Pluto in Cap, the USA, the future of the world

[Rad]

Mexican village turns vigilante to fight drug cartel

By Agence France-Presse
Thursday, October 25, 2012 13:15 EDT

URAPICHO, Mexico — At the entrance of this western Mexican village, farmers in ski masks carry rifles as they man a checkpoint to protect their people, fearful that a drug cartel may strike at any time.

Urapicho, a hillside village surrounded by forests, corn fields and cow pastures, has become the latest community in the western state of Michoacan to take security in its own hands against the menace of organized crime.

The decision by the residents of Urapicho to turn into a vigilante village highlights the state of fear that many Mexicans live in amid a brutal drug war, and their distrust of local police.

“The barricade is there to prevent anybody who wants to hurt the population from coming in,” said a 52-year-old corn farmer, who like others in Urapicho refused to give his name for fear of retaliation.

People in this village of 1,500 say they were at peace until the bodies of two suspected drug cartel members turned up on the road leading up to Urapicho in August.

Since then, villagers say, some residents have received threatening phone calls from people blaming them for the deaths while rumors swirl that the gang wants to make Urapicho pay for its slain comrades.

Hundreds of people attended a meeting in the village square to discuss what to do next. By a show of hands, they agreed to set up a 24-hour checkpoint, placing rocks on the road to slow cars entering the isolated village.

Armando Ballinas, a state public safety official, said the cartel provided financial aid to some villagers and began to threaten them when they refused to work for the gang. The discovery of the bodies heightened those tensions.

The state of Michoacan is the scene of a turf war between two cartels, La Familia Michoacana and its splinter group the Knights Templar, which are fighting for control of drug trafficking routes.

The feud has sparked street shootouts, kidnappings and brutal killings in the state, with bodies sometimes turning up on the side of roads.

Now in Urapicho, four burly men, one of them wearing a military green jacket, carry shotguns and assault rifles under a blue tent while others hide behind trees as they check the identification papers of unknown visitors.

Only one paved road leads up to the village, a quiet hamlet with a bullring and brick homes where women wear colorful Purepecha indigenous dresses and sell them on the street while men in straw hats tend to the fields.

Local police are not welcome in Urapicho — like in the rest of Mexico, municipal police have a reputation for corruption. A municipal police commander countered that indigenous villages traditionally want to “impose their own law.”

The villagers say they want the more trustworthy army instead to set up a permanent post.

President Felipe Calderon deployed tens of thousands of troops across the nation to crack down on cartels in 2006. Since then, an estimated 60,000 people have died in the drug war.

“The government is the one that must take care of this issue but until now we have had no support,” said a 30-year-old musician wearing a baseball cap. “We want peace.”

Many Urapicho residents work outside the village but around 80 farmers and street vendors have stopped going to their jobs for fear of being kidnapped or killed, villagers said.

“The country in general is living through this situation,” Nicolas Zalapa Vargas, the mayor of the municipality of Paracho, which includes Urapicho, told AFP. “This situation is not exclusive to Michoacan, Paracho or Urapicho.”

Talks will be held with the state government to discuss the village’s petition to have an army outpost as well as its own community patrol, he said.

The people of Urapicho are following in the footsteps of the bigger nearby town of Cheran, where residents took up arms last year against illegal loggers raiding their forest.

More than a year after its revolt, the town of Cheran now has brick checkpoints manned by armed men and women wearing blue uniforms with the words “community patrol” emblazoned on the back.

In Urapicho, some residents are uneasy with the security arrangement.

A 27-year-old grocery store worker said she didn’t like having to show what was in her bags at the checkpoint, or having to explain why she was going out at a certain time.

“It’s not good,” she said as she sold candy to a child. “We can’t be at ease with this.”

[Rad]

Intelsat blocks Iranian channels in Europe

By Agence France-Presse
Thursday, October 25, 2012 20:09 EDT

WASHINGTON — International satellite services provider Intelsat has blocked Iran’s official broadcast channels in Europe, a company spokesman said Thursday.

But it would not confirm or deny an Iranian report that it did so at the order of the US government.

“Intelsat confirms that we took IRIB (Islamic Republic of Iran Broadcasting) channels off the satellite,” Alexander Horwitz, a spokesman for the Washington-based company, told AFP.

“Our business is a dynamic one, in which the customers’ requirements and our available capacity are constantly changing, and thus the start and stop of services on our satellites is routine,” he said, without providing further details.

The Intelsat spokesman was questioned about a report by Iranian state-owned English language network Press TV that said Intelsat had taken a number of Iranian channels off the air in Europe on the order of the United States, in order to tighten sanctions on Tehran.

The channels that were shut down included Sahar, Jam-e-Jam, Islamic Republic of Iran News Network and al-Kowsar, said Press TV, a unit of IRIB.

Press TV said it was not among the channels removed.

Horwitz declined to identify the IRIB channels that were affected by Intelsat’s move.

According to Press TV, Intelsat was ordered to take the action by the US Office of Foreign Assets Control (OFAC), the economic and trade sanctions arm of the US Treasury Department.

A Treasury spokesman, questioned by AFP about the report, declined to comment.

Horwitz said that Intelsat still holds a license, amid sweeping US sanctions against Iran over its nuclear program, to provide certain broadcast services in Iran.

Intelsat also transmits the Farsi language program of Voice of America.

“Intelsat adheres strictly to the US sanctions requirements with respect to the services it provides in Iran,” Horwitz said.

Iranian authorities protested publicly on October 16 against European satellite operator Eutelsat, accusing it of illegally taking off the air Iranian public television channels.

Last week, European Union foreign ministers agreed tough new sanctions against Iran over its nuclear program, which the West says is aimed at building an atomic bomb but which Tehran insists is for peaceful ends only.

[Rad]

October 25, 2012

Iran Said to Nearly Finish Nuclear Enrichment Plant

By DAVID E. SANGER and WILLIAM J. BROAD
NYT

WASHINGTON — Intelligence officials from several countries say Iran in recent weeks has virtually completed an underground nuclear enrichment plant, racing ahead despite international pressure and heavy economic sanctions in what experts say may be an effort to give it leverage in any negotiations with the United States and its allies.

The installation of the last of nearly 3,000 centrifuges at a site called Fordo, deep under a mountain inside a military base near the holy city of Qum, puts Iran closer to being able to build a nuclear weapon, or come up to the edge, if its leaders ultimately decide to proceed.

The United States, Israel and the United Nations have all vowed to prevent that from happening, imposing increasingly tough sanctions on the country and using cyberwarfare to slow its progress in obtaining a weapon. President Obama said last week that the time for a negotiated settlement was “running out.”

Talks this year between Iran and the so-called P5-plus-1 — the five permanent members of the United Nations Security Council plus Germany — have made little progress. The New York Times reported Sunday that the United States and Iran had reached an agreement in principle to hold direct talks after the American presidential election. Mr. Obama denied the report but said in Monday’s debate with Mitt Romney that he was open to such talks.

Iran’s progress at Fordo was disclosed by officials familiar with the findings of inspectors from the International Atomic Energy Agency who have been to the site recently as part of their regular visits. The officials included some from European governments who have opposed taking military action to slow the Iranian program, arguing that sanctions — with a mix of covert action — are far preferable.

The report comes at a moment when Iran has emerged as a point of contention in the foreign policy debates surrounding the approaching election. Mr. Romney has charged that the president has been “weak” on Iran, and said that Iran’s production of nuclear material had expanded greatly during Mr. Obama’s tenure. But he also embraced diplomacy in the debate on Monday.

Asked about the intelligence reports, Tommy Vietor, the spokesman for the National Security Council, said, “While we can’t comment on a report that has yet to be released, we remain concerned about Iran’s defiance of its international obligations.” He noted that “the president is determined to prevent Iran from getting a nuclear weapon and continues to believe there is time and space for diplomacy.”

Until just two months ago, Prime Minister Benjamin Netanyahu of Israel suggested he would not allow the Fordo plant to go into operation, warning that once it did Iran would have begun to enter a “zone of immunity” where it could produce nuclear fuel without fear of an Israeli strike. Israel does not possess the bunker-busting bombs that would be needed to destroy the facility, though the United States does have one weapon that can do the job: the “massive ordnance penetrator” that just entered the American arsenal.

In September, however, Israeli officials suddenly stopped using the “zone of immunity” phrase, and Mr. Netanyanu told the United Nations that he could wait until late spring before any taking military action, saying that was when Iran would be on the cusp of the ability to produce a bomb. European and American officials interpreted that announcement as evidence that Mr. Netanyahu concluded that Israel could not get through the more than 200 feet of rock over the Fordo plant without American help.

The prospect of a renewed round of diplomacy may explain the pace of activity at the underground site. The fact that the Fordo plant is approaching full operation, shortening the amount of time it would need to build a weapon, gives Iran added ability to exert pressure on the United States and its allies. “When slapped with new sanctions,” said Mark Fitzpatrick, a former State Department official who now studies the Iranian program at the International Institute for Strategic Studies in London, “Iran typically likes to pick up the pace of its enrichment work to try to show that it can’t be pressured into submission.”

The installation of the last centrifuges at Fordo represents a milestone for the Iranians that the Obama administration hoped to avoid. In September 2009, Mr. Obama, along with the leaders of Britain and France, revealed the existence of the site, in an effort to galvanize international efforts to stop Iran’s program. His top national security aides predicted that the public exposure would force Iran to abandon the plant.

While that did not happen, a senior administration official said Thursday that the exposure of the plant’s existence three years ago “eliminated its use as a ‘sneak out’ venue,” because it forced Iran to allow inspectors inside the facility. “Sneak out” is a phrase that connotes covert production of bomb fuel, while “break out” is used to describe a race for a bomb. Mr. Obama, in the Monday debate, insisted that “we have a sense of when they would get breakout capacity,” a phrase that left many thinking that was the line he would not let Iran cross.

While the plant is not yet fully running — fewer than half of all its centrifuges are spinning out enriched uranium — Iran could have it doing so within months, officials say. Fordo is designed to make “medium enriched” fuel that is relatively close to bomb grade, and American officials worry that, in a relatively short amount of time, that fuel could be converted to a type suitable for weapons. But as Mr. Vietor noted, with inspectors visiting, “We are in a position to closely observe Iran’s program and detect any effort by Iran to begin production of weapons-grade uranium.”

In August, the International Atomic Energy Agency said Fordo was roughly three-quarters complete, and that Iran had installed 2,140 centrifuges there, a doubling since a previous report three months before.

[Rad]

October 25, 2012

Israeli Officials Asked to Be Silent on Issue of U.S.-Iran Talks

By JODI RUDOREN
IHT

JERUSALEM — Israel’s Ministry of Foreign Affairs sent an e-mail on Monday to its embassies and consulates around the world, sharing Prime Minister Benjamin Netanyahu’s declaration that he had no knowledge about the possibility of bilateral talks between the United States and Iran, and advising others not to speak publicly about the issue.

“We remind that the P.M. asked that all requests for interviews in the matter require his approval,” read the brief e-mail, its last three words underlined for emphasis.

The e-mail was part of a broader effort, including instructions to all government employees who deal with the news media and orders by the prime minister himself to his cabinet that everyone should remain silent on the matter.

Weeks after Mr. Netanyahu struggled to repair a rift with the Obama administration about public comments on the Iranian nuclear threat, the prime minister and his aides were trying to head off any political problems over a report in The New York Times on Sunday saying that Washington and Tehran had agreed in principle to have direct talks after the American presidential election. With President Obama fighting for re-election on Nov. 6 and Mr. Netanyahu starting his own campaign ahead of Jan. 22 balloting, both sides wanted to control the message to avoid further flare-up.

But even the prime minister’s 10 a.m. warning to his cabinet to stay silent had come too late. At least three senior cabinet ministers had already commented in radio interviews on the article. And they had not all said the same thing about whether Israel was aware of the negotiations over whether to have negotiations, or whether it supported the idea.

The Times article has caused plenty of confusion in the United States, where Mr. Obama seemed to contradict himself on the issue during Monday night’s debate with Mitt Romney, his Republican challenger. First Mr. Obama declared of the reports, “They are not true,” but later he told Mr. Romney, “I’m pleased that you are now endorsing our policy of applying pressure and potentially having bilateral discussions with the Iranians.”

On Sunday, the Iranian Foreign Ministry dismissed the Times report. Meanwhile in Jerusalem, officials and spokesmen and spokeswomen struggled to manage their message, knowing that a central issue in the coming campaign would be the Iranian nuclear program, and whether Mr. Netanyahu’s aggressive battle against it had hurt Israel’s precious relationship with Washington.

In the United States, cabinet secretaries and leaders of the president’s party typically speak from the same talking points and, on significant matters, only upon authorization from the White House. That is not the case in Israel’s coalition government, where individual ministers are far freer to express themselves and do so without regard to official policy — at great length, in many forums and in colorful language. It is a truism of Israeli politics that if Mr. Obama wakes up worrying about what his Republican opponents will say about him, Mr. Netanyahu wakes up worried about ministers walking out of a cabinet meeting and diverting from the decision just made.

“I think most people who react don’t know anything and just speak as if they know,” one top Israeli official said of potential talks between Iran and the United States, speaking on the condition of anonymity in light of the prime minister’s order. “I heard from the P.M., not privately but in a group, just in passing, that we have no information about it. The prime minister should know. I think if he says it, it’s true.”

