What to expect from Science in 2013
By Dean Burnett, The Guardian
Sunday, December 30, 2012 9:51 EST
It is customary to look back at the end of the year, but we can also look ahead to what to expect in 2013
Over the festive period, I ended up watching “Most Shocking Celebrity Moments of 2012“. I didn’t want to, it’s not something I’d ever watch normally, but I was at my mother’s house so didn’t have control over the TV. I really have no interest this sort of thing, but there was one element of the programme that did fascinate me.
These programmes always feature talking heads, whose job is usually mocking the antics of attention-seeking z-listers with no sense of irony or self-awareness, although some have a logical reason for being there. One of the talking heads on this show was Dane Bowers. When he first appeared, he was described as “Dane Bowers: Former pop star”, which is fair enough. When he appeared later in the same show, he was described as “Dane Bowers: Friend of Alex Reid“.
I don’t know why Dane Bowers and Alex Reid would be friends, what could they have in common? Regardless of this, I’ve never actually witnessed someone getting less famous in the space of a single programme before. We ended up wondering what his claim to fame would eventually be if the programme continued even longer. “Dane Bowers: Working digestive system”, or maybe “Dane Bowers: Biped”. Sadly, there’s no way of knowing whether this prediction is accurate or not.
But this is not always the case with more scientific subjects and areas, where past trends and data can be used to determine the likelihood of something happening in the future. So predictions about scientific matters can be made without invoking some pseudoscientific gibberish like astrology.
Seeing as there will be plenty of people who will be doing recaps of the most notable science of 2012, coupled with the fact that mentioning science in the context of “the past” currently risks reigniting a tediousturf war in the science-communication field, it seems it would be more interesting to look ahead, not back, to see what science breakthroughs and landmarks we can expect in 2013.
2013 Predictions: Computing
With the ever increasing demand for more powerful and faster processors in our computing devices, we are nearing the point where the laws of physics become a restriction. The commercial value of developing an alternative, more powerful but workable means of processing cannot be understated, so a lot of research into this area would be the logical end result. Around June in 2013, we could expect to see a breakthrough in quantum computing, resulting in processors that use the spin and entanglement of particles to perform calculations at much greater speeds than semiconductors.
Quantum computers would be somewhat different to current methods though, which underpin much of modern society, so they would initially be met with resistance by established interests. However, this should change via the usual way new technologies are proliferated; via the porn industry. The combination of quantum processes and the porn industry will provide some interesting results. Applications of entanglement and super states will allow willing individuals to have sex across surprising distances, and it will be possible to have threesomes and orgies with just two participants.
2013 predictions: Science stunts
2012 saw the record-breaking free fall dive from the stratosphere by Felix Baumgartner. In order to generate similar levels of publicity for sponsoring company Red Bull, this formidable achievement will have to bettered with an even more impressive/reckless stunt. As a result, late in 2013, perhaps in October, one year after the 2012 jump, we should see Baumgartner or a similarly courageous/insane individual attempt the first ever interplanetary jump, between the moon and Earth.
In order to achieve escape velocity from the moon (2.4 kilometres per second), the jumper will have to use some sort of rocket assist to initiate the jump (perhaps built into the boots of the jumper, to make it look cool), and carry enough oxygen and supplies for several days of travelling alone across 384,400 kilometres of vacuum in a spacesuit. Also, a parachute would be necessary for the last “falling through the atmosphere at supersonic speeds” bit at the end of the journey.
This will set the record for most records set during a single stunt, including the first interplanetary jump, and first trip that is worse than flying Ryanair. It will also mark the first ever successful attempt of an energy drink producer to land on the moon. It will be live-streamed online, so that certain people can actually deny that it’s happening while watching it in real time.
2013 predictions: Neuroscience
The current enthusiasm for bizarre studies involving MRI scanners will reach its peak around May in 2013 with the publication of a study which claims to have isolated the brain region that processes an individual’s credulous response to being shown an image of a brain scan. The study will present data that suggests a specific area of the brain, probably in the medial temporal lobe, is responsible for people finding brain scans and other imaging studies cool and credible without any associated understanding of what they actually mean or represent, which would explain the proliferation of dubious science stories where very complicated cognitive processes are ridiculously oversimplified and “located” in the brain via the use of scanners.
This study will become quite widespread as people site it as grounds for requiring improved standards in science reporting. However, the data supporting this study will have also been derived from the use of brain scans, and thus will result in a logical paradox which casts doubt over any future studies that use MRI Scanners, leading to a decline of their popularity in mainstream media.
2013 predictions: Medicine and healthcare
2012 saw several advances when it came to repairing serious, supposedly permanent injuries. Paralysed people were able to control robotic arms, electrochemical treatments allowed paralysed rats to walk again, several other examples abound. There have even been promising signs for restoring sight to the visually impaired via technical solutions, and advances in the extraction of stemcells for a variety of therapeutic purposes promises even greater progress treating disabilities. Buoyed by the example set by British paralympians, people with impairments in the UK will be keen to sign up for these treatments, which will be heavily subsidised by the UK government who are keen to get disabled people into work (by any means necessary)
After the initial success of this scheme to treat the disabled, the UK government will finally realise that the people they’ve been demonising and tormenting for some considerable time are now an army of technically enhanced super-beings with every reason to be furious at them. Towards the end of the year, around November, we should see a force of enraged cyborgs storm parliament and kick the cabinet out into the street, where they will be forced to undergo cruelly ironic challenges, such as having to walk 20 metres after having their legs broken, in order to keep their jobs.
Resistance is futile!
2013 predictions: Space
Early in 2013, let’s say by the end of February, the Mars Curiosity Rover will find something on the red planet that strongly indicates the presence of life. It may be an unlikely rock combination, some weird colouring of soil, or any number of things. As Curiosity isn’t equipped to find life, this will result in a flurry of enthusiasm for an immediate follow up mission to hopefully find the life and bring samples of it home. This will provide some distraction from the ongoing financial crisis for a while, but right-wing columnists like Richard Littlejohn will soon start ranting about the Mars missions, under the guise that it is “yet more tax being spent on immigrants”, which is technically true, if missing the point somewhat.
These are just some of the things we can look forward to in 2013. All of the above will be announced by Brian Cox, who will be named ‘Mister Science’ by all UK media by mid January. This will mean he is the go-to guy for all types of science in the media. If a science story breaks and Brian Cox is not available, it will have to wait until he is.
So there we have it. And as with my Nobel Prize predictions, if any of these ends up being accurate, I’ll eat this blog. I’ll literally track down and devour the server that hosts it. Although on the subject of predictions, I’d say there’s a 60-65% chance that someone will leave a comment stating that Dane Bowers and Alex Reid have both had a “physical relationship” with Jordan, revealing that the commenter hasn’t actually bothered reading to the end of the piece.
Meh, c’est la vie. Happy New Year!
Dean Burnett demonstrates his cluelessness about how the world works on a regular basis on Twitter, @garwboy
© Guardian News and Media 2012
In the USA....
Obama says Newtown shooting his worst day as president
By Agence France-Presse
Sunday, December 30, 2012 12:11 EST
US President Barack Obama said in an interview broadcast Sunday that the massacre at a Connecticut elementary school which killed 20 young children was “the worst day of my presidency.”
Obama also expressed skepticism about a proposal by the gun lobby group The National Rifle Association to introduce armed guards in every US school and admitted there would be resistance to new proposals to control firearms.
“The question … becomes whether we are actually shook up enough by what happened here that it does not just become another one of these routine episodes where it gets a lot of attention for a couple of weeks and then it drifts away,” Obama said.
“It certainly won’t feel like that to me,” Obama said in an interview with NBC’s “Meet the Press.”
“This is something that was the worst day of my presidency. And it’s not something that I want to see repeated.”
Obama has promised to unveil broad-based proposals to rein in gun violence in the United States in the New Year, but has also said he believes there is a right in the US Constitution for individuals to bear arms.
He has committed to putting a halt to gun violence at the top of his agenda for his second term, though his remarks Sunday did not appear to signal an all-out effort to shape public opinion on the issue.
On December 14, a disturbed man, 20-year-old Adam Lanza, killed his mother in their Newtown, Connecticut home before embarking on a horrific shooting spree at a local elementary school.
He blasted his way into Sandy Hook Elementary School and shot dead 20 six- and seven-year old children and six adults with a military-style assault rifle before taking his own life with a handgun as police closed in.
The bloodshed, the latest in a string of mass shootings in the United States, reopened a national debate on the country’s gun laws, which are far more lax than in most other developed nations.
December 30, 2012
Day of Seesaw Talks Produces No Accord on Fiscal Crisis
By JONATHAN WEISMAN
WASHINGTON — Senate leaders on Sunday failed to produce a fiscal deal with just hours to go before large tax increases and spending cuts were to begin taking effect on New Year’s Day, despite a round of volatile negotiations over the weekend and an attempt by Vice President Joseph R. Biden Jr. to intervene.
In seesaw negotiations, the two sides got closer on the central issue of how to define the wealthy taxpayers who would be required to pay more once the Bush-era tax cuts expire.
But that progress was overshadowed by gamesmanship. After Republicans demanded that any deal must include a new way of calculating inflation that would mean smaller increases in payments to beneficiaries of programs like Social Security, Democrats halted the negotiations for much of the day.
The Republican leader in the Senate, Mitch McConnell, made an emergency call to Mr. Biden in hopes of restarting negotiations, and the White House sent the president’s chief legislative negotiator to the Capitol to meet with Senate Democrats. Soon after, Republicans withdrew their demand and discussions resumed, but little progress was made.
Lawmakers will be back on Monday. Senator Harry Reid of Nevada, the majority leader, said the Senate would return at 11 a.m. Monday and then left the Capitol just after 6 p.m.
“Talk to Joe Biden and McConnell,” Mr. Reid told reporters when asked if negotiations were continuing.
In the balance are more than a half-trillion dollars in tax increases on virtually every working American and across-the-board spending cuts that are scheduled to begin Tuesday. Taken together, they threaten to push the economy back into recession.
“It looks awful,” said Senator Richard J. Durbin of Illinois, the second-ranking Democrat. “I’m sure the American people are saying, with so much at stake why are they waiting so late to get this done?”
Senator Lindsey Graham, Republican of South Carolina, who had said early Sunday that he thought a deal was within reach, said later on his Twitter feed, “I think we’re going over the cliff.”
Weeks of negotiations between President Obama and Speaker John A. Boehner inched toward a deal to avert the so-called fiscal cliff, while locking in trillions of dollars in deficit reduction over 10 years and starting an effort to overhaul the tax code and entitlement programs like Medicare. But earlier this month, Mr. Boehner walked away from those talks.
Instead he tried to reach a much more modest deal to avoid a fiscal crisis by extending the expiring tax cuts for incomes under $1 million. When Mr. Boehner’s own Republican members revolted, he ceded negotiations to the Senate. But compromise has proved equally elusive in that chamber.
Absent a last-minute deal, Mr. Reid is expected to move on Monday to bring to a vote a stopgap measure pushed by Mr. Obama, which would retain lower tax rates for incomes below $250,000 and extend unemployment benefits. But it was not clear that would even get a vote. The objection of a single senator on Monday would run out the clock on the 112th Congress before a final tally could be taken.
Mr. Obama appeared on the NBC program “Meet the Press” on Sunday and implored Congress to act. “We have been talking to the Republicans ever since the election was over,” Mr. Obama said in the interview. “They have had trouble saying yes to a number of repeated offers.”
He added, “Now the pressure’s on Congress to produce.”
After the talks broke down over the inflation demand, Senate Republicans emerged from a closed-door meeting on Sunday afternoon to declare the issue off the table for now. Senator John McCain, Republican of Arizona, said that holding the line against raising taxes on high-income households while fighting for cuts to Social Security was “not a winning hand.”
Then they mustered a new talking point, saying Democrats want to raise taxes only to spend more money. Their new objection: Democrats are seeking a one- to two-year “pause” for across-the-board spending cuts and an extension of expired unemployment benefits for two million people.
“We raise taxes, and we spend more?” asked Senator Kay Bailey Hutchison, Republican of Texas. “It’s business as usual.”
