Sunday, December 14, 2008
WASHINGTON: A few days before the presidential election, the director of national intelligence, Mike McConnell, told a group of intelligence officials that the new administration could well be tested by a terrorist attack on the homeland in its first year in office. "The World Trade Center was attacked in the first year of President Clinton, and the second attack was in the first year of President Bush," he said.
President-elect Barack Obama made a similar observation when he told "60 Minutes" that it was important to get a national security team in place "because transition periods are potentially times of vulnerability to a terrorist attack." During the campaign, Joe Biden warned that "it will not be six months before the world tests Barack Obama like they did John Kennedy."
Should we be worried? In fact, the probability of a Qaeda attack on the United States is vanishingly small, for the same reasons that for the past seven years the terrorist group has not been able to carry out one.
President Bush and his supporters have often ascribed the absence of a Qaeda attack on the United States to the Iraq war, which supposedly acted as "flypaper" for jihadist terrorists, so instead of fighting them in Boston, America has fought them in Baghdad. Other commentators have said that Al Qaeda is simply biding its time to equal or top 9/11.
The real reasons are more prosaic. First, the American Muslim community has rejected the Qaeda ideological virus. American Muslims have instead overwhelmingly signed up for the American Dream, enjoying higher incomes and educational levels than the average.
Second, though it is hard to prove negatives, there appear to be no Qaeda sleeper cells in the United States. If they do exist, they are so asleep they are comatose. True, in 2003, the FBI arrested Iyman Faris, an Ohio trucker who met with Qaeda leaders in Pakistan after Sept. 11 and then had a plot to demolish the Brooklyn Bridge with a pair of blowtorches, a deed akin to trying to blow up the Statue of Liberty with a firecracker. But he is an exceptional case. Two years after his arrest, a leaked FBI report concluded, "To date, we have not identified any true 'sleeper' agents in the U.S."
Third, when jihadist terrorists have attacked the United States, they have arrived from outside the country, something that is much harder to do now. The 19 hijackers of 9/11 all came from elsewhere.
Ramzi Yousef, the mastermind of the 1993 Trade Center bombing, flew to New York from Pakistan. Today's no-fly list and other protective measures make entering the country much more difficult.
Fourth, the Bush administration has made Americans safer with measures like the establishment of the National Counterterrorism Center, where officials from different branches of government share information and act on terrorist threats. As a result of such measures, scores of terrorism cases have been aggressively investigated in the United States.
But despite the billions of dollars invested in all these efforts and the thousands of men and women who get up every day to hunt for terrorists, the resulting cases have almost never involved concrete terrorist plots or acts.
Of the so-called terrorism cases since 9/11, many have revolved around charges of "material support" for a terrorist group, a vague concept that can encompass almost any dealings with organizations that have at one point engaged in terrorism. And in the cases where a terrorist plot has been alleged, the plans have been more aspirational than realistic.
If Al Qaeda can't get people into the country, doesn't have sleeper cells here and is unable to garner support from the American Muslim community, then how does it pull off an attack in the United States? While a small-bore attack may be organized by a Qaeda wannabe at some point, a catastrophic mass-casualty assault anything along the lines of 9/11 is no longer plausible.
This is not to say Al Qaeda is no longer a threat to our interests. It has of course regenerated itself on Pakistan's border with Afghanistan since 9/11, and as the 2005 attacks on the London subways and the foiled 2006 plot to bring down airliners leaving Heathrow Airport showed, it remains a grave danger to Britain.
In addition, Al Qaeda's inability to attack the American homeland for the foreseeable future does not then mean that it can't kill large numbers of American living overseas. If the 2006 "planes plot" had succeeded, British prosecutors say, as many as 1,500 passengers would have died, many of them Americans.
The incoming Obama administration has much to deal with, between managing two wars and the implosion of the financial system and car industry. But the likelihood of a terrorist attack on the United States in its early stages by Al Qaeda is close to zero.
Peter Bergen is a senior fellow at the New America Foundation and the author of "The Osama bin Laden I Know."
Sunday, December 14, 2008
The wars in Afghanistan and Iraq have put enormous strains on the U.S. military. The last seven years have been especially hard on those serving in the National Guard and other reserve forces, who too often have had to shortchange their families, finances and careers to accommodate repeated and unexpected tours of active duty overseas. Many are tired and demoralized.
American communities that depend on the National Guard to provide the first line of domestic defense are also being shortchanged. The years of prolonged overseas deployments have stretched Guard units dangerously thin and left the Guard with barely 60 percent of the equipment it needs to carry out its basic missions. That raises serious doubts about the Guard's readiness to respond to either a natural disaster or a terrorist attack.
These problems arose because the Bush administration badly underestimated the number of troops needed in Iraq and Afghanistan, and has had to rely far too heavily on the National Guard and the Reserves to make up the differences.
More than 450,000 people serve in the U.S. Army and Air National Guard, and somewhat less than 400,000 in the army, navy, marine and air force reserves. Roughly half a million of these part-time soldiers have fought in Iraq or Afghanistan. At one point in 2005, nearly half the United States front-line fighting forces in Iraq, and more than half in Afghanistan, came from the Guard and the Reserves.
Those percentages have come down since Robert Gates took charge of the Pentagon and began addressing the problem, in part by beginning an expansion - long opposed by the Bush White House - of the active-duty army and marine forces. But over 20 percent of American forces in Afghanistan and over 10 percent in Iraq still come from the Guard and the Reserves.
Reserve units are meant to be sent overseas, although only for limited periods in national emergencies or as part of full-scale wartime mobilizations. Most reservists, like Guard members, have civilian jobs and family responsibilities. Their units are generally the last in line for getting new equipment and maintaining combat readiness.
Guard units sent overseas experience similar problems. And their overuse abroad creates a dangerous void in their home states. Governors throughout history have depended on locally available, properly equipped National Guard units to respond to natural disasters and other emergencies. Regular army troops and military reserve units are legally barred from domestic law enforcement duties. National Guard troops are not.
There can be no excuse for the way the Pentagon has overtaxed these units. And there is no letup in sight. The 21st century has already shown that America's need for active-duty ground forces will be considerably greater than once expected, not just for war-fighting, but also for training foreign forces, peacekeeping and other missions. It has also shown that assuring the security of America has again become an essential requirement of overall defense planning.
The National Guard is ideally designed to reinforce homeland security. The Reserves are meant to provide America with rapidly expandable armed forces in times of unexpected, and temporary, crisis.
Neither can perform these essential functions properly the way they are being used today.
We urge President-elect Barack Obama to continue the expansion of active-duty forces. Relieving the stress on the Guard and the Reserves - allowing them to fulfill their primary missions - is one more reason why Obama must live up to his commitment for an early, orderly drawdown of troops in Iraq. The administration and Congress must also provide the National Guard with more money to accelerate its resupply efforts.
No one can predict the timing or the nature of the next domestic emergency. The country cannot afford to be caught unprepared.
By Jeremy Gaunt
Sunday, December 14, 2008
LONDON: Investors head into what for many will be the last full trading week of the year expecting more U.S. interest rate cuts, but many remain rattled by emerging dissent over how governments should help ailing economies.
They will also get another check on the post-credit-crunch health of the financial sector, with fourth-quarter earnings from the banking giants Goldman Sachs and Morgan Stanley .
The price of oil, meanwhile, is likely to be in particular focus, with oil-producing countries meeting to discuss supply cuts at a time when lower prices are one of the few areas of easing pressure on monetary authorities.
Investors were in no need of new stress after a year that has seen the global banking model break down, the value of stocks plummet by half, lending freeze up and market volatility soar. But the new source of worry is squabbling among the authorities about how to proceed.
Michala Marcussen, strategy director at Société Générale Asset Management, described the problem. "When you have politics involved," Marcussen said, "you get a lot of back-and-forth. It's not like when you watch economic data."
The failure of the U.S. Congress last week to agree on a bailout for the country's automakers was a shock to the system for investors who had become used to pledges from governments and central banks to do what it took to build confidence, including flooding the global economy with money.
There was a similar impasse in Washington over a financial bailout package earlier in the year, but that ended in a compromise. The latest fight means there will be no bailout passed by Congress for the automakers this year.
To that can be added a growing dispute in Europe over how far governments should go to pump up their deteriorating economies. Using unusually undiplomatic terms, German officials have been criticizing others, primarily Britain, for going into debt with rescue plans.
For investors, who hate uncertainty, it all suggests more volatility ahead just as some confidence was coming back to markets. State Street's latest investment flow data, for example, showed a tentative recovery in the appetite for risk.
One place from where help is almost certain to come, however, is the Federal Reserve, which meets Tuesday. The U.S. central bank is widely expected to reduce interest rates by as much as 75 basis points, to just 0.25 percent.
Since the financial crisis escalated in September 2007, the Fed has cut rates from 5.25 percent to the current 1 percent in an effort to pump money into both the banking system and the now recessionary economy.
There is debate among investors, however, about whether it is working, given the continued deterioration of the economy and the volatility of financial markets. One former Fed governor, Frederic Mishkin, said last week that such a debate was wrong and asked just how bad things might have gotten if the Fed had not acted as aggressively as it has.
But the issue is also arising - and not just in the United States - of what happens when rates are so low that they cannot be cut anymore. Quantitative easing, which essentially entails various measures for pumping money into the economy, is likely.
For investors, one effect of this could be on government bonds, which central banks might buy to keep yields low. But whatever the effect, investors are ending the year in a new environment.
"The unprecedented nature of the crisis has caught out forecasters and policy makers alike," analysts at ING wrote in a research note. "Led by the U.S., past monetary and fiscal norms are being abandoned in desperate attempts to curtail recession and deflation."
Investor attention will also be on the foreign exchange and energy markets this week.
In the currency markets, volatility jumped at the end of last week after the collapse of the U.S. auto bailout proposal, with the dollar weakening sharply after five weeks of gains against major currencies.
The focus will be on whether the latest weakness is a short-lived reaction or whether the dollar's recent burst of strength is now over. The soaring yen may also begin to concern the Japanese authorities.
The price of oil , too, will be in focus, with the Organization of Petroleum Exporting Countries meeting Wednesday in Oran, Algeria.
Crude prices have fallen close to 70 percent since peaking in mid-July as a weaker global economy has smothered demand. This has removed inflation as a worry for general investors and allowed central banks to cut rates.
But OPEC is expected to agree on a large cut in supply at the Oran meeting. The cartel's president has called for a more "severe" reduction than the two million barrels a day its members have already agreed to.
And then there are the banks. Goldman Sachs reports its results Tuesday and Morgan Stanley on Wednesday. Both are expected to announce quarterly losses, but the reports will be studied for signs of further credit-related woes or, possibly, signs of improvement.
Goldman has said it will cut at least 4,800 job globally, while Morgan Stanley has announced at least 6,800 layoffs.
World Bank chief warns wealthy nations against harming developing world
Sunday, December 14, 2008
MIANYANG, China: Wealthy nations must be careful not to cause more suffering to the developing world as they take bolder steps to bolster their faltering economies, the World Bank president, Robert Zoellick, said Sunday.
Zoellick warned that poorer countries, already faced with mounting job losses, were vulnerable to the unintended consequences of policies devised to rescue financial markets.
"Developed countries have guaranteed a lot of bank debt," Zoellick said in an interview while touring the part of Sichuan Province devastated by an earthquake in May. "It's actually made it hard for developing countries that had good budgetary programs to be able to go to market and issue bonds."
He added: "It's important for developed countries to recognize that at some point they're going to need exit strategies for these guarantees or be able to discipline them. I'm not saying that they should take that step now, but otherwise developing countries will be bearing the brunt of this."
The World Bank said last week that the global financial meltdown was a heavy burden on developing economies, forecasting 4.5 percent growth next year, down from 6.3 percent in 2008.
"This financial crisis has moved to an economic crisis, and next year it will be an unemployment crisis," Zoellick said.
He said the recovery could be hindered if countries turned inward in an attempt to save their economies with little regard for others. "I'm worried that the unemployment, particularly as combined with price discounting, could lead to waves of protectionism," he said.
While praising monetary expansion and fiscal stimulus in the United States and elsewhere, Zoellick said such policies could contain the seeds of future economic problems adding that it would require discipline to rein them in down the road.
Along with potentially swollen budgets, developed countries could find themselves sitting atop another liquidity roller-coaster after injecting huge amounts of cash to get their clogged financial markets flowing again.
Loose monetary policy after the bursting of the technology bubble earlier this decade in part explained the credit boom and bust in the United States that sparked the current financial crisis, Zoellick said.
"You have tremendous liquidity now, much more than in 2001, so when the velocity of money picks up, the central banks are going to have to be able to absorb some of that liquidity," he said.
Fallout from Zimbabwe
Sunday, December 14, 2008
Here are the fruits of Robert Mugabe's rule of horrors: political chaos, economic collapse, desperate food shortages, violence and now a fierce cholera epidemic. Eight-hundred people have died More than 16,000 are infected, and there is no end in sight.
The increasingly delusional Mugabe - Zimbabwe's illegitimate president - announced on Thursday that the cholera crisis is over.
Tell that to the Chigudu family which lost five children, aged 20 months to 12 years, in a matter of hours. Or to the World Health Organization, which warns that the crisis now poses a regional threat.
Mugabe blames the West for the epidemic that is spread by water contaminated with excrement. The blame is all his. Water taps in the capital's suburbs went dry last week, so people could not wash hands or food. Hospitals are closed. Garbage is everywhere. Sludge spews from burst sewer lines.
The international community must provide emergency shipments of food, water purification tablets and anti-cholera drugs. The United States has allocated another $6.2 million for supplies like soap, rehydration tablets and water containers. Unfortunately, the dying will continue until Mugabe allows international health care workers to enter the country and do their jobs.
There will be no end to these horrors until Mugabe is gone. He stole this year's election and has blocked a unity government. South Africa and other states that insist on an African-led solution to this crisis must stop enabling Mugabe. They must renounce their recognition of Mugabe as president and press him and his cronies to cede power. The cholera epidemic, spilling into South Africa and other border states, shows there is nowhere to hide from Mugabe's legacy.
By Barbara Lewis
Sunday, December 14, 2008
LONDON: Chakib Khelil, president of the Organization of Petroleum Exporting Countries, is a skilled communicator who will oversee efforts to bolster sagging prices and to restore the cartel's clout at a critical meeting Wednesday in Algeria.
During his year as the public face of OPEC, Khelil has sought to steer the group's 12 members as they tried to slow a record rally and then struggled to brake a record price crash.
With almost a decade of experience in OPEC policy and 19 years as a World Bank energy specialist, Khelil, 69, an Algerian fluent in five languages, has rarely been at a loss for words.
As oil slid from a record of nearly $150 a barrel to just above $40, he said he thought an ideal price would be between $70 and $90 - a price range now widely accepted in the group.
"Normally OPEC has no price target," Khelil said. "But people say the bottom price, the bottom cost below which we cannot step down, is between $70 and $90 a barrel."
Khelil said Saturday that OPEC ministers were in agreement on the need to cut output. "There is an OPEC consensus on the reduction," Khelil said in Algiers, without giving details.
While Khelil's approach to policy has been pragmatic, his role as a politician from Algeria has given him a degree of empathy with OPEC members that have a great need for high prices, like Venezuela and Iran.
The two countries have said they can live for a while on their profits. But many analysts say the countries need an oil price of nearly $100 a barrel if they are to finance big spending plans, and they have been at the forefront of calls to lower OPEC's output ceiling.
Although the average for benchmark U.S. crude this year is still above $100, the outlook for 2009, when many predict fuel demand will contract further, looks much weaker.
Given the conflicting agendas of various OPEC members, analysts said Khelil had kept his nerve.
"Khelil has managed the situation as well as anyone could, particularly with Iran and Venezuela as members," said John Hall, an analyst who regularly attends OPEC meetings.
Equally, Khelil has been undaunted by international criticism. In March, when OPEC was criticized for keeping output steady even though oil was hitting what were then all-time highs above $100, Khelil blamed the price increase on speculators and on the United States, where he previously worked and was educated.
"What's happening in the oil market is due to the mismanagement of the U.S. economy, which is probably affecting the rest of the world," he said.
At home, Algeria's own price needs are considerable. Independent analysts estimate it could require a minimum of $75 to $80 a barrel to finance its $80 billion 2009 budget without having to tap into reserves, borrow or raise taxes.
Khelil studied for a doctorate in petroleum engineering in Texas and worked for foreign companies, including Shell and Phillips Petroleum. He also worked at the World Bank in Washington from 1980 until he took early retirement in 1999 to return to Algeria.
He became energy and mines minister and an adviser to President Abdelaziz Bouteflika. In those roles, he has raced to make up for Algeria's years of underinvestment in oil and natural gas, promoting a policy of openness and competitiveness in international investment.
Algerian governments have often had to use oil and gas revenue to meet pressing social needs, which has tended to starve the state energy giant, Sonatrach, of investment resources. But the price rally gave the country more independence and provided Khelil with the scope to embark on a huge modernization and liberalization of the energy sector.
"The World Bank liberalizer has become a pragmatic Algerian politician, as well as an OPEC president whose articulate way of presenting OPEC policy is admired internationally," said Jon Marks, editor of African Energy magazine. "He has had to navigate some difficult political waters, and he has done it with some aplomb."
William Maclean contributed reporting.
By Lydia Polgreen
Sunday, December 14, 2008
AIR MOUNTAINS, Niger: Until last year, the only trigger Amoumoun Halil had pulled was the one on his livestock vaccination gun. This spring, a battered Kalashnikov rifle rested uneasily on his shoulder. When he donned his stiff fatigues, his lopsided gait and smiling eyes stood out among his hard-faced guerrilla brethren.
Halil, a 40-year-old veterinary engineer, was a reluctant soldier in a rebellion that has broken out over an improbable - and as yet unrealized - bonanza of riches in one of the world's poorest countries.
A battle is unfolding on the stark mountains and scalloped dunes of northern Niger between a band of Tuareg nomads, who claim the riches beneath their homeland are being taken by a government that gives them little in return, and an army that calls the fighters drug traffickers and bandits.
It is a new front of an old war to control the vast wealth locked beneath African soil.
Niger's northern desert caps one of the world's largest deposits of uranium, and demand for it has surged as global warming has increased interest in nuclear power. Growing economies like China and India are scouring the globe for the crumbly ore known as yellowcake. A French mining company is building the world's largest uranium mine in northern Niger, and a Chinese state company is building another mine nearby.
Uranium could infuse Niger with enough cash to catapult it out of the kind of poverty that causes one in five children here to die before their fifth birthday.
Or it could end in a calamitous war that leaves Niger more destitute than ever. Mineral wealth has fueled conflict across Africa for decades, a series of bloody, smash-and-grab rebellions that shattered nations. The misery wrought has left many Africans to conclude that mineral wealth is a curse.
Here in the Sahara, the uranium boom has given new life to longstanding grievances over land and power. For years, the Tuareg have struggled against a government they largely disdained. But this new rebellion has shed the parochial complaints of an ethnic minority, claiming instead that the government is squandering the entire country's resources through corruption and waste.
Armed with a slick Web site and articulate spokesmen in Europe and the United States, the movement has drawn sympathy from Westerners drawn to the mysterious Tuareg and their arguments for justice.
It has also drawn in a wide range of fighters - not just illiterate herdsmen but college students, aid workers, even former pacifists like Halil.
"This uranium belongs to our people; it is on our land," Halil said. "We cannot allow ourselves to be robbed of our birthright."
When Halil was in high school, an old French map hung in his classroom. The verdant crescent along the southern border was labeled "useful Niger." The vast, dun-colored swath across the north that he called home was labeled "useless Niger."
It was a profound lesson, in politics as well as geography. The agricultural belt along the south had all the power. The herders of the north were irrelevant.
It had not always been so. The Tuareg have plied the barren peaks here for centuries, ruling over the caravan routes that crossed the Sahara with the riches of Africa - from salt to slaves. With their camels and swords they enriched themselves through tribute and plunder.
By the time Halil was born, that era was long gone. As a boy he dreamed of having a huge herd of camels, as his father had before the great droughts of the 1970s wiped him out.
After excelling in school, Halil went to college in Benin, but failed to get the Niger government to give him a scholarship to veterinary school abroad.
"My family had no connections," he said. "Unless you have a friend in government, your chances of getting a scholarship are zero."
Instead, he started a union of herders to try to get those notoriously individualistic people to band together for their common interests.
In his travels, Halil began to notice the stream of geologists from France, China, Canada and Australia scouring ever deeper into Tuareg grazing lands. Little seas of flags, used to mark potential mining areas, sprang up everywhere, he said. "I asked myself, 'What do we Tuareg get out of this?"' he said. "We just get poorer and poorer."
Halil's efforts were part of a wave of civic activism that has swept over Africa in the past 15 years as the continent has become more democratic. Many of these elected governments are deeply flawed, but because of a more youthful, urban population in touch with new technology, their citizens are often better informed and less willing to tolerate the corruption that has squandered so much of Africa's potential.
In February 2007, a group of armed Tuaregs mounted an audacious attack on a military base in the Air Mountains. A new insurgency was born. They called themselves the Niger Movement for Justice and unfurled a set of demands: that corruption be curbed and the wealth generated by each region benefit its people.
Far from being useless, as Halil's high school map had said, Tuareg lands produce uranium that accounts for 70 percent of the country's export earnings. But almost none of those earnings returned to those who lost access to grazing land and suffered the environmental consequences of mining, the rebels argued.
To fight the rebellion, the government has effectively isolated the north, devastating its economy. International human rights investigators have also documented serious misdeeds on both sides. The rebels use anti-vehicle land mines that have killed soldiers and civilians, while the army has been accused of extrajudicial killings, arbitrary detentions and looting of livestock. In all, hundreds of people have been killed, and thousands have been pushed from their land.
