A Place in the Auvergne, Wednesday, 3rd December 2008

U.S. says verifying North Korea nuclear claims is vital

Reuters
Wednesday, December 3, 2008
By Jon Herskovitz and Melanie Lee
A top U.S. negotiator, arriving in Singapore on Thursday for talks with North Korea on the reclusive state's nuclear programme, said it was important to nail down ways of verifying Pyongyang's claims.
"What we need to do is to make sure that the verification protocol is one that clarifies issues so that there won't be any misunderstandings, " the diplomat, Christopher Hill, told reporters after arriving for talks with his North Korean counterpart, Kim Kye-gwan.
"We need some specificity on this protocol, we had a lot of discussions about it and I think we do have an understanding on how to go forward," he said.
The two days of talks are expected to set the tone for a broader meeting in Beijing next week of six regional powers that also include South Korea, China, Japan and Russia.
Analysts say North Korea, sensing U.S. President George W. Bush's team may want a diplomatic success before leaving office in January, may try to wring concessions in Beijing.
SAMPLING ISSUES
The most recent stumbling block in a disarmament-for-aid deal the North reached with the five other powers is Pyongyang's objection to allowing international inspectors to take nuclear samples out of the country for testing.
Hill has been criticised by conservatives in Washington for being too flexible with North Korea and not obtaining detailed information from Pyongyang about its suspected programme to enrich uranium for weapons, or for proliferating technology to countries such as Syria.
President-elect Barack Obama has mostly supported Bush's North Korea diplomacy. The one thing Obama appears willing to consider, and which analysts say North Korean leader Kim Jong-il dearly prizes, is the first direct talks with a U.S. president.
"Further discussion on verification would only be possible after Obama takes office and sets it as a priority. Until then, the U.S. will likely remain in limbo on North Korean issues," said Kim Seung-hwan, with the Centre for Strategic and International Studies in Seoul.
Impoverished North Korea has spent the best part of two decades goading U.S. presidents and regional powers into handing over billions of dollars to curtail, but never actually end, its nuclear weapons programme, which is considered one of Asia's biggest security threats.
The North has largely cut ties with South Korea, once a major aid donor, in anger at the tough policies of its conservative president who took office in February. In the meantime, it has won concessions in the nuclear talks that benefit its economy.
(Additional reporting by Isabel Reynolds in Tokyo and Kim Junghyun in Seoul)
(Editing by Richard Balmforth)

http://www.iht.com/articles/reuters/2008/12/03/asia/OUKWD-UK-KOREA-NORTH.php

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EU bans imports of Chinese soy-based foods for children
Reuters
Wednesday, December 3, 2008
BRUSSELS: European Union regulators have banned imports of Chinese soy-based food products for infants and young children after an industrial chemical was found in Chinese soybean meal, the European Commission said Wednesday.
The chemical, melamine, is used in pesticides and plastics. It was recently the focus of a scandal over milk products that sickened nearly 300,000 children in China.
Rich in nitrogen, melamine is fairly inexpensive and can be added to substandard or watered-down milk to fool quality checks, which often use nitrogen to measure protein levels in milk.
"Competent authorities in the member states will have to test all other feed and food containing soya and soya products originating from China before allowing imports," said the European Commission, the executive arm of the European Union.
Only feed and food containing less than 2.5 milligrams of melamine per kilogram, or 2.2 pounds, will be allowed into EU markets. The ban is expected to come into force by the end of this week.
All Chinese shipments of baking powder, or ammonium bicarbonate, will also be tested at EU points of entry after high levels of melamine were found, the commission added.
Last year, the EU imported around 68,000 tons of various soy products or products containing soy for a total value of some €34 million, or $43 million at current exchange rates. The imports include soybeans, soybean flour and meal, soya sauce and protein concentrates as well as textured protein substances.
The EU has already banned imports of milk and milk products from China, as well as all products originating from China for infants and young children that contain any proportion of milk.
Although the EU does not import milk or milk products from China, the commission is concerned that composite food products that enter EU markets might contain, or be made from, such items, like cookies and sweets, especially chocolate.
EU countries are also obliged to test processed food from China that contains powdered milk.

http://www.iht.com/articles/2008/12/03/business/food.php

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Saudi Arabia finds chemical in milk from China
The Associated Press
Wednesday, December 3, 2008
RIYADH, Saudi Arabia: The Saudi government has found excessive amounts of the industrial chemical melamine in powdered milk imported from China and lower concentrations in chocolate wafer cream made in Malaysia.
The kingdom's Food and Drug Administration said Tuesday it found melamine in five samples of milk and dairy products. The milk was produced by Nestle in China and the wafers by Apollo Industries in Malaysia.
China has been struggling to get melamine out of its food supply after the chemical was found in infant formula and other dairy products. Six babies died and nearly 300,000 were sickened by melamine-tainted formula.
Elsewhere in the Middle East, authorities in the United Arab Emirates have been monitoring imports closely and have not found any melamine-contaminated Chinese food products in that country.
The UAE's General Secretariat of Municipalities banned Chinese dairy and related products in October and ordered them to be withdrawn until tests ensured they are free from melamine.
In November, the UAE's government announced new requirements for imports of dairy products to address concerns about the possible presence of melamine.
The decree, which went into effect Nov. 10, requires food products with more than 15 percent of dairy content to be accompanied by a certificate stating that the presence of melamine in the product does not exceed 2.5 parts per million unless the exporting country has banned imports of Chinese dairy products.
In Jordan, Mohammed al-Rawashdeh, the director-general of the country's food and medicine department, has asked the customs department not to clear any milk and dairy product shipments from any country before ensuring they are melamine-free, the Petra news agency reported on Tuesday.
http://www.iht.com/articles/ap/2008/12/03/news/ML-Saudi-Tainted-Milk.php

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Nigeria teething syrup death toll hits 34
Reuters
Wednesday, December 3, 2008
By Camillus Eboh
Nigeria is flying in doses of antidote for hospitals after the number of infants killed by teething syrup tainted with a poisonous chemical rose to 34, health officials said Wednesday.
Five more children have died on top of 28 reported to have lost their lives last month in three locations after being given "My Pikin" teething syrup contaminated with diethylene glycol, blamed for causing kidney failure.
A 14-month-old infant died after taking the teething medicine on November 2, but the death was initially unreported.
"The children still died in spite of dialysis treatment because the kidneys were already damaged," the National Agency for Food, Drug Administration and Control (NAFDAC) said.
The agency said it hoped to take delivery of some 100 doses of antidote from London Thursday.
The agency said it had so far retrieved 425 bottles of "My Pikin" syrup from the market and arrested a number of people involved in the distribution of the contaminating chemical.
More than 40 children aged between four months and three years have been hospitalised since the first case was discovered on November 3 with symptoms including diarrhoea, vomiting, fever and convulsions as well as an inability to pass urine for days.
Health officials believe the number of cases could be higher as many parents in Africa's most populous country do not have access to basic health care for their children.
NAFDAC started testing more children's drugs last week for fear that different brands of cough and teething medicine may also have been contaminated with the toxic chemical.
It has shut down Lagos-based Barewa Pharmaceuticals, the manufacturer of "My Pikin," as well as a company called Tranxell Ltd, an un-registered firm that supplied chemicals to Barewa and other local drugs and textile manufacturers.
No officials from either company have been available to comment on the case.
Tainted, fake and counterfeit drugs have long been a problem in Africa's most populous nation, although NAFDAC has been spearheading a crackdown.
In 1990, 109 children in Ibadan and in the central city of Jos died after taking paracetamol syrup which contained ethylene glycol solvent, a compound related to diethylene glycol which is also normally used in engine coolant.
(Writing Tume Ahemba; Editing by Nick Tattersall)
http://www.iht.com/articles/reuters/2008/12/03/africa/OUKWD-UK-NIGERIA-DRUGS.php







Panel seeks changes in U.S. environmental reviews
By Cornelia Dean
Wednesday, December 3, 2008
The Environmental Protection Agency must revise its approach to assessing environmental health hazards and other risks, because current practices hinder useful and timely regulation, an expert panel of The National Research Council is reporting.
The council, the research arm of the National Academy of Sciences, said the agency should scrap some of the assumptions on which its decisions have been based, reduce its focus on individual chemicals and other hazards to consider how they act in combination. And it should accept that uncertainty is always going to be an issue and aim to provide practical information to policy-makers as quickly as possible.
The report, which the panel produced at the behest of the EPA, is being made public Wednesday and is online at www.nas.edu.
Risk assessment — determining whether something is a hazard and, if so, how great and to whom — is a crucial step in devising appropriate environmental regulations and other decisions, the panel said, and the field is advancing as testing systems and other technology advance.
But assessing environmental risks is highly complex and full of uncertainty, it continued, and at the EPA "the regulatory risk assessment process is bogged down," with some assessments taking a decade or more. For example, the report cited an assessment of trichloroethylene, a commonly used solvent, that has been under way since the 1980s and is not expected before 2010.
The environmental agency's conclusions about risk are usually crucial in establishing regulatory goals. As a result, they are often subject to intense political or economic pressure. When the Bush administration proposed changes it said would streamline risk-assessment procedures, critics called the proposal an attempt to weaken environmental regulation. In a 2007 report, the academy dismissed the proposal as "fundamentally flawed" and the administration withdrew it.
Thomas Burke, an epidemiologist at the Bloomberg School of Public Health at Johns Hopkins University, said the new report focused on the use of "defaults," assumptions that are made about one factor or another in the face of uncertainty.
"Many of them are founded on good science, but there are some hidden assumptions," he said. "Right now when we don't have information on a pollutant we treat it as if there's no risk. That's a so-called hidden default."
He added, "We really need to address these gaps."
Another issue the report cited was the effect of cumulative exposures to a variety of environmental hazards. Usually these hazards are studied one by one. But Dr. Burke said, "You have to consider not just the one compound but you have to ask broadly, because people are exposed to many, many thousands of substances." Even drinking water is "a rich mixture," he added.
A spokesman for the American Chemical Society said it would have no comment on the report until members had had time to read it.
Joel Tickner, a professor of environmental health at the University of Massachusetts Lowell who studies chemicals in the environment, said that while he had not seen the report, its focus on speeding environmental review and consideration of cumulative effects was overdue.
"We put a lot of effort into finding more complex ways to characterize the problems while we don't put nearly as much resources into studying solutions," he said. He too cited trichloroethylene. "Given that we know trichloroethylene is a neurotoxin and a carcinogen and that there are very good alternatives it makes no sense to put so much resources into studying it."
He said that by focusing on safer alternatives for processes like degreasing, industries in Massachusetts had reduced their use of the compound by 90 percent.
"But as long as we are uncertain we assume there is no problem," he said. "That provides almost an incentive to having scientific uncertainty."
http://www.iht.com/articles/2008/12/03/healthscience/04epa.php






White House shift on coal-mining rules angers environmentalists
By Robert Pear and Felicity Barringer
Wednesday, December 3, 2008
WASHINGTON: The White House has approved a final rule that will make it easier for coal companies to dump rock and dirt from mountaintop mining operations into nearby streams and valleys.
The rule is one of the most contentious of all the regulations emerging from the White House in President George W. Bush's last weeks in office.
James Connaughton, chairman of the White House Council on Environmental Quality, confirmed in an interview Tuesday that the rule had been approved by the White House Office of Management and Budget. That clears the way for publication in the Federal Register, the last stage in the rule-making process.
Stephen Johnson, administrator of the Environmental Protection Agency, concurred in the rule, first proposed nearly five years ago by the Interior Department, which regulates coal mining.
In a letter to Interior Secretary Dirk Kempthorne, dated Tuesday, Johnson said the rule had been revised to protect fish, wildlife and streams. Mining activities must comply with water quality standards established by the federal government and the states, Johnson said.
But a coalition of environmental groups said the rule would accelerate "the destruction of mountains, forests and streams throughout Appalachia."
Edward Hopkins, a policy analyst at the Sierra Club, said: "The EPA's own scientists have concluded that dumping mining waste into streams devastates downstream water quality."
Bush has boasted of his efforts to cooperate with President-elect Barack Obama to ensure a smooth transition, but the administration is rushing to complete work on regulations to which Obama and his advisers object. The rules deal with air pollution, auto safety, abortion and workers' exposure to toxic chemicals, among other issues.
The National Mining Association, a trade group, welcomed the rule, saying it could end years of uncertainty that had put jobs and production in jeopardy.
"This is unmistakably a fire sale of epic size for coal and the entire fossil fuel industry, with flagrant disregard for human health, the environment or the rule of law," said Vickie Patton, deputy general counsel of the Environmental Defense Fund.
The Environmental Protection Agency is trying to finish work on a rule that would make it easier for utilities to put coal-fired generating stations near national parks. It is working on another rule that would allow utility companies to modify coal-fired power plants and increase their emissions without installing new pollution-control equipment.
Joan Mulhern, a lawyer at Earthjustice, an environmental group, denounced the mining regulation.
"With less than two months left in power," Mulhern said, "the Bush administration is determined to cement its legacy as having the worst environmental record in history."
At issue, she said, is a type of mining in which "coal companies blast the tops off mountains to reach the seams of coal and then push the rubble into the adjacent valleys, burying miles of streams."
Administration officials rejected the criticism.
"This rule strengthens protections for streams," said Peter Mali, a spokesman for the Interior Department office that wrote the regulation. "Federal law allows coal mine waste to be placed in streams, and the rule tightens restrictions as to when, where and how those discharges can occur."
Governor Steven Beshear of Kentucky and Governor Phil Bredesen of Tennessee, both Democrats, had urged the Bush administration not to approve the rule. Beshear said he feared that it would lead to an increase in pollution of "Kentucky's beautiful natural resources."


http://www.iht.com/articles/2008/12/03/america/coal.php





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Hawaii endorses electric vehicle grid
By John Markoff
Wednesday, December 3, 2008
SAN FRANCISCO: The state of Hawaii and Hawaiian Electric have endorsed an effort to build an alternative transportation system based on electric vehicles with exchangeable batteries and an "intelligent" battery recharging network.
The plan, the brainchild of a former Silicon Valley software executive, Shai Agassi, and made official Tuesday, is designed to overcome one of the major hurdles to electric cars: the lengthy time it takes to recharge a battery.
By using existing electric car technologies, coupled with tens of thousands of recharging stations connected by the Internet, Agassi thinks his company, called Better Place, will make all-electric vehicles feasible.
The announcement Tuesday follows endorsements from Israel, Denmark, Australia, Renault-Nissan and an alliance of Northern California localities supporting the idea. The company plans to test the program in 2009 in anticipation of a widespread rollout in 2012.
Agassi has raised $200 million in private financing for his plan. In October, he obtained a commitment from the Macquarie Capital Group to raise an additional $1 billion for an Australian project.
On Tuesday, he said he was optimistic about his project despite the dismal investment and credit markets because his network could provide investors with an annuity. Users of his recharging network would subscribe to the service, paying for access and for the miles they drive.
Given the downturn in the mortgage market, he said that investors were looking for new classes of assets that will provide dependable revenue.
"I believe the new asset class is batteries," he said. "When you have a driver in a car using a battery, nobody is going to cut their subscription and stop driving."
Agassi has said that even if oil prices continued to decline, his electric recharging network - which ideally would use renewable sources like solar and wind power - could provide competitively priced energy for a new class of vehicles.
He noted that his network idea would be appropriate first for "island" economies that typically have significantly higher energy costs, and then will become more cost-competitive as it grows in scale.
"We always knew Hawaii would be the perfect model," he said by telephone. "The typical driving plan is low and leisurely, and people are smiling."
Hawaii is a relatively small market with high energy costs. The state has about 1.2 million cars and replaces 70,000 to 120,000 vehicles annually.
Drivers on the islands rarely make trips of more than 100 miles, meaning there would be less need for his proposed battery recharging stations.
Part of Agassi's model depends on quick-change service stations to swap batteries for drivers who need to use their cars before they have completely recharged their batteries.
Peter Rosegg, a spokesman for Hawaiian Electric, said that Better Place, based in Palo Alto, California, would become a major customer for electricity and was also planning to invest in renewable energy sources that would be connected to the electric grid.
"It's going to be a nonexclusive agreement, but so far they're the only one that has shown up," Rosegg said.
In late November, the mayors of San Francisco and nearby major cities endorsed Better Place to help create an electric recharging network by 2012. The company estimates that it will cost $1 billion to build a charging network of up to half a million stations in the San Francisco area.
Despite challenges, the Better Place model is promising, said Daniel Kammen, a professor in the Energy and Resources Group at the University of California, Berkeley. It could appeal to owners of fleets of vehicles and to customers who are willing to work through the difficulties that inevitably accompany a new transportation system.
"It has a lot of promising features," he said.


http://www.iht.com/articles/2008/12/03/technology/hawaii.php

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Carmakers' bailout plea gaining support
Reuters
Wednesday, December 3, 2008
By Kevin Krolicki and John Crawley
A top lawmaker predicted Washington would approve a bailout for U.S. automakers after they submitted survival plans, and General Motors and Chrysler said they needed an immediate infusion of cash to avoid failures.
U.S. House Speaker Nancy Pelosi, a California Democrat, said Washington had little choice about helping the automakers, who say they support one in 10 American jobs.
"I believe that an intervention will happen either legislatively or from the administration," Pelosi said. "I think it's pretty clear bankruptcy is not an option."
The Detroit automakers on Tuesday urged Congress to authorise $34 billion (22 billion pounds) in loans and credit lines, far more than the $25 billion they failed to secure in November when lawmakers demanded the companies offer plans showing they could be made "viable."
The development came on the same day that GM, Chrysler and Ford posted a drop in combined U.S. sales of nearly 40 percent for November and warned that the world's largest vehicle market showed signs of tumbling further in 2009.
GM asked for $18 billion in loans and credit lines from the federal government, saying it urgently needs $4 billion of the money by the end of December to pay its bills.
Ford told Congress it needed a $9 billion taxpayer-funded standby line of credit and said a further restructuring would push it back to profitability by 2011.
Ford and GM shares both gained almost 6 percent.
Chrysler, the smallest and most vulnerable of the Detroit automakers, requested $7 billion from the government by the end of this month, saying that without the aid it could run short of cash by early 2009.
The company, privately owned by Cerberus Capital Management, also said it was seeking partnerships, a strategic alliance or merger.
Democratic leaders have demanded a deep range of commitments from the automakers to cut costs and map a clear path to regain competitive footing.
Senate Majority Leader Harry Reid, a Nevada Democrat, said he would introduce a placeholder bill on Monday that could be used to help automakers. A Congressional bailout would extend the scope of the government's crisis intervention beyond the financial sector by making it a major stakeholder in a key industrial sector.
"We're looking to make sure we do everything we can to take care of the auto industry, if in fact it's viable," Reid said.
But Sen. Arlen Specter, a Republican from Pennsylvania, warned that the car companies would still face a skeptical Congress. "The mood of Congress candidly isn't supportive," Specter said after a meeting with auto executives, dealers and labour leaders.
FEW FRIENDS IN HIGH PLACES
The Detroit CEOs met a hostile reception from lawmakers in hearings in November, capped by a controversy over their decision to fly private jets to Washington to plead for aid.
The three auto chief executives made alternate travel plans this time to get to hearings set for Thursday and Friday.
Ford Chief Executive Alan Mulally is driving a Ford Escape hybrid, GM CEO Rick Wagoner is taking a Chevrolet Malibu hybrid and Chrysler CEO Bob Nardelli also plans to drive to Washington.
While the Democratic-led Congress faces pressure to help Detroit and prevent a further shock to the recession-bound U.S. economy, the industry has managed to alienate lawmakers from both parties over the years.
Many Democrats blame the automakers for resisting tougher fuel-economy and emission regulations, while Republicans are wary of extending another bailout after taking a political backlash for backing a $700 billion rescue for banks.
"If these companies are asking for taxpayer dollars, they must convince Congress that they are going to shape up and change their ways," said Christopher Dodd, a Democrat who chairs the Senate Banking Committee. "They must demonstrate a commitment to profitability and viability that includes raising fuel efficiency standards and reining in excessive compensation and perks like private jets."
GM, Ford and Chrysler failed two weeks ago to obtain a $25 billion bailout from lawmakers unconvinced that taxpayer money would be well-spent.
Democratic leaders had asked them to return this week with retooled plans focussing on viability. Although the chances for aid appear to have improved, statements from GM and Chrysler underscored the cost of another rejection.
"There is no Plan B," said GM Chief Operating Officer Fritz Henderson, who vowed the top U.S. automaker would cut brands, models, workers and dealers while negotiating new concessions from bondholders and the United Auto Workers union.
GM would also phase out its Pontiac brand, try to sell Saab and negotiate with its 400 Saturn dealers about scrapping that line of cars and crossovers despite investing heavily in an attempt to turn it around in recent years.
At its core, the GM plan represents an attempt to convince a range of stakeholders, including its union, bondholders and dealers, to accept the kinds of sweeping changes to contracts that are typically accomplished in bankruptcy.
But GM and Chrysler both said bankruptcy is not an option since it would cause consumers to shun their brands and risk spinning into a liquidation that would touch off a cascade of supplier bankruptcies and cost hundreds of thousands of jobs.
Ford, considered the best-positioned of the three, has said a bankruptcy by either of its rivals could threaten it, as well, because they share most of the same parts suppliers.
"I'm not sure we have the ability to fix the problem. And I would not take bankruptcy off the table," Rep. Spencer Bachus of Alabama, the top Republican on the House Financial Services Committee, told CNBC television.
The political calculus remains uncertain for the automakers in Washington. Democrats hold a slim majority in the Senate and the Bush administration continued on Tuesday to back a plan not supported by many Democrats.
U.S. Commerce Secretary Carlos Gutierrez told Reuters the administration backs a Senate bill that would redirect $25 billion from a program already approved to help Detroit make more fuel-efficient vehicles. But that bill is opposed by many Democrats, who say the $700 billion bank bailout fund could be used to help the auto industry.
Another complication emerged on Tuesday when GM and Chrysler both said they were counting on loans from the $25 billion fund administered by the Department of Energy in addition to money from the still-pending rescue package.
A key barometer for the industry will be the hearings on Thursday and Friday at the Senate Banking and House Financial Services committees, respectively. Both panels were sharply critical of the industry last month
Ford shares closed up 6 percent at $2.70 and GM shares gained 6 percent to $4.85. Shares of both companies have more than doubled since late November on increasing optimism that a bailout deal was coming.
(Writing by Julie Vorman in Washington, Martin Howell in New York. Additional reporting by Jui Chakravorty and Bill Rigby in New York; Doris Frankel in Chicago; and Richard Cowan, Thomas Ferraro in Washington; Editing by Bernard Orr, Gary Hill)
http://www.iht.com/articles/reuters/2008/12/03/america/OUKWD-UK-AUTOS-BAILOUT.php
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Some in Michigan oppose auto bailout
By Monica Davey and Susan Saulny
Wednesday, December 3, 2008
KALAMAZOO, Michigan: Wander Michigan's cities and towns, and many residents offer the same message about the prospect of a $34 billion bailout of U.S. automakers: Please provide the help, not just for the sake of the industry and its workers but for all the other people whose jobs are so intricately braided into the state's automobile-centric economy.
But the quiet truth in Michigan, home of the Big 3 manufacturers, is that the state is not of one voice on the matter. Other opinions are alive, and they can be just as passionate in opposition to a rescue.
This, even though neighbors or friends or parents may have once depended on the industry. This, though speaking for the bailout here is something akin to embracing the Great Lakes or apple pie, as evinced by the letter of support signed last month by all of Michigan's congressional delegation, Democrats and Republicans alike.
There have been no statewide opinion polls published on the bailout request, though with Michigan's economy so tied to the industry, those for it undoubtedly outweigh those against, political, economic and polling experts suggest. Still, "there are plenty of people who are rolling their eyes," said Bill Ballenger, editor of the closely followed newsletter Inside Michigan Politics.
"You keep your head down if you're one of them, but they're out there," Ballenger said. "There are a lot of them."
In interviews across the state over the past two weeks, criticism of the automakers' request surfaced again and again. Many people said they had long watched Michigan's economy strain and falter - in no few cases causing the collapse of their own employers and loss of their own jobs - and could no longer see why the Big 3 should be singled out for rescue.
"How many other, small companies would like a bailout?" said Heather Davison, who lives in Davisburg, less than an hour north of Detroit, and has been unemployed for a year. "It seems to me that the car companies saw the banks getting a bailout and said, 'Oh, let's go!"'
Davison, 34, lost her job as a graphic designer for a real estate publication when the company she worked for failed. She said General Motors, Ford and Chrysler should have made changes to their cars and work force years ago.
"They should have made a car that was more efficient," she said. "And how many GM vehicles are there out there? They should have thought of this, of the need to restructure, a long time ago."
Like some others interviewed, Davison was unsparing as well in her criticism of the United Automobile Workers. "I've watched that Ron Gettelfinger on TV," she said of the union's president. "He talks about the need to restructure, but they needed to look at that a long time ago."
John Raterink, a tool and machine maker who works at a small shop in Grand Rapids that supplies parts to the auto industry, opposes a bailout even though his livelihood is tethered to the carmakers. Raterink, 46, points a finger at the Big 3 for a lot of economic misery.
"I remember when GM shut down 11 plants, some of which were in the Great Lakes region," he said. "They said, 'We can't afford to keep doing business like this.' But do you know what happened at the upper echelon of GM? They got six-figure bonuses at the end of the year. It's really hard to feel sorry for a company that's lived so high on the hog." In fact, GM awarded seven-figure bonuses to many of its top executives last year in the form of stock.
Raterink said he had seen dozens of machine shops like his disappear across western Michigan because of the outsourcing of work to other countries.
"If we look at thousands of workers in counties around here, they got no sympathy," he said. "We got hurt, and we got hurt badly. As a result of their practices, I haven't seen a raise in six years, and I've seen my health benefits decline."
The Big 3's share of the American market has dropped 30 percentage points in the last 13 years, to some 44 percent. That plunge has had a ripple effect across the state, home to more than half the people employed nationwide by the Big 3.
Michigan can hardly afford it. The state's economy has been in recession for years, with some experts convinced that it never emerged from the last national recession, in 2001.
The unemployment rate is 9.3 percent - tied with Rhode Island's for the highest in the country - and the safety net of social services is stretched beyond ability to care for all of those in need. The number of Michigan residents who receive some form of public assistance, like food stamps or home heating credits, is now 1.82 million, or close to 20 percent of the population, a record for the state.
At the shop where Raterink makes tools and machinery, there used to be 15 workers. Now there are five.
"They weren't offered any bailout," he said of those who lost their jobs. Then, of the Big 3 and the mismanagement he perceives, he added, "The wolf you let loose is at your door."
Susan Saulny reported from Saugatuck, Michigan.
http://www.iht.com/articles/2008/12/03/business/michigan.php