What the prime minister said, according to a statement e-mailed to international journalists at 7:51 p.m. on Sunday, was this: “I have no information about such talks, and I cannot say that they are taking place.” He neither denounced nor embraced the notion, but said more broadly that “Iran is using the negotiations with it to buy time” and that the international community should impose stricter demands on any further talks.

But this followed about 24 hours of confusion.

Around 8 p.m. Israeli time on Saturday, a senior Israeli official, demanding anonymity, told a Times reporter that the Israelis were aware of the effort toward bilateral talks and were open to it, so long as Washington’s demands were clear: Tehran must stop enriching uranium, export its enriched-uranium stockpile and forfeit any effort to weaponize the material. Iran insists that its program is only for civilian use.

Two hours later, Israel’s ambassador to the United States, Michael B. Oren, called the reporter with an official response he said was authorized by a high-ranking person in Jerusalem. The White House had not informed Israel of the agreement with Tehran, he said, and “we do not think Iran should be rewarded with direct talks.”

Israelis woke up Sunday morning to see the Times article splashed across local news sites, and public officials were in high demand to discuss it.

Foreign Minister Avigdor Lieberman told Israel Radio that “there is no one in Israel who knew, and we hope this is nothing beyond selling half a duck.” But Deputy Prime Minister Moshe Yaalon, who is the head of strategic affairs and is well briefed on Iran, encouraged “any negotiation that will lead to the end of the nuclear program.”

Also on the radio was Silvan Shalom, a leader of Mr. Netanyahu’s Likud Party whose portfolio has nothing to do with foreign affairs but is a frequent commenter on pretty much everything. “The Iranians are trying to buy time,” Mr. Shalom said. “Their desperate efforts to resume the dialogue stem only from the fact that the sanctions are working.” He added, “I do not think that we need to fall into this trap.”

Some who heard Mr. Shalom grew concerned. “Israelis speak even when they’re not in the loop because they don’t want anyone to know whether they’re in the loop or not,” noted one senior official, again on the condition of anonymity because of the prime minister’s demand. “The minister of transportation can talk about it, the minister of agriculture can talk about it, anyone can talk about anything.”

Conveniently, it was a Sunday morning, when Mr. Netanyahu meets at 9:30 with a forum of Likud officials called Sarenu — Hebrew for “our ministers” — and then with the full cabinet.

“He said that everybody who wanted to talk about it should be on the same page with him,” recalled a senior official who was at the session.

Another person who attended said the admonition was neither routine nor rare, especially on Iran but also on other delicate security issues, like Gaza or Egypt.

“Ministers like Yaalon, like Dan Meridor, like Ehud Barak — they know everything,” the official said, naming two deputy prime ministers who deal with Iran, plus the defense minister. “It’s more important for the ministers who are not in the security circle.”

Hours later, Mr. Netanyahu spoke for himself, and his words were widely distributed around the government with the warning — again, something that does not happen every day — not to deviate.

Shortly afterward in Washington, Ambassador Oren posted a link to the prime minister’s statement to international journalists on Twitter.

Mark Landler contributed reporting from Washington.

[Rad]

U.S. ‘coordinates weapon deliveries’ to Syria rebels: Russia

By Agence France-Presse
Thursday, October 25, 2012 17:54 EDT

MOSCOW — Russia on Thursday accused Washington of “coordinating” deliveries of arms to Syrian rebels, despite assurances by the State Department that the United States provides no lethal assistance.

“Washington is aware of the deliveries of various weapons to illegal armed groups active in Syria. Moreover, judging by the declarations of US officials published in US media, the US coordinates and provides logistical assistance in such deliveries,” the foreign ministry said in a statement.

Russia’s top general Nikolai Makarov on Wednesday said rebels fighting against Bashar al-Assad’s army in Syria are using US-made Stingers, a type of shoulder-launched missile systems also known as MANPADs.

State Department spokeswoman Victoria Nuland promptly denied that the US is delivering any such, or any other, weapons to the rebels.

“We are providing no lethal assistance to the Syrians,” she said, adding that the only MANPADs sighted by the US in Syria were “Soviet vintage”.

In its statement, the Russian foreign ministry acknowledged that “the US does not deliver MANPADs to the rebels” directly, and did not specify how the alleged logistical assistance is carried out.

Makarov said Russia did not yet know who was bringing the Stingers into Syria, adding it was possible that these and other weapons could have been delivered from abroad on several means of transport, including passenger planes.

“For this, all kinds of transport could be activated, including civil aviation. This is a serious matter,” he said.

Russia is under sustained pressure from the West, Turkey and Assad’s foes in the Arab world to cut its military cooperation with the Syrian regime.

President Vladimir Putin last week defended Russia’s right to trade weapons with whoever it wanted, so long as sales did not break any sanctions from the UN Security Council where Moscow has a permanent, veto-wielding seat.

“In all other cases, no one can on any pretext dictate to Russia or any other state with whom and how it should trade,” Putin said.

Moscow has refused to take sides against Assad, condemning the West and Turkey for making clear their support for the rebels battling his regime.

[Rad]

Spanish unemployment tops 25 percent

By Agence France-Presse
Friday, October 26, 2012 7:42 EDT

Spain announced Friday that its unemployment rate broke the 25-percent barrier for the first time as austerity cuts squeezed the recession-struck economy.

Tens of thousands of jobs were destroyed in the third quarter, even as Prime Minister Mariano Rajoy’s government raised taxes, cut spending and pondered whether to snatch a eurozone rescue line.

The unemployment rate rose to 25.02 percent in the third quarter from 24.63 percent in the previous three months, a National Statistic Institute report showed.

Among workers aged 16-24 the jobless rate towered at 52.34 percent in the third quarter, only slightly down from 53.27 percent in the previous quarter, the institute said.

After more than a year of recession, the soaring jobless figures and biting cuts have prompted growing street protests and unions have called a general strike for November 14.

A total of 5.78 million people searched in vain for work in the July-September quarter, up 85,000 from the previous three months, the official data showed.

The number of Spanish households in which every member is out of work climbed to 1.74 million — or one in ten of Spanish homes.

Spain’s jobs drama is being fed by a recession that is now moving into a second year, according to the Bank of Spain.

The economy has been shrinking since mid-2011 and is expected to decline again in the third quarter of 2012 at a rate of 0.4 percent, the same as in the previous three months, the central bank said this week.

Rajoy’s right-leaning Popular Party government has predicted an unemployment rate of 24.6 percent at the end of the year.

The government has declared its determination to slash the budget deficit come what may, however.

Spain, the fourth-largest economy in the 17-nation single currency area, has launched a vast austerity programme to save 150 billion euros ($194 billion) between 2012 and 2014.

After missing last year’s deficit-cutting target by a large margin, Spain promised to lower the overall deficit to 6.3 percent of economic output this year and to 4.5 percent of output next year.

But already Madrid has been forced to admit that the cost of a banking sector rescue will push the shortfall to 7.4 percent of gross domestic product in 2012.

Rajoy’s government is predicting the economy will shrink by 0.5 percent next year, a far more optimistic outlook than most private forecasts centred on a 1.5-percent slump.

If the economy fares worse than Madrid anticipates, the government may be forced to take even tougher austerity measures to meet its deficit-cutting commitments, the central bank has warned.

[Rad]

In the USA...


The United States Is On Course To Be The World’s #1 Oil Producer In 8 Years

By: Ray Medeiros October 25th, 2012

Despite the absolutely ridiculous claims the GOP are making about American oil production, the Wall Street Journal is reporting that the United States may soon be the world’s largest oil producing nation, overtaking Saudi Arabia.

The Department of Energy is forecasting that by 2020, U.S. production of oil could reach 15 million barrels a day, putting the nation’s production above Saudi Arabia.

Just next year the average will be 11.4 million barrels, just below what the output of Saudi Arabia is right now.

Here is a quick list on why oil production is so high right now.

Production in the Gulf of Mexico, which slowed after BP’s 2010 well disaster and oil spill, has begun to climb again. Huge recent finds there are expected to help growth continue.

A long period of high oil prices has given drillers the cash and the motivation to spend the large sums required to develop new techniques and search new places for oil. Over the past decade, oil has averaged $69 a barrel. During the previous decade, it averaged $21.

A natural gas glut forced drillers to dramatically slow natural gas exploration beginning about a year ago. Drillers suddenly had plenty of equipment and workers to shift to oil.

So the Republican claim that we aren’t drilling enough in this country is a flat out lie. Regardless of where the oil comes from, whether it may be offshore, federal land, state or private land, oil production in America is high.

Oil prices on the other hand are not coming down. This begs the question why isn’t Drill Baby Drill working to lower oil prices? I thought blaming Wall Street speculators was wrong and misguided.

It turns out that drilling our way to lower gas and oil just won’t work, so we need a new approach — and that is the approach of President Obama.

****************

Bernie Sanders Exposes 18 CEOs who took Trillions in Bailouts, Evaded Taxes and Outsourced Jobs

By: Jason Easley October 25th, 2012

Sen. Bernie Sanders fired back at 80 CEOs who wrote a letter lecturing America about deficit reduction by released a report detailing how 18 of these CEOs have wrecked the economy by evading taxes and outsourcing jobs.

80 CEO’s raised the ire of Sen. Sanders by publishing a letter in the Wall Street Journal urging America to act on the deficit, and reform Medicare and Medicaid.

Sen. Sanders responded to the lecture from America’s CEO’s by releasing a report that detailed how 18 of them have helped blow up the deficit and wreck the economy by outsourcing jobs and evading US taxes.

Sanders said,

    There really is no shame. The Wall Street leaders whose recklessness and illegal behavior caused this terrible recession are now lecturing the American people on the need for courage to deal with the nation’s finances and deficit crisis. Before telling us why we should cut Social Security, Medicare and other vitally important programs, these CEOs might want to take a hard look at their responsibility for causing the deficit and this terrible recession.

    Our Wall Street friends might also want to show some courage of their own by suggesting that the wealthiest people in this country, like them, start paying their fair share of taxes. They might work to end the outrageous corporate loopholes, tax havens and outsourcing provisions that their lobbyists have littered throughout the tax code – contributing greatly to our deficit.

    Many of the CEO’s who signed the deficit-reduction letter run corporations that evaded at least $34.5 billion in taxes by setting up more than 600 subsidiaries in the Cayman Islands and other offshore tax havens since 2008. As a result, at least a dozen of the companies avoided paying any federal income taxes in recent years, and even received more than $6.4 billion in tax refunds from the IRS since 2008.

    Several of the companies received a total taxpayer bailout of more than $2.5 trillion from the Federal Reserve and the Treasury Department.

    Many of the companies also have outsourced hundreds of thousands of American jobs to China and other low wage countries, forcing their workers to receive unemployment insurance and other federal benefits. In other words, these are some of the same people who have significantly caused the deficit to explode over the last four years.

Here are the 18 CEO’s Sanders labeled job destroyers in his report. (All data from Top Corporate Dodgers report.)

1). 1. Bank of America CEO Brian Moynihan
Amount of federal income taxes paid in 2010? Zero. $1.9 billion tax refund.
Taxpayer Bailout from the Federal Reserve and the Treasury Department? Over $1.3 trillion.
Amount of federal income taxes Bank of America would have owed if offshore tax havens were eliminated? $2.6 billion.

2). Goldman Sachs CEO Lloyd Blankfein
Amount of federal income taxes paid in 2008? Zero. $278 million tax refund.
Taxpayer Bailout from the Federal Reserve and the Treasury Department? $824 billion.
Amount of federal income taxes Goldman Sachs would have owed if offshore tax havens were eliminated? $2.7 billion

3). JP Morgan Chase CEO James Dimon
Taxpayer Bailout from the Federal Reserve and the Treasury Department? $416 billion.
Amount of federal income taxes JP Morgan Chase would have owed if offshore tax havens were eliminated? $4.9 billion.

4). General Electric CEO Jeffrey Immelt
Amount of federal income taxes paid in 2010? Zero. $3.3 billion tax refund.
Taxpayer Bailout from the Federal Reserve? $16 billion.
Jobs Shipped Overseas? At least 25,000 since 2001.

5). Verizon CEO Lowell McAdam
Amount of federal income taxes paid in 2010? Zero. $705 million tax refund.
American Jobs Cut in 2010? In 2010, Verizon announced 13,000 job cuts, the third highest corporate layoff total that year.

6). Boeing CEO James McNerney, Jr.
Amount of federal income taxes paid in 2010? None. $124 million tax refund.
American Jobs Shipped overseas? Over 57,000.
Amount of Corporate Welfare? At least $58 billion.

7). Microsoft CEO Steve Ballmer
Amount of federal income taxes Microsoft would have owed if offshore tax havens were eliminated? $19.4 billion.

. Honeywell International CEO David Cote
Amount of federal income taxes paid from 2008-2010? Zero. $34 million tax refund.

9). Corning CEO Wendell Weeks
Amount of federal income taxes paid from 2008-2010? Zero. $4 million tax refund.

10). Time Warner CEO Glenn Britt
Amount of federal income taxes paid in 2008? Zero. $74 million tax refund.

11). Merck CEO Kenneth Frazier
Amount of federal income taxes paid in 2009? Zero. $55 million tax refund.

12). Deere & Company CEO Samuel Allen
Amount of federal income taxes paid in 2009? Zero. $1 million tax refund.

13). Marsh & McLennan Companies CEO Brian Duperreault
Amount of federal income taxes paid in 2010? Zero. $90 million refund.

