari's perfume line, which Trapani said customers will not notice.
"We want the best solution for both the eye and the cost," Trapani said. "The challenge is to cut costs and diminish expenses, without negatively affecting the image of the brand or the quality."
Of the watchband, he said, "It's more wearable and costs less."
But Trapani is resisting a shift to lower-price offerings, even though margins tend to be higher on less expensive items.
"This isn't a business where you reduce prices to sell more," he said. "This is totally wrong."
With price cuts and more drastic style changes off the table, even Bulgari's most basic internal operations are changing, like the workshop where its most expensive jewelry is made by hand.
Here, where loose rubies, emeralds and sapphires sit like pens and paper clips at a bank, goldsmiths do double-duty and shine up their creations when polishers are out sick.
Overtime expenses, which are typical this time of year as the 21 goldsmiths rush to get one-of-a-kind necklaces and earrings to stores in time for the holidays, have been nearly eliminated.
Of course, demand for the most expensive ornaments has not disappeared entirely. During a recent visit, three of the craftsmen were busy finishing custom-ordered pieces, including cufflinks featuring Greek coins from the fifth century B.C. and a pair of pendant earrings heavy with diamonds and sapphires.
"We won't change the game of life, thank God," said Nicola Bulgari, Trapani's uncle and a vice chairman of the company.
"It's part of the joy of life to wear jewelry, for the man and his ego. It is a world of fantasy and folly. Men will always be in love with women and want to make them happy," he said.
Perhaps, but even Bulgari, who at 67 remains active in designing the highest-end collections, is having to adapt to new economic realities: he has stopped making additions to his collection of vintage American automobiles.
"If I need to sell them, I will," he said. He added that he was still buying shares in the company, which is publicly traded. The family holds a controlling stake.
"It's a test for everybody," he said of the tight times. "I know what they're selling at Bergdorf and Saks; they're cutting numbers with an ax."
He noted that Bulgari's perfume business was a bright spot. "People are buying perfume like no tomorrow," he said. "It's a great consolation, it's not expensive, so you don't feel guilty."
Giovanna Gambarelli would certainly agree.
A few yards from the workshop where the goldsmiths create custom pieces behind thick glass and tight security, Gambarelli was recently shopping for bargains at Bulgari's little-known factory outlet in an industrial area on the edge of Rome.
Sporting a Rolex watch and a Tiffany bracelet, Gambarelli, 39, recalled how she had shopped three years ago at the Via Condotti store. This year, eyeing watches marked with a little green label that signified the deepest markdowns, she said, "If you don't want the new collection, you can choose anything here and get a 40 percent discount."
Stephen Webster of Garrard's: The crown hipster of jewelry
By Suzy Menkes
Monday, December 8, 2008
LONDON: Stephen Webster remembers standing in front of Garrard, the crown jeweler, as a young, unknown designer, when the grand London store was the first to give him a break by stocking his bold and edgy work.
This week, Webster can walk into Garrard with a new role as creative director. And this time, he is expected to bring more than the rock 'n' roll spirit he tuned into when he spent the 1980s in California. Ron Burkle, Garrard's current owner, is hoping to match heritage with hip and welcome Webster's smoking-hot celebrity clientele. That star-studded list includes Christina Aguilera through Cameron Díaz and Jennifer Lopez to Elton John.
"It's a historical brand - the only one left and it's everything I've been passionate about," says Webster, referring to the history of the oldest jewelry company in the world, founded in 1735, and the supplier of jewels to generations of royals.
Queen Elizabeth may have given her last big order for a ruby and diamond tiara back in 1978 and withdrawn last year the royal warrant, but Webster has the energy and the confidence to - as he describes it - put "Garrard back on the map."
The jeweler is certainly a striking advertisement for his own designs, especially the men's collection that he says is flying out of the stores.
From under his artfully chaotic hair, two sapphire and diamonds twinkle in his ears; a trip of bracelets circle his wrist; and under the tautly fitted shirt is a belt with a buckle that looks like a Hell's Angel has mated with a goth night-clubber.
In his offices in a London town house, the walls are dominated by photographs of David Bowie and Elvis Presley and an art piece by Banksy pronouncing: "I fought the law - and I won." Downstairs, a design team works, in hand sketches or with a computer, on a new "organic" collection with a "Jules Verne" inspiration.
It has been a long journey since the 15-year-old from the port town of Gravesend saw his draftsman father ground down by drawing blue prints of water pumps - and set out at Medway College to become a fashion designer.
"But everything about it was wrong - a room full of girls and the teacher looked like Quentin Crisp, he was so flamboyantly gay!" says Webster.
The student escaped to the jewelry room and "fell in love with the industrial making process."
The skills that Webster learned all those years ago can be seen in a silver ring of entwined thorns or in the lacy wings of bats and bugs.
Like all of Webster's work, there is something of the night about it - an underground spirit far from the dainty diamond flowers of conventional jewelry. He, his wife Anastasia and their family may live in a cliff top house as well as in London, but this is not a designer who would be drawn to that English idyll of a country cottage with roses round the door.
But then Webster's formative years were spent outside Britain, first in Canada where he was apprenticed to a jeweler who "spent his life down the mines" and who became his mentor. Webster traces from this point his fascination with exotic stones with "a brilliant color palette," like rings centered on hematites, coral and blue goldstone.
Not that Webster has anything against diamonds - and that started with Elizabeth Taylor. She was one of the many "jewelry junkies" with "amazing enthusiasm" who flocked to the designer's store when he relocated from Canada to Santa Barbara, California. John Travolta and Oprah Winfrey were other clients who wandered through the "open door" and into his life.
It seems fitting that the entrepreneur who invested in the Stephen Webster brand last year was Californian. Ron Burkle, supermarket billionaire, used his Yucaipa Companies private equity fund to buy into the jeweler after a fortuitous encounter with Webster's friend and muse, Aguilera.
Burkle was also the investor who has rescued Garrard from its checkered recent history, first under Prince Jefri Bolkiah of Brunei, then with luxury entrepreneurs Lawrence Stroll and Silas Chou, who saw their money pouring down a gilded plug-hole.
Jade Jagger, a scion of rock royalty, was the first designer to shake up Garrard, as the brand started to make the cultural shift from old grandeur to new money. Webster, the incarnation of glam rock, feels that he has lived fine jewelry's new journey, away from its position as gifts for traditional engagement, marriage and first baby. He became part of that process when he returned to England in the early 1990s, continuing to finance himself by trips back to America and developing a personal style and confidence.
"Jewelry actually became part of fashion," says Webster, whose silver collection sells at relatively modest prices (from $250 to $2,000) while fine white and yellow jewelry runs from $1,500 to $175,000. The dramatic brooch with a bat mothering a swarm of moths sells at $35,800 and bespoke jewelry starts at $15,000, moving ever upwards.
Webster looks back at the "painfully slow process" of building his business with his brother David who is now product development director. First there was the shared stand at the Basel, Switzerland, trade fair; the gradual opening of accounts with leading stores; the personal visits, which he still does to loyal provincial shops; the opening of a London store in 1994, as the city became more international and cosmopolitan.
But always there was the problem of the expensive inventory - the gold and the gem stones - and the periods when a store like Neiman Marcus would "become my bank."
"As a company, we had huge growth and no funds," Webster says. "From everything you hear now, bankers were giving it away. But I couldn't get a loan. And I couldn't bear being told we were high risk."
But finally, spurred by the fresh investment, the Stephen Webster brand has made it, with 20 international boutiques and global points of sale from Dubai through Moscow to Hong Kong and Tokyo and including far-flung spots like Seoul and Yekateringburg, Russia. The crowning glory will be the opening of a flagship in London's Mount Street in April.
Or perhaps it will be this week, as Webster walks through Garrard, thinking of its 300-year history, which is about to start a new phase with a designer who can turn a moth into a jewel and who has brought to the temple of high end rocks a blast of rock 'n' roll.
Wall St. rallies on hopes for stimulus
Dow Chemical to cut 5,000 jobs to cope with downturn
Crisis has China looking inward
As other sources of funding dry up, Japanese companies turn to banks
Monday, December 8, 2008
TOKYO: Lending growth by Japanese banks hit a record high in November, with companies tapping their credit lines as access to funds through financial markets narrowed in the wake of the global credit crisis.
Fund-raising has increasingly become a headache for many companies already struggling from slack exports and consumption, and the global downturn looks set to weigh on the Japanese economy, already in its first recession in seven years, well into next year.
Underscoring the effect of the global downturn on the Japanese economy, the current-account surplus in October was less than half the level a year earlier as exports fell and import costs were bloated by oil prices that remained high until the middle of this year.
Bank lending increased 3.2 percent in November from a year earlier, accelerating from a revised growth rate of 2.1 percent in October and the biggest increase since records became available in 2001, data from the Bank of Japan showed Monday.
"There was a conspicuous rise in lending by major banks, which means that even large companies that are considered blue chips are taking on more bank loans in the face of tighter conditions for direct financing," said Junko Nishioka, chief economist at RBS Securities.
Weakened corporate activity is expected to be seen in the release of revised data Tuesday on gross domestic product. Analysts forecast that the economy shrank 0.2 percent in the July-September period, double the preliminary reading of a 0.1 percent contraction, according to a Reuters poll.
The Bank of Japan data showed that the outstanding balance of commercial paper dropped 9.9 percent in November from a year earlier after falling 8.5 percent in October, the largest decline in nearly two years.
A growing number of borrowers are turning to banks because raising funds in financial markets has become difficult and costly amid the turmoil on global financial markets.
Since mid-September, when the U.S. investment bank Lehman Brothers defaulted on its yen-denominated bonds, the interest rates offered on new commercial paper in Japan have jumped and the issuance of corporate bonds has became difficult for companies with low credit ratings.
The plunge in Japanese share prices and a sharp appreciation in the yen against major currencies in October added to the strain on Japanese credit markets, which had previously been shielded from the severe shortage of liquidity afflicting much of the developed world.
Alarmed by the quick deterioration in the ability of Japanese companies to secure funds, the Bank of Japan held an emergency policy meeting last week, and announced measures to bolster corporate finances.
The central bank said it would expand its lending by about ¥3 trillion, or $32 billion, and accept lower-rated corporate bonds as collateral for its market operations to help tide over companies through a year-end credit squeeze.