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Obama's stimulus package seeks to save jobs and energy
By John M. Broder
Wednesday, December 3, 2008
WASHINGTON: President-elect Barack Obama and leaders in Congress are fashioning a plan to pour billions of dollars into a so-called green jobs program to give a jolt to the economy and lay the groundwork for a more energy-efficient country.
The details and cost of the evolving program are still unclear, but a senior Obama aide, speaking on condition of anonymity to discuss a work in progress, said it would probably include weatherizing hundreds of thousands of homes, installation of "smart meters" to monitor and reduce home energy use, and billions of dollars in grants to state and local governments for mass transit and infrastructure projects.
The "green" component of the stimulus plan will cost at least $15 billion a year, and perhaps considerably more, depending on how the projects are defined, aides working on the package said.
Obama said during the campaign that he supported a measure to address global warming by capping carbon emissions while allowing emitters to trade pollution permits. He said he would devote $150 billion of the revenue from the sale of those permits over 10 years to energy efficiency and alternative energy projects to wean the nation from the fuels that were the main causes of the heating the atmosphere.
But the adviser who discussed the green energy project said Obama would not await passage of a global warming bill before embarking on the new energy and infrastructure spending. House and Senate supporters of a climate bill said they would continue working on legislative language but did not expect quick action on a cap-and-trade law because of the economic emergency.
In effect, that means the cost of the green jobs program would not be paid for out of pollution credits purchased by power generators and other carbon emitters, but instead would be added to the overall budget deficit.
Officials in Congress who are working with the incoming Obama administration said the stimulus program would also probably involve tax breaks or direct government subsidies for a variety of clean energy projects, including solar arrays, wind farms, biofuels and technology to capture carbon dioxide emissions from coal-burning power plants.
The programs will be a part of a larger economic stimulus package whose outlines remain faint, but which is expected to cost from $400 billion to $500 billion. Obama has said that his goal is to create or save 2.5 million jobs over the next two years. Obama has assigned his economic and environmental advisers the task of devising a proposal that is expected to combine a shot of new U.S. funds into existing national and state programs, and the possible creation of new agencies modeled on New Deal public works programs.
"We'll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels, fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead," Obama said in a radio address last month, echoing a campaign promise.
Although the political climate appears favorable to a costly plan to stimulate the economy, large sums of new money always touch off a lobbying frenzy and energy projects invariably spark debate between those who want to conserve energy and those who want to more fully exploit domestic sources of oil, natural gas and coal.
Some experts note that the record of government intervention into energy markets and favoring some new technologies over others is not promising, citing as a spectacular example the Carter-era Synthetic Fuels Corp., which spent more than $3 billion without producing any commercially usable amount of coal-based liquid fuel.
Ethanol and other nonoil-based fuels have also not yet fully proven their commercial value, in some cases yielding less energy than is required to produce it, or, in the case of ethanol, diverting crops and driving up food prices.
The plan may also face resistance from fiscal hawks. In 2004, Senator John McCain almost single-handedly blocked a $100 billion energy package, saying that the billions of dollars in subsidies for ethanol and other alternative fuels were little more than a special-interest boondoggle. The bill was revived a year later at half the cost, and much of the money in it has not yet been spent.
"Now they're talking about some large amount of money - what, $100 billion? - and spending it on windmills, job training, whatever," said David Kreutzer, who studies energy economics and climate change at the conservative Heritage Foundation. "But where do you get the $100 billion in the first place? Are you going to take $100 billion from some other part of the economy, are you going to tax some people to pay for it? Are you just going to print it or borrow it? The money has to come from somewhere."
Obama's team and lawmakers say they want a plan ready shortly after Congress reconvenes in January.
http://www.iht.com/articles/2008/12/03/america/green.php

















French aid worker freed in Afghanistan
The Associated Press
Wednesday, December 3, 2008
PARIS: A French aid worker kidnapped at gunpoint in the Afghan capital and later seen in an emotional hostage video was released by his captors Wednesday and is "doing well," President Nicolas Sarkozy announced.
Dany Egreteau, a 32-year-old worker for Solidarite Laique, or Secular Solidarity, was captured by gunmen in Kabul on Nov. 3 as he drove to work with another aid worker who managed to escape. An Afghan who tried to prevent the kidnapping was killed.
"I rejoice over his liberation, which happened several minutes ago," Sarkozy said in a surprise announcement while on a visit to Compiegne, north of Paris.
"He is doing well. His family is being notified," the president said, adding that medical exams were being conducted before he is returned to France on Thursday.
"We had been very concerned for him," Sarkozy added.
Egreteau has appeared in a video with a rifle pressed to each side of his head and chains around his legs. In the video, obtained by news agencies in Afghanistan on Nov. 26, Egreteau, streaked with dirt, pleaded for his release, barely seeming to open his eyes.
"I have been here for the last eight days, fully in the black," he said, his voice trembling at times.
He referred to a ransom demand, begging for someone to pay it.
Roland Biache, managing director of the Paris-based aid organization, said earlier that the kidnappers had made no immediate specific demands.
Sarkozy thanked the French military deployed in Afghanistan, French intelligence services and Afghan authorities "for their collaboration and their efficiency" in the case.
Foreign Minister Bernard Kouchner expressed "joy" at Egreteau's release and stressed the need for humanitarian groups in Afghanistan.
"The work of humanitarian organizations, next to the Afghan people to help Afghanistan onto the path of peace and development is indispensable," Kouchner said in a statement. "To take these NGOs and their personnel as targets ... is unacceptable."
Security has deteriorated across Afghanistan over the last two years, with a recent spike in crimes against Westerners in the capital Kabul.
http://www.iht.com/articles/ap/2008/12/03/europe/EU-France-Afghanistan-Hostage.php

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Black box found from French airbus crash, no leads
Reuters
Wednesday, December 3, 2008
PARIS: Investigators have found the black box flight recorders of an Air New Zealand Airbus A320 which crashed in France last week, but they still cannot explain how the incident occurred, French authorities said on Wednesday.
The plane, which had been leased to a German carrier, was being refitted and tested before returning to Air New Zealand, when it plunged into the Mediterranean sea on an approach run into the southwestern city of Perpignan on November 28.
All seven people aboard are believed to have been killed.
France's BEA civil aviation security organisation said the aircraft's flight recorders have been found and their protective casing and memory cards appear to be intact, but investigators have so far been unable to extract information from them.
"Additional work is needed although it is not possible at the moment to predict results," the authority said in a statement.
"The crew had given no indication of any problem to air traffic control when it stopped responding to calls," the statement added.
"At this stage of the inquiry, nothing explains why the aircraft left its trajectory and crashed into the sea."
The A320 is a twin-engine, single-aisle airliner made by the Airbus unit of European aerospace group EADS that normally seats around 150 passengers. About 1,960 A320 aircraft are in service with airlines around the world.
(Reporting by James Mackenzie, editing by Nita Bhalla)
http://www.iht.com/articles/reuters/2008/12/03/europe/OUKWD-UK-FRANCE-AIRCRASH.php





Ex-U.S. official cites Pakistani training for India attackers
By Somini Sengupta and Alan Cowell
Wednesday, December 3, 2008
MUMBAI: A former Defense Department official said Wednesday that American intelligence agencies had determined that former officers from Pakistan's army and its powerful Inter-Services Intelligence agency helped train the Mumbai attackers.
But the official, who spoke on condition of anonymity, said that no specific links had been uncovered yet between the terrorists and the Pakistani government.
His disclosure came as Secretary of State Condoleezza Rice held meetings with Indian leaders in New Delhi and Admiral Mike Mullen, the chairman of the Joint Chiefs of Staff, met with their Pakistani counterparts in Islamabad, in a two-pronged effort to pressure Pakistan to cooperate fully in the effort to track down those responsible for the bloody attacks in Mumbai last week.
Also on Wednesday, a "fully functional" bomb was found and defused at a major Mumbai train station that had reopened days earlier, the Mumbai authorities announced. The discovery raised terrifying questions about why the authorities had failed to find it all this time.
Meanwhile, tens of thousands of people marched through Mumbai, both mourning the at least 173 dead and protesting the failures of Indian politicians and security services to protect citizens.
Rice strove to balance demands on both countries. She said that Pakistan had a "special responsibility" to cooperate with India and help prevent attacks in the future, here and elsewhere. At the same time, she warned India against hasty reaction that would yield what she called "unintended consequences."
"The response of the Pakistani government should be one of cooperation and of action," she said at an evening news conference in New Delhi with her Indian counterpart, Pranab Mukherjee. "Any response needs to be judged by its effectiveness in prevention and also by not creating other unintended consequences or difficulties."
Mukherjee said his government was convinced that the attackers and their "controllers" came from Pakistan. He said he had conveyed to Rice "the feeling of anger and deep outrage in India" and said that his government was prepared to act "with all the means at our disposal" to protect Indian territory and citizens.
Both American and Indian authorities have concluded that there was little doubt that the Mumbai attacks were directed by militants inside Pakistan, and Indian officials have said they have identified three or four masterminds of the attack, including a leader of Lashkar-e-Taiba, Yusuf Muzzamil.
But Rice said it was premature to comment on whether any particular organization was responsible for the attacks on India's financial and entertainment capital. She described the assault last week as distinct from others that had struck India since it targeted high-profile targets, including those frequented by foreigners, and appeared to be designed to "send a message."
Rice said Pakistan had assured her that it would cooperate with India in its search for those responsible for the slaughter in Mumbai. She said President Asif Ali Zardari "has told me he will follow leads wherever they go" but she made clear that Washington expected him to do so wholeheartedly.
"This is a time for everybody to cooperate and to do so transparently, and this is especially a time for Pakistan to do so," she said.
Lashkar-e-Taiba is officially banned in Pakistan, but it has been linked to the country's powerful intelligence service and is believed to have moved its militant networks to Pakistan's tribal areas.
For the moment, Zardari is playing down any links to Pakistan, including the Indian identification of the surviving attacker as a Pakistani. "We have not been given any tangible proof to say that he is definitely a Pakistani. I very much doubt that he's a Pakistani," Zardari told CNN's "Larry King Live," saying that his government would take action if India produced evidence to support the claim.
He also indicated that he would turn down an Indian demand, made on Monday night, to hand over about 20 fugitives, some of them linked to organized crime, said by India to be living in Pakistan. Rather, Zardari said, they would be tried in Pakistani courts if there were evidence to support a trial.
In Islamabad, Mullen met with President Zardari; the Pakistani national security adviser, Mahmud Ali Durrani; and several top military officials, including the army chief of staff, General Ashfaq Pervaiz Kayani, and the new intelligence chief, Lieutenant General Ahmed Shuja Pasha.
Mullen pressed the Pakistani leaders to crack down on Lashkar-e-Taiba's network of training camps, including those in Pakistan-controlled Kashmir, and the organization's guerrilla recruiting efforts, an American military official said.
In New Delhi, response to a question, Rice said that the sophistication and choice of targets in Mumbai distinguished it from previous attacks. Earlier in the day, also in response to a question, Rice was asked about any possible involvement by Al Qaeda. "Whether there is a direct Al Qaeda hand or not, this is clearly the kind of terror in which Al Qaeda participates," she said.
The bomb was found in a bag the Chhatrapati Shivaji Terminus, the old Victoria station, one of the sites singled out for attack last week. It held about 20 pounds of explosives and was rigged with a timer, the Indian authorities said, but it was not clear whether it had not been activated or had malfunctioned.
The bag, apparently left behind by the attackers a week ago, had been collected along with a large pile of luggage that passengers had abandoned as they fled. That is where the police found it on Wednesday.
The station has been open for days, with thousands of passengers streaming through, and the discovery raised new questions about the capability of Indian security services.
There were conflicting accounts about how the bomb were found. Some reports said that the police had been tipped off by the surviving attacker, but others said a sniffer dog found it during a routine sweep of the abandoned luggage ahead of an officials visit. It was rendered neutral on the spot, the authorities said, and then subsequently removed for analysis. Train service was not disrupted for the maneuvers.
Rice's diplomatic agenda takes place as Washington is seeking high-level cooperation in different spheres with both India and Pakistan, nuclear-armed neighbors. Washington wants Pakistan to help defeat Al Qaeda and Taliban insurgents along the border with Afghanistan.
But Pakistani security officials have threatened to withdraw troops from the lawless border region to redeploy them if India and Pakistan slide toward their fourth war since independence from Britain in 1947, Reuters reported.
In October, Washington opened a new chapter of cooperation with India when Congress gave final approval to a breakthrough agreement permitting civilian nuclear trade between the two countries for the first time in three decades.
Under the terms of the deal, the United States will now be able to sell nuclear fuel, technology and reactors to India for peaceful energy although New Delhi tested bombs in 1974 and 1998 and never signed the Nuclear Nonproliferation Treaty. In exchange, India agreed to open up 14 civilian nuclear facilities to international inspection, but would continue to shield eight military reactors from outside scrutiny.


http://www.iht.com/articles/2008/12/03/asia/04mumbai-cnd.php

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Police say find explosives at Mumbai station
Reuters
Wednesday, December 3, 2008
NEW DELHI: Police in Mumbai on Wednesday said they had found 8 kg (18 lb) of explosives in a bag left behind last week at the city's train station at the start of a three-day rampage by Islamist militants.
There was no bomb, an official at the train station's police control room told Reuters. The station was one of the sites attacked last week by militants.
(Reporting by Rina Chandran; Editing by Bryson Hull)
http://www.iht.com/articles/reuters/2008/12/03/asia/OUKWD-UK-INDIA-MUMBAI-BOMB.php

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COLUMNIST
William Pfaff: What was the message?
By William Pfaff
Wednesday, December 3, 2008
PARIS: What is the message of a terrorist attack that fails to deliver a message? Threats and warnings are being exchanged by India and Pakistan about the terrorist attack on Mumbai, carried out by presumed Muslim extremists. But acting for what purpose, and under whose instructions?
The attacks are presumed by the Indians to have to do with the Kashmiri Muslims fighting to force India to withdraw from their part of the disputed region in the north of the Indian subcontinent, bordering the two countries and also Tibet and China. Its Hindu ruler chose in 1947 to deliver its Muslim population to India during the frantic days of British India's partition. The UN ordered a referendum among the Muslims (believed today to favor independence). India has never accepted.
If Kashmir was the motive for the Mumbai attacks, why were the targets hotels and restaurants frequented by Western tourists, but also by residents of Mumbai and other prosperous Indians, and a Lubavitch Hasidic Jewish center - an outpost of mainly American and Israeli Jews? None of them have anything to do with Kashmir.
This makes the message seem like a Middle Eastern message, having to do with Iraq and Palestine. But the terrorist who was captured said he was a Pakistani, and the evidence thus far is that the group of terrorists left from Pakistan.
Could Samuel Huntington be right after all? Are we witnessing an indiscriminate war between civilizations? But we know that the modern conflict between Muslims and Europeans and Americans began with the Europeans' post-1918 partition and colonization of the Ottoman Empire's Arab possessions, and a quarter-century later, by Israel's European-supported installation in Palestine.
After that, there was the Suez attack, a fiasco for Britain and France, when Washington supported Egypt. A quarter-century after that, the Americans and the Muslim Pakistanis, together with the Saudi Arabians, organized the successful Muslim mujahideen resistance to the Russian invasion and occupation of Afghanistan.
In 1980, there was a terrible war between Muslim Iraqis and Muslim Iranians. Desert Storm followed that, caused by the invasion of Muslim Kuwait by Muslim Iraq, resisted by Muslim as well as European armies under American leadership. After that came the American refusal to remove the military bases it had built in Saudi Arabia, which was the main grievance that inspired Osama bin Laden's 9/11 attack on New York and Washington.
The Asian Muslim countries, including Indonesia, where more Muslims live than anywhere else, had nothing to do with any of this. So what actually is it all about?
Certainly not Huntington's fantasy of a war of civilizations, despite the American political and journalistic habit of forgetting the past and pinning everything that happens today on the Muslims and Osama bin Laden. .
There is great concern today that India will retaliate against Pakistan for the Mumbai attacks, even though there is no conclusive proof of official Pakistani responsibility. That the attack was by a militant offshoot of the Kashmir clash is more plausible.
It would be illogical for the new Pakistani civilian government to be involved with an action that embroiled it in further conflict with India while it has extremely difficult relations with the United States over American attacks on supposed Taliban and Al Qaeda centers inside the Pakistani frontier tribal zones, and while intense American and NATO pressure is on Pakistan to do more against the Taliban.
Der Spiegel Online carried an article on Nov. 27 entitled "Terror in India - Obama's First Test." Why a test for President-elect Barack Obama? Even if he were already president of the U.S., what would he be expected do about it?
It would be closer to the truth to suggest that this might have been influenced by conflicts in which the United States has directly or indirectly taken an irresponsible hand, without positive results for the United States and with tragic results for others. But the U.S. has never had anything to do with Kashmir.
The mind-set expressed in the Spiegel headline - that anything unpleasant that happens in the world is either the result of American actions or something for which the United States must take responsibility - is widespread, and the result of an American policy of global interventionism that Obama and his new national security team seem ready to continue. If they do so, they are likely to regret it.
http://www.iht.com/articles/2008/12/03/opinion/edpfaff.php

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Islamic extremists being coaxed toward YouTube
Reuters
Wednesday, December 3, 2008
WASHINGTON: Islamic extremists are being instructed on how to use the popular video-sharing site YouTube as a way to disseminate propaganda videos, a U.S.-based terrorism monitor said on Tuesday.
Militants are being encouraged to use the online site through postings on other Islamic forums on the Internet, according to the SITE Intelligence Group.
Last week, an extremist authored step-by-step instructions on posting video to YouTube, which he described as "one of the most famous and biggest international sites that publish sections of videos from all over the world."
The posting encourages readers to post scenes of Western forces coming under attack to, it says, "shame the Crusaders by publishing clips of videos showing their losses, which they hid for a long time."
Islamic extremists have long used the Internet as a tool to communicate with supporters and distribute propaganda but the latest posting specifically coaxes militants towards YouTube and touts it as a user-friendly tool.
"I say that the YouTube site is one of the easiest sites to record and upload the clips," the posting states, pointing readers to the software they might need to publish on the Internet.
"I ask you, by Allah, as soon as you read this subject, to start recording on YouTube, and to start cutting and uploading and posting clips on the jihadist, Islamic, and general forums," the posting states.
YouTube, a unit of Google, could not immediately be reached for comment on how it might respond to the types of postings described in the message.
The message author calls for a "YouTube Invasion" by militants and includes several screenshots showing step by step instructions on how to create a YouTube account and to upload material.
The video-sharing site has often been a chosen venue for users to post controversial clips and other material.
In March, Pakistani authorities ordered Internet service providers to block the website after it ran material deemed insulting to Islam.
(Reporting by Patrick Rucker; Editing by Eric Beech)
http://www.iht.com/articles/reuters/2008/12/03/america/OUKWD-UK-SECURITY-ISLAMIST-YOUTUBE.php