14). Qualcomm CEO Paul Jacobs
Amount of federal income taxes Qualcomm would have owed if offshore tax havens were eliminated? $4.7 billion.

15). Tenneco CEO Gregg Sherill
Amount of federal income taxes Tenneco would have owed if offshore tax havens were eliminated? $269 million.

16). Express Scripts CEO George Paz
Amount of federal income taxes Express Scripts would have owed if offshore tax havens were eliminated? $20 million.

17). Caesars Entertainment CEO Gary Loveman
Amount of federal income taxes Caesars Entertainment would have owed if offshore tax havens were eliminated? $9 million.

18). R.R. Donnelly & Sons CEO Thomas Quinlan III
Amount of federal income taxes paid in 2008? Zero. $49 million tax refund.

Eighteen of the 80 CEOs who signed the call for deficit action are actually some of the biggest outsourcers and tax cheats in America. First, they crashed the economy in 2008. They followed that up by taking billions in taxpayer bailout dollars. Their next step was to outsource jobs and evade taxes. Now they are calling for action on a deficit that they helped create over the past four years.

Bernie Sanders is exposing the hypocrisy of these CEOs, and every American should understand that if Mitt Romney is elected president, these pigs see potential for unlimited feeding from the taxpayer trough. Only by standing together can we tell these CEOs that the bill has come due, and it is time for them to pay.

We can tell these gluttons of our dollars that the all you can eat taxpayer buffet is now closed.

**************

October 25, 2012

Panetta Says Risk Impeded Deployment to Benghazi

By ELISABETH BUMILLER

WASHINGTON — Defense Secretary Leon E. Panetta said Thursday that he and top military commanders “felt very strongly” that deploying American forces to defend against the fatal attack last month on the United States diplomatic compound in Benghazi, Libya, was too risky because they did not have a clear picture of what was happening on the ground.

“There’s a lot of Monday-morning quarterbacking going on here,” Mr. Panetta told reporters at the Pentagon, adding that “the basic principle is that you don’t deploy forces into harm’s way without knowing what’s going on, without having some real-time information about what’s taking place.”

As a result, Mr. Panetta said, he and two top commanders “felt very strongly that we could not put forces at risk in that situation.” The commanders are Gen. Martin E. Dempsey, the chairman of the Joint Chiefs of Staff, and Gen. Carter F. Ham of Africa Command, which oversees American military operations in Africa, including Libya.

Mr. Panetta was at the White House for a regular meeting on the afternoon of Sept. 11 as the first reports of the attack unfolded, an American official said. By that evening Mr. Panetta had consulted with General Dempsey and General Ham and had ordered a number of American military forces in the region to move closer to Libya.

Defense officials say they did not receive a request for military support from the State Department as the attack unfolded.

In response to Mr. Panetta’s decision, a small Special Operations “strike force” team moved from Central Europe to the Sigonella Air Base in Sicily while two Navy destroyers already in the Mediterranean were moved off the Libyan coast. A rapid-reaction team of elite Marines left Rota, Spain, and arrived to protect the American Embassy in Tripoli, the Libyan capital, the next day.

But a senior military official said that uncertainty about what was happening on the ground in Libya delayed the decision about where to send the Special Operations forces until about 9 p.m. in Washington, or 3 a.m. on Sept. 12, in Libya.

Ultimately, the decision relayed from the military’s Joint Staff in Washington was “to get close but not into Libya,” the official said. The task force then deployed over the next 24 hours to Sigonella, which is about an hour by plane from Benghazi. But by that time the shooting was over and the Americans were eventually evacuated.

As Mr. Panetta told reporters on Thursday, “This happened within a few hours, and it was really over before we had the opportunity to really know what was happening.”

Republicans, in the meantime, continue to question the Obama administration about its handling of an event that has become a source of sharp debate in the presidential campaign.

On Thursday, Speaker John A. Boehner of Ohio released a letter asking the president to answer a number of questions about Libya publicly, including what military options he had been offered or had considered during the attack and its immediate aftermath.

Mr. Boehner also said in his letter that “information now in the public domain contradicts how you and senior administration officials consistently described the cause and nature of the terrorist attack in the day and weeks immediately following.”

Why, Mr. Boehner asked, “did the administration fail to account for facts that were known at the time?”

Mr. Boehner sent his letter after a series of three leaked e-mails sent by State Department officials shortly after the attack began — including one that alerted the White House Situation Room that a militant group had claimed responsibility for it — stirred new debate on Wednesday about the Obama administration’s shifting accounts.

The first e-mail, sent about a half-hour after the assault began, said the State Department’s regional security officer in Tripoli had reported that the mission in Benghazi was under attack, and that “20 armed people fired shots.” A second said the firing at the mission had stopped. In the third, the embassy in Tripoli reported that a local militant group, Ansar al-Shariah, had claimed responsibility through postings on Facebook and Twitter.

Eric Schmitt contributed reporting.

*************

October 25, 2012

Michigan Vote a Test Case on Enshrining the Rights of Unions

By STEVEN GREENHOUSE

DETROIT — Tired of battling legislative efforts to roll back union rights in state after state, organized labor is trying a new strategy: going on the offense. The first target is Michigan, the cradle of the United Automobile Workers and a bastion of union power.

Michigan’s unions are asking voters to approve a referendum on the ballot this November, known as Proposal 2, that would lock a series of labor protections into the state Constitution, including the right of public sector unions to bargain collectively and a prohibition against the legislature’s enacting a “right to work” law.

The ballot campaign represents an attempt by unions and their Democratic allies to slow or stop the wave of Republican-backed measures adopted in Wisconsin, Indiana, Ohio, Tennessee and other states in the last two years to curb collective bargaining and weaken unions, especially those representing government workers.

“Besides the presidential race, Proposal 2 is probably going to be the most significant thing on the ballot nationally,” said F. Vincent Vernuccio, director of labor policy at the Mackinac Center, a conservative research center based in Midland, Mich. “Michigan is surrounded by Wisconsin, Indiana, Illinois and Ohio — states that have taken wildly different views of private and public sector unions. The nation is on a teeter right now on union matters, and Michigan will give momentum to one side or the other depending on how this plays out.”

Business groups and Michigan’s Republican governor, Rick Snyder, say that if the referendum to enshrine labor rights in the Constitution is approved, it will cast a major cloud over the state’s business climate — broadcasting to the world that organized labor, whenever it deems fit, can use its muscle to go to the voters to trump the legislature and governor.

“Michigan’s union bosses are field-testing a new weapon,” said Rich Studley, president of the Michigan Chamber of Commerce. “If this weapon is successful in banning legislation, we’ll see it deployed in the 21 other states that allow initiatives and referendums.”

Further flexing their muscles, unions are sponsoring two other proposals on the Michigan ballot. One would repeal a law that allows emergency managers appointed to oversee financially distressed communities to void union contracts. Another would amend the Constitution to guarantee home health aides the right to unionize.

Both sides are flooding the airwaves with ads about Proposal 2, with each side accusing the other of using misleading scare tactics.

In one union-backed commercial, for example, a firefighter is wearing an elaborate fireproof apparatus over his head. “This air pack I’m wearing gives me 30 minutes to look inside your burning house and find you,” he says. “Having the most modern dependable equipment when the clock is ticking, that counts. If it comes from collective bargaining, the politicians can’t cut it without our say-so.”

Opponents are broadcasting an ad that begins with a child leaving for school. “When we send them off in the morning, we should be certain they’re safe in school,” the voice-over says. “If Proposal 2 passes, it would eliminate safety rules for school bus drivers. Worse, Proposal 2 could prohibit schools from removing employees with criminal records. That’s dangerous for kids and terrifying for parents.”

Although most of the campaign’s financial disclosures are not due until after the election, political experts estimate that more than $30 million will be spent in the fight, with national business and labor groups contributing substantial financing.

At the moment, the proposal’s chances of passing are difficult to predict. Proponents had a significant lead at first, but that has eroded as business-backed groups have escalated their attacks. A Detroit News poll released Oct. 12 found that 43.2 percent of the 600 people surveyed supported the proposal, and 41.8 percent opposed it. The difference was within the poll’s margin of error.

Union leaders say Proposal 2 has a simple aim: to protect collective bargaining against further assault.

“Collective bargaining is a fundamental right; collective bargaining lifts all boats,” said David Hecker, president of the Michigan branch of the American Federation of Teachers. “There’s no question that in Michigan, every worker, union or not, is better off today because of what the U.A.W. has achieved historically. People can afford to send their kids to college. They have a cottage up north.”

Governor Snyder is fighting hard to defeat Proposal 2 and preserve the emergency manager law, which was updated during his tenure.

He said the emergency manager law is vital to help communities that have lost population bring their cost structures into line, avert bankruptcy and return quickly to local control.

But many union officials oppose the law because it empowers emergency managers to scrap union contracts. “We see it as a power grab against democratically run communities,” said Albert Garrett, the top Michigan official of the American Federation of State, County and Municipal Employees.

As for Proposal 2, Mr. Snyder said he urged labor leaders not to place it on the ballot for the same reason he successfully urged Republican legislators not to introduce right-to-work legislation — the issues are highly divisive.

“They call it the collective bargaining proposal, but I call it the back-in-time proposal,” Mr. Snyder said in an interview. “This would literally wipe out up to 170 laws that are on the books, some dating from the 1960s. The cost of litigation that would come out of this is huge.”

He said he feared that Proposal 2 would trump two laws he deemed particularly important, one making it easier to fire ineffective teachers and another requiring all government employees to pay at least 20 percent of the cost of their health care plans. Under Proposal 2, those provisions would be superseded in communities or school districts that agree to union contracts that contain conflicting provisions.

“It would significantly raise the cost structure of local government,” Mr. Snyder said.

Labor leaders say public sector unions have bargained innovatively to hold down health costs, asserting that the current restrictions might inhibit future innovation. They further argue that if a democratically elected school board agrees to let union members pay 17 percent rather than 20 percent of their health care coverage, state lawmakers should not get in the way.

Governor Snyder’s allies complain that Proposal 2 would undercut his efforts, which include cutting corporate taxes, to make Michigan friendlier to business.

“Proposal 2 is a very scary thing to me,” said Ralph Beebe, president of Highland Engineering, a military equipment manufacturer. “Michigan is going in the right direction, and I think it would be a huge step backward.”

Chamber of Commerce officials warn that if the proposal passes, businesses in southwest Michigan that are weighing expansion might decide to expand just across the border in Indiana, which passed a right-to-work law early this year.

Right-to-work laws prohibit union contracts at private sector workplaces from requiring employees to pay any dues or other fees to the union, a move that often saps unions’ strength and treasuries. In states without such laws, workers at unionized workplaces generally have to pay such dues or fees.

John Armelagos, a nurse in Ann Arbor, acknowledged that Michigan’s Republican-dominated legislature had not enacted a broad law curbing many unions’ ability to bargain. That contrasts with Wisconsin and Ohio, where the legislatures enacted wide-ranging antibargaining laws, although Ohio voters repealed that law in a union-backed referendum last November.

“In Michigan, we’re dying a death by a thousand cuts,” Mr. Armelagos said, pointing to laws that limit bargaining on such issues as how to evaluate teachers or staff levels for fire trucks in some communities. “Conservative politicians are passing law after law that restricts our collective bargaining rights.”

To rally public support, proponents have sought to turn Proposal 2 into a referendum on whether collective bargaining is good or bad for America.

Ivy Bailey, an elementary-school teacher in Detroit, said collective bargaining helped lift her father, a longtime assembly plant worker at General Motors, into the middle class and send two daughters to college.

“People fought for the right for us to bargain,” she said. “If we could trust the boss to do the right thing, we wouldn’t need collective bargaining.”

*************

October 25, 2012

Business Leaders Urge Deficit Deal Even With More Taxes

By JACKIE CALMES

The partisan rift over taxes has blocked a deficit reduction deal for two years and has spilled into the 2012 campaigns. Yet as Republicans and Democrats continue to brawl, business leaders are increasing pressure on Washington to reach a deal on taxes and spending, even if it raises their own tax bills.

On Thursday morning, more than 80 executives of leading American corporations signed a statement calling for a deficit reduction compromise that would “include comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit.”

Several members of the group, which includes highly paid chief executives of financial and industrial corporations who will stand to pay more if President Obama succeeds in his effort to raise taxes on the wealthy, then helped ring the opening bell at the New York Stock Exchange to draw attention to their coalition, Fix the Debt. The group has raised $37 million for a nationwide education and lobbying effort.

Alarmed last year by Washington’s brinkmanship over raising the nation’s debt ceiling, these executives are now mobilizing to avert another such crisis at the turn of the year. After the November elections, they plan to press the two parties to compromise on a long-term substitute for the “fiscal cliff” — the immediate across-the-board spending cuts and tax increases that would affect nearly all Americans on Jan. 1, potentially sending the economy back into recession.

The business leaders’ goal contrasts with the campaign messages of both parties. While the executives seem to answer Mr. Obama’s call for “economic patriotism” by their tentative embrace of higher personal taxes, in interviews many of them have rejected his “pay your fair share” talk as class warfare, and a good number oppose his re-election.

But the business leaders’ position also contradicts the stand of Mitt Romney and other Republicans, who say that all tax increases are “job killers,” that the federal budget can be balanced with spending cuts alone and that any overhaul of the tax code should be “revenue neutral,” neither raising nor lowering the government’s total tax collection.