"What is happening in Japan now is that only large firms can issue commercial paper or corporate bonds, and even if the BOJ purchases some of these, it will not be able to quite get around to the capital crunch of the small and midsized firms," said Takeshi Minami, chief economist at Norinchukin Research Institute.
Overwhelming weakness in the global economy is likely to hobble Japan's export-oriented economy, which has fallen into its first recession in seven years, economists said. Japanese government bond futures rose Monday as the plunge in the country's current-account surplus, coupled with the U.S. report last week of the biggest number of monthly job losses in 34 years, bolstered concerns about a global recession.
The expected 0.2 percent contraction of the Japanese economy in the third quarter to September would follow a 0.9 percent contraction in the second quarter, its sharpest quarterly decline in seven years, and the two quarters together tipped Japan into a recession.
While the weakness in those quarters largely stemmed from the effect of high oil prices, the economy is expected to take the full brunt of the global downturn in the fourth quarter and beyond.
Recent data has shown that Japanese companies are curtailing production at an unprecedented pace as demand plunges not just in the United States and Europe, two of the main markets for Japanese goods, but also in emerging countries that had weathered the global financial turmoil until recently.
Many analysts expect the Bank of Japan to cut interest rates again by March, the end of the Japanese business year, after trimming its main rate to 0.3 percent from 0.5 percent in October.
"Given that economic conditions are expected to worsen further, it's probable that the BOJ will cut interest rates again this month and will bring them to around zero by March," said Yasuhiro Takahashi, an economist at Nomura Securities.
In defaults, can creditors trust courts?
By Umesh Desai and Andrew Marshall
Monday, December 8, 2008
HONG KONG: Facing a wave of Asian corporate defaults as the global crisis bites, debt investors are taking a close look at the protection they can get from courts, putting pressure on borrowers in countries with weak legal systems.
Many of the Asian legal systems provide weak safeguards to creditors in distress, are extremely slow and suffer from poor enforcement, or fail to provide enough deterrents to stop company directors from siding with shareholders rather than creditors.
In times of growth, this matters less. But with corporate default rates expected to jump, legal codes are in the spotlight.
Rachana Mehta, head of fixed income at KE Capital Partners, said the absence of trading liquidity in secondary markets would mean that more investors would have a hold-and-buy strategy and thus would need to know about the enforceability of their claims in the event of a default.
Companies in countries where creditors have weaker rights, or where the rights they have are enforced poorly or at a glacial pace, may find it even harder to attract buyers for their debt.
"Compared to North America, Australia or Western Europe, Asia in general is a more challenging environment for enforcing creditor rights," said David Maund, managing director at Alvarez & Marsal, a debt-restructuring consultancy.
He said the legal difficulties in Asia related to inconsistent interpretation and implementation of the law. "That tends to be an issue particularly in places like the Philippines, Indonesia, Thailand, India and China."
Measuring legal risk requires experience, and isn't always precise, but several comprehensive surveys of competing Asian legal systems paint a relatively coherent and consistent picture.
The Strength of Legal Rights Index, one of the variables used in calculating the World Bank's Ease of Doing Business rankings, shows Singapore, Hong Kong and Malaysia as having the legal codes that best protect the rights of borrowers and creditors, while Indonesia and the Philippines are much weaker.
The index measures the letter of the law, not implementation, but another World Bank rating, the Rule of Law Index from the World Governance Indicators, gives an idea of law enforcement. Singapore and Hong Kong again score highly, and Malaysia is also among the strongest in emerging Asia with a 2007 rating of 65.2 out of 100 - well above India at 56.2, China at 42.4, the Philippines at 33.8 and Indonesia languishing at 27.1.
The indices show the importance of looking at enforcement. Bangladesh scores 8 out of 10 for the quality of its legal code, but only 24.8 out of 100 for how well the law is enforced.
The Economist Intelligence Unit risk consultancy also seeks to quantify legal risk, and its results are similar. Malaysia does well among emerging southeast Asian nations, with a legal risk score of 38, with zero being lowest risk and 100 highest. India is ahead of China, as in the World Bank rankings, with a risk score of 60 versus China's 63.
The Philippines, an underperformer in most stability and governance indices, does well with a score of 55. And once again Indonesia is among the worst performers, with a score of 73, riskier even than Pakistan and Bangladesh.
But investors also need to go beyond overall measures of country legal risk and look at the details of the law. Experts say some Asian legal codes fail to impose strong enough sanctions on company directors who fail in their duties, in contrast with cases like Enron and Worldcom, whose executives went to jail. This creates moral hazard as there is little incentive for directors to ensure creditors are fairly treated.
Peter Gibson, Standard & Poor's rating services managing director and associate general counsel, said some jurisdictions were hampered by problems like a lack of certainty about judicial outcomes and the time needed for the legal process to reach completion.
The Economist Intelligence Unit ranks countries on similar measures. While India's overall rank is above China, it has the bottom score for speed of judicial process. China scores relatively well on speed, and even Indonesia, for all its faults, is faster.
Christopher McKee, head of the U.S.-based International Country Risk Guide, said Indian courts showed a high level of independence from political interference. "However - and I think this is key - the rate of case flow in India, especially in urban areas, is quite sluggish, which, in the end does little to improve creditors' rights," he said.
In China, laws were improving, but interference was a worry.
Ford to cut production in Russia
Northern Rock cuts variable rate
EU's Barroso sees broad support for stimulus plan
Wall Street braced for grim views from industrials
Monday, December 8, 2008
By Scott Malone
With some of the United States' largest and most diversified companies ready to spell out their 2009 financial forecasts over the next two weeks, Wall Street is braced for bad news.
The question is how bad?
Investors expect many U.S. industrials to follow the lead of 3M , which on Monday set a profit target for next year that was about 12 percent lower than analysts had forecast. What will be on their mind is how General Electric , United Technologies and other manufacturers plan to ride out the deepening global recession.
More job cuts are likely to be a key theme. Companies across all sectors of the U.S. economy, including Dow Chemical , AT&T and Caterpillar , are all shedding workers in a bid to cut costs.
A key worry for investors will be how order backlogs are holding up. Big-ticket capital goods such as jet engines, electricity-producing turbines and automation equipment are typically ordered months if not years in advance and industrial companies count on a backlog of orders to help smooth out results when the economy weakens.
"What are they seeing in terms of cancellations and how is the backlog holding up for projects that they've signed?" is a top concern of Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors in Cincinnati, which holds stakes in GE, United Technologies and Honeywell International .
"If we're starting to already see large-scale cancellations and a rapid erosion of backlog, the stocks are definitely vulnerable for another leg down," Sorrentino said.
Industrial shares have been hit hard this year, with the Standard & Poor's capital goods industry index down about 46 percent, a steeper fall than the 38.5 percent slide of the broad S&P 500 and the 33 percent decline of the Dow Jones industrial average .
3M shares tumbled 5 percent on Monday after the company warned profit would fall next year.
Wall Street's expectations are already low ahead of outlook briefings from United Technologies, Danaher , Honeywell, GE and ITT over the next two weeks.
Analysts, on average, expect GE earnings per share to tumble 18.3 percent next year and Honeywell to fall 5.6 percent, according to Reuters Estimates. They look for United Tech EPS to grow 3.4 percent, ITT to rise 2.3 percent and Danaher to tick up 0.9 percent.
But even those forecasts may be too high, given the recessions in the United States, Japan and much of Europe, and fears that U.S. unemployment could near 10 percent next year.
"We sense that 2009 EPS forecasts are likely to be further trimmed by most companies," Sterne Agee analyst Nicholas Heymann wrote in a note to clients.
He forecast that, even in the wake of recent job cuts, major U.S. companies could slash payrolls another 20 percent next year as they make dramatic moves to cut costs.
Some observers have already warned aggressive job cutting could set off a self-reinforcing vicious cycle in the U.S. economy, which is highly dependent on consumer spending.
"Frankly, I hate to see it," Sorrentino said of the flurry of pink slips. "Typically, the first victim when you start doing layoffs is productivity, so in a way it almost amplifies the downward push on profitability when you get into this."
Another worry for the industrial sector is slowing demand in emerging markets, which had kept many diversified manufacturers on a growth footing even as the U.S. economy slowed over the past year.
"A recession among our trading partners has weakened the outlook for exports, which is one of the few remaining pillars providing positive support to the economy, particularly to the manufacturing sector," said Daniel Meckstroth, chief economist the Manufacturers Alliance/MAPI trade group.
MAPI forecast on Monday that U.S. manufacturing production would fall 4.2 percent next year.
While U.S. President-elect Barack Obama's plan for major investment in the nation's infrastructure, which sparked a rally in stocks on Monday, was a bright spot for the sector investors said the benefits of that plan might not be felt till the latter part of next year.
That leaves industrials facing an uncertain start to 2009.
"We would not be surprised if companies were to abandon quarterly EPS targets in favour of annual guidance updated quarterly," Deutsche Bank AG analyst Nigel Coe wrote in a note to clients.
(Editing by Andre Grenon)
Group says finance crisis shows transparency vital
Monday, December 8, 2008
By Peter Apps
Lack of transparency in the banking sector helped cause the global financial crisis and multinational companies, inter-governmental and non-governmental organisations must do more to open up, a report said on Monday.
In its annual Global Accountability Report, the London-based One World Trust rated 30 corporations and organisations from Goldman Sachs to the United Nations refugee agency UNHCR but found only one met what it described as minimum standards.
The overall worst performers were UN nuclear watchdog the International Atomic Energy Agency (IAEA), defence alliance NATO and in bottom place the International Olympic Committee (IOC), all accused of lacking openness and accessibility to those their actions affected.
"The credit crunch and global financial crisis shows just how important transparency is in all sectors," said trust deputy head of research Letitia Labre. "Companies and organisations are not doing enough to be accountable to those they affect."
The impact from bad debts in the US mortgage market spread through the global financial system, with banks no longer trusting each other to lend money, prompting a credit crunch and worldwide slump in markets and economic growth.
Critics blame banks and other investment institutions for packaging and selling financial products they did not fully understand, with little clarity on who would take responsibility and with mutual mistrust now paralysing markets.
The report, which focuses on a representative sample of organisations each year, rated only one private sector bank -- one of the few surviving Wall Street banks, Goldman Sachs. It put the bank in the bottom third of the list.
In contrast, mining firm BHP Billiton and oil giant Shell -- representatives of industries often criticised for their lack of transparency in negotiating contracts with developing world governments -- were among the best performing corporates.