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COLUMNIST


Thomas L. Friedman: Calling all Pakistanis
Wednesday, December 3, 2008
On Feb. 6, 2006, three Pakistanis died in Peshawar and Lahore during violent street protests against Danish cartoons that had satirized the Prophet Muhammad. More such mass protests followed weeks later. When Pakistanis and other Muslims are willing to take to the streets, even suffer death, to protest an insulting cartoon published in Denmark, is it fair to ask: Who in the Muslim world, who in Pakistan, is ready to take to the streets to protest the mass murders of real people, not cartoon characters, right next door in Mumbai?
After all, if 10 young Indians from a splinter wing of the Hindu nationalist Bharatiya Janata Party traveled by boat to Pakistan, shot up two hotels in Karachi and the central train station, killed at least 173 people, and then, for good measure, murdered the imam and his wife at a Saudi-financed mosque while they were cradling their 2-year-old son - purely because they were Sunni Muslims - where would we be today? The entire Muslim world would be aflame and in the streets.
So what can we expect from Pakistan and the wider Muslim world after Mumbai? India says its interrogation of the surviving terrorist indicates that all 10 men come from the Pakistani port of Karachi, and at least one, if not all 10, were Pakistani nationals.
First of all, it seems to me that the Pakistani government, which is extremely weak to begin with, has been taking this mass murder very seriously, and, for now, no official connection between the terrorists and elements of the Pakistani security services has been uncovered.
At the same time, any reading of the Pakistani English-language press reveals Pakistani voices expressing real anguish and horror over this incident. Take for instance the Inter Press Service news agency article of Nov. 29 from Karachi: "'I feel a great fear that [the Mumbai violence] will adversely affect Pakistan and India relations,' the prominent Karachi-based feminist poet and writer Attiya Dawood told IPS. 'I can't say whether Pakistan is involved or not, but whoever is involved, it is not the ordinary people of Pakistan, like myself, or my daughters. We are with our Indian brothers and sisters in their pain and sorrow."'
But while the Pakistani government's sober response is important, and the sincere expressions of outrage by individual Pakistanis are critical, I am still hoping for more. I am still hoping - just once - for that mass demonstration of "ordinary people" against the Mumbai bombers, not for my sake, not for India's sake, but for Pakistan's sake.
Why? Because it takes a village. The best defense against this kind of murderous violence is to limit the pool of recruits, and the only way to do that is for the home society to isolate, condemn and denounce publicly and repeatedly the murderers - and not amplify, ignore, glorify, justify or "explain" their activities.
Sure, better intelligence is important. And, yes, better SWAT teams are critical to defeating the perpetrators quickly before they can do much damage. But at the end of the day, terrorists often are just acting on what they sense the majority really wants but doesn't dare do or say. That is why the most powerful deterrent to their behavior is when the community as a whole says: "No more. What you have done in murdering defenseless men, women and children has brought shame on us and on you."
Why should Pakistanis do that? Because you can't have a healthy society that tolerates in any way its own sons going into a modern city, anywhere, and just murdering everyone in sight - including some 40 other Muslims - in a suicide-murder operation, without even bothering to leave a note. Because the act was their note, and destroying just to destroy was their goal. If you do that with enemies abroad, you will do that with enemies at home and destroy your own society in the process.
"I often make the comparison to Catholics during the pedophile priest scandal," a Muslim woman friend wrote me. "Those Catholics that left the church or spoke out against the church were not trying to prove to anyone that they are anti-pedophile. Nor were they apologizing for Catholics, or trying to make the point that this is not Catholicism to the non-Catholic world. They spoke out because they wanted to influence the church. They wanted to fix a terrible problem" in their own religious community.
We know from the Danish cartoons affair that Pakistanis and other Muslims know how to mobilize quickly to express their heartfelt feelings, not just as individuals, but as a powerful collective. That is what is needed here.
Because, I repeat, this kind of murderous violence only stops when the village - all the good people in Pakistan, including the community elders and spiritual leaders who want a decent future for their country - declares, as a collective, that those who carry out such murders are shameful unbelievers who will not dance with virgins in heaven but burn in hell. And they do it with the same vehemence with which they denounce Danish cartoons.


http://www.iht.com/articles/2008/12/03/opinion/edfriedman.php


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Pakistan kills up to 30 militants in airstrike
Reuters
Wednesday, December 3, 2008
PESHAWAR, Pakistan: Pakistan killed up to 30 Islamist militants in an air strike and three soldiers and a civilian were killed in a suicide attack in the northwest near the Afghan border Wednesday, officials said.
The air raid on a militant hideout in Mohmand tribal region came hours after a suicide bomber rammed an explosive-laden car into a military convoy in nearby Shabqadar town.
"We have reports that 25 to 30 militants were killed and many wounded in the air strike," a military official told Reuters on condition of anonymity.
Mohmand lies close to Bajaur, another tribal region, where security forces have launched a massive operation against the militants since August. The military says more than 1,500 militants have been killed in the Bajaur operation. There has been no independent verification of that casualty estimate.
Pakistani forces are battling al Qaeda and Taliban militants in the northwest. The militants have retaliated with a campaign of suicide bombings, particularly against security forces in the ethnic Pashtun tribal regions on the Afghan border.
The violence has raised concern about nuclear-armed Pakistan's prospects as its civilian government struggles with an economic downturn and with pressure from India which blames militants from Pakistan for last week's assault in Mumbai.
Abdul Qadeer, a shopkeeper in Shabqadar, said troops had opened fire after the suicide blast but caused no casualties.
"After the attack, the vehicle caught fire and we have reports of three security people and a civilian killed," said a police official who declined to be identified.
The attack in Shabqadar came two days after a suicide car-bomber killed eight people in an attack aimed at a military checkpoint in the Swat valley, to the northwest of Islamabad.
(Reporting by Izaz Mohmand; Writing by Augustine Anthony)
http://www.iht.com/articles/reuters/2008/12/03/asia/OUKWD-UK-PAKISTAN-VIOLENCE.php

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Afghans say they will sign treaty banning cluster munitions
By Walter Gibbs and Kirk Semple
Wednesday, December 3, 2008
OSLO: In a surprising last-minute change of policy, the government of President Hamid Karzai of Afghanistan agreed Wednesday to join about 100 nations signing a treaty banning the use of cluster munitions, Afghan officials said.
The decision appeared to reflect Karzai's growing independence from the Bush administration, which has opposed the treaty and, according to a senior Afghan official who requested anonymity because of the sensitivity of the issue, had urged Karzai not to sign it.
"Until this morning, our position was that we were unable," Afghan's ambassador to Norway and the Nordic countries, Jawed Ludin, said in a telephone interview Wednesday. "But given the persistent campaign by the various civil society organizations and victims," he said, Karzai gave his authorization.
The news was greeted by cheers and celebration in Oslo's City Hall, where the signing ceremony began Wednesday. Even though it is one of the nations that has most suffered the effects of cluster munitions, especially in terms of civilian casualties, Afghanistan had been a significant holdout from the treaty.
The decision appeared to be the latest effort by Karzai to distance himself from his American backers. In recent months, he has become more bold in his public criticisms of the American mission, including speaking out against aerial bombings and other operations by the U.S.-led forces that have caused many civilian casualties, offended cultural sensitivities and undermined popular support for the war that routed the Taliban in late 2001.
While several Afghan officials interviewed Wednesday said that the United States did not publicly pressure the Afghans to reject the treaty, an official in the Karzai administration said that throughout the process that led to the treaty, the Americans made it clear "that they would prefer that Afghanistan stay out of it."
Afghan officials said the government had been opposed to the treaty because of concern that it would hamper the fight against the insurgency.
But the Karzai administration realized that no cluster munitions were being used in Afghanistan and so would not bear on the government's fight.
Representatives of about 100 nations began signing the ambitious treaty Wednesday morning formally renouncing the use of the bombs, typically anti-personnel weapons that eject dozens of explosive bomblets when detonated.
But some of the world's biggest military powers, including the United States, China and Russia, reject the pact and many of the signatories expressed concern that the treaty they were signing fails to bind the countries most prone to military conflict.
As the sponsor of a drive to outlaw the use of the bombs, Norway was the first to sign the treaty, followed by Laos, Lebanon and Ireland.
But the United States has rejected the new treaty and therefore may legally continue to deploy its cluster-bomb arsenal.
Russia, China, India, Pakistan and most Middle Eastern states have also refused to give up their weapons.
The host of the signing conference, Foreign Minister Jonas Gahr Stoere of Norway, said universal compliance was not necessary for the cluster-bomb treaty to work.
"What we've adopted today is going to create profound change," he said. "If you use or stockpile cluster weapons after today you will be breaking a new international norm."
The United States has defended its decision not to sign the treaty. James Lawrence, director of the State Department's Office of Weapons Removal and Abatement, said in a telephone interview that the United States was "getting a bad rap" from treaty proponents despite developing cluster munitions that were less likely to harm civilians and despite providing nearly half of all global funding for the clearance of unexploded ordnance.
"The U.S. government and the U.S. military are aware of the humanitarian concern and are trying to do something about it in a reasonable way," he said. "We're actually doing more than a lot of the countries that are going to Norway to sign the treaty."
Whether dropped from aircraft or fired from artillery, cluster bombs can scatter dozens or even hundreds of smaller explosives across an area the size of a football field. Some bomblets fail to explode upon hitting the ground and, like landmines, can remain a deadly hazard to children, farmers and other civilians long after a conflict ends.
"This is the weapon that just can't stop killing," said Thomas Nash, coordinator of the Cluster Munition Coalition, a London-based group of organizations that would like to see cluster bombs outlawed.
Kirk Semple reported from Kabul.


http://www.iht.com/articles/2008/12/03/asia/cluster.php





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Afghan refugees return home to a life of desperation
By Adam B. Ellick
Wednesday, December 3, 2008
CHAMTALA SETTLEMENT, Afghanistan: Only seven months ago, Allah Nazar, a 10-year-old paralyzed by polio, had a two-bedroom mud home and weekly appointments at a hospital in Pakistan, where he lived with his family of 13.
Now Nazar is homeless, living in the eastern Afghan desert 15 miles from Jalalabad, the provincial capital, sitting aimlessly in a wooden wheelbarrow, wondering if the imminent winter will be his last. Even his makeshift wheelchair is too wobbly for a simple joy ride along the rocky terrain.
"His condition is getting worse because of the cold weather and the lack of facilities and treatment," said Abdul Wahab, a village elder and close friend of the boy's family. "Are there any human rights here?"
An Afghan presidential decree guarantees refugees a "safe and dignified return." But seven years into Afghanistan's reconstruction effort, this is the reality playing out in and around Nangarhar Province. Here, 30,000 newly returned Afghans live on the brink of desperation in makeshift settlements like Chamtala.
Meanwhile, the government and international aid groups lack the capacity to shield them properly from the harsh Afghan winter that is swirling their way.
"Look at all these children," said Nazar's mother, Khwaga, cradling her newborn daughter. "They're all suffering from flu. We don't have a roof over our heads. We are tired of this hunger."
Nazar and his family, who returned to Afghanistan in May, are among 3.5 million Afghans who have been repatriated from Pakistan since the Taliban were ousted in 2001, one of the largest refugee movements in recent history, according to the United Nations.
The flow of returnees has slowed since 2006. But here in the eastern part of the country, which has absorbed more than 60 percent of this year's nearly 300,000 returnees, the situation is dire.
In a clear sign that life is untenable for many new arrivals, 40 percent of Afghan returnees left the nation again in 2007, citing insecurity and a lack of shelter and jobs, according to the Afghanistan Independent Human Rights Commission.
The government of Afghanistan, where the population has surged by 20 percent since 2001, is already strained by deteriorating security, a national food crisis and a lack of basic services like electricity, even in urban centers like Kabul.
"This is indeed one of the worst we can find," said António Guterres, the United Nations high commissioner for refugees, who visited two camps in eastern Afghanistan in November. "These are the poorest of the poor, the most vulnerable of the vulnerable."
Since the late 1970s, when the Soviet Union invaded, millions of Afghans have fled because of war. New generations of Afghans were born and married abroad, mainly in neighboring Pakistan and Iran, having never known their ancestral homeland.
In Pakistan, they lived in poor but industrious refugee settlements. Men held down manual-labor jobs, and most Afghans had homes, however spartan. Pakistan played host for decades. Although it still maintains dozens of camps, Pakistan closed two large camps in North-West Frontier Province near the Afghan border during the past 18 months, saying they had become sanctuaries for militant groups like Al Qaeda and the Taliban.
The nation's largest camp, Jalozai, was closed in May, forcing 110,000 Afghans to choose between two bleak options: relocate within Pakistan or return home.
With Pakistan suffering from a food and fuel crisis, and with rent prices soaring in nearby cities like Peshawar, the answer was easy enough for 70 percent of them.
Nazar, the boy with polio, watched as bulldozers razed his school and house. Then, with $100 stipends given to his and the other families by the United Nations refugee office, Nazar and his relatives boarded a truck and three days later found themselves at this makeshift settlement.
"The Pakistan government forced us to leave," said Wahab, the village elder.
And the Afghan government "has been stringing us along" with failed promises, he said.
International aid organizations, like the United Nations refugee office, Unicef and the World Food Program, have provided minimal services, like daily water tankers and plastic sheets for shelter. But the refugee office has already depleted its regional housing materials this year.
At an international refugee conference in Kabul in November, the Afghan Ministry of Refugees and Repatriation requested $528 million from donor countries to support reintegration. If granted, the money will come from the $22 billion Afghanistan National Development Strategy fund that begins in the spring of 2009.
Along the sidelines, refugee experts voiced frustration with the annual scramble by governments to offer assistance "as if winter comes by surprise," as one refugee expert said.
With four ministers since 2001, the Afghan Refugee Ministry has hardly won the trust of international observers. Experts say it lacks the resources to put in place a crisis management plan. In the past year, two Afghan ministers were dismissed for the mishandling of refugee situations.
Guterres, the United Nations refugee official, said that inefficiency and corruption were partly to blame. In 2005, the government announced 100 locations to be given to returnees as part of its Land Allocation Scheme. Today, 15 are in operation.
Chamtala is an example of such chaos. In June, the provincial government demarcated the camp for land allocation, but to date, only 600 of its 4,000 families have been granted plots.
During his visit, Guterres listened as layers of village elders surrounded him pleading for intervention. They said that even refugees fortunate enough for selection could not afford the $120 fee imposed by the government.
"We would prefer a more generous policy, but we also have to recognize the limited resources of the country," Guterres said.
In most of the world, refugees in such desperate circumstances flock to urban slums, where job opportunities are more numerous, he said. But Afghans, who adhere to a strict brand of Islam, prefer secluded, walled-off homes that keep women out of public view.
Land is a delicate issue in decentralized Afghanistan. Tribes often maintain ownership of fertile land, especially amid the current drought.
At Chamtala, jobs are hard to find, and elders say the daily mobile health clinic is insufficient.
"There are 6,000 families here," a village elder told Guterres. "If even one of us has an emergency, what should we do?"
If there is any hope for Chamtala, it may be in the example of Sheik Mesri New Township, a mud-walled refugee complex 40 minutes away where nearly all of the 6,000 plots have been granted to refugees who began settling there in late 2005.
International aid organizations built 80 water wells and provided materials and a labor stipend for refugees who built their own homes.
In a sign of progress, when village elders here had a chance to talk to Guterres, they brought up less-pressing issues, like electricity and garbage removal.
But it took three years to erect the community, and experts are not sure it can be replicated before more desperate returnees give up and leave again.


http://www.iht.com/articles/2008/12/03/asia/03refugees.php

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NATO scraps press and psy ops merger in Afghanistan
Reuters
Wednesday, December 3, 2008
By Jon Hemming
The U.S. commander of NATO forces in Afghanistan has scrapped a plan to merge the office that releases news with "Psy Ops," which deals with propaganda, to comply with alliance policy, a spokesman said on Wednesday.
The original plan worried Washington's European NATO allies. Germany had threatened to pull out of media operations in Afghanistan, officials said last week, as it could have undermined the credibility of information released to the public.
"The new communications structure has started to be implemented now, but it is now completely within the framework of NATO policy regarding public affairs," said ISAF spokesman Brigadier General Richard Blanchette.
More than seven years after U.S.-led and Afghan forces toppled the Taliban in the wake of the September 11 attacks, many Afghans are increasingly frustrated at the failure of their government and NATO troops to bring security and contain the Taliban insurgency.
The Taliban, through their website, telephone text messages and frequent calls to reporters, have been particularly successful in the information war, Britain's Chief of Defence Staff Jock Stirrup admitted last week.
"They've beaten us to the punch on numerous occasions, and by doing so they've magnified the sense of difficulty and diminished the sense of progress. This is down in part to their skill, and in part to our own failings," he said in a speech.
NATO POLICY
In an attempt to respond to those failings, U.S. General David McKiernan, the commander of 50,000 troops in NATO's International Security Assistance Force (ISAF), had ordered the combination of the Public Affairs Office, Information Operations and Psy Ops (Psychological Operations) from December 1, said three NATO officials with detailed knowledge of the move.
But that order went against policy agreed by the 26 nations within NATO which recognises there is an inherent clash of interests between its public affairs offices, whose job it is to issue press releases and answer media questions, and that of Information Operations and Psy Ops.
Information Operations advises on information designed to affect the will of the enemy, while Psy Ops includes so-called "black operations," or outright deception.
The move caused considerable concern at higher levels within NATO which had challenged the order by the U.S. general, said the three NATO officials who all declined to be named.
A one-star general will now head a new office of strategic communications, but that would remain separate from public affairs, Blanchette said.
Asked why McKiernan had changed his plan, Blanchette said: "Because the commander wanted to make sure he had something that was completely compliant with NATO policy."
(Editing by Bill Tarrant)
http://www.iht.com/articles/reuters/2008/12/03/europe/OUKWD-UK-AFGHAN-NATO.php

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Croatian prime minister asks police to explain Facebook incident
The Associated Press
Wednesday, December 3, 2008
ZAGREB, Croatia: Croatian Prime Minister Ivo Sanader says the officers who detained two men who criticized him on Facebook should be punished if they made errors.
He says "no one should be detained" for expressing an opinion.
Sanader says he has asked police to explain to him the brief detentions of the two. One, a 22-year-old, started an anti-Sanader group on the social networking site and was questioned by police last week.
The second man, who joined another group, said he was detained overnight Tuesday for putting up posters calling for an anti-government protest.
In a statement Wednesday, Sanader asked police to punish the officers if they violated police procedure.
The detentions have triggered fierce criticism from opposition, media and civic groups.
http://www.iht.com/articles/ap/2008/12/03/europe/EU-Croatia-Facebook-Arrests.php

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Hamas security frees three reporters in Gaza
Reuters
Wednesday, December 3, 2008
GAZA: Hamas security forces freed three Palestinian journalists Wednesday whom they had arrested last month and accused of fabricating news critical of the Islamist group, officials said.
The journalists worked in the Hamas-controlled Gaza Strip for the Palestine Press, a local news agency with ties to the group's main rival, President Mahmoud Abbas's Fatah faction.
A Hamas internal security official said the three men were released after they confessed that they had "fabricated reports" critical of the Hamas cabinet and its security forces.
One of the journalists, speaking to reporters and human rights officials -- as Hamas security men stood nearby -- said after their release: "We made a mistake and it won't be repeated."
The Hamas security official said the release followed "intense intervention by fellow journalists" who appealed to the group's leader in Gaza, Ismail Haniyeh.
Since Hamas routed Fatah forces in Gaza last year, activists had traded accusations of persecution. The Islamist group says several Hamas-affiliated journalists have been imprisoned by security forces loyal to Abbas in the Israeli-occupied West Bank.
(Writing by Nidal al-Mughrabi, Editing by Jeffrey Heller)
http://www.iht.com/articles/reuters/2008/12/03/africa/OUKWD-UK-PALESTINIANS-JOURNALISTS.php


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U.S.-led coalition in Iraq dwindles as allies leave
Reuters
Wednesday, December 3, 2008
By Michael Christie
A string of departures by the U.S. military's allies in Iraq is turning into an exodus as violence subsides and the end of a U.N. mandate permitting their deployment to the country approaches.
Barely a day goes by without an end-of-mission ceremony in a dusty military camp somewhere in Iraq, with U.S., allied and Iraqi officials delivering grateful speeches to departing troops, and pinning medals on chests as military bands play.
On Wednesday, it was the turn of an Azerbaijani contingent to say goodbye at Camp Ripper in once volatile but now relatively tranquil Anbar province. On Thursday, Tongan marines will celebrate their departure at Camp Victory in Baghdad.
Troops from Bosnia-Herzegovina, South Korea, Poland, Armenia, Kazakhstan, Georgia, Latvia and Macedonia have already bade their farewells in the past two months and Japan will end its air force mission flying supplies into Iraq this year.
"The fact that we have the ability to redeploy some of those elements is actually a good news story," said Lieutenant General Lloyd Austin, commander of U.S. combat forces in Iraq.
"It's a good news story because it means security has improved in a lot of places to the point that we can actually operate effectively despite the loss of some of that great capability," he told a news conference.
The tasks carried out by the partners would be taken on by an ever-more confident and capable Iraqi army, Austin added.
The sectarian bloodshed unleashed after the U.S.-led invasion in 2003 has dropped significantly in the past year.
Once dominant Sunni Arabs who initially allied with al Qaeda in confronting the U.S. invaders switched their allegiance to the Shi'ite-led government, and the government cracked down on Shi'ite militias that had established violent fiefdoms.
Additional U.S. troops and a build-up of Iraqi army and police ranks helped to drive al Qaeda and others underground.
Car bombs and suicide bombings remain frequent and bloody -- at least 296 Iraqi civilians died violent deaths in November. But U.S. military deaths last month dropped to the lowest level since the war began more than five years ago, with six killed.
At its peak, the force that outgoing U.S. President George W. Bush called a "coalition of the willing" in the run-up to the invasion of Iraq included troops from 38 nations. But the overwhelming bulk consisted of U.S. soldiers.
There are 146,000 U.S. and 4,100 British troops in Iraq now. Other nations have no more than 1,000.
The number of allies would slip to a "handful" by the end of the year, a Bush administration official said in September.
This is not just down to a sharp decline in violence.
A U.N. mandate governing foreign troops in Iraq expires at the end of the year and Iraq does not want it to be renewed.
The Iraqi government has negotiated a security pact with the United States that paves the way for U.S. troops to pull out of Iraqi cities by the middle of next year and withdraw completely from the country by the end of 2011.
But the pact does not cover Washington's partners. Britain is seeking its own bilateral accord to allow its troops in Iraq to remain near the southern city of Basra into next year.
(Editing by Tim Cocks and Richard Balmforth)
http://www.iht.com/articles/reuters/2008/12/03/africa/OUKWD-UK-IRAQ-COALITION.php