Despite the violence, mining and exploration continues largely unabated, but the rebels contend that corrupt officials siphon off much of that wealth. The country's prime minister was forced to step aside after being accused of embezzling $237,000, and last summer he was indicted.
"This wealth needs to be used to help the people, not the politicians," said Alhagy Alambo, president of the rebel movement. "Otherwise it is just plunder."
The government argues that Niger is a democracy, if an imperfect one, with peaceful means of redressing grievances.
They call the men fighting in the north bandits and traffickers who have moved drugs, untaxed cigarettes, gasoline and even human cargo across the vast Sahara for decades.
"Niger is a democratic country that is ruled by laws," said Ben Omar, Niger's minister of information. "If someone has a grievance, let him form a political party and bring it to the ballot."
The Tuareg have been fighting here for centuries, warriors who cover their faces with long, blue scarves that stain their skin an inky blue.
After France lost its grip on most of its Saharan colonies in 1960, the Tuareg found themselves a small minority divided among new nations created by arbitrary borders that meant little to them. Worse, droughts reduced them to penury.
But the parched land on which they lived was valuable. A French mining company, Areva, was scooping hundreds of tons of uranium from northern Niger every year. Unlike southern farmers, who owned their land, nomads could use pastureland but had no title to it.
The hardships of global warming and desertification, which eats away grazing land, further impoverished the Tuareg, forcing many to abandon herding. Yet as its fertility degraded, their land became increasingly sought after as the global price of uranium rose steadily. This paradox would prove explosive.
Halil sat out the last Tuareg uprising, which began in 1990 and ended with a peace agreement in 1995. Back then, he was idealistic, hoping to avoid violence. But he knew his people's history well.
"Tuareg are fighters," he said. "It is our nature."
In June 2007, an army vehicle exploded after driving over a land mine planted by the rebels. Villagers say that the army then slaughtered three elderly men; the army says no one was killed. But the story of the slaughtered elders swiftly spread among the Tuaregs.
For Halil, it was a sign that nonviolence was foolish.
"If they were going to kill old defenseless men, how could we even talk about negotiation?" he said. "Fighting was the only way to defend our communities and our way of life."
After months of indecision, Halil sent his pregnant wife and his 2-year-old daughter to stay with her parents. He set off for the Air Mountains.
Once there, Halil found a growing army. He learned how to use a weapon and march in formation, but was more useful in jobs closer to his former vocations - healer and organizer.
Wounded fighters sought him out under his tree in the camp. He treated infections and counseled men on splinting broken bones. Fighters started calling him the doctor.
"I felt that I was useful," Halil said.
Each new recruit must swear a three-part oath on the Koran: Never betray the movement; never attack civilians or take their property; serve all of Niger's people, not just one tribe or clan.
But the oath has exceptions, and stealing from outsiders is not only tolerated but encouraged. Armed men stole a new, white Toyota truck from Unicef's offices in April. The same vehicle turned up at a rebel base a few days later, its Unicef emblem scratched off. The rebels drove it to Mali to try to sell it.
Such slips made Halil uneasy.
"I was not born to be a soldier," he said.
The fighters spend little time actually fighting. Mostly, they drive around on patrols, take shelter under the meager shade of thorny acacia trees and prepare Tuareg tea, a potent brew poured into small glasses.
At such moments, Halil ached for home. He thought of his newborn son, whom he had never seen. He wondered if he made the right choice, leaving his family and taking up the way of the gun.
"Sometimes I have doubts," he said, stoking the embers of a campfire.
By Simon Romero
Sunday, December 14, 2008
KOUROU, French Guiana: Not so long ago, French Guiana was etched into the public imagination as a depraved prison colony by books with titles like "Horrors of Cayenne," "Hell Beyond the Seas" and, of course, "Papillon," Henri Charrière's classic memoir of his incarceration on Devil's Island.
But now this overseas sliver of France offers something altogether different - a bit of insight into the shifting fortunes of the United States in at least one corner of the evolving world economy.
From Kourou, where 20,000 people, many of them transplanted cosmopolitans, live sandwiched between jungle and ocean, it is easy to see how much Americans, who once dominated the commercial space industry, have been reduced to just another competitor - or, worse, a partner in joint ventures with Russians - on a global field of play.
The driving force behind Kourou's development is Arianespace, a French company that began as a poor cousin to NASA nearly three decades ago. Today, it has edged past Boeing and Lockheed Martin to become the leading player in the $3.2 billion commercial-satellite-launching industry; it accounts for about half of all the tonnage sent into orbit for business purposes each year.
That pales, of course, alongside the bigger business of military and government satellite launches, which the United States and Russia still lead. But it does include the launching of commercial satellites that transmit the data for a globalized economy, as well as for satellite broadcast, Internet and Earth-imaging tools. And in that, the Americans are no longer in charge.
Kourou seems a bit fantastical to be so important. With jungle on three sides and the Atlantic on the fourth, it is an equatorial one-project town. Yet its post-1960s apartment blocks are neatly tended, its gendarmerie stations staffed by men in French khakis, its food stores stocked with imported pâtés and wine. Imagine it as Los Alamos, New Mexico, where the United States carried out research to develop the atomic bomb, and provisioned by France.
Most of the time it seems to sleep. But about half a dozen times a year, in launches that are believed to cost $200 million apiece, rockets light up the sky.
"Through perseverance and some good luck and timing, we've done fine for ourselves," said Thierry Vallée, an official at France's space agency, CNES, who has a knack for understatement. He says this while standing in the Guiana Space Center's control room, under a global map of competing launch sites in places like Alcântara (Brazil), Sriharikota (India), and Xichang (China).
The roots of this odd achievement lie deep in the psychological jolt France got when it lost its first launch site, in Algeria, in the 1960s. Determined not merely to follow America, France was desperate to find another way to reach space independently.
Since the equator is the ideal latitude to launch from - the Earth's rotation is fastest there, thrusting payloads into space like a slingshot - the French looked around at their outposts that were near it and decided on this one, after rejecting French Polynesia and Djibouti.
As Americans reached for the moon, France and its European partners slowly built their commercial launch operations here. Then the Americans began to stumble. The Reagan administration prohibited the space shuttles from carrying most commercial payloads after the Challenger disaster in 1986. And later, NASA gave up on two flawed plans for new vehicles, the National Aerospace Plane and Lockheed Martin's X-33 unmanned space plane.
Boeing and Lockheed Martin, whose mainstay was U.S. military contracts, kept launching commercial satellites from California and Florida in those years. But that business declined drastically when the telecommunications and dot-com bubbles burst.
Meanwhile, Arianespace had tied together CNES with other European stakeholders, building a consortium that could launch here. The Europeans were mainly public entities like CNES, but because they lacked large military programs, commercial launches were the game they could play. "The Europeans had to turn to the commercial sector if they wanted to maintain their independent space capabilities," said Jeff Foust, a senior analyst with Futron, a Maryland aerospace consulting firm.
And they caught some breaks. With the end of the Cold War, as NASA pulled back, Russia's space program went on poverty rations and Russians became available as partners. Today, Frenchmen learn from Russians here and accept business from Mexicans, Koreans and some Americans.
"Welcome to the future," says Boris Dubrovin, the foreman of a crew of some 60 Russian technicians who are scrambling to build a replica of a Soviet-era launch site located in the desert steppes of Central Asia. The project will allow Arianespace to use Russia's Soyuz rockets for smaller tasks.
Meanwhile, the French look warily at new competitors.
China recently built and launched satellites for Nigeria and Venezuela. And Boeing has partnered with Russian, Ukrainian and Norwegian firms to form Sea Launch, which operates from Pacific Ocean platforms. Another American company, ILS, is controlled by Russia's Khrunichev space center and launches from Kazakhstan's Baikonur Cosmodrome.
One risk for all of these players is the current souring of the global economy. The number of launches is expected to drop next year, and it is anybody's guess what demand will be beyond that.
But if the pattern of the past decade can hold, satellite operators the world over will still flock to Kourou, where they will find the French Foreign Legion protecting the space center, residents sending postcards to mainland France through La Poste - and, on the offshore Îles du Salut, which include Devil's Island, futuristic tracking stations standing near old corroding prison cells where convicts like Charrière once dreamed of escape.
"France found a use for one of the pieces of confetti left over from its empire," said Peter Redfield, an anthropologist who studies French Guiana, "while the Americans, after the lunar missions, are still asking what to do for an encore."
By Eric Pfanner
Sunday, December 14, 2008
PARIS: The morning after Barack Obama was elected the next president of the United States last month, Maurice Lévy, chief executive of Publicis Groupe, the advertising company based in Paris, sent an e-mail message to the 15,000 Publicis employees in the United States.
"Congratulations on such a great choice," he wrote. "Once again the American people have proved that they are right there when it comes to turning points in history - and they know how to make history."
In his support for Obama, Lévy had plenty of company in Europe, of course. And Lévy understands the value of friendly relationships with politicians; associates say he uses the informal French "tu," rather than the formal "vous," to address President Nicolas Sarkozy of France.
But openly gushing about the results of another country's election is unusual for any chief executive, let alone a discreet Frenchman whose company's commercial messages go out to Americans of all political stripes.
"I have always thought - politics, that is something I should not get involved in," Lévy said during an interview in his Paris office. "But I had to because this is so fantastic.
"It erases all the bad images, the bad pictures of the last eight years with one vote," he added. "It is a wonderful demonstration of the strengths of America, a formidable lesson for the world."
Like many Europeans of his generation, Lévy said, he has always admired American culture. But it is also clear that the prospect of trans-Atlantic rapprochement makes good business sense to an executive whose office overlooks the Arc de Triomphe and whose clients include McDonald's, Procter & Gamble and General Motors.
So forgive Lévy if he isn't pulling a long face at a time when the economic news is going from bad to worse. Since the election, forecasters have predicted that ad spending will fall in most major developed markets next year.
For Publicis, whose subsidiaries include the ad agencies Saatchi & Saatchi and Leo Burnett, as well as the media buying operations ZenithOptimedia and Starcom Mediavest, analysts at Morgan Stanley predict that revenue from the company's existing businesses will fall 4 percent next year.
The automotive industry, along with two other sectors hit hard by the downturn - health care and financial services - account for about a third of Publicis's revenue. In addition to GM, its clients include Renault, Toyota and Fiat. As GM's woes have deepened over the past year, the carmaker has been cutting its ad spending, Lévy said. Publicis expects further reductions from GM and other automakers as they streamline their product offerings, he added.
"Nobody should think they are not conscious of cost," Lévy said of GM. "They are very tough on us."
As carmakers and other advertisers look for more efficient ways to get their messages across, Lévy said, the economic crisis will hasten the shift of advertising to the Internet and away from traditional media. By 2010, he said, 15 percent of global ad spending will be online.
Lévy has tried to prepare Publicis for this shift by beefing up its digital capabilities. Two years ago, the company acquired Digitas, a specialist in online marketing, for $1.3 billion. Publicis has also invested substantially in emerging markets, where ad spending has been growing more rapidly than in Western Europe, Japan or North America.
"This has recently become a higher risk strategy," the Morgan Stanley analysts wrote in a recent report on Publicis. Indeed, the notion that Internet ad spending will be less affected by the downturn, which has become something of a mantra in the industry, remains unproven. During the last downturn, Internet spending suffered the most. Emerging markets can also be volatile.
But Lévy said Publicis would stick with its approach. This month, the company acquired W&K Communications, an agency based in Beijing. In November, it announced the purchase of Tribal, a Brazilian agency specializing in digital advertising.
"We have other negotiations under way in China; we have contacts in India," Lévy added.
Might he be planning a bigger move? There has long been speculation in the industry about the possibility of a merger between Publicis and Interpublic Group, based in New York. Those companies are neck-and-neck for the No.3 position in the industry, after Omnicom Group and WPP Group.
Publicis previously made a run, unsuccessfully, at Aegis Group, a company based in London specializing in media buying and digital advertising. There has been renewed talk in the industry that Aegis might be for sale, following the recent resignation of its chief executive, Robert Lerwill.
But Lévy said his company was not holding discussions with Interpublic. And he said the fate of Aegis was out of his hands because the French investor Vincent Bolloré holds a nearly 30 percent stake in that company, allowing him to keep other potential suitors of Aegis at bay. Bolloré is also the board chairman of the French advertising company Havas, in which he owns a 32.9 percent stake.
"It is important at a time like this not to spend a lot of time on chess games," Lévy said. "We are not looking at any game-changing operations."
He said big, geographically diversified advertising companies like Publicis, alongside small, boutique agencies with a creative reputation, would fare better than midsize companies in the downturn.
"There will be casualties," he said, without naming names. "There will be consolidation. There will be companies that will not be in business when this crisis is over - advertisers, advertising agencies and media."
While Lévy is ebullient about the election of Obama, his admiration for the United States has its limits. In deploring what he sees as the root of the crisis - a "perversion" of capitalism that drove Wall Street to try to profit from the idea of extending home ownership to the masses - he echoed a widely held French view.
"Capitalism cannot be only about maximizing profit," he said.
But aren't advertising and marketing all about fueling capitalism - about making people want bigger houses, and things to fill them with?
"We don't lie to them, we don't cheat to them," he said. "We don't tell them something is a triple-A product when it is not a triple-A product."
By Seth Sherwood
Sunday, December 14, 2008
Urban renewal these days usually means housing developments or renovated waterfronts. In the northern French city of Lille, however, it means tapered trousers and boho-chic dresses.
Under a creative public initiative called Maisons de Mode, Lille, France's fourth-largest metropolis, and nearby Roubaix have been recruiting young fashion designers to set up shop in two downbeat neighborhoods. The allure for the designers includes freshly constructed boutiques, dirt-cheap rents and free publicity. For Lille, which has a venerable textile tradition and lovely Flemish-style architecture, the benefit is an injection of cool and cachet, to say nothing of chic prêt-à-porter.
One of the new garment districts extends along the Rue du Faubourg des Postes, which cuts through an immigrant neighborhood known as Lille Sud. The first eight stores opened in a 2007 ceremony attended by Agnès b., who is a key patron of Maisons de Mode. Several more are expected by 2010.
The nerve center has been the Jardins de Mode (58-60 Rue du Faubourg des Postes; 33-3-20-99-91-20; www.maisonsdemode.com), which houses a collection of ateliers. A converted cinema, it hosts La Nuit des Soldes, a twice-yearly party (January and July) at which the program's designers sell their lines to the public.
A permanent ground-floor boutique also carries creations by others affiliated with Maisons de Mode, including kitsched-out dashikis (38, or $48) by Strangelove, a sly and playful South African arts collective, and Western-style shirts with embroidered patterns (105) by the Paris-based Espiral Man label.
Down the block is Petites Créations (31 Rue du Faubourg des Postes; 33-3-59-09-10-30). The boutique showcases the work of Sophie Laverdure, a former architect who makes sleek, black leather purses and small silvery pouches on slender chains (25 to 350).
Also nearby is a boutique that changes themes. This year's is Contemporary Africa (51 Rue du Faubourg des Postes; 33-3-59-09-69-76). Among its offerings are the Mozambican Sandra Muendane's elegantly draped dresses and tops from bamboo (70 to 120). In 2009, the space will feature designers from Eastern Europe, Russia and Turkey.
The second sartorial zone is a 30-minute subway ride away in Roubaix, along the Rue de l'Espérance and the Avenue Jean Lebas. This fashion scene revolves around a fashion and art museum, La Piscine (23 Rue de l'Espérance; 33-3-20-69-23-60; www.roubaix-lapiscine.com), a converted indoor municipal pool where glass cases display classic footwear by Martin Margiela and Jean-Paul Gaultier.
The queen of the Roubaix scene is arguably Hélène Boulanger, a graduate of the École Supérieure des Arts et Techniques de Mode. Her form-fitting, rock 'n' roll womenswear is available at her store, Sue (80 Avenue Jean Lebas; 33-3-20-02-09-79; www.sue-elen.com), as well as in boutiques in New York City and Tokyo.
Until this month, Boulanger was among only a handful of designers in Roubaix. But on Dec. 4, Maisons de Mode celebrated the opening of 15 more boutiques nearby. Urban renewal has never been so chic.
By Amy Thomas
Sunday, December 14, 2008
The French have elevated many things to high art: fashion, flirting, foie gras. Chocolate is no exception. With boutiques that display truffles as rapturously as diamonds, the experience of visiting a Parisian chocolatier can be sublime.
The problem, of course, is squeezing in as many of these indulgent visits as possible while also giving the rest of the city its due. My solution: devote one full day to chocolate boutiques, and do it in style. So, on my last visit to Paris, I took to the city's Vélib' bike system and mastered a two-wheeled circuit of eight of the chocolatiers that had the best reputations and most glowing reviews in city guidebooks and online message boards. It was exhilarating and exhausting, not to mention decadent. It was a chocoholic's dream ride.
The Vélib's industrial-looking road bikes that are already icons of Parisian-chic just a year and a half after the city initiated the program made the moveable feast more fun. Progressing from pralines to pavés, I spun by the Eiffel Tower, zipped across the Seine and careened through the spindly streets of St.-Germain-des-Prés alongside other bikers: Parisians in summer dresses and business suits, their front baskets toting briefcases, baguettes and sometimes even Jack Russell terriers.
Practically speaking, the bikes were all but essential. How else could I cover five arrondissements in as many hours, while simultaneously countering a day of debaucherous extremes?
The hedonism began in the center of town with the oldest master on my list, Michel Cluizel (201, rue St.-Honoré; 33-1-42-44-11-66; www.chocolatmichelcluizel-na.com), who has been making chocolate since 1948. A short distance from a Vélib' station at the intersection of Rues de l'Echelle and St-Honoré, I passed luxury stores flaunting billowy gowns and four-inch Mary Janes and stepped inside what was just as divine: a store where molten chocolate spews from a fountain and the shelves are stocked with bars containing as much as 99 percent cacao.
Cluizel has a single American outpost, in New York, at which I've indulged in hot cocoa made with a blend of five cocoa beans. At his Parisian shop, managed by his daughter Catherine, I discovered the macarolat (1.55 euros, or about $2 at $1.29 to the euro). A chocolate version of the macaroon, it has a dark chocolate shell filled with almond and hazelnut praline, the nuts ground coarsely to give a rich, grainy texture. It was two bites that combined creamy and crunchy, snap and subtlety. But it was just two bites; I wanted more.
A quick spin west landed me at the doors of Jean-Paul Hévin (231, rue St-Honoré, (33-1-55-35-35-96; www.jphevin.com). A modern blend of dark wood cabinetry, slate floors and backlit wall cubbies where cobalt-accented boxes of bonbons are displayed, the space would feel intimidating if not for the shopkeepers, who are both numerous and gracious as they juggle the crowds ogling mango coriander macaroons and Pyramide cakes. After considerable debate would it be ridiculously gluttonous to have a "choco passion," a cocoa cake with chocolate mousse, chocolate ganache and praline puff pastry, so early in the day? I settled on a caramel bûche (3.20 euros). Larger than an individual bonbon but smaller than a Hershey bar, the silky caramel enrobed in delicate dark chocolate hit the sweet spot.
With the choco-salty taste lingering on my tongue, I picked up a bike outside the Hôtel Costes, craning my neck to spy any A-listers were Sting and Trudie in there? Beyoncé and Jay-Z? and set out for the 16th Arrondissement.
Just beyond the Place de la Concorde I veered onto Avenue Gabriel. It is a curving street that winds past both the United States Embassy and Pierre Cardin's showcase for young artists, Espace, before eventually turning into a narrow café-lined passage where you have to weave around double-parked delivery trucks. Hoping to avoid throngs of wide-eyed tourists on the parallel Champs-Élysées and cars haphazardly zigging and zagging on the rotary around the Arc de Triomphe, I took the residential backstreets to Avenue Victor Hugo.
It was on this street that I found the most eccentric chocolatier on my list: Patrick Roger (45, avenue Victor Hugo; 33-1-45-01-66-71; www.patrickroger.com). It's not just the chocolate sculptures (a life-size farmer, for example), seasonal window displays (a family of penguins, also life-size) or snazzy aquamarine packaging he's known for: his intensely flavored bonbons are as bold as they come.
"I do think Patrick Roger is outstanding since he combines new, unusual flavors," said David Lebovitz, an American chocolate connoisseur, author of "The Great Book of Chocolate" and a Paris resident. But, he added, Rogers "isn't doing weird flavors just to be trendy, like others tend to do in Paris nowadays."
I sampled a few to confirm. The Jamaica has a rich coffee flavor from ground Arabica coffee beans; the Jacarepagua blends sharp lemon curd and fresh mint, and then there's the Phantasme, made with ... oatmeal. Each costs less than 1 euro.
About 90 minutes in, I had tasted creamy, salty and tart and had traversed a good stretch of the city. I was high on Paris and sugar coasting beneath Avenue Kléber's towering chestnut and plane trees toward the Place du Trocadéro in the 16th Arrondissement. Winding my way down the steep hills of the Rue Benjamin Franklin and the Boulevard Delessert, past romantic cafes and limestone edifices, alternately beige and gray depending on the light, I felt as though I was in a quaint Gallic village, not the capital city. That is until I was spit out across the river from the grandest Parisian landmark of all: the Eiffel Tower.
Digital cameras flashed, souvenirs were hawked and regiments of tour buses idled in one big mechanical whir. It was as if every foreigner had descended on the monument at that very moment. I didn't exhale until I entered the quietly sophisticated Seventh Arrondissement.