“To say that you can solve this without increases in taxes is ludicrous,” said David M. Cote, the chief executive of Honeywell, a Republican and a member of Mr. Obama’s Bowles-Simpson fiscal commission in 2010. “Most wealthy people get it. They just don’t want to be put in the position, though, where you pay more in the taxes and the profligate spending continues.”

The Wall Street event on Thursday was just the latest, if the highest profile, of near daily developments in recent weeks in which prominent figures have stepped out of corporate suites to back a deal that would generate more revenue and, by implication, raise taxes on themselves. They support those moves if they are part of a bipartisan compromise that also reduces the long-term costs of entitlement programs, chiefly Medicare and Medicaid, that are the biggest factors driving projections of unsustainable federal debt.

Lloyd C. Blankfein, the chief executive of Goldman Sachs, who is a Democrat, said, “The people, including myself, who are willing to give more revenue don’t want to take on the moral hazard” of sending more money to Washington unless the White House and Congress “deal with the pressing need to cut the budget.”

On Monday, Jamie Dimon of JPMorgan Chase hosted a Wall Street lunch for about 75 other chief executives to hear from budget experts, including Senator Mark Warner of Virginia, a Democrat, and Senator Lamar Alexander of Tennessee, a Republican, about what the business leaders could do to promote a bipartisan deal. How, for example, could they persuade Republicans to drop their antitax position?

Business leaders “think it’s just really important that we fix this,” said Mr. Dimon, an early backer of Mr. Obama whose relationship with him later frayed. “They’re not into whether the tax rate for higher-paid individuals is 35 percent or 39.6 percent.” He was referring first to the top Bush-era tax rate, which high-income taxpayers now pay, and then to the Clinton-era rate, which they face after Dec. 31 if the Bush tax cuts expire as scheduled. Mr. Obama supports ending the cuts for high incomes, and Republicans oppose it.

On Tuesday, attendees at the national conference of the Securities Industry and Financial Markets Association met in New York with Mr. Warner and Senator Saxby Chambliss, Republican of Georgia. The two belong to the Senate’s bipartisan “Gang of Eight,” which has struggled for nearly two years to draft a spending and taxes deal.

“I’m talking to everybody in this room,” Mr. Chambliss told his audience. “If you like the package that we ultimately come up with, then we haven’t done our job — because everybody is going to have to ultimately pay a price in this.”

Like others who have privately lobbied lawmakers, Mr. Blankfein and Mr. Cote reject suggestions that the philosophical chasm between the parties is unbridgeable.

“There are very conservative Republicans in the House who sit there and say, ‘I would agree to a revenue increase if there was significant entitlement reform,’ ” Mr. Cote said. “And then you’ll run into Democrats who say there won’t be any entitlement reform unless there’s revenue increases. For most of us in the business community, we say: ‘It sounds to us like you’ve got a deal. You just need to sit down and flesh out the details.’ ”

That, as members of the Simpson-Bowles commission can attest, is easier said than done.

The panel’s dissenters, who opposed the majority’s recommendations of a $4 trillion, 10-year package to reduce annual deficits with a combination of spending cuts and new revenue, included all three House Republicans. Among them was Representative Paul D. Ryan of Wisconsin, the House Budget Committee chairman, who is now Mr. Romney’s vice-presidential running mate.

The Fix the Debt campaign’s inspiration is the dormant Simpson-Bowles framework, and the group’s formation is due in large measure to nonstop proselytizing of business leaders by the commission’s chairmen, Erskine B. Bowles, a businessman who was a White House chief of staff to President Bill Clinton, and Alan K. Simpson, a former Senate Republican leader from Wyoming.

According to the group’s president, Maya MacGuineas, the money raised is financing a growing staff of about 35 at a Washington “war room,” chapters in up to 35 states and ultimately, perhaps, television ads and other help for politicians — members of Congress or even the president — who would need support in taking unpopular positions on tax increases or spending cuts.

Mr. Dimon, speaking for JPMorgan Chase, said: “You know, we’re in 1,900 hamlets in America. I’d — we’d — be calling them all up, literally we’d start flying people in. It would be a whole different ballgame, I think, if we had something to support, and with the president supporting it.”

***************

October 25, 2012

Obama Campaign Endgame: Grunt Work and Cold Math

By JIM RUTENBERG
NYT

CHICAGO — This is what “grinding it out” looks like at President Obama’s election headquarters: scores of young staff members intently clicking away at computer keyboards as they crunch gigabytes of data about which way undecided voters are leaning, where they can be reached, and when; strategists standing at whiteboards busily writing and erasing early voting numbers and turnout possibilities; a lonely Ping-Pong table.

The wave of passion and excitement that coursed through Mr. Obama’s headquarters here in 2008 has been replaced with a methodical and workmanlike approach to manufacturing the winning coalition that came together more organically and enthusiastically for him the last time, a more arduous task with no guarantee of success.

As Washington and the cable news commentariat breathlessly discuss whether Mitt Romney’s post-debate movement in the polls has peaked, Mr. Obama’s campaign technicians — and that’s what many of them are — are putting as much faith in the multimillion-dollar machine they built for just such a close race as in the president himself.

“We are exactly where I thought we would be, in a very close election with 12 days left with two things to do and two things only: persuade the undecided and turn our voters out,” said Jim Messina, 43, the president’s technocratic campaign manager, slightly paler and more hunched than he was when the campaign began. Pointing to the rows of personnel outside his office on Thursday, he added, “Everything in that room has been focused on that.”

Four years ago, Mr. Obama’s political team here was preparing one of its trademark showstoppers: a half-hour prime-time program extolling Mr. Obama’s character and plans across four networks, culminating in a live feed from a boisterous rally in Florida.

There will be no such razzmatazz this time around. Any extra money in this tight final phase of the election is being wired to Nevada and Florida for more Spanish-language ads, to Iowa and Ohio for more on-the-ground staff members, and to Google and Facebook for more microtargeted messaging to complacent, maybe even demoralized, young supporters.

Mr. Obama emphasized the importance of their task during a stop at a phone bank here in Chicago on Thursday, telling volunteers, “If we let up and our voters don’t turn out, we could lose this election.” He added quickly, “The good news is, if our voters do turn out, we will definitely win the election.”

At the White House, it is clear that the action has moved to Chicago, with some staff members, who are legally prohibited from even wearing campaign buttons to work, pining to be on the trail and others whiling away the time preparing for the lame-duck Congressional wrangling on the budget impasse.

For Mr. Obama’s campaign staff in a nondescript office tower here, the task now comes down to creating an electorate more favorable to Democrats than most major pollsters have assumed, with percentages of Obama-friendly black, Latino and young voters that rival those of 2008, at least enough to offset the large drop in support among other segments of the population, like independent men.

An ABC News/Washington Post tracking poll on Thursday had Mr. Romney with a 50-to-47-percent edge among likely voters nationwide, the first time the challenger had reached 50 percent in the poll. But Mr. Obama’s aides here are at least projecting an air of confidence. They say their system, which they began building long before the Republican primaries, is exceeding expectations. Eleven days will tell whether they are bluffing.

After using their huge database to increase registration among favorable voting groups in crucial states, they are now pinpointing people who ordered absentee ballots and need a nudge to send them, or sporadic voters who indicated they would vote for the president but may need to be pushed to show up at their polling place.

“We made a strategic choice very early on that getting our supporters — and the right types of supporters — to the polls before Election Day was a big priority for us,” said Mitch Stewart, the Obama campaign’s battleground state director, who has been helping organize Mr. Obama’s supporters since the 2008 election and started at the campaign some 19 months and, in his words, “20 pounds ago.”

With a box of Tastykakes sitting on his desk in his spartan office, Mr. Stewart added, “The electorate’s going to look much more like 2008 than 2010.”

Some polls in recent weeks have shown Mr. Obama with an advantage among all registered voters, and Mr. Romney with an advantage or tied among likely voters. Mr. Obama’s aides are contending that the pollsters are wrongly assuming that Mr. Obama’s voters are less enthusiastic and that turnout among his key groups will be down, that is, he has fewer likely voters than he had four years ago.

A new Time magazine poll this week showed Mr. Obama ahead by a two-to-one ratio among those who voted early in Ohio.

His aides pointed to statistics showing that a slightly higher percentage of African-Americans had voted early in North Carolina compared with the percentage at this point four years ago, and that their percentages are up along with those of Hispanics in the early mail-in vote in Florida, which they attributed to their turnout operations.

Officials with Mr. Romney’s campaign disagree, and they said that whatever gains Mr. Obama had would be unsustainable through Election Day, contending that he is succeeding only in getting those most likely to support him to show up early, an assessment that Mr. Obama’s aides dispute.

“Every cycle, when someone is losing, they claim they are altering the electorate,” said Rich Beeson, Mr. Romney’s political director.

Of course, at this stage of the race, each campaign is engaged in a bit of bravado, aimed at giving supporters and undecided voters alike a sense that it is the winning team to be on.

There is little dispute that for Mr. Obama to at least come close enough to matching his 2008 coalition to win he will need to induce people to vote in a way he did not have to four years ago, before the full impact of the Great Recession was followed by intensive partisan wrangling.

Mr. Obama’s aides here said they had prepared for the need to rebuild his coalition all along, and that is why they have kept careful tabs on his former supporters, and worked to identify potential new ones, since he took office, all the while perfecting ways to keep track of them, keep in touch with them, and, ultimately, persuade them to vote.

The campaign is refocusing its advertising to scare less motivated supporters to vote. One new ad presents a reminder of Al Gore’s loss to George W. Bush in the Florida recount of 2000, which, the ad says, made “the difference between what was, and what could have been.”

But ultimately, if Mr. Obama does win, it could come down to the huge room of technicians and data crunchers in a corporate office here, sitting on exercise balls or squeezing stress toys as they dispatch information to volunteers knocking on doors hundreds of miles away.

In interviews, Mr. Obama’s aides wistfully recalled when the office had just opened, a vast, mostly empty space with a countdown of the days scrawled in Magic Marker — then well into the hundreds. Now it is done with a digital clock, ticking off the very last minutes and seconds.

Peter Baker contributed reporting from Chicago, and Mark Landler and Jackie Calmes from Washington.

[Rad]

 SPIEGEL ONLINE
10/26/2012 01:07 PM

Cutting Carbon: Is Europe's Emissions Trading System Broken?

By Joel Stonington

Emitting CO2 into the atmosphere is dirt cheap in Europe these days. At just 8 euros per ton, the low price is undermining the European Union's effort to establish an effective cap and trade system. Implementing necessary fixes to the system, however, won't be easy in the face of industry opposition.

Europe's carbon market is in deep trouble and it's not just environmentalists sounding the alarm. Back in April, the CEO of Shell said that the European Union's system for trading allowances for the emission of greenhouse gases was "in danger." But that's about as direct as anyone will get in this world of bureaucratese. Most simply talk of "price weakness" (meaning that emission credits are absurdly cheap), a desire for "long-term policy certainty" (the system needs a fix!), and the need to "restore confidence" (and the fix has to come fast!).

The simple fact is that the most important tool in Europe's fight against climate change needs a major fix. When it was introduced in 2005, the idea was to make pollution expensive. And in the summer of 2008, the price for emitting a ton of carbon peaked at a price of around €30. But the global financial crisis and ensuing economic downturn in Europe have taken their toll. Prices are currently hovering around €8 euros per ton of carbon emissions, hardly the disincentive policy makers had hoped for.

"The emissions trading system is not very credible," said Jo Leinen, a Social Democratic member of European Parliament from Germany, in a recent phone interview. "It doesn't look like it has credibility in the near future. So we need to give it back its real function to be an incentive for low carbon investment and low carbon technology."

The regime, known as the Emissions Trading System (ETS), is now entering a third phase intended to begin the process of reducing the number of credits available, thus forcing prices up and pollution down. It will also dramatically increase the number of credits that are auctioned off rather than handed out. But its problems this year are more obvious than ever. Far too many carbon credits were given out in the beginning of the program and companies produced less in the downturn, resulting in a huge surplus of credits. Current prices for emissions certificates hardly act as a disincentive to continue emitting CO2.

Looking at Fixes for the ETS

The European Commission is aware of the problem. In a draft report leaked to the press earlier this week, the Commission lays out proposals for both short- and long-term fixes to the ETS. And time, it would appear, is of the essence. "The options for structural measures outlined in the report should be discussed and explored without delay," the report reads according to Bloomberg.

Neither fix, however, will be easy and even proposals for short-term repairs are controversial. It remains to be seen whether there is enough political will to address the issue as the EU continues to muddle through the euro crisis. Yet failure to act would render meaningless the single most important governmental tool for reducing the emissions that cause climate change.

According to a Climate Action Commission report released on Wednesday, the EU remains on track to achieve its goal of 20 percent lower emissions by 2020 relative to 1990. Some point to the reductions as a success for the ETS, such as a recent study by the Environmental Defense Fund, while others suggest reductions so far are due to governmental policies in addition to the economic downturn. Indeed, success for the program can thus far mostly be measured in the fact that it exists at all.

But the ETS blueprint calls for the third phase, which will run from 2013 to 2020, to be much more rigorous, making it more expensive for major emitters and generating large amounts of revenue for member countries through the increased auctioning of credits.

Yet the huge surplus of credits handed out early in the program has largely undermined the teeth that the launch of the third phase was supposed to show. The proposed solution for the short-term is to take some credits out of the system early in the third phase of the program and put them back in at the end. The idea has been called back-loading.