Rwanda stirs Congo's troubles
By Jeffrey Gettleman
Wednesday, December 3, 2008
KIGALI, Rwanda: There is a general rule in Africa, if not across the world: Behind any rebellion with legs is usually a meddling neighbor. And whether the rebellion in eastern Congo explodes into another full-fledged war, and drags a large chunk of central Africa with it, seems likely to depend on the involvement of Rwanda, Congo's tiny but disproportionately mighty neighbor.
There is a long and bloody history here, and this time around the evidence seems to be growing that Rwanda, or at a minimum, many Rwandans, are meddling again in Congo's troubles. As before, Rwanda's stake in Congo is a complex mix of strategic interest, business opportunity and the real fears of a nation that has heroically built itself after near obliteration by ethnic hatred.
The signs are ever-more obvious, if not yet entirely open. Several demobilized Rwandan soldiers, speaking in hushed tones in Kigali, Rwanda's tightly controlled capital, described a systematic effort by Rwanda's government-run demobilization commission to send hundreds if not thousands of fighters to the rebel front lines.
Former rebel soldiers in Congo said that they had seen Rwandan officers plucking off the Rwandan flags from the shoulders of their fatigues after they had arrived and that Rwandan officers served as the backbone of the rebel army. Congolese wildlife rangers in the gorilla park on the thickly forested Rwanda-Congo border said countless heavily armed men routinely crossed over from Rwanda into Congo.
A Rwandan government administrator said a military hospital in Kigali was treating many Rwandan soldiers who were recently wounded while fighting in Congo, but the administrator said he could get thrown in jail for talking about it.
There seems to be a reinvigorated sense of the longstanding brotherhood between the Congolese rebels, who are mostly ethnic Tutsi, and the Tutsi-led government of Rwanda, which has supported these same rebels in the past.
The brotherhood is relatively secret for now, just as it was in the late 1990s when Rwanda denied being involved in Congo, only to later admit that it was occupying a vast section of the country. Rwanda's leaders are vigilant about not endangering their carefully crafted reputation as responsible, development-oriented friends of the West.
Senior Rwandan officials do not deny that demobilized Rwandan soldiers are fighting in Congo, but they said the soldiers were doing it on their own, without any government backing.
"They are ordinary citizens, and if their travel documents are in order, they can go ahead and travel," said Joseph Mutaboba, Rwanda's special envoy for the Great Lakes region.
But according to several demobilized soldiers, Rwandan government officials are involved, providing bus fare for the men to travel to Congo and updating the rebel leadership each month on how many fighters from Rwanda are about to come over. Once they get to the rebel camps, the Rwandan veterans said they flashed their Rwandan army identification cards and then were assigned to a rebel unit.
"We usually get a promotion," said one fighter who was recently a corporal in the Rwandan army and served as a sergeant in the rebel forces last month. He said that he could be severely punished if identified and that Rwandan officials and rebel commanders told the fighters not to say anything about the cooperation.
Another cause for suspicion is Rwanda's past plundering of Congo's rich trove of minerals, going back to the late 1990s when the Rwandan army seized control of eastern Congo and pumped hundreds of millions of dollars of smuggled coltan, cassiterite and even diamonds back to Rwanda, according to United Nations documents.
Many current high-ranking Rwandan officials, including the minister of finance, the ambassador to China and the deputy director of the central bank, were executives at a holding company that a United Nations panel in 2002 implicated in the illicit mineral trade and called to be sanctioned. The officials say that they are no longer part of that company and that the company did nothing wrong. Nonetheless, eastern Congo's lucrative mineral business still seems to be heavily influenced by ethnic Rwandan businessmen with close ties to Kigali.
Some of the most powerful players Wednesday, like Modeste Makabuza Ngoga, who runs a small empire of coffee, tea, transport and mineral companies in eastern Congo, are part of a Tutsi-dominated triangle involving the Rwandan government, the conflict-driven mineral trade and a powerful rebel movement led by a renegade general, Laurent Nkunda, a former officer in Rwanda's army.
Several United Nations reports have accused Makabuza Ngoga of using strong-arm tactics to smuggle minerals from Congo to Rwanda and one report said that he enjoyed "close ties" to Rwanda's president, Paul Kagame. This week a rebel spokesman said that Makabuza Ngoga was on Nkunda's "College of Honorables," essentially a rebel advisory board. Nkunda's troops recently marched into areas known to be mineral rich — and areas where ethnic Rwandan businessmen are trying to gain a foothold.
Makabuza Ngoga said in an interview that he was not doing anything illegal.
"I'm just a businessman," he said. "I work with them all."
A Tale of Two Africas
Rwanda and Congo are polar opposites, a true David-and-Goliath matchup. Crossing the border from Gisenyi, Rwanda, to Goma, Congo, is a journey across two Africas, in the span of about 100 yards.
The two-minute walk takes you from one of the smallest, tidiest, most promising countries on the continent, where women in white rubber gloves sweep the streets every morning and government employees are at their desks by 7 a.m., to one of the biggest, messiest and most violent African states, home to a conflict that has killed more than five million people, more than any other since World War II.
While Congo is vast, Rwanda is packed. While the Congolese are often playful, known for outlandish dress and great music, Rwandans are reserved. While Congo is naturally rich, Rwanda is perennially poor. Yet Rwanda has emerged as a darling of the aid world, praised for strong, uncorrupt leadership and the strides it has made in fighting AIDS and poverty.
The fates of the two countries are inextricably linked. In 1994, Hutu militias in Rwanda killed 800,000 people, mostly minority Tutsis, and then fled into eastern Congo. Rwanda responded by invading Congo in 1997 and 1998, denying it each time initially but later taking responsibility. Those invasions catalyzed years of war that drew in the armies of half a dozen African countries.
When the Rwandan military controlled eastern Congo from 1998 to 2002, it established a highly organized military-industrial network to illegally exploit Congo's riches, according to United Nations documents. A 2002 United Nations report said that top Rwandan military officers worked closely with some of the most notorious smugglers and arms traffickers in the world, including Viktor Bout, a former Soviet arms dealer nicknamed the Merchant of Death who was arrested this year.
"I used to see generals at the airport coming back from Congo with suitcases full of cash," said a former Rwandan government official who said that if he was identified, he could be killed.
Rwanda may have a lot going for it — a high economic growth rate, low corruption, a Parliament with a majority of seats held by women. But many people here say they do not feel free. When the former government official was interviewed at a Kigali hotel, he abruptly stopped talking whenever the maid walked by.
"You never know," he whispered, nodding toward the young woman who was smiling behind a plate-glass window smeared with soap suds. "She could be a lieutenant."
Scarred by a Genocide
Rwanda is tiny, tough and intensely patriotic. Like Israel, it is a postgenocidal state, built on an ethos of self-sacrifice. Its national motto is Never Again.
One oft-cited threat is the Democratic Forces for the Liberation of Rwanda, also known as the FDLR, a mostly Hutu militia that is based just across the border in the green folds of eastern Congo. The militia is thought to number 5,000 to 10,000 fighters. Some of its leaders are wanted "genocidaires" who fled Rwanda in 1994 after massacring Tutsi.
"These guys want to come back and finish the job," said Major Jill Rutaremara, a spokesman for Rwanda's military Forces.
Nkunda, the rebel leader, has used the presence of the Hutu militia and the Congo government's failure to disarm it as a rationale for his continued armed struggle. His forces have routed Congolese government troops in the past two months and pushed the region to the precipice of another regional war. United Nations officials say he has not acted entirely alone, either: they said they observed Rwandan tanks firing from Rwandan territory to support Nkunda's troops as they advanced in October. Rwandan officials denied this.
Rwandan military officers admit, when pressed, that the Hutu militia has little chance of destabilizing Rwanda. The last time it attacked inside Rwanda was 2001.
Some Western diplomats, Congolese officials and Rwandan dissidents now believe that the Rwandan government is simply using the FDLR as an excuse to prop up Nkunda and maintain a sphere of influence in the mineral-rich area across the border.
"These are people who want to make business, and they cover it up with politics," said Faustin Twagiramungu, a former Rwandan prime minister now in exile in Belgium.
Congolese officials say that that the Rwandan government is making no efforts to bring the Hutu militiamen back into Rwanda because Rwanda wants to make sure that any Hutu-Tutsi violence plays out in Congo.
"What's happening in eastern Congo is a Rwandese war is being fought on Congolese soil," said Kikaya bin Karubi, a member of Congo's Parliament.
Rwandan officials dismiss these claims with a confident chuckle.
"We want to deal with these guys here," Major Rutaremara said. "We want them back."
Mutaboba, the Rwandan government envoy, said the allegations were part of "an organized campaign to distort the whole problem and give it a regional dimension."
"It's not," he said. "It's a Congo problem."
Ethnic and Business Ties
But it may be hard drawing a fine line between Congo and Rwanda, despite the lines on a map. There is a long history of ethnic and business ties that seamlessly flow across the colonially imposed borders, especially among the minority Tutsi who dominate business on both sides, yet at the same time, feel threatened and a heightened sense of community as a result.
For example, several demobilized Rwandan soldiers in Kigali said the vast majority of volunteers who recently crossed the border to fight with Nkunda were Tutsi. Some of the soldiers said that they had relatives living in eastern Congo and that it was like a second home to them.
According to four soldiers and one employee at the Rwandan demobilization commission, at the end of their monthly meetings, officials at the commission ask for anyone fit and ready to fight to stand up. Sometimes the commission provides bus fare to the border, the soldiers said, and other travel costs. The soldiers usually travel unarmed, picking up weapons on the other side, they said.
One demobilized Rwandan lieutenant who just got back from fighting in Congo looked surprised when asked why he went.
"Why? I am Tutsi," he said. "One hundred percent Tutsi."
http://www.iht.com/articles/2008/12/03/africa/04congo.php

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Higher education may become unaffordable for most Americans
By Tamar Lewin
Wednesday, December 3, 2008
The rising cost of college - even before the recession - threatens to put higher education out of reach for most Americans, according to an annual report from the National Center for Public Policy and Higher Education.
Over all, published college tuition and fees increased 439 percent from 1982 to 2007, adjusted for inflation, the study found, while median family income rose 147 percent. Student borrowing has more than doubled in the last decade, and students from lower-income families, on average, get smaller grants from the colleges they attend than students from more affluent families.
"If we go on this way for another 25 years, we won't have an affordable system of higher education," said Patrick Callan, president of the center, a nonpartisan organization that promotes access to higher education.
"When we come out of the recession," Callan added, "we're really going to be in jeopardy, because the educational gap between our work force and the rest of the world will make it very hard to be competitive. Already, we're one of the few countries where 25- to 34-year-olds are less educated than older workers."
Although college enrollment has continued to rise in recent years, Callan said, it is not clear how long that can continue.
"The middle class has been financing it through debt," he said. "The scenario has been that families that have a history of sending kids to college will do whatever if takes, even if that means a huge amount of debt."
But low-income students, he said, will be less able to afford college. Already, he said, the strains are clear.
The report, "Measuring Up 2008," is one of the few to compare net college costs - that is, a year's tuition, fees, room and board, minus financial aid - against median family income. Those findings are stark. Last year, the net cost at a four-year public university amounted to 28 percent of the median family income, while a four-year private university cost 76 percent of the median family income.
The share of income required to pay for college, even with financial aid, has been growing especially fast for lower-income families, the report found.
Among the poorest families - those with incomes in the lowest 20 percent - the net cost of a year at a public university was 55 percent of median income, up from 39 percent in 1999-2000. At community colleges, long seen as a safety net, that cost was 49 percent of the poorest families' median income last year, up from 40 percent in 1999-2000.
The likelihood of large tuition increases next year is especially worrying, Callan said. "Most governors' budgets don't come out until January, but what we're seeing so far is Florida talking about a 15 percent increase, Washington State talking about a 20 percent increase and California with a mixture of budget cuts and enrollment cuts," he said.
In a separate report released this week by the National Association of State Universities and Land-Grant Colleges, the public universities acknowledged the looming crisis but painted a different picture.
That report emphasized that families have many higher-education choices, from community colleges, where tuition and fees averaged about $3,200, to private research universities, where they cost more than $33,000.
"We think public higher education is affordable right now, but we're concerned that it won't be, if the changes we're seeing continue and family income doesn't go up," said David Shulenburger, the group's vice president for academic affairs and co-author of the report. "The public conversation is very often in terms of a $35,000 price tag, but what you get at major public research university is, for the most part, still affordable at 6,000 bucks a year."
Although tuition has risen at public universities, his report said, that has largely been to make up for declining state appropriations.
The report offered its own cost projections, not including room and board.
"Projecting out to 2036, tuition would go from 11 percent of the family budget to 24 percent of the family budget, and that's pretty huge," Shulenburger said. "We only looked at tuition and fees because those are the only things we can control."
Looking at total costs, as families must, he said, his group shared Callan's concerns.
Shulenburger's report suggested that public universities explore a variety of approaches to lower costs - distance learning, better use of the last year in high school, perhaps even shortening college from four years.
"There's an awful lot of experimentation going on right now, and that needs to go on," he said. "If you teach a course by distance with 1,000 students, does that affect learning? Till we know the answer, it's difficult to control costs in ways that don't affect quality."
Callan, for his part, urged a reversal in states' approach to financing higher education.
"When the economy is good, and state universities are somewhat better funded, we raise tuition as little as possible," he said. "When the economy is bad, we raise tuition and sock it to families, when people can least afford it. That's exactly the opposite of what we need."
http://www.iht.com/articles/2008/12/03/america/college.php

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WITNESS - Counting Congo's bodies
Reuters
Thursday, December 4, 2008

Finbarr O'Reilly, Reuters chief photographer for West and Central Africa, was born in Swansea, Wales, in 1971 and started as an arts correspondent. He joined Reuters in 2001, turning to photography in 2005 and winning the World Press Photo Award for picture of the year in 2006. In the following story he describes his latest reporting mission in the Democratic Republic of Congo.

By Finbarr O'Reilly

A Congolese refugee in a tattered baseball cap, worn clothes and blue flip-flops begged me for a cigarette at Kibati, a camp for 65,000 people displaced by fighting in eastern Congo.
I scolded him, saying smoking was bad for his health, as if anything could be worse for your health than living in this conflict-racked corner of Democratic Republic of Congo.
Machine gun fire erupted nearby and people dived for cover, ducking into rows of flimsy tents made from torn sheets of white plastic stretched over sticks.
"Mister, mister, come lie down in here," a voice called from one tent as bullets hummed nearby like an electrical current.
I snapped a few blurry pictures of people running before crawling through the curtain door of the tent, where a man and two children huddled on the ground. I kneeled above them and took a few more photographs.
"When you hear gunshots, if you lie flat, you can be OK, but if you stay up like that, paff!" said the man, Boniface Buhoro, a tailor who had fled weeks of combat further north in an area now controlled by anti-government Tutsi rebels.
Several people had already been killed by gunfire in this refugee camp in North Kivu province at the foot of Nyiragongo volcano on the front lines between Congo's army and advancing rebels. At least two more were killed in the next few days.
For 45 minutes, I lay with my legs intertwined with Buhoro's, his three-year-old son Sadiki wedged between us.
Army boots crunched past outside over black lava rock as soldiers fired their weapons at full stride.
At first we assumed rebels were attacking, but in fact drunken army troops were fighting each other, shooting randomly.
In the panic, soldiers went from tent to tent robbing refugees who had already lost almost everything, typical behaviour for the badly paid and poorly disciplined army.
"Every day, something like this happens. They rob and steal and kill us or rape the girls. We don't even have anything to eat, but they take what they want," said Buhoro.
I crawled outside as things calmed down.
The man who'd asked me for a cigarette lay face down.
"He's dead already -- stress," said someone in the small crowd around the body. He had apparently died of heart seizure.
This is how many Congolese go: if not by the gun, then from conflict-induced illnesses, preventable diseases or hunger in a resource-rich but shattered nation lacking infrastructure.
DEATH ALL AROUND
More than five million people have died, most from lack of access to food or basic health, during a decade of fighting and upheaval in Congo, according to aid agencies. This makes Congo's enduring conflict the deadliest since World War Two.
I spent two years in Democratic Republic of Congo and Rwanda from 2002 to 2004, covering the regional war that engulfed much of central Africa. The day I took shelter with Buhoro was the first on my latest trip to report again on Congo's seemingly unending cycle of violence.
Most of the victims perish far from sight, deep in the bush.
This time, death seemed all around.
Driving to the front line early one morning, mist hung over the road and smoke from Nyiragongo volcano darkened the sky.
Marking the first rebel position were the bodies of two government soldiers, a bullet through each of their skulls.
Travelling north later, I reached the hilltop village of Kirumba, where local Mai-Mai militiamen had clashed with government troops fleeing the Tutsi rebel advance.
The army quickly buried their dead, but the Mai-Mai corpses were set on fire by beer-drinking troops.
I found them the next morning, fat still bubbling on one charred corpse, its genitals cut off. Another body had an umbrella stabbed into its face. Soldiers joked and laughed.
Back near Kibati camp, I followed a funeral procession into a sun-dappled banana grove. A tiny purple casket containing the body of eight-month old Alexandrine Kabitsebangumi, who had died from cholera, was being lowered into the dark earth.
The grove was filled with graves. As women sang a haunting hymn, the mourners moved aside, allowing me to photograph.
There's no joy getting a good picture from a baby's funeral.
Another victim, another memory, another ghost.
After two weeks, I left Congo, crossing into Rwanda.
As my car climbed the steep hills, providing stunning scenic views back into Congo -- that beautiful, terrible place -- I passed another procession carrying a body on a bamboo stretcher.
I didn't stop. I just kept driving.
(For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com/)
(Editing by Pascal Fletcher and Sara Ledwith)
http://www.iht.com/articles/reuters/2008/12/04/africa/OUKWD-UK-WITNESS-CONGO-DEMOCRATIC.php









Internet helps foster communication between Iran and U.S.
By Farah Stockman


The Boston Globe
Wednesday, December 3, 2008
TEHRAN: U.S. officials took it as a quiet sign of good will: In October, the Iranian government gave permission to Iranian bloggers to travel to the United States to write about its presidential election. But minutes before the bloggers boarded the plane in Tehran, Iranian security officials reversed the decision, confiscating the bloggers' passports.
"It was like a dream," said Fariba Pajooh, a 28-year-old blogger who was slated to spend three weeks visiting American colleges and newspapers, including Harvard University and The Providence Journal.
The abruptly aborted trip illustrates an ongoing power struggle within the Iranian government over how to relate to the United States on the eve of a new - and perhaps more receptive - administration. One faction favors increased dialogue and exchanges with Americans, while another, apparently more powerful, group opposes such contact.
But the canceled blogger trip also illustrates the significant role that the Internet is already playing in fostering communication between Iran and the United States, even as the two governments remain embroiled in internal debates about whether or not to re-establish relations.
Three decades after the United States cut off diplomatic ties with Iran, blogs and e-mail have become crucial conduits for communication between the countries - and for often-lively debates among officials of both countries and average citizens.
"The Internet is our most significant ally," Goli Ameri, assistant secretary of state for Educational and Cultural Affairs, told Congress earlier this year in highlighting efforts to reach out to average Iranians.
With an estimated 60,000 active Farsi-speaking blogs, Iran has one of the most vibrant blogospheres in the world, outstripping the rest of the Middle East. In 2006 and 2007, President Mahmoud Ahmadinejad used a blog to address the American people, even as the Bush administration shunned him and American news outlets portrayed him as dangerous and unstable.
"Noble Americans," he wrote in 2006, "I consider it extremely unlikely that you, the American people, consent to the billions of dollars of annual expenditure from your treasury for this military misadventure" in Iraq.
Some Americans responded with sharp retorts, according to the blog.
"You're one of the most stupid presidents ever!" one writer - identified as an American named Nicholas - apparently wrote. "I'm sure about half of the comments posted on this blog are just totally fake and used as propaganda."
Last year, the U.S. State Department also began to use the blogosphere to engage the Iranian people, setting up a Farsi-speaking team to debate Iranian government officials on their blogs. There, representatives of the two governments argued over topics including Iran's nuclear program.
While prohibited from contacting Iranian officials in any formal way, U.S. officials seemed to relish their lengthy encounters on the Net, including one this summer with Ali Akbar Javanfekr, Ahmadinejad's media adviser.
Javanfekr had written that "the smart policies of Iranian government have strengthened the foundations of Iran's economy," which, he said, "Iran's enemies don't have the ability nor the intellect to understand."
"If by strengthening Iran's economic foundations you mean having double-digit unemployment rates, very high inflation, and the rationing of energy supplies then you are correct in saying it is hard for us to see and understand," the U.S. team responded, according to a transcript that was verified by the State Department.
Outside the realm of officialdom, many ordinary Iranians and Americans have their own stories of friendlier connections through chat rooms and on social-networking sites like YouTube and Facebook.
Farhad Ghorbani, a 24-year-old journalist with Irpana, the student arm of a state-owned news agency, searched the Internet for someone who could help him obtain a mold for shaping wood to make a violin. When he found such a person in the United States, his teacher helped him write a message in English. The American wrote back, and - despite the U.S. embargo on sending goods to Iran - sent Ghorbani the mold.
"People are relating to the Americans on the computer," he said.
"We can chat. Regardless of the political views and what the politicians do, we want to have this kind of cultural relationship with the United States."
Seeking to capitalize on such sentiments, the Bush administration recently decided to open a diplomatic office in Tehran to process visas, the first official U.S. presence in Tehran since 1979. But Secretary of State Condoleezza Rice said last week that the administration ran out of time to open the office and would now leave the decision about opening it to the Obama administration.
Iranian officials, for their part, are deeply divided over whether to welcome such a move, with many arguing that a U.S. diplomatic presence would be meddlesome and could cause embarrassing long lines for visas. But some have pushed for greater engagement.
Thus, when the Institute for War and Peace Reporting, a nongovernmental organization with offices in London and Washington, D.C., sought permission to set up a Tehran office to introduce a Web site featuring Iranian bloggers, Iran's Ministry of Culture and Islamic Guidance agreed.
And when the institute proposed bringing a group of bloggers to America to cover the presidential election, which drew enormous interest in Iran, the culture ministry sought to make it happen, vetoing just two of the bloggers.
At 4 a.m. on Oct. 15, ten bloggers arrived at the airport in Tehran ready for the trip to New York. But just before they boarded the plane, a security official arrived, asked them to step aside, and seized their luggage.
No explanation was given, Pajooh said. In the weeks that followed, at least 7 of the 10 bloggers were interrogated for hours by Iranian security officials. Their passports still have not been returned, Pajooh said.
Iran's Minister of Culture and Islamic Guidance, Mohammad Reza Saffar-Harandi, declined to specify why the bloggers' trip was canceled.
"This is a new thing, and we had our advisers changed," he said through a translator, before criticizing the United States for its alleged ill-treatment of visiting Iranian journalists. "We have always witnessed bad conduct on the other side."
Trita Parsi, an analyst based in Washington who advocates greater engagement with Iran, likened the infighting between various Iranian factions to the jostling among U.S. policy makers over how to deal with Iran.
"You have a political system that is in some way at war with itself, and this is an outcome," he said. "Both Iran and the United States are having that problem right now."
http://www.iht.com/articles/2008/12/03/mideast/bloggers.php