Transparency campaigners have praised the Extractive Industries Transparency Initiative for improving the transparency of mining and similar firms, although say colossal problems still remain.
The International Foundation for Organic Agriculture topped the table followed by multilateral lender the European Bank for Reconstruction and Development (EBRD), World Bank group member of the International Finance Corporation and UN children's fund UNICEF.
They were followed by aid agencies and non-governmental groups Plan International, Transparency International, Catholic Relief Services and Islamic Relief.
The poor performance of organisations such as the IAEA and International Olympic Committee were particularly worrying, the trust said.
"These are very powerful bodies which have the ability to affect the lives of all of us," said Labre.
The report graded the organisations according to four dimensions of accountability: transparency, participation of stakeholders, evaluation of performance and scalability and response to complaints.
Researchers examined documents provided by the organisations, interviewed their key officials and examined publicly available information as well as talking to stakeholders and experts on each of the organisations.
(Editing by Charles Dick)
3M sheds 1,800 jobs
Irish debt mountain puts it in trillion-dollar club
Stoking fear everywhere you look
By David Carr
Monday, December 8, 2008
With unemployment figures beginning to resemble a mushroom cloud and the Fed running out of card tricks, I told a friend we were going to spend the weekend at my house making hard choices — scrutinizing every expense, eliminating spending where we could and downsizing at every turn.
"Really," he said. "What has changed at your house?"
Well, nothing really — I might toil in a threatened industry, but my ID card still works when I go to the office and my wife is prospering in a job she loves. But like everyone else, I am making my way through a data cloud that is crackling with panic.
The other day, I got in a cab and there was a news report on the back seat television about soaring unemployment in New York. An info-screen on an ascending elevator ride in Manhattan suggested that we were all only going one way — down. The news zippers in Times Square were full of reports of crumbling consumer confidence even as people streamed in to the stores beneath them.
Once I made it to my office, it got worse. An RSS feed from Reuters was waiting on my desktop saying, "U.S. employers axed 533,000 jobs from payrolls in November, the most in 34 years." My e-mail inbox not only included a note from a friend that she had been laid off, but it was flanked by contextual ads from Google labeled "Unemployed?"
I have a pal who is persistently I.M.-ing me because he is at loose ends after being laid off, and my social networks are rife with digital fretting and various versions of, 'Did you hear about so-and-so?' Why, yes I did. Over and over.
Every modern recession includes a media séance about how horrible things are and how much worse they will be, but there have never been so many ways for the fear to leak in. The same digital dynamics that drove the irrational exuberance — and marketed the loans to help it happen — are now driving the downside in unprecedented ways.
The recession was actually not officially declared until last week, but the psychology that drives it had already been e-mailed, blogged and broadcast for months. I used to worry that my TiVo thought I was gay — doesn't everyone enjoy a little "Project Runway" at the end of a long, hard week? Now I worry that my browser knows I am about to lose my job.
"When everyone is talking about recession, we all feel like something has to change, even if nothing has changed for us," said Dan Ariely, author of "Predictably Irrational," a book that explains why people do things that defy explanation. "The media messages that are repeating doom and gloom affect every one, not just people who really have trouble and should make changes, but people who are fine. That has a devastating effect on the economy."
With unemployment, auto sales, home foreclosures and consumer confidence all benchmarking historic levels of distress, news outlets are hardly making it up. But the machinery of the economy began to freeze in place far more quickly than it has in the past, in part because so much scary data is circulating so much faster than it used to. This recession got deeper faster because we knew more bad stuff quickly.
"Our collective hive-mind gets into a tizzy over other things that suddenly zoom into focus," said Xeni Jardin, one of the editors of the blog Boing-Boing. "It's a hurricane! OMG, salmonella in the hamburgers! Wait, we're all fat! There is an escalation of attention that feeds itself, because this recession is appearing throughout all forms of digital human expression. And unlike any of those other topics, this affects everyone."
Nobody fears getting caught out on a down cycle more than those who run public companies, and defensive layoffs — not based so much on current realities but on horrors to come — have become the norm. Last week, speaking at the Reuters Media Summit, Barry Diller, the chief executive of IAC/Interactive, chided the leaders of entertainment economies for the kind of panic and greed-driven right-sizing that was anything but.
"The idea of a company that's earning money, not losing money, that's not, let's say, 'industrially endangered,' to have just cutbacks so they can earn another $12 million or $20 million or $40 million in a year where no one's counting is really a horrible act when you think about it on every level," he said. "First of all, it's certainly not necessary. It's doing it at the worst time. It's throwing people out to a larger, what is inevitably a larger, unemployment heap for frankly no good reason."
Media companies have been hammered on the leading edge of the recession because they run on advertising, a discretionary expenditure that always is among the first things to go. Viacom had third-quarter earnings of over $400 million in 2008, down 37 percent compared with the same quarter last year, but it was still nicely profitable. Nonetheless, the company laid off 850 people.
Michelle Rabinowitz, a producer at MTV News, was one of them. A Web and pop-cult savvy journalist who has covered everything from Britney Spears to the shootings at Virginia Tech, she is, at 28, just the kind of talent media companies fought over in the last couple of years and will again in the future. But for now, they're dumping bodies off the back of the truck.
"A lot of young people had to find jobs after 9/11, so we know about tough times, but at least we know what that was about," she said. "I go outside and the sky is not falling, but my job is not there, the value of the apartment that I bought is not there, my 401(k) is not there. It's weird, it's like somebody made a bad decision somewhere — the Federal Reserve, a media company, an executive, who knows? Everything sort of looks the same, but everything has changed."
There is a kind of emotional contagion afoot. James Fowler, an associate professor at the University of California, San Diego, recently co-wrote a study looking at how happiness can be spread among friends. The opposite is true as well.
"There are studies on bank runs, and it shows that people who know others who have taken their money out of the bank are much more likely to do it as well," he said. "We always overshoot the upside and, because of the same contagious effects, we overshoot the downside. Everything is fine, and then all of the sudden we are looking for water and supplies to ride out the coming storm."
Courtesy of the media, we no longer have to be obsessed to be neurotic: the neurosis comes to us. On CNN.com, I came across this scary bit about Paul Nawrocki, a former toy company executive who takes a 90-minute train ride into New York to walk the streets with a sandwich board. "Almost homeless," reads the sign. "Looking for employment. Very experienced operations and administration manager."
I'm already working on mine. "Will write for food."
Times Co. to borrow against building
Volvo cutting fewer jobs than planned; Sweden said to be preparing auto aid
BOLIVIA: Government faces economic dangers
Employers plan to further slow hiring
Brussels set to approve French, Austrian bank aid
S&P cuts Russia's credit rating
The Associated Press
Monday, December 8, 2008
MOSCOW: The credit ratings agency Standard & Poor's lowered Russia's foreign currency sovereign credit rating a notch on Monday, citing heavy outflows of capital amid the global financial turmoil.
Russia's international reserves have dropped from $583 billion to $455 billion since August as the government has spent billions to prop up the ruble, weakened by plunging oil prices. S&P lowered the rating to "BBB/A-3" from "BBB+/A-2."
"The lowering of the ratings on Russia reflects risks associated with the sharp reversal in external portfolio and other investment flows, which has increased the cost and difficulty of meeting the country's external financing needs," S&P's credit analyst, Frank Gill, said in a statement.
S&P said the rating is likely to be further downgraded "if the banking crisis and external pressures continue to impair the government's balance sheet and its still substantial arsenal of liquid assets."
It said Russia's unpredictable business environment still impedes its ability to attract capital.
Independent analysts said the rating downgrade reflects severe external pressure on Russia's economy.
"It's an unavoidable product of a deep fall in oil prices," said Ron Smith, chief economist at Moscow-based Alfa Bank. He said the rating would have to be further reviewed if oil prices dip below $40 a barrel.
The price of crude oil, the backbone of Russia's economy, dropped from a record-high $147 a barrel in July to $40 last week. Russian producers of metals and other commodities have been laying off employees as demand shrinks.
Pension funds eye battle on executive pay
Monday, December 8, 2008
By James Molony
Executive pay will be the most important corporate governance issue next year for pension fund investors wrestling with the fallout from the financial crisis, the governance chief for Railpen Investments said.
Deborah Gilshan told Reuters worried trustees will be more inclined to vote against pay deals at AGMs and will try to block the re-election of directors, as well as casting circumspect eyes over new bonus deals designed to retain top directors.
Railpen is one of the country's largest pension funds with some 20 billion pounds in assets under management.
Gilshan said the issue of remuneration has gained greater importance among pension scheme trustees as they absorb the furore over bankers receiving payouts as their firms made losses.
Some commentators have argued bonus schemes at banks contributed to the crisis by encouraging excessive risk-taking.
Gilshan said the fund managers employed by pension schemes will now see more pressure from trustees to rigorously question companies over remuneration.
"You will see next year more public engagement between shareholders and companies," Gilshan said at last week's Local Authority Pension Fund Forum annual conference.
"Votes against will go up and we may see more defeats of company resolutions... and not just on remuneration but also on things like director's re-elections," she said.
Another potential area of conflict will emerge where boards propose extraordinary remuneration measures.
As bonuses are hit due to the economic slowdown, some remuneration committees may look to retain directors by issuing special bonuses -- and they will have to have "good, credible" explanations for doing so, Gilshan said.
One consequence of the crisis may be that companies return to more traditional bonus schemes such as share options, while assessing performance over longer time horizons, she added.
"Within companies there seems to have emerged a more short-term approach. We might go back to a longer term view," she said. "Some of the pay systems were quite short term."
"When I started working long-term incentives were five years -- now three years is seen as long term.
"The whole bonus structure around banks was something which caused a lot of what happened," she said. "Bonus schemes were incentivising the wrong sorts of behaviours."
"We're keen to see risk-adjusted remuneration incentive schemes which take into account the risk that's been taken as well as the return," Gilshan said.
(Editing by Simon Jessop)
In Chicago factory sit-in, an anger spread wide
By Monica Davey
Monday, December 8, 2008
CHICAGO: The scene inside a long, low-slung factory on this city's North Side this weekend offered a glimpse at how the nation's loss of more than 600,000 manufacturing jobs in a year of recession is boiling over.
Workers laid off Friday from Republic Windows and Doors, who for years assembled vinyl windows and sliding doors here, said they would not leave, even after company officials announced that the factory was closing.