Michel Chaudun (149, rue de l'Université, 33-1-47-53-74-40) is wildly talented as an artist and chocolate sculptor (his watercolors decorate the store along with chocolate Fabergé eggs and African statues), to say nothing of his reputation for being one of the world's best chocolatiers. After 22 years of turning cacao into sublime bonbons, he's responsible for influencing many of the city's newer generation of chocolatiers.
His pavés are particularly worshipped. They're sugar cube-size squares of cocoa-dusted ganache that you deftly spear from the box with a toothpick and then allow to melt a little on your tongue a little before biting into the rich creaminess. Fresh and luscious, they're also hypersensitive to warm temperatures. Which meant tant pis if I tried to save any for later, they would wind up a choco-puddle.
Hopping on and off the Vélib's so often courted a certain amount of trouble. Parisian cynicism reared its head when a disgusted man at a station told me that 90 percent of the bikes don't work. I wouldn't say the defective bicycles were that frequent, but I learned an essential checklist: Are the tires inflated? The rims, straight? Is the front basket intact? Do the gears work? Is the chain attached? With these things checked, you're good to go, as I was after savoring the last pavé from my modest box of six (3.40 euros).
Cutting across the square fields in front of Les Invalides I glided by college students throwing Frisbees and old men playing pétanque. To my right, the gilded dome of Les Invalides; to my left, more gold crowning the ornate Alexandre III bridge. This was a decadent journey indeed.
Finally, in the Sixth Arrondissement, it seemed I could toss an M & M in any direction and hit a world-class chocolatier. There was the whimsical Jean-Charles Rochoux (16, rue d'Assas, 33-1-42-84-29-45; www.jcrochoux.fr), where gaudy chocolate sculptures of garden gnomes belie the serious artistry of his Maker's Mark truffles.
Christian Constant (37, rue d'Assas, 33-1-53-63-15-15), a Michelin-starred chef and award-winning chocolatier, excels at such spicy and floral notes as saffron and ylang-ylang. Pierre Marcolini (89, rue de Seine, 33-1-4407-3907; www.marcolini.be), the lone Belgian of the group, offers 75 percent dark chocolate from seven South American and African regions. Buzzing, I intended to finish the circuit in grand style.
The line snaking out of Pierre Hermé's slim boutique (72, rue Bonaparte, 33-1-43-54-47-77; www.pierreherme.com) told me I was doing the right thing. When I made it inside the snapping automatic doors, it was (forgive me!) like being a kid in a candy store: pristine rows of cakes adorned with fresh berries, coffee beans and dark chocolate shavings.
"Un Plénitude, s'il vous plait."
I took my treasure to a nearby park and tucked into the dome-shaped cake filled with chocolate mousse and ganache, crunchy caramel and fleur de sel. I relished the fluffy whipped richness, the bite of dark chocolate and the tang of salt. Had I died and gone to heaven? No, it was just a rapturous day in the City of Light and dark chocolate.
PEDALING FOR PAVÉS
After doubling the number bicycles since the program started last summer to 20,600, Paris' Vélib" (www.velib.paris.fr) is now the largest free bike program in France. There are 1,451 stations in the city, or one approximately every 900 feet. Each station has about 15 to 20 bikes. The bikes are simple: three speeds, an adjustable seat, a bell and basket and a headlight.
By purchasing a one-day or weeklong pass at the kiosk located at a station, you can hop on any bicycle and drop it at your next destination. To unlock a bike, you punch in your personal access code at the kiosk.
Though it's called a free bike program (Vélib' is short for vélo libre, or free bike), a day pass costs 1 euro. The first half-hour on the bike is no additional charge, the second half-hour is 1 euro, and the third half-hour is 2 euros. After that, it's 4 euros every half-hour. The shorter your trips, the lower the cost. My total cost for five hours was 12.60 euros, or about $16.15 at $1.29 to the euro.
By Paul Vitello
Sunday, December 14, 2008
The sudden crush of worshipers packing the small evangelical Shelter Rock Church in Manhasset, New York - a Long Island town of yacht clubs and hedge fund managers - forced the pastor to set up an overflow room with closed-circuit TV and 100 folding chairs, which have been filled for six consecutive Sundays.
In Seattle, the Mars Hill Church, one of the fastest-growing evangelical churches in the country, grew to 7,000 members this fall, up 1,000 in a year. At the Life Christian Church in West Orange, New Jersey, prayer requests have doubled - almost all of them aimed at getting or keeping jobs.
Like evangelical churches around the United States, the three churches have enjoyed steady growth over the past decade. But since September, pastors nationwide say they have seen such a burst of new interest that they find themselves contending with powerful conflicting emotions - deep empathy and quiet excitement - as they re-encounter an old piece of religious lore:
Bad times are good for evangelical churches.
"It's a wonderful time, a great evangelistic opportunity for us," said the Reverend A.R. Bernard, founder and senior pastor of the Christian Cultural Center in Brooklyn, New York's largest evangelical congregation, where regulars are arriving earlier to get a seat. "When people are shaken to the core, it can open doors."
Nationwide, congregations large and small are presenting programs of practical advice for people in fiscal straits - from a homegrown series on "Financial Peace" at a Midtown Manhattan church called the Journey, to the "Good Sense" program developed at the 20,000-member Willow Creek Community Church in South Barrington, Illinois, and now offered at churches all over the country.
Many ministers have for the moment jettisoned standard sermons on marriage and the Beatitudes to preach instead about the theological meaning of the downturn.
The Jehovah's Witnesses, who moved much of their door-to-door evangelizing to the night shift 10 years ago because so few people were home during the day, returned to daylight witnessing this year. "People are out of work, and they are answering the door," said a spokesman, J.R. Brown.
Bernard plans to start 100 prayer groups next year, using a model conceived by the pastor Rick Warren, to "foster spiritual dialogue in these times" in small gatherings around the city.
A recent spot check of some large Roman Catholic parishes and mainline Protestant churches around the nation indicated attendance increases there, too. But they were nowhere near as striking as those reported by congregations describing themselves as evangelical, a term generally applied to churches that stress the literal authority of Scripture and the importance of personal conversion, or being "born again."
Part of the evangelicals' new excitement is rooted in a communal belief that the big Christian revivals of the 19th century, known as the second and third Great Awakenings, were touched off by economic panics. Historians of religion do not buy it, but the notion "has always lived in the lore of evangelism," said Tony Carnes, a sociologist who studies religion.
A study last year may lend some credence to the legend. In "Praying for Recession: The Business Cycle and Protestant Religiosity in the United States," David Beckworth, an assistant professor of economics at Texas State University, looked at long-established trend lines showing the growth of evangelical congregations and the decline of mainline churches and found a more telling detail: During each recession cycle between 1968 and 2004, the rate of growth in evangelical churches jumped 50 percent. By comparison, mainline Protestant churches continued their decline during recessions, though a bit more slowly.
The little-noticed study began receiving attention from some preachers in September, when the stock market began its free fall. With the swelling attendance they were seeing, and a sense that worldwide calamities come along only once in an evangelist's lifetime, the study has encouraged some to think big.
"I found it very exciting, and I called up that fellow to tell him so," said the Reverend Don MacKintosh, a Seventh-day Adventist and religious broadcaster in California who contacted Beckworth a few weeks ago after hearing word of his paper from another preacher. "We need to leverage this moment, because every Christian revival in this country's history has come off a period of rampant greed and fear. That's what we're in today - the time of fear and greed."
Frank O'Neill, 54, a manager who lost his job at Morgan Stanley this year, said the "humbling experience" of unemployment made him cast about for a more personal relationship with God than he was able to find in the Catholicism of his youth. In joining the Shelter Rock Church on Long Island, he said, he found a deeper sense of "God's authority over everything - I feel him walking with me."
The sense of historic moment is underscored especially for evangelicals in New York who celebrated the 150th anniversary last year of the Fulton Street Prayer Revival, one of the major religious resurgences in America. Also known as the Businessmen's Revival, it started during the Panic of 1857 with a noon prayer meeting among traders and financiers in Manhattan's financial district.
Over the next few years, it led to tens of thousands of conversions in the United States and inspired the volunteerism movement behind the founding of the Salvation Army, said the Reverend McKenzie Pier, president of the New York City Leadership Center, an evangelical pastors' group that marked the anniversary with a three-day conference at the Hilton New York. "The conditions of the Businessmen's Revival bear great similarities to what's going on today," he said. "People are losing a lot of money."
But why the evangelical churches seem to thrive especially in hard times is a Rorschach test of perspective.
For some evangelicals, the answer is obvious. "We have the greatest product on earth," said the Reverend Steve Tomlinson, senior pastor of the Shelter Rock Church.
Beckworth, a macroeconomist, posited another theory: though expanding demographically since becoming the nation's largest religious group in the 1990s, evangelicals as a whole still tend to be less affluent than members of mainline churches, and therefore depend on their church communities more during tough times, for material as well as spiritual support. In good times, he said, they are more likely to work on Sundays, which may explain a slower rate of growth among evangelical churches in nonrecession years.
Monsignor Thomas McSweeney, who writes columns for Catholic publications and appears on MSNBC as a religion consultant, said the growth is fed by evangelicals' flexibility. In a cascading financial crisis, he said, a pastor can discard a sermon prescribed by the liturgical calendar and directly address the anxiety in the air.
But a recession also means fewer dollars in the collection basket.
"We are at the front end of a $10 million building program," said the Reverend Terry Smith, pastor of the Life Christian Church in West Orange. "Am I worried about that? Yes. But right now, I'm more worried about my congregation."
Sunday, December 14, 2008
NEW YORK: Wal-Mart Stores Inc's chief executive said on Sunday he sees changes in the habits of the chain's customers as they contend with the recession, and also said Wal-Mart had offered to help the incoming Obama administration with health care and environmental issues.
"The number one issue today is (consumers') concern about their job," Lee Scott said on NBC's "Meet the Press."
"In our pharmacy group, we have increases in prescription drugs, but not at the same rate it was," he said. "What we're seeing is an increase in self-treatment."
Strained consumers are also changing the food they buy at Wal-Mart, Scott said. "We're seeing an increase in food storage as people are cooking more at home," he said. They are "using leftovers more extensively," and buying more frozen food.
Small businesses are also changing how they buy goods, he said. Cash-strapped restaurant owners are visiting the stores more frequently to buy supplies as one day's cash flow allows them to buy supplies for the following day.
Scott, who will retire in early 2009, also said he sees a role for Wal-Mart in the debate around issues such as the environment and health care, which he has previously said "profoundly" affect the chain's shoppers and business.
Wal-Mart has "reached out" to President-elect Obama's team to work on the U.S. health care and energy issues, he said, adding that people critical of Wal-Mart's involvement in political debates were "on the wrong track."
"These are not times to be self-serving," he said. "We have a responsibility to participate."
(Reporting by Phil Wahba; Editing by Derek Caney and Leslie Adler)
Sunday, December 14, 2008
Guantánamo, Cuba: I confess that I came here for the dateline. It beats Düsseldorf or The Hague. Like Sarajevo or Gaza City, it is one of those datelines that incline a reader onward.
I was in Santiago de Cuba, where the 50th anniversary of Fidel Castro's Cuban revolution will be celebrated on Jan. 1. It was hot, nobody knew if the ailing Fidel would show up, or where exactly the festivities would take place. I thought, I'll drive out to Guantánamo, you never know.
The night before I left, a band showed up on the terrace of my Santiago hotel and played "Guantanamera," the wistful melody about the peasant girl from Guantánamo. I thought it strange that a place once associated with a love song now summons grim images of George W. Bush's war on terror.
Guantanamera: Once I heard it, of course, I couldn't get the chorus out my head. Would some proud, sultry-eyed woman fit the image? Purposeless journeys bring pleasant surprises. Yes, I'd go to Guantánamo for a glimpse of the U.S. naval base and whatever else I might find.
It's a two-hour drive from Santiago, complicated by the absence of road signs, a Cuban idiosyncrasy. I went past the town to a hillside where the bay glimmered silver and the U.S. control tower glinted far away. What a place for a bunch of Yemenis to end up.
On the way back to Guantánamo, I gave a ride to a woman who told me she worked in a prison in Havana for $20 a month and had come here to visit her children, whom she had entrusted to her mother after a painful divorce.
I asked her if she'd like to leave. "No," she said, "but I'd like to have relatives abroad sending me money!"
In Guantánamo, we pulled up by the main plaza. Dusk was falling. Old folk sat on benches under the palms. I set out across the square toward a whitewashed church, Santa Catalina de Ricci, whose heavy wooden doors were flung open.
A surprise awaited me. The church was full. A young priest in luminous green vestments was holding Mass. His words met me as I entered: "La Misa es siempre un encuentro con Dios" - "Mass is always an encounter with God."
I am a stranger to faith. Yet a wave of physical relief swept over me. After 10 days in Cuba, with its hymns to the heroism of Fidel, Che Guevara, the revolution and socialism, the priest seemed a merciful figure. Instead of the deification of Fidel and the utopian perfectibility of mankind, he posited human fallibility and a consoling salvation.
Graham Greene's masterpiece, "The Power and the Glory," came to me, with its condemned priest in his cell observing: "When you visualized a man or woman carefully, you could always begin to feel pity - that was a quality God's image carried with it."
I was spellbound, standing in the doorway, a breeze coming in. Cuba's relations with the Catholic Church have improved in recent years, especially since the visit of Pope John Paul II in 1998. Atheism has ceased to be a revolutionary tenet.
The priest began to tell the Parable of the Talents. How a wealthy man, parting on a journey, gave five talents to one of his servants, two to another, and one to a third. And the servant with five talents invested wisely and earned another five. And the servant with two talents did the same, also doubling his money. But the third, fearful of his master, hid the talent in the ground and earned nothing.
And the first two enter "into the joy of thy lord," but the third "wicked and slothful" servant is cast into "outer darkness."
"Where is this parable told?" the priest asked.
A child's hand shot up. "Saint Matthew!"
The child was right. But what of the parable in a land where there's nothing to invest in? Was it a "free enterprise parable," as John Howard, the former conservative prime minister of Australia once called it, a reminder that if you are given assets you must add to those assets, and that if you are entrusted with the word of God, you must make that word grow?
Or was it rather, a parable about the cost of standing up to authority, of being a whistle-blower like the third servant, who calls his master a "hard man, reaping where thou has not sown?" Was it about the courage to face down totalitarianism and its rich apparatchiks?
I wondered, but preferred mystery to answers. I'd seen America's Guantánamo prison. I'd felt the suffering of the woman in the car. I'd left New York's financial disaster, based on greed for multiplying assets, for the economic ravages of Cuba's head-in-the-ground communism.
Yes, pity. And if this priest had the power to turn the wafer into the flesh and blood of God, and if the people gathered here believed that and were consoled, I was ready to bow my head in silence. That, it seemed, was why I had come to Guantánamo.
The Associated Press
Sunday, December 14, 2008
ANCHORAGE, Alaska: Governor Sarah Palin's home church was badly damaged by arson, leading the governor to apologize if the fire was connected to "undeserved negative attention" from her failed campaign as the Republican vice-presidential nominee.
Damage to the Wasilla Bible Church was estimated at $1 million, the authorities said Saturday. No one was injured in the fire, which was set Friday night while a handful of people, including two children, were inside, according to the Central Mat-Su fire chief, James Steele.
He said the blaze was being investigated as an arson but did not know of any recent threats to the church. The authorities did not know whether Palin's connection to the church was relevant to the fire, Steele said.
"It's hard to say at this point. Everything is just speculation," he said. "We have no information on intent or motive."
Steele would not comment on the means used to set the fire.
Pastor Larry Kroon declined to say whether the church had received any recent threats.
"There are so many variables," he said. "I don't want to comment in that direction."
Palin, who was not at the church at the time of the fire, stopped by Saturday. Her spokesman, Bill McAllister, said in a statement that Palin told an assistant pastor that she was sorry if the fire was connected to the "undeserved negative attention" the church has received since she became the vice-presidential candidate on Aug. 29.
"Whatever the motives of the arsonist, the governor has faith in the scriptural passage that what was intended for evil will in some way be used for good," McAllister said.
The 1,000-member evangelical church was the subject of intense scrutiny after Palin was named John McCain's running mate. Early in Palin's campaign, the church was criticized for promoting in a Sunday bulletin a Focus on the Family "Love Won Out Conference" in Anchorage. The conference promised to "help men and women dissatisfied with living homosexually understand that same-sex attractions can be overcome."
The fire was set at the entrance of the church and moved inward as a small group of women were working on crafts, Steele said. The group was alerted to the blaze by a fire alarm.
Outside temperatures were minus 20 degrees Fahrenheit (minus 29 Celsius) as firefighters battled the blaze.
Steele said a multiagency task force was being assembled to investigate the fire.
Wasilla, the governor's hometown, is 40 miles, or 65 kilometers, north of Anchorage.
U.K. bank rescue plan, a model for others, is in trouble
By Julia Werdigier
Sunday, December 14, 2008
LONDON: Gordon Brown's British bank rescue plan was widely praised and quickly emerged as a model for other countries, including the United States, to emulate. But the accolades may have been premature.
Despite the government's aggressive efforts, the plan is in trouble because the banks are resisting pressure to lend more as they seek to protect themselves in the harsh economic climate.
When Brown, the British prime minister, in October, presented the plan to inject capital into banks in exchange for a substantial shareholding, he promised not just to stabilize the British banking system, which threatened to crumble under its exposure to American subprime mortgages and the country's own bursting housing bubble, but also to jump-start the stalled lending market.
The first part worked: The troubled banks were saved and even Barclays, which declined the rescue package, found outside investors to help repair its balance sheet. Brown's popularity ratings surged and some newspapers christened him Flash Gordon.
But less than two months later, the plan is attracting mounting criticism from lenders, economists and opposition politicians for failing to fix the credit markets. Brown on Friday acknowledged the need for more action and said the government was working on a "second stage" of the banking rescue.
Michael Taylor, a senior economist at Lombard Street Research in London, said, "There is no sign yet of significant easing of credit conditions." Taylor added, "In fact some banks are tightening the credit conditions so in that sense the plan's not working."
Britain agreed in October to inject £50 billion, or $75 billion at current rates, in exchange for large equity stakes it would use to put pressure on the banks to ease lending to businesses and consumers. The biggest beneficiary was Royal Bank of Scotland, and the government plans to sell all of its bank investments back to shareholders once the market recovers. A separate credit line to back interbank lending, along with interest rate cuts and a fiscal stimulus package worth £20 billion, was supposed to further grease the lending market.
Even though interbank lending rates have started to decline slowly since October they remain relatively high as banks continue to hoard capital amid concern about rising loan defaults. Banks failed to fully pass on the recent Bank of England rate cuts to customers; the average cost of a two-year fixed-rate mortgage fell by 0.71 of a percentage point in November compared with a 1.5 point cut in the central bank rate during the same month.
Some analysts said the idea that a bank recapitalization would repair the lending market was flawed from the beginning. On one hand, the plan aims to force banks to reduce risks and return to profitability to quickly repay the government; on the other it is supposed to pressure them to lend more and take on more risk.
"Current policy objectives are conflicting and incoherent," said Michael Coogan, director general of the Council of Mortgage Lenders. "The government needs to decide on its key priority. The tug of war with lenders being pulled in every direction at once needs to end."
Vincent Cable, the finance spokesman for the Liberal Democrats, said the multiple objectives of the recapitalization plan were "canceling themselves out." He said the top priority should be to restore lending or else "the economy is threatened to be throttled."
Brown hoped that the capital injection would give banks enough additional cash to remain liquid while they wrote down toxic assets and rebuilt their balance sheets so that they could lend again. But most banks, hunkering down to survive what is expected to be a long and damaging recession, remain paralyzed.
Alistair Darling, chancellor of the Exchequer, as recently as Wednesday attacked them for not fulfilling their part of the deal, saying that with billions of taxpayers' money invested, the general public was "looking for something in return."
The initial rescue plan had two inherent flaws, some analysts said.
For one thing, the capital injection came in tandem with a requirement that the banks set aside more capital as a cushion against further losses. The cash investment from the government made banks stronger as they faced a worsening economic climate, but it did not give them enough to revive lending, said John Hitchins, head of the British banking team at PricewaterhouseCoopers in London.
The second flaw was that it failed to properly assess the risks associated with toxic assets that remained on the banks' balance sheets. HBOS, the mortgage lender, said Friday that bad loans backed by assets including homes rose 75 percent in the past two months, indicating things might get worse before they got better. At a time when unemployment, home repossessions and loan defaults increase, banks are naturally reluctant to lend.
"When everyone is at risk of losing their job," said Matthew Sharratt, an economist in London for Bank of America, "how do you assess the risk of your lending?"
The Bank of England quickly reduced interest rates to make loans more affordable for borrowers. But Britain, like the United States, remains at risk of falling into a so-called liquidity trap, a situation originally described by John Maynard Keynes in the 1930s in which monetary policy stops working because banks see no advantage in lending to customers.
Government dictates are not likely to revive lending on their own. As a result, Darling said he was considering a range of other options, including a national loan guarantee program favored by the opposition Conservative Party. Under such a plan, the government would directly underwrite commercial or even household loans. That could help overcome bank concerns over lending losses, but it would also further increase the risks for taxpayers.
Another option would be for the government to pool toxic assets into a separate entity, a so-called bad bank, with the hope to free up banks' balance sheets and recoup some of the investments later. That, too, could help, but again only by saddling taxpayers with the ultimate responsibility for covering the bad debts.
Martin Weale, director of the National Institute of Economic and Social Research, which also advises the government, said Brown's initial rescue plan had failed because it was too small.
"In a normal crisis about 10 percent of GDP is used to recapitalize the banks, we only put 3 percent of GDP in there," Weale said, referring to gross domestic product. "Banks are still cautious because they need more capital."