N.Korean teen defectors get capitalist education
Reuters
Wednesday, December 3, 2008
By Jon Herskovitz
North Korean teenager Han Jee-hee's journey to school in South Korea began by slipping past border guards into China where she went into hiding to avoid forcible repatriation home.
Han eventually made it to South Korea, leaving behind family, friends and a broken education system in the North where schools have a curriculum steeped in extolling the state's communist ideology.
The 19-year-old is among more than 200 North Koreans studying at the Hangyoreh Junior and Senior High School, set up by South Korea to prepare the young defectors for the huge changes they face living in a capitalist state. Lessons include academic courses as well as learning to use gadgets such as cell phones that other teenagers take for granted.
"Finding a way to live after they leave this school is nothing compared to the struggle it took for them to get here," said Principal Gwak Jong-moon, an expert in special education.
The students, wearing the school's stylish blue blazers, on average have missed nearly four years of school during their escape from the North. After reaching China, they typically went into hiding and then made their way to a third country from where they sought passage to South Korea.
The children at Hangyoreh mostly come from the poorest parts of impoverished North Korea. Most live in South Korea without one or both of their parents, few have had much formal education and almost all have emotional scars from their harrowing escapes.
"For me survival was far more important than studying," said a 19-year-old defector, who asked not to be named. He spent years in hiding in China before seeking passage to the South.
LIFE ON THE RUN
Up until the first 22 students came to the school when it opened in 2006, the government did not have any special curriculum for the defectors, who were usually so overwhelmed by schools in the South that they simply dropped out.
Besides academic courses, the students learn how to surf the Internet as well as how to use basic tools of the modern world such as credit cards.
Civic groups, many of them Christian-based, have also tried to help by setting up private schools for defectors.
Students stay from six months to two years at the Hangyoreh school before making the transition to a regular school, or starting a job.
Some critics say more should be done to prepare the young defectors for the country's gruelling education system and its cut-throat job market.
Hangyoreh has been pushed to its limits due to an ever increasing number of defectors. About half of the 14,000 North Koreans who have defected to the South since 1989 have arrived in the last three years.
The school, situated in hills overlooking farmland about an hour's drive from Seoul, has modern classrooms, a well-equipped gym, language labs and dorms where students live four-to-a-room.
The students usually take new names in the South because the North regularly sends relatives of defectors to prison to deter others from leaving the destitute state.
The escape route from North Korea is via China which regards these defectors as economic refugees and forcibly repatriates them home where rights groups say they are usually imprisoned in brutal conditions.
YANKEE IMPERIALISTS
Han left North Korea to join an aunt who had already made her way to the South. She reached South Korea via China and Vietnam.
"We were taught in the North that schools in the South were tightly controlled and sometimes students there were killed by Yankee imperialists," she said.
Han, who said she loves her new life, hopes to be an English teacher. But she is wary of the challenge of South Korea's intensely competitive education system.
"Competition can be good if it motivates me and challenges me to be better, but here you have to step on others to climb up the ladder," she said.
For most of the students, the time at Hangyoreh is a respite ahead of a new life in the South, where defectors are often treated like strangers who happen to speak the same language.
A few graduates have managed to obtain places at South Korea's top universities but many of the Hangyoreh students have scaled down their career dreams.
"I wanted to be a doctor back in the North, but I've come to realise after I got to the South that I might not be competent enough," said Hangyoreh student Jang Jung-sim. "Now I've set my sights on becoming a kindergarten teacher."
(Additional reporting by Kim Junghyun, editing by Megan Goldin)
http://www.iht.com/articles/reuters/2008/12/03/asia/OUKWD-UK-KOREA-DEFECTORS-SCHOOL.php

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Europe's big stimulus plans don't quite add up
By David Jolly
Wednesday, December 3, 2008
PARIS: As recession has swept across Europe, countries have been rushing to respond with impressive-sounding stimulus plans: €11 billion in Spain, €31 in Poland, €80 billion in Italy, €32 billion in Germany and £20 billion in Britain. France was set to follow Thursday with its own €20 billion plan.
There is just one problem, economists and analysts say: Behind the big headlines, the numbers are wispy, at best, and there is very little in the way of new spending.
Surveying the various European plans, Gilles Moëc, senior economist at Bank of America in London, said the total was far short of what was necessary. "The harvest is not so nice," he said.
But Dominique Barbet, an economist at BNP Paribas in Paris, said the main point of the dramatic announcements was "to reassure the public and to open the door so that the governments that want to do something big can do it."
Spain and Ireland, for example, have relatively healthy public finances, he said, so they have more scope for spending.
Italy and France, which have been skirting EU budget limits for years, "can announce plans to make sure small and medium companies can get credit, but that doesn't mean it will actually cost anything."
Europe, which fell into recession in the third quarter, clearly needs a lift. As if to underscore the dismal state of the economy, the EU statistics office reported Wednesday that retail sales in the 27-nation bloc fell 0.8 percent in October from a year earlier.
The European Commission, the executive arm of the EU, last week proposed an economic stimulus plan for the bloc valued at about €200 billion, or $254 billion, 1.5 percent of EU gross domestic product, including the figures already announced. It called for the 27 member governments to provide €170 billion of the total.
The remaining €30 billion was to come from the EU budget and the European Investment Bank. In any event, European finance ministers vetoed €5 billion of that spending Tuesday.
The national plans are also coming up short. Prime Minister Silvio Berlusconi's supposed €80 billion stimulus package, which cleared the Italian cabinet last Friday, contained virtually no new spending, economists said. Poland, citing its finances and its desire to join the euro currency bloc, said on Sunday that it would not use deficit spending to bolster growth.
So far, Britain's package, at about 1.1 percent of GDP, and Spain's which is considerably more, are the most serious moves. But analysts note that their economies also seem to be among the hardest hit by the global crisis.
In Spain, which is losing more than 40,000 jobs a week, Prime Minister José Luis Rodríguez Zapatero has announced a series of stimulus packages this year, including an €11 billion initiative last week. And Gordon Brown's government is cutting the sales tax in Britain by 2.5 percentage points.
The contrast with the United States is striking. The incoming Obama administration is expected to push for a stimulus package of $600 billion or more, 4 percent of GDP, which comes on top of the $168 billion the Bush administration sent out in tax rebate checks last summer.
By way of comparison, the UN Millennium Development Goals include a call for governments to spend 0.7 percent of gross national product as official development assistance - a target few countries meet.
Washington, of course, has much greater power to carry out economic policy than does Brussels.
Thomas Mayer, chief European economist, at Deutsche Bank in London, noted that with no central political or fiscal authority, the European Commission could only suggest action.
"The only country with the room for maneuver and the critical mass is Germany," Mayer said. "But the Germans don't want to move." Chancellor Angela Merkel's government has presented its crisis spending plans as being worth as much as €50 billion over two years, he said, but "it all boils down to €6 billion next year and €6 billion in 2010. All the rest is acrobatics."
Merkel said Monday that she was "keeping all options" open," and there is talk of a second stimulus package, but the chancellor has also stressed that Germany should not get into "a race for billions" with other countries.
"There's an ideological resistance in some European countries" to using deficit spending, Katinka Barysch, an economist at the Center for European Reform in London, said. "People are saying: 'It's borrowing and spending that got us into this mess, so why should we do more of it?"'
In fact, there is not as much need for deficit spending in Europe as in the United States, she said, because Europe has a more extensive social welfare system that automatically buffers the effects of a downturn. "We're also a little less Keynesian than they are in America," she added, referring to the economic theory that governments should seek to replace private demand with deficit spending during economic downturns.
Barbet at BNP Paribas also noted that demographics in Europe were different than in the United States.
"The U.S. population is growing faster than in Europe, so we have to be extremely cautious about the debt we leave for future generations," Barbet said
There is a certain irony in the fact that the European Commission, which has been harping for years on the need for states to keep their spending in check, should now be urging them so unsuccessfully to spend.
José Manuel Barroso, the EC president, said last week that the EU's tough budgetary rules - which restrict deficits to 3 percent of GDP in normal times - would be applied with maximum flexibility during the crisis.
President Nicolas Sarkozy was expected to announce Thursday the French government's stimulus plans. Economists estimate it will total about €20 billion, a little more than 1 percent of GDP, but once again, almost none of that would require additional spending.
Jean Pisani-Ferry, an economist at the Bruegel research institute in Brussels, wrote in a commentary published Thursday in Le Monde that the effort also risked undesired consequences, as national governments seek to aid national champions instead of focusing firepower on the best macro-economic targets.
The French plan, for example, is expected to include a €1,000 rebate for consumers who trade in their old cars for newer less-polluting models. Proponents of the plan are touting the "green" benefit, but it also stands to give the faltering French auto industry a shot in the arm.
With the lack of a coherent or coordinated fiscal policy response, EU governments may just end up leaving the economic stimulus to monetary policy. The European Central Bank and Bank of England were both expected to cut interest rates at their meetings Thursday.
http://www.iht.com/articles/2008/12/03/business/stimulus.php





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Budgets behaving badly
By David Leonhardt
Wednesday, December 3, 2008
WASHINGTON: Last week, on the same day the U.S. Treasury Department announced a brand new $800 billion program to stem the financial crisis, Barack Obama held a news conference to say that he was serious about getting the budget deficit under control.
To which a properly skeptical citizen might respond: Good luck with that.
The deficit in the current fiscal year could end up approaching $1 trillion, which is roughly equal to the combined budgets of the military and Medicare, a health insurance program for people aged 65 and over. Given the depth of the crisis, running a big deficit makes perfect sense. But the government also needs to have long-term plans to reduce it. And the sort of deficit we're now facing will require some pretty creative plans.
Fortunately, there is a group of economists who are almost ideally suited to help Obama with this task — to come up with budget cuts that can reduce government spending without harming the quality of government services. They're called behavioral economists.
Behavioral economics sprang up about three decades ago as a radical critique of the standard assumption that human beings behaved in economically rational ways. The behaviorialists, as they're known, pointed out that this assumption was ridiculous.
Would-be weight losers pay $100 a month to belong to a gym they rarely visit. Borrowers get fooled into taking out a loan with an appealing teaser rate. Patients fail to follow even a basic regimen of prescribed drugs — a failure that can leave them with serious medical complications and Medicare with big hospital bills.
Thanks to insights like these, behavioral economics has entered the mainstream. In this year's campaign, Obama signaled an interest in the field by surrounding himself with advisers who were quite sympathetic to it. Of course, this was before the financial crisis became so serious that it overwhelmed everything else. Today, it's reasonable to ask whether the Obama administration will still have time for behavioral economics.
That's why some economists are now talking about whether Obama should add a new kind of adviser to his team, one specifically charged with translating the lessons of the behavioral revolution into real-world policies. This person would work with Medicare officials to improve drug compliance. He or she would think about how mortgage regulations should be rewritten, how health insurance choices should be presented and how carbon emissions might be cut.
"The issues we struggle with today are inherently behavioral as never before," Sendhil Mullainathan, a behavioral economist at Harvard, told me. "It's impossible to think of the current mortgage crisis without thinking seriously about underlying consumer psychology. And it's impossible to think of future regulatory fixes without thinking seriously about that issue."
Behavioral economics may sound like an ivory tower subject, but it's really the opposite. It's the study of everyday life as it actually happens, not as some textbook says it should. It offers economic policy makers a new set of tools — a more subtle, psychological set — beyond tax rates, interest rates and other traditional tools.
And it can already claim one big policy success. In 2006, Congress passed a pension bill with a clause that came straight out of research on savings by Richard Thaler, a behavioral pioneer, and others. ( Thaler and Cass Sunstein recently wrote "Nudge," a book advocating behavioral policies, and both were informal advisers to the Obama campaign.)
The savings research had found that many more people saved money in a 401(k) retirement plan if they didn't have to take active steps to join the plan. In one study, only 45 percent of a company's new employees participated in the 401(k) when doing so required them to take some kind of action, like filling out a form. Eighty-six percent participated when doing so was the default option.
The new pension law gave companies a small incentive to make employees opt out of a 401(k), rather than opt in. The law doesn't restrict employees' choices in any way. It simply encourages a more sensible default. Peter Orszag, Obama's nominee for budget director, has called the law "a tangible example of how economic research can be rapidly translated into concrete policy changes that should improve people's lives."
Orszag's interest in behavioral work, together with the reach of the budget office, makes it the obvious place for a behavioral maven to be based. An outside committee of experts — a smaller-scale version of the financial crisis board that will be headed by Paul Volcker, the former Federal Reserve chairman — may also make sense. Obama's aides have learned that they have a better chance of persuading him of an argument when they tell him that they've spoken with the top experts in a given field.
The group would have plenty of work. Take the current policies toward prescription drugs. Right now, Medicare separates hospital insurance and drug insurance into different programs. The insurers running the drug plans, Dana Goldman of the RAND Corporation points out, make more money when they have to cover fewer prescriptions.
The government, on the other hand, often loses money when people don't take medications for chronic conditions like diabetes and hypertension. Later on, these people show up at the hospital, and Medicare foots the bill.
A more sensible policy would get rid of these perverse incentives and also take into account the reasons that patients fail to take their pills. Goldman suggests charging an annual fee for a drug, rather than the current system of charging people separately for each prescription refill, which gives them a reason not to get the refill.
To take another example, many laid-off workers remain unemployed for months at a time, out of a mistaken belief that they will be able to find a new job that pays as much as their old one. In the process, they often do permanent damage to their finances. Jeffrey Kling of the Brookings Institution says that the unemployment insurance system could help people get over this psychological barrier by temporarily subsidizing a new, lower-paying job.
A behaviorally savvy Social Security Administration, meanwhile, could help people make better choices about when to start receiving checks. (Many now do so at age 62, the earliest possible date, which is generally a mistake.) The Environmental Protection Agency could redesign fuel economy stickers so that they emphasized the long-term gasoline costs of driving the vehicle. Banking regulators could devise a standard, default mortgage that didn't involve a teaser rate or other gimmicks.
During the campaign, some liberals criticized the Obama team's interest in behavioral economics, saying that the field wasn't ambitious enough to solve today's biggest economic problems. And it certainly can't solve the current crisis — or the deficit — by itself. But no one is arguing that the Obama administration bury itself in behavioral research instead of working on the crisis.
The promise of behavioral economics is that it can help create a better government, one that wastes less money and does more to improve people's lives. That's hardly a modest goal.
"Everybody is preoccupied, as they should be, with preventing the next Great Depression," as Thaler, an economist at the University of Chicago, says. "But it will be important for the administration to have people tasked with thinking long term — like, once it's not O.K. to spend $100 billion on a whim, how do you get our budget under control?"


http://www.iht.com/articles/2008/12/03/business/03leonhardt.php





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Bank of America-Merrill merger becomes a necessity
By Elinor Comlay and Jonathan Stempel


Reuters
Wednesday, December 3, 2008
NEW YORK: Bank of America and Merrill Lynch shareholders may vote "yes" on the companies' merger because of the consequences of voting "no."
Merrill was arguably saved from extinction when it agreed to merge on Sept. 15, an hour before Lehman Brothers filed for bankruptcy. The fear was that Merrill could be next if shareholders and trading partners fled, as many did at Lehman and the former Bear Stearns.
The value of the all-stock merger had fallen by Monday to about $19 billion from an original $50 billion on concern that a deep economic recession would cause credit losses to soar and require Bank of America to raise plenty of dilutive capital.
Still, Bank of America and Merrill shareholders are expected to vote Friday morning for the merger. Bank of America shareholders will vote for it because of the potential long-term benefits, and Merrill's will vote for it because voting "no" could be a death sentence.
Bank of America and Merrill representatives could not immediately be reached for comment.
Merging "is more important for Merrill," said Cassandra Toroian, chief investment officer at Bell Rock Capital in Paoli, Pennsylvania, which owns Bank of America shares.
"Do I wish it wasn't at this price? Yes, but long-term shareholders recognize it's truly an opportunity."
Merrill may appear pricey after JPMorgan Chase paid $1.9 billion for Washington Mutual's bank assets, and Wells Fargo agreed to buy Wachovia, valued Monday at $10.1 billion.
But the merger has already won the blessings of the U.S. Federal Reserve and major shareholder advisers. Bank of America must hold a vote because Merrill shareholders would own close to one-fourth of the merged bank. A closing is expected later this month.
Adding Merrill would lift Bank of America, based in Charlotte, North Carolina, above JPMorgan and Citigroup as the largest U.S. bank by assets.
Bank of America would have the largest U.S. retail bank and brokerage, and become one of the world's largest wealth managers and investment banks. It expects $7 billion of annual cost savings, but has not said where. CNBC television said on Monday that the merged entity could cut 10,000 jobs, mostly from Merrill.
Both companies have declined to detail expected cost cuts.
Merrill shareholders would receive 0.8595 of a Bank of America share for each of their shares. As of the close Monday, Merrill shares traded at an 8.3 percent discount to the price implied by Bank of America's offer, suggesting that some investors still believe the merger will not happen. That spread, however, was more than twice as large two months ago.
Since becoming Bank of America's chief in 2001, Kenneth Lewis has integrated several purchases, including FleetBoston Financial, MBNA and LaSalle Bank.
Yet investors worry that with the U.S. economy in recession he is biting off too much, even with a $25 billion infusion from the government's financial industry bailout.
In July, Bank of America bought Countrywide Financial, adding exposure to a sinking housing market that is nowhere near a bottom. Merrill, meanwhile, as of Sept. 26 had more than $72 billion of mortgage exposure, including $39.6 billion to residential loans and $15.7 billion to commercial real estate.
Credit issues lurk elsewhere. Bank of America's credit card unit had a third-quarter loss, and Lewis said on Nov. 18 that the card industry may face its biggest losses ever.
Keeping Merrill's 17,000 brokers happy is critical, although Merrill said in November that it expected most will stay. Lewis called Merrill's brokerage "the crown jewel" in the merger. The chief executive of Merrill, John Thain, was named to run the combined company's investment banking and wealth-management businesses.
"The franchise is going to be very formidable," said Michael Nix, a portfolio manager at Greenwood Capital Associates in Greenwood, South Carolina.


http://www.iht.com/articles/2008/12/03/business/deal04.php





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Merrill reportedly plans to halve year-end bonuses
Reuters
Wednesday, December 3, 2008
(Reuters) - Merrill Lynch, which is set to merge with Bank of America , plans to cut year-end bonuses in half, Bloomberg News said, citing two people with knowledge of the situation.
Bonuses on average will fall 50 percent, and some traders and investment bankers will face steeper cuts, the people, who declined to be identified because the plans are not officially public, told the news service.
The company could not be immediately reached for comment.
Merrill's revenue through September fell 96 percent from a year earlier, forcing Chief Executive John Thain to slash compensation, the firm's biggest expense, the Bloomberg report said.
Merrill agreed to merge with Bank of America on September 15, an hour before Lehman Brothers Holdings Inc filed for bankruptcy. The fear was that Merrill could be next if shareholders and trading partners fled, as many did at Lehman and the former Bear Stearns.
Bank of America and Merrill shareholders are expected to vote on Friday morning for the merger.
(Reporting by Pratish Narayanan in Bangalore, editing by Will Waterman)


http://www.iht.com/articles/reuters/2008/12/03/business/OUKBS-UK-MERRILL-BONUS.php