Some of the plant's 250 workers stayed all night, all weekend, in what they were calling an occupation of the factory. Their sharpest criticisms were aimed at their former bosses, who they said gave them only three days' notice of the closing, and the company's creditors. But their anger stretched broadly to the government's costly corporate bailout plans, which, they argued, had forgotten about regular workers.
"They want the poor person to stay down," said Silvia Mazon, 47, a mother of two who worked as an assembler here for 13 years and said she had never before been the sort to march in protests or make a fuss. "We're here, and we're not going anywhere until we get what's fair and what's ours. They thought they would get rid of us easily, but if we have to be here for Christmas, it doesn't matter."
The workers, members of Local 1110 of the United Electrical, Radio and Machine Workers of America, said they were owed vacation and severance pay and were not given the 60 days of notice generally required by U.S. law when companies make layoffs. The workers voted Friday afternoon to stage the sit-in.
Company officials, who were no longer at the factory, did not return telephone or e-mail messages. A meeting between the owners and workers is scheduled for Monday. The company, which was founded in 1965 and once employed more than 700 people, had struggled in recent months as home construction dipped, workers said.
Still, as they milled around the factory's entrance this weekend, some workers said they doubted that the company was really in financial straits, and they suggested that it would reopen elsewhere with cheaper costs and lower pay. Others said managers had kept their struggles secret, at one point before Thanksgiving removing heavy equipment in the middle of the night but claiming, when asked about it, that all was well.
Workers also pointedly blamed Bank of America, a lender to Republic Windows, saying the bank had prevented the company from paying them what they were owed, particularly for vacation time accrued.
"Here the banks like Bank of America get a bailout, but workers cannot be paid?" said Leah Fried, an organizer with the union workers. "The taxpayers would like to see that bailout go toward saving jobs, not saving CEO's."
In a statement issued Saturday, Bank of America officials said they could not comment on an individual client's situation because of confidentiality obligations. Still, a spokeswoman also said, "Neither Bank of America nor any other third party lender to the company has the right to control whether the company complies with applicable laws or honors its commitments to its employees."
Inside the factory, the "occupation" was relatively quiet. The Chicago police said that they were monitoring the situation but that they had no reports of a criminal matter to investigate. About 30 workers sat in folding chairs on the factory floor. (Reporters and supporters were not allowed to enter, but the workers could be observed through an open door.) They came in shifts around the clock. They tidied things. They shoveled snow. They met with visiting leaders, including Representative Luis Gutierrez, a Democrat from Chicago, and the Rev. Jesse Jackson. Throughout the weekend, people came by with donations of food, water and other supplies.
"All the workers are saying is, If I build you a house, and you want to sell the house after I build it but you don't pay me, I want to place a lien," Gutierrez said in an interview. "With their bodies and their voices, they're placing a lien."
The workers said they were determined to keep their action — reminiscent, union leaders said, of autoworkers' efforts in Michigan in the 1930s — peaceful and to preserve the factory and its equipment.
"The fact is that workers really feel like they have nothing to lose at this point," Fried said. "It shows something about our economic times, and it says something about how people feel about the bailout."
Until last Tuesday, many workers here said, they had no sense that there was any problem. Shortly before 1 p.m. that day, workers were told in a meeting that the plant would close Friday, they said. Some people wept, others expressed fury.
Manuela Rivera, 58, who had worked at the factory for 13 years, said her blood pressure had risen dangerously high from the stress, the prospect of paying this month's bills and searching — "Where?" she said — for a new job. "There are no jobs," Rivera said.
Many employees said they had worked in the factory for decades. Lalo Muñoz, who was among those sleeping over in the building this weekend, said he arrived 34 years ago. The workers — about 80 percent of them Hispanic, with the rest black or of other ethnic and national backgrounds — made $14 an hour on average and received health care and retirement benefits, Fried said.
"This never happens — to take a company from the inside," Mazon said. "But I'm fighting for my family, and we're not going anywhere."
Car parts firm Wagon calls in administrators
Detroit churches pray for 'God's bailout'
By Nick Bunkley
Monday, December 8, 2008
DETROIT: The Sunday service at Greater Grace Temple began with the Clark Sisters song "I'm Looking for a Miracle" and included a reading of this verse from the Book of Romans: "I consider that our present sufferings are not worth comparing with the glory that will be revealed in us."
Pentecostal Bishop Charles Ellis III, who shared the sanctuary's wide altar with three gleaming sport utility vehicles, closed his sermon by leading the choir and congregants in a boisterous rendition of the gospel singer Myrna Summers's "We're Gonna Make It" as hundreds of worshipers who work in the automotive industry — union assemblers, executives, car salesmen — gathered six deep around the altar to have their foreheads anointed with consecrated oil.
While Congress debated aid to the foundering Detroit automakers Sunday, many here whose future hinges on the decision turned to prayer.
Outside the Corpus Christi Catholic Church, a sign beckoned passers-by inside to hear about "God's bailout plan." Roman Catholic churches in the Detroit area distributed a four-page letter from Cardinal Adam Maida, the archbishop, offering "some pastoral insights and suggestions about how we might prepare to celebrate Christmas this year when economic conditions are so grim."
In the letter, Cardinal Maida acknowledged that "things in Michigan will probably never be the same" but encourages the region's 1.3 million Catholics to maintain their faith. "At this darkest time of the year, we proclaim that Christ is our light and Christ is our hope," he wrote.
Last week Cardinal Maida gathered 11 Detroit-area religious leaders, representing Christian, Jewish and Muslim congregations, to call on Congress to approve the $34 billion in government-backed loans that the automakers have requested.
At Greater Grace Temple, an 8,000-member Pentecostal church in northwest Detroit, the Sunday service was dedicated to addressing the uncertainty facing workers whose livelihood depends on the well-being of General Motors, Ford Motor and Chrysler.
"We have never seen as midnight an hour as we face this coming week," Bishop Ellis said, referring to the possibility that Congress would soon vote on a deal to give the carmakers enough money to stay afloat into next year.
"I don't know what's going to happen, but we need prayer," he said. "When it's all said and done, we're all in this thing together."
Greater Grace, the largest church in Detroit, invited officials from the United Automobile Workers union to speak before Bishop Ellis gave his sermon, titled "A Hybrid Hope."
The SUVs on the stage, a Chevrolet Tahoe, Ford Escape and Chrysler Aspen on loan from local dealerships, were all gas-electric hybrids, and Bishop Ellis urged worshipers to combat the region's woes by mixing hope with faith in God.
"We have done all that we can do in this union, so I turn it over to the Lord," General Holiefield, a UAW vice president for Chrysler, told the crowd. A vice president for the parts suppliers, James Settles Jr., asked those present "to continue your prayers, so we can see a miracle next week."
Bishop Ellis encouraged the congregation to pray, not that Congress would "do the right thing" and approve loaning money to the car companies, but that Detroiters would "make it" through these tough times.
"We've got to keep the faith," said Mike Young, 47, who works for the Dana Corporation, a parts supplier, and has spent more than three months of this year on furlough. His factory, in the suburb of Auburn Hills, builds drive shafts for Chrysler, which has said it would soon run out of money without billions of dollars in aid from Congress. "But you can't count on that," Young said. "All my hope is in God."
Panel urges creation of genocide alert system
By Brian Knowlton
Monday, December 8, 2008
WASHINGTON: Declaring the prevention of genocide "an achievable goal," a task force that includes several prominent figures close to President-elect Barack Obama recommended Monday that an interagency group be created to analyze threats, work with other countries and coordinate action in places like Darfur.
"Preventing genocide and mass atrocities is a truly difficult issue, and there has to be a different approach," Madeleine Albright, the former secretary of state and a co-chairwoman of the task force, said in a telephone interview. The challenge, she said, is "to develop a system within the United States government where there will be a group of people whose main job it will be to stay on top of these particular issues."
Albright is an Obama supporter and adviser. Also on the panel is a close political adviser of the president-elect, Tom Daschle, the former Senate majority leader, who is said to be Obama's choice for secretary of health and human services. The group consulted several people linked to the Obama team.
Brooke Anderson, chief national security spokeswoman for Obama, welcomed the report, but would say only that the president-elect was "committed to strengthening U.S. leadership and international efforts to prevent and respond to genocide and other humanitarian crises."
Adding heft to the panel's prescriptions was the presence on the panel of William Cohen, a former Republican senator who was defense secretary in the Clinton administration, and Anthony Zinni, former chief of the U.S. Central Command.
But Albright said that military involvement was just one of several possible tools considered in the report, which emphasizes early detection and diplomatic efforts to prevent crises.
"We needed to have a choice between doing nothing and sending in the Marines," Albright said.
Several top Obama appointees have taken hard-line positions on the genocide in Sudan's Darfur region, including Susan Rice, the United Nations ambassador-designate, and Senator Hillary Rodham Clinton, nominated as secretary of state.
Rice and another Obama foreign-policy adviser, Tony Lake, held senior posts in the Clinton administration and have said they regretted the failure to halt the Rwandan genocide of 1994.
The panel called for the creation of an interagency Atrocities Prevention Committee at the National Security Council, which would be headed by the retired general James Jones if he is confirmed by the Senate. It would analyze threats, help coordinate diplomatic and other measures, and develop international responses to emerging genocide threats. Jones said last year that in chaotic places like Darfur, "there is an application for military forces." But Obama has been more cautious, speaking of U.S. "help" for Darfur but not of direct intervention.
And the risks and high costs of intervention in a chaotic region might appear dissuasive at a time when the United States is already engaged in two wars.
Albright said that, while she was not speaking for him, she expected Obama to give the subject serious attention. (She also said that while she had "no ambitions" of any post in the Obama administration, "I will be helpful in any way I can.") The group calls for an early-warning system on worldwide risks of genocide, with input from the country's intelligence agencies. Acute warning of looming crises would trigger automatic policy review.
"While there are things like volcanic genocide where there's just an eruption" that is not foreseen, Albright said, "there are actually some patterns to be seen."
The report recommends making genocide prevention and response a part of military planning, defense doctrine and training, while at the same time redoubling U.S. support for international partners like the United Nations and the African Union, both of which are involved in Darfur.
Obama addressed genocide in the second presidential debate.
"When genocide is happening, when ethnic cleansing is happening somewhere around the world and we stand idly by, that diminishes us," he said, before adding: "We're not going to be able to be everywhere all the time. That's why it's so important for us to be able to work in concert with our allies."