Tripling the size of the government's investment would increase the government's shareholding in banks, probably bringing those in the plan fully under government control.
Brown is still proud of his proposal, which remains the model for other countries as they struggle to revive lending. But he seems a bit flustered: In Parliament on Wednesday, he was embarrassed by a slip of the tongue in which he announced his government had "saved the world" instead of saying it had saved the British banks.
But it is clear that more needs to be done. Sharratt, the Bank of America economist, said: "You're just not sure what will work. So you need to try out a range of things."Barclays to bolster lending
Barclays said it would present a financial package to bolster lending to small and midsize businesses in Britain, Bloomberg News reported Sunday from London.
"Barclays will announce a package of support for small businesses, including lending commitments," on Monday, a bank spokesman, Michael O'Toole, said by telephone. He declined to give further details.
The announcement followed government pressure on banks to help businesses weather the short-term shocks caused by the economic slump. HSBC Holdings, which is based in London and is Europe's largest bank, this month created a $5 billion fund to increase access to credit for businesses, with $1.5 billion allocated to British customers.
By Geraldine Fabrikant
Sunday, December 14, 2008
For Bernard Madoff, the embattled hedge fund manager, the world came to an end when his funds were unable to meet $7 billion in withdrawals at a time when he was supposedly managing $17 billion.
The number may sound staggering, but in fact it is typical of what has been going on at hedge funds - no matter how successful - when they offer investors the chance to withdraw their money rather that putting up a barrier, which is known as a gate. A gate blocks investors from taking out more than a fixed percentage in any redemption period.
As investors, endowments and funds of funds have needed to raise cash, they have turned to hedge funds that allowed them to pull money out quickly.
"We have become the ATM machines for people that need cash," said George Weiss, who heads a $3 billion multistrategy fund for both U.S. and foreign investors.
Weiss, who has been a hedge fund manager for 20 years, said that his fund was down about 7.5 percent so far this year. Even so it has had 35 percent withdrawals.
While investors have been redeeming actively from hedge funds, some of those that have turned in the best performance - even if it means a decline, albeit a small one - have found investors scrambling for the exits.
"The managers that had the most investor friendly provisions, regardless of performance, but the more flexible you were, got the most redemptions," said Kathryn Hall, whose firm, Hall Capital Partners, acts as an investment adviser for about $20 billion in assets.
She and others point out that the current market has presented enormous problems for investors seeking liquidity whether they are endowments, individuals or funds of funds because many funds do not permit withdrawals unless they receive the request 90 days or more before the planned withdrawal. And some funds only permit investors to take out a percentage of their holdings.
But there can be tension over that rule between managers and investors. "The idea is in theory is that gates protect ongoing investors from too much liquidation," said Robert Rosenkranz, the founder of Acorn Partners, a two-decades-old fund of hedge funds "In theory it is balancing the interests of the redeeming people and the ongoing investors. In some cases it protects ongoing investors."
But, he added, "the manager's decision is not totally disinterested because the gates do allow them to collect fees for longer periods of time."
Weiss and other fund managers say that investors, and particularly funds that use foreign banks to bolster their leverage, have been scrambling to exit from whatever funds they can. There are a rash of explanations, Hall said.
She noted that there had been discussions about withdrawals since autumn. The original focus, she was "market neutral funds." Those are funds that are theoretically not correlated to the stock market's rise or fall, like funds that go long and short equities or other instruments. In other words, that are betting on gains as well as declines.
But she added that those funds did not turn out to be market neutral so that they were not efficient in tumultuous markets as expected. "So investors wanted to reduce their exposure," she said.
In other cases, investors wanted to realign their portfolios. When a fund performs better than other funds in a portfolio, investors will often sell some of the fund that has grown to be too big a percentage of the total in an effort to rebalance. "If a fund did well and was flexible, the more withdrawals it has gotten, regardless of performance," she said.
Leveraged funds of funds have perhaps been under the greatest pressure for withdrawals because the funds often attempted to bolster returns by borrowing against the funds. That was fine when funds were going up in value, but as they started to plummet, the borrowers "blew through margin requirements" as one money manager put it. In order to pay off the debt investors went to the funds that were most liquid.
"The deleveraging has been going on for more than a year," said Charles Gradante, a co-founder of Hennessee Group which advises investors about hedge funds. "Many investors were using leverage and as the market started to drop in price, the leverage they were using went against them. They had to generate cash. Much of the cash came out of their stock portfolios, but some of it came from liquid hedge funds," he said.
And there was also a problem with private equity, particularly among endowments. As private equity funds called on investors to provide cash for new investments, at a time when returns from older investments were minimal, endowments and foundations too sought to raise cash. In some cases that came from hedge funds, experts say.
By Gretchen Morgenson
Sunday, December 14, 2008
NEW YORK: Here in Bailout Nation, you'll be surprised to learn, some of us are more equal than others.
Witness the congressional back of the hand delivered Thursday to Detroit's Big Three automakers. Chrysler and General Motors, with Ford's support, were asking for $14 billion to see them through the end of the year; the Senate said no.
Mitch McConnell of Kentucky, who leads the Senate Republicans, opposed the rescue. "None of us want to see them go down, but very few of us had anything to do with the dilemma that they have created for themselves," he said. "We simply cannot ask the American taxpayer to subsidize failure."
That's a new concept - not asking the taxpayer to subsidize failure. Is that not what we just did with the banks, to the tune of $700 billion, 50 times what the beleaguered carmakers asked for?
Moreover, in the bank rescue, taxpayers are subsidizing not only failure but also outright recklessness and greed. In spite of the fact that financial institutions drove the country into the economic ditch, and even though "very few of us had anything to do with the dilemma that they have created for themselves," the financial industry received billions, with few strings attached.
Complaints about bailing out high-earning autoworkers are another fascinating disconnect. The supposedly exorbitant autoworker wages that get everybody so riled up pale in comparison with the riches of Wall Street.
Neither were the banks required, as Detroit would have been, to get rid of their private jets or supply the Treasury with in-depth restructuring plans in exchange for bailout funds.
This is not to argue that handing money over to troubled carmakers is a good idea or without peril. (On Friday, the Treasury said it would move to prevent carmaker failures until Congress reconvenes in January and deals with the mess.)
Rather it is to remind everyone of the degree to which the banks have been blessed with a no-questions-asked bailout that will almost certainly generate tremendous taxpayer losses down the road.
Yes, of course, banks are different from you and me and Chrysler and GM. Because lending makes the world go round, banks need to be healthy and well-capitalized.
But the Troubled Asset Relief Program, or TARP, is open to banks that are both well and sickly. And nobody overseeing the program seems eager to ensure that its funds go only to those institutions that will survive and be able to pay back the taxpayer.
"Why is it that each of the Big Three needed a specific plan in hand to share in $14 billion while most of the banks only needed a large hat in hand to share $700 billion?" asked Brian Foley, a compensation consultant in White Plains, New York. "I don't have a sense of transparency, that there are visible accountability criteria being applied to TARP."
As of Dec. 5, the Treasury had allocated a total of $335 billion to TARP and disbursed $195 billion to institutions under its various parts.
Testifying before Congress last Wednesday, Neel Kashkari, the youthful former Goldman Sachs executive whom the Treasury has charged with overseeing "financial stability," defended the $700 billion triage package intended to get banks lending again.
The plan's achievements so far, according to Kashkari: "First, we did not allow the financial system to collapse. That is the most direct important information. Second, the system is fundamentally more stable than it was."
Maybe so. But an audit of the Troubled Asset Relief Program, released last week by the Government Accountability Office, the investigative arm of Congress, suggests that the program's holes are many.
For example, the congressional auditors said, the Treasury has no way to determine if the program is achieving its goals of increased lending by banks. There also seems to be no monitoring of the banks' compliance with TARP limits on executive compensation, the agency added.
The Treasury should take nine actions to ensure the integrity of the TARP, according to the agency. Many relate to keeping its operations transparent, managing conflicts of interest and hiring enough staff members to ensure that the program's goals are met.
While these recommendations all have merit, there is one important item missing from the TARP to-do list: Hire tough-minded bank analysts to help determine which institutions are best positioned to use TARP funds in a way that will benefit their shareholders and the taxpayers at the same time.
Such a team could help prevent the Treasury from throwing good money after bad.
According to the congressional auditors, as of Nov. 21, about 48 employees were assigned to TARP. Only five are permanent staffers; the rest come from other Treasury offices, U.S. government agencies and organizations providing temporary help.
What is needed is a small army of TARP analysts - a lot of former bankers are out of work, by the way - to conduct a worst-case analysis of the banks' assets and capital cushion.
Such a burndown analysis, as it is called in private equity circles, typically involves extremely harsh loss estimates for every loan category in Year One and higher-than-average loss estimates for loans in Years Two and Three, the elimination of dividend payments, and a valuation of the bank's prospects based primarily on its deposits - not its loan portfolio.
The essential questions are these: What are the bank's assets really worth, how much can it earn and how much capital would the bank need to operate profitably?
Bankers will object, of course. They want to keep their rosy scenarios intact for as long as they can. But such a see-no-evil approach has been central to the slow-motion nature of this train wreck. Now that the government is dispensing dollars, it is time for misplaced optimism over asset values to disappear.
Private investors looking to put money into beleaguered banks are running precisely these types of analyses. Why shouldn't the officials who have opened the taxpayer spigot for the banks do the same?
By Emily Kaiser
Sunday, December 14, 2008
WASHINGTON: The financial crisis has cast doubt on a widely held belief that the modern economy is less volatile, and central bankers who had been praised for orchestrating decades of stability are scrambling for new ideas.
For two days this week, the U.S. Federal Reserve's policy-setting committee will try to figure out what more it can do to revive the economy now that its benchmark short-term interest rate is nearing zero.
Another rate cut seems assured when the meeting adjourns Tuesday. The only question is whether the reduction will halve the federal funds rate to one-half a percentage point, or even lower. And of more important interest to world investors is what hints the central bank might drop about its remaining policy options.
The Bank of Japan's decision on rates is due Friday, and with the country's short-term borrowing costs already at 0.3 percent, it faces much the same question. Economists polled by Reuters last week saw a 40 percent chance that the central bank would return to a zero-interest policy in the next few months.
Japan ended a six-year period of zero interest rates in July 2006. During that time, the central bank embarked on what was then a unique policy of flooding the banking system with cash to try to restore growth.
As the United States adopts a similar strategy, some economists have taken to calling the Federal Reserve chairman, Ben Bernanke, "Bernanke-san."
It has been quite a drastic change.
In 2004, before anyone imagined that governments around the world would be spending trillions of dollars to clean up a financial disaster, top economists like Bernanke were lauding the years of stability, dubbed the Great Moderation.
"One of the most striking features of the economic landscape over the past 20 years or so has been a substantial decline in macroeconomic volatility," Bernanke, who was then one of the Fed's governors, said at the time. "My view is that improvements in monetary policy, though certainly not the only factor, have probably been an important source of the Great Moderation."
It raises the question that if monetary policy was credited with helping to keep the economy on an even keel, should it now bear some of the blame for the current turmoil?
Dean Maki, co-chief U.S. economist at Barclays Capital, said low interest rates and volatility might have lulled households, businesses, investors and policy makers into a false sense of security that encouraged more risk-taking and less regulation.
"It will be years before the final verdict is rendered on whether the Great Moderation is over or has just suffered a one-time setback," he said. "If it indeed has ended, in retrospect the low output volatility of this period may have played a part in sowing the seeds of its own demise."
Already, the year-old U.S. recession is longer than the past two, which lasted eight months apiece. Economists polled by Reuters expect the economy to contract in the current quarter and in the next two, which suggests at least an 18-month slump. That would be longer than the 1981-82 recession, considered one of the worst since World War II.
It is a similar story elsewhere. The Japanese economy is likely to contract for two straight fiscal years, and Britain faces one to two years of recession, according to Reuters poll of economists.
In terms of duration, those forecasts certainly would not be consistent with a Great Moderation. In terms of depth, it is too soon to say where this episode will rank, but economic data may provide some clues.
On Thursday, British retail sales are expected to post a 0.6 percent drop for November, after the previous month's 0.1 percent dip, which was much smaller than expected. A sharper decline could signal a more worrisome slide in consumer confidence to come and pile more pressure on the government to step up its stimulus spending.
So far, Washington is winning the spending race hands down, with Detroit automakers currently pressing for billions of dollars of emergency assistance.
But even if they manage to secure a lifeline, automakers face the gloomy prospect of persuading Americans to spend thousands of dollars on new cars at a time when their homes and retirement accounts have taken a beating and the job market is suffering.
It may be time to bid farewell to the Great Moderation.
Sunday, December 14, 2008
MADRID: Three European banks on Sunday announced a total of about $3.8 billion (2.5 billion pounds) in exposure to an investment fund run by Bernard Madoff, the U.S. investor accused of running a $50 billion "Ponzi" scheme.
The largest banks of both Spain and France, Santander and BNP Paribas , and Swiss private bank Reichmuth & Co became the latest parties to detail possible losses over investments made with Madoff, who was arrested in New York on Thursday in the alleged fraud.
Santander put its client exposure at over $3.09 billion. BNP Paribas said it could face a potential loss of 350 million euro from exposure to Madoff-linked investments. And Swiss private bank Reichmuth & Co said it had about 385 million Swiss francs at stake, around $325 million.
U.S. prosecutors and regulators have accused the 70-year-old Madoff, the founder of Bernard L. Madoff Investment Securities LLC and a former chairman of the Nasdaq Stock Market, of masterminding a fraud through his investment advisory business, which managed at least one hedge fund.
A Ponzi scheme is a swindle offering unusually high returns, with early investors paid off with money from later investors.
Hundreds of people, investing with him through the firm's clients, entrusted Madoff with billions of dollars, industry experts have said.
Santander, which has to date emerged unscathed from the global financial crisis, said in a statement on Sunday that its investment fund Optimal had exposure to Madoff Securities of 2.33 billion euros, 2.01 billion of which were funds invested for institutional investors and private banking clients outside Spain.
The remaining 320 million euros were part of the investment portfolios of private banking clients in its home country, which are qualifying investors, the bank said in a statement.
"Optimal will undertake legal actions to defend the interests of the shareholders of the subfund," the bank said in a statement on Sunday evening.
Santander said its exposure came from an investment company managed by Optimal called Optimal Multiadvisors Ireland, which was authorised by the Irish Financial Services Regulatory Authority.
The Irish-based company had a subfund called Optimal Strategic US Equity which had used Madoff Securities to carry out its investments.
The custodian of Optimal Multiadvisors and Optimal Strategic is HSBC Institutional Trust Services in Ireland, which belongs to HSBC , said Santander.
It said the Santander group also had 17 million euros invested in Madoff-related investments through another fund.
In its statement, BNP Paribas said it had no investments of its own in Madoff funds but had risk exposure through its trading business and collateralized lending to funds of hedge funds.
Switzerland's Reichmuth wrote to clients in a letter dated December 13, posting the letter on its website over the weekend.
The Lucerne-based bank said Reichmuth Matterhorn, a fund of hedge funds, had investments in instruments linked to Madoff.
"The affected funds amount to roughly 3.5 percent of our assets under management of approximately 11 billion Swiss francs," the letter said.
The announcements are likely to be followed by others across Europe. On Saturday, French-language newspaper Le Temps said Geneva-based private banks and asset managers could lose more than 5 billion Swiss francs.
According to Spanish newspaper El Mundo, the Bank of Spain and Spain's stock exchange regulator CNMV are assessing the impact on Spanish investors of the alleged fraud.
The two regulators are confident the impact will be "limited," sources close to the investigations were quoted as saying.
Spain's second largest bank, BBVA , told Reuters on Saturday that no BBVA customers in Spain were exposed to the alleged fraud, but the bank has so far not commented on whether clients outside Spain are exposed.
(Reporting by Sarah Morris in Madrid, Sudip Kar-Gupta in Paris and Lisa Jucca in Zurich; Editing by Leslie Adler)
By Helene Cooper and Jackie Calmes
Sunday, December 14, 2008
CHICAGO: At a time of mounting pressure on Governor Rod Blagojevich of Illinois to resign, two associates of President-elect Barack Obama confirmed that his chief of staff, Rahm Emanuel, had communicated with Blagojevich's office about potential candidates for Obama's Senate seat and provided a list of names.
The Obama associates said the interactions concerned several people who might fill the seat. Such contacts are common among party officials when a political vacancy is to be filled. Prosecutors made it plain Tuesday, the day Blagojevich was arrested on corruption charges, that their investigation in no way targeted Obama.
But the allegations that Blagojevich wanted, in effect, to sell the Senate seat to the highest bidder have brought intense scrutiny to all contacts the governor's office had about the vacancy.
The Illinois attorney general, Lisa Madigan, said Sunday that she had heard reports Blagojevich might resign as early as Monday, or possibly take a temporary leave so that he might still draw a paycheck.
But a Blagojevich spokesman, Lucio Guerrero, told The Associated Press on Sunday that he had "no knowledge" of any plans by the governor to resign on Monday.
Senator John McCain of Arizona added his voice to the long list of public figures who are calling on Blagojevich to step down. He also indicated on ABC that he thought senior Republicans should devote more attention to solving the country's economic ills and less to scoring points in the corruption scandal.
If the governor does not step down, he will face several challenges.
Madigan has asked the state supreme court to declare Blagojevich unfit to serve, in which case the lieutenant governor would succeed him - and name Obama's replacement to the Senate. And the state's general assembly will convene Monday to consider both an attempt to impeach Blagojevich and separate legislation to hold a special election to replace him.
Lieutenant Governor Pat Quinn said on NBC that draft legislation would allow him, if Blagojevich did step down, to appoint someone to the Senate seat until a special election was held.
The attorney general expressed serious doubt Sunday that Blagojevich would defiantly proceed with a Senate appointment when he is under such fierce scrutiny. "Nobody in their right mind would accept an appointment to the U.S. Senate seat that this governor made," Madigan said on CBS.
The governor met Saturday with one of Illinois's most prominent criminal defense attorneys, Edward Genson. But Genson said he had "not yet" been retained by Blagojevich, The Chicago Tribune reported.
The Tribune reported that communications between Emanuel and the Illinois governor, both Democrats, had been captured on court-approved wiretaps, but Obama associates gave conflicting accounts of the interactions.
Obama aides have said privately that Emanuel did not engage in any deal-making with Blagojevich, whom U.S. prosecutors charged last week with conspiring to turn a profit from the appointment.
Emanuel has not been accused of wrongdoing by U.S. prosecutors.
Obama has said he never spoke with the governor about the seat. But Obama's aides have declined publicly to answer questions about what discussions they had, with several saying they were doing so at the request of the office of Patrick Fitzgerald, the U.S. attorney for the Northern District of Illinois.
Madigan, who said her office was cooperating with U.S. prosecutors, told NBC that it "doesn't appear from what I've heard so far that there is anything improper that has occurred" regarding Emanuel.
For now, the Illinois governor alone has the power to fill the Senate vacancy. The criminal complaint against him alleges that he sought to benefit personally from the appointment by securing high-paying jobs for himself and his wife, or campaign contributions, in return for his selection.
Obama said Thursday that his aides were looking through all of their possible contacts with the governor and would release more information soon. Republicans, meanwhile, have raised questions about Obama's refusal to say more and about his past ties with the main characters in the story.
Emanuel's list of possible candidates included a senior adviser to Obama, Valerie Jarrett; Madigan; Representative Jan Schakowsky, Democrat of Illinois; and Dan Hynes, the state comptroller.
The criminal complaint quotes Blagojevich as saying at one point that Obama's aides were not willing to give him anything more than "appreciation" in return for appointing a candidate they favored.
Schakowsky told The New York Times last week that she called Emanuel last month when she was exploring whether she might fill Obama's seat. She and Emanuel had served in the House together.
Schakowsky said Emanuel had declined to tell her whether Obama had a favorite to fill the seat. She said he seemed wary about Blagojevich.
One of the schemes Blagojevich is accused of involves Emanuel's House seat, for which Illinois law requires a special election.
According to the criminal complaint, Blagojevich talked about approaching an unnamed "president-elect adviser" to ask for help raising "10, 15 million" to start a nonprofit organization.
Jackie Calmes reported from Washington. Brian Knowlton and David Johnston contributed reporting from Washington.
Sunday, December 14, 2008
Rod Blagojevich is the perfect holiday treat for a country fighting off depression. He gift-wraps the ugliness of corruption in the mirthful garb of farce. From a safe distance outside Illinois, it's hard not to laugh at the "culture of Chicago," where even the president-elect's Senate seat is just another commodity to be bought and sold.
But the entertainment is escapist only up to a point. What went down in the Land of Lincoln is just the reductio ad absurdum of an American era where both entitlement and corruption have been the calling cards of power. Blagojevich's alleged crimes pale next to the larger scandals of Washington and Wall Street. Yet those who promoted and condoned the twin national catastrophes of reckless war in Iraq and reckless gambling in our markets have largely escaped the accountability that now seems to await the Chicago punk nabbed by the U.S. attorney Patrick Fitzgerald.
The Republican partisans cheering Fitzgerald's prosecution of a Democrat have forgotten his other red-letter case in this decade, his conviction of Scooter Libby, Dick Cheney's chief of staff. Libby was far bigger prey. He was part of the White House Iraq Group, the task force of propagandists that sold an entire war to America on false pretenses. Because Libby was caught lying to a grand jury and federal prosecutors as well as to the public, he was sentenced to two and a half years in prison. But President Bush commuted the sentence before he served a day.
Fitzgerald was not pleased. "It is fundamental to the rule of law that all citizens stand before the bar of justice as equals," he said at the time.