For their part, Democrats beat back the inflation proposal, and then promptly proclaimed themselves incensed that Republicans would not soften their position on a generous level of taxation on inherited estates and an insistence that a final deal permanently prevent the alternative minimum tax, a parallel tax system meant to ensure that wealthy people pay more, from expanding to affect more of the middle class.
Democrats were also demanding that across-the-board cuts to military and domestic programs — known as the “sequester” — at least be delayed.
“We’re not here to defend government, we’re here to make sure of the defense of our country,” said Senator Barbara A. Mikulski, Democrat of Maryland, whose state would be hit particularly hard. “Sequester has consequences.”
Senate Democratic aides were openly making legislative plans for later this week, to press Democratic proposals after the fiscal deadline is breached — and after the next Congress is sworn in on Thursday with more Democrats in both the House and the Senate.
But officials close to the negotiations said the talks were continuing, centered for now on a new axis, Mr. McConnell and Mr. Biden.
Much of the umbrage was oddly discordant. Mr. Obama has long advocated for a permanent fix to the alternative minimum tax, which must be “patched” each year to keep it from applying to middle-income families. Until this weekend, both Democrats and Republicans appeared willing to let the across-the-board cuts take effect, at least temporarily, while a larger deficit deal is negotiated early next year.
Indeed, many Republicans were the loudest in protesting the cuts. Now that Democrats want them canceled, Republicans equate that position to raising taxes in order to spend more.
On some of the biggest sticking points, the two sides are now inches apart. Barely a week after House Republicans refused to vote to allow taxes to rise on incomes over $1 million, Senate Republicans proposed allowing tax rates to rise on incomes over $450,000 for individuals and $550,000 for couples. Democrats countered with a proposal to extend expiring Bush-era tax cuts up to $360,000 for individuals and $450,000 for couples. For both sides, that meant major movement. Mr. Obama has been holding firm at a $250,000 threshold.
Of course, a big question hung over the negotiations in the Senate: even if the Senate can find an accord, would it pass the House?
Even on the estate tax, the two sides are not far apart, although their language is. Republicans want to tax estates valued above $5 million at 35 percent. Democrats want to tax inheritances above $3.5 million at 45 percent.
If that sounds like a bridgeable divide, Democrats are not conceding an inch. “The net result is that 6,000 Americans would get a $1-million-a-year tax break on their estate tax,” Mr. Durbin said. “The Republicans once again are ready to shut us down over not 2 percent of the population, but 0.1 percent of the population.”
Robert Pear and John M. Broder contributed reporting.
GOP backs off Social Security in fiscal cliff talks
By Samantha Kimmey
Sunday, December 30, 2012 19:34 EST
Republicans have decided to take a proposal to alter Social Security off the table in an attempt to reach an agreement on the fiscal cliff, reported the Huffington Post.
Many Republicans in Congress want to change Social Security so that it is tied to a chained consumer price index (CPI) rather than normal measures of inflation.
Chained CPI assumes that as certain products become more expensive, people will switch to cheaper alternatives. Some Democrats call the switch from traditional inflation to chained CPI a benefit cut, although some liberal economists support it, reported CQ Roll Call.
That’s not to say that Republicans have given up on the idea altogether — just that it could be pursued in the future, potentially as part of a debt ceiling deal, said Sen. Bob Corner (R-TN).
Just after 6 p.m., HuffPo reported that Senate Majority Leader Harry Reid (D-NV) said there would be no deal on Sunday but that “There’s still time left to reach an agreement.”
Bernie Sanders: House Republicans are the problem
By Eric W. Dolan
Sunday, December 30, 2012 11:50 EST
Independent Sen. Bernie Sanders of Vermont said Saturday that Republicans were solely to blame for the lack of a budget deal to avert the fiscal cliff.
During an appearance on MSNBC, Sanders denied that both parties were responsible for the current gridlock in Washington.
He said “nobody wants” the economically damaging combination of across-the-board spending cuts and tax increases, but that “right-wing extremists” in the House were preventing a deal by refusing to compromise on tax hikes on the rich.
“I don’t think there is an equivalence,” Sanders explained. “People are saying, ‘Well shouldn’t the rich pay a little more in taxes and then shouldn’t we cut Social Security, Medicare, and Medicaid?’ The answer is, ‘no.’ The wealthy are doing phenomenally well. Their taxes are down. The middle-class is hurting. We have the most unequal distribution of wealth and income. It should not be a balance on the middle-class and the rich.”
David Brooks on the fiscal cliff: GOP has a brain freeze
By Eric W. Dolan
Sunday, December 30, 2012 13:36 EST
New York Times columnist David Brooks on Sunday said Republicans had prevented a deal to avert the so-called fiscal cliff because the party was at odds with itself.
“What’s happening in Washington right now is pathetic. When you think about what the revolutionary generation did, what the civil war generation did, what the World War II generation did, we’re asking not to bankrupt our children and we’ve got a shambolic, dysfunctional process,” he remarked on NBC’s Meet the Press.
“Now I think most of the blame still has to go to the Republicans,” Brooks added. “They’ve had a brain freeze since the election. They have no strategy. They don’t know what they want. They haven’t decided what they want.”
Republican House Speaker John Boehner (OH) broke off budget negotiations with the President Barack Obama earlier this month and attempted to pass his “Plan B” bill. Boehner’s proposal would have extended tax cuts for those making less than $1 million a year, but died to due to a lack of support from his own party.
But Obama was partially at fault too, according to Brooks, who said the President had “governed like a visitor from a morally superior civilization” at times. Brooks said Republicans needed to be reassured that Obama wouldn’t “screw” them if they took a risk.
“They do not feel that right now.”
And the buffoon speaks:
Boehner: Don’t blame GOP for fiscal cliff
By Agence France-Presse
Sunday, December 30, 2012 13:53 EST
US House Speaker John Boehner on Sunday warned President Barack Obama that he should not cast blame on Republicans for a possible failure to avert the so-called “fiscal cliff,” saying the president was equally responsible.
“Americans elected President Obama to lead, not cast blame,” the top Republican in Congress said in a statement shortly after an interview aired in which Obama accused Republicans of dropping the ball on negotiations to prevent huge tax hikes and spending cuts from kicking in on January 1.
“Republicans made every effort to reach the ‘balanced’ deficit agreement that the president promised the American people, while the president has continued to insist on a package skewed dramatically in favor of higher taxes that would destroy jobs,” Boehner added.
“We’ve been reasonable and responsible. The president is the one who has never been able to get to ‘yes.’
Obama told NBC talk show “Meet the Press” broadcast Sunday that Congress was now under pressure to produce a deal in the 36 hours before the US economy was due to topple over the fiscal cliff. He barely concealed his anger that Republicans have refused what he sees as a reasonable compromise.
The president said it had been “very hard” for top Republican leaders to accept that “taxes on the wealthiest Americans should go up a little bit, as part of an overall deficit reduction package.”
After talks with Boehner fizzled earlier this month, Obama has now tasked Senate leaders with negotiating a deal.
Republican Senate Minority Leader Mitch McConnell’s office called Obama’s comments “discordant,” and said it was Republicans who were working to bring the two parties together for a solution.
December 30, 2012
A Showdown Long Foreseen
By JENNIFER STEINHAUER
WASHINGTON — The titanic struggle over how to reach a broad Congressional tax agreement is not just the latest partisan showdown, but rather the culmination of two years of escalating fiscal confrontations, each building on the other in its gravity and consequences. On Sunday, lawmakers could not seem to find one final way out.
From the first fight over a short-term spending agreement to keep the government open in early 2011 to the later tangle over the debt ceiling to the failure of last year’s special budget committee and the resulting automatic spending cuts that now loom along with tax increases, the so-called fiscal cliff was built, slab by partisan slab, to where it now threatens the nation’s finances.
“Something has gone terribly wrong,” said Senator Joe Manchin III, Democrat of West Virginia, “when the biggest threat to our American economy is the American Congress.”
Years of increased spending on everything from wars to expanded entitlement programs — combined with protracted, stubborn unemployment and a nation of workers whose earning power and home values have plummeted in recent years — have persuaded lawmakers in both parties that fiscal policy is the most pressing domestic concern.
But a fundamental ideological chasm between the majority of lawmakers and an empowered group of Congressional Republicans — fueled by some Tea Party victories in both chambers in 2010 — has made it more difficult than ever to reach fiscal and budgetary compromises.
Each fight has left Democrats and Republicans both more distrustful and wary of working together, each in search of a voter mandate to push its vision to the fore. In some ways, that dynamic has come full circle.
In 2011, right after their big midterm victory, Republicans were able to push Democrats out of their comfort zone on spending, using short-term measures to keep the government open and the debt ceiling as weapons against the Obama administration. After the 2012 election, Democrats are using that same strategy to tear Republicans from their orthodoxy on taxes, and the Republicans’ pain is evident.
“Hats off to the president — he won,” Senator Lindsey Graham, Republican of South Carolina, said ruefully on Sunday.
As a result, members of both parties have became increasingly addicted to short-term solutions to long-term problems, cobbling together two- and three-month bills and short-term extensions to fight over again and again until the string has run out on many major pressing issues.
Also, a change in the way this Congress does business — the elimination of home-state earmarks that once greased so many Congressional deals — and the escalating use of the Senate filibuster to prevent debate on even routine legislation have further hamstrung lawmakers in their efforts to get anything done.
With less than 48 hours to go before substantial tax hikes and large spending cuts affected nearly every aspect of American life, the 112th Congress was lurching toward its operatic end in a state of legislative dysfunction, ideological asymmetry and borderline chaos.
“This is one of the lowest points of the U.S. Senate,” Senator Barbara A. Mikulski, Democrat of Maryland, remarked as she ticked off what she said were other nadirs in a long Senate career, including the impeachment of President Bill Clinton. “This is what we’re doing to ourselves.”
A Sunday session on the eve of New Year’s Eve was marked by confusion, acrimony and a fair amount of sitting around waiting for things that never happened.
On the Senate side, Senator Harry Reid of Nevada, the majority leader, took to the floor at midday to proclaim the talks all but finished, shocking even some Democrats. Later he said, well, maybe they were not. Mr. Reid said he had made a counteroffer to the most recent one offered by his Republican counterpart, Senator Mitch McConnell of Kentucky. Then his aides said he had been sort of joking.
Mr. McConnell, seeking a lifeline, or at least perhaps a sympathetic ear, turned to Vice President Joseph R. Biden Jr., his old Senate friend, almost like one brother calling another to ask how to deal with the awful family fight brewing back home. Mr. Biden and Mr. McConnell have worked together for decades in the Senate and two years ago were able to cut the last major tax deal.
At some point within the pandemonium, members of Congress started talking, almost inexplicably, about the stalled farm bill. It is one of the many measures — once relatively noncontroversial and typically passed with bipartisan glee — that have expired and that Congress has been unable to renew, and the sudden attention to it seemed incongruous given the crisis atmosphere.
Bending to the wishes of Speaker John A. Boehner, House members returned to the Capitol on Sunday night, ostensibly to hear about a Senate deal. But since one had not materialized, they instead contented themselves by voting on subjects like the dignified burial of veterans, and by snacking on pizza.
Representative Bill Huizenga of Michigan, a freshman Republican who has enjoyed the highs of his party’s hard-fought victories and remains in defiance of Democrats even as that dominance has crumbled, found himself on Sunday in a place he has come to know well — the middle of an impasse.
“I feel like I’m trapped in ‘Groundhog Day,’ ” Mr. Huizenga said.
And in a way he was, as he and his colleagues found themselves yet again on the brink of a fiscal crisis, this one magnified by all the others before it.
December 30, 2012
Philadelphia School District Plans to Close Dozens of Schools
By JON HURDLE
PHILADELPHIA — Like many public schools here, University City High School is underused, underfinanced and underperforming.
Nearly 80 percent of its 11th-grade students read below grade level in statewide tests this year, while 85 percent failed to make the grade in math. Last year, about only a quarter of its students participated in precollege testing like the SAT.
Largely because of the lure of local charter schools, the school is one-quarter full, with fewer than 600 students for its nearly 2,200 seats. It needs major work on its infrastructure, including lighting and heating systems, that would cost an estimated $30 million.
Now, facing deep financial problems, the Philadelphia School District has proposed an unprecedented downsizing that would close 37 campuses by June — roughly one out of six public schools, including University City. If the sweeping plan is approved, the district says it will improve academic standards by diverting money used for maintaining crumbling buildings to hire teachers and improve classroom equipment.