'No Brainer'

European Climate Action Commissioner Connie Hedegaard called this "an administrative thing" in a recent phone interview, though it's more controversial than that, with some opponents calling the plan a form of market manipulation.

According to Mark Lewis, a carbon market analyst at Deutsche Bank, the market is betting that back-loading will happen, with the only question being how many credits should be taken out. Without the back-loading plan looming, Lewis estimates that emissions allowances today would be worth just two or three euros. "The only value that these allowances have at the moment," said Lewis, "is the value of the political option."

Hedegaard laid out a plan in July containing models for withholding 400 million, 900 million or 1.2 billion carbon credits from planned auctions during the next three years. The price on Friday for an EU carbon permit on the ICE Futures Europe exchange is €7.94 euros per metric ton. A report from Deutsche Bank suggests the price would stay steady or drop if only 400 million are taken out and rise to around €15 per ton within 18 months if 900 million or 1.2 billion were initially removed.

"On backloading, this is a no brainer," Hedegaard said. "This is an overflooded market. Would it be wise to continue to overflood it?"

Various players in the carbon market have proposed that up to a full year's worth of carbon credits -- in 2011, 2.08 billion allowances were issued -- be removed for later back-loading. With phase three, credit auctions were supposed to provide member countries with money for investing in low-carbon initiatives. But revenue from the scheme is less than half of what was projected just a few years ago.

It isn't difficult to find the culprit. When the system was designed, it used contemporary models predicting economic growth. But 2008 radically changed the outlook in Europe and the surplus of carbon credits has been building ever since.

'A Very Expensive Route'

As it currently stands, The European Commission does not expect the surplus to disappear organically by 2020. A commission draft document recently predicted that 1.5 billion surplus allowances will still be on the books at the end of the third phase. The draft report leaked earlier this week raised that estimate to 2 billion, according to Reuters.

"Having a low carbon price isn't a reflection of cheap decarbonization," said David Hone, Senior Climate Change Advisor at Shell, in a recent phone interview. "It probably means you've gone down a very expensive route and haven't allowed the ETS to do what it was set up to do, which is to find the lowest cost route to tackle the emissions problem."

Simply temporarily removing allowances from the system, though, may not be enough. The recently leaked draft document proposing fixes to the ETS laid out a number of deeper structural adjustments to the program, changes that Commissioner Hedegaard said are political dynamite. "It is more difficult when you come to the more structural options that we will present a month from now," she said.

Proposals for such larger fixes include a tighter cap on emissions, canceling credits outright or lowering the total number of credits issued, according to Reuters. Indeed, the United Kingdom recently called for 1.8 billion credits to be permanently removed from the system to spur prices higher.

Some ideas from the financial and academic communities appear no longer to be under consideration, such as the creation of a central bank for the ETS that could adjust the number of credits in a downturn or the idea of setting a mandatory minimum price for auctions.

Of course, much of this feels like déjà vu. SPIEGEL ONLINE noted back in 2006 that phase two of the ETS was "expected to run more smoothly." But that didn't happen. With the downturn, significant industry profits resulting from the sale of unused emissions certificates, a fraud scandal and the simple fact of too many credits given away, some studies now politely refer to both phase one and two as "teething phases."

'No Man's Land'

All of this, however, should not suggest that the system is broken entirely. The conversation about the cost of carbon in Europe is firmly entrenched in boardrooms. The biggest producers of greenhouse gases are part of the program with an expected 50 percent of the EU emissions part of the plan by 2013. Some are optimistic that Europe will simply be able to work out the kinks along the way.

But as with many proposals for necessary reform in Europe, opposition to potential ETS fixes is substantial. Ironically, the main opposition to both short- and long-term fixes to the ETS comes from those who have profited from or been given special allowances in the program.

Industrial manufacturers, for example, received millions of unneeded credits during the recession that they then sold on to power companies, essentially a twice-removed subsidy for the manufacturing sector. Perhaps not surprisingly, the powerful manufacturing and business lobby, BusinessEurope, has objected to the backloading plan, according to Bloomberg. The estimate of windfall profits during the first two phases runs at €19 billion euros, according to a study put out in 2010.

"It's uncontroversial that the sale of allowances during the nadir of the recession was an important source of income for many companies," confirms Damien Morris, Senior Policy Advisor at Sandbag Climate Campaign.

The other major opposition to any ETS changes is coal-dependent Poland. Back in April, Poland's Environment Minister Marcin Korolec told Reuters that fixing the ETS could bankrupt industry in the country. Poland is one of 10 EU countries that can get exemptions from paying for allowances for up to seven years. But that's only if Poland agrees to invest in renewables and diversify, something the country has not been willing to do.

"We're sort of in no mans land at the moment," said Deutsche Bank's Lewis. "You've got a price out there that is costing the consumer an extra seven or eight euros a ton. Power is really what is affected. We're paying a higher power price than we would be otherwise because of the carbon market but we're not getting the advantage of renewable investments."

[Rad]

Astronomer insists there is a Planet X four times the size of Earth lurking at the edge of our solar system

BBC

    Distortion to orbits of asteroids beyond Pluto imply mystery planet is tugging at them, claims astronomer.
   
The evidence for 'Planet X' - the mysterious hypothesised planet on the edge of our solar system - has taken a new turn thanks to the mathematics of a noted astronomer.

Rodney Gomes, an astronomer at the National Observatory of Brazil in Rio de Janeiro, says the irregular orbits of small icy bodies beyond Neptune imply that a planet four times the size of Earth is swirling around our sun in the fringes of the solar system.

Planet X - perhaps mis-named now that Pluto has been demoted to a dwarf planet - has been widely hypothesised for decade, but has never been proven.

Gomes measured the orbits of 92 Kuiper belt objects - small bodies and dwarf planets - and said that six objects appeared to be tugged off-course compared to their expected orbits.
The hypothetical planet - four times the size of Earth - will float beyond Neptune and Pluto and cause disturbances in the Kuiper belt of asteroids

The hypothetical planet - four times the size of Earth - will float beyond Neptune and Pluto and cause disturbances in the Kuiper belt of asteroids

He told astronomers at the American Astronomical Society on Tuesday that the most likely reason for the irregular orbits was a 'planetary-mass solar companion' - a distant body of planet size that is powerful enough to move the Kuiper belt objects.

He suggested the planet would be four times bigger than Earth - around the size of Nepture and would be 140 billion miles from the sun, or about 1,500 times further than the Earth.

Alternatively an object the size of Mars on an irregular orbit that bought it to within five billion miles of the sun - close to Neptune's orbit - could be the solution.

However, due to the distances involved, it will be tough to for Earthbound astronomers to catch a glimpse of the hypothetical newest member of our solar system.

Even non-planet Pluto is hard to spot thanks to the distances involved.
The Kuiper belt lies on the outskirts of our solar system, and calculations imply a planet also lurks out there

The Kuiper belt lies on the outskirts of our solar system, and calculations imply a planet also lurks out there
The solar system as we know it, showing (l-r), Mercury, Venus, Earth, Mars, Jupiters, Saturn, Uranus and Neptune

The solar system as we know it, showing (l-r), Mercury, Venus, Earth, Mars, Jupiter, Saturn, Uranus and Neptune

While other astronomers are on the astronomical fence, they have applauded his methods.

Rory Barnes, from the University of Washington told National Geographic  that Gomes 'has laid out a way to determine how such a planet could sculpt parts of our solar system.

'So while, yes, the evidence doesn't exist yet, I thought the bigger point was that he showed us that there are ways to find that evidence.

'I don't think he really has any evidence that suggests it is out there.'

Hal Levison, from the Southwest Research Institute in Boulder, Colorado, said: 'It seems surprising to me that a [solar] companion as small as Neptune could have the effect he sees.

'[But] I know Rodney, and I'm sure he did the calculations right.'

The previous ninth planet, Pluto, is one of the largest of the Kuiper belt dwarf planets, at some 1,400 miles wide.

It got downgraded by the International Astronomical Union in 2006 for failing to meet all the criteria of a 'planet', namely that its mass is not sufficient enough to clear its orbit of surrounding objects.

http://www.youtube.com/watch?v=DZTyAw_Nuow&feature=related

[Rad]

 SPIEGEL ONLINE
10/26/2012 07:02 PM

The Ferrari-Red Communists: China at a Crossroads in Shift from World's Factory to Industrial Power

By Erich Follath and Wieland Wagner

The Chinese are seen as victors in the global financial crisis, and as both a hope and a threat to German industry. Beijing wants to be more than the world's factory. But the country's economic engine is showing signs of stalling and it is uncertain what direction it will take in the future.

A visit with Mr. Huang, one of the richest and most controversial men in the People's Republic of China, is full of surprises. Take, for example, the four pairs of climbing boots lined up like exhibits behind the door to his office. "I was at the South Pole and North Pole, and twice on Mt. Everest with these," says Huang, pointing proudly to a series of photos that serve as proof of his adventures. There are Buddha statues and various animals in the adjacent rooms, including rhesus monkeys and pygmy rabbits in cages, as well as small sharks swimming in circles in a large aquarium leaning against a wall.

"I love nature," says Huang Nubo, 56, a businessman with an estimated net worth of at least $1 billion (€772 million). The founder and chairman of the Beijing Zhongkun Investment Group, Huang discovered a market niche: He builds resorts with an emphasis on sustainable design. His company benefits from the new wanderlust and "green" consciousness of the affluent Chinese upper and middle classes.

He tells the short version of life story while a Siam cat purrs on his lap. He was orphaned at 13, and in 1960 his father committed suicide after a quarrel with a party secretary. His mother later died of grief. He attended Beijing University, joined the Communist Party to further his career and became an official in the party's propaganda division. Then he withdrew from politics and founded his company.

"As an entrepreneur, you have more freedom than you do in politics, and you can usually move around more," says Huang, whose party connections certainly didn't hurt his growing business. But, as he points out, "Chinese society has developed unevenly, which isn't good. Too many people are losing out." This is why Huang gives a substantial portion of his profits to the needy. With charitable donations of about $5 million a year, he is seen as one of the country's most generous philanthropists.

Distrust over Global Buying Spree

Huang has trouble understanding why his latest project is so controversial. "I'm hurt by the mistrust with which I and the entire Chinese nation were met." He is talking about Iceland and, more specifically, about an almost virgin piece of land in the northeastern part of the island, complete with waterfalls and snow-covered peaks, called Grimsstadir a Fjöllum. Huang fell in love with this wildly romantic stretch of wilderness during a visit to Iceland. He wanted to acquire 30,639 hectares (about 120 square miles) of land and invest about $200 million in the property. The plans included a 120-room hotel, a golf course and a riding facility, which could all be reached via a new airport built specifically for the site.

Some of the public in Iceland, a NATO country, saw the potential deal as a sellout and even envisioned looming geopolitical problems. One commentator even likened the entrepreneur to Dr. No, the villain of the 1962 James Bond film of the same name. Huang's party connections were brought up, to support the theory that it was merely a cover for sending an agent to Iceland. Many had their suspicions about the "noticeable" proximity of the Grimsstadir site to a deep-water port. Was this man really working for the Communist Party and planning to build a base for Chinese polar ambitions?

Huang has lost his initial enthusiasm for the Iceland project, and now he is retreating more and more into his third passion, next to making money and conquering nature: writing poetry. Several volumes of his prizewinning verses have already been published. At night, after the employees have gone home, he sits among his sharks and pygmy rabbits, writing verses like: "Whose smiling face would be no mask / And whose heaven no exile."

The fears of some Icelanders make sound like paranoia, but they are not unfounded. China and its entrepreneurs are acquiring all kinds of assets all over the world, and in many cases their actions are strategic in nature, including the acquisition of farmland in Mozambique, copper mines in Afghanistan and ports in Greece. China is on a global buying spree, and it sees the current economic crisis in Europe and the United States as an historic opportunity to energetically press ahead with its offensive. The financial services firm PricewaterhouseCoopers estimates that China's so-called red capitalists spent $23.9 billion on shares in foreign companies in the first half of 2012, or three times as much as in the same period last year.

The commodities sector is a case in point. In Mid-July, the state-owned energy giant Sinopec spent $1.5 billion for almost half of Canadian company Talisman Energy's oil and gas rights in the North Sea. Almost concurrently, CNOOC, another Chinese energy giant, bought the Canadian firm Nexen for more than $15 billion. Planners in Beijing hope that these deep-water drilling specialists will help them achieve the breakthrough in industrial policy that they need to expand in the Pacific. CNOOC is the main Chinese player in oil and gas exploration in disputed waters that are also being claimed by neighbors Vietnam, the Philippines, Malaysia and Japan, with which there is even talk of possible war over the claims.

China's Engine Begins to Stall

The one side of the Chinese economy is characterized by an unbroken and even growing thirst for expansion. The other side is the domestic economy, which hasn't been doing very well for some time. There is even talk of a "bubble" that could burst, and of the "Chinese party" coming to an end as a result. China's engine is beginning to stall, with the economy falling well short of the 10-percent average annual growth rates in the last decade. In the months from July to September, the economy grew by only 7.4 percent, and it was the seventh quarter in a row in which the growth rate declined. In July, exports grew by only 1 percent before increasing again.

While these numbers sound impressive in times of European stagnation and American record debt levels, they are disconcerting for the People's Republic, because other indicators are also disappointing at the moment. The Shanghai Stock Exchange Composite Index fell to a three-year low, and growth in industrial production fell short of expectations. Entire industries are suffering from weak demand. With labor costs on the rise, industries like shipbuilding and small manufacturing of products like Christmas decorations are no longer as lucrative as they once were.