In Darfur, Obama said, "we could be providing logistical support, setting up a no-fly zone at relatively little cost to us, but we can only do it if we can help mobilize the international community and lead."
The task force was sponsored by the U.S. Institute of Peace, the American Academy of Diplomacy and the U.S. Holocaust Memorial Museum.
EU joins demands for Mugabe to quit
Monday, December 8, 2008
By Ingrid Melander
The European Union extended a travel ban to 11 more Zimbabwean officials Monday and joined calls for President Robert Mugabe to step down after 28 years in power.
Spreading cholera, food shortages and economic collapse have brought new demands for Mugabe's resignation from his old foes in the West. He blames Western sanctions for Zimbabwe's hardship. Critics blame his increasingly authoritarian rule.
French Foreign Minister Bernard Kouchner said EU foreign ministers added 11 more names to a list of over 160 Zimbabweans -- including Mugabe -- banned from visiting the bloc, a move meant to increase pressure on Zimbabwe's government.
"I think the moment has arrived to put all the pressure for Mugabe to step down," EU foreign policy chief Javier Solana said before the ministers' meeting in Brussels.
Echoing similar calls from the United States and former colonial power Britain, French President Nicolas Sarkozy, whose country holds the rotating EU presidency, said "President Mugabe must go. Zimbabwe has suffered enough."
EU ministers said in a statement that the people added to the blacklist were "actively engaged in violence or human rights infringements." The list was confidential until published in the EU's official journal, diplomats said.
One said those added included five members of a Joint Operations Command, which comprises security service chiefs who the opposition say were instrumental in organising a violent campaign that returned Mugabe to power.
However, ministers also agreed to take one person off the bloc's black list, diplomats said.
One named him as Simba Makoni, former finance minister who left the ruling ZANU-PF party earlier this year and contested the presidential election against Mugabe in March.
Zimbabwean Information Minister Sikhanyiso Ndlovu told Reuters the EU had no right to call Mugabe to step down, saying he was constitutionally elected.
"No foreign leader, regardless of how powerful they are, has the right to call on him to step down on their whim," he said.
The United States said it would continue to push for the international community to act on Zimbabwe, but said the country's neighbours held the most influence.
"We made extensive efforts in the Security Council to get the international system to act, and we are going to continue those efforts, but quite frankly some of the states in the region have to step up. They need to use their leverage," U.S. State Department spokesman Sean McCormack said.
South African ruling ANC party leader Jacob Zuma urged swift action to end Zimbabwe's humanitarian crisis, exacerbated by political deadlock between Mugabe and opposition leader Morgan Tsvangirai over implementing a power-sharing deal.
The impact of Zimbabwe's crisis is felt keenly in South Africa, where cholera victims seeking treatment have joined millions of immigrants who have fled in search of jobs.
"Some swift action is clearly needed," Zuma said in Namibia.
South African officials were in Zimbabwe to assess the scale of the crisis, responding to an unprecedented appeal for international help from Mugabe's government.
Basic foodstuffs are running out and the cholera epidemic has killed at least 575 people. Prices of goods are doubling every 24 hours, and the 100 million Zimbabwean dollar a week limit for bank withdrawals buys only three loaves of bread in the once relatively prosperous country.
Hopes of rescuing Zimbabwe have dimmed as deadlock continues between Mugabe and Tsvangirai over forming a government in line with a deal in September that followed widely condemned and violent elections.
"More pressure needs to be brought to bear on the negotiating parties to ensure a speedy conclusion of an agreement," Zuma said.
Zimbabwe's health system cannot cope with the cholera epidemic and the water supply network has failed, forcing people to drink from contaminated wells and streams.
Kenyan Prime Minister Raila Odinga urged the African Union Sunday to hold an emergency summit to formulate a resolution to send troops into Zimbabwe to deal with the crisis.
Botswanan Foreign Minister Phandu Skelemani and South African Archbishop Desmond Tutu, a Nobel laureate, have also called for Mugabe's removal.
Former U.N. Secretary-General Kofi Annan said in a statement issued by the Elders, a group of prominent figures that includes ex-U.S. President Jimmy Carter and Tutu, that there was "bitter disappointment in the current leadership."
South Africa's powerful COSATU trade union federation said Monday 38 members of the Zimbabwe Congress of Trade Unions arrested during protests last week had been released after five days in detention.
Seven of those released had appeared in court and been charged "with inciting the public to rise against the government" before being released on bail, COSATU said.
(Additional reporting by Nelson Banya, James Mackenzie and Francois Murphy in Paris and Paul Simao in Pretoria; editing by Matthew Tostevin and Sophie Hares)
EU split on call for Congo bridging mission
Monday, December 8, 2008
By Ingrid Melander and David Brunnstrom
European Union ministers were split on Monday over the U.N.'s call for an EU force to boost peacekeepers in Congo, with Belgium urging the bloc send a bridging mission and Britain wanting it to bolster U.N. troops.
Last Friday, United Nation's Secretary-General Ban Ki-moon repeated a call for a EU "bridging force," saying it may take up to six months for the U.N. to deploy 3,000 more peacekeepers to Congo to boost its 17,000-strong force, known as MONUC.
The foreign ministers took no decision at a meeting in Brussels on Monday and tasked EU foreign policy chief Javier Solana and the European Commission to prepare a response to Ban's letter, an EU official said.
The idea of an EU mission has been in the air for a few weeks but the bloc has so far been reluctant to commit troops, and prospects appeared to dim after Belgium said last week there was little appetite for such a mission.
Belgian Foreign Minister Karel De Gucht said before the discussions there was an urgent need for bridging mission of 2,500-3,000 troops.
"It will take four to six months before the additional troops for MONUC will arrive and the humanitarian situation is dramatic over there," De Gucht told reporters.
Foreign Secretary David Miliband told reporters beefing up the U.N. peacekeeping force was the priority.
"Our position has always been that there is a ... a U.N. commitment to increase the size of the MONUC force, so the first port of call is for countries to see whether they can add, either at a planning or operational level to that MONUC force," said Miliband.
Some 250,000 people have been displaced by the violence in Congo, in which forces of renegade Congolese Tutsi Gen. Laurent Nkunda has been battling pro-government militias.
Two EU "battle groups" are on standby for missions at any given time. One of those on standby until the year-end is British, while the other is led by Germany with contributions from France, Spain, Belgium and Luxembourg.
"EUROPE SHOULD BE EFFECTVE"
From January 1, Italy will head one standby battle group with forces from Spain, Portugal and Greece, and Greece the other, with troops from Bulgaria, Cyprus and Romania.
Italian Foreign Minister Franco Frattini said it was premature to say if his country would be ready to send troops in a battle group but added that some countries would call for such a deployment and he was willing to discuss it.
"One point is very clear, Europe should be effective. We cannot stay as inactive as we are now," he told reporters.
The EU's Solana said ministers would discuss Ban's call, but added: "Let me also underline that the situation on the ground is getting slightly better, and politically also."
The U.N. says fighting in Congo has triggered a humanitarian catastrophe and aid groups have criticised the EU's failure to respond with troops.
"We have had a month of every possible excuse as to why Europe will not send forces to bolster U.N. peacekeepers," said Elise Ford, Head of Office at Oxfam International in Brussels.
"Without an adequate professional force supporting U.N. peacekeepers to provide a measure of security for the population, the killing, raping and looting will continue unabated. We cannot stand by and watch."
Congo's 1998-2003 war sucked in six neighbouring armies and caused more than 5 million deaths. EU soldiers intervened in the country in 2003 to halt militia violence that grew out of the broader war and to protect 2006 elections that returned President Joseph Kabila to office.
(Writing by Ingrid Melander and David Brunnstrom; Editing by Sophie Hares)
Shipowners losing this battle of wits
By Mark McDonald
Monday, December 8, 2008
HONG KONG: A nightmare scenario has shipowners, insurers, seafarers and naval officers in something of a panic, given a sharp increase in brazen pirate attacks in the Gulf of Aden.
The scenario unfolds with the Somali pirates in control of the Saudi supertanker Sirius Star becoming frustrated in negotiations over their ransom demands. They pump 50,000 gallons of crude oil into the water - a fraction of the tanker's load - and they threaten to leave the pumps running until their demands for $15 million are met. To reinforce their message, they toss a crew member over the side, and he drowns in the oily muck.
The scenario is horrifying but plausible. In the Gulf of Aden alone, the huge expanse of water between Yemen and Somalia, 14 ships are being held for ransom, including the Sirius Star and a Ukrainian ship, the Faina, with 32 battle tanks aboard. Rumors are swirling in the region that both ships could soon be released.
Shipowners and governments are desperately seeking successful countermeasures to address what has clearly become a crisis situation. On Monday, the European Union began a yearlong naval operation in the pirate-infested gulf, the EU's first maritime mission ever.
Eight countries are participating in the flotilla, which will be backed up with three airplanes. Ground-based personnel are at Northwood Headquarters in Britain.
Javier Solana, the EU foreign policy chief, said the mission would have "robust rules of engagement" while coordinating with other navies operating in the region, including those of the United States, India and Russia.
This week the UN Security Council passed a resolution allowing navies to breach the 20-kilometer, or 12-mile, territorial limit and enter Somali waters in pursuit of pirates.
In the gulf this year 102 ships have been attacked and 40 have been hijacked. With 21,000 ships passing through the region each year and only a handful of international navies to run interference, the risk-to-reward ratio for impoverished Somalis has been unbeatable.
"Somali fishermen simply changed their business model, and they've got military hardware in the meantime," said Dieter Berg, head of marine underwriting for the huge reinsurance company Munich Re. "Piracy is now a real industry in Somalia. Whole clans are living off it."
Berg said some pirate outfits were now getting inside information in Europe about upcoming shipments of dangerous cargo and shipping routes, the better to plot and pick their attacks.
Interviews with owners, insurers, security companies and anti-piracy experts suggest that many technical innovations are being tried now, everything from high-tech sonic cannons to jury-rigged electrified wires strung around the hulls of their boats.
Some ships have put on extra crew to stand 24-hour watches. Sonic guns and night-vision goggles are now in such demand in the region that they have doubled in price. Nonlethal weapons like low-impact claymore mines and laser-light rifles known as "dazzle guns" are being considered.