The 237-school district faces a cumulative budget deficit of $1.1 billion over the next five years, after $419 million in state cuts to educational financing this year. The district’s problems are compounded by the end of federal stimulus money and rising pension costs.
Even after borrowing $300 million to pay the bills for this academic year, the district faces a deficit of $27.6 million, a figure that officials say will rise sharply in coming years.
Its problems are worsened by having to maintain buildings that are drastically underused. Among 195,000 student “seats,” 53,000 are empty, according to the district’s new superintendent, William R. Hite Jr., who argues that the solution is to close the schools, sell their buildings and transfer students into those that remain open. Some middle schools would be converted to elementary schools, and vice versa, and many students would be moved to different schools, sometimes in different neighborhoods.
In all, 17,000 students and more than 1,100 teachers would be affected by closings, program changes and new grade configurations. Schools that would be closed were selected on the basis of their physical condition, usage, academic record and cost per student.
The proposal, announced on Dec. 13, is the outcome of a two-year process that began long before Dr. Hite’s arrival on Oct. 1. Without the closings, he warns, finances will deteriorate to the point where the district itself will be in jeopardy.
“We run the risk of talking about a district that is no longer financially able to operate,” Dr. Hite told a noisy meeting of about 450 parents, students and teachers at Martin Luther King High School in the Germantown neighborhood on Dec. 19, at which district officials were trying to sell their plan.
Although the district has been able to borrow enough to operate this year, it has reached its credit limit, Dr. Hite said. “We no longer have the ability to borrow that kind of money going forward,” he said.
Other large cities, including Chicago, Detroit and Washington, are also considering school closings because of declining enrollment, competition from charter schools and overcapacity, said Michael Casserly, the executive director of the Council of the Great City Schools, an advocacy group for urban public schools.
But Philadelphia has been hit hard by state education financing that has been among the lowest per student of any major city, Mr. Casserly said. “The state’s historical lack of spending has had an eroding effect on the district,” he said.
The proposed cuts — which are scheduled to be voted on in March by the School Reform Commission, a state organization that oversees the district — have ignited angry protests from teachers, students and parents. They argue that children, particularly in their elementary years, should not be forced to attend school outside their neighborhoods; that academic improvements would be disrupted; and that students attending new schools would be victimized because of longstanding inter-neighborhood rivalries.
At University City High, the announcement produced shock and disbelief, said Timothy Stults, the principal, who has overseen academic improvements since taking over leadership of the school in 2009. He now wonders whether his work will be undone by the impending closing.
“I had some level of emotion, some frustration” in response to the district’s announcement, Mr. Stults said.
Under his leadership, the proportion of students attaining the state proficiency or advanced standard in reading rose to 22.4 percent this year from 6.7 percent in 2010. Math proficiency increased to 14.4 percent from 3.6 percent over the same period.
“In many respects, this school was the worst school in the city,” Mr. Stults said. “That’s no longer the case.”
For some students, anger over the planned closing of University City High has been replaced by an understanding that the proposal reflects the poor condition of their building, not academic performance. Students are now focusing on how to keep the school community together, albeit in a different location.
“Emotion turns into logic,” said Matthew Gillian, 18, a senior who is helping in the search for alternative locations for University City students at schools that remain open. “It makes you understand why certain things have to happen.”
Obama admits ‘security problem’ at Benghazi mission
By Agence France-Presse
Sunday, December 30, 2012 12:04 EST
President Barack Obama admitted Sunday that a probe into a deadly assault on a US consulate in Libya had uncovered a “huge problem” in security procedures at the mission.
“We’re not going to be defensive about it,” Obama said in an interview recorded on Saturday for NBC’s Meet the Press. “We’re not going to pretend that this was not a problem. This was a huge problem.”
On September 11, the anniversary of the 2001 attacks by Al-Qaeda on New York and Washington, heavily-armed militants stormed the US consulate in the eastern Libyan city of Benghazi and attacked a nearby CIA safehouse.
Four Americans died in the assault, including US ambassador Chris Stevens, and Obama’s domestic opponents have attacked the administration’s handling of both security prior to the attack and public statements afterwards.
In his interview, Obama said all of the recommendations of a critical report into the State Department’s operation in Benghazi would be implemented, and said US agents were hunting down those responsible for the killings.
“With respect to who carried it out, that’s an ongoing investigation. The FBI has sent individuals to Libya repeatedly,” the president said.
“We have some very good leads, but this is not something that I’m going to be at liberty to talk about right now.”
Obama also defended UN ambassador Susan Rice, who was accused by Republican lawmakers of misleading the public when she said the attack was a spontaneous protest against an anti-Muslim film made privately in the United States.
Rice had been considered the frontrunner to replace Secretary of State Hillary Clinton as America’s top diplomat in Obama’s second term, but dropped out of the running after becoming the focus of Republican attacks.
“She appeared on a number of television shows reporting what she and we understood to be the best information at the time,” Obama said, accusing opponents of making a scapegoat of his close ally.
“This was a politically motivated attack on her. I mean, of all the people in my national security team, she probably had the least to do with anything that happened in Benghazi.”
Revealed: how the FBI coordinated the crackdown on Occupy
New documents prove what was once dismissed as paranoid fantasy: totally integrated corporate-state repression of dissent.
guardian.co.uk, Saturday 29 December 2012 14.58 GMT
It was more sophisticated than we had imagined: new documents show that the violent crackdown on Occupy last fall – so mystifying at the time – was not just coordinated at the level of the FBI, the Department of Homeland Security, and local police. The crackdown, which involved, as you may recall, violent arrests, group disruption, canister missiles to the skulls of protesters, people held in handcuffs so tight they were injured, people held in bondage till they were forced to wet or soil themselves –was coordinated with the big banks themselves.
The Partnership for Civil Justice Fund, in a groundbreaking scoop that should once more shame major US media outlets (why are nonprofits now some of the only entities in America left breaking major civil liberties news?), filed this request. The document – reproduced here in an easily searchable format – shows a terrifying network of coordinated DHS, FBI, police, regional fusion center, and private-sector activity so completely merged into one another that the monstrous whole is, in fact, one entity: in some cases, bearing a single name, the Domestic Security Alliance Council. And it reveals this merged entity to have one centrally planned, locally executed mission. The documents, in short, show the cops and DHS working for and with banks to target, arrest, and politically disable peaceful American citizens.
The documents, released after long delay in the week between Christmas and New Year, show a nationwide meta-plot unfolding in city after city in an Orwellian world: six American universities are sites where campus police funneled information about students involved with OWS to the FBI, with the administrations' knowledge (p51); banks sat down with FBI officials to pool information about OWS protesters harvested by private security; plans to crush Occupy events, planned for a month down the road, were made by the FBI – and offered to the representatives of the same organizations that the protests would target; and even threats of the assassination of OWS leaders by sniper fire – by whom? Where? – now remain redacted and undisclosed to those American citizens in danger, contrary to standard FBI practice to inform the person concerned when there is a threat against a political leader (p61).
As Mara Verheyden-Hilliard, executive director of the PCJF, put it, the documents show that from the start, the FBI – though it acknowledges Occupy movement as being, in fact, a peaceful organization – nonetheless designated OWS repeatedly as a "terrorist threat":
"FBI documents just obtained by the Partnership for Civil Justice Fund (PCJF) … reveal that from its inception, the FBI treated the Occupy movement as a potential criminal and terrorist threat … The PCJF has obtained heavily redacted documents showing that FBI offices and agents around the country were in high gear conducting surveillance against the movement even as early as August 2011, a month prior to the establishment of the OWS encampment in Zuccotti Park and other Occupy actions around the country."
Verheyden-Hilliard points out the close partnering of banks, the New York Stock Exchange and at least one local Federal Reserve with the FBI and DHS, and calls it "police-statism":
"This production [of documents], which we believe is just the tip of the iceberg, is a window into the nationwide scope of the FBI's surveillance, monitoring, and reporting on peaceful protestors organizing with the Occupy movement … These documents also show these federal agencies functioning as a de facto intelligence arm of Wall Street and Corporate America."
The documents show stunning range: in Denver, Colorado, that branch of the FBI and a "Bank Fraud Working Group" met in November 2011 – during the Occupy protests – to surveil the group. The Federal Reserve of Richmond, Virginia had its own private security surveilling Occupy Tampa and Tampa Veterans for Peace and passing privately-collected information on activists back to the Richmond FBI, which, in turn, categorized OWS activities under its "domestic terrorism" unit. The Anchorage, Alaska "terrorism task force" was watching Occupy Anchorage. The Jackson, Michigan "joint terrorism task force" was issuing a "counterterrorism preparedness alert" about the ill-organized grandmas and college sophomores in Occupy there. Also in Jackson, Michigan, the FBI and the "Bank Security Group" – multiple private banks – met to discuss the reaction to "National Bad Bank Sit-in Day" (the response was violent, as you may recall). The Virginia FBI sent that state's Occupy members' details to the Virginia terrorism fusion center. The Memphis FBI tracked OWS under its "joint terrorism task force" aegis, too. And so on, for over 100 pages.
Jason Leopold, at Truthout.org, who has sought similar documents for more than a year, reported that the FBI falsely asserted in response to his own FOIA requests that no documents related to its infiltration of Occupy Wall Street existed at all. But the release may be strategic: if you are an Occupy activist and see how your information is being sent to terrorism task forces and fusion centers, not to mention the "longterm plans" of some redacted group to shoot you, this document is quite the deterrent.
There is a new twist: the merger of the private sector, DHS and the FBI means that any of us can become WikiLeaks, a point that Julian Assange was trying to make in explaining the argument behind his recent book. The fusion of the tracking of money and the suppression of dissent means that a huge area of vulnerability in civil society – people's income streams and financial records – is now firmly in the hands of the banks, which are, in turn, now in the business of tracking your dissent.
Remember that only 10% of the money donated to WikiLeaks can be processed – because of financial sector and DHS-sponsored targeting of PayPal data. With this merger, that crushing of one's personal or business financial freedom can happen to any of us. How messy, criminalizing and prosecuting dissent. How simple, by contrast, just to label an entity a "terrorist organization" and choke off, disrupt or indict its sources of financing.
Why the huge push for counterterrorism "fusion centers", the DHS militarizing of police departments, and so on? It was never really about "the terrorists". It was not even about civil unrest. It was always about this moment, when vast crimes might be uncovered by citizens – it was always, that is to say, meant to be about you.
Occupy Oakland clashes: Police used teargas to drive back protesters following an attempt by the Occupy supporters to shut down the city of Oakland. Photograph: Noah Berger/AP
Indian gang rape victim's ashes scattered on river Ganges
Jason Burke in Delhi
guardian.co.uk, Tuesday 1 January 2013 13.00 GMT
The ashes of the 23-year-old victim of the gang rape in Delhi that has provoked an international outcry and three weeks of protests in India have been scattered on the surface of the river Ganges.
The medical student, who died last weekend of injuries sustained in an hour's assault in a moving bus in Delhi, was cremated on Sunday in the Indian capital, close to where she was living with her family. Her identity has still not been made public.
The case has triggered outrage, grief and anger, with protests across India continuing on Tuesday. It has also provoked an unprecedented debate about sexual aggression towards women in the country.
Six men, including one who claims to be a juvenile aged 17, have been detained and are accused of her rape and murder. Police have drawn up a 1,000-page charge sheet which they will present in court on Thursday.
Hundreds of people joined the family by the banks of the Ganges – a sacred river, according to Hindu belief – at the village of Bharauli, 600 miles east of Delhi. According to the Times of India newspaper, the funeral cortege took three hours to cover the five miles to the river from their ancestral home because of the crowds.
India's often ruthless and sensationalist media had agreed to stay away.
The suspects in the case could face the death penalty if convicted.
Police in Delhi say "a bone test" will be used to establish the exact age of the man who claims to be 17. A juvenile cannot be prosecuted for murder in India.
The rape took place on 16 December and the victim, a physiotherapy student, died last week in a Singapore hospital where she had been sent for emergency treatment after 10 days in a local hospital. Her family have said they would like to see her attackers hanged.
Four of the suspects were living in a slum neighbourhood in Delhi.
Neighbours and relatives told the Guardian that they too would like to see a death penalty imposed if the men were found guilty.