The country is experiencing a dual set of developments. Its top companies, like computer maker Lenovo, machine builders Sany and Huawei, a company that experts believe has just overtaken Sweden's Ericsson as the global market leader in telecom equipment manufacturing, are celebrating their triumph. Meanwhile, other industrial firms must largely reinvent themselves in a painful process.

China is shedding its image as the world's factory. The current economic model is "urgently in need of change," states a highly critical March report by the World Bank -- which, astonishingly enough, was co-produced with the Chinese government. The report was presented by World Bank President Robert Zoellick. According to the report, China will jeopardize its previous successes unless it implements fundamental reforms, and it will have to curb the near-monopolistic influence of state-owned companies and curtail the power of those interest groups that benefit from "special relationships with decision-makers." The report concludes that "China has reached another turning point."

A New Era for China
China's current problems are in full evidence in Dongguan, a major city in the Pearl River Delta and home to the world's largest shopping mall. Very few consumers can be found in the 660,000-square-meter New South China Mall, and even most of the stores along the central, Venice-like Canal Grande have gone out of business. Chinese gondoliers dose in the evening sun, and the stone "San Francisco Bridge" looks deserted. The mall was planned without taking the real needs of the population into account, and now it has to be reconfigured. Specialization instead of megalomania is the order of the day, as it is throughout Dongguan, which was the country's third-largest exporting city, falling well behind Shanghai and Shenzhen.

Until recently, armies of migrant workers were making vast quantities of cheap consumer products, from watches to mobile phones, for the European and US markets. They worked and lived in a vast thicket of factories and dormitories in the southern Chinese exporting province of Guangdong, near Hong Kong.

But now the Dongguan model is fast becoming outdated, after hundreds of low-wage operations have gone out of business. This is partly a result of reduced consumption in the crisis-ridden United States and Europe, but it's also because the People's Republic, following in the footsteps of Japan and South Korea, is transforming itself with giant steps into a more mature and rapidly aging industrial society. The consequences are rising wages and higher costs, labor shortages in some industries and stricter worker safety and environmental regulations. Many manufacturers of shoes and toys have already moved to cheaper countries, like Vietnam and Cambodia.

'A Concept Worldwide, Even for Nobel Laureates'

China's forward thinkers are tasked with moving mountains, sometimes quite literally, to safeguard the future. A huge, reddish-brown area that is currently taking shape on the outskirts of Dongguan on excavated land is to become a "launch pad into the high-tech age of the People's Republic," and the name Donggan will become "a concept worldwide, even for Nobel laureates," says Zhang Bingyun, a nuclear scientist and the prophet of a new era. In less than six years, he and hundreds of other scientists plan to put China's first spallation neutron source into operation. There are currently only four such facilities worldwide, in the United States, Great Britain, Switzerland and Japan.

"We will make enormous progress in the development of new materials, but also in biotechnology and genetics," Zhang predicts. His hope is that private high-tech companies will set up shop in Dongguan and enhance existing products. For now, however, only the government is building facilities in the area. The Communist Party planners want their investment to expedite much-touted "indigenous innovation," or creativity on command. They're also hoping to find a Bill Gates for the command economy.

The construction site is also a battlefield of the ideologues. Behind the scenes, the party's planners are at odds over the question of what the country needs. Does it need more easily regulated state capitalism and masses of workers, sent from the countryside to the cities to enable the country to produce goods more and more effectively for the rest of the world? Or more private companies with high-tech potential, which are difficult to control and can easily become political trouble spots that could undermine the Communist Party's claim to absolute power?

A Vicious Circle

The political and economic mix that fostered China's economic miracle in the last three decades was ideally suited to catapult a poor, underdeveloped nation forward. But it isn't suited to developing an increasingly affluent and industrialized country.

A fundamental flaw of the current model is that the bureaucrats manipulate the flow of money and set key prices -- like interest rates and the currency's external value -- and pump cheap money into the economy as they see fit. This keeps state-owned companies alive that should have gone bankrupt long ago. Private households, compelled to exercise caution in a country with a poor and rudimentary healthcare and pension system, are hording money instead of boosting domestic consumption.

Last year, the party had no choice but to intermittently cool down the boom that had been created artificially with government funds for infrastructure projects, especially in the real estate market. Real estate prices had risen to dizzying heights.

It's a vicious circle, because a significant portion of the Chinese economy depends on the construction boom. In 2011, concrete makers and steel mills saw a sharp drop in demand. At the same time, expiring tax incentives reduced the Chinese desire to buy new cars. Cheap domestic brands like BYD ("Build Your Dreams") were especially hard-hit by the slump. BYD's consolidated profits declined by more than 90 percent in the first two quarters of 2012, compared to the same period last year, and even executives were selling their company stock.

Structural Problems

Prime Minister Wen Jiabao has recognized that there are structural problems in China's economy, which lead to "unstable, unbalanced, uncoordinated and ultimately unsustainable development."

But when he boldly linked thoughts of restructuring the economy with political liberalization two years ago, the state media didn't publish his remarks, and Wen didn't even object. He will not stand for office again at the upcoming 18th party congress in Beijing, which will mark a change in China's leadership and possibly even set a new political course for the country.

When it comes to foreign operations, the party's policy is to encourage activity that can best be described as "swarming out." China is also active in the entertainment industry. The Dalian Wanda Group, a Chinese conglomerate, acquired AMC Entertainment, an American chain of movie theaters, for $2.6 billion in May 2012. And American sports fans no longer have to worry about whether the Chinese should be allowed to invade their sanctum, because it's already happened. In late July, the computer company Lenovo, which had already acquired IBM's PC division in the past, became the technology sponsor of the National Football League. A state-owned company in Beijing has also acquired Italian luxury yacht maker Ferretti.

Mickey Mouse is already part Chinese, while Donald Duck is becoming a Peking duck. Both Disney and director Steven Spielberg's animation factory DreamWorks felt compelled to seek partners in Shanghai so as not to miss out on the important market in the Far East.

Emulating Germany and Buying a Little of It Too

On their long march to the top of the global high-tech industry, China's capitalistic communists have their sights set on one goal in particular: Germany. While a few backward-looking party strategists warn against too much influence from countries in the West, domestic pioneers like economist Li Daokui openly encourage their fellow Chinese to emulate the "outstanding German model." Li becomes very enthusiastic when he thinks about Berlin. Despite the global financial crisis and the troubles facing the euro, he feels that all key indicators are positive for Germany.

China has the world's largest foreign-currency reserves, a $3-trillion treasure chest, from which it's currently scooping money to buy up companies all across Germany. For the Chinese, the weak euro is turning a buying spree into a bargain hunt, with acquisitions of German companies in recent years growing from 84 in 2009, when the People's Republic first unseated Germany as the world's top exporting nation, to 158 in 2011.

The Chinese are primarily interested in acquiring the latest technical knowhow. A handful of German auto parts suppliers have fallen into Chinese hands in the last few months. In late August, it was announced that a subsidiary of the Chinese construction equipment maker Shandong Heavy Industry had acquired Kion, a forklift manufacturer based in the western German city of Wiesbaden. And after lengthy debates, the Düsseldorf-based operator of mobile wireless network provider E-Plus hired the Beijing company ZTE to expand its network. According to industry insiders, ZTE undersold the bids of Western top dogs Ericsson and Nokia Siemens Networks by almost half.

But probably the most strategically important investment of the year for the Chinese was their January acquisition of a traditional German industrial company, the world market leader in its industry. When Chinese construction equipment giant Sany acquired Putzmeister, a maker of concrete pumps based in Aichtal near Stuttgart, it was the first time Chinese buyers had managed to absorb one of the "hidden champions" of the large group of German small and midsized companies known collectively as the Mittelstand. All in all, the Chinese paid about half a billion euros for one of the pearls of German industry.

Sany Chairman Liang Wengen, 56, orchestrated the deal. One of the most successful Chinese pioneers operating in Germany, his net worth of $8.1 billion makes him one of the five richest men in China. Liang is a completely different type of person than the colorful entrepreneur-poet Huang. Levelheaded, goal-oriented and always very close to the reins of power, Liang is a self-made man. A former bamboo basket weaver in his native Hunan Province, he worked his way up through a weapons factory and later developed his own, small factory for welding equipment. He joined the party early on, and in addition to receiving an award for being a "model private entrepreneur," he was named an "Architect of Socialism with Chinese Character."

Liang is the kind of business leader with whom politicians feel comfortable, and who they like to have at their side. For instance, he was allowed to accompany Xi Jinping, the current vice president and designated new party leader and future president of China, to the United States. At the upcoming party congress, Liang is expected to be the first private businessman to be appointed to the party's Central Committee, the illustrious circle of China's most powerful men and women.

'German Industry Has No Choice But to Join Forces with Chinese'
Sany, which employs almost 70,000 workers, is headquartered in Changsha, famous as the city where Mao Zedong studied for six years. The former Chinese leader was also born near Changsha. Dozens of souvenir chops sell small images of Mao, and an oversized statue of the Great Chairman stands in downtown Changsha, his outstretched right hand seemingly setting the country's direction.

But little remains of Mao's egalitarian ideas. The new person he once set out to create is no longer in demand, but rather the person who can frequently afford to buy something new.

The modern building where Sany President Xiang Wenbo has his office is called Dangwei Lou, or Party Committee Building, because Xiang is also a Communist Party leader. But the office is furnished at least as luxuriously as the executive suite of a major German company, with heavy, dark mahogany furniture and modern art on the walls. The floor-to-ceiling window offers a view of a park landscaped with bamboo and a decorative pond. There are four Maybach limousines in the parking lot.

Xiang is bursting with self-confidence, but also with patriotic zeal. He was behind a nationalist Internet campaign that successfully derailed a plan by the Carlyle Group, a US private equity firm, to acquire a majority stake in his Chinese competitor, the Xugong Group. "We can sell everything, just not our country," Xiang blogged polemically at the time.

Why, then, should Germany "sell itself" to China, and why is the Putzmeister deal any different?

Xiang chuckles to himself, and answers the question in a roundabout way. "I am convinced that German industry has no choice but to join forces with major Chinese companies like Sany," says the Sany president. He explains that while Germany has the superior technologies, China controls an enormous market. German companies, he says, need that market to expand and generate profits.

German Success in China Comes with a Price

It's true that China became a lifeline for many German businesses, especially during the years of the worldwide recession, 2008 and 2009. Thanks to a massive government economic stimulus program, China remained liquid, allowing chemical manufacturers like BASF and, most of all, German automakers VW, BMW and Daimler to actually grow their earnings. Volkswagen already sells more cars in China than at home.

But this success has its price. Beijing expects foreign companies to produce locally, bring along their knowhow and form joint ventures with domestic partners. Almost all the companies listed on Germany's DAX blue-chip stock index are active in China. The Germans' high-tech expertise is often "fed" into Chinese companies, which have copied the patents so that trains, cars and machine tools and the original products are often as identical as two peas in a pod. Recently, the Chinese company FAW reportedly recreated an entire VW transmission in Changchun in northern China. This practice can turn partners into dangerous competitors, and it also creates bad blood.

China's dumping activities are an equally serious problem for Western companies. The government subsidizes individual, future-oriented industries with so much cash and loans that they are able to displace their competitors in the world market by charging rock-bottom prices. The solar-panel industry is a case in point. Ten years ago, the United States produced 27 percent of solar panels worldwide, while the Chinese made only 1 percent. Today the American share of the global market is only 3 percent, while the Chinese make about 65 percent of solar panels. The Chinese manufacturers are embroiled in ruinous competition, and the party is likely to allow only three or four major companies to remain on the market. When Washington imposed punitive tariffs, Beijing set off a minor trade war by retaliating with measures of its own against US goods in other industries.

Merkel Avoids Making Public Criticism

The cheap Chinese solar panels also did serious damage to German solar companies, costing thousands of jobs. But during a visit to Beijing in late August -- the second this year, with almost half the cabinet at her side -- Chancellor Angela Merkel avoided any sharp criticism of her hosts, at least publicly, addressing neither human rights issues nor economic problems.

Merkel suggested that the solar dispute ought to be resolved through negotiations, and the large delegation of German business leaders traveling with the chancellor also proved to be tame and timid. Outgoing Premier Wen Jiabao told members of the delegation that they could write to him if they had any problems, as if he were an advice columnist. A few days later, it became clear just how isolated the chancellor is with her soft-line approach, when the European Union refused to be palmed off with vague offers to negotiate and launched an anti-dumping probe into Chinese solar manufacturers.

Sebastian Bersick, professor of international relations at Fudan University in Shanghai, says: "It wouldn't be smart for Germany to expand its bilateral relations with China to such an extent that its success ends up alienating other EU member states." The government in Berlin, says Bersick, should rethink its "sino-centered approach" and diversify its interests. Are China and Germany entering into a partnership that's "too close for some," as the New York Times writes?

German Firms Expand in China

In fact, German companies are expanding in China more than ever -- and this with Beijing's blessing. Chemical producer Lanxess has just broken ground on a new €235-million synthetic rubber plant in Changzhou, near Shanghai. But not all DAX-listed companies are entirely pleased with their Chinese operations. The new BASF numbers are reportedly disappointing, and the mood is somber at the company, where everyone is hoping that a new leadership in Beijing will bring greater transparency.