Not in the Bush era, man. Though the president had earlier vowed to fire anyone involved in leaking the classified identity of a CIA officer, Valerie Plame Wilson - the act Libby tried to cover up by committing perjury - both Libby and his collaborator in leaking, Karl Rove, remained in place.
Accountability wasn't remotely on Bush's mind. If anything, he was more likely to reward malfeasance and incompetence, as exemplified by his gifting of the Presidential Medal of Freedom to George Tenet, L. Paul Bremer and Gen. Tommy Franks, three of the most culpable stooges of the Iraq fiasco.
Bush had arrived in Washington vowing to inaugurate a new, post-Clinton era of "personal responsibility" in which "people are accountable for their actions." Eight years later he holds himself accountable for nothing. In his recent exit interview with Charles Gibson, he presented himself as a passive witness to disastrous events, the Forrest Gump of his own White House. He wishes "the intelligence had been different" about WMD in Iraq - as if his administration hadn't hyped and manipulated that intelligence. As for the economic meltdown, he had this to say: "I'm sorry it's happening, of course."
If you want to trace the bipartisan roots of the morally bankrupt culture that has now found its culmination in our financial apocalypse, a good place to start is late 2001 and 2002, just as the White House contemplated inflating Saddam's WMD. That's when we learned about another scandal with cooked books, Enron. This was a supreme embarrassment for Bush, whose political career had been bankrolled by the Enron titan Kenneth Lay, or, as Bush nicknamed him back in Texas, "Kenny Boy."
The chagrined president eventually convened a one-day "economic summit" photo op in August 2002 (held in Waco, Texas, lest his vacation in Crawford be disrupted). But while some perpetrators of fraud at Enron would ultimately pay a price, any lessons from its demise, including a need for safeguards, were promptly forgotten by one and all in the power centers of both federal and corporate governance.
Enron was an energy company that had diversified to trade in derivatives - financial instruments that were bets on everything from exchange rates to the weather. It was also brilliant in devising shell companies that kept hundreds of millions of dollars of debt off the company's bottom line and away from the prying eyes of shareholders.
Regulators had failed to see the iceberg in Enron's path, and so had Enron's own accountants at Arthur Andersen, a corporate giant whose parallel implosion had its own casualty list of some 80,000 jobs. Despite Bush's post-Enron call for "a new ethic of personal responsibility in the business community," the exact opposite has happened in the six years since. Warren Buffett's warning in 2003 that derivatives were "financial weapons of mass destruction" was politely ignored. Much larger companies than Enron figured out how to place even bigger and more impenetrable gambles on derivatives, all the while piling up unseen debt. They built castles of air on a far grander scale than Kenny Boy could have imagined, doing so with sheer stupidity and cavalier, greed-fueled carelessness rather than fraud.
The most stupendous example as measured in dollars is Citigroup, now the recipient of potentially the biggest taxpayer bailout to date.
The price tag could be some $300 billion - 20 times the proposed first installment of the scuttled Detroit bailout. Citigroup's toxic derivatives, often tied to subprime mortgages, metastasized without appearing on the balance sheet. Both the company's former chief executive, Charles O. Prince III, and his senior adviser, Robert Rubin, the former Clinton Treasury secretary, have said they didn't know the size of the worthless holdings until they'd spiraled into the tens of billions of dollars.
Once again, regulators slept. Once again, credit-rating agencies, typified this time by Moody's, kept giving a thumbs-up to worthless paper until it was too late. There was just so much easy money to be made, and no one wanted to be left out. As Michael Lewis concludes in his brilliant account of "the end" of Wall Street in Portfolio magazine: "Something for nothing. It never loses its charm."
But if all bubbles and panics are alike, this one, the worst since the Great Depression, also carried the DNA of our own time. Enron had been a Citigroup client. In a now-forgotten footnote to that scandal, Rubin was discovered to have made a phone call to a former colleague in the Treasury Department to float the idea of asking credit-rating agencies to delay downgrading Enron's debt. This inappropriate lobbying never went anywhere, but Rubin neither apologized nor learned any lessons. "I can see why that call might be questioned," he wrote in his 2003 memoir, "but I would make it again." He would say the same this year about his performance at Citigroup during its collapse.
The Republican side of the same tarnished coin is Phil Gramm, the former senator from Texas. Like Rubin, he helped push through banking deregulation when in government in the 1990s, then cashed in on the relaxed rules by joining the banking industry once he left Washington.
Gramm is at UBS, which also binged on credit-default swaps and is now receiving a $60 billion bailout from the Swiss government.
It's a sad snapshot of our century's establishment that Rubin has been an economic adviser to Barack Obama and Gramm to John McCain. And that both captains of finance remain unapologetic, unaccountable and still at their banks, which have each lost more than 70 percent of their shareholders' value this year and have collectively announced more than 90,000 layoffs so far.
The New York Times calls its chilling investigative series on the financial failures "The Reckoning," but the reckoning is largely for the rest of us - taxpayers, shareholders, the countless laid-off employees - not the corporate and political leaders who led us into the quagmire. It's a replay of the Iraq equation: The troops, the Iraqi people and American taxpayers have borne the harshest costs while Bush and company retire to their McMansions.
As our outgoing president passes the buck for his failures - all that bad intelligence - so do leaders in the private and public sectors who enabled the economic debacle. Gramm has put the blame for the subprime fiasco on "predatory borrowers." Rubin has blamed a "perfect storm" of economic factors, as has Sam Zell, the magnate who bought and maimed the Tribune newspapers in a highly leveraged financial stunt that led to a bankruptcy filing last week. Donald Trump has invoked a standard "act of God" clause to avoid paying a $40 million construction loan on his huge new project in Chicago.
After a while they all start to sound like O.J. Simpson, who, when at last held accountable for some of his behavior, told a Las Vegas judge this month, "In no way did I mean to hurt anybody." Or perhaps they are channeling Donald Rumsfeld, whose famous excuse for his failure to secure post-invasion Iraq, "Stuff happens," could be the epitaph of our age.
Our next president, like his predecessor, is promising "a new era of responsibility and accountability." We must hope he means it.
Meanwhile, we have the governor he leaves behind in Illinois to serve as our national whipping boy, the one betrayer of the public trust who could actually end up paying for his behavior. The surveillance tapes of Blagojevich are so fabulous it seems a tragedy we don't have similar audio records of the bigger fish who have wrecked the country.
But in these hard times we'll take what we can get.
In Athens, the university of anarchy
By Rachel Donadio
Sunday, December 14, 2008
ATHENS: Early Saturday morning inside the gates of Athens Polytechnic University, a dozen groggy young people in hooded sweatshirts slumped on folding chairs around a smoky fire. Others trickled in, holding cups of coffee. Small gypsy children scampered around with wheelbarrows, collecting empty beer bottles. One lit a cigarette.
But the young people and their friends were not simply recovering from a long night of drinking or studying. They were regrouping for revolution.
Many of the violent protests that have rocked Athens in recent days, after the police shot and killed a 15-year-old boy on Dec. 6, have taken place in and around the university, driven by a group of anarchists that has long occupied the buildings here. Garbage fires burn in its courtyard. On the streets outside, youths throwing gasoline bombs and rocks have clashed with riot police officers armed with tear gas.
The National Technical University of Athens, as it is officially called, is one of Greece's leading schools, training engineers, architects and scientists since 1836. It moved its main campus outside the city center in the 1980s, leaving its neoclassical downtown buildings largely to the whims of protest groups.
The university administration seems to view the squatters as uninvited house guests who overstayed their welcome so long ago that they have become fixtures. They hold regular demonstrations and often destroy university property.
But these protests have been different.
"In former times, a couple of years ago, there were only students protesting," said Constantinos Moutzouris, the university's rector. "This time there are all kinds of groups. This is difficult to control."
Conversations with those inside the university revealed a mix of students, older anarchists and immigrants protesting everything from police brutality to globalization to American imperialism.
Some are simply thrillseekers along for the ride.
Administrators say that evicting the anarchists now, especially after the protests of the past week, would entail a police operation they are unwilling to undertake for fear of instigating further violence or destruction.
Under an asylum law instituted after the police crushed a student rebellion at the polytechnic university against the military junta in 1973, the Greek police are not allowed on university property unless invited by administrators.
Yet unlike when the police killed protesters at Kent State University in Ohio in 1970, a tragic episode in a dramatic time, emotion over the Athens shooting has intensified, not faded, over time.
In Greece, the police are seen as both overly aggressive and disconcertingly passive. Although a police bullet killed the teenager, sparking the latest violence, the government then told the police not to use force to tamp down the protests, to avoid further mayhem. The cost of the ensuing riots, in which businesses and cars were torched, is estimated at $1.3 billion nationwide.
Outside the university gates Saturday morning, merchants were sweeping up the broken glass from their vandalized shops. The hulks of burned-out cars sat like carcasses in the streets.
Asked what the shops had to do with the death of the student, one black-clad young woman said, in perfect American English, that they represented "the corporate machine." The protesters do not have a traditional hierarchy, she said, but held "collective meetings" in the university auditorium.
Like rave parties, the protests are called through text-message chains or on Web sites like indymedia.org.
Protesters have said they will continue to demonstrate until the police charged with killing the teenager, Alexandros Grigoropoulos, are tried and jailed.
In an inner courtyard, someone has spray-painted "Don't Blame Us, The Rocks Ricocheted." A lawyer for the policeman who killed the teenager has said that the bullet was deformed, so that it was probably not a direct hit.
The Greek authorities have insisted that the violence has been driven by a radical handful, whom they refer to as "the known unknown."
That term is "nonsense," said Dimitris Liberopoulous, 44, a freelance book editor and anarchist sympathizer who discussed the protest movement over coffee in Exarchia, the neighborhood surrounding the university. "It's a game of semiotics," he said.
He said the authorities did not know who the protesters were, nor understand their frustration at class division, the poor economy, a broken education system and a corrupt government.
"We are thousands of people," Liberopoulous said. "We live in a parallel society with parallel values and parallel ideas."
That the authorities have not identified and arrested the ringleaders seems more a question of political will.
Greece has witnessed low-level political violence for decades. Starting in the mid-'70s, the terrorist group November 17 killed at least 23 people until the Greek authorities largely dismantled it before the 2004 Athens Olympics.
Last year, another group fired a rocket-propelled grenade at the U.S. Embassy here, causing damage but no injuries.
It is unclear whether the self-styled anarchists have ties with terrorist groups. But security experts fear that terrorist groups might see the new unrest as fertile ground for attacks.
They also worry that the anarchists themselves might up the ante.
More protests are expected this week, though Athens was largely calm Sunday.
"There's a proverb," Liberopoulous said. "That a civil war never ends."
By Thomas Fuller
Sunday, December 14, 2008
MUMBAI: Some day Farhang Jehani might patch up the bullet holes and cover the shrapnel pockmarks. But for now they are the Leopold Café's new decor.
"We are going to let it be," Jehani said over the din of his crowded restaurant, where eight people were killed in the Mumbai terrorist attacks. "It's part of history."
In the two weeks since the attacks, this Mumbai neighborhood of narrow streets shared by street urchins and the well-to-do has staggered back onto its feet. But at the Leopold Café, it is often standing room only.
The restaurant has become a sort of shrine of defiance against terrorism. That, at least, is how Jehani portrays it. "I want it to go on the same way - as if nothing has happened," he said.
Tourists come to buy T-shirts emblazoned with the restaurant logo (sales are now five times what they were before the attack). Passers-by stop to peer at the bullet holes in the restaurant's facade. And an eclectic clientele - some coming out of curiosity, others to show their support - sits down for a meal and freely flowing beer.
"I thought I'd come to have a look," said Jagdeep Kishore, a lawyer in his early 60s from New Delhi who came to Mumbai for a conference. Leopold has become a household name in India, Kishore said. "But I never imagined this place would be full of people."
The diversity of the clientele mirrors Mumbai itself. Tourists, especially budget travelers, have been the mainstay of the restaurant for years, starting with hippies in the 1960s. But after the attacks, the Leopold has attracted more wealthy and middle-class Mumbai natives.
"There are more Indians now," Amerita Kotak, 16, part of a group of high school students waiting for a table on Friday night. "People want to see what's happened."
The attacks, which left 163 victims and nine out of 10 gunmen dead, began a few hours after dusk Nov. 26.
At about 9:40 p.m., dinner at the Leopold was interrupted with a minute-long volley of gunfire and the loud bang of an exploding grenade. The gunmen never entered the restaurant, said Jagat Khadka, the Leopold's bouncer, whose left arm was grazed by a bullet. They stood outside and casually opened fire, sending waiters and customers running for the kitchen or ducking below their tables, according to interviews with the Leopold staff.
Six patrons and two waiters were killed. The gunmen then walked down a narrow street to the back entrance of the Taj hotel, where they then terrorized guests and hotel staff for more than two days.
Both waiters at the Leopold who died, Peer Pasha and Hidayat Khazi, were Indian Muslims. A note at each table, placed under the glass tabletop, advises diners that donations for family members of the "deceased staff" can be made at the cashier.
Jehani says he does not know the identities of the other six killed, except that three were foreigners, including one German. Jehani escaped injury because he had gone up to the restaurant's mezzanine bar to watch the end of a cricket match between England and India.
On the way upstairs he saw two young men standing on the sidewalk with large rucksacks, not an unusual sight in a neighborhood popular with backpackers. They looked like "decent" people, he said. "I thought they were waiting for friends." About three minutes later the men began their shooting spree.
The atmosphere at Leopold's on the most recent Saturday night was raucous and boozy. But amid the mainly Indian crowd were reminders of the power of the weapons that the gunmen used.
The bullet that grazed Khadka had punctured a solid wood door plated with a layer of stainless steel. Bullets had left holes in the restaurant's granite-paneled walls that looked like they were made with percussion drills.
Many buildings in Mumbai exhibit perpetual dilapidation, and Leopold Café is no exception. It is hard to know whether some of the missing tiles and broken windows here were caused by the attack or longstanding disrepair.
But the divot under Table 24 is unmistakable. The attackers' grenade had blasted a fist-sized hole in the granite floor and sprayed shrapnel across the adjacent counter.
Shrouded in revelry, the scars of the attacks do not seem to bother customers here.
"Nobody seems to give any impression of trepidation, absolutely not," said Pat Dunworth, an insurance assessor from Sheffield, England, who was sitting two tables down from the grenade hole. "It's no different from being in Bangkok or Los Angeles."
Patrons at the Leopold, which first opened as a wholesale cooking oil business in 1871, say they admire the restaurant's speed in reopening. Restaurant staff took two days to mop up the blood and bits of scalp from the floor. Zoroastrian priests in white robes came to bless the business with burning sandalwood. The first customers were served on Dec. 1, just 48 hours after the siege of the Taj hotel was over.
But in newspapers and on Internet blogs, some Indians say they are worried that this type of resilience is also self-defeating. After each new terrorist attack - and there have been many in India in recent years - life returns to normal and the pressure to prevent future attacks dissipates.
On the sidewalk outside Leopold on Friday night, Arnaz Irani, a jewelry designer, said she found the scene inside disconcerting.
"We were shocked that people could even be sitting in there," Irani said. "It's so upsetting to think that people were in there lying dead and now everyone is laughing and eating."
Of all the targets the gunmen chose in their killing spree - the train station, the Chabad-Lubavitch Jewish center, the hospital and hotels were the main targets - the Leopold was among the easiest to find and gain access to. The restaurant is located on the Colaba Causeway, a main boulevard, and advertised by a large sign, sponsored by Coca-Cola, that reads, "Coke Time, Join the Friendly Circle."
In Mumbai, life spills out onto the streets, whether at food stalls, wet markets or along Marine Drive along the Arabian Sea, where couples stroll. The Leopold Café is the symbol of these "soft targets," in the lingo of terrorism experts, and a sign of the city's continued vulnerability.
Three police officers are now posted on the street outside the Leopold, but their only weapon is one tall nightstick shared among them. Khadka, the stocky bouncer who is also head of security at the restaurant, says he is not armed. During the attacks, he ran for his life down a side street. Asked what he would do if gunmen returned, he shrugged.
"Next time I won't run away," he said.
Sunday, December 14, 2008
NEW DELHI: India denied on Sunday its warplanes had violated Pakistani airspace.
"The Indian Air Force denies any such violation of airspace," Air Force spokesman, Wing Commander Mahesh Upasani told Reuters, describing Pakistani accusations as an attempt to divert "the attention of the people towards something which has not happened."
Pakistan said on Saturday that Indian warplanes had violated its airspace but said this was "inadvertent" and there was no cause for alarm about an escalation of tension between the nuclear-armed neighbours.
The report followed a rise in tensions after gunmen killed 179 people in India's financial capital Mumbai in an attack which New Delhi blamed on Pakistan-based Islamist militants.
A Pakistan Air Force spokesman said there were two violations, one in the Kashmir area and another in the sector around the city of Lahore in Pakistan's Punjab province.
In response to India's denial on Sunday, the Pakistani Air Force said it stood by its statement.
"Our stance is the same. There's no change in it," spokesman Humayun Viqas said.
India has been extremely careful in recent years to prevent its warplanes from straying into Pakistan's airspace.
Pakistan shot down two Indian planes which it said had gone into its airspace during the 1999 Kargil conflict, fought on the Line of Control dividing disputed Kashmir.
India said the planes were in its airspace when they were shot down.
Following the Mumbai attacks, India, backed by the United States, has called on Pakistan to crack down on Pakistan-based militant groups. But the government in New Delhi has resisted domestic pressure to launch retaliatory strikes of its own.
India and Pakistan have fought three wars and went to the brink of a fourth in 2002 following an attack on the Indian parliament in December 2001 that New Delhi blamed on militants based in Pakistan.
(Reporting by Bappa Majumdar; Additional reporting by Kamran Haider; Writing by Simon Denyer; Editing by Jeremy Laurence)
The Associated Press
Sunday, December 14, 2008
ISLAMABAD: Pakistan and India talked hopefully about improving relations Sunday as the nuclear-armed rivals appeared to be searching for a path away from confrontation after the Mumbai terror attacks.
Prime Minister Gordon Brown of Britain, making whirlwind visits to both countries' capitals to try to calm tensions in the region, on Sunday pledged more technical support and funding to help Pakistan and India battle terrorism.
At a news conference with Brown, President Asif Ali Zardari of Pakistan played down reported violations of his country's airspace by Indian aircraft a day earlier. For his part, Prime Minister Manmohan Singh of India said he hoped relations could be "normalized" - but not until "our neighbor stops allowing its territory to be used for acts of terrorism against India."
India has called on Pakistan to crack down on militant groups operating out of Pakistan, particularly Lashkar-e-Taiba, which India has blamed for the Mumbai attacks that left more than 160 people dead.
Pakistan has carried out raids on a charity believed to be linked to Lashkar, but also has urged India to provide further evidence.
Abdullah Ghaznavi, Lashkar's chief spokesman, denied involvement in the Mumbai attacks, saying his group only targets Indian forces and Indian defense installations as part of efforts to force India out of its portion of the disputed Kashmir region. "This is a jihad, and it will continue," Ghaznavi said in a call Sunday from an undisclosed location.
Brown urged India and Pakistan, which both possess nuclear weapons, to cooperate to peacefully resolve the crisis, which the United States fears could divert Pakistan's attention from battling Qaeda and Taliban militants along its border with Afghanistan.
Brown promised Pakistan new bomb-scanning technology, forensic assistance, help improving airport security and other support. He also announced a $9 million program to help fight the causes of extremism and strengthen democracy, including trying to reach out to and educate Pakistani youth to avoid radicalization.
Brown said he had discussed similar assistance for India with Singh earlier Sunday, including help against radicalization, airport security improvements and better information-sharing.
Three-quarters of the most serious terror plots investigated by the British authorities have links to Al Qaeda in Pakistan, Brown said.
Pakistani officials said Indian aircraft entered Pakistan's section of Kashmir and flew over the eastern city of Lahore on Saturday. Pakistani jets chased the Indian aircraft back over the border, the authorities here said.
Both sides are usually careful to avoid such territorial violations, and it was unclear how two separate but apparently accidental incursions could occur on the same day.
Zardari tried to dismiss the incidents, calling them "technical incursions" that had been blown out of proportion.
An Indian Air Force spokesman, Mahesh Upasani, denied Sunday that Indian aircraft has crossed into Pakistani airspace.
Singh said India hopes relations can be "normalized." "This is my belief that all issues can be resolved through mutual wisdom and cooperation," he said, while making clear that New Delhi's tolerance had limits. "Our good intentions should not be misconstrued as our weakness," he said.
Sunday, December 14, 2008
KANDAHAR, Afghanistan: Three policemen were killed and 12 others were wounded on Sunday in a bomb blast in the southern Afghan city of Kandahar, a local official said.
The escalation of violence in Afghanistan this year, the bloodiest period since the Taliban was ousted in 2001, has raised fears about the prospects of stability in the country despite an increasing number of foreign troops.
Five policemen and seven civilians were among the wounded when a wooden cart fixed with explosives was detonated outside the Chinese hospital in the capital of Kandahar province, a spokesman for the governor of Kandahar said.
Earlier reports from the governor's office in Kandahar said four policeman had been killed and the explosion came from a suicide bomber.
Removed from power in 2001, the Taliban largely rely on suicide and roadside bomb attacks as part of their campaign to topple the Western-backed government and drive out foreign troops under the command of NATO and the U.S. military.
(Reporting by Ismail Sameem; Writing by Kabul newsroom)
By Steven Erlanger
Sunday, December 14, 2008
PARIS: Afghanistan and all its neighbors - except, notably, Iran - agreed at an informal conference here Sunday to intensify their regional relations in the interest of security and stability, pledging to work together to stabilize Afghanistan, restrict narcotics traffic and coordinate against terrorist groups.