Protesters and politicians have called for a special session of parliament to pass new laws to increase punishments for rapists – including possible chemical castration – and to set up fast-track courts to deal with rape cases within 90 days.
Thousands of Indians have lit candles, held prayer meetings and marched through various cities and towns to express their grief and demand stronger protection for women and the death penalty for rape, which is now punishable by a maximum of life imprisonment.
On Monday, the Indian army and navy cancelled their new year celebrations, as did Sonia Gandhi, head of the ruling Congress party.
Several hotels and clubs across the capital also did not hold their usual parties.
Women face daily harassment across India, including catcalls on the streets and groping and touching on public transport.
Indian media are currently reporting incidents of sexual violence that would rarely have gained attention previously. One incident involved a teenager, raped repeatedly by her brother, who fled only to be assaulted on a bus by a conductor. Others involved a 15-year-old held for 15 days by three men in a village in the Sultanpur district of Uttar Pradesh, a poverty-stricken northern state, an 11-year-old allegedly raped by three teenagers in the north-eastern city of Guwahati and two cases of rape in the city of Amritsar.
In the Delhi slum home of gang-rape accused: 'We are good people'
They deserve the worst, says neighbour of brothers who led gang accused of rape and murder of 23-year-old student
Jason Burke in Delhi
The Guardian, Monday 31 December 2012 18.19 GMT
The sun slides away behind the dome of a medieval tomb and, as the shadows fall across the cluttered homes of Ravi Das colony, the temperature drops. Winter in Delhi is short but here, in this slum colony in the south of the city, the cold bites hard while it lasts.
The new year will bring little cheer. Most of the men work on the booming city's many construction sites. Others drive rickshaws, one of the Indian capital's most distinctive sights. The women sell vegetables or sew, earning enough to put a chicken in the pot a couple of times a month.
At around 11 o'clock on a Sunday night just over two weeks ago, Ram Singh, a 33-year-old school bus driver known as a troublesome drunkard, and his younger brother Mukesh headed back down the narrow lanes to the squalid one-bedroom brick home where they had spent the afternoon drinking. They cooked some dinner, argued briefly, according to neighbours who heard them, then all went quiet.
The people of Ravi Das colony, named after a 15th-century saint, had little warning that they were about to be at the centre of a news story that has led bulletins for two weeks in India and across much of the world.
That night, a 23-year-old physiotherapy student had been gang-raped on a bus in the capital. Nearly two weeks later, she died of her injuries in the Singapore hospital where she had been sent for treatment.
On Monday, the Indian government said compensation of £19,000 would be paid to the family of the still anonymous victim as dozens of high-profile new year celebrations were cancelled in Delhi and elsewhere.
The police came for the Singh brothers 36 hours after the attack. They also wanted two others, Pawan Gupta, a 19-year-old student who helped his parents out on their fruit stand, and Vinay Sharma, a cleaner in a local gym. The men, once arrested, reportedly confessed quickly. They had, it is alleged, gone out with two others in Ram Singh's unlicensed school bus on a "joyride". Cruising Delhi's streets they had picked up a woman and her male friend.
As the bus continued along busy roads, they had battered the man into unconsciousness and repeatedly raped the woman, causing massive internal injuries with an iron rod, before dumping them near the city's airport.
The police have now finalised a 1,000-page charge sheet for the suspects' first court appearance, which is scheduled for Thursday.
The death of the victim on Friday night led to an outpouring of outrage, anger and, often, shame across India. "For what they have done, they deserve the worst," said Ram Devi, a neighbour of the Singh brothers, on Monday.
In the often emotional debate in India over recent days many factors have been cited for the attack, only the most egregious among hundreds, if not thousands, of similar incidents that occur every year across the country. Poor policing, lax laws, embedded misogyny, even Bollywood film stereotypes have been blamed. Many have spoken of "monsters" or "beasts". One newspaper described Ravi Das colony as "the den of the rapists", "Delhi's underbelly" and "a fertile breeding ground for criminals".
Ram and Mukesh Singh grew up in the colony, neighbours say. Their parents were from Karauli, a remote and lawless part of Rajasthan, the vast western Indian state which, despite the romantic facade it presents to millions of tourists, is one of the country's poorest. Back in the early 1990s, as India started slowly booming, the parents had come to Delhi to find work and squatted what was then derelict land. They had three children, all boys.
Like so many poor Indians, the family shuttled between their ancestral village and the city, where work and better educational facilities were to be found. Ram and Mukesh, unlike their parents, were literate. Both were in school until their mid-teens.
Mukesh, about 30, was quiet, nondescript, a follower, according to neighbours. "We had no trouble with him … But he'd do anything to impress his older brother," said one teenage boy. It was Mukesh, a part-time taxi driver fired recently for indiscipline, who allegedly drove the bus during the assault.
However, Ram was a drinker and a brawler whom other men in the colony frequently had to keep in line. Asha, his sister-in-law, told the Guardian Ram had recently fought with her husband. Ram Singh's wife died three years ago and a complicated affair with a neighbour made for tension locally.
But Ram Singh did not harass local girls. "He knew what trouble he'd get if he tried it on with them," said Asha. "This is a nice, clean neighbourhood with nice people living here," said Ram Devi. "If there's a problem with someone or something we get together and sort it out."
Out on the streets however, in the anonymity of a seething, overcrowded city, things were different.
Two other men allegedly involved also come from the colony. Pawan Gupta, a relative said, had grown up in a temple in the remote rural town of Basti in north-eastern Uttar Pradesh, again one of the poorest parts of India. He had given up further education to came to Delhi to help his parents run their fruit stall but, still only 20, was hoping to go to college. He had "fallen in with the wrong sort", the relative explained. Vinay Sharma, the son of an airport cleaner, was doing a distance college course in communications while working at the gym.
The final pair accused in the case are an as yet unidentified 17-year-old and Aksay Kumar Thakur, a 26-year-old also from a remote, poor part of India, a village in the deep south of Bihar, an area known for brutal violence between castes, Maoist guerrillas and government forces, and against women. He and the teenager were recent arrivals in the city and had found work as helpers on Ram Singh's bus.
"They must have just got caught up in it. Or maybe being all together they went mad," said Asha. "But we are very different people, good people."
Certainly, Ravi Das colony is far from the pit of inequity and squalor portrayed by some local media. The narrow lanes are swept clean, the walls of the brick houses painted bright yellow, pink and blue. Plastic flowers decorate doors. There is, said one young woman proudly, drinking water twice a day, for an hour at a time.
Clusters of electricity wires cling to posts, bringing enough power for a weak lamp or two and televisions on which the people of the colony watched news reports of the rape and its aftermath.
As night gathers, the lanes are full of smoke from the wood-fired clay stoves cooking rice and lentils for dinner. Halfway between the seething city around it and the villages where almost all its inhabitants, including the alleged rapists, grew up, life may be tough and unpredictable in the colony but there is a chance of something better.
Next door to the Singh brothers, now facing a possible death sentence for murder, lives 18-year-old Pana Anuraji. A cobbler's daughter, she is studying fashion. "I'm going to be a famous dress designer," she says brightly, as her mother stirs a smoke-blackened pot.
Indian gang-rape victim's family calls for attackers to be hanged
Jason Burke in Delhi
The Guardian, Monday 31 December 2012 19.16 GMT
Indian protesters light candles around a mannequin representing the rape victim during a Delhi rally
Indian protesters light candles around a mannequin representing the rape victim during a rally in Delhi. Photograph: Sajjad Hussain/AFP/Getty Images
The family of the Indian gang-rape victim has spoken for the first time, calling for the men accused of the attack to be executed.
"The fight has just begun. We want all the accused hanged and we will fight for that, till the end," the brother of the 23-year-old medical student, who has not yet been named, told the Indian Express newspaper.
Hundreds of well-wishers, politicians and neighbours have crowded the family's modest home in south-west Delhi since the cremation of the victim's remains on Sunday morning.
The girl's mother was admitted to hospital after she collapsed following the funeral, local media reported.
"We are all in shock. Nobody can accept this news. My wife took it the hardest. It is too painful. I have not gone inside her room," her father said.
"She was born in this house. Her books, clothes they are all here. It is hard to believe I will never hear her voice again, she will never read books to me in English again."
The family has been held up as an example for the effort they made to fund the education of their daughter in a country where the schooling of male children is prioritised.
"While other kids cry before going to school, she would cry if we stopped her," the father , reported to be in his 50s, told the local DNA newspaper. "She was always keen on a career in medicine. She was most happy when she got a chance to heal somebody's wounds."
North Korea leader Kim Jong-Un vows ‘radical’ economic shift
By Agence France-Presse
Tuesday, January 1, 2013 5:39 EST
North Korean leader Kim Jong-Un called Tuesday for a “radical turnabout” in the impoverished country’s economy in a rare New Year’s address that also appeared to offer an olive branch to South Korea.
Kim’s speech, broadcast on state television, was the first of its kind for 19 years, since the death of his grandfather and the North’s founding president Kim Il-Sung.
Kim’s father and the country’s previous ruler, Kim Jong-Il, never made a major address to his people.
The year 2013 will be one of “great creations and changes in which a radical turnabout will be effected”, Kim said, adding that “the building of an economic giant is the most important task” facing the country.
Praising the success of the country’s space scientists in launching a long-range rocket last month, Kim said a similar national effort was now needed on the economic front.
“The entire party, the whole country and all the people should wage an all-out struggle this year to effect a turnaround in building an economic giant and improving the people’s standard of living,” he said.
But he offered no specifics for how this might be achieved by the isolated state, which is already under multiple sanctions and relies on its sole major ally China for 70 percent of its foreign trade.
When Kim Jong-Il died in December 2011 he left a country in dire economic straits — the result of a “military first” policy that fed an ambitious missile and nuclear program at the expense of a malnourished population.
Despite a rise in staple food output, daily life for millions is an ongoing struggle with under-nutrition, according to a recent World Food Programme report.
The address will be closely scrutinized in South Korea, which has just elected its first woman president, the conservative Park Geun-Hye, who has signaled a desire for greater engagement with Pyongyang.
Kim’s tone was conciliatory as he urged a scaling down of tensions between the two Koreas who remain technically at war.
“An important issue in putting an end to the division of the country and achieving its reunification is to remove confrontation between the North and the South,” Kim said.
“The past records of inter-Korean relations show that confrontation between fellow countrymen leads to nothing but war,” he added.
The South’s president-elect Park has distanced herself from outgoing President Lee Myung-Bak’s hardline policy towards Pyongyang.
But in her first policy statement following her election victory last month, Park made it clear she still saw Pyongyang as a serious threat and would put national security before any trust-building program.
Yu Woo-Ik, the South’s unification minister, said the North should not test the patience of the international community with missile and nuclear program.
In his address Kim made it clear that building the economy did not mean a complete shift away from his father’s “military first” policy.
“The military might of a country represents its national strength. Only when it builds up its military might in every way can it develop into a thriving country,” he said.
The UN Security Council is still considering whether to punish Pyongyang for its rocket launch, which most of the world saw as a disguised ballistic missile test.
The speech lauded the launch as a historic national achievement and stressed the need to develop more “sophisticated military hardware”.
But Kim made no mention of the North’s nuclear weapons program, despite growing speculation that Pyongyang is preparing to conduct a nuclear test following the rocket success.
Yang Moo-Jin, a professor at Seoul’s University of North Korean Studies, said the general tone of Kim’s speech was positive.
“It might signal limited economic reforms this year and also sends a message to South Korea’s incoming president about a desire for improved cross-border relations,” Yang said.
December 31, 2012
Fearing Fighting, Residents Flee Capital of Central African Republic
By LYDIA POLGREEN
JOHANNESBURG — As efforts to broker a deal to stop a rebel advance failed, residents of the capital of the Central African Republic were packing up their belongings and fleeing into the country’s vast hinterlands, fearing a major battle between government troops and guerrilla fighters.
Rebels rejected an offer from the country’s president, François Bozizé. It was brokered by the African Union and proposed forming a government of national unity. But the rebels balked, saying that previous agreements with the president had been made and quickly broken.
“Bozizé speaks, but does not keep his word,” said a rebel spokesman, Juma Narkoyo. “That is why we have taken up arms to make our voices heard.”