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Charities no haven for laid-off bankers
Reuters
Wednesday, December 3, 2008
By Rebekah Curtis
People dumped from finance jobs who hope to find employment in the voluntary sector may have to reconsider, because as Britain slips into recession, ailing charities are struggling to absorb the unemployed.
So far 180,000 financial professionals worldwide have lost their jobs as banks implode, prompting talented and financially astute people to seek work in other sectors.
Some of those job-hunters are turning to teaching maths and science at schools. But British charities are also seeing increased interest from the newly unemployed.
"In our shops people come and volunteer who have been made redundant. And in the head office too," said Rosie Shannon, spokeswoman for charity Save the Children.
But unless people are prepared to serve in shops or fulfil administrative roles for nothing, they may struggle to find the unpaid posts to fill gaps in both their time and their resumes.
And as a tighter-fisted public cuts down on donations and corporate partnerships fall by the wayside, charities are also beginning to lay employees off and turn away volunteers.
International development charity VSO (Voluntary Service Overseas) said it received 2,572 enquiries for voluntary work between September and mid-November this year, more than double the 1,233 it received for the same period in 2007.
VSO said that unless applicants had management experience, it struggled to place them.
"We've had an increase in interest from people from that background but we haven't been able to accept applications because we actually have very few jobs for financial professionals," said VSO spokeswoman Catherine Raynor.
"It's a shame," she said. "People are keen to offer their time and commitment, so it's never easy to say they're not right. But it's our commitment to our partners to get the best people for the jobs," she added.
"If you've had management experience within your role ... rather than very specific financial skills, then we'd love to hear from you."
LUXURY OF CHARITY
The axe is heaviest on financial service jobs, but the slowdown is also hitting charities.
"Charitable giving is...a luxury good in economic terms. I would expect charities to have a relatively hard time," said Stephen Lea, an economic psychologist at the University of Exeter.
Three-quarters of charities believe income will remain stable or decrease in the next year, according to research from the Institute of Fundraising, the Charity Finance Directors' Group and PricewaterhouseCoopers.
The survey of 362 charities showed 32 percent putting capital projects on hold, while 71 percent expect either no growth or lower income from corporations in the coming 12 months.
Non-profit institutions serving households, the only available measure of charities in Britain, contributed about 3 percent of GDP in 2007, according to the Office for National Statistics.
JOB CUTS
Nearly one-third of British charities cut jobs between Sept 2007 and Sept 2008 and slightly more than half limited staff pay increases, according to a survey carried out by the Charities Aid Foundation and the Association of Chief Executives of the Voluntary Sector.
Cerebral palsy charity Scope said in October it was making five senior management posts redundant, from the executive management board to other back office departments.
Internationally focussed Oxfam is preparing to cut 5-7 percent of its UK-based staff or between 35 and 45 positions in 2009/2010.
The downturn is also hitting sales in some charity shops.
"When the (economic crisis) news hit the papers five or six weeks ago things took a big tumble," said Martin Penny, manager of an Oxfam shop on London's Marylebone High Street.
"We're 20 or 25 percent down (in sales) on this time last year, we should be building up for Christmas. It's a bit gloomy," he said, adding that he had seen an increase in graduate volunteers in recent weeks.
WEATHERING THE STORM
Scope is among charities that have been directly hit by this year's hefty stock market losses.
It said in October it had lost 800,000 pounds of reserves on the stock market in a year.
Save the Children also lost money on equity investments.
"Every time the FTSE drops 100 points, Save the Children loses 175,000 pounds from the value of those investments," chief executive Jasmine Whitbread said in written remarks for Reuters.
But experts say its focus on children may help Save the Children weather the storm.
The causes most likely to retain support are those focussed on children, followed by international emergency relief and medical research, according to a survey by consultants the Management Centre.
"There are some kinds of expenditure that people conserve at all costs as they get poorer, and one of them is expenditure on children," said Lea, the psychologist at Exeter.
Giles Pegram, director of fundraising at the National Society for the Prevention of Cruelty to Children, said children are "often more vulnerable to abuse and cruelty when there is an economic downturn because poverty increases family tensions."
Charities focussed on arts heritage and culture are likely to be the worst hit in the credit crisis, the survey showed.
Some animal welfare organizations are also feeling the pinch. Animal charity Blue Cross, which depends entirely on donations, has dropped its income forecast for the coming year by 10 percent because donations from legacies have fallen by half.
Animals in need of a new home after Christmas may also see the public turn a cold shoulder.
"Many animals are not being re-homed as quickly as in previous years, presumably because people are thinking twice before taking on another pet because of the cost implications," said RSPCA spokeswoman Katy Geary.
(Editing by Catherine Bosley and Sara Ledwith)


http://www.iht.com/articles/reuters/2008/12/03/business/OUKBS-UK-FINANCIAL-BRITAIN-CHARITIES.php

















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Dollar buoyant in time of crisis
By John KempReuters
Wednesday, December 3, 2008
LONDON: Perhaps the most surprising development during the past three months has been the surging value of the dollar, the currency at the heart of the crisis. It is almost as if investors have responded to a fire alarm by running toward the source of the fire.
From a recent low on July 15, the trade-weighted value of the dollar has risen 19 percent. The dollar has been broadly stable against the yuan (up 1 percent), while posting huge gains against the Swiss franc (up 20 percent), the euro (up 26 percent), the British pound (up 35 percent) and the Australian dollar (up 52 percent). Only against the yen has it slipped marginally (down 6 percent).
Since 1997, commentators and policy makers have openly worried about the gaping U.S. trade deficit, the resulting dependence on foreign capital inflows, and the risk of a sharp correction in the value of both U.S. government bonds and the dollar if investors started to balk at financing the resulting payments gap.
Expansion of the U.S. economy witnessed a large decline in the value of the dollar by almost 40 percent from February 2002 to March 2008. As the crisis intensified and the United States slipped toward recession, there was renewed alarm about a possible currency collapse.
Instead, the dollar has witnessed its most broad-based and sustained appreciation since the late 1990s. In the past month, the currency has traded at its highest level against the euro in two years.
For 10 years, the widening deficit in the current account of the U.S. balance of payments has been the main source of perceived dollar risk. The deficit ballooned from $125 billion in 1996 (1.6 percent of gross domestic product) to $788 billion by 2006 (6 percent of GDP).
Persistent deficits in the trade balance could not be covered by a moderately positive net inflow of profits, interest and dividend earnings from abroad. So the United States resorted to big sales of government and private debt, including U.S. Treasury notes and securitized mortgages, corporate equities, whole companies, and other forms of real property to foreigners to finance the import surge.
The financing requirement absorbed more than half of all funds that investors worldwide made available for investing outside their home country. The net external debt of the United States quintupled in just a decade from $456 billion in 1996 (5.8 percent of GDP) to a staggering $2.442 trillion in 2007 (18 percent of GDP).
It is a moot point whether the deficit in the current account spurred the issuance of record quantities of often poor-quality debt, as critics of the Federal Reserve have charged, or whether a global savings glut coupled with strong overseas appetite for U.S. assets created a capital account surplus and forced the United States to run a large trade deficit, as the Federal Reserve chairman, Ben Bernanke, has claimed.
In reality, the balance of payments is an integrated whole and part of the wider international flow of funds. China's willingness to lend found a ready willingness to borrow in the United States, mostly to fund consumption and a flood of new homes. The end result is that China has ended up owning a lot of U.S. government paper, and the United States has ended up owing a lot of money.
Policy makers have warned for more than a decade that these "global imbalances" were unsustainable and would eventually need to be reversed. The hope was adjustment would come about mainly through a significant but orderly devaluation of the dollar and rise in U.S. exports, rather than a deep recession in the United States that would cut import demand.
In the end, policy makers have been spared the choice.
The unfolding credit crisis is producing a deep recession, cutting U.S. demand for imports and forcing the long-overdue adjustment in the trade deficit. Because the recession is centered on the United States, U.S. import demand is falling more rapidly than the demand for the country's exports in Europe, Asia and the rest of the world, producing the necessary current-account adjustment.
It is a bitter irony that recession has removed one of the main sources of downward pressure on the dollar.


http://www.iht.com/articles/2008/12/03/business/col.php








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U.S. productivity rises by more than expected
Bloomberg News
Wednesday, December 3, 2008
WASHINGTON: U.S. worker efficiency rose more than forecast in the third quarter and labor costs increased less than anticipated, a report showed Wednesday, signaling company efforts to rebuild profits are paying off.
Productivity, a measure of employee output per hour, rose at a 1.3 percent annual rate, compared with a 1.1 percent gain estimated last month, revised figures from the Labor Department showed. Labor costs climbed at a 2.8 percent rate, less than the 3.6 percent pace forecast.
Companies reduced expenses as the economy contracted by reducing employee hours at the fastest pace in six years. The drop in raw-material prices combined with the smaller-than- expected increase in labor costs indicates companies are moving to shore up profits as the economy heads for what may be the longest recession in seven decades.
"Businesses have been more proactive in their response to weakening growth, cutting labor quickly in response to weaker demand, as they attempt to preserve profitability," Aaron Smith, a senior economist at Moody's Economy.com in West Chester, Pennsylvania, said before the report.
U.S. companies eliminated an estimated 250,000 jobs in November, the most since November 2001, ADP Employer Services said Wednesday in a report based on payroll data. The drop was larger than forecast.
Economists had forecast productivity would rise at a 0.9 percent annual pace, according to the median of 57 forecasts in a Bloomberg News survey. Estimates ranged from gains of 0.6 percent to 1.5 percent.
The gain in unit labor costs, which are adjusted for efficiency gains, followed a 2.6 percent drop from April through June that was larger than previously estimated.
Hours worked fell at a 3.1 percent pace, the biggest drop since the first three months of 2002. Non-farm output fell at a 1.9 percent rate, the most since the last recession.
Compared with the third quarter of 2007, productivity rose 2.1 percent, close to the 2.5 percent annual average since 1995. Labor costs were up 1.4 percent year-over-year.
The drop in commodity costs is another saving grace for companies dealing with a slowdown in demand, and may allow them to retain some of the staff they would otherwise have cut in incoming months, Brian Bethune, an economist at IHS Global Insight in Lexington, Massachusetts, said before the report.
"We are moving into the point where companies reduced hours as much as they can," Bethune said. "Cost management is still a major challenge, but there is still some scope to do more on the material-cost and supplier-costs side," Bethune said.
A Labor Department report Friday is projected to show the economy lost 325,000 jobs in November, the most since October 2001, according to the survey median. The decline would bring the total drop in payrolls to 1.5 million so far this year.
Gross domestic product contracted at a 0.5 percent annual pace last quarter.
The U.S. economy entered a recession in December 2007, according to a panel at the National Bureau of Economic Research that dates American business cycles. The last time the U.S. was in a recession was from March through November 2001.
Some economists are concerned that the productivity surge that began in 1996 is waning.
During the 1990s, the former Fed chairman Alan Greenspan was one of the first to recognize productivity was accelerating because of the increased use of computers and the Internet, and that the improvement would contain inflation even as the economy gained strength and unemployment stayed low. The realization allowed the Fed to keep interest rates little changed from 1996 to 1999.
U.S. companies are cutting jobs to improve productivity and to counter a global slowdown in demand. Xerox, the world's largest maker of high-speed color printers, is eliminating 3,000 jobs and reducing manufacturing costs to save money next year.
"We're managing our operations with a close eye on the bottom line," the chief executive Anne Mulcahy said last month. "The restructuring actions we're taking this quarter are expected to deliver $200 million in savings next year, giving us greater flexibility to operate even more efficiently and effectively in an uncertain economic environment."


http://www.iht.com/articles/2008/12/03/business/03usecon.php





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Global stocks rise on anti-recession plays
Reuters
Wednesday, December 3, 2008
By Herbert lash
Global stock markets rose on Wednesday, spurred by companies that do well in a weak economy, as record contractions in U.S. and European service sector data sent European government bond yields to historic lows and revived a safe-haven bid for U.S. debt.
McDonald's and Coca-Cola were the top boosters to the Dow, while other large-cap stocks, such as Procter & Gamble , which are all seen as a defensive hedge against the weakening economy, were big gainers.
But dire economic data, including a U.S. private sector report that pointed to a worsening jobs outlook, kept an aversion to risk alive, helping the dollar and yen to rally against major currencies.
U.S. Treasury debt prices turned positive in the afternoon amid a revived safe-haven bid for government bonds.
Oil prices extended losses as U.S. fuel demand continued to crumble under the weight of the financial crisis, prompting the Organisation of Petroleum Exporting Countries to sharpen the axe for another round of production cuts.
Wall Street rose, after a day of volatile trade, as investors bought stocks that will hold in an economic slump.
"Investors are trying to find stable (areas) -- consumer staples, health care and biotech," said John Schloegel, vice president of investment strategies for Capital Cities Asset Management in Austin, Texas. "They're asking, 'What might be the safest parts of the market?'"
Bleak services sector activity in November illustrated the recessions on both sides of the Atlantic while the ADP Employer Services report showed U.S. private employers cut 250,000 jobs last month. ADP's report suggests Friday's U.S. government jobs report will show losses of 300,000 jobs or more.
In the United States, the Institute for Supply Management's non-manufacturing index fell to a record low of 37.3 in November, from 44.4 in October. The level of 50 separates expansion from contraction.
In Europe, the Markit Eurozone Purchasing Managers Index for services companies fell to 42.5 in November from the prior month's 45.8 level, the lowest in the survey's 10-year history.
"The ADP report is part of the reason the market opened down and why people are moving towards defensive positions," said Peter Jankovskis, director of research at OakBrook Investments in Lisle, Illinois. "There are people bracing for the November payrolls report on Friday. We are in a very nervous market," he said.
The Dow Jones industrial average rose 172.60 points, or 2.05 percent, at 8,591.69. The Standard & Poor's 500 Index rose 21.93 points, or 2.58 percent, at 870.74. The Nasdaq Composite Index rose 42.58 points, or 2.94 percent, at 1,492.38.
MSCI world equity index rose 1.4 percent.
The FTSEurofirst 300 index of top European shares cut early losses to rise 4.02 points or 0.49 percent to close at 829.33. Britain's FTSE 100 index rose 47.10 points or 1.14 percent to close at 4169.96.
Gains were led by drug companies like Novartis and GlaxoSmithKline .
Earlier, Japan's Nikkei posted a 1.8 percent gain following a rebound on Wall Street on Tuesday, and MSCI's index of other Asian stock markets put on just 0.4 percent.
The 30-year euro zone government bond yield plumbed 3.319 percent earlier, a record low according to Calyon. In after-hours trade it fell even further, touching 3.28 percent.
The benchmark 10-year U.S. Treasury note gained 9/32 in price to yield at 2.67 percent, just above Monday's five-decade low of about 2.65 percent. The 2-year U.S. Treasury note was little changed, yielding 0.89 percent.


http://www.iht.com/articles/reuters/2008/12/03/business/OUKBS-UK-MARKETS-GLOBAL.php





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U.S. autoworkers' union pledges to make concessions
German automakers brace for downturn
U.S. carmakers ready to deliver their next pleas to Congress
Chinese state fund turns inward
More bad news expected for Chinese real estate
Euro-zone service activity slides further
China's economy, in need of jump start, waits for citizens' fists to loosen
Thai central bank slashes interest rate
Australian economy grows at slowest pace in 8 years
Downturn hits mobile phone makers
Telecom Italia plans to sell assets to trim debt
2 Canadian phone giants in different struggles
Lead director pins GM's hopes on U.S. government rescue
Auto slump seen lasting into 2010
In November, U.S. shoppers cut spending even more
Jefferies cutting jobs and closing offices
All options on table as Congress reviews autos bailout
Mandelson calls for active industrial policy
BlackBerry-maker hit as subscriber growth slows
Glaxo cuts further 200 manufacturing jobs
Euro-zone retail sales sink
South Korea steps up crisis fight










Spanish businessman murdered in ETA shooting
The Associated Press
Wednesday, December 3, 2008
MADRID, Spain: A suspected Basque separatist gunman firing at close range killed a businessman Wednesday, two weeks after the arrest of the militant group ETA's leader, officials said.
The Basque entrepreneur was shot in the head in the Basque town of Azpeitia, near San Sebastian. Two young male attackers later fled in a car, Basque police said.
The victim was identified as Ignacio Uria Mendizabal, 71. He worked for a construction company involved in a project to build high-speed railways in the Basque region of northern Spain.
Spanish Prime Minister Jose Luis Rodriguez Zapatero described him as a hardworking man who was well known in the region and had spent decades providing jobs as he worked to develop it.
Zapatero vowed to hunt down his killers and said ETA is doomed in its quest to create an independent homeland through bombs and bullets.
"The terrorist group ETA will never impose its violent solutions on us," Zapatero told reporters.
The Basque regional president, Juan Jose Ibarretxe, called the shooting of a 71-year-old man at close range as he got out of a car to go have lunch an act of cowardice.
"Some act of bravery, some way to defend the Basque people," Ibarretxe said.
The shooting came two weeks after the arrest in France of ETA's leader, Mikel de Garikoitz Aspiazu. The Spanish Interior Ministry had said it expected ETA to retaliate for that arrest.
ETA declared what it called a permanent cease-fire in March 2006 and entered peace talks with Zapatero's government. But the talks went nowhere and ETA ended the truce in December 2006 with a car bombing that killed two people at Madrid's Barajas international airport.
Since then, it has staged several dozen attacks, most of them car bombings. Wednesday's shooting was the fourth death blamed on ETA this year.
Since his arrest, Aspiazu has been charged in the Madrid airport attack and separately for allegedly plotting an attack against the America's Cup sailing race last year in Valencia, Spain. He is wanted in connection with many other cases as well.
ETA has now killed 825 people since launching its campaign for an independent Basque homeland in the late 1960s, according to the Spanish Interior Ministry.
http://www.iht.com/articles/ap/2008/12/03/europe/EU-Spain-Basque-Attack.php

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British army defuses explosives found in Belfast
The Associated Press
Wednesday, December 3, 2008
BELFAST, Northern Ireland: British army engineers defused four homemade grenades discovered in a bag in a hard-line Protestant part of Belfast, the Police Service of Northern Ireland said Wednesday.
Members of the public discovered the four devices, apparently abandoned, about 9 p.m. Tuesday in a backpack near a BMX bicycle track in the Donegall Road district of south-central Belfast. Engineers used a robot to blow apart the devices without detonating them, causing no injuries.
The area is a power base for the outlawed Ulster Defense Association, the largest British Protestant paramilitary group in Northern Ireland. Its members have loosely observed a cease-fire since 1994 but have refused to disarm in support of Northern Ireland's 1998 peace accord, as its archenemies in the Irish Republican Army already have done.
The police commander for south Belfast, Chief Inspector Trevor O'Neill, said the weapons were "crude devices" constructed by anti-Catholic extremists, but he declined to specify whether any particular paramilitary group had been linked to the find.
"It was totally reckless for such devices to be left in a BMX track, widely used by members of the community. This is a busy area and just a short distance away from a nursery school and other community and youth facilities," O'Neill said. "It is fortunate that someone wasn't killed or seriously injured."
The homemade devices — locally called "blast bombs" — typically must be thrown because they cannot be detonated by timer or remote control.
Services on a nearby railway line were shut down Tuesday night as a precaution, and police planned more searches in the area for other potential explosive devices Wednesday. Police reported no arrests.
http://www.iht.com/articles/ap/2008/12/03/europe/EU-NIreland-Bombs.php

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Homemade bombs explode outside Greek AFP bureau
Reuters
Wednesday, December 3, 2008
ATHENS: Two homemade gas-canister bombs exploded at the entrance of the Athens office of French news agency Agence-France Press (AFP) on Wednesday without causing any injuries, police and witnesses said.
A police official said no-one had claimed responsibility for the attack, which caused only minor damage. Small homemade bomb attacks by self-proclaimed anarchists are a regular occurrence in the Greek capital.
"We heard two small explosions at the office door," said AFP reporter Eleni Koliopoulou. "There were two of us in the office and we were evacuated by the fire department. We are both OK."
The police official said there was no warning given before the attack and the office was unguarded.
(Reporting by Dina Kyriakidou and Renee Maltezou; Editing by Richard Balmforth)
http://www.iht.com/articles/reuters/2008/12/03/europe/OUKWD-UK-GREECE-AFP.php

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U.S. lets Mexico have drug war funds
The Associated Press
Wednesday, December 3, 2008
MEXICO CITY: The U.S. government was finally releasing $400 million on Wednesday to support Mexican police and soldiers in their fight against drug cartels.
The money comes at a critical time: Mexico's death toll from drug violence has soared above 4,000 so far this year, and drug-related murders and kidnappings are spilling over the U.S. border as well.
But many questions remain about the direction of this drug war, and both Mexico and Colombia, where 90 percent of U.S.-bound cocaine is produced, worry they'll be handcuffed by concerns about human rights and corruption once Barack Obama is president.
"If the United States strips us of those resources, what will be done? Where will they come from?" Andres Pastrana asked in an Associated Press interview. The former Colombian president worked with U.S. President Bill Clinton to launch Plan Colombia, which has spent more than $6 billion in U.S. aid since 2000 to fight drug trafficking and leftist rebels.
The aid to Mexico - which includes no cash - includes helicopters and surveillance aircraft, airport inspection equipment and case-tracking software to help police share real-time intelligence. It also supports Mexican efforts to weed out corrupt police, improve the judicial system and protect witnesses.
Most of it, however, will go to notoriously corrupt police forces and the same military whose soldiers have tortured, raped and killed innocent civilians while battling the cartels, according to Mexico's National Human Rights Commission. President Felipe Calderon himself said more than half of state and local police can't be trusted, and federal ranks are rife with corrupt officers.
The U.S. government has stood by Calderon. But Anthony Placido, the U.S. Drug Enforcement Administration's intelligence chief, acknowledged the dangers.
"Law enforcement work anywhere in the world, and certainly in Mexico, can be perilous," Placido said in October when asked whether Mexican corruption has imperiled U.S. agents. "Is it dangerous? Absolutely."
After both nation's lawmakers approved the money this summer, Mexico went public with Operation Clean House, which ensnared a dozen high-ranking police officials, including the former drug czar, on allegations of spying for the powerful Sinaloa cartel.
Colombia has been cleaning house as well: A week before Obama's election, President Alvaro Uribe fired 20 officers - including three generals and four colonels - for negligence in the biggest-ever purge of Colombia's military. On Nov. 4, the army commander resigned. Uribe also reversed his resistance to U.N. monitoring, saying he would assign a human rights ombudsman to every batallion.
"The United States is a supremely important ally," Colombian armed forces chief Gen. Freddy Padilla told the AP. "But it's an ally that doesn't provide aid and support blindly."
Colombia places almost no restrictions on U.S. support, allowing U.S. soldiers and drug agents to operate freely in its territory. But Mexicans have always chafed at U.S. military aid, and Calderon's administration objected to human rights restrictions proposed by U.S. lawmakers, who ultimately dropped most of the conditions.
The help still comes with some strings: The last 15 percent won't be released until the State Department confirms Mexico is meeting human rights and police corruption goals.
Washington has been unwavering in its support of Calderon's drug fight, even as top members of his security Cabinet fell in the corruption scandal. Obama also said Central America should get more than the $65 million in aid it is getting as part of the Merida Initiative. And while Obama has frequently criticized Colombia's human rights record, he pledged his full support for Uribe's fight against the leftist Revolutionary Armed Forces of Colombia, which sustains its rebellion with cocaine profits.
But the U.S. is taking a hard look at how it fights this drug war - starting with the U.S. money and guns that sustain the cartels. The Brookings Institution estimates that 2,000 guns enter Mexico from the United States every day, and many Latin American nations complain that U.S. drug consumption is ultimately responsible for the violence.
"The U.S. has to go after the flow of guns and bulk cash and stolen vehicles that go from north to south over our southern border," one of Obama's top Latin America advisors, Dan Restrepo, told The AP. "It's our responsibility to do far more than what we're doing to cut off those flows."
The mostly-military nature of the aid also is being examined after the U.S. Congress's research arm reported that Plan Colombia has failed to meet its goal of halving illegal drug production in Colombia, and coca cultivation increased 27 percent last year. Vice President-elect Joe Biden commissioned last month's report as Senate Foreign Relations chairman.
Democrats in Congress already shifted more than $100 million of Colombia's aid to nonmilitary purposes, such as strengthening the judicial system and responding to the world's worst internal refugee crisis after Sudan.
Colombia's military, which has nearly doubled in size under Uribe, worries of more cuts to come.
"It would be an error to deprive of aid a government with a clear democratic conviction and a military that is infinitely respected by the Colombian people," Padilla said.
Obama, however, has argued that only a regional, multilateral approach can discourage cartels from crippling governments through corruption and intimidation.
"It's time to work together to find the best practices that work across the hemisphere, and to tailor approaches to fit each country," Obama said in his main campaign address on Latin America.
http://www.iht.com/articles/2008/12/03/america/04mexico.php