Although Iran had said its foreign minister would attend the conference, then said no, then said yes and then said its ambassador to France would represent Tehran, no Iranian official showed up Sunday morning, according to the French Foreign Ministry spokesman, Eric Chevallier.
"It's unfortunate, but when nobody showed up this morning, everyone sat down to work," Chevallier said. "No one explained why."
Iran was annoyed with President Nicolas Sarkozy of France for remarks last week criticizing President Mahmoud Ahmadinejad's constant threats against Israel, and it may be that with elections in Iran in June, it was easier for Foreign Minister Manouchehr Mottaki to stay home.
Iran's failure to attend was a blow to French hopes for the conference, the first of its kind, which was meant to bring together all the countries touching on Afghanistan, including the "stans" of the former Soviet Union, China, India and Pakistan.
The conference also included the United Nations Special Representative for Afghanistan, Kai Eide, and senior European Union officials responsible for foreign policy and aid.
Germany was also invited, as a financier of great importance and a country which will be asked to do more on the ground in Afghanistan - with civilian and police trainers, if not with many more troops. All countries with troops in Afghanistan were also represented, including the United States and Britain, while Russia also attended.
With the American president-elect, Barack Obama, vowing a "surge" of troops and civilian advisers to try to stabilize Afghanistan, the French, who remain president of the European Union until the end of the year, wanted to present a forward-looking European initiative, French officials said.
And after the terrorist violence in Mumbai, and its apparent connections to Pakistan, Foreign Minister Bernard Kouchner of France thought it was another opportunity for the two countries to sit down over a shared problem.
"There is a consensus that there can be no peace, security and prosperity in Afghanistan without the strong involvement of its neighbors," Kouchner said after the meeting. "And there can be no peace, security and prosperity for the region without a stable Afghanistan."
Pakistan in particular has been charged with not doing enough to prevent cross-border operations by the Taliban, and NATO convoys and supply depots have recently been attacked in Pakistan itself. On Sunday, in Bahrain, General David Petraeus, head of U.S. forces in Iraq and Afghanistan, said that the problems in Pakistan brought "new urgency" to finding alternate supply routes through the "stans" - Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan and Kyrgyzstan.
The Pakistani foreign minister, Shah Mehmood Qureshi, said at the meeting that the attack on Mumbai "was an attack on us all," a French official said.
The conference became more detailed on economic regional cooperation, officials reported, with the European Commission offering to host a meeting of economic experts to prepare better for a regional economic conference planned for Islamabad early next year.
By Steven Lee Myers and Alissa J. Rubin
Sunday, December 14, 2008
BAGHDAD: President George W. Bush flew to Iraq on Sunday, his fourth and final trip to highlight the recently completed security agreement between the United States and the country that has occupied the bulk of his presidency and will to a large extent define his legacy.
But his appearance at a news conference here was interrupted by an Iraqi journalist who shouted in Arabic "This is a gift from the Iraqis; this is the farewell kiss, you dog" and threw one of his shoes at the president, who ducked and narrowly avoided being struck.
As chaos ensued, he threw his other shoe, shouting, "This is from the widows, the orphans and those who were killed in Iraq." The second shoe also narrowly missed Bush as Prime Minister Nuri Kamal al-Maliki stuck out a hand in front of the president's face to help shield him.
A scrum of security agents descended on the man, who was about 12 feet from the lectern, and wrestled him to the floor and then out of the ornate room where the news conference was taking place. The president was uninjured and brushed off the incident. "All I can report is it is a size 10," he said jokingly before continuing his news conference and noting the apologies of Iraqi journalists in the front row.
Shortly before 10 p.m., Bush departed the Green Zone by helicopter to Camp Victory, where he was greeted with cheers and whoops from hundreds of troops inside the enormous rotunda of the Al Faw palace. Speaking at a lectern beneath an enormous American flag that nearly reached the domed ceiling, he praised this generation of soldiers and reflected on the sacrifice of those who had died.
He called the surge "one of the greatest successes in the history of the United States military."
"Thanks to you," he told the soldiers, "the Iraq we're standing in today is dramatically freer, dramatically safer and dramatically better than the Iraq we found eight years ago."
Bush's arrival here during daylight hours had been one measure of progress; his first visit on Thanksgiving Day 2003 took place entirely at night.
As with previous visits in November 2003, June 2006 and September 2007 preparations for the visit were secretive and carried out with ruse. The White House schedule for Sunday had Bush attending the "Christmas in Washington" performance at the National Building Museum in downtown Washington. Instead, he left the White House by car on Saturday night, arriving at Andrews at 9 p.m. Air Force One remained inside its immaculate hangar until moments before taking off. A dozen journalists accompanying him were only told of the trip on Friday and allowed to tell only a superior and a spouse and only in person.
Air Force One arrived in Baghdad at 4 p.m. after a 10-and-a-half-hour overnight flight from Andrews Air Force Base near Washington. It was Bush's fourth visit to IraqOn arriving here, he met the two senior American officials, Ambassador Ryan Crocker and General Ray Odierno, on the tarmac. He met with Iraqi leaders and was expected to meet with American troops.
The president and his aides have touted the security agreement as a landmark in Iraq's troubled history, one made possible by the dramatic drop in violence over the last year. They credit the large increase in American troops Bush ordered in 2007 for creating enough security to allow political progress to take root.
The new security agreements, which take effect on Jan. 1, replace the United Nations Security Council resolutions that authorized the presence of foreign troops in Iraq. Iraqi officials extracted significant concessions from the Bush administration over several months of hard bargaining, including a commitment to withdrawal all American forces by the end of 2011.
Bush's national security advisor, Stephen Hadley, said the situation in Iraq today was "a pretty optimistic place," a phrase that few would have credibly used even a year ago. He described the security agreement that will govern American military operations after the new year "a remarkable document."
Referring to the Iraqi parliament's contentious and lively debate leading up to a vote last month, Hadley added that the agreement was a public one: "I think the only one there is in the Arab world, and publicly debated and discussed in an elected parliament."
There was an unmistakeable hint of triumphalism in Hadley's remarks, as in Bush's valedictory visit, even though the president is leaving office with the war very much unfinished.
"If you've been through 2005 and 2006," Hadley said en route to Baghdad, when asked whether the president was "feeling pretty good" about the situation here now, "it's hard not to feel awfully good about 2008 and into 2009."
After arriving at the airport, Mr Bush quickly flew into Baghdad itself aboard a military helicopter, under extraordinary security. The flight passed uneventfully, swooping low over neighborhoods along the once notorious airport road. He landed at Salam Palace, boarded a civilian SUV and drove a short distance to an honor guard with Iraq's president, Jalal Talabani.
The president made brief remarks at the end of his meeting with Talabani and Iraq's two vice presidents, Adil Abd al-Mahdi and Tariq al-Hashimi. The three comprise Iraq's Presidency Council. The two leaders sat in arm chairs before their respective flags. Talabani spoke first, praising the president: "Thanks to him and his courageous leadership we are here now in this building."
Bush then spoke, calling the security agreements "a reminder of our friendship and as a way forward to help the Iraqis realize the blessings of a free society."
"The work hasn't been easy," he said, "but it's been necessary."
By James Glanz and T. Christian Miller
Sunday, December 14, 2008
BAGHDAD: An unpublished, 513-page federal history of the U.S.-led reconstruction of Iraq depicts an effort crippled before the invasion by Pentagon planners who were hostile to the idea of rebuilding a foreign country, and then molded into a $100 billion failure by bureaucratic turf wars, spiraling violence and ignorance of the basic elements of Iraqi society and infrastructure.
"Hard Lessons: The Iraq Reconstruction Experience," the first official account of its kind, is circulating in draft form here and in Washington among a tight circle of technical reviewers, policy experts and senior officials. It also concludes that when the reconstruction began to lag - particularly in the critical area of rebuilding the Iraqi police and army - the Pentagon simply put out inflated measures of progress to cover up the failures.
In one passage, for example, former Secretary of State Colin Powell is quoted as saying that in the months after the 2003 invasion, the Defense Department "kept inventing numbers of Iraqi security forces - the number would jump 20,000 a week! 'We now have 80,000, we now have 100,000, we now have 120,000."'
Powell's assertion that the Pentagon inflated the number of competent Iraqi security forces is backed up by Lieutenant General Ricardo Sanchez, the former commander of ground troops in Iraq, and L. Paul Bremer 3rd, the top civilian administrator until an Iraqi government took over in June 2004.
Among the overarching conclusions of the history is that five years after embarking on its largest foreign reconstruction project since the Marshall Plan in Europe after World War II, the U.S. government has in place neither the policies and technical capacity nor the organizational structure that would be needed to undertake such a program on anything approaching this scale.
The bitterest message of all for the reconstruction program may be the way the history ends. The hard figures on basic services and industrial production compiled for the report reveal that for all the money spent and promises made, the rebuilding effort never did much more than restore what was destroyed during the invasion and the convulsive looting that followed.
By mid-2008, the history says, $117 billion had been spent on the reconstruction of Iraq, including some $50 billion in U.S. taxpayer money.
The history contains a catalog of new revelations that show the chaotic and often poisonous atmosphere prevailing in the reconstruction effort.
When the Office of Management and Budget balked at the U.S. occupation authority's abrupt request for about $20 billion in new reconstruction money in August 2003, a veteran Republican lobbyist working for the authority made a bluntly partisan appeal to Joshua Bolten, then the Office of Management and Budget director and now the White House chief of staff. "To delay getting our funds would be a political disaster for the President," wrote the lobbyist, Tom Korologos. "His election will hang for a large part on show of progress in Iraq and without the funding this year, progress will grind to a halt." With administration backing, Congress allocated the money later that year.
In an illustration of the hasty and haphazard planning, a civilian official at the U.S. Agency for International Development was at one point given four hours to determine how many miles of Iraqi roads would need to be reopened and repaired. The official searched through the agency's reference library, and his estimate went directly into a master plan. Whatever the quality of the agency's plan, it eventually began running what amounted to a parallel reconstruction effort in the provinces that had little relation with the rest of the U.S. effort.
Money for many of the local construction projects still under way is divided up by a spoils system controlled by neighborhood politicians and tribal chiefs. "Our district council chairman has become the Tony Soprano of Rasheed, in terms of controlling resources," said a U.S. Embassy official working in a dangerous Baghdad neighborhood, referring to the popular TV mob boss. "'You will use my contractor or the work will not get done."'
The United States could soon have reason to consult this cautionary tale of deception, waste and poor planning, as both troop levels and reconstruction efforts in Afghanistan are likely to be stepped up under the new administration.
The incoming Obama administration's rebuilding experts are expected to focus on smaller-scale projects and emphasize political and economic reform. Still, such programs do not address one of the history's main contentions: that the reconstruction effort has failed because no single agency in the U.S. government has responsibility for the job.
Five years after the invasion of Iraq, the history concludes, "the government as a whole has never developed a legislatively sanctioned doctrine or framework for planning, preparing and executing contingency operations in which diplomacy, development and military action all figure."
"Hard Lessons" was compiled by the Office of the Special Inspector General for Iraq Reconstruction, led by Stuart Bowen Jr., a Republican lawyer who regularly travels to Iraq and has a staff of engineers and auditors based here. Copies of several drafts of the history were provided to reporters at The New York Times and ProPublica by two people outside the inspector general's office who have read the draft but are not authorized to comment publicly.
Bowen's deputy, Ginger Cruz, declined to comment for publication on the substance of the history. But she said it would be presented Feb. 2 at the first hearing of the Commission on Wartime Contracting, which was created this year as a result of legislation sponsored by Senators Jim Webb of Virginia and Claire McCaskill of Missouri, both Democrats.
The manuscript is based on about 500 new interviews, as well as more than 600 audits, inspections and investigations on which Bowen's office has reported individually over the years. Laid out for the first time in a connected history, the material forms the basis for broad judgments on the entire rebuilding program.
In the preface, Bowen gives a searing critique of what he calls the "blinkered and disjointed prewar planning for Iraq's reconstruction" and the botched expansion of the program from a modest initiative to improve Iraqi services to a multibillion-dollar enterprise.
Bowen also swipes at the endless revisions and reversals of the program, which at various times gyrated from a focus on giant construction projects led by large Western contractors to modest community-based initiatives carried out by local Iraqis. While Bowen concedes that deteriorating security had a hand in spoiling the program's hopes, he suggests, as he has in the past, that the program did not need much outside help to do itself in.
Despite years of studying the program, Bowen writes that he still has not found a good answer to the question of why the program was even pursued as soaring violence made it untenable. "Others will have to provide that answer," Bowen writes.
"But beyond the security issue stands another compelling and unavoidable answer: The U.S. government was not adequately prepared to carry out the reconstruction mission it took on in mid-2003," he concludes.
The history cites some projects as successes. The review praises community outreach efforts by the Agency for International Development, the Treasury Department's plan to stabilize the Iraqi dinar after the invasion and a joint effort by the Departments of State and Defense to create local rebuilding teams.
But the portrait that emerges overall is one of a program's officials operating by the seat of their pants in the middle of a critical enterprise abroad, where the reconstruction was supposed to convince the Iraqi citizenry of U.S. good will and support the new democracy with lights that turned on and taps that flowed with clean water. Mostly, it is a portrait of a program that seemed to grow exponentially as even those involved from the inception of the effort watched in surprise.
On the eve of the invasion, as it began to dawn on a few U.S. officials that the price for rebuilding Iraq would be vastly greater than they had been told, the degree of miscalculation was illustrated in an encounter between Donald Rumsfeld, then the defense secretary, and Jay Garner, the retired lieutenant general who had hastily been named the chief of what would be a short-lived civilian authority called the Office of Reconstruction and Humanitarian Assistance.
The history records how Garner presented Rumsfeld with several alternative rebuilding plans, including one that would include projects across Iraq.
"What do you think that'll cost?" Rumsfeld asked of the more expansive plan.
"I think it's going to cost billions of dollars," Garner said.
"My friend," Rumsfeld replied, "if you think we're going to spend a billion dollars of our money over there, you are sadly mistaken."
In a way he never anticipated, Rumsfeld turned out to be correct: Before that year was out, the United States had appropriated more than $20 billion for the reconstruction, which would indeed involve projects across the entire country.
Rumsfeld declined comment on the report, but a spokesman, Keith Urbahn, said quotes attributed to him in the document "appear to be accurate." Powell also declined to comment.
The secondary effects of the invasion and its aftermath were among the most important factors that radically changed the outlook. Tables in the history show that measures of things like the production of electricity and oil; public access to potable water, mobile and landline telephone service; and the presence of Iraqi security forces all plummeted at least 70 percent, and in some cases all the way to zero, in the weeks after the invasion. Subsequent tables in the history give a fast-forward view of what happened as the avalanche of money tumbled into Iraq over the next five years. By the time a sovereign Iraqi government took over from the Americans in June 2004, none of those services - with a single exception, mobile phones - had returned to prewar levels. And by the time of the security improvements in 2007 and 2008, electricity output had, at best, a precarious 10 percent lead on its levels under Saddam Hussein; oil production was still below prewar levels; and access to potable water had increased about 30 percent, although with the nation's ruined piping system it was unclear how much actually reached people's homes uncontaminated.
Whether the rebuilding effort could have succeeded in a less violent setting will never be known. In April 2004, thousands of the Iraqi security forces that had been oversold by the Pentagon were overrun, abruptly mutinied or simply abandoned their posts as the insurgency broke out, sending Iraq down a violent path from which it has never completely recovered.
At the end of his narrative, Bowen chooses a line from "Great Expectations" by Charles Dickens as the epitaph of the U.S.-led attempt to rebuild Iraq: "We spent as much money as we could, and got as little for it as people could make up their minds to give us."
James Glanz reported from Baghdad, and T. Christian Miller, of the nonprofit investigative Web site ProPublica, reported from Washington.
By Taghreed El-Khodary and Isabel Kershner
Sunday, December 14, 2008
GAZA: At odds with a statement made by the exiled leader of Hamas in a television interview broadcast Sunday, leaders of the Islamic group in Gaza left open the possibility of renewing a tenuous truce with Israel that is due to expire at the end of the week.
"The truce was limited to six months and ends on Dec. 19," the Hamas political chief, Khaled Mashal, said in a television interview from Damascus with Hamas's Al-Quds satellite television.
"For Hamas, and I think for the majority of forces, the truce ends after Dece. 19 and will not be renewed," he said.
But Mahmoud Zahar, a senior Hamas leader in Gaza, said the group had not yet finalized its position. The local Hamas leadership was to meet with representatives of the other Palestinian armed groups Sunday night and only afterward formulate an official policy, Zahar said in an interview by telephone.
An Israeli official said the different voices show "there is no one Hamas today," and that the statement from Damascus may have been a pressure tactic to try to extract better terms from Israel for a continuation of the truce.
On Sunday afternoon the head of the Hamas government in Gaza, Ismail Haniya, addressed a huge crowd of supporters celebrating the 21st anniversary of the foundation of the group, which took over Gaza in 2007.
While Haniya criticized Israel for its continuing "aggression" and the strict embargo it has imposed on the area, he also avoided making any definitive pronouncement on the future of the truce.
The mixed messages from Hamas came as a senior Israeli Defense Ministry official, Amos Gilad, was in Cairo to discuss terms for extending the truce with Egyptian mediators. The original truce understandings were brokered by Egypt and went into effect on June 19. Hamas said they were valid for six months.
Israel has expressed readiness to extend the truce, even though it has been increasingly violated in recent weeks.
"Israel wants to see calm prevail in the south," Mark Regev, a spokesman for Israeli Prime Minister Ehud Olmert, said Sunday. "Israel has been willing, and continues to be willing, to abide by the understandings reached with the Egyptians," he said. But he added that calm was conditional on Hamas stopping the daily rocket fire from Gaza against Israeli civilian centers.
A spokesman for the Israeli Defense Ministry, Shlomo Dror, also said that Israel was ready to continue with the calm, "but not like it is today."
Hamas has failed to stick to its commitments all along, Dror said, not least by carrying on smuggling weapons and explosives into Gaza.
A tense quiet largely prevailed for the first months of the truce, showing that Hamas was able to control smaller groups in Gaza, but it began to unravel on Nov. 4. Then, Israeli forces entered the Palestinian territory for the first time since June to blow up a tunnel that, according to Israel, Hamas was planning to use to capture soldiers along the border. Five Hamas militants were killed the night of the raid.
Since then, some 250 rockets and mortar shells have been fired from Gaza at Israel, according to the Israeli military, and at least 10 more Palestinian militants have been killed in Israeli strikes.
Though the recent rocket fire has not killed anyone, life in the Israeli towns and villages around Gaza has become intolerable, Dror said.
As a result, Israel has tightened the blockade.
Nevertheless, Israeli officials responded cautiously to Mashal's statement from Damascus casting doubt on the future of the truce. One said it was probably a pressure tactic; another said what counted was deeds, not words.
Israel, like the United States and the European Union, classifies Hamas as a terrorist organization and boycotts the group.
In Gaza, though, Hamas seems to have maintained a certain level of popularity. An estimated 200,000 Palestinians turned out for the anniversary rally Sunday, despite some expectations that the Israeli-imposed embargo and resulting hardship for the 1.5 million residents might keep people at home.
Local Hamas leaders sounded defiant and triumphant. The master of ceremonies declared from the podium that soon the green flags of Hamas would fly in the West Bank too, and introduced Haniya as "the future president of Palestine."
Haniya said that the fuel shortages caused by the embargo had brought the Palestinians of Gaza to the point of using "candles and wood in our stoves to cook." Calling Gaza "the land of jihad and resistance," he insisted that the crowds attending the rally proved that Hamas remained undefeated.
A woman attending the rally, Inshirah Abu Al-Ola, 48, from Khan Yunis, said she had "sympathy" Hamas. She was forgiving about the fuel shortages, saying "the world will not give Hamas a chance."
But a man who stayed away from the rally said his old dreams of a Palestinian-governed Jerusalem and the return of the Palestinian refugees had now been reduced to obtaining a canister of cooking gas.
Taghreed El-Khodary reported from Gaza and Isabel Kershner from Jerusalem.
By Jim Giles
Sunday, December 14, 2008
It's a lovely idea: a social-networking site with automatic translation bolted on. That's Meedan, a gathering place for English and Arabic speakers who want to exchange thoughts on Middle East issues. Comments are translated automatically and instantly; Nebraska can now chat with Nablus.
But consider a cautionary tale. A group of Israeli journalists prepared for a visit to the Netherlands last year by sending questions via e-mail to the Dutch Foreign Ministry. After online translation from Hebrew to English, the first question reportedly read: "The mother your visit in Israel is a sleep to the favor or to the bed your mind on the conflict are Israeli Palestinian and on relational Israel Holland."
That's the problem with translation Web sites: They tend to be funnier than they are useful.
Perhaps that is an unfair comparison. Maybe there is something especially challenging about Hebrew-to-English translation. Well, there is - but it is a problem that will also affect Meedan. Computers are taught to translate using pairs of documents that have already been translated by humans. The more pairs a computer studies, the more it learns. Much is available for some languages. English-French and English-German software thus does a reasonably good job. For language combinations where the pool of parallel texts is smaller, like English-Hebrew and English-Arabic, the challenge is greater.
English-to-Arabic translation has its own quirks. Arabic is a "head initial" language: verbs are often placed at the beginning of a sentence. Subject and object usually follow, although not always in that order; Arabic speakers use context and meaning to decide which is which, but for a computer it is not so easy. A literal translation from Arabic might read something like "chase dog ball." It's obvious to a human that the writer is talking about a dog chasing the ball, but a computer could just as well have the ball chase the dog.