The liberals' greatest hope is Wang Yang, 57. The party chief for Guangdong Province is China's most interesting politician at the moment. He advocates increasingly opening up China's economy to private enterprise, and to do so he wants to "open the cages and replace the birds." He has included the typically American pursuit of happiness in the five-year plan for his province, and he was strayed from convention by mediating in citizens' protests in ways that favor the demonstrators. He is also willing to grant more freedoms to entrepreneurs. When asked whether this development could end the monopoly of the Communist Party one day, Wang, whose nickname is "Little Marshall," says nothing.

Even a reformer like Wang knows that anyone who sticks his neck out too far can jeopardize his own prospects of advancement. Wang differs markedly from Bo Xilai, the former party leader in the southwestern city of Chongqing, who had called for more government control and a revival of Marxism. At the party convention in November, Wang stands a chance of being elected to the Politburo Standing Committee, the group of the country's top nine leaders that will shape China's future. But Wang, who, ironically enough, was Bo's predecessor in Chongqing, could also fall victim to Bo's friends in the Communist Party, who want to deny his rival the chance to rise to the top out of revenge.

'Accessories of Power and Corruption'
In China, with its lack of legal certainty, it's possible to plunge precipitously. In both politics and business, there is a thin line between success and failure, and between a successful corporate leader who enjoys the party's support, like Sany Chairman Liang, and someone whose connections aren't quite as good, and who once took one step away from the correct path, someone like Wu Ying.

She was considered China's Wonder Woman, a woman who succeeded at everything she did. A farmer's daughter and former hairdresser with strong entrepreneurial instincts, she built a chain of beauty salons. In 2005, with assets of more than $500 million, she was already among the wealthiest people in China -- and had not even celebrated her 26th birthday yet. But her career ended suddenly, after she had illegally borrowed money from private individuals in return for the promise of high returns, and was unable to pay back a large portion of the funds.

She was sentenced to death for financial fraud in December 2009, but the severity of the punishment was even criticized in the official press. In May 2012, the courts reduced her sentence to death with a two-year reprieve, the same sentence that was recently handed down to Bo Xilai's wife, although she was convicted of a capital crime for the murder of a British businessman. In the Chinese justice system, that two-year reprieve means the sentence will likely be commuted to a life term.

At least the excitement over young entrepreneur Wu prompted leaders in Beijing to violate an ideological taboo. They announced that private shadow banks were to be legalized. The new rule was to initially apply only to Wenzhou, the port city that the great reformer, former Communist Party Chairman Deng Xiaoping, also used for especially bold experiments. Premier Wen even seemed to want to take things a step further, by proposing that the state-owned banks' de-facto monopoly be lifted. Some already envisioned the dawn of a new era.

But now the enthusiasm has given way to a more sober assessment, even in Wenzhou. "Where is the real relief for smaller private companies like ours?" asks Zhou Dewen, chairman of the local small-business association. Lending has proven to be tenuous, says Zhou, while there is still considerable resistance to fundamental reforms in Beijing. And, once again, the prime minister has been exposed as little more than a figurehead and feel-good politician.

Many Chinese Embittered

A grimly smiling old man is sitting between stacks of American and Chinese business publications and books (15 of which he authored) in Beijing, in an apartment in the district were senior party officials live. Mao Yushi, 83, is a business guru hated by many and deified by some.

He doesn't mince words. He describes Mao Zedong as a "totalitarian" ruler, and calls the Marxist theories that are still taught at Chinese universities "hopelessly outdated." China's progress is solely dependent on other countries, Mao Yushi says coolly. "That's where all technological innovations and progressive ideas come from." In his view, China urgently needs to become politically liberalized, and the Communist Party should compete with other parties. "We have no human rights guarantees, no democratic institutions and no economic planning certainty. That's why many of our most talented entrepreneurs emigrate, even though China is still a fabulous place to make money."

Mao Yushi has low expectations for the upcoming party congress. The party elite, fearful of losing its privileges, will not take the necessary step of strengthening the private sector, he says. "Things would be different if Deng were still alive. He was open to new ideas, and he was a flexible man for whom solutions to problems were paramount, not an ideology." In May, Mao Yushi was awarded the Milton Friedman Prize for Advancing Liberty in Washington. He is a man who no longer needs to make allowances for anything or anyone.

He is worried about the gradual aging of and growing income disparity in Chinese society, and the social tensions that could arise as a result. Based on the so-called Gini coefficient, which measures the inequality of wealth distribution in a country, the differences between rich and poor are even more dramatic in China than in India. In China, more than one in four people lives on less than $2 a day. At the other end of the spectrum, the country will be the world's largest market for luxury goods by 2015.

Provocative Displays of Wealth

Many Chinese are embittered over blatant corruption, in a country where the relatives of politicians are usually the ones who become multi-millionaires, often without any discernible effort.

When the members of the Beijing Sports Car Club, founded in 2009, meet once a week in their own, exclusive lounge near the city's football stadium, they like to show off their toys, the Lamborghinis and Ferraris parked on a well-guarded parking lot. Zhang Kuan, 32, the chairman of the club, is eager to show off his dark-gray McLaren MP4-12C, a car worth hundreds of thousands of dollars, which he picked up in person at the Tianjin customs port in May. The club's 700 members also travel on luxury trips together, to places like Las Vegas and London. It's an insular group, and when they race at night, it's usually against each other. During the day, members are often spotted in the company of fashion models.

Cigar smoker Zhang bought his first car, a VW Santana, in 1999. Things went uphill very quickly for him after that, and he made a fortune with "investments, real estate and insurance," as he put it, somewhat vaguely, in an interview with Time in June. In addition to his Lotus, Zhang, who also has good political connections, owns several sports cars, including a fire-red Ferrari. He also collects luxury watches. "My father's generation isn't as keen on the things that interest me," says Zhang. "For him, luxury means the entire family getting together. But for people my age, it's always the latest toy that counts. That's how we express ourselves and live our dreams."

Ferrari Becomes a Red Rag for the Party

The provocative display of wealth troubled almost no one until recently, and certainly few government officials. But the word "Ferrari" recently became a red rag for many politicians, and it's even blocked on the Chinese Internet. Things aren't going well for the Communist Party and with preparations for its party congress. After the murder and corruption affair of former Chongqing party chief Bo Xilai and his wife, a new scandal surrounding an Italian sports car, its driver and an accident he had threatens to cast a shadow on the carefully planned political show.

Early one morning, seven months ago, a man driving a Ferrari in Beijing lost control over the car, possibly while engaged in sexual activity. The driver, who was allegedly naked, was killed immediately, while his female companions reportedly survived, but were seriously injured. The police covered up the circumstances of the accident. But soon the Internet was filled with rumors that the driver could have been the son of a prominent individual.

In early September, it was apparently no longer possible to conceal the details, or someone deliberately leaked them to the public. The dead driver of the Ferrari, Ling Gu, 23, was the son of a top official and a graduate of Peking University. His father is the long-standing secretary of party leader and President Hu Jintao. After the incident, he lost his influential job as head of the main office of the Central Committee and was demoted to an insignificant position. He was replaced by Li Zhanshu, a close associate of the new "emperor" designate. Was the scandal misused as a tool in the power struggle in Beijing?

For Dali Yang, a professor of political science at the University of Chicago, one thing is clear: "Chinese politicians are extremely concerned about the fact that the party is being so closely associated with expensive cars and watches, these accessories of power and corruption. They want to do everything in their power to prevent public anger from turning towards them."

Translated from the German by Christopher Sultan

[Rad]

‘Big Bang’: Right-wing Netanyahu-Lieberman pact polarizes Israeli politics

By Agence France-Presse
Saturday, October 27, 2012 7:55 EDT

The rightwing alliance between Israeli Prime Minister Benjamin Netanyahu and his foreign minister has polarised political forces in Israel ahead of next January’s parliamentary election.

Netanyahu and Avigdor Lieberman’s surprise announcement late on Thursday that their respective Likud and Yisrael Beitenu parties would run on a joint ticket was dubbed “the rightwing Big Bang” by the Israeli press.

Alongside the ultra-nationalist Yisrael Beitenu, the premier’s right-wing Likud — already predicted to win the vote — would be able to form a broad nationalist bloc leaning strongly to the right.

Such a move would also allow Netanyahu to overcome, to some degree, the chronic instability of past coalition governments in the country.

“Israel needs a strong coalition government based on a political list based on genuine cooperation,” Netanyahu said on Thursday evening.

“We ask the people to support strengthening the state, and I want a clear mandate so I can take care of the basic” issues.

Israeli media quoted a survey by an adviser to Lieberman, according to which the joint list would receive 51 seats in the 120-seat Knesset, or parliament, when the votes are cast on January 22.

Other polls, however, predict an outcome of less than 42 seats, the current combined number of Likud (27) and Yisrael Beitenu (15), the third largest political force in the Knesset.

“We are not worried about the polls, what interests us is the construction of a broad nationalist camp,” Lieberman said at a news conference on Friday.

“Israel must move away from a reality of many parties to a system of larger parties. We will probably never reach two, like in the United States, but must achieve a system of four or five parties to ensure governmental stability,” he added.

Assuming his expected victory takes place, Netanyahu is certain to remain premier.

But the Likud has vehemently denied a report of a premiership rotation deal with Lieberman, a populist authoritarian certain to receive a key position in the future cabinet.

The leaders of the political centre and left denounced the “nationalist” and even “racist” Likud.

Lieberman, a settler who was chief of Netanyahu’s staff during his first term as prime minister in the late 1990s, is famous for his anti-Arab and nationalistic statements.

“The demon is out of its nationalistic closet. Netanyahu has removed his mask,” the leader of the centre-right Kadima party Shaul Mofaz told public radio, calling on the centre to unify.

“Bibi” Netanyahu and Lieberman’s together might “encourage the centre-right parties to announce close cooperation in a national salvation front,” wrote Yossi Sarid, former Knesset member for the left-wing Meretz party in a column in left-leaning daily Haaretz.

Such a front would have “but a single mission: no to ‘Biberman’.”

Speaking on public radio, Labour chief Shelly Yachimovich called for the creation of a “centre-left bloc, consisting of the centrist parties and moderate members of the Likud.”

In recent weeks media have noted the ambitions of potential candidates, such as former prime minister Ehud Olmert and former foreign minister Tzipi Livni, to head a centrist bloc to compete with Netanyahu.

The Likud-Yisrael Beitenu alliance also threatens the orthodox parties, which could lose the pivotal role they have wielded in past coalitions, and they could even be excluded from the next one.

According to commentators, Netanyahu’s pact with Lieberman’s pact with Lieberman implies the adoption of at least some of Yisrael Beitenu’s platform.

Its policies include military conscription of rabbinic seminary (yeshivot) students and reducing the power of the Chief Rabbinate on matters such as conversions.

The Israeli parliament decided earlier this month that the election would be held on January 22, 2013, nine months before its scheduled date.

[Rad]

U.S. and Canada launch joint cybersecurity plan

By Agence France-Presse
Saturday, October 27, 2012 7:11 EDT

Canada and the United States announced they were launching a joint cybsersecurity plan to protect their digital infrastructure from online threats.

The action plan, under the auspices of the US Department of Homeland Security and Public Safety Canada, aims to better protect critical digital infrastructure and improve the response to cyber incidents.

“Canada and the US have a mutual interest in partnering to protect our shared infrastructure,” said the Public Safety Minister Vic Toews.

“We are committed to working together to protect vital cyber systems, to respond to and recover from any cyber disruptions and to make cyberspace safer for all our citizens.”

Homeland Security Secretary Janet Napolitano said the plan “reinforces the robust relationship” between their two agencies.

Through the plan, Washington and Ottawa hope to improve collaboration on managing cyber incidents between their respective cyber security operation centers, enhance information sharing and engagement with the private sector and pursue US-Canadian collaboration to promote cyber security awareness to the public.

The announcement came after the US House Intelligence Committee warned earlier this month that equipment supplied by Chinese telecoms groups Huawei and ZTE could be used for spying and called for their exclusion from government contracts and acquisitions.

Canada later invoked a “national security exception” that could exclude China’s Huawei Technologies from a role in helping build its new super secure government network.

[Rad]

October 26, 2012

Boxer-Turned-Politician Shakes Up Ukrainian Elections

By DAVID M. HERSZENHORN
IHT

BORYSPIL, Ukraine — Vitali Klitschko, the world heavyweight boxing champion, stood on an outdoor stage — gloves off, sport coat on — pounding away, oratorically, in his bid to win a large number of seats for his party in Ukraine’s parliamentary elections on Sunday.

Mr. Klitschko, the leader of an opposition party, the Ukrainian Democratic Alliance for Reform, has injected an element of unpredictability into an election that from the outset has seemed heavily tilted in favor of the Party of Regions of President Viktor F. Yanukovich.

Critics here and in the West say the race is distorted by the continued imprisonment of prominent opposition leaders, government manipulation of media outlets and other malfeasance.

But where others see a fixed fight, Mr. Klitschko sees opportunity. With one giant hand wrapped around a microphone, the other occasionally chopping the air, he landed blow after blow against the status quo, lamenting that Ukraine has lagged behind its Eastern European neighbors.

He denounced corruption among the authorities, and insisted that pensions and salaries should be bigger and living standards better. “Six million Ukrainians do not see a future for themselves in this country and are looking for jobs abroad, 70 percent of young people want to leave the country and live abroad,” he told a crowd of about 250 gathered at an athletic field here.