Regimens: For the best pick-me-up, lie down
By Nicholas Bakalar
Wednesday, December 3, 2008
A cup of strong coffee might make you feel wide awake, but a small study suggests that for improved physical and mental performance, an afternoon nap works better.
Scientists spent a morning training 61 people in motor, perceptual and verbal tasks: tapping a keyboard in a specific sequence, discriminating between shapes on a computer screen and memorizing a list of words. Then the scientists randomly divided the subjects into three groups. The first took a nap from 1 to 3 p.m. At 3, the second group took a 200-milligram caffeine pill, and the third took a placebo. The subjects repeated the tasks they had been taught earlier and were scored by researchers who did not know which group they were in.
Those who had caffeine had worse motor skills than those who napped or had a placebo. In the perceptual task, the nappers did significantly better than either the caffeine or placebo group. On the verbal test, nappers were best by a wide margin, and the caffeine consumers did no better than those given a placebo. Despite their mediocre performance, caffeine takers consistently reported less sleepiness than the others.
"People think they're smarter on caffeine," said Sara Mednick, an assistant professor of psychiatry at the University of California, San Diego, and the lead author of the study, which appeared in the Nov. 3 issue of Behavioral Brain Research. "But this study is a strong argument for taking a nap instead of having a cup of coffee."

http://www.iht.com/articles/2008/12/03/healthscience/02regi.php

COLUMNIST

Roger Cohen: A court for a new America
Wednesday, December 3, 2008
THE HAGUE: Of the many issues that have soured relations between Europe and the United States under the Bush administration, few have been as poisonous as America's refusal to join the world's first permanent war crimes court here. The snub has been seen as a symbol of U.S. contempt for the rule of law.
In one of his last acts, Bill Clinton signed the founding treaty of the International Criminal Court, but the signature never led to U.S. ratification. On the contrary, President Bush withdrew the signature.
This remarkable, and gleeful, "un-signing" was followed by an aggressive campaign to oblige countries to make a formal commitment, under threat of U.S. reprisals, never to surrender U.S. citizens to the court.
Former Republican Congressman Tom DeLay caught the snarling Bush-Cheney view of the institution when he referred to a "kangaroo court" that was a "clear and present danger" to Americans fighting the war on terror.
As a result, I can think of no better place for President-elect Barack Obama to start signaling a changed American approach to the world, and particularly its European allies, than the ICC. Even short of American membership, which would involve a tough battle in Congress, there is much he can do. But "re-signing" followed by ratification should be Obama's aim.
The effect of U.S. rejection of the court, combined with the trashing of habeas corpus at Guantánamo Bay, has been devastating. Allies from Canada to Germany that are court members have been dismayed by the U.S. dismissal of an institution they see doing evident good.
Other smaller nations from Latin America to Africa, browbeaten by the United States on the issue, have looked elsewhere for lost military or financial support. The American idea, grounded in legal principles, has been undermined.
It's time to look again at the ICC. Over the past six years, the court has achieved what Philippe Kirsch, its Canadian president, called "a great deal of acceptability." There are now 108 member countries, including every European Union nation except the Czech Republic, which appears set to join.
The United States stands alone among major Western industrial powers in rejecting the court: It has in effect deserted those powers' attempt to mark a new century with a new commitment to eradicating genocide and crimes against humanity by ensuring there is no impunity for them. Washington has broken ranks with the Western liberal tradition of which it should be a cornerstone.
Initial U.S. fears that the court would be politically motivated have proved groundless. The court's respect for the principle that it can exercise its jurisdiction only when national courts prove unwilling or unable to do so has proved unbending. Attempts to bring British forces in Iraq before the court for alleged crimes have been rejected by the prosecutor, Luis Moreno-Ocampo of Argentina.
Obama should now confront U.S. responsibility, and signal a new commitment to multilateralism, in his attitude toward the court. After the terrible decade of the 1990s, with its genocides in Bosnia and Rwanda and the loss there of a million lives while the United States and its allies dithered, it is unconscionable that America not stand with the institution that constitutes the most effective legal deterrent to such crimes.
The ICC has filed charges against alleged war criminals in Congo, Central African Republic, Uganda and Sudan since it started work in 2002. The first trial, involving a Congolese warlord, Thomas Lubanga, is set to begin in January.
But it is in Sudan that the incoherence of American policy toward the ICC has been most evident. The United States is against impunity for the genocidal crimes in Darfur, yet it is not a member of the court seeking to prosecute those responsible.
The court has issued arrest warrants for a former Sudanese government minister, Ahmad Harun, and for Ali Kushayb, a leader of the government-backed janjaweed militia. In July, it requested an arrest warrant for Omar Hassan al-Bashir, the Sudanese president, on charges of genocide, but judges are still reviewing whether to push ahead with the prosecution.
When I asked Brooke Anderson, Obama's chief national security spokeswoman, about policy toward the court, I received this e-mail response: "President-elect Obama strongly supports the ICC's efforts to investigate and prosecute those responsible for atrocities in Sudan."
That's a good start and a good signal.
Obama should follow up by making sure that, even if court membership is not quickly attainable, the United States plays a part in the ICC's 2010 review conference. This will address critical issues including how to define the crime of aggression, and may extend to whether the ICC can exercise jurisdiction in cases involving terrorism and drug-trafficking.
The new president should also ensure the United States cooperates with the court in providing information and assisting in making arrest warrants effective. Its influence on the court's credibility could be enormous.
Only by aligning America again with international law can the damage inflicted on America's image and appeal by the Bush Administration be undone.
Readers are invited to comment at my blog: www.iht.com/passages
http://www.iht.com/articles/2008/12/03/opinion/edcohen.php

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OPINION

Rape as genocide
By David Scheffer
Wednesday, December 3, 2008
'In this society if you rape one woman, you have raped the entire tribe" - so said one observer of the mass rape occurring in Darfur.
People hear the word genocide and think of six million victims of the Holocaust or an estimated 800,000 dead in Rwanda. They do not imagine that mass rape can be so well planned and targeted that it wipes out a substantial part of an ethnic group as thoroughly, though more slowly, than widespread killings. Yet three judges sitting on the International Criminal Court will decide soon whether to confirm an arrest warrant against a head of state, President Omar Hassan al-Bashir of Sudan, on grounds that he masterminded rape as genocide against three ethnic groups in Darfur that have challenged his power.
The ICC's prosecutor, Luis Moreno-Ocampo, has filed war crimes and crimes against humanity charges against Bashir. But the centerpiece of Moreno-Ocampo's application is the charge of rape as genocide "causing serious bodily or mental harm to members of the group" and "deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or in part." Such acts of genocide arising from rape rather than from murder can be prosecuted as stand-alone crimes before the International Criminal Court.
Their complexity, despite helpful rulings from the Rwanda and Bosnia war crimes tribunals, may discourage the judges from affirming genocide charges while they opt for the more familiar terrain of other atrocity crimes charges. Hanging in the balance is whether the heinous strategy of mass rape in modern warfare will be condemned and prosecuted for what it truly is: genocide.
The judges have to find "reasonable grounds" to arrest Bashir on the rape-as-genocide charges. They need not establish proof beyond a reasonable doubt - that standard applies at trial. So far, the evidence presented by Moreno-Ocampo appears compelling under either standard.
The prosecutor's investigation reveals that Bashir's forces and agents forcibly drove approximately 2.5 million Sudanese, including substantial numbers of the Fur, Masalit, and Zaghawa ethnic groups, into camps of internally displaced persons. They then inflicted rape and other forms of severe sexual violence upon thousands of women and girls, and continue to do so. A common tactic is for the Janjaweed tribal militia and Sudan's armed forces and security agents to roam outside the camps raping and often gang-raping women and girls who must leave the camps to collect firewood, grass or water in order to survive. One witness said: "Maybe around 20 men rape one woman. ... These things are normal for us here in Darfur. ... They rape women in front of their mothers and fathers."
Babies born following the rapes are called "Janjaweed babies" who rarely have a future in the mother's ethnic group. Infanticides and abandonment of such babies are common. One victim explained, "They kill our males and dilute our blood with rape. [They] ... want to finish us as a people, end our history."
Imagine the collective horror if men and boys in these ethnic groups were raped and then castrated. Would anyone doubt that genocidal impulses were at work by depriving men of their ability to father babies within their own ethnic group? Raped women and girls are similarly crippled.
In the 1990's I met scores of rape victims from atrocities in the Balkans, Sierra Leone, Uganda and eastern Congo. In most cases their experiences were so devastating to their character, their ethnic bonds and often to their health that the logic of how mass rape can destroy a substantial part of a group and thus constitute genocide seemed clear. These women typically were ostracized from their communities, could not marry their ethnic men, or were physically incapable of rearing children.
The fairly unique circumstances in Darfur enable Bashir to inflict conditions of life that are destroying the three ethnic groups. Of the estimated 80,000 to 265,000 "slow deaths" in the camps to date, the targeted groups have suffered grievously. The evidence shows a highly sophisticated strategy at work combining scorched-earth assaults on ethnic villages followed by isolation in camps where starvation, illness, and rape are used to achieve genocidal aims.
The judges also must find reasonable grounds that Bashir has had the specific criminal intent to commit genocide through a strategy of mass rape. The rules on establishing the mens rea, or guilty mind, have been highly developed in genocide cases prosecuted before other war crimes tribunals. The genocidal intent can be inferred from the factual circumstances of the crime. In Darfur, there is no shortage of actions, including repeated mass rapes, from which to infer genocidal intent. The prosecutor argues that the only reasonable inference available on the evidence is that Bashir intended to destroy in part the ethnic groups.
The wild card remains the United Nations Security Council, which may yet cave into political pressure and prevent approval or execution of an arrest warrant against the Sudanese leader. But if the judges can continue their review and find reasonable grounds to charge rape as genocide, thousands of women and girls attacked by rapists as a means of decimating their ethnic groups will share a small measure of justice and peace.
David Scheffer, the former U.S. ambassador at large for war crimes issues (1997-2001), is a law professor and director of the Center for International Human Rights at Northwestern University School of Law.

http://www.iht.com/articles/2008/12/03/opinion/edscheffer.php

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OPINION

How not to run foreign policy
By Joseph R. Wood
Wednesday, December 3, 2008
President-elect Obama is preparing to govern from his platform of change. But the mistakes characteristic of American administrations defy change over time. Here are three things not to do when running American foreign policy:
-Do not personalize foreign policy. American presidents and top advisers rise through a sea of elites in highly competitive careers in politics and other fields. They are confident in their own charm (FDR and JFK spring to mind). They see others in comparable positions abroad as likely to have much in common. This produces a belief that the same skills that built coalitions in domestic politics or in the private sector will translate into foreign policy.
Personal relationships can ease awkward conversations. But, with both friends and adversaries, to believe that one's strength of personality or genuine graciousness will sway leaders of other nations from their own interests is to court failure. Respect for principles or power, or ideally both, is decisive. Charisma is not.
Allied leaders whose instincts seem to run alongside ours will be constrained by their own domestic politics and interests, frequent amiable phone calls notwithstanding. Chancellor Angela Merkel's determined opposition to beginning the NATO accession process for Ukraine and Georgia (a historic rejection of American leadership in the Alliance) and Prime Minister Silvio Berlusconi's defense of the Russian invasion of Georgia are examples of avowedly pro-American leaders whose ready access to the U.S. president did not change their policies at pivotal moments. Prime Minister Tony Blair and President José María Aznar were both close to Washington, but their departure into the political wilderness brought governments seeking to distance themselves from the United States.
President Nicolas Sarkozy's vacation in the United States and meal at Kennebunkport, President Bush's family retreat, mutated into self-serving shots against Bush on missile defense and Georgia when relations with Moscow seemed to require it. And a fishing trip to Kennebunkport and reciprocal visit to Sochi, together with repeated offers of cooperation and engagement, failed to soften the words or actions of Vladimir Putin, the penultimate in the long series of Russian leaders whose welcome in the West as a reformer or Westernizer proved premature.
- Do not concoct a mismatch of rhetoric and policy. Especially, do not speak loudly and carry no stick. A rhetorical hard line on principles that is not matched by actions gains all the problems of confrontation and all the drawbacks of appeasement.
Red lines should be few and must be held to, not lightly tripped across as in the Six-Party talks on North Korea's nuclear program, or in agreeing to rules on commercial energy relationships with Russia in the G-8 and then ignoring violations, or in insisting that the Iraqi government respect human rights while doing little to help Christian and other religious minorities there.
The United States need not be always confrontational or always accommodating. But inconsistency between rhetoric and actions is read by friends and enemies as weakness (or at best distraction). It renders impossible the genuine assertion of strength.
- Do not expect others to do the work of American leadership for us. Retreating from Europe in the immediate aftermath of World War II or, after the Cold War, initially insisting that we had no significant interests in the Balkans were unsustainable policies. More recently, putting Europe in front in negotiations with Iran over nuclear weapons, or with Russia over Georgia, has not worked well, at least if the objectives were to slow the Iranian nuclear program or to convince Russia not to draw new borders in Europe.
Over the last two years, coordinating with Europe became the essence of much U.S. policy. The result, while avoiding the outward appearance of seams in the Atlantic relationship, was that the United States was steered by a lowest-common-denominator process of European policy-making, minimizing the contribution of those who agreed with us and maximizing the influence of those driven by commercial and energy interests in Iran and Russia.
Outsourcing leadership fails. Attempting to endow other countries with the imprimatur of American power does not impress leaders who threaten and invade neighbors with democratically elected governments or seek to destroy Israel and the West.
Gaining multilateral support for policies led by the United States is desirable and often essential.
These "do nots" don't fall into "realist" or "idealist" schools. They are lessons of human nature as it plays out across party lines, across international borders and over time. They are useful cautions for all American administrations.
Joseph R. Wood, a senior fellow at the German Marshall Fund of the U.S., was deputy assistant to the vice president for national security from 2005 to 2008.

http://www.iht.com/articles/2008/12/03/opinion/edwood.php

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EDITORIAL

Reducing U.S. reliance on security contractors
Wednesday, December 3, 2008
U.S. forces in Iraq have relied too heavily on private security contractors who have operated with no real legal accountability. The trigger-happy tactics of these armies for hire have alienated Iraqis.
The fact that they have been out of reach of Iraqi law has been an especially bitter pill to swallow.
For some of those contractors, that get-out-of-jail-free card is now being withdrawn. A new agreement with the Iraqi government that allows American troops to remain in Iraq stipulates that contractors working for the Pentagon who commit crimes will be subject to prosecution in Iraqi courts.
The Pentagon and State Department employ an estimated 10,500 private contractors to protect convoys, diplomats and other officials. They are infamous among Iraqis for their "spray and pray" approach to security: spraying bullets and praying they hit the enemy.
The Bush administration, meanwhile, has shown little interest in prosecuting contractors for crimes committed in Iraq. In a particularly horrifying incident, employees of the security firm Blackwater Worldwide working with the State Department mowed down at least 17 Iraqi civilians in Baghdad last year. The Justice Department has yet to formally indict anyone involved.
To date, the U.S. government has not completed a single criminal prosecution against a contractor for killing Iraqis in the field.
Adding to the sense of impunity, U.S. law is unclear on whether contractors working for agencies other than the Pentagon are even subject to American criminal law. (It is not clear whether the new agreement also applies to contractors working for other agencies.) The House has passed a bill that would make all contractors liable under American criminal law, regardless of what agency they work for. The Senate bill, sponsored by the now President-elect Barack Obama, got stuck. The incoming Congress should pass it quickly.
Companies warn that the agreement will make it much harder for them to hire Americans and others to provide security in Iraq. If true, it is still an acceptable price to pay to show this country's commitment to the rule of law. The next administration must quickly reduce its reliance on the private armies so favored - and so protected - by the Bush administration.

http://www.iht.com/articles/2008/12/03/opinion/ediraq.php

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A touchy path for Obama: Taking charge of the CIA
By Mark Mazzetti and Scott Shane
Wednesday, December 3, 2008
WASHINGTON: For two years on the presidential campaign trail, Barack Obama rallied crowds with strongly worded critiques of the Bush administration's most controversial counterterrorism programs, from hiding terrorism suspects in secret CIA jails to questioning them with methods he denounced as torture.
Now Obama must take charge of the CIA, in what is already proving to be one of the more treacherous patches of his transition to the White House.
Last week, John Brennan, a CIA veteran who was widely seen as Obama's likeliest choice to head the intelligence agency, withdrew his name from consideration after liberal critics attacked his alleged role in the agency's detention and interrogation program. Brennan protested that he had been a "strong opponent" within the agency of harsh interrogation tactics, yet Obama evidently decided that nominating Brennan was not worth a battle with some of his most ardent supporters on the left.
Obama's search for someone else and his future relationship with the agency are complicated by the tension between his apparent desire to make a clean break with Bush administration policies he has condemned and concern about alienating an agency with a central role in the campaign against Al Qaeda.
Mark Lowenthal, an intelligence veteran who left a senior post at the CIA in 2005, said Obama's decision to exclude Brennan from contention for the top job had sent a message that "if you worked in the CIA during the war on terror, you are now tainted," and had created anxiety in the ranks of the agency's clandestine service.
One of the first issues Obama must grapple with is the future of CIA detention: Will the agency continue to hold prisoners secretly, question them using more aggressive methods than allowed for military interrogators, and transfer terrorism suspects to countries with a history of using torture?
During the presidential campaign, a constant theme for Obama was the need to restore "American values" to the fight against terrorism. He pledged to banish secret CIA interrogation rules and require all American interrogators to follow military guidelines, set out in the Army Field Manual on interrogation.
In a speech last year, Obama cast the matter as a practical issue, as well as a moral one. "We cannot win a war unless we maintain the high ground and keep the people on our side," he said. "But because the administration decided to take the low road, our troops have more enemies."
On Wednesday, a dozen retired generals and admirals were to meet with senior Obama advisers to urge him to stand firm against any deviation from the military's noncoercive interrogation rules.
But even some senior Democratic lawmakers who are vehement critics of the Bush administration's interrogation policies seemed reluctant in recent interviews to commit the new administration to following the Army Field Manual in all cases.
Senator Dianne Feinstein, Democrat of California, who will take over as chairwoman of the Senate Intelligence Committee in January, led the fight this year to force the CIA to follow military interrogation rules. Her bill was approved by Congress but vetoed by President George W. Bush.
But in an interview Tuesday, Feinstein indicated that extreme cases might call for flexibility. "I think that you have to use the noncoercive standard to the greatest extent possible," she said, raising the possibility that an imminent terrorist threat might require special measures.
Afterward, however, Feinstein issued a statement saying: "The law must reflect a single clear standard across the government, and right now, the best choice appears to be the Army Field Manual. I recognize that there are other views, and I am willing to work with the new administration to consider them."
Senator Ron Wyden of Oregon, another top Democrat on the Intelligence Committee, said that he would consult with the CIA and approve interrogation techniques that went beyond the Army Field Manual as long as they were "legal, humane and noncoercive." But Wyden declined to say whether CIA techniques ought to be made public.
CIA officials have long argued that publishing a list of interrogation techniques only allows Al Qaeda to train its operatives to resist them. But they say the secrecy has led to exaggeration and myth about the agency's detention program.
During the campaign, Obama's aides said he would consider allowing the CIA to continue holding prisoners in overseas jails but would insist that inspectors from the International Committee of the Red Cross be allowed to visit them. They also said he would end the practice of "rendering" terrorism suspects to countries that have used torture.
One of the retired generals meeting with the Obama team on Wednesday, Paul Eaton, who oversaw the training of Iraqi forces for the army in 2003 and 2004, said in an interview Tuesday that it was crucial for leaders to send the right message on the treatment of prisoners.
Eaton pointed out that Vice President Dick Cheney once dismissed waterboarding, the near-drowning procedure considered by many legal authorities to be torture, as a "dunk in the water" and said such statements influenced rank-and-file soldiers to believe that brutality was not really prohibited.
"This administration has set a tone problem for the military," Eaton said. "We've had eight years of undermining good order and discipline."
It is widely expected that Obama will replace Michael Hayden, the CIA director. Among those mentioned as possible candidates for the job are Stephen Kappes, a CIA veteran who is the deputy director; Tim Roemer, a former congressman from Indiana who was a member of the Sept. 11 Commission; Senator Chuck Hagel, Republican of Nebraska, who is retiring from the Senate in January; and Jack Devine, a former head of the agency's clandestine service who left the CIA before the Sept. 11, 2001, attacks.
The flap over Brennan, who served as a chief of staff to George Tenet when he ran the CIA, was the biggest glitch so far in what has been an otherwise smooth transition for Obama. Some CIA veterans suggest that the president-elect may have difficulty finding a candidate who can be embraced by both veteran officials at the agency and the left flank of the Democratic Party.

http://www.iht.com/articles/2008/12/03/america/intel.php

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Italian judge suspends trial of CIA agents
The Associated Press
Wednesday, December 3, 2008
MILAN, Italy: An Italian judge on Wednesday suspended a kidnapping trial linked to the CIA's extraordinary rendition program after the government said testimony could be a threat to Italy's national security.
The Milan trial involves 26 Americans and five Italian intelligence agents charged in the 2003 kidnapping of an Egyptian cleric. Most of the Americans are CIA agents.
It is the first trial to involve the CIA's program of secretly transferring terrorism suspects to third countries where, critics of the program contend, they risked torture.
Judge Oscar Magi suspended the trial until March 18 in the expectation that Italy's Constitutional Court would have resolved the national security issue by then. A ruling from the high court is due March 10.
Both Premier Silvio Berlusconi and his predecessor Romano Prodi have warned that testimony in the case could compromise operations between Italian spy services and the CIA.
Prosecutor Armando Spataro argued that the use of state secrecy was "blocking justice and the verification of the truth."
None of the CIA agents have appeared in court. From the outset, the CIA has declined to comment on the case.
The defendants are charged with abducting cleric and terror suspect Osama Moustafa Hassan Nasr, also known as Abu Omar, from a Milan street on Feb. 17, 2003 and flying him to Egypt, where he claimed he was tortured in Egyptian custody.