The rebel coalition, known as Seleka, is made up of several groups of fighters opposed to the government of Mr. Bozizé, who came to power after a brief civil war in 2003 and has had a tenuous grip on the presidency ever since, winning two elections but facing a constant threat of rebellions aimed at toppling him.
The Seleka rebels say that Mr. Bozizé has not lived up to the terms of a peace agreement signed in 2007. Mr. Narkoyo said the rebels had no plans to seize the capital, Bangui, but in the past they have advanced despite claims that they would stay put.
Government officials, meanwhile, said that the rebels were not actually from the Central African Republic, but were instead foreign provocateurs bent on destabilizing one of the most fragile nations in Africa in order to exploit its mineral wealth.
“They are Chadians, Sudanese and Nigerians,” said Louis Oguéré Ngaïkouma, secretary general of Mr. Bozizé’s political party. “It is a conspiracy against the people of the Central African Republic and its president to steal our riches.”
Suspicion of one’s neighbors is no idle thing in this part of Africa, where local wars often become wider conflagrations. The Democratic Republic of Congo, which lies to the south of the Central African Republic, has been caught up in one of the deadliest conflicts of the last half-century as Rwandan, Ugandan and Congolese troops fought over the country’s bounty of diamonds, coltan and tin.
War in Sudan, which lies north of the Central African Republic, has also spilled over into its neighbors, especially Chad, which also borders the Central African Republic.
Hugues Kossi, a college student in Bangui, said he feared all-out war in his city.
“I am afraid of combat and stray bullets,” he said. But he said he was also tired of the poverty and misrule of Mr. Bozizé’s government.
“It is bad governance that has led us to this situation,” Mr. Kossi said.
The United States has closed its embassy in Bangui and evacuated its staff members. The French government has said it will not help Mr. Bozizé fight the rebels, but that it has deployed an extra contingent of soldiers from a neighboring country to help protect French citizens.
Christian Panika contributed reporting from Bangui, Central African Republic.
12/31/2012 05:06 PM
Increasing Barbarity: Gaining a Clearer View of the Syrian Civil War
By Christoph Reuter
After spending months reporting on the conflict, a SPIEGEL journalist has pieced together a realistic view of the situation on the ground, and reports that dictator Bashar Assad's fall seems inevitable. But as the fighting grows more barbarous on both sides, he worries what the ultimate price will be.
It was August 2012 and we were sitting in front of the TV. The Syrian state-run channel was reporting that the country's army was fighting bravely in the streets of Maraa, and was close to defeating the terrorists there. At this very moment, the program continued, Syrian army troops were storming the cultural center where the last terrorists had holed up. The screen showed soldiers running past three-story apartment buildings.
We watched the TV, fascinated.
We had been in Maraa for days, waiting for a driver who would take us further into the interior of the country. Not a single government soldier had been seen in this small city north of Aleppo in quite a while. Not even the artillery cannons in Aleppo were capable of reaching the town. Someone called an acquaintance living near the cultural center, and learned that everything was quiet there too. And the multi-story apartment buildings? There aren't any in Maraa.
The entire report, several minutes long and related in a breathless tone, was fiction. This time we ourselves were witnesses and knew the truth.
When the Syrian state-run television channel or the private channel al-Dunya, which is owned by the Assad family, expose a Satanic conspiracy against Syria under the direction of United States President Barack Obama, or reveal that the movements of FC Barcelona's soccer players are actually secret commands directed at Syrian rebels, no one in the West pays much attention. These reports are all too clearly grotesque propaganda.
But when the events reported are ones that seem plausible at first glance -- for example the flood of foreign al-Qaida fighters supposedly organizing the Syrian rebellion, the presence of a huge number of CIA agents or the expulsion of Christians from Syrian cities -- these claims elicit a response in the West. It's often difficult for us journalists to determine whether or not they are true, because the Syrian civil war is far less accessible than the war in Libya was. In Libya, the eastern part of the country around Benghazi was liberated in a week, making it possible for journalists to travel there.
There is no Benghazi in Syria. Any corner of the country's embattled regions can be hit by an air strike at any time. At the same time, the regime's Orwellian PR machine not only presents journalists with its official view of the situation, but also provides us with supposed eyewitnesses to atrocities and al-Qaida fighters it has allegedly captured.
And no other war has been so ubiquitously captured on video. Whether these videos are real or falsified is difficult to determine. Any cliché, any falsehood can be illustrated with a video.
During one of my first trips to Syria, I traveled by bus from Damascus to Homs and found myself at an evening protest in the Hamra district of the city. The protestors, perhaps 300 of them at that point, walked along pitch-black streets toward a large intersection. For 26 minutes, the growing crowd chanted in the street, the sound reverberating off the surrounding buildings. Here and there, the power was on and streetlights bathed the demonstrators in yellowish light. Ahead of us, about 150 to 200 meters (500 to 650 feet) away, was the T-junction where the troops would appear.
It took a great deal of courage to walk in the middle of that street. With few exceptions, only the youngest of the protestors ventured there, everyone else keeping to the semidarkness along the building walls. At the edge of the crowd, a father walked with his perhaps 11-year-old son, holding tight to the boy's hand and talking to him in a quiet voice. Those who were even more afraid stuck to the side streets, peering out into the main street.
My own experiment with going to the middle of the street was a peculiar experience that took several minutes to accomplish. It felt as if I had glue on the soles of my shoes, and I could barely set one foot in front of the other. The shots could come at any moment, generally with about 10 or 20 seconds' warning. The dictatorship wanted to be sure that anyone who dared to defy it would experience the consequences.
A few of the demonstrators were standing closer to the intersection, and I heard them shout, just as I later heard the shouts in Aleppo as the regime's troops approached, and within seconds everyone had dived for cover. If the feeling wasn't complete insanity, it was something so close to it that our feet didn't know the difference.
That evening in Homs, no one knew what would happen from one minute to the next. Then we found out why things had remained so calm. New reports came in every minute, revealing that in the neighboring district of Bab Sabaa, state security force units had stormed the Fatima Mosque and shot into the crowd of people praying there. Other troops had opened fire on the nearby Rauda Mosque.
That particular night, we returned unharmed to the place where we were staying in Homs.
Traveling the Old-Fashioned Way
Journalists' trips to Syria since the beginning of the revolution have generally been weeks-long expeditions into a country under extreme conditions, making our way forward the way our ancestors traveled centuries ago, when no one knew what the world looked like beyond the next hill. We make our way from village to village, district to district, traveling by car, truck, motorcycle or on foot, with a rotating cast of companions.
Just knowing the way is no longer enough, not since the army and the regime's security forces started setting up "flying checkpoints," which spring up suddenly and arrest or simply shoot members of the opposition, or even just those who come from a town controlled by the rebels.
Many people hardly leave their villages or neighborhoods anymore. Those who do set out, because they want to or have to transport something -- journalists like us, for example -- try to scout out the route beforehand. A motorcyclist might cover the route first, an unsuspicious car drives on a kilometer or two ahead, or a vegetable truck goes first to check out the situation, its driver remaining in constant telephone contact with the second vehicle, at least when there is mobile phone service.
In all of the larger towns, the people who help us and travel with us change constantly. Each local committee, each rebel group has control over its own neighborhood, but nothing beyond that. Trips that would once have taken a few hours now often require days or even weeks.
The benefit of this mode of travel, though, is that it allows us the unfiltered experience of all the facets of reality here. We travel with professors and cattle-herding nomads, with students, bus drivers and defected intelligence agents and soldiers. Sometimes we drive with rebels from the Free Syrian Army (FSA), sometimes with a taxi driver who's just happy to have a fare. Our impressions of reality in Syria are formed from countless small experiences, from hours-long chance encounters during these journeys and while waiting endlessly somewhere by the side of the road.
The rebels are starting to form media committees, especially near the Turkish border, where there are many foreign journalists. They too tell us their stories of the civil war, but they don't try to keep tabs on us. It would be futile in any case, given how often the people accompanying us change. And deep in the interior of the country, by the dam on the Euphrates River in the north of the country, or on the steppes east of Hama, in the beleaguered city of Rastan, or in Houla, the town west of Homs where more than 100 people were massacred on May 25, we're generally the first journalists to visit in months anyway -- or the first to show up at all.
Often our routes themselves reveal a great deal about the situation here. Drivers in the provinces of Homs and Hama, for example, take the precaution of making wide detours around any Alawite village. "They've all got weapons from the regime there," one driver explained. "They may not all support Assad, but there are militias in every village."
Investigating the Houla Massacre
Getting to Houla, the site of the massacre, from Rastan, barely 30 kilometers (20 miles) away, takes us three days and three different vehicles. Taldou, the part of the city where the massacre occurred, is located in a valley, surrounded by the higher elevation Alawite villages from which the murderers approached on the afternoon of May 25. "They keep an eye on all the roads into Taldou," an elderly farmer explained during one of our many hours of waiting. "You have to travel in vehicles they're familiar with. Otherwise they'll come down, block the road, and you're dead."
So we waited until a milk truck came, waited until a second familiar vehicle was available, then traveled in slow motion toward Taldou. But the route we took proved to be an important clue in the question of who perpetrated the massacre, rebels or soldiers.
What we saw was that it would hardly have been possible for 700 rebels to have traveled here unnoticed from Rastan, kill people in Taldou and then disappear again without a trace. This, however, is the story that the regime is spreading in various creative ways. There's the Jacobite nun from a convent near Homs, for example, who is traveling the world as a supposedly neutral PR spokesperson for the regime and spreading the myths that there is CIA conspiracy against Syria and that many thousands of foreign al-Qaida fighters are in the country. Then there are the two supposed eyewitnesses from Taldou that the regime presented to willing journalists in Damascus, political tourists and the United Nations employees trying to reconstruct the course of events of the massacre.
When we were in Taldou for two days in mid-July, it was under bombardment from army artillery. The houses were in the line of fire of snipers at a military post outside the town -- just as they were at the time of the massacre, which also included houses near the post. The testimony of eyewitnesses and survivors suggests the same conclusion that the UN's report reached: It was the army, not the rebels, who perpetrated the massacre.
We had to make two attempts before we got to Houla. The first time, in June, the trip was too dangerous. But detours and waiting are never useless. We were traveling most of the time through areas that were no longer under the regime's control, and in dozens of villages, small cities and suburbs over the course of months, we asked the same questions again and again: Who is in charge here? Who are the leaders of the committees? What do those who used to hold power here do now? Who is fighting: army defectors, civilians, foreigners? What causes soldiers to desert and civilians to take up arms? What do the rebels want to do after the revolution?
It is an ocean of small stories and large decisions, and we can only publish a fraction of it. Taken together, though, the things we learn allow us to reach conclusions about events in this war and about shifts occurring in the balance of power, because every few months we revisit the same places and meet the same people. If they're still alive, that is.
In April we were in the northern province of Idlib and followed the trail of havoc left by the regime's "Brigade of Death" as it attacked village after village with helicopters, tanks and troops. We traveled to Bashiriya, Sarmin, Taftanaz, Kurin, Deir Sunbul, Kastan, Ain Sauda. We saw the destruction there, and at the same time pieced together a detailed picture of the FSA, which had one of its strongholds in Idlib in the spring of 2012. Around two thirds of the FSA is made up of army deserters local to the area. Outsiders from Damascus or Aleppo are rare, and we didn't encounter any foreign jihadists.
In July, in the city of Rastan in central Syria, I met Lieutenant Faïs Abdullah again. When we first met him in December 2011, Abdullah, with a clean-shaven face and a hounded look, was one of the first officers who had deserted the Syrian army. It was the pure chance of a broken foot that had brought him home on leave to Rastan, where he saw his fellow soldiers gunning down demonstrators and storming the city.
Promises of Paradise
Rastan, a city generally perceived as loyal to the regime, seems an unlikely place for the rebellion. Mustafa Tlass, a friend of the late Hafez Assad from their military academy days and the regime's eternal defense minister, comes from here, as do thousands of army officers. Yet Rastan unexpectedly turned against the regime. And when the peaceful demonstrations gave way to armed resistance, trained members of the army such as Abdullah were on hand to lead the movement.
In July 2012, Rastan is liberated but a ghost town, half destroyed and surrounded by armored divisions, artillery emplacements and army troops that shell the city daily. The rebels are the only people still here, aside from a few city residents. Faïs Abdullah, clean-shaven seven months ago, now sports a thick beard and is commander of the "Ali ibn Abi Talib Brigade," named after the fourth Caliph.