Computers can also be stumped by the ambiguities in written Arabic. Take the word kataba, which means "he wrote." This is normally written as ktb, as are the words kutiba, for "it was written," and kutub, meaning books. It is usually straightforward for a reader to judge which meaning is intended, but humans do so by drawing on something computers lack - an understanding of the meaning of the text.
Given those hurdles, the translations on Meedan are surprisingly good. One Arabic speaker asked a question that appeared as: "Has Pakistan has [sic] become a hotbed of terrorist groups?" Not bad, considering that the original question included the word martaan, an expression that literally means "fertile ground." Context-dependent meanings are the bane of translation engines, but Meedan translated it appropriately as "hotbed."
Meedan's software, which was developed by International Business Machines, can dodge many problems because it has had plenty of practice. The company hired some 20 professional translators to create a collection of English-Arabic parallel documents containing more than half a million words. The Meedan software would have seen martaan translated as "hotbed" in news articles about terrorism. Since the word "terrorist" appeared in the user's question, the software could guess the context and choose the appropriate, nonliteral translation.
The site's translators will monitor activity, so that when the computer slips up, they can adjust the translation. So can users; each human-made change will also be noted by the IBM software and, at least in theory, the error will become less likely to occur again.
Will Meedan live up to its Arabic meaning of "gathering place"? It depends on how you look at it. The translations are certainly not perfect. But translations need only be good enough to satisfy those using them, said Jennifer DeCamp, a machine-translation expert at Mitre in McLean, Virginia. Meedan, she predicted, will attract users committed enough to live with a little clumsy language.
"Languages play a huge role in putting barriers between groups of people," says Stuart Shieber, a computational linguist at Harvard University. The question is not whether Meedan is ideal, it's whether it's better to have it than to not." But when the subject is Middle East politics, even a minor misunderstanding can tip polite debate into angry argument. As with any dispute, language matters. Terrorist or freedom fighter? Martyr or murderer?
Human editors and translators often wrestle with such terminology, so it is not hard to imagine a clumsy computer translation sparking an ugly - and unnecessary - dispute. Meedan's software will have to be good enough to avoid that, or users might decide they were better off living with the language barrier.
By Reuel Marc Gerecht
Sunday, December 14, 2008
PRAGUE: Few post-9/11 issues have produced more anxiety and revulsion than the CIA's use of "aggressive interrogation" and the extrajudicial rendition of terrorist suspects to countries that practice torture. President-elect Barack Obama has promised to ban waterboarding and other pain-inflicting soliciting techniques, as well as rendition. He has also promised to close the Guantánamo Bay prison.
More broadly, liberal Democrats in Congress intend to deploy a more moral counterterrorism, where the ends - stopping the slaughter of civilians by Islamic holy warriors - no longer justify reprehensible means. Winning the hearts and minds of foreigners by remaining true to our nobler virtues is now seen as the way to defeat our enemies while preserving our essential goodness.
Sounds uplifting. Don't bet on it happening.
Obama will soon face the same awful choices that confronted George W. Bush and Bill Clinton, and he could well be forced to accept a central feature of their anti-terrorist methods: extraordinary rendition. If the choice is between non-deniable aggressive questioning conducted by Americans and deniable torturous interrogations by foreigners acting on behalf of the United States, it is almost certain that as president Obama will choose the latter.
Of course, he and his senior officials seem to believe now that they don't have to make this choice. For them there is a better way to combat terrorism, by using physically non-coercive questioning of suspects and civilian courts or military courts-martial to try and punish jihadists.
But this third way, which is essentially where America was before the Clinton administration embraced rendition, is plausible only if Obama is lucky. He might be. If there is no "ticking time bomb" situation - say, where waterboarding a future Khalid Shaikh Mohammed (the 9/11 mastermind) could save thousands of civilians - then there is need neither for the CIA's exceptional methods, nor the harsh services of Jordan's General Intelligence Department.
And there are signs that Obama won't have to confront such a situation. Through American and allied efforts, Al Qaeda has sustained enormous damage since 9/11. Osama bin Laden's decisive battle in Iraq, where Al Qaeda intended to re-energize its holy war against the Americans among the Arabs, has turned into a military and moral disaster. Arab Muslim fundamentalists have finally started the great debate as to whether it is, in fact, unacceptable to kill believers and nonbelievers in jihad.
And the internal-security services of our allies in Europe are, on the whole, vastly better today than they were in 2001. Thanks to intrusive surveillance methods (many of which are outlawed in the United States), they are much more efficient in pre-empting the plots of holy warriors traversing their borders.
However, troubles in Pakistan may well reverse Obama's luck. He has said he intends to be hawkish about fighting Al Qaeda and the Taliban in Central Asia. So, let us suppose that he increases the number of Special Forces raids into Pakistan, and those soldiers capture members of Al Qaeda and their computers, and learn that the group has advanced plans for striking American and European targets, but we don't know specifically where or when.
What would Obama do? After all, if we'd gotten our hands on a senior member of Al Qaeda before 9/11, and knew that an attack likely to kill thousands of Americans was imminent, wouldn't waterboarding, or taking advantage of the skills of our Jordanian friends, have been the sensible, moral thing to do with a holy warrior who didn't fear death but might have feared pain?
Obama will probably not have the option of ordering the CIA to aggressively interrogate another member of Al Qaeda - not after running a campaign that highlighted the moral failings of President Bush. To get the CIA back in the interrogation business would probably require a liberal Democratic Congress to pass laws guaranteeing case officers' immunity from criminal and civil prosecution. This seems unlikely - unless, of course, the United States is again devastated by a terrorist strike.
And because of Obama's plan to close Guantánamo, the Justice Department is already going to have to figure out how to move, try, punish and release its detainees. Thus the last thing in the world the Obama administration will want is to bring in more "enemy combatants" from the Central Asian battlefield.
Which brings us back to rendition, which, properly understood, is what Americans do when they realize that active counterterrorism against jihadists prepared to use mass-casualty weapons is an ethical, juridical and operational tar pit. It isn't an ideal solution - U.S. intelligence officers have no control of the questioning, and Washington can become beholden to foreign security services - but it's a satisfactory compromise. Just ask Samuel Berger, the national security adviser for President Bill Clinton, who no doubt worked through all the pitfalls when he first approved extrajudicial rendition.
In addition, the CIA is able to guard the secrecy of foreign liaison operations more effectively, especially from congressional prying, than it can its own activities. It has also certainly paid close attention to how the press tracked some of its clandestine international flights carrying terrorism suspects after 9/11, and will in the future undoubtedly make it much harder to sleuth out who is going where.
A dense bipartisan moral fog surrounds rendition. Former senior Clinton officials can still deny that they sent anyone away to be tortured. Few are as honest and frank as Walt Slocombe, a Clinton under secretary of defense who once remarked that the difference between Democratic and Republican rendition was that Democrats "drilled air holes in the boxes."
If Obama's Democrats get blown back into the ugly world that we live in, and resume rendition (and, of course, fib about it), then Bush and Vice President Dick Cheney, who have been vilified for besmirching America's honor, may at least take some consolation in knowing that hypocrisy is always the homage vice pays to virtue.
Reuel Marc Gerecht, a former CIA officer, is a fellow at the Foundation for Defense of Democracies.
Sunday, December 14, 2008
HONG KONG: Dozens of people in Hong Kong were hurt after two bottles containing an acidic liquid were dropped from a building into a busy commercial district on Saturday, said the police, which are investigating whether the act was intentional.
The 750 ml bottles containing an acidic and corrosive liquid exploded after hitting the ground, causing injuries and burns to 46 people, some of whom had to be treated in hospital before being released, a police spokeswoman said.
"After an initial investigation, we've determined two bottles containing a corrosive liquid were dropped from above," said Leona Leung at the Hong Kong Police Department.
"The matters is under investigation. So far nobody has been arrested," she added.
The liquid has been sent to the laboratory, and the police have not yet determined the contents, she added.
An unidentified man who witnessed the scene said people affected covered their eyes in pain, the South China Morning Post reported on Sunday. Other victims had holes in their clothings and backpacks, according to the newspaper.
The incident happened shortly after 5 p.m. on Saturday in a bustling shopping district of Kowloon, across the city from the main Hong Kong island, which is usually clogged with tourists and shoppers.
(Reporting by Rafael Nam; Editing by Bill Tarrant)
By Jackie Calmes
Sunday, December 14, 2008
CHICAGO: He will not formally take power for almost six weeks, but President-elect Barack Obama is already showing some glimpses of how he will wield it.
Despite his professed resolve to stay at arm's length from governance during the transition, the economic crisis has forced him to play a more active role - nowhere more so than in Washington's scramble to avert the collapse of the Big Three automakers with a government lifeline.
From here at what an aide called his "mini-White House," Obama has been pulling on the levers of power far more than any president-elect in memory, using his new stature to influence events in Congress and the real White House of President George W. Bush and yet limited in his ability - as the collapse of the auto bailout legislation in the Senate showed - to control them.
On Friday, after Senate Republicans' opposition had doomed a $14 billion industry loan the night before, Obama called on Bush and Congress to find an alternative. Twenty-four hours earlier, Obama had used the bully pulpit of a news conference to urge Congress to approve the loan or risk "a devastating ripple effect throughout our economy."
It was Obama who set the debate in motion just a week after his election, despite his reluctance to be involved directly. Amid signs that GM and Chrysler might not survive the year, he pressed Bush at a private meeting to support government help. In the next weeks, he directed his advisers to open lines of communication to Republicans. A White House aide said Obama speaks with Bush "more than any of us know."
In both the auto debate and parallel work on his promised two-year economic recovery plan, Obama has shown an inclination to set the broad terms for debate, and then to delegate details to advisers and Congress. For weeks, in public appearances that included "60 Minutes," he has consistently defined the goal for the auto bailout as twofold: A loan from taxpayers, but on the conditions that the companies, including Ford, remake themselves to be viable enterprises and their products to be energy efficient.
Yet Obama digs deeply into issues himself; he surprised one adviser in a conference call about the automakers by knowledgeably discussing "DIP financing," a complex special form of financing for distressed companies.
Along the way, with a skeleton team of senior advisers, Obama has shown no hesitation in stepping into disputes between the more experienced Democrats who run the House and Senate to forge the united front he will need in coming years to pass his ambitious agenda.
When it looked last month as if Congress might fail to act because Speaker Nancy Pelosi, Democrat of California, and Senator Harry Reid, Democrat of Nevada, the majority leader, disagreed over where the loan money should come from, Obama had Rahm Emanuel, the Illinois congressman who will be his White House chief of staff, call Reid, Democrats familiar with the incident said.
"Harry, don't make this a fight between you and Nancy," Emanuel said, according to one. "Make it about what the industry is going to do in return for this money."
Afterward Reid and Pelosi jointly told the company chiefs to return to Detroit and come back with detailed survival plans. They did, but as this past week's second lame-duck session approached, chances for a deal with the White House remained grim. Pelosi, unlike Reid, would not agree to Bush's demand to get the emergency funds from a new environmental program intended to subsidize the industry's long-term retooling to produce energy-saving vehicles.
Obama himself called her in California in early December after news of the worst monthly job losses in 34 years, say people familiar with events. That weekend the speaker acquiesced to Bush, and Obama vowed on television that as president he would replenish the retooling program she wanted to protect.
By all accounts, Obama has good relations with Pelosi and Reid. But as president he must necessarily be less deferential, making occasional run-ins inevitable, Democrats say.
The hints of Obama's leadership style are, of course, limited by the self-imposed constraints reflected in his mantra that the nation has one president at a time. After he takes office, it will be clearer where Obama fits on the presidential spectrum between the wonkish and pragmatic but less disciplined style of Bill Clinton, and the crisper but less curious and more ideological decision-making of Bush.
Most of Obama's contacts with Congress and the White House as well as auto executives, labor leaders and bankruptcy experts have been through his senior staff.
Besides Emanuel and John Podesta, his transition chief, Obama's auto team includes Phil Schiliro, a longtime House aide who has gotten a jump on his job as White House legislative liaison to Congress.
Former Treasury Secretary Lawrence Summers, who will head Obama's National Economic Council, has been Obama's touchstone on the economic aspects of the bailout. Also involved are Joshua Steiner, a former Treasury official who is a partner in a private-equity firm, and Brian Deese, a policy adviser on the Obama campaign.
"Do everything you can to help the process along but don't get in the way," Obama told them, according to one member of his team. "But if there is some way I can be constructive, I want you to do it. And don't talk about it."
After his daily workout, Obama arrives at his office in a no-frills suite in the Federal Building downtown. He snacks on peanuts while reviewing memorandums and joining the conference calls that are his main conduits for information until he and his Washington-based staff are together in the White House.
Obama asks lots of questions, advisers say, and typically makes quick decisions. He leaves the office each day with a notebook stuffed with policy papers and information on potential hires. Each night at home there is a final conference call, about issues coming up the following day.Housing secretary chosen
The widely respected housing commissioner for New York City, Shaun Donovan, has been selected by the president-elect to be the next secretary of housing, according to transition officials, Jackie Calmes reported from Washington.
Assuming that Donovan, 42, is confirmed by the Senate to head the Department of Housing and Urban Development, he would be returning to the agency where he worked in the Clinton administration as acting federal housing commissioner and, earlier, as deputy assistant secretary for multifamily housing, overseeing subsidies and properties for about two million families.
Donovan has experience in all facets of the affordable housing market, having worked in both the nonprofit and private sectors and in academia as a scholar of housing policy.
By Sam Dillon
Sunday, December 14, 2008
As President-elect Barack Obama prepares to announce his choice for U.S. secretary of education, there is a question not only about the person he will choose, but also about the approach to overhauling U.S. schools that his selection will reflect.
Despite an 18-month campaign for president and many debates, there is still uncertainty about what Obama believes is the best way to improve education.
Will he side with those who want to abolish teacher tenure and otherwise curb the power of teachers' unions? Or with those who want to rewrite the main U.S. law on elementary and secondary education, the No Child Left Behind Act, and who say the best strategy is to help teachers become more qualified?
The debate has sometimes been nasty.
"People are saying things now that they may regret saying in a couple of months," said Jack Jennings, a Democrat who is president and chief executive of the Center on Education Policy in Washington. "Unfortunately, they're all friends of mine, which makes it awkward."
Some of the harshest criticism has been aimed at the woman Obama appointed to lead his education policy working group, the most important education post of the transition: Linda Darling-Hammond, a professor of education at Stanford University.
She is liked by the teachers' unions, and partly for that reason has been portrayed as an enemy of change by detractors. These have included people who have urged Obama to appoint Joel Klein, the New York City schools chancellor, or Michelle Rhee, the schools chancellor in Washington, as secretary of education. Both of them have clashed with teachers' unions.
Editorials and opinion articles in The New York Times, The Washington Post and The Los Angeles Times have described the debate as pitting education advocates of change against those representing the educational establishment or the status quo. But who those advocates are depends on who is talking.
Bruce Fuller, an education professor at the University of California, Berkeley, used different terms in discussing the debate.
He said it pitted "professionalization advocates such as Darling-Hammond," who believe policies should emphasize raising educators' morale and helping teachers improve their instruction, against "efficiency advocates like Klein and Rhee." The efficiency advocates focus on raising test scores, cracking down on poor school management and purging bad teachers, he said.
"It's tough love, without any love," Fuller said.
Darling-Hammond has become a controversial figure partly because of her longtime criticism of Teach for America, the nonprofit group that recruits college graduates to teach for two years in hard-to-staff schools. She says the group loses too many recruits at the end of their two-year commitments, just when they are learning to teach.
Teach for America has no official preference for or opposition to any candidate, said Kevin Huffman, a spokesman for the group.
But an organization called Leadership for Educational Equity, which was founded to help former members of the Teach for America corps become involved in politics, has photographs of Darling-Hammond, Obama and Klein alongside an article on its Web site that is headlined, "Education Secretary Fight Could Affect Teach for America's Mission."
The article notes that Darling-Hammond "has long been a vocal critic of Teach for America," and it urges the group's alumni to make their views on the candidates known.
Obama has given no hint of his own leanings.
Arne Duncan, the chief executive of Chicago Public Schools, may have an edge. He is a longtime friend of the president-elect and has closed failing schools and improved achievement without alienating the teachers' union. The superintendent of Denver Public Schools, Michael Bennet, who has enacted a plan to reward effective teachers with higher pay, has also attracted the transition team's interest.
Klein and Rhee, as well as Colin Powell, the former secretary of state, and several current and former governors, have also been considered, a member of the transition team said. Powell has said publicly that he is not interested.
One outspoken former Teach for America official is Whitney Tilson, a New York mutual fund manager. In a recent Web blog entry, Tilson said of Darling-Hammond, "She's influential, clever and (while she does her best to hide it) an enemy of genuine reform."
Tilson is on the board of Democrats for Education Reform, a political action committee based in New York.
The group sent the Obama transition team a 43-page memorandum shortly after the election with policy advice and a "wish list" of candidates for secretary that included Duncan; Wendy Kopp, founder of Teach for America; and Jon Schnur, who started a nonprofit group, New Leaders for New Schools, that trains principals for urban schools, said Joe Williams, the executive director of Democrats for Education Reform.
Williams said his group also liked Klein and Rhee. "We'd be thrilled if either one were named secretary," he said.
The two national teachers' unions have also been active. The National Education Association has not formally endorsed anyone but has discussed candidates with the Obama transition team, indicating some candidates who would have the union's support, said John Wilson, the executive director.
The American Federation of Teachers presented the Obama team with written evaluations of a string of candidates without endorsing any of them, said Randi Weingarten, the union's president.
"We have no candidate in the race," Weingarten said.
But last week she publicly praised Duncan in an interview with The Associated Press. "Arne Duncan," she said, "actually reaches out and tries to do things in a collaborative way."
Sunday, December 14, 2008
PORTO, Portugal: More than 14,000 people dressed as Santa Clauses paraded in Portugal's city of Porto on Sunday to try to set a new world record for the largest gathering of Santas and raise money for charity.
Despite cold weather and drizzling rain, the crowd in red-and-white hats and jackets, including scores of women and children with fake white beards, strolled through the city streets singing songs and dancing in the annual parade that started in the afternoon and continued after dark.
"It's not just a gathering of people at the time of the year when people normally get together, but it is also a social event to bring the warmth of Christmas to those who don't always have it," Vitor Ferreira, one of the organisers of the event, told Reuters.
Every Santa, or Pai Natal (Father Christmas) as he is known in Portugal, who took part in the parade donated 1 euro to buy presents for the needy children in Porto, Portugal's second-largest city, Ferreira said.
He said 17,400 people had signed up to take part, although bad weather prevented some from parading. Still, over 14,200 showed up in the end, which organisers claimed to be record, according to RTP national television channel.
According to the Guinness World Records web site (http://www.guinnessworldrecords.com), the previous world record for the largest gathering of Santas was set last year in Derry City, Northern Ireland, where a total of 12,965 people took part dressed up as Santa or Santa's helpers. (Reporting by MiguelPereira, writing by Andrei Khalip, editing by Myra MacDonald)
The Associated Press
Sunday, December 14, 2008
CAIRO: A bus packed with passengers traveling along a narrow road in southern Egypt plunged into an irrigation canal, killing 57 people on Sunday, officials said.
Ahmed Diaa, the governor of Minya, said the bus, with at least 70 passengers on board, swerved to avoid an oncoming pickup truck near a village close to the city of Minya, 214 kilometers, or 133 miles, south of Cairo.
Rescuers on small boats searched the canal for passengers, and volunteers pulled bodies out of the water. A crane later lifted the bus out of the canal.
One survivor told the Egyptian private television station Dream that a boat came to get him and a friend after the bus plunged into the water, but many people were unable to get out of the bus.
The accident took place early Sunday at the end of a major Muslim holiday, when inter-city roads are crowded with returning vacationers.
Diaa initially said 36 people were killed, but rescue efforts continued hours after the accident and he later put the death toll at 57, according to state-run television.
Egypt has a history of serious bus and car crashes because of speeding, careless driving and poor road conditions. At least 8,000 people were killed in accidents in 2006, the most recent statistics available.
The incident Sunday is one of the worst road accidents in recent months, and a prosecution team was at the scene investigating. A string of fatal accidents and fires have fueled Egyptian anger at the government because of the belief that many of the incidents are due to official negligence or poor infrastructure.
650,000 remain without power in U.S. ice storm
By Sharon Otterman
Sunday, December 14, 2008
Warmer temperatures Sunday and Monday were expected to melt most of the ice from a severe storm last Friday that left 1.4 million customers without power in a wide swath of the Northeast. But the melting ice will present its own risks, as bent trees snap back into place, potentially taking out more power lines, utility officials said.
About 650,000 customers remained without power Sunday morning in upstate New York, Massachusetts, New Hampshire, Vermont and Maine. In New Hampshire, the hardest-hit state, about 234,000 customers were still blacked out despite the efforts of more than 340 electricity crews fanned out across the state, officials said.
Temperatures in southern New Hampshire and northern Massachusetts were forecast to climb into the lower 40s Fahrenheit (4 to 6 degrees Celsius) on Sunday afternoon and to the mid-50s by Monday. The reprieve was expected to be brief, with snow forecast in some areas by Wednesday.
The rising temperatures "should be able to melt just about all of the ice," aiding utility workers, said Neal Strauss, a spokesman for the National Weather Service in Taunton, Massachusetts. "But the falling ice is going to be a safety issue for some people, and could cause some problems on the power lines."
New Hampshire experienced the most widespread electricity outages in its history, said Martin Murray, a spokesman for the Public Service Company of New Hampshire, the state's largest power provider. At its height on Friday evening, 322,000 customers were in the dark, dwarfing the prior record of 93,000 outages after a 1996 snowstorm.