http://www.iht.com/articles/ap/2008/12/03/europe/EU-Italy-CIA-Trial.php

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Obama aides talk torture with ex-generals
The Associated Press
Wednesday, December 3, 2008
WASHINGTON: A dozen retired U.S. generals met with President-elect Barack Obama's top legal advisers Wednesday, pressing their case to overturn seven years of Bush administration policies on detention, interrogation and rendition in the war on terror.
"President-elect Obama has said that Americans do not engage in torture, that we must send a message to the world that America is a nation of laws, and that we as a nation should stand against torture. He believes that banning torture will actually save American lives and help restore America's moral stature in the world," said an official close to the transition who asked not to be named to discuss internal matters. "This meeting is timely and very helpful to advancing this work."
Among those who met with Eric Holder, Obama's pick to be attorney general, and Greg Craig, tapped to be White House counsel, were General Charles Krulak, a former Marine Corps commandant, and retired Marine General Joseph Hoar, former chief of the Central Command.
Hoar called the meeting "productive."
"It's important that the dialogue is going," Hoar said. "Part of the challenge here is big and philosophical. Part is nuts and bolts. How do you translate the rhetoric of the campaign and the transition period into action?"
The generals would like to see authority rescinded for the CIA to use harsh interrogation methods that go beyond those approved for use by the military, an end to the secret transfer of prisoners to other governments that have a history of torture, and the closing of the U.S. jail at Guantánamo Bay Naval Base.
President George W. Bush vetoed legislation championed by the retired officers that would have held the Central Intelligence Agency to the military's interrogation methods in March.
Obama has criticized the use of torture in interrogating detainees and promised to close Guantánamo Bay's military prison. The transition team official said no decisions about the detainee policies will be made until after the inauguration and Obama's full national security and legal teams are in place.

http://www.iht.com/articles/2008/12/03/america/04torture.php

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Guantánamo and China: A shared legal dead zone
By Richard Bernstein
Wednesday, December 3, 2008
NEW YORK: The execution in China last week of Wo Weihan, accused in a secret trial of spying for Taiwan, brought with it the standard, requisite criticism from the Bush administration, and there's nothing wrong with that.
Indeed, China's dispatch of Wo despite global pleas for clemency came at the end of a judicial travesty complete with a bureaucratic cruelty all too familiar in China. Wo, a Taiwan native, educated in Europe, who ran a medical supply business in China, was arrested in 2005 and held for 10 months without access to a lawyer or to members of his family. He was said to have confessed - and after 10 months in the hands of China's Public Security Bureau, you would confess, too - but then recanted, on the ground that his confession was coerced.
The trial was held in total secrecy, with the evidence, if there was any, withheld on the grounds of national security. The charges were that Wo provided information about Chinese missile technology to Taiwan and also some personal information about the health of one of China's top leaders, a top secret in China.
Then, after allowing no contact with him for four years, Wo's two daughters were allowed to see him for half an hour Nov. 27.
According to one of them, who lives in Austria, the Chinese Foreign Ministry assured Austrian diplomats that there would be another opportunity for the family to visit the prisoner the next day, but before they could do so, he was brought to the execution ground and put to death with a bullet in his head.
"We are deeply disturbed and concerned that Wo Weihan was executed today," was the American government's official reaction, delivered by a press officer at the U.S. Embassy in Beijing.
No doubt the concern is genuine. China's human rights record remains abysmal, but one price paid by the United States as it tries to bring pressure on Beijing is that some of the very things that China is accused of doing - preventing transparency, using national security to justify closed-door proceedings, bypassing the normal procedures in certain cases - are what the Bush administration has been doing at its detention center for alleged enemy combatants in Guantánamo Bay, and that certainly would seem to rob Washington of some of its moral authority.
"Guantánamo was all about trying to create a place that would be outside the jurisdiction of both American and international law, a dead legal zone," said Andrew Nathan, a political scientist at Columbia specializing both in China and in human rights law. "It was to deny the detainees any recourse to due process."
What makes Guantánamo similar to China, Nathan said, is that when it comes to matters deemed by the regime in Beijing to be of great importance, the entire country is a sort of dead legal zone, inside a closed system not subject to independent outside scrutiny by independent civilian courts.
Happily, there isn't much else in which China and the United States are comparable in this regard. Indeed, in the case of Guantánamo, as recent court rulings that have gone against the Bush administration demonstrate, the American system didn't fail to function. It all happened very slowly, but pro bono lawyers took up the cases of some detainees, journalists wrote about them, and independent judges, including judges appointed by Bush, have ordered that the Guantánamo detainees be allowed to appeal their incarceration to regular civilian courts.
Still, for all the important differences, what's striking is that both governments make the same basic argument to justify the policies they've pursued. In both instances, executive authority has found that certain situations are so immediate a threat to the national well-being that extrajudicial measures are justified in dealing with those situations.
That, after all, is how Guantánamo came into existence in the first place. It was a part of the effort following the attacks of Sept. 11, 2001, to take unprecedented measures to prevent further attacks, and defenders of the administration's actions make just that point - there haven't been any terrorist attacks in this country since Sept. 11, and if we owe that fact to the extrajudicial measures being taken, then it's hard to argue that those measures weren't justified.
China's government of course makes the same argument - not in so many words but in so many actions.
Terrified of public disorder, and determined to ensure the absolute respect for their top leaders that, these leaders believe, public order requires, the country's ever-vigilant public security apparatus clamps down at the slightest sign of trouble. No doubt, those who administer justice in China genuinely believe that the threat of chaos in a country that, historically speaking, has had a lot of chaos, justifies their ruthlessness and their secrecy.
"The Chinese have created a simulacrum of a legal system," Nathan said, "and that's how they always respond to outside criticism on human rights. They say they are following their own rule of law. But not all rules of law are equal, and in China for any case that the party considers important, the courts do what the party tells them to do."
In the case of Guantánamo, the American courts have clearly not been following orders from the administration, and that's a very big difference with China. Guantánamo is a genuine exception in American history, not the rule, while in China, a kind of Guantánamo writ large is the system, and it works exactly the way the political leaders have designed it to operate.
"China is more decentralized than we think it is," Nathan said.
"Not all these things are decided at the level of the party central committee, but by the local party secretaries or the heads of public security. The role of the highest authorities is to tell the lower ones to just get it done, protect the state, do what you have to do, so we don't see any subversion."
Certainly in the case of Wo Weihan, somebody got it done, and it's hard to imagine anything getting done like that in the United States, thank God. Still, in the case of Guantánamo - and in the administration's early justification of torture - it does seem as if an American government took a page out of China's book.
Did we gain in security what we lost in moral authority as a result? History will tell eventually, but for the moment, I strongly doubt it.

http://www.iht.com/articles/2008/12/03/america/letter.php

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Nixon's the one still preoccupied with enemies
The Associated Press
Wednesday, December 3, 2008
WASHINGTON: In December 1972, when a less-complicated president might have been relishing a big re-election victory a month earlier, Richard Nixon had enemies on his mind.
One of them, North Vietnam, would soon be rained with bombs. Other foes of Nixon merely received his vitriol.
"Never forget," Nixon told his national security adviser, Henry Kissinger, in a taped Oval Office conversation revealed Tuesday. "The press is the enemy. The establishment is the enemy. The professors are the enemy.
"Professors are the enemy," he repeated. "Write that on a blackboard 100 times and never forget it."
The conversation was on Dec. 14, 1972, four days before the U.S. unleashed a massive series of air attacks on Hanoi and Haiphong aimed at getting North Vietnam to negotiate more seriously in peace talks.
"We're going to bomb them," Nixon told Kissinger and an adviser, Alexander Haig, giving the go-ahead for one of the most controversial acts of the war. "We'll take the heat right over the Christmas period, then on January 3, it's Christmas withdrawal."
The Nixon Library, run by the National Archives, posted nearly 200 hours of White House tape recordings online and opened 90,000 pages of documents in its latest release of material from his administration.
The tapes include a conversation Nixon had with Ambassador Anatoly Dobrynin of the Soviet Union earlier in December. Nixon wanted the Soviets to lean on Hanoi to negotiate seriously in the lagging talks.
"Your government and I - we've got bigger fish to fry than this damn thing," Nixon said, meaning the war. "The main thing is to get this one out of the damn frying pan so that we can get busy, on with other things." He called Vietnam an "irritant."
Peace negotiations resumed in early January and quickly produced agreement, although largely on terms negotiated before the bombing.
Luke Nichter, a Nixon scholar, said the latest tapes show "President Nixon was more involved in the minutiae of the Vietnam War than we previously thought, at least during the Christmas bombing period." Nichter runs nixontapes.org, devoted to dissemination and analysis of taped meetings and phone calls involving Nixon.
More than 2,200 hours of tape recordings from the Nixon White House have been made available by the National Archives, with some 1,200 hours still to come. Paradoxically, said Nichter, "one of the most secretive presidential administrations in American history will over time become the best chronicled because of the tapes."
The latest documents underscore the degree to which Nixon's distrust of so much around him was reflected by his suspicious aides, who provided unflattering information on public figures and critics of the president, including their marital, mental and drinking problems.
In one memo, Governor George Wallace of Alabama was branded a "psychotic" who could be useful in making trouble for his fellow Democrats. The treatment for mental illness received by Senator Thomas Eagleton was reported to Nixon in other correspondence before that disclosure forced Eagleton to resign from the 1972 Democratic ticket headed by the anti-war presidential candidate George McGovern.
The records show that Nixon kept an exceptionally close eye on anti-war and civil rights protests, even the benign.
Mark Felt, a senior FBI official, regularly reported to Nixon and his national security team on events as minor as a high-school cafeteria fight in which seven students were arrested and a peaceful sit-in by 20 college students in Rhode Island.
Felt was up to much bigger things on the sly. He was Deep Throat, feeding revelations to The Washington Post about the Watergate scandal that ultimately would bring Nixon down.

http://www.iht.com/articles/2008/12/03/america/nixon.php

British balance human gain versus the cost of drugs
By Gardiner Harris
Wednesday, December 3, 2008
RUISLIP, England: When Bruce Hardy's kidney cancer spread to his lung, his doctor recommended an expensive new pill from Pfizer. But Hardy is British, and the British health authorities refused to buy the medicine. His wife has been distraught.
"Everybody should be allowed to have as much life as they can," Joy Hardy said in the couple's modest home outside London.
If the Hardys lived in the United States or just about any European country other than Britain, Hardy would most likely get the drug, although he might have to pay part of the cost. A clinical trial showed that the pill, called Sutent, delays cancer progression for six months at an estimated treatment cost of $54,000.
But at that price, Bruce Hardy's life is not worth prolonging, according to a British government agency, the National Institute for Health and Clinical Excellence. The institute, known as NICE, has decided that Britain, except in rare cases, can afford only £15,000, or about $22,750, to save six months of a citizen's life.
The British authorities, after a storm of protest, are reconsidering their decision on the cancer drug and others.
For years, Britain was almost alone in using evidence of cost-effectiveness to decide what to pay for. But skyrocketing prices for drugs and medical devices have led a growing number of countries to ask the hardest of questions: How much is life worth? For many, NICE has the answer.
Top health officials in Austria, Brazil, Colombia and Thailand said in interviews that NICE now strongly influences their policies.
"All the middle-income countries - in Eastern Europe, Central and South America, the Middle East and all over Asia - are aware of NICE and are thinking about setting up something similar," said Dr. Andreas Seiter, a senior health specialist at the World Bank.
Even in the United States, rising costs have led some in Congress to propose an institute that compares the effectiveness of new medical technologies, although the proposals so far do not allow for price considerations. At the present rate of growth, medical costs will increase to 25 percent of the nation's gross domestic product in 2025 from 16 percent, with half of the increase coming from new drugs and devices, according to the Congressional Budget Office.
To arrest this trend, the United States needs to adopt at least some of NICE's methods, said Dr. Mark McClellan and Dr. Sean Tunis, who served earlier in the Bush administration as, respectively, administrator and chief medical officer of the Center for Medicare and Medicaid Services. Tunis said he spent a lot of time in government "learning about NICE and trying to adopt the processes and mechanisms they used, and we just couldn't."
That is because the idea of using price to determine which drugs or devices Medicare or Medicaid provides has provoked fierce protests.
But McClellan said the U.S. government would soon have no choice.
Drug and device makers, which once routinely denounced the British for questioning product prices, have begun quietly slashing prices in Britain to gain NICE's coveted approval, especially because other nations are following the institute's lead.
Companies have said that they will consult with NICE to help determine which experimental compounds enter the final stage of clinical trials, so the British agency's officials will soon influence which drugs enter the market in the United States.
The British government created NICE a decade ago to ensure that every pound spent buys as many years of good-quality life as possible, but the agency is increasingly rejecting expensive treatments. The denials have led to debate over what is to blame: company prices or the health institute's math.
Dr. Michael Rawlins, chairman of NICE, blames the industry, saying that some companies raise prices "to get profits up so their executives can get better bonuses." Dr. Karol Sikora, a prominent London oncologist, said that the institute's math was flawed and that Rawlins had a "personal vendetta" against cancer treatments.
Drug company executives who were interviewed uniformly promised to cooperate with NICE, but industry advocates were not so kind. Robert Goldberg, vice president of the Center for Medicine in the Public Interest, an advocacy group financed by drug makers, likened Rawlins and his institute to terrorists and said their decisions were morally indefensible.
It all started with Viagra.
Pfizer's introduction of the drug in 1998 panicked British health officials, who feared it would wreck the government's health budget.
So they placed restrictions on its use. Pfizer sued, claiming the government's decision was arbitrary. To defend itself against similar claims, the government needed a standard method of rationing. The following year, NICE opened.
Asked whether he thought the institute would succeed, Frank Dobson, the Labour health minister at the time, famously said, "Probably not, but it's worth a bloody good try."
Britain's National Health Service provides 95 percent of the nation's care from an annual budget, so paying for pricey treatments means less money for, say, sick children. Before NICE, hospitals and clinics often came to different decisions about which drugs to buy, creating geographic disparities in care that led to outrage.
Now, any drug or device approved by the institute must be offered to patients. The institute has also written hundreds of treatment guidelines in hopes of improving, and making more consistent, basic medical care.
The institute has analyzed the cost-effectiveness of surgeries, cancer screening tests and medical devices. For example, it found that drug-coated cardiac stents were worth only $450 more than bare-metal ones.
Five years ago, the British health institute recommended more emergency room CT scans of patients suffering from head trauma - forcing hospitals to buy more machines.
But the decisions that get the most attention are those involving new drugs. Any drug that provides an extra six months of good-quality life for £10,000 - about $15,150 - or less is automatically approved, while those that give six months for $22,750 or less might get approved. More expensive medicines have been approved only rarely.
The spending limits represent the health institute's best guess for how much the nation can afford.
After consulting a citizens group, the institute decided that the nation should spend the same amount saving or improving the life of a 75-year-old smoker as it would a 5-year-old.
The academics got drug prices for the drug that Hardy, the kidney cancer patient, wanted, and the value of three other kidney cancer medicines, and calculated the costs of administering them and treating their side effects. Not one of the drugs came close to being worth their expense, the group suggested. In a preliminary ruling in August, a committee from NICE agreed.
The decision caused a firestorm. Twenty-six prominent British oncologists wrote a letter to The Sunday Times saying that the institute assessed cancer treatments poorly and that patients were remortgaging their homes to buy drugs freely available in other countries.
Flooded with anguished comments, the institute beat a hasty retreat. A preliminary consultation posted Nov. 5 said that the institute would instruct its appraisal committees to consider approving expensive life-saving drugs for terminal illnesses affecting fewer than 7,000 patients per year - a policy that seems tailor-made for Sutent and the three other kidney cancer drugs.
Negotiations with companies on possible discounts are continuing, and a committee is scheduled on Jan. 14 to make public this nascent compromise.
Agencies like NICE are popping up across the globe. Dr. Leonardo Cubillos, Colombia's national director of insurance, said that Colombia was using British methods to choose drugs for a national health insurance package.
Membership in an international group of drug and device assessment agencies has grown to 45 last year from 8 in 1992. The British institute has created a consulting group to advise foreign governments.
Much of the reason for this proliferation of agencies is that, while prescription drugs represent just 10.3 percent of overall medical spending in the United States, that share is 17 percent on average in industrialized countries.
As spending on drugs soared in many nations, often haphazardly, overall health often showed little improvement. So international aid agencies are advising governments to adopt British assessments and deliberations to improve their public's health while lowering costs, and officials are listening - a trend that is likely to accelerate during the present global economic slowdown.

http://www.iht.com/articles/2008/12/03/europe/drug.php

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Britain takes more measures to stabilize housing
The Associated Press
Wednesday, December 3, 2008
LONDON: The British government will guarantee interest payments worth up to £1 billion owed by homeowners struggling to keep up with mortgages, in an effort to prevent home repossessions, Prime Minister Gordon Brown said Wednesday.
Brown's announcement to Parliament of the $1.5 billion plan came as a trio of British banks pledged to step up lending to small businesses or relax policies on home repossessions after repeated calls from the government and the Bank of England to increase lending in the face of recession.
The measures are the latest to cushion the economy from the effects of the global credit squeeze. The prime minister's efforts to bolster the banking industry has lifted the Labour government's popularity in opinion polls after Brown trailed the opposition Conservative Party for a year.
The Treasury will guarantee payments to banks, allowing homeowners to defer part of their payments by up to two years, Brown said. The eight largest lenders in Britain, accounting for 70 percent of outstanding mortgages, had agreed to the plan, he said.
"We will do everything in our power so no hardworking family who demonstrates to their bank a willingness to pay, that they can or should face the fear of repossession," Brown said. "We will make this possible by guaranteeing lenders against the risk of loss from those deferred interest payments."
HBOS, Royal Bank of Scotland, Nationwide Building Society, Lloyds TSB, HSBC Holdings and Barclays were among lenders who had agreed to the package. They have been reducing home loans because of the crisis.
"The government's recognition that it needs to offer increased support to help keep more people in their homes is welcome, and we will work with ministers to make sure the suggested scheme will help in practice," said Michael Coogan, director general of the Council of Mortgage Lenders.
Meanwhile, Lloyds TSB promised to pass on interest rate cuts by the Bank of England to small businesses. Its merger partner, HBOS, said it would provide more attractive loans to small and midsize companies. And Northern Rock, the nationalized British mortgage lender, said it would wait at least six months before moving to repossess homes when payments fall behind.
Two days ago, Royal Bank of Scotland, in which the British government has taken a majority stake, announced a similar grace period if owners fall behind on payments. Home repossessions by banks rose 12 percent in the third quarter from a year earlier as higher unemployment and a contraction in the economy left more Britons unable to pay off debt.
The government is also concerned that banks are refusing to increase lending even after a £37 billion rescue package. British banks approved 32,000 mortgages in October, the fewest since 1999 and a third of the 104,000 monthly average in 2007. Brown has said that returning lending to the levels of last year is one of the "strings attached" to his bank bailout plan.
Mervyn King, the governor of the Bank of England, warned last week that banks must resume lending if Britain were to avoid a recession. But the government has so far shied away from requiring banks to increase lending. The Queen's speech on Wednesday, which outlined the government's agenda for the coming year, made no mention of any plans to compel an increase of bank loans.

http://www.iht.com/articles/2008/12/03/business/ukbank.php

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Interest rate cut bets knock pound to 13-year low
Reuters
Wednesday, December 3, 2008
By Jessica Mortimer and Christina Fincher
The pound hit its lowest level in almost 13 years on Wednesday as another batch of dire economic data convinced investors that the Bank of England would slash interest rates to prevent a recession turning into a slump.
The floundering pound fell to 80.4 on a trade-weighted basis, its weakest since January 1996, after data showed the dominant services sector contracted last month at its fastest pace since records began more than a decade ago.
Sterling has now fallen 17.5 percent on the trade-weighted index since the start of the year.
Wednesday's figures on the service sector followed surveys earlier this week showing the country's manufacturing and construction sectors are also in sharp decline.
Economists said the pace of deterioration in the economy and a sharp drop in price pressures gave the central bank ample room to follow up last month's stunning 150 basis point cut with another sharp reduction -- probably of 100 basis points on Thursday.
Such a move would take UK interest rates to 2 percent, their lowest level since 1951. Interest rates have never fallen below 2 percent since the Bank was created in 1694.
"A 100 basis point cut is now priced in across all markets," Deutsche Bank economist George Buckley said.
"There is a risk that they will do more and it would be very disappointing if they did less," he said, adding: "All these PMI figures are consistent with a sizeable drop in GDP."
Interbank markets suggest banks remain extremely reluctant to lend, despite a taxpayer-backed recapitalisation package.
By 3:37 p.m., the pound had fallen 0.8 percent on the day to $1.4783, while the euro strengthened to a session high of 86.07 pence -- closing in on last month's record high of 86.62 pence.
"The pound has been performing relatively poorly compared with other currencies, and the key to that is the Bank of England policy outlook," Standard Chartered currency strategist Rob Minikin said.
Markets believe that they will act aggressively and cut rates by 100 basis points on Thursday and probably take them down further after that," he added.
SHAKY OUTLOOK
Analysts say sterling is particularly vulnerable to deleveraging flows in the market that are boosting the low-yielding yen and weighing on currencies that previously had the attraction of higher yield.
Global recession worries and the prospect of a further round of monetary easing have left investors increasingly risk averse, weighing on riskier currencies such as the pound and sending UK stocks down three quarters of a percent.
Along with the Bank, central banks in the euro zone, New Zealand and Sweden are expected to cut rates substantially this week. The Australian central slashed borrowing costs by a full percentage point on Monday.
Evidence on Wednesday of easing UK inflationary pressures suggested the Bank has room for a sharp cut, with the British Retail Consortium reporting a drop in annual shop price inflation to 2.7 percent in November from October's 3.0 percent.
There was also more bad news overnight as a Nationwide survey showed UK consumer confidence tumbling six points in November to its lowest since the survey began in May 2004 as Britons fretted about impending recession.
"In short, conditions are dismal and are set to deteriorate further," RBS economist Ross Walker said in a note to clients.
A Reuters poll released on Monday showed 40 out of 62 economists expected UK interest rates to fall by 100 basis points to 2.00 percent on Thursday.
(editing by David Stamp/Victoria Main)

http://www.iht.com/articles/reuters/2008/12/03/business/OUKBS-UK-BRITAIN-STERLING.php

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