Foam sprayers and high-pressure fire hoses have been used to drench the speedboats of approaching hijackers. Huge floodlights have been installed on ships and gasoline bombs prepared. Some ships are stocking special sprays developed by the U.S. military to make decks so slippery that the pirates, if they do come aboard, will not be able to stand up. Some ships have built - and actually used - panic rooms for crews to hide in.
Private enterprise also is getting involved. A number of the world's best-known security companies, including Blackwater and Aegis, are trying to expand into the maritime-security business. They are offering teams of onboard guards - most of them former military combat veterans - to repel the pirates.
"Blackwater offered to put a couple ships in the water, but they don't have the UN mandate," said Arthur Bowring, managing director of the Hong Kong Shipowners Association, referring to the legal protections afforded national navies. "I've had lots of e-mails from these security companies offering us their services - at vast expense."
The effectiveness of security guards remains to be seen, and most anti-piracy experts and insurers do not endorse the use of armed guards. But without armed guards, some analysts say, there is no real deterrent for the pirates.
"How do pirates in a small boat stop a 30,000-ton ship? It's firearms, that's all it is," Andy MacDonagh, a director of the private military contractor Raven Special Projects, said in an interview with Lloyd's List. "But as soon as you fire back, they are going to turn round and go the other way because they're so vulnerable."
An unarmed three-man team was overwhelmed by pirates who captured the chemical tanker Biscaglia in the gulf last week. The guards, two Britons and an Irishman, jumped overboard as the pirates clambered onto the ship. They were pulled from the water by a helicopter deployed from a nearby French frigate.
"Of course they went overboard," said Bowring. "They didn't want to sit on a beach in Somalia for three months. They're far too experienced for that."
The security team, employed by Anti Piracy Maritime Security Solutions, in Poole, England, carried no firearms but did have water sprayers and a sonic cannon. The cannon - a long-range acoustic device, or LRAD, which can cost as much as $125,000 - shoots sound waves from a dish transmitter. The noise, if properly aimed and focused, can be debilitating at 100 meters, or 330 feet.
"The pirates were basically laughing at our guys," said the company owner, Nick Davis. "LRADs don't work when they take an AK-47 round through them."
So the pirates won that battle and the Biscaglia remains anchored offshore, with hijackers negotiating for its release.
The pirate clans, meanwhile, are untouchable at their bases in Somalia, which has not had an effective government since the early 1990s.
"The problem," said Berg, "lies ashore."
EU launches Somalia anti-piracy operation
Monday, December 8, 2008
By David Brunnstrom
The European Union agreed on Monday to launch an anti-piracy naval operation off the coast of Somalia involving warships and aircraft from several nations.
The mission, the first such naval operation mounted by the 27-member EU, will initially involve three warships -- from Greece, Britain and France, and two maritime surveillance aircraft from France and Spain.
The naval force will be joined by a fourth ship from Germany upon approval of the mission by the German parliament, which is expected mid-month, EU officials said. Two maritime surveillance aircraft will be provided by France and Spain, they said.
A surge in piracy in one of the world's busiest shipping lanes off Somalia has pushed up insurance costs, brought pirate gangs tens of millions of dollars in ransoms and prompted foreign navies to rush to the area to protect merchant shipping.
There are already several international naval operations in the area, including a NATO mission to counter piracy, but they have done little to deter the pirates.
European foreign ministers meeting in Brussels agreed to the launch of the EU mission from Tuesday, foreign policy chief Javier Solana told a news conference.
Solana said it would be the EU's first naval operation "and in a place in the world that everybody's looking at."
"The rules of engagement are very robust, with the possibility of using all means, including force to protect, to deter and to prosecute all acts of piracy."
An EU official said the British and French ships were in the region and the Greek flagship would sail from Greece Tuesday.
It is under the operational command of Britain and command of the naval force at sea will be held for an initial four months by Greece, then by Spain and then the Netherlands.
"THREAT TO TRADE"
There have been around 95 pirate attacks in Somali waters this year, with some 40 ships taken, including a Saudi tanker holding $100 million (67 million pounds) of oil.
Foreign Secretary David Miliband told reporters the mission was significant.
"Piracy is a threat to European trade; also to global trade. The fact there are 19 hostage ships now in harbour is very clear proof of the need. The fact that the European Union is stepping up to the plate on this is a significant step forward," he said.
The U.N. Security Council last week cleared the way for the EU mission when it renewed its authorisation for countries to use military force against pirates off Somalia.
The U.S.-drafted resolution, adopted unanimously by the 15-nation council, extends for one year the right of countries with permission from Somalia's transitional government to enter Somali waters to pursue and attack pirates.
French U.N. Ambassador Jean-Maurice Ripert said last week he was confident the EU operation would improve security in the Gulf of Aden, a major sea lane for Middle East oil used by ships heading to and from the Suez canal.
An unresolved issue has been jurisdiction over captured pirates and where they can be prosecuted. U.S. envoy Rosemary DiCarlo told reporters last week Washington hoped more countries would use a 1988 convention against unlawful acts committed at sea to put captured pirates on trial.
(Additional reporting by Ingrid Melander)
Rioting in Greece continues
By Anthee Carassava
Monday, December 8, 2008
ATHENS: The violence in Greece by youths angry over the killing of a teenager by the police raged for a third day on Monday as thousands of police officers failed to contain some of the worst rioting in recent years.
A major street march through the center of central Athens quickly turned violent Monday night, as demonstrators threw concrete slabs, rocks and flaming gasoline bombs at police officers. A Christmas tree set up by the government in the center of the city was set on fire.
The rioting also intensified in the country's second-largest city, Salonika, and for the first time spread to Trikala, a city in the country's agricultural heartland.
Schools were shut in Athens, the capital, and high school and university students spilled onto the streets, leading to scattered violence throughout the day. But the evening demonstration, which had attracted thousands and was organized by the nation's Communist Party, was accompanied by some of the worst of the violence of the past several days, and bystanders said they were growing more frustrated with the police's inability to stop the riots.
The windows of one of Athens' luxury hotels, the Athens Plaza on Syntagma Square, were smashed, and the lobby was filled with tear gas or smoke. A hotel guard said guests were evacuated. A small fire burned in the lobby of the Foreign Ministry opposite the Parliament building, The Associated Press reported.
On Sunday, protesters took to the streets in Athens and other Greek cities, burning shops, cars and businesses despite swift action by the government, which charged a police officer with premeditated manslaughter in the shooting death of the 15-year-old on Saturday night.
Senior security officials said they had put the country's entire 45,000-member police force on alert in one of the biggest security mobilizations since Athens hosted the 2004 Summer Olympics. Britain and Australia issued travel advisories for their citizens visiting Athens.
Panayiotis Stathis, an Athens police spokesman, said security forces were "trying to control the situation," while using restraint in putting down any protests. "The orders decreed to officers is to be tolerant but responsive to any criminal attack," Stathis said.
As night fell on Sunday, rioters were barricaded at two university campuses in the capital. The Greek police and military have not been permitted to enter college campuses since 1973, when tanks quashed a student uprising at Athens Polytechnic, leading to at least 22 civilian deaths.
Panagiotis Sotiris, 38, a spokesman for Uniting Anti-Capitalist Left, a coalition of leftist groups which helped take over the Athens Law School on Monday, said in an interview with Reuters that the violence was not only connected to the killing of the 15-year-old boy, "but is a struggle to overthrow the government's policy."
"We are experiencing moments of a great social revolution," he said.
Young people also continued to clash with the police in other cities. In the northern city of Salonika, 300 students fought pitched battles with the police on Monday, overturning scores of trash cans and setting them ablaze. The rioting seemed to worsen Monday night, as dozens of buildings were damaged and rioters threw homemade firebombs, The Associated Press reported. In Veroia, a town about 40 miles from Salonika, an estimated 400 stone-wielding students clashed with the local police, who retaliated with tear gas. In the small Greek town of Trikala, a student protest march turned violent and one policeman was injured.
In Athens, some 15,000 police officers fanned out across the city's meandering streets, the authorities said. Rebel youth and self-styled anarchists threw rocks at police officers in riot gear and shouted anti-establishment slogans.
Workers in the capital's central district had returned to their jobs on Monday but expressed frustration as they surveyed the damage done by the rioters. Department stores, banks and scores of cars have been destroyed in the rioting.
"What happened with the teenager was terrible," said Marina Christodoulou, a teller at a bank destroyed by rioters. "But watching these rebellious youths tear down the town without an inkling of a response from the police makes the authorities look like cowards."
The details of the Saturday night confrontation that led to the death of the 15-year-old, whose name has not been officially released by the authorities, remained in dispute. The police said two police officers had been stopped by about 30 aggressive youths in Exarchia, a central Athenian district of bars, restaurants and bookstores that is a gathering place for anarchists.
The police said one officer, Epaminondas Korkoneas, fired three warning shots, one of which struck and killed the boy. Greek media quoted witnesses who said the officer had aimed at the boy. Korkoneas has been charged with premeditated manslaughter. The other officer present has been charged as an accomplice.
An autopsy is being carried out on the boy's body to determine the trajectory of the bullet that killed him.
Clashes between the police and anarchists and other radical youth in Greece are common, but the rioting represented the worst of such violence in years. A longstanding, delicate co-existence between the police and the groups of far-left youth in parts of the capital had been shattered, political analysts said.
"For decades," said John Brady Kiesling, a former American diplomat in Athens, "there has been a modus vivendi whereby police tolerate certain crime in Exarchia, and anarchists refrain from waging attacks against them. That live-and-let-live attitude has worked well for both sides. But once there is some type of police action, anarchists retaliate massively and leftist-leaning youth gangs rally to their cause of police resentment."
The anarchist movement in Greece traces its roots to a military junta that ruled the country from 1967 to 1974. Because of the population's sensitivity to state violence against civilians, however, the authorities are hesitant to use overwhelming force against them, even when they become violent.
Kiesling and other analysts contacted Monday suggested that the authorities were holding out against coordinated security operations until a public outcry empowered the police to take action.
With the conservative government stung by a string of corruption scandals and its popularity plummeting in the face of difficult economic conditions, politicians and security officials were weighing the options of a large-scale police operation to uproot radical elements propelling the protests.
"The timing may not be right for such a move," said Marianna Giannakou, a former conservative lawmaker. "But Greece must move on and end its tolerance of extremism."
Fought over any good books lately?