“What future we can talk about?” Wages, he said, should be such “ that for a month’s salary a television set and a washing machine could be bought, a car in five years and an apartment in 10 years.” To applause and chants of “Klitschko! Klitschko!” he declared, “We can do this.”

In a country where politics in recent years has focused almost entirely on the bitter rivalry between President Yanukovich and the jailed former prime minister, Yulia V. Tymoshenko, Mr. Klitschko, 41, is emerging as a serious force.

The acronym for Mr. Klitschko’s party, Udar, spells the word “punch” in Ukrainian, and polls show it surging into second place, ahead of the opposition coalition that includes Ms. Tymoshenko’s party, Fatherland, but still trailing the governing Party of Regions and its allies.

The precise makeup of Parliament, called the Verkhovna Rada, will not be known until weeks after Sunday’s voting because half of the 450 seats will be filled by individual candidates not required to declare a party affiliation. The other half are filled proportionally through voting for party lists.

The election is being watched closely as a gauge of democracy in Ukraine, a former Soviet republic of 45 million, once viewed as on a steady track toward integration with Europe after the Orange Revolution of 2004.

But the country has become increasingly isolated since Mr. Yanukovich’s election in a runoff with Ms. Tymoshenko in 2010.

Control of Parliament will also be a major factor in the higher-stakes presidential contest in 2015.

Mr. Yanukovich’s government has taken aggressive steps to show the elections as fair, even installing Web cameras in more than 30,000 polling stations.

Officials say that Ukraine is being unfairly maligned in the West, largely based on the case of Ms. Tymoshenko, who they insist was legitimately convicted on charges related to the alleged rigging of natural gas contracts with Russia.

Sergey Tigipko, a vice prime minister, said in an interview that Mr. Yanukovich’s administration had steered Ukraine out of the financial crisis, with solid growth since 2010, improvements in social services, and increases in pensions.

Mr. Tigipko said that record would help the Party of Regions win support not just from its base, in the Russian-speaking predominantly east and south of the country, but also in the center and the Ukrainian-speaking west.

“The economic growth and the improvement in social standards should convince people,” Mr. Tigipko said.

But financial analysts say that the country’s economy is in trouble again as a result of flagging demand in Europe, particularly for steel, Ukraine’s main export.

Critics, including senior Western leaders, say Mr. Yanukovich’s government has a long way to go to prove its commitment to democracy.

In an opinion column inThe New York Times this week, Secretary of State Hillary Rodham Clinton and Catherine Ashton, the European Union’s high representative for foreign affairs, described “worrying trends” in Ukraine, including “reports of the use of administrative resources to favor the ruling party candidates.”

But no critic has been as harsh as Ms. Tymoshenko, who looms large in Ukraine’s political life, even from prison.

In an open letter to Mr. Yanukovich this week, she complained about her treatment in prison, saying she was secretly recorded even in the bathroom. “Maybe you get more self-confidence in your political capability by watching a female political opponent naked,” she wrote.

Supporters of Ms. Tymoshenko say they are counting on the European Court of Human Rights to order her release, and on her running again for president.

One of her lawyers, Sergey Vlasenko, said the elections could never be considered fair because Ms. Tymoshenko was barred from the ballot.

“These elections are already fraud,” Mr. Vlasenko said in an interview. “If Ms. Tymoshenko would be free, the campaign would be totally, totally different.”

But analysts say many voters are disenchanted with the familiar choices.

“There is a demand for a new political figure, after disillusionment with the old ones,” said Mikhail Pogrebinsky, the director of the Kiev Center of Political and Conflict Studies, a research group.

Mr. Pogrebinsky said that Mr. Klitschko is famous, though not a traditional politician, and plain-spoken, both advantages. He is also mostly untested, having served in the Kiev City Council and run unsuccessfully for mayor.

His newness — and independent wealth — seemed to appeal to voters in Boryspil, a city of 53,000 about 22 miles from the capital, Kiev, and the location of the country’s main international airport.

On Thursday, supporters stood atop a decommissioned Soviet armored personnel carrier that was repainted bright red with the name of Mr. Klitschko’s party emblazoned in white on its side, and waved flags directing people to his rally.

The after-work crowd was largely receptive, applauding enthusiastically at several points, especially when he criticized what he called the greed of current officials.

Ukrainian news accounts have recently focused on a huge residential compound, with a golf course and other trappings where Mr. Yanukovich lives outside of Kiev

Ilona Musayeva, 40, who sells cosmetics from a stall in a local market, said that she would vote for Mr. Klitschko and that the public did not have to worry about him stealing from taxpayers. “I respect him,” she said. “I think he has enough money.”

Mrs. Musayeva and other Boryspil residents said it was hard for young people to find work, hard for old people to live on their pensions, hard to do much more than struggle to get by.

On stage, Mr. Klitschko said he had ruled out any partnership with the Party of Regions but after the elections might consider an alliance with Ms. Tymoshenko’s party, now led by Arseniy Yatseniuk, 38, a former foreign minister.

Mr. Klitschko insisted that Ukraine should — and could — keep up with its neighbors.

“We promise good salaries, good pensions, good medical care, good living conditions,” he said, to applause and cheers. “Poles could do it. Georgians could do it. And we also can do it. That is why we have engaged in this battle for Ukraine, and I am sure that we shall win it.”

[Rad]

October 26, 2012

Berlusconi Is Found Guilty of Tax Fraud

By RACHEL DONADIO
IHT

ROME — A court in Milan convicted former Prime Minister Silvio Berlusconi of tax fraud on Friday and sentenced him to four years in prison. Mr. Berlusconi is also currently on trial over charges that he paid for sex with an underage prostitute. He has denied the accusation.

The ruling was Mr. Berlusconi’s fourth lower-court conviction, and the first since he stepped down as prime minister in November, after years in which his personal legal battles often eclipsed the work of his government. His four-year sentence was reduced to one year under a law aimed at reducing prison overcrowding.

Besides being a blow to Mr. Berlusconi personally, the ruling comes at a time when his center-right party is unraveling and Italy is in the throes of the most dramatic political transition since the early 1990s, when he first came to power. It was just two days ago that he announced that he would not lead his party in Italy’s next elections.

“It’s without a doubt a political sentence, the way so many other trials invented against me have been political,” Mr. Berlusconi said after Friday’s ruling, calling in to a news program on a channel he owns.

A lawyer for Mr. Berlusconi said the former prime minister would appeal the ruling, which must go through two more rounds of appeal before becoming definitive. It is unlikely that he will ever serve jail time. Even if a definitive ruling were reached before the statute of limitations in the case runs out next year, Mr. Berlusconi would enjoy immunity as long as he remained in the Parliament.

However, the judges also barred the former prime minister from holding public office for five years, a penalty that would be applied only if his conviction were upheld by the highest court. They also took the unusual step of reading the reasoning behind the verdict, which normally takes 60 to 90 days after a ruling. That could speed up the appeals.

On Wednesday, Mr. Berlusconi, 76, said he would not lead his People of Liberty party in Italy’s national elections next spring to replace the unelected technocratic government of Prime Minister Mario Monti, who has been guiding Italy through a perilous economic crisis. But he said that he would stay involved in politics.

The case at the heart of Friday’s ruling centered on a scheme in which Mr. Berlusconi and several other defendants used a series of offshore companies to buy the rights to broadcast American movies on Mr. Berlusconi’s private television networks and falsely declared the amount of the payments to avoid taxes. Prosecutors said the defendants then inflated the price for the television rights of some 3,000 films as they relicensed them internally to Mr. Berlusconi’s networks, pocketing the difference, which amounted to around 250 million euros, about $320 million. Mr. Berlusconi, who has major holdings in real estate, insurance, advertising and publishing, has been involved in dozens of legal cases over the years. In 1997 and 1998, when Mr. Berlusconi was the opposition leader, he was convicted by lower courts on charges of tax fraud and corruption.

All three previous lower-court convictions were either overturned on appeal or thrown out for lack of evidence — or the statute of limitations ran out before a definitive highest court ruling was reached.

Gaia Pianigiani contributed reporting.

[Rad]

October 26, 2012

Dozens Are Killed in Myanmar as Sectarian Violence Flares Again

By THOMAS FULLER
IHT

PHITSANULOK, Thailand — A resurgence of sectarian violence in western Myanmar has left more than 60 people dead, according to a local government official, and is renewing concerns that tensions could spread to other parts of the country during a fragile transition from authoritarian rule to democracy.

Win Myaing, a local government official, said by telephone on Friday that 64 people had been killed and more than 2,000 homes destroyed during seven days of sporadic fighting. Some casualties were attributed to security forces opening fire on crowds.

Reports from Rakhine State, the area of the fighting, paint a picture of a chaotic and bloody week of clashes between Buddhist and Muslim communities that are increasingly segregated after thousands of Muslims, a minority in the country, fled to refugee camps during the last outbreak of violence in June.

This week’s violence again put Muslims on the run. Hundreds of Muslim villagers fled onto boats, and some are still at sea, according to a community leader. The United Nations said people were also heading to the already overcrowded refugee camps it helped set up after the earlier clashes.

Amid the confusion, Mr. Win Myaing had initially given the death toll as 112. It was impossible to independently confirm the figures, or how people had died. One Buddhist activist reported that some Buddhists had been wounded by gunshots from the security forces.

Even before the latest clashes, the Buddhist-led government had faced international criticism over its treatment of a Muslim group in the west called the Rohingya, members of which have been denied citizenship, although many have lived in Myanmar, also known as Burma, for generations.

The renewed violence also raised new worries about the possible impact on much-needed economic development. In the port city of Kyaukpyu, violence flared near a Chinese pipeline project, forcing many Chinese workers to take shelter indoors, according to one resident.

The fighting has been confined to a relatively narrow slice of the country, along the western border. But in a sign of spreading tensions, Muslim leaders across Myanmar said they would not celebrate the important Muslim holiday of Id al-Adha, partly out of security concerns and partly to protest what they view as discrimination against Muslims in the west. The holiday, which lasts several days, began Friday in most parts of the world.

The secretary general of the United Nations, Ban Ki-moon, said on Thursday that the country’s “fabric of social order could be irreparably damaged” if the violence was not curtailed. His statement also said the transition to democracy would be in jeopardy if “vigilante attacks, targeted threats and extremist rhetoric” were not stopped.

About 50 people were killed in the initial spasms of violence in June between Buddhists and Muslims, some of whom are Rohingya. The group is widely reviled by the Buddhist majority for complex historical reasons, including resentment of British colonial policies that brought many people from India to the country.

More than 70,000 people, most of them Muslims, remain in the camps set up after that unrest.

The clashes create new challenges for President Thein Sein, who in his 19 months in power has worked to meet a clamor for economic and political changes while trying to also deal with unsettled relations among the country’s many ethnic groups. He has signed cease-fire agreements with a number of insurgent groups.

A statement from Mr. Thein Sein’s office on Thursday said the violence in Rakhine State had “a great impact on the national integrity.” But the statement was cryptic about the causes of the violence, blaming “persons and organizations” for manipulating the situation.

He has set up a commission to look into the earlier unrest, but its work appears to have stalled. He also agreed to allow the international Organization of Islamic Cooperation to provide aid to the Rohingya, but then barred the group from setting up offices in the country. Maung Zarni, a visiting fellow at the London School of Economics, said the clashes could complicate the country’s search for foreign investment.

“This is going to damage their efforts to come out and join the international community,” he said. “The minute that large-scale violence flares up, investors start thinking about risk.”

The waters off Rakhine State are rich in natural gas, and much of it will be sent to China through a pipeline scheduled to be completed next year.

The Chinese pipeline project now faces instability on both ends: before entering China, the pipeline passes near areas of Kachin State where the Burmese government is battling ethnic Kachin rebels.

The clashes near Kyaukpyu broke out on Tuesday, according to Zaw Win Myint, who owns a stationery store there.

“Crowds from both sides attacked each other with homemade weapons,” Mr. Zaw Win Myint said.

A Muslim community leader and a relief worker said hundreds of Muslims from fishing villages near Kyaukpyu took to the sea to escape attacks by Buddhist villagers who belong to the Rakhine ethnic group.

In a sign that the violence was spreading beyond the Rohingya community, the Muslims who fled Kyaukpyu are known as Kaman and have also lived in the area for many generations. (Muslims make up about 4 percent of Myanmar’s estimated population of 55 million but are from several ethnic groups.)

“Rakhine mobs were attacking Muslim communities and setting fire to houses,” Khin Maung Hla, the Muslim community leader said from his cellphone while on a fishing boat. Some boats sought refuge at a navy base in nearby Sittwe, the capital of Rakhine State, but others remain at sea, according to the Muslim relief worker, who asked that his name not be used.

Local residents and officials interviewed by phone said the precise cause of this week’s clashes was unclear, but some pointed to a localized dispute among young people that flared into a wider conflict. (The violence in June was set off by reports of the rape and murder of a Buddhist woman that was blamed on Muslims.)

A Rakhine Buddhist activist, Tun Tun, who visited Buddhist victims of the latest violence in hospitals, said by telephone that many of the injured had been fired on by security forces.

“Security forces shot the Rakhine without any warning,” he said.

Win Myaing, the spokesman for the Rakhine State government, confirmed that security forces had opened fire, but said they did so to “to maintain law and order.” He did not say whether the forces shot into the crowd or fired warning shots.