Though progress in restoring power was being made, some customers may not have power until Friday or Saturday, Murray said. And as trees weighed down with ice spring back up - or "bounce back," as the power company calls it - some additional damage to power lines was expected, he said.
"Some roads continue to be impassable," he said. "We haven't been able to get to all the areas to assess what needs to be done yet."
President George W. Bush declared a state of emergency in New Hampshire and 9 of Massachusetts's 14 counties late Saturday, directing the Federal Emergency Management Agency to provide relief assistance. Local governments and other organizations opened emergency shelters, which in some cases saw newcomers on Sunday as residents decided not to brave another night without electricity or heat.
The storm, which began Thursday evening, resulted from an unusual set of weather conditions. According to Strauss, a layer of cold air from Canada blew in, while above it, a rush of warm, damp air came in from the Gulf of Mexico and the Caribbean. The result was a heavy rainstorm that froze on the way down. The weight of the ice snapped trees and power lines and destroyed transformers and other infrastructure.
At least four deaths appear to be related to the storm, The Associated Press reported. A Danville, New Hampshire, man died of carbon monoxide poisoning from the generator he was using after his power went out Thursday night. Carbon monoxide from a gasoline-powered generator killed a couple in their 60s at Glenville, New York, the police said Saturday. And the body of a Marlborough, Massachusetts, public works supervisor was recovered from a reservoir Saturday, a day after he went missing while checking on tree limbs downed by the ice.
By Charles McGrath
Sunday, December 14, 2008
NEW YORK: Richard Yates's 1961 novel, "Revolutionary Road," is far from the kind of property that typically becomes a big Hollywood movie, especially one starring Kate Winslet and Leonardo DiCaprio in their first post-"Titanic" outing together. For one thing, the book is set back in the mid-20th century - an era that, until "Mad Men" came along to exhume it, was thought to have about as much entertainment potential as the Bronze Age. The story requires armies of boring fedora-wearing commuters to disembark from Grand Central every morning. The characters wear dopey clothes and drive boatlike cars, and everyone drinks and smokes too much - even pregnant women.
Nor does it help that "Revolutionary Road" is among the bleakest books ever written. It ends unhappily, with a gruesome death, and neither of the main characters is entirely likable to begin with. Partly autobiographical, the novel tells the story of Frank and April Wheeler, who in the mid-1950s move with their two children to the 'burbs (the movie was shot on location in Darien, Connecticut, a good deal more upscale than the Wheelers' town) and from the minute they get there hold themselves apart.
On no particular evidence the Wheelers consider themselves full of unrealized potential. Frank (drawing on Yates's experience as a sometime copywriter for Remington Rand) works for Knox Business Machines at what he calls "the dullest job you can possibly imagine," but thinks of himself as an intellectual, an "intense, nicotine-stained Jean-Paul Sartre sort of man."
April, like Yates's first wife, Sheila, has theatrical aspirations, and it's she who comes up with the solution to their depressing, unfulfilled lives: they'll chuck everything and move to Paris, where she'll get a well-paying secretarial job until Frank "finds" himself. For Frank, who has meanwhile begun a grubby affair with a young woman at the office, the plan is an agreeable pipe dream, but April is deadly earnest about it, and the marriage proceeds to unravel with the inexorableness of Greek tragedy. Watching them is like rubbernecking at a car wreck.
"I'm pretty surprised it ever got made," Blake Bailey, Yates's biographer, said recently about the movie version, scheduled to open Dec. 26 in the United States and worldwide throughout the winter. "It has long been an ambition in Hollywood to make a movie that's the last word on postwar suburban malaise, but like any highly nuanced work of literary art, 'Revolutionary Road' is awfully hard to translate onto the screen."
By all accounts, that the movie did get made is owing mostly to the drive and enthusiasm of Winslet, who was taken with the script from the moment she read it. "I loved the emotional nakedness, the brutal honesty about what can sometimes happen in a marriage," she said in an interview. She began lobbying DiCaprio, she recalled, and she also worked on Sam Mendes, the director. He was an easier sell in some ways, because he happens to be her husband.
What none of the principals knew then is that for all its gloominess, or maybe even because of it, "Revolutionary Road" is a novel cherished by a passionate and protective coven of admirers (including, incidentally, Matthew Weiner, the creator of "Mad Men") who pass it along, the novelist Richard Ford has said, like a secret literary handshake. They cherish its honesty, its uncompromising exactness, the austere beauty of its prose.
But despite its many champions, the book has slipped in and out of print, never quite catching on with a wider audience, and it would probably amuse and irritate the author in equal measure to know that it has been reissued in a movie tie-in edition.
Though he would have hated the term, Yates was a writer's writer, or even a writer's writer's writer. He was extravagantly admired by his peers and by many critics; but popular success, which he cared about more than he let on, maddeningly eluded him. He was dogged by bad luck - "Revolutionary Road," his first novel and also his best, was a finalist for the 1962 National Book Award but lost to "The Moviegoer" by Walker Percy - and bad timing. At a time when postmodernism and meta-fiction were starting to become fashionable, he clung to the realist tradition of his models Fitzgerald and Flaubert.
Yates could also be his own worst enemy, courtly and cavalier at times but at other times bitter and self-inflated, and after the breakup of two marriages he became almost a caricature of the alcoholic, self-destructive American writer. By the end of his life he was doing little else but smoke (even when attached to an oxygen tank), cough, drink and write. He died in 1992 at 66, though he seemed much older.
He knew his way around Hollywood sufficiently to be skeptical about the movie prospects of "Revolutionary Road." Right after the book came out, Sam Goldwyn Jr. expressed interest. But Yates wrote later: "Cooler heads in his organization decided that the moviegoing public 'is not ready for a story of such unrelieved tragedy."'
Much the same thing happened in 1965 when Yates took a meeting with Albert S. Ruddy, the producer of "The Godfather," who had just bought the rights to "Revolutionary Road." Is the miserably unhappy ending of the novel a problem? Ruddy asked, according to Bailey's biography, "A Tragedy Honesty."
"Why, hell, let's face it, of course it's a problem. Nine out of 10 guys in This Town would cop out on a problem like that."
What Ruddy proposed was not a cop-out, exactly, but rather a lot of tricky camerawork - a flashback here, a match-dissolve there, a dolly-back and a pan - so the audience couldn't be entirely certain what had happened.
Ruddy, caught up in the "Godfather" saga, eventually sold the rights to the actor Patrick O'Neal, who was passionate about the book but not really a writer and spent the rest of his life trying to finish a workable screenplay. Marion Rosenberg, now a producer but O'Neal's agent at the time, advised his widow, Cynthia, that the way to film "Revolutionary Road" was to steer clear of Hollywood entirely. Despite being approached many times and by some big names, she said, she didn't want to let the book out of her sight until she knew it was in the proper hands, and a few years ago she sold it to BBC Films.
"I thought that was the way to develop the script," she said. "Under the radar, with people who understood the written word."
Justin Haythe, the screenwriter hired by the BBC, is 35, an American who grew up in London, and "Revolutionary Road" is just his second script. He got the job, he said recently, because he was "hugely affordable," adding, "You don't want to front-load a project like this with a lot of unnecessary expense."
Another thing in his favor was that he already knew the novel, having read and admired it a few years earlier. "The book is very cinematic in some ways," Haythe said, pointing to a few scenes, like a roadside quarrel between Frank and April, that practically contain their own stage directions.
"But it never occurred to me that it could be a viable business proposition," Haythe went on. "You've got the ending, the whole outlook of the book." Everything changed, he said, when Winslet and Mendes took an interest, and once DiCaprio came on board the movie almost immediately went into production.
Scott Rudin, the producer of "Revolutionary Road," has a track record of making sophisticated literary adaptations, like "The Hours" and "No Country for Old Men." He knew Yates and tried, years ago, to buy the rights to his novel. "Kate sent me the script and asked my advice," Rudin said. "I told her, 'The perfect director for this lives right in your house.' I think Sam wanted some validation from someone who wasn't his wife."
He added: "No one was worried about the subject matter. In a way that was the catalyst. In my experience it often works that way. The very things that to an outsider would seem daunting. Those are always the reason why people take something on. The only thing we were worried about was whether people would still buy the idea of Paris as a panacea for everything."
Haythe's original screenplay, which Rosenberg called one of the best first drafts she had ever seen, was a faithful and at times literal adaptation, using great chunks of Yates's own language.
"Sam's a very visual guy, and he kept saying, 'What does it look like?"' Haythe recalled. "I told him I imagined it as a kind of shot going up into the air, and then it starts to fall back to earth at the same speed. To think of it like that was a great way to be held to account as a writer. Sam got me to focus on this as a tragic love story, and the big challenge was to find ways to externalize all the things they don't say to each other."
Mendes said that in editing the film he cut some 18 scenes, or 20 minutes. "The result is less literal but more in the spirit of the book," he explained.
When he picked up the novel after first reading the script, Mendes recalled, it "just slayed me."
"The book is very particular in its insights into what people are thinking when they're saying the opposite," he said. "The subtext is made explicit, and you get this sense of an overpowering ache, of collective longing."
He added that a number of early viewers of the movie, including Yates's daughters, had approached him to say: You didn't mess it up. (Or words to that effect: the book's partisans tend to be more graphic.) "That's meant to be high praise," Mendes explained, "but I think it's really a sigh of relief. There are a lot of great books, but somehow this one is different. If you make a film of 'War and Peace,' people don't come up to you say, 'You better not mess it up.' I'm glad I didn't know about this at the beginning, or I think I might have just frozen."
By Michael Schwirtz
Sunday, December 14, 2008
MOSCOW: The police in Moscow are investigating the killing of a Central Asian migrant worker, who was stabbed several times and decapitated in an apparent attack by ultranationalists.
The severed head of the victim, a citizen of Tajikistan, was discovered Wednesday in a trash can, wrapped in a plastic bag, the press service for the investigative wing of the Prosecutor General's Office said.
Investigators said the victim and another Tajik migrant worker were attacked Dec. 6 after they left work at a food warehouse south of Moscow. The newspaper Kommersant quoted unnamed police sources saying the victim was Salekh Azizov, 20, from Vidnoe, also south of Moscow. The second Tajik worker escaped but was hospitalized with injuries, the investigators said.
In an e-mail statement sent to two human rights organizations that monitor hate crimes in Russia, an obscure group calling itself the Militant Organization of Russian Nationalists claimed responsibility for the killing. The statement included a photograph of the victim's severed head.
Galina Kozhevnikova, a deputy director of the Sova Center, one of the organizations that received the statement, said it asserted that the killing was a demonstration of the group's "resolve to fight against the non-Russian occupation, and a warning to officials that the same will happen to them if they do not stop the flow of immigration."
Millions of migrant workers, mostly from the former Soviet republics of Central Asia, live in Russia, which is dependent on their labor because of a rapidly declining population and a dwindling domestic work force. But violent attacks against ethnic minorities in Russia are common and have become more severe as more non-Slavic workers leave economically blighted regions for Russian cities in search of work, analysts said.
This year, 85 people have been killed and 367 have been wounded in attacks by violent nationalists, Kozhevnikova said. She said the numbers were probably far higher because many attacks go unrecorded or are reported months later.
A student who was attacked Dec. 5 - Stanley Robinson, an black American from Providence, Rhode Island, who was on a study-abroad program to Volgograd in southern Russia - remained in critical condition after being stabbed three times on his way back from a gym, a relative said. The police are still investigating whether the attack was a hate crime.
Human rights groups have criticized the police and prosecutors for appearing to sympathize with violent nationalists and for not adequately addressing racist attacks.
State-run television channels have largely ignored the killing of the Tajik worker, though newspapers, which are typically more independent of the government, have covered it heavily.
A police crackdown this year on nationalist and neo-fascist groups in Moscow reduced the number of attacks in the capital this summer, Kozhevnikova said.
But violence in Moscow has begun to rise again, particularly after the rape and killing of a 15-year-old ethnic Russian girl two months ago. A city maintenance worker from Uzbekistan was charged with the crime, setting off protests and revenge attacks by ultranationalist groups, who often refer to non-Slavs on Russian soil as "occupiers."
In the killing of the Tajik worker, the police found his head next to the Mozhaisky District administration building in western Moscow, not far from where the girl was killed.The episode is reminiscent of another beheading videotaped and disseminated on the Internet more than a year ago. In the video, a masked person decapitates a bound, dark-skinned man with what appears to be a large knife.Moments later, another man, also bound, is shot in the head. The video ends with two people in masks giving Nazi salutes in front of a red banner emblazoned with a swastika. The police have not identified the killers.
By Michael Schwirtz
Sunday, December 14, 2008
MOSCOW: The Russian police detained dozens of anti-government protesters who attempted to hold an unsanctioned rally in Moscow on Sunday.
A huge contingent of police and riot troops in body armor prevented the planned protest in central Moscow from materializing in the latest sign that public expression of dissent against the authorities will not be tolerated under President Dmitri Medvedev any more than it was under his predecessor, Vladimir Putin, who is now prime minister.
As many as 100 people were detained, including Eduard Limonov, the head of the banned National Bolshevik Party, said a spokeswoman for Other Russia, a coalition of opposition groups led by Limonov and the former chess champion Garry Kasparov, among others. Meanwhile, the police said that about 10 people were detained during a similar protest in St. Petersburg, the Interfax news agency reported.
The planned demonstration was meant as a protest against the Kremlin's handling of the financial crisis and against plans to change the Constitution to extend presidential and parliamentary term limits, a move government critics have said could be used to extend the authority of Putin, and possibly lead to his early return to the presidency. Putin has said that Medvedev will remain president until his term ends in 2012, but has not ruled out running for a third term after that.
As with similar protests organized by Other Russia, the authorities denied permission for demonstrators to hold the rally Sunday, called the Dissenters' March, but organizers vowed to go ahead with the event anyway.
The police appeared to have foreknowledge of who would attend the protest and detained people as they arrived at the designated site, taking them to waiting buses.
The rally was scheduled to correspond with the establishment this weekend of a new opposition group, Solidarity, an organization modeled on the Polish anti-Communist movement of the 1980s of the same name.
On the opening day of Solidarity's founding congress Friday, unidentified individuals dumped a busload of dead and wounded sheep outside the meeting hall in a Moscow suburb. The sheep were wearing baseball caps and tee shirts with Solidarity written on them, according to Kasparov's Web site.
By James C. Mckinley Jr
Sunday, December 14, 2008
HOUSTON: A Houston man who had served five years in prison was ordered released Friday after a genetic test proved he was not the man who sexually assaulted an 8-year-old boy in 2002.
District Attorney Kenneth Magidson said the authorities bungled the arrest and trial of the man, Ricardo Rachell, because neither the police nor the prosecutor ever asked for tests of biological evidence found on the victim that would have positively identified his attacker.
Instead, Rachell, 51, was convicted solely on the testimony of the victim and another young boy, who said he saw him and the victim together before the attack.
Rachell vehemently maintained his innocence from the day he was arrested, and in late November a test of the biological evidence never even mentioned, much less introduced, during the trial proved that the boys had named the wrong man.
On Friday morning, Judge Susan Brown of the Harris County District Court, who presided at the trial, ordered Rachell released on his own recognizance pending a hearing on whether his conviction should be thrown out.
It remained unclear whether the original defense lawyer, Ron Hayes, knew about the evidence. Scott Durfee, the general counsel for the Harris County district attorney, said a document turned over to the defense, known as an "offense report," mentioned the existence of bodily fluids from the attacker found on the boy and his clothes.
Hayes told The Houston Chronicle on Friday, however, that he had never heard about the evidence. "It was not disclosed in any offense report that I saw," he said. "If I had been aware, I would have pushed for DNA testing, without question."
The case is one of 540 that have been reviewed by the Harris County district attorney since 2001, when the Texas Legislature enacted a law allowing prisoners to seek to have their convictions re-examined in light of new DNA evidence.
At the time of Rachell's arrest, the Houston HoustonDepartment's crime laboratory was embroiled in a scandal over slipshod work and dubious results. The laboratory had a long history of making mistakes, and it was not uncommon for DNA evidence to be collected but never analyzed, an independent audit found.
So pervasive were the problems that the laboratory was shut down two months after Rachell's arrest.
The failures in the Rachell case did not stop at the laboratory.
Detectives gathered biological evidence from the victim and took a DNA sample from Rachell but did not ask for it to be tested. The prosecutor never raised the evidence at trial. Neither did the defense, nor the lawyer who handled Rachell's appeal.
The evidence did not surface until Deborah Summers, a court-appointed lawyer, petitioned Harris County to produce it under the 2001 state law, if it existed. Summers recalled that she had had little hope of success.
"Then I got a call out of the blue from the D.A.'s office in February 2008 saying we have this evidence and we have to send it to the lab," she said.
Rachell's legal nightmare began on Oct. 20, 2002, when a man enticed the 8-year-old victim to an abandoned house with an offer of money for clearing away trash. The man then raped the boy.
The next day, the victim's family told the police that the boy had seen Rachell in the neighborhood and identified him as his attacker. Rachell lived nearby with his mother and was known to ride a bicycle in the neighborhood.
Prosecutors said Magidson's office would ask for a full pardon, which would clear Rachell's name and entitle him to $300,000 in state reparations.
By Steve Lohr
Sunday, December 14, 2008
Harvard kicked off a small but ambitious experiment last week that it hopes will become a new "third stage" of university education. For the student-fellows in the program, most in their 50s and early 60s, the goal is a second-act career in a new stage of life.
The 14 fellows have résumés brimming with achievement - including a former astronaut, a former senior official at the U.S. Agency for International Development, a physician-entrepreneur from Texas, a former public utility official from California, a former health minister from Venezuela and a former computer executive from Switzerland.
They gathered at Harvard on Thursday to begin the yearlong program intended to help them learn how to be successful social entrepreneurs or leaders of nonprofit organizations focused on social problems like poverty, health, education and the environment. Their interests include sickle cell anemia, women's education in Africa, health care quality and water conservation.
The opportunity, the fellows say, is to pick up new knowledge, skills and professional relationships in a new realm. To Charles Bolden Jr., one of the fellows, it has the potential to be as life-changing as his selection to join America's space program nearly three decades ago.
"The Harvard program feels sort of like that," said Bolden, 62, a retired major general in the U.S. Marine Corps and a veteran of four space shuttle missions.
The program, called the Harvard Advanced Leadership Initiative, is a collaboration among five of the university's professional schools - business, law, government, education and public health. It is seen as a next stage for universities, beyond undergraduate and then graduate and professional schools.
If successful, Harvard professors say, it can serve as a model for schools at other universities, creating case studies and course material.
"This is about deploying a leadership force to have an impact on major social problems," said Rosabeth Moss Kanter, a professor at the Harvard Business School who heads the program. "We want to make the case to the world that experience matters."
Nonprofit organizations face a collective "leadership deficit" over the next decade of more than 600,000 senior managers, the Bridgespan Group, a nonprofit organization that advises foundations and nonprofit groups, has estimated.
The Harvard program is aimed at the upper tier of that leadership gap. "This initiative is path-breaking and has enormous potential if it is done properly," said Thomas Tierney, the chairman of Bridgespan.
The Harvard experiment is part of a larger effort to help find productive "next" careers for a coming flood of retiring American baby boomers - more than 75 million people born from 1946 to 1964.
Indeed, more than five million Americans who are 44 to 70 are already engaged in a stage of work after their first careers that has a social impact, mainly in education, health care, government and other nonprofit organizations, according to a survey this year by Peter D. Hart Research Associates.
Such later-in-life, second acts have been called "encore careers," "postcareers" and "engaged retirement." No matter the name, the concept seems to have considerable appeal, encouraged by celebrity role models like Bill Gates and Bill Clinton. Half of Americans age 50 to 70 want to find work that has a social impact after their primary career ends, according to a poll by Princeton Survey Research Associates.
"There is a pretty significant pool of interest, and the question is whether they will be able to act on that interest in large numbers," said Marc Freedman, chief executive of Civic Ventures, a nonprofit organization whose programs and research focus on social careers for baby boomers.
Civic Ventures and other groups have sponsored programs at community colleges to develop initiatives that match people's experience and skills to later-in-life careers in education, health care and social services. The Harvard program, along with the community college efforts, represents "the fitful creation of institutions and pathways for this new stage of engagement and purpose in the second half of life," Freedman said.
The fellows in the leadership program come to Harvard with varying degrees of certainty about their next step. But all say they hope to use the course work, tutorials and field trips to become more effective social entrepreneurs. Next November, each fellow is expected to deliver not a dissertation, but a business plan of action.
Hans Ulrich Märki, 62, a Swiss citizen, retired in April as the chairman of IBM operations in Europe, the Middle East and Africa. He has traveled widely across those regions, met with heads of state and worked on applying technology to fields like education, health care and energy. As yet, he said, he has no particular project in mind, but is eager to explore the possibilities at Harvard, though he confesses to some anxiety. "I haven't sat on a school bench in 40 years."
Dr. Charles Denham, 52, is already a successful social entrepreneur. He has a thriving consulting firm that works with companies on health care information technology and finances his nonprofit Texas Medical Institute of Technology, a research and education organization dedicated to improving health care quality in hospitals. Denham wants to pass on what he has learned but also consult Harvard's experts to become more productive.
Within Harvard, there is a strong sense that developing this third stage of education must be part of the evolving mission of leading universities. "It may be a steep hill to climb to success, but this has to be part of the 21st-century educational plan," said Charles Ogletree, a professor at the Harvard Law School.
There is also a personal incentive for many of the faculty as well. "All of us are motivated to some degree by that fact that we're at or near this stage in our own lives," said David Gergen, 66, a professor at the Kennedy School of Government. "We want to know how to go through this and how to help others to go through this to have more of an impact."