By Joanne Kaufman
Monday, December 8, 2008
Jocelyn Bowie was thrilled by the invitation to join a book group. She had just returned to her hometown, Bloomington, Indiana, to take an administration job at Indiana University, and thought she had won a ticket to a top echelon. "I was hoping to network with all these women in upper-level jobs at IU, then I found they were in the book group," she said. "I thought, 'Great! They'll see how wonderful I am, and we'll have these great conversations about books.' "
Bowie cannot pinpoint the precise moment when disillusion replaced delight. Maybe it was the evening she tried to persuade everyone to look beyond Oprah Winfrey's picks, "and they all said 'What's wrong with Oprah?' " she said.
Or perhaps it was the meeting when she lobbied for literary classics like "Emma" and the rest of the group was abuzz about "The Secret Life of Bees," a pop-lit best seller.
The last straw came when the group picked "The Da Vinci Code" and someone suggested the discussion would be enriched by delving into the author's source material. "It was bad enough that they wanted to read 'Da Vinci Code' in the first place," Bowie said, "but then they wanted to talk about it." She quit shortly after, making up a polite excuse: "I told the organizer, 'You're reading fiction, and I'm reading history right now.' "
Yes, it's a nice, high-minded idea to join a book group, a way to make friends and read books that might otherwise sit untouched. But what happens when you wind up hating all the literary selections — or the other members? Breaking up isn't so hard to do when it means freedom from inane critical commentary, political maneuvering, hurt feelings, bad chick lit and even worse chardonnay.
"Who knew a book group could be such a soap opera?" said Barb Burg, senior vice president at Bantam Dell, which publishes many titles adopted by book groups. "You'd think it would just be about the book. But wherever I go, people want to talk to me about the infighting and the politics."
One member may push for John Updike, while everyone else is set on John Grisham. One person wants to have a glass of wine and talk about the book, while everyone else wants to get drunk and talk about their spouses. "There are all these power struggles about what book gets chosen," Burg said. Then come the complaints: "It's too long, it's too short, it's not literary enough, it's too literary ... "
The literary societies of the 19th century seemed content to leave the drama to authors and poets, whom they discussed with great seriousness of purpose. Some book groups evolved from sewing circles, which "gave women a chance to exercise their intellect and have a social gathering," said Rachel Jacobsohn, author of "The Reading Group Handbook," which gives a history of the format plus dos and don'ts for modern hosts.
Today there are perhaps four million to five million book groups in the United States, and the number is thought to be rising, said Ann Kent, the founder of Book Group Expo, an annual gathering of readers and authors.
"I firmly believe there was an uptick in the number of book groups after 9/11, and I'm expecting another increase in these difficult economic times," she said. "We're looking to stay connected and to have a form of entertainment that's affordable, and book groups are an easy avenue for that."
Most groups are all-female, but there are plenty of all-male and coed ones. Lately there have emerged plenty of online-only book groups too, though — given the difficulty of flinging a drink in the face of a member who suggests reading Trollope — those are clearly a different animal.
And more clubs means more acrimony. Sometimes there is a rambler in the group, whose opinion far outlasts the natural interest of others, or a pedant, who never met a literary reference she did not yearn to sling. The most common cause of dissatisfaction and departures?
"It's because there's an ayatollah," said Esther Bushell, a professional book-group facilitator who leads a dozen suburban New York groups and charges $250 to $300 a member annually for her services. "This person expects to choose all the books and to take over all the discussions. And when I come on board, the ayatollah is threatened and doesn't say anything." Like other facilitators, she is hired for the express purpose of bringing long-winded types in line.
For Doreen Orion, a psychiatrist in Boulder, Colorado, the spoiler in her book group was a drama queen who turned every meeting into her own personal therapy session. Orion was used to such people in her practice, but in her personal life — well, no thanks. "There were always things going on in her life with relationships, and she'd want to talk about it," she said. "There'd be some weird thing in a book and she'd relate it to her life no matter what. Everything came back to her. It was really exhausting after a while."
What attracted Susan Farewell to a book group called the IlluminaTea were guidelines that precluded such off-putting antics. No therapy talk, no chitchat and no skipping meetings. "It was very high-minded," said Farewell, a travel writer in Westport, Connecticut Members took turns selecting books, "and you felt that your choice was a measure of how intelligent and sophisticated and worldly you were," she said.
The high standards extended to the refreshment table. "When it was your month to host a meeting, you would do your interpretation of a tea, and the teas got very competitive," Farewell said. Homemade scones and Devonshire cream were par for the course, and Farewell recalls spending the day before her hostess stint making watercress and smoked salmon sandwiches.
This started to feel oppressive. "If the standards had been more relaxed, I would have stayed in the group," she said. "But I just felt I couldn't keep getting clotted cream. I couldn't work and carry on the formality and get through the novel every month, so I just said I couldn't make the meetings anymore."
Some who leave one group find happiness in another. Orion and another woman broke from their original group and contacted another woman who had also left. "Then we secretly reconstituted as another group," Orion said. "We've been going strong for 10 years, but our experience has made us cautious about inviting new members. We've become very selective."
Nancy Atkins Peck, an artist and historian in Glen Rock, New Jersey, has also made a successful transition. Until the election cycle of 2004, she had loved her book group — the members read "A Tree Grows in Brooklyn," novels by Virginia Woolf "and sometimes a paperback of no importance," she said.
Then, after a presidential debate, an argument about the candidates ensued, "so it was decided that we couldn't read any political books or have any political discussions anymore," recalled Peck, who had just suggested the group read a book about the Bush White House.
"It was nixed, and I just felt that was unnatural," given that the group had successfully discussed other sensitive issues, she said. She and her husband then joined a coed group, which has worked out well. "And we read a heck of a lot of political books," she said triumphantly.
Sometimes the problem is a life-stage mismatch among group members. "I know of a group where all but one member has young children," said Susanne Pari, author of the novel "The Fortune Catcher" and the program director at Book Group Expo. "They talk for 15 minutes about the book and then launch into a discussion of poopy diapers and nap times and preschool."
Then the one member who had nothing to bring to the soiled Pampers conversation announced she did not have time for the group. For etiquette reasons, "it's very uncommon" for people to give the real reason for their disenchantment, Pari said.
Bushell, the book-group facilitator, tells of one woman who left a group "because she didn't envision herself sitting around talking about a book — she thought some business networking would take place."
Another woman decamped because she wanted to read more chick lit. "I hate to sound ponderous," Bushell said, "but I have a certain moral obligation. I don't feel I can be paid for leading a discussion about 'The Devil Wears Prada.'"
At Book Passage, a store with two branches in the San Francisco area, Kate Larson is something of a Miss Lonely Hearts for newcomers and disgruntled book group members. "I collect names, and when I get 12 or 14 I ask them to come to a meeting at the store," she said. "If it looks like they all agree about what kinds of things they want to read, they've got a book club."
Larson uses a newsletter to help people find special-interest groups — say, in science fiction or spirituality. Groups made up of total strangers seem to last longer, she said, "because the focus is truly on the book."
As for Bowie of Indiana University, she was asked to join another group but has chosen to stay unaffiliated. "My experience was a real disappointment," she said. "Now when I look at a novel in a store and it has book group questions in the back, it almost puts me off from buying it."
By Simon Romero
Monday, December 8, 2008
CUSCO, Peru: From the postcards bearing his swashbuckling, fedora-topped image to the luxury train emblazoned with his name that runs to the foot of the mountain redoubt of Machu Picchu, reminders are ubiquitous here of Hiram Bingham, the Yale explorer long credited with revealing the so-called Lost City of the Incas to the outside world almost a century ago.
But in recent months, a confluence of contrary events has threatened to upend the legacy of Bingham, the ostensible model for the fictional Indiana Jones. Peru has threatened legal action against Yale to recover thousands of artifacts Bingham removed. Evidence has emerged suggesting that a German adventurer may have arrived there first. And a dispute has been grinding on over who owned the site when Bingham supposedly discovered it.
Scholarly circles in Peru have been abuzz with revisionist debate.
Not only may Bingham not be quite the heroic pioneer that he has been portrayed as, but it may well be that the Lost City of the Incas was never really lost after all.
The disputes over who discovered or rediscovered the sacred site have become so contentious they have been living up to the phrase "the fights of Machu Picchu," coined by the U.S. writer Daniel Buck in an allusion to a Pablo Neruda ode, "The Heights of Machu Picchu."
No one in the field of Machu Picchu studies seriously challenges the fact that Bingham arrived at the jungle-shrouded ruins in 1911, excavated and photographed them, and largely introduced them to the world.
But his claims have been challenged over time.
"Hiram Bingham never thought someone would doggedly investigate his path," said Mariana Mould de Pease, a Peruvian historian.
Soon after Bingham led his expeditions to Machu Picchu, claims surfaced that a British missionary, Thomas Payne, and a German engineer, J.M. von Hassel, had beaten him there. And maps found by historians show references to Machu Picchu as early as 1874.
The latest challenge comes from recently publicized claims raising the possibility that a German adventurer arrived at Machu Picchu and looted it decades before Bingham even set foot in Peru. Records show that the German, Augusto Berns, purchased land in the 1860s opposite the Machu Picchu mountain, built a sawmill on his property and then tried to raise money from investors to plunder nearby Incan ruins, all with the blessing of the Peruvian government.
"The Berns information is a matter that has to be investigated further," said Jorge Flores Ochoa, a prominent Peruvian anthropologist. "Hiram Bingham painted himself as a great explorer who ventured to the ends of the Earth, but that was a fantasy. The truth is that others, perhaps many others, arrived at Machu Picchu long before he did."
Berns, an engineer, went to Peru to work on the Southern Peruvian Railway. An article this year in the magazine South American Explorer by Paolo Greer, a cartographer based in Alaska, offered additional detail about Berns, showing how he stopped cutting railroad ties on his property in the 1880s and started trying to lure investors into ventures for prospecting the area for gold and silver.
"Berns's mining claims proved worthless," Greer said in an e-mail message. "However, he spent years purposely searching for Inca sites, employing local guides who were intimate with the area."
Moreover, some scholars say, Bingham may have known about Berns's activities. Mould de Pease said she found in Yale's own archives an 1887 Peruvian government document authorizing Berns to remove treasure from areas that may have included Machu Picchu. She reported the find in a 2003 book.
"If this document was in Bingham's own papers, then he knew that Berns could have arrived there first," she said.