Anyone who wants to fight alongside him must be religious, says Abdullah, a Muslim, but it doesn't matter which religion specifically. He doesn't care if his fighters are Druze or Christian.
We rarely see Abdullah's 70 men pray, though. Far more of their time is spent trying to open their Facebook pages over the satellite telephone network, which is constantly crashing. Nor is their practical role model the life of the Prophet, with his dates and swordfights. Instead they like "Murat," a James Bond type who fights bad guys with high-speed chases and explosives as the hero of a Turkish television series popular in Syria.
Later Abdullah explains how we should understand this matter of religion, beards and promises of Paradise: "What can I offer someone who is supposed to confront the tanks of Assad's army with not much more than a Kalashnikov?"
Something new has come into being in Syria that didn't exist here before. In their videos, these bearded field commanders and fighters with their constant cries of "Allahu akbar" look the way the West imagines radical jihadists look. And that's certainly how journalists portray it, writing from their computers with disarming candor. The al-Qaida followers are easy to recognize, author Amir Madani wrote in the well-regarded American Huffington Post, because they are heavily bearded and fearless fighters.
By late this autumn, tens of thousands of rebels were fighting against the Assad regime, but they didn't match the clichéd image of the fearless super-terrorist, heavily bearded and always ready for action. Likewise, the 200 to 300 Libyans who were in northern Syria in September came not to establish an Islamic state, but to topple their next dictator. There are also dozens of Iraqi Sunnis fighting on the rebels' side, for example around the city of Deir el-Zour near the Iraqi border, and they are the ones most likely to have connections to al-Qaida's former Iraqi presence.
Two groups identifying themselves as fundamentalists have also cropped up in Aleppo: "Ahrar al-Sham," which translates as "Free Men of Syria," and "Al-Nusra Front." Both groups work together with the FSA, but operate outside its command structure.
According to both the organizations' own assertions and the concordant reports of eyewitnesses, the two groups each include around 50 foreigners in their ranks -- Dagestanis, Tajiks, one British man, Pakistanis, a couple of Tunisians, Libyans, Iraqis, Yemenis, Saudis, Turks -- most of whom met in Egypt at a year-long program for Islamic preachers, where non-Arabs can learn Arabic to a passable level. About 30 Chechens also came to Syria for a while, but left again when they ran out of ammunition.
What these foreigners in Aleppo have in common, says one member of the Ahrar al-Sham brigade, is less a hatred of Assad than a conviction that they must fight against all Shiites, whom they consider traitors to Sunni Islam. "When this is over," the man says, "they want to continue on and fight against the Hezbollah."
These men with beards and Kalashnikovs, constantly shouting "Allahu akbar," do fit with a certain framework, but that framework doesn't exist anymore. Nor does the image of the ultra-warrior apply to all who adorn themselves with the al-Qaida logo. A group of jihad tourists kidnapped a British and a Dutch photographer in late July, and the British photographer, John Cantlie, later said their camp seemed "like an adventure course for disenchanted 20-year-olds."
In the village of Atmeh, directly on the border with Turkey, we too met radicals with warlike garb, headbands and al-Qaida flags, their black garments and new SUV spotless. "They drive back and forth here all day," said one perplexed FSA member. "They seem to like it." And in Antakya, the sleepy provincial capital in Turkey where journalists, aid organizations and Syrian refugees meet, the jihad tourists can be found every evening on the patios of the nicer hotels, enjoying a Coca Cola and a water pipe.
That doesn't stop Syria's state-run media from spreading the story that the majority of those fighting on the rebels' side are foreign al-Qaida terrorists. Ironically, that story finds willing ears in the West, including with Islam alarmists who think they detect al-Qaida behind every bearded man they see, and with left-wing conspiracy theorists who see the US as synonymous with interventionist imperialism.
The true danger, the one we sense growing with each trip we make to Syria, is the increasing brutality and barbarism on both sides. The question is no longer simply how this conflict will end, but also at what price. In any case, the fall of the house of Assad is inevitable.
Tens of thousands of people have died. They are civilians, soldiers and rebels. Gangs massacre their way through suburbs and villages. Half a million people have fled abroad, and far more are desperately on the move within their own country, afraid to stay where they are, but fearing death around every next corner.
A year ago, Homs, Aleppo, Rastan, Talbiseh, Douma, Zabadani, Deir el-Zour, Idlib and hundreds of other cities and villages did not yet look like small Mediterranean Stalingrads. The irresistible pull of revenge increases with each wave of killing, for both the Alawites and the Sunnis.
"If someone has lost a son, it's still possible to stop him," said a pharmacist in the village of Martin. "If he's lost two, it's very difficult. With three, it's impossible. I've read about what Mahatma Gandhi achieved in India and I admire it. But what would have become of him here? In a week he would have been lying dead in a field."
Translated from the German by Ella Ornstein
Ukraine accused of allowing foreign nations to kidnap asylum seekers
By The Guardian
Monday, December 31, 2012 14:43 EST
By Oksana Grytsenko, The Guardian
In latest case, Russian says he was kidnapped on street, taken across border and tortured into making a false confession
Ukraine has been accused of allowing other states to abduct and repatriate their own nationals who have sought refugee status in the former Soviet republic, in contravention of international rights governing refugees.
Three prominent cases in as many years involving people from Russia, Palestine and Uzbekistan, which share many disturbing similarities, prompted strong criticism of Ukraine from human rights groups.
The latest case involved an anti-Putin activist, Leonid Razvozzhayev, who said he was seized by masked men on the streets of Kiev, the Ukrainian capital, and whisked across the border to Russia. He initially admitted plotting an uprising across Russia but later denied it, saying he had made the statement under pressure.
“They were torturing me for two days, [they] kidnapped me from Ukraine,” Razvozzhayev yelled to his friends, who filmed him leaving a court in Moscow in October.
It was suspected that Russian FSB (security service) officers had masterminded the snatch. A Ukrainian police spokesman, Volodymyr Polishchuk, appeared to confirm this, saying: “It is most likely that security or law enforcement officials of foreign countries acted there. You can come to this conclusion if you watch the video that was on Russian television the next day, in which [Razvozzhayev] is escorted by Russian FSB officials,” he said.
However, Russian and Ukrainian law enforcement bodies have refused to open a criminal investigation into the alleged kidnapping, saying that Razvozzhayev deliberately crossed the border. His lawyers deny this. Razvozzhayev remains in detention in Russia.
“The situation is clearly unsatisfying, with many questions unanswered,” said Oldrich Andrysek, the UN high commissioner for refugees regional representative, adding that the UNHCR had asked the Russian authorities to let it meet Razvozzhayev to clarify the situation. “With the two dramatically different accounts of what happened, it stands to reason that there is a need to ascertain what really happened,” he added.
The case is reminiscent of that of Dirar Abu Sisi, a Palestinian engineer who was seeking a residency permit in Ukraine in 2011.
In February Abu Sisi was travelling by train from Kharkiv to Kiev when two men entered his compartment, took his passport and asked him to go with them, according to Andriy Makarenko, another passenger.
Days later, Abu Sisi turned up in an Israeli prison, charged with belonging to Hamas. He is still in jail.
His family and lawyer claim the operation was conducted by the Mossad, the Israeli secret service, with Ukrainian assistance.
“Ukraine and its secret services were definitely involved in arrest of Dirar Abu Sisi and his transportation to Israel,” his lawyer, Tal Linoy, said.
Like Razvozzhayev, Abu Sisi admitted guilt, but later retracted it, claiming that his confession had been made under pressure. Both Ukrainian and Israeli officials refused to comment on how the Palestinian had arrived in Israel.
Maksym Bukkevych, a human rights campaigner for Ukraine with the No Borders initiative, recalled a similar story about an event in late 2009 relating to an Uzbek citizen, Hamidullo Turgunov, who had sought refugee status in Ukraine.
Turgunov disappeared from the country and reportedly resurfaced two weeks later in jail in Uzbekistan. The UN refugee agency requested information from Ukraine about him but “has not received a satisfactory explanation”, according to Andrysek.
In a statement on Razvozzhayev’s abduction, Amnesty International accused Ukraine of ignoring human rights law.
“Amnesty International has repeatedly raised concerns that Ukraine does not respect the rights of refugees and asylum seekers,” said Heather McGill, an Amnesty researcher on Europe and central Asia.
“We have also raised concerns about the seeming willingness of the Ukrainian authorities to allow abductions by other states, such as in the cases of Dirar Abu Sisi and Hamidullo Turgunov,” she added.
So concerned is Amnesty about Ukraine’s record on asylum that earlier this year it prevented a Syrian asylum seeker from being returned from Britain to Ukraine because of the risk he would end up in Syria.
© Guardian News and Media 2012
01 January 2013 - 06H36
UK press predicts rocky ride for PM in 2013
AFP - British newspapers welcomed in the New Year on Tuesday with a warning for Prime Minister David Cameron that he will have to lay a clear path to economic growth and national renewal in 2013.
Newspapers said Cameron needed to reset Britain's direction in the world at a time when the cuts in the budget deficit would really kick in.
The Times asked how happy a New Year it was going to be, saying the "suspended animation" of British politics would break in 2013, when austerity spending reductions will bite.
It said Cameron has to convince the country that he had made "the correct economic choices" and Britain was indeed on the right track.
He also has to persuade the "malcontents" in his Conservative Party that he can deliver a new settlement in Britain's relations with the European Union that will keep them satisfied.
"Above all else, though, the politics of 2013 will be dominated by the actual experience of austerity," it said.
"Britain's resolution this New Year must be to get its stuttering economy started."
The Daily Telegraph said 2013 would be a year of challenges and it was unclear whether Britain's leaders would rise to them.
"Today we enter the fifth year since the banking crash, and crisis management can, perhaps, give way to a more measured assessment of the longer-term ramifications of this seismic event," the broadsheet said.
In 2013 Britain can "think long and hard about the kind of people we want to be, the kind of country we want to live in and the kind of role we think we should have in the world."
Britain's EU membership is "in a state of flux", while the withdrawal of nearly 5,000 troops from Afghanistan will give space to think about Britain's future military posture.
And the UK's survival will come into focus when the bill for a referendum on Scotland leaving the union is published.
The Daily Mail said "whisper it quietly, but there are grounds for cautious hope about the economy. The deficit has already been cut by 25 percent and is still falling, unemployment is down, and our national credit rating is strong".
On the domestic scene, Cameron needs to find a narrative to persuade voters he truly understands their problems, it said, rather than focus on "side issues" like gay marriage.
The Daily Express said Cameron's "dithering over the EU" must end this year.
"David Cameron must very soon decide if he is prepared to lead an unstoppable movement to restore British sovereignty. If he decides not to do so then a people's army will march right over the top of him," it said.
The Sun said 2012 would be remembered as a momentous year in modern British history.
"Doom-mongers predicted we would be seen as a global laughing stock. A declining world power -- riven with riots and inequality -- slipping into its dotage. They were proved utterly wrong. Instead, we showed a rainbow nation at ease with itself.
"If 2012 taught us anything it's that we are at our best when we believe in ourselves.
UK economy could face 'groundhog' year as morale stays low
Policymakers have little idea how to boost growth, warns Institute for Public Policy Research thinktank
The Guardian, Tuesday 1 January 2013
The UK economy could suffer a "groundhog year" in 2013, a left-of-centre thinktank has warned, with little or no growth amounting to a rerun of last year's economic performance, when GDP is thought to have fallen 0.1%.
Other economists have predicted Britain will tumble into an unprecedented triple-dip recession and has a strong chance of being stripped of its prized AAA credit rating.
The Institute for Public Policy Research (IPPR) said consumer and business morale had been dampened by talk of years of austerity and uncertainty over the eurozone crisis.
"It seems that time has stood still for the last 12 months," said Tony Dolphin, IPPR chief economist. "Policymakers appear to have little idea how to boost growth in the economy and are left hoping that the news will get better. The risk is that 2013 could be groundhog year for the UK economy."
He said the government was counting on "something just turning up" to lift the economy. The government's official economic forecaster, the Office for Budget Responsibility, expects the UK economy to grow by 1.2% in 2013. But the IPPR said such growth could only be achieved if consumers started spending more, which would require them to take on more debt. Dolphin said: "This would be a significant change from the trend of the last four years, and is very unlikely."