Others scoff at the possibility that Berns set foot on Machu Picchu, pointing to discrepancies in the richly worded prospectuses that he sent out to investors. In one document, Berns referred to an "ancient gold-washing apparatus" called "llamajcansha," which "in the ancient Indian languages, means 'gold yard."'
"It is unlikely that readers of his prospectus in the United States spoke Quechua," Buck wrote in an essay published in the Lima newspaper La República, referring to the indigenous language spoken in this part of Peru. "Otherwise they would have figured out that llamajcansha meant 'llama yard."'
Buck added, "Berns was selling a load of llama dung."
Skeptics also say no substantive proof has emerged that Berns ever spirited away artifacts from Machu Picchu.
Meanwhile, in an effort to assert greater control over its cultural heritage, the Peruvian government said last month that it would take legal action against Yale in an effort to secure the return of thousands of artifacts Bingham took to the university. Peru claims the artifacts had been lent to Yale and therefore should have been returned. The threat of legal action is an abrupt turnaround from a recent preliminary understanding between Yale and Peru that appeared to put the parties on the road to resolving the dispute.
Both sides in the case have seized on the revelations about Berns as supporting evidence.
An aide to Cecilia Bákula, director of the National Institute of Culture in Lima, which manages the Machu Picchu site, said she was unavailable for comment. But in the view of Mould de Pease, the historian, the authorization given to Berns shows that Peru had sovereignty over Machu Picchu before Bingham arrived there.
For Yale, revelations that an earlier adventurer had designs on Incan ruins may reinforce its view that the items removed by Bingham are neither unique treasures nor critically important artifacts. "It is quite possible that all the treasures were removed by the German, Augusto Berns, many years before Bingham arrived," said R. Scott Greathead, a lawyer representing Yale.
Complicating matters further, property records indicate that tracts of land, including Machu Picchu, were repeatedly bought and sold by families in the Cusco area before Bingham arrived.
"My great-grandfather, Mariano Ignacio Ferro, owned Machu Picchu when Hiram Bingham claimed to have discovered it, and even helped the American find his way there," said Roxana Abrill Nuñez, a museum curator in Cusco who is waging a high-profile legal battle to be compensated for her family's loss of Machu Picchu. She claims that the state expropriated the site from her family without payment.
For others in Cusco, the actions of a German once forgotten to history offer insight into a city that may have been lost and found repeatedly since the Incas abandoned it, even if it took Bingham's work to lodge it in the public imagination.
"All I know is that anything was possible in the turbulent years before Bingham made it to Machu Picchu, with others probably arriving even before this German," said David Ugarte Vega, an anthropologist at the National University of San Antonio Abad in Cusco.
"What is certain is that the image of Bingham is at last being challenged," Ugarte Vega said, "while the descendants of those great builders who assembled Machu Picchu are working as porters for the newest wave of travelers who come to see the site from afar."
By Sam Roberts
Monday, December 8, 2008
It has remained one of World War II's most enduring mysteries, one that resonated decades later in the aftermath of the terrorist attacks of Sept. 11, 2001: Who in Washington knew what and when before the Japanese attacked Pearl Harbor on Dec. 7, 1941?
Specifically, who heard or saw a transcript of a Tokyo shortwave radio news broadcast that was interrupted by a prearranged coded weather report? The weather bulletin signaled Japanese diplomats around the world to destroy confidential documents and codes because war with the United States, the Soviet Union or Britain was beginning.
In testimony for government inquiries, witnesses said that the "winds execute" message was intercepted as early as Dec. 4, three days before the attack.
But after analyzing U.S. and foreign intelligence sources and decrypted cables, historians for the National Security Agency concluded in a historical documentary released last week that whatever other warnings reached Washington about the attack, the "winds execute" message was not one of them.
A Japanese message intercepted and decoded on Nov. 19, 1941, at an American monitoring station on Bainbridge Island, Washington, appeared to lay out the "winds execute" situation. If diplomatic relations were "in danger" with one of three countries, a coded phrase would be repeated as a special weather bulletin twice in the middle and twice at the end of the daily Japanese-language news broadcast.
"East wind rain" would mean the United States; "north wind cloudy," the Soviet Union; and "west wind clear," Britain.
In the history "West Wind Clear," published by the Center for Cryptologic History at the National Security Agency, Robert Hanyok and David Mowry attribute accounts of the message being broadcast to the flawed or fabricated memory of some witnesses, perhaps to deflect culpability from other officials for the United States' insufficient readiness for war.
A congressional committee grappled with competing accounts of the "winds execute" message in 1946, by which time the question of whether it had been broadcast had blown into a controversy. The New York Times described it at the time as a "bitter microcosm" of the investigation into American preparedness.
"If there was such a message," the paper wrote, "the Washington military establishment would have been gravely at fault in not having passed it along" to military commanders in Hawaii. If there was not, then the supporters of those commanders "would have lost an important prop to their case."
In an interview, Hanyok said there were several lessons from the controversy that reverberate today. He said that some adherents of the theory that the message was sent and seen were motivated by an unshakable faith in the efficacy of radio intelligence, and that when a copy of the message could not be found they blamed a cover-up - a reminder that no intelligence-gathering is completely foolproof.
Washington also missed potential warning signs because intelligence resources had been diverted to the Atlantic theater, he said, and the Japanese deftly practiced deception to mislead Americans about the whereabouts of Tokyo's naval strike force.
"The problem with the conspiracy theory," Hanyok said, "is that it diverted attention from the real substantive problems, the major issue being the intelligence system was so bureaucratized."
Beginning about Dec. 1, Washington became aware that the Japanese were ordering diplomats overseas to selectively destroy confidential documents. But, the NSA study found, "because of the sometimes tardy exploitation of these messages, intelligence officers in the army and navy knew only parts of the complete program. It is possible that they viewed the Japanese actions as ominous, but also contradictory and perhaps even confusing. More importantly, though, the binge of code destruction was occurring without the transmittal of the winds execute message."
The authors concluded that the weight of the evidence "indicates that one coded phrase, 'west wind clear,' was broadcast according to previous instructions some six or seven hours after the attack on Pearl Harbor."
"In the end, the winds code never was the intelligence indicator or warning that it first appeared to the Americans, as well as to the British and Dutch," they wrote, and did not add to the view that prevailed then in Washington and London "that relations with Tokyo had deteriorated to a dangerous point."
"From a military standpoint, the winds coded message contained no actionable intelligence either about the Japanese operations in Southeast Asia and absolutely nothing about Pearl Harbor.
"In reality," they concluded, "the Japanese broadcast the coded phrase(s) long after hostilities began - useless, in fact, to all who might have heard it."
That war with Japan was anticipated is apparent from a separate memorandum to President Franklin Roosevelt dated Nov. 13, 1941, from William Donovan, director of the Office of Strategic Services, the precursor to the Central Intelligence Agency. The memorandum was found in the National Archives last year by the Nazi War Crimes and Japanese Imperial Government Records Interagency Working Group.
Reporting on a conversation the week before between Hans Thoman, the German chargé d'affaires to the United States, and Malcolm Lovell, a Quaker leader, Donovan quoted Thoman as saying that Japan was trying to buy time.
"In the last analysis, Japan knows that unless the United States agrees to some reasonable terms in the Far East, Japan must face the threat of strangulation, now or later. Should Japan wait until later to prevent this strangulation by the United States, she will be less able to free herself than now, for Germany is now occupying the major attention of both the British empire and the United States.
"If Japan waits, it will be comparatively easy for the United States to strangle Japan," Donovan's memorandum quoting Thoman continued. "Japan is therefore forced to strike now, whether she wishes to or not."
Monday, December 8, 2008
LONDON: David Ross, a co-founder of the British mobile phone retailer Carphone Warehouse, resigned Monday as deputy chairman of the company after failing to declare he had pledged shares he owned in the business against personal loans.
Ross, with an estimated fortune of £873 million, or $1.3 billion, is one of Britain's best-known businessmen and was chosen in May by Boris Johnson, the mayor of London, to help organize the 2012 Olympics.
Ross also had failed to disclose similar arrangements for his shares in the bus and rail company National Express, of which he is chairman, and two other companies of which he is a director, regulatory filings showed Monday.
Shares in Carphone, which Ross founded with Charles Dunstone in 1989, fell 4 pence, or 4.3 percent, to close at 89 pence, its lowest close since July 2003, on concerns that Ross might have to sell his 19 percent stake in the business.
British regulations require that directors should disclose immediately if they have pledged shares against personal loans.
Carphone said Ross had struck his loan agreements from 2006 to 2008.
"The company hadn't been aware of this until this time," Dunstone told analysts during a conference call. "As a result of that, David has tendered his resignation to the board."
Ross could not be immediately reached for comment. The Financial Services Authority, a British regulator, declined to comment on whether it would be taking action on the matter.
The London mayor's office and the London Organizing Committee for the Olympic Games had no immediate comment.
Carphone said Ross had pledged 136.4 million shares against personal loans from 2006 to 2008. This was on top of around 41 million shares pledged against loans which he had previously disclosed.
It said Ross had notified the company Sunday that none of the loans were in default and that he had no current intention of selling his shares.
"In addition, he has given an undertaking to the board to facilitate an orderly market, where possible, for any potential future disposal of shares in the company," Carphone said.
The self-storage company Big Yellow said Ross, a director of the company, had also pledged a holding of 11.46 million of its shares against personal loans.
National Express said he had pledged a holding of 3.01 million shares against personal loans, while the marine safety group Cosalt said he had pledged a holding of 3.99 million shares for the same purposes.
Big Yellow and Cosalt also said Ross had no intention of selling his holding, while National Express said he would attempt to ensure an orderly sale process if one were to occur.
Dunstone said he did not know why Ross had not declared his loan arrangements earlier and said the details of the loans were a personal matter.
"I think it was probably an oversight or a misunderstanding of what needs to be done," he said. "It's clearly a great personal sadness to me, having worked with David for such a long time, to lose him from the board."
Carphone said that no other directors had undertaken similar loan arrangements.
Monday, December 8, 2008
LONDON: Sterling hit a record low against a broadly stronger euro on Monday, with doubts about Britain's ability to navigate a quick path through recession undermining sentiment and euro buy orders hastening the pounds fall.
By 4:38 p.m., the euro had hit 87.38 pence -- a level not seen since the euro's inception in 1999.
"Sterling is getting hammered by stops," a London-based trader said, adding that 90 pence was a realistic target.
(Reporting by Veronica Brown)