His gloomy outlook was echoed by the Centre for Economics and Business Research, which said the UK economy had a 50/50 chance of falling into a triple-dip recession next year. The consultancy said household budgets would continue to be squeezed. People would be underemployed rather than unemployed and would suffer another year of falling incomes in real terms, with very slow pay growth failing to keep up with inflation.
The split between the UK and the European Union split could also become "politically serious" this year, said Douglas McWilliams, CEBR chief executive, . "Oddly, rather than the other way round, it could be that the prospect of a UK exit triggers the euro break-up."
A poor economic performance in the UK would put public finances under pressure and raise questions over Britain's ability to pay back its debts, warned economists. Howard Archer, of IHS Global Insight, said he strongly suspected at least one major credit-rating agency would strip the UK of its top rating in 2013. "The loss of the UK's AAA rating would clearly be seen as an embarrassment for the government, given the emphasis it has frequently placed in the past on keeping [it]," he said.
There were fresh calls for the coalition to intervene to stimulate the UK economy. The IPPR said the government should boost demand in the economy, invest further in infrastructure projects, establish a British Investment Bank modelled on the French one, and guarantee everyone who had been out of work for a year a job on the minimum wage in a charity or in local government.
Top of the wish-list for the British Chambers of Commerce was access to finance for growing firms. It welcomed the idea of a British Business Bank but asked for a firm timetable for its creation. "There is an urgent need for a patient business lender to give innovative, new and growing businesses, as well as those businesses in recovery, access to the levels of finance they need to grow and evolve," it said.
The CEBR did predict some bright spots for the world economy in 2013, saying Asia could bounce back a bit after sputtering in 2012. "Since the political succession was sorted out in China they have been pushing the levers in favour of economic growth. Structural and long-term problems remain but these may be overtaken in 2013 by extra demand from China.
"And Japan, with a new aggressive government, is likely to try reflation before anything else," said McWilliams. In China a survey of private factory managers indicated activity in December had reached its fastest pace since May 2011. The HSBC Purchasing Managers Index rose to 51.5, well above November's 50.5 – with a reading above 50 signalling expansion.
Hollande refuses to back down on French super-tax
President tells France 'we will still ask more of those who have the most' after court rules proposed 75% rate unconstitutional
Angelique Chrisafis in Paris
The Guardian, Tuesday 1 January 2013
François Hollande on Monday vowed to press on with his super-tax on the rich, despite a damning decision by France's top court to throw it out as unconstitutional. But it is uncertain when a new version of the tax will be introduced and whether it will be watered down.
In his televised new year's address, the French president deliberately did not mention the figure of a 75% tax on incomes over €1m (£800,000), leaving the way open for his deeply symbolic measure to be changed.
"We will still ask more of those who have the most," said Hollande. He added that the exceptional tax on France's wealthy would be "adjusted without changing its objective" but did not provide details of any new proposal.
The president, who is at record unpopularity levels in the polls as he faces a grim year of further economic gloom in France, suffered a major personal blow over the weekend when France's highest court threw out his tax proposal.
The temporary tax, which Hollande had described as an act of "morality" and "patriotism" by the wealthy, now faces a delay of at least a year, if not a mortal blow.
The measure was rejected as unconstitutional on the basis of a technical issue, leaving France surprised that the government could have overlooked the fine detail of its flagship measure. The embarrassed government was attacked for amateurism by political opponents to the right and left of Hollande.
France's constitutional council ruled that the 75% tax was unfair because it flouted the law in France that taxes are set per household, not per individual. For example, if one member of a couple earned €1.2m and the partner earned nothing, they would face 75% tax on €200,000. But a couple who earned €900,000 each, €1.8m between them, would not be subject to the super-tax.
It is not clear whether the tax could now be made to apply to households that jointly earn over €1m, which would increase the number it affects from around 2,000 people to some 15,000.
Or the income threshold could be raised to €2m, so the tax affected far fewer households.
The government's lack of haste to force through a revised measure has underlined how the 75% tax, which would have brought in only €200m out of €20bn of new taxes next year, was more symbolic than effective in bringing in revenue. But it had become a crucial political marker for Hollande in terms of his support on the left. Dropping the measure altogether would be seen as very damaging to his political credibility.
The tax remains overwhelmingly popular with the French public, 60% of whom approve of it. But the row over tax exile is raging after the actor Gérard Depardieu said he was moving abroad because taxes were too high.
Hollande also used his new year's address, a setpiece in French politics, to reiterate what he has called his "great battle for employment".
He has promised to stem France's constant rise in joblessness and ensure the numbers start to drop by the end of 2013."All our efforts will be aimed at a single objective: reversing the unemployment trend within a year, whatever the cost,"he said.
This task now looks extremely difficult after France saw its 19th month of rising unemployment. The new year could soon see France breaking its own 1997 record of 3.2m unemployed.
Hollande said he did not underestimate the "serious difficulties" facing the government, admitting "this march forward has not been without bumps or setbacks" but insisting his reforms would get France "out of this crisis faster and stronger"
Saudi Arabia's riches conceal a growing problem of poverty
In a country with vast oil wealth and lavish royalty, an estimated quarter of Saudis live below the poverty line
Kevin Sullivan for the Washington Post
Guardian Weekly, Tuesday 1 January 2013 11.09 GMT
A few kilometres from the blinged-out shopping malls of Saudi Arabia's capital, Souad al-Shamir lives in a concrete house on a trash-strewn alley. She has no job, no money, five children under 14 and an unemployed husband who is laid up with chronic heart problems.
"We are at the bottom," she said, sobbing hard behind a black veil that left only her eyes visible. "My kids are crying and I can't provide for them."
Millions of Saudis struggle on the fringes of one of the world's most powerful economies, where jobs and welfare programmes have failed to keep pace with a population that has soared from 6 million in 1970 to 28 million today.
Under King Abdullah, the Saudi government has spent billions to help the growing numbers of poor, estimated to be as much as a quarter of the native Saudi population. But critics complain that those programmes are inadequate, and that some royals seem more concerned with the country's image than with helping the needy. In 2011, for example, three Saudi video bloggers were jailed for two weeks after they made an online film about poverty in Saudi Arabia.
"The state hides the poor very well," said Rosie Bsheer, a Saudi scholar who has written extensively on development and poverty. "The elite don't see the suffering of the poor. People are hungry."
The Saudi government discloses little official data about its poorest citizens. But press reports and private estimates suggest that between 2 million and 4 million of the country's native Saudis live on less than about $530 a month – about $17 a day – considered the poverty line in Saudi Arabia.
The kingdom has a two-tier economy made up of about 16 million Saudis, with most of the rest foreign workers. The poverty rate among Saudis continues to rise as youth unemployment skyrockets. More than two-thirds of Saudis are under 30, and nearly three-quarters of all unemployed Saudis are in their 20s, according to government statistics.
In just seven decades as a nation, Saudi Arabia has grown from an impoverished backwater of desert nomads to an economic powerhouse with an oil industry that brought in $300bn last year.
Forbes magazine estimates King Abdullah's personal fortune at $18bn, making him the world's third-richest royal, behind the rulers of Thailand and Brunei. He has spent government funds freely on high-profile projects, most recently a nearly $70bn plan to build four "economic cities", where government literature says "up to 5 million residents will live, work and play".
The king last year also announced plans to spend $37bn on housing, wage increases, unemployment benefits and other programmes, which was widely seen as an effort to placate middle-class Saudis and head off any Arab Spring-style discontent. Abdullah and many of the royals are also famous for their extensive charitable giving.
For many years, image-conscious Saudi officials denied the existence of poverty. It was a taboo subject avoided by state-run media until 2002, when Abdullah, then the crown prince, visited a Riyadh slum. News coverage was the first time many Saudis saw poverty in their country.
Prince Sultan bin Salman, a son of Crown Prince Salman, said in an interview that the government has acknowledged the existence of poverty and is working to "meet its obligations to its own people".
Prince Sultan said the Saudi government was "three to five years" away from dramatically reducing poverty through economic development, micro-lending, job training and creation of new jobs for the poor.
The Saudi government spends several billion dollars each year to provide free education and health care to all citizens, as well as a variety of social welfare programmes – even free burials. The government also provides pensions, monthly benefits and payments for food and utility bills to the poor, elderly, disabled, orphans and workers who are injured on the job.
Much of the welfare spending comes from the Islamic system of zakat, a religious requirement that individuals and corporations donate to charity 2.5% of their wealth; the money is paid to the government and distributed to the needy.
"Living in Saudi Arabia is like living in a charitable foundation; it is part and parcel of the way we're made up," Prince Sultan said. "If you are not charitable, you are not a Muslim."
Despite those efforts, poverty and anger over corruption continue to grow. Vast sums of money end up in the pockets of the royal family through a web of nepotism, corruption and cozy government contracts, according to Saudi and US analysts.Bsheer said some Saudi royals enrich themselves through corrupt schemes, such as confiscating land from often-poor private owners, then selling it to the government at exorbitant prices.
At the other end of the spectrum, many of the poorest Saudis are in families headed by women such as Shamir, who are either widowed, divorced or have a husband who cannot work. Under Islamic law, men are required to financially support women and their children. So women who find themselves without a man's income struggle, especially because the kingdom's strict religious and cultural constraints make it hard for women to find jobs.
The situation for many families, including Shamir's, is worse because they are "stateless" and not officially recognised as Saudi citizens, even though they were born in the country.
The UN estimates that there are 70,000 stateless people in Saudi Arabia, most of them descended from nomadic tribes whose traditional territory included parts of several countries. Their legal limbo makes it harder for them to receive government benefits.
Shamir, 35, lives in the shadow of a huge cement factory. The houses and streets are covered in a haze of smoke and dust. Her concrete house is down a narrow alley, where graffiti covers the cracked walls and litter piles up in the street. Her landlord is threatening to kick her out, and a local shop owner has cut off her credit for food and gas for her stove. She lives mainly on charity from wealthy Saudis who show up with food and clothes.
One recent morning, her children ran to the door to help unload food being dropped off by a middle-class Riyadh couple in an SUV. Shamir said donations help her pay for the electricity to run an air conditioner, but she does not have enough to buy school supplies for her children.
While middle-class Saudi youths have all the latest gadgets, Shamir's 14-year-old daughter, Norah, has never sent an email or seen Facebook. Her husband has a second wife who has another 10 children. Most of them are unemployed.
Shamir said her husband earned about $500 a month as a security guard until his health forced him to quit five years ago. She said she has tried in vain to find work as a seamstress or a cleaner.
"I've been patient all these years," Shamir said. "I hope that God will reward me with a better life for my children."
India’s government to roll out its cash-to-poor program in new year
By Agence France-Presse
Monday, December 31, 2012 15:32 EST
India’s government is to roll out Tuesday the first phase of its hugely ambitious plans to hand out cash to welfare claimants in what it considers a “game-changer” policy 18 months ahead of elections.
Finance Minister P. Chidambaram, speaking before the start of the direct cash transfers on January 1, said 20 out of India’s 629 districts would change over to the new system with a further 23 to follow in February and March.
In all, money for 23 separate welfare schemes — mostly education funds which were previously disbursed to third parties by the central government — will now be paid into the bank accounts of an estimated 200,000 beneficiaries.
“This is a game-changer for governance… this is a game-changer in how we account for money, it is game-changer in how the benefits reach the individual,” Chidambaram told a press conference on Monday.
For example, scholarships for higher education for low-caste students which were previously paid to a university would instead be transferred directly to the individual who would then pay for his or her studies.
The advantage is that the government can confirm the money has reached the intended claimant, without them having to pay bribes to secure their due or officials diverting the funds for other purposes.
Critics counter that the government has been too quick in pushing forward a pet project and is bound to face enormous implementation problems because of the complex technology and public administration required.
Chidambaram said that there was no intention at this stage to start handing out cash in place of subsidised food, fuel and fertiliser — three key benefits for the poor included in India’s $61-billion annual welfare budget.
“There will be glitches. There will be a problem here or a problem there. These will be overcome by our people standing out in the districts,” added Chidambaram, who said the cash scheme would be rolled out nation-wide.
Mexico and Brazil are considered the world leaders in cash welfare schemes, using their Progresa/Oportunidades and Bolsa Familia programmes respectively to target the poor.
Originally published Monday, December 31, 2012 at 5:03 AM
Bill to avert fiscal cliff heads to House
By ANDREW TAYLOR
Legislation to negate a fiscal cliff of across-the-board tax increases and sweeping spending cuts to the Pentagon and other government agencies is headed to the GOP-dominated House after bipartisan, middle-of-the-night approval in the Senate capped a New Year's Eve drama unlike any other in the annals of Congress.
The measure cleared the Senate on an 89-8 vote early Tuesday, hours after Vice President Joe Biden and Senate Republican Leader Mitch McConnell of Kentucky sealed a deal.
It would prevent middle-class taxes from going up but would raise rates on higher incomes. It would also block spending cuts for two months, extend unemployment benefits for the long-term jobless, prevent a 27 percent cut in fees for doctors who treat Medicare patients and prevent a spike in milk prices.
The measure ensures that lawmakers will have to revisit difficult budget questions in just a few weeks, as relief from painful spending cuts expires and the government requires an increase in its borrowing cap.
House Speaker John Boehner pointedly refrained from endorsing the agreement, though he's promised a vote on it or a GOP alternative right away.
The measure is the first significant bipartisan tax increase since 1990, when former President George H.W. Bush violated his "read my lips" promise on taxes. It would raise an additional $620 billion over the coming decade when compared with revenues after tax cuts passed in 2001 and 2003, during the Bush administration. But because those policies expired at midnight Monday, the measure is officially scored as a whopping $3.9 trillion tax cut over the next decade.
President Barack Obama praised the agreement after the Senate's vote.
"While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay," Obama said in a statement. "This agreement will also grow the economy and shrink our deficits in a balanced way - by investing in our middle class, and by asking the wealthy to pay a little more."
The sweeping Senate vote exceeded expectations - tea party conservatives like Pat Toomey, R-Pa., and Ron Johnson, R-Wis., backed the measure - and would appear to grease enactment of the measure despite lingering questions in the House, where conservative forces sank a recent bid by Boehner to permit tax rates on incomes exceeding $1 million to go back to Clinton-era levels.
"Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members - and the American people - have been able to review the legislation," said a statement by Boehner and other top GOP leaders.
Lawmakers hope to resolve any uncertainty over the fiscal cliff before financial markets reopen Wednesday. It could take lots of Democratic votes to pass the measure and overcome opposition from tea party lawmakers.
Under the Senate deal, taxes would remain steady for the middle class but rise at incomes over $400,000 for individuals and $450,000 for couples - levels higher than President Barack Obama had campaigned for in his successful drive for a second term in office. Some liberal Democrats were disappointed that the White House did not stick to a harder line, while other Democrats sided with Republicans to force the White House to partially retreat on increases in taxes on multi-million-dollar estates.
The measure also allocates $24 billion in spending cuts and new revenues to defer, for two months, some $109 billion worth of automatic spending cuts that were set to slap the Pentagon and domestic programs starting this week. That would allow the White House and lawmakers time to regroup before plunging very quickly into a new round of budget brinkmanship, certain to revolve around Republican calls to rein in the cost of Medicare and other government benefit programs.
Officials also decided at the last minute to use the measure to prevent a $900 pay raise for lawmakers due to take effect this spring.
Even by the dysfunctional standards of government-by-gridlock, the activity at both ends of historic Pennsylvania Avenue was remarkable as the administration and lawmakers spent the final hours of 2012 haggling over long-festering differences.
Republicans said McConnell and Biden had struck an agreement Sunday night but that Democrats pulled back Monday morning. Democrats like Tom Harkin of Iowa said the agreement was too generous to upper-bracket earners. Obama's longstanding position was to push the top tax rate on family income exceeding $250,000 from 35 percent to 39 percent.
"No deal is better than a bad deal. And this look like a very bad deal," said Harkin.
The measure would raise the top tax rate on large estates to 40 percent, with a $5 million exemption on estates inherited from individuals and a $10 million exemption on family estates. At the insistence of Republicans and some Democrats, the exemption levels would be indexed for inflation.
Taxes on capital gains and dividends over $400,000 for individuals and $450,000 for couples would be taxed at 20 percent, up from 15 percent.
The bill would also extend jobless benefits for the long-term unemployed for an additional year at a cost of $30 billion, and would spend $31 billion to prevent a 27 percent cut in Medicare payments to doctors.
Another $64 billion would go to renew tax breaks for businesses and for renewable energy purposes, like tax credits for energy-efficient appliances.
Despite bitter battling over taxes in the campaign, even die-hard conservatives endorsed the measure, arguing that the alternative was to raise taxes on virtually every earner.
"I reluctantly supported it because it sets in stone lower tax rates for roughly 99 percent of American taxpayers," said Sen. Orrin Hatch, R-Utah. "With millions of Americans watching Washington with anger, frustration and anxiety that their taxes will skyrocket, this is the best course of action we can take to protect as many people as possible from massive tax hikes."
Obama calls on House to follow Senate and back fiscal cliff deal
Senate votes 89-8 – two hours after midnight deadline – to pass legislation to block impact of tax increases and spending cuts
Rory Carroll and Ewen MacAskill in Washington and agencies
guardian.co.uk, Tuesday 1 January 2013 13.53 GMT
Barack Obama has called for the House of Representatives to follow the Senate's lead and pass the fiscal cliff deal "without delay" to extend tax cuts for middle-class Americans and raise tax rates on top earners.
The Senate voted 89-8 early on Tuesday to pass legislation to block the impact of across-the-board tax increases and spending cuts scheduled to take effect at the beginning of the new year. The legislation would prevent middle-class taxes from rising, and raise rates on incomes over $400,000 (£246,0000) for individuals and $450,000 for couples.
"While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay," Obama said in a statement after the Senate voted overwhelmingly to approve the legislation.
"There's more work to do to reduce our deficits, and I'm willing to do it. But tonight's agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans," he said.
The House is expected to vote on the bill later on Tuesday. It is due to reconvene at noon. While Democrats had little problem getting a bill through the Senate where they have a majority, the House is much more difficult, where the Republicans hold sway. The Obama administration hopes that a combination of Democrats and moderate Republicans will see it pass.
A deal was reached late on Monday night when the White House and Congressional leaders reached a compromise to avert some but not all of the austerity measures due to take effect on Tuesday.
Without a deal, every taxpayer in America faced imminent steep rises. These would be accompanied by deep cuts in federal spending programmes, ranging from defence to welfare, in particular unemployment benefits.
Because the House did not have chance to vote on the Senate deal, the fiscal cliff deadline technically passed at midnight. But if the agreement is approved later on Tuesday, any economic damage should be averted. The goal will be to have full Congressional approval before Wall Street reopens on Wednesday.
The Republican minority leader in the Senate, Mitch McConnell, hammered out the accord with vice president Joe Biden, after two months of talks between Obama and other Congressional leaders failed.
As well as the tax rises on wealthy Americans, the deal also delays automatic federal spending cuts for two months.
"Just last month Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans," Obama said at a hastily arranged news briefing. "Obviously, the agreement that's currently being discussed would raise those rates and raise them permanently."
Going over the "cliff" makes a deal more palatable to Republicans. With taxes automatically going up at midnight, Republicans in the House, ideologically opposed to tax rises, would in fact be voting to bring them down, at least for all but the top 2% of wealthiest taxpayers.
Under the deal, taxes will not go up for most Americans. Unemployment benefits, help with university tuition and tax credits for clean energy companies will all be protected.
Tax rises will be imposed only on households earning $450,000 a year or more, or individuals earning more than $400,000. The Democrats had been pushing for a $250,000 threshold while the Republicans had wanted the limit set at those earning $1m or more. But the deal postpones difficult decision on spending cuts for two months, meaning there will be more tough negotiations ahead.
Earlier on Monday Obama said his preference would have been for a "grand bargain" that would have dealt more broadly with America's economic problems, especially its huge deficit. But, showing his exasperation with Republicans who control the House, he said this was not possible with this Congress.
It is the first time Congress has met on New Year's Eve since 1995 when Washington was confronted by another Democratic-Republican economic showdown.
Obama, in spite of having won a second term, desperately needs this victory over the Republicans to prevent that second term being destroyed by repeated stand-offs with Republicans in Congress.
The danger for the Obama administration in the showdown was that a combination of sudden tax rises and government spending cuts would have a negative impact on the country's sluggish rise out of recession.
Fiscal cliff: what happens if Congress can't strike a deal?
The deadline is fast looming, and we're still some way from a deal. So how would tax, spending and the economy be affected?
guardian.co.uk, Friday 28 December 2012 18.12 GMT
The United States looks set to leap, eyes wide open, off the fiscal cliff, as an enormous $560bn package of tax increases and government spending cuts will land together on January 1. The fear is that taxes and spending cuts will hurt consumers and cause unemployment to rise, which in turn will slow down the US economy. The economy has made only meager progress toward growth in the past two years.
The fiscal cliff is a creation of the US Congress, which could not agree on a yearly budget that would also help the country reduce its deficit, or long-term debt, of $1.3tn. To resolve the impasse in August 2011, the Congress decided to push the big decisions off by 17 months. Now the 1 January deadline looms, and with little sign of a deal in Washington, so too do tax hikes and automatic spending cuts.
So what happens if the US begins the New Year by going over the fiscal cliff?
The tax hikes, which will hit 90% of Americans, come from the expiration of two stimulus measures: the Bush-era tax cuts and the payroll tax holiday. The Tax Policy Center estimates that the combined effect of the tax hikes will raise taxes by an incredible $500bn over the next decade, which means a $3,500 increase in the yearly tax bill for the average American.
The first and biggest tax hike is end of the so-called Bush tax cuts – a package of tax cuts for Americans of all income levels introduced by President George W Bush in 2001 to stimulate a sluggish economy after the technology boom ended, and which have been kept in place since then. The U.S. Treasury estimated that the elimination of the Bush tax cuts will raise taxes by $849bn over the next decade. That would work out to about $2,200 a year in increased taxes for the average middle-class family, according to the National Economic Council and the president's Council of Economic Advisors. It would also include halving the tax credit usually given to families with children to $500 per child.
The terms of the fiscal cliff mean that the Bush tax cuts will lapse for all Americans, even though both Republicans and Democrats agree that the tax cuts should stay in place for middle-class Americans making less than $250,000 in income a year.
Barack Obama Obama favours raising taxes on the highest earners. Photo: Charles Dharapak/AP
The two parties differ on whether the tax cuts should stay in place for Americans making more than that. Republicans support keeping the tax hikes in place for all Americans, including high-earning ones, while President Obama and Democrats favor raising the nation's income by taxing the wealthy.
The payroll tax holiday was a short-term stimulus measure imposed by President Obama in 2010 to encourage workers to spend more. Payroll taxes include several smaller taxes, meant to fund social programs. For instance, the US government charges a payroll tax of 6.2% on the paychecks of all Americans to fund Social Security pension payments to the elderly and disabled, and 1.45% to pay for Medicare health benefits. There are other, smaller taxes that go to pay for unemployment benefits.
These payroll taxes usually make up a whopping one-third of all the US government's revenues every year, or $870bn, according to to the Tax Policy Center. For the past two years, the payroll tax has only been 4.2%, but that will lapse with the fiscal cliff.
The Tax Policy Center estimates that letting the payroll tax lapse would cost American workers $115bn in taxes next year.
A major casualty would be the elimination of unemployment benefits to 2.1 million Americans who are long-term unemployed. Those benefits are due to expire, and Barack Obama has urged Congress to extend them as part of any deal. The benefits are worth about $30bn, according to the Congressional Budget Office, or just under one-third of all the unemployment benefits the government paid out last year. More Americans will lose their benefits over the course of the next few months.
At the same time as all these tax hikes and benefit cuts, there will also be a big slash in government spending, to the tune of $984bn cut from the federal budget between now and 2021.
Congress agreed last year that every year for the next 10 years, it would cut government spending by $110bn a year – half from defense spending, and half from batches of other government programs such as Medicare, which would take a 2% cut to pay doctors who provide healthcare. The cuts would also hit programs like farm subsidies, student loan support, national parks, and assistance to those living in low-income housing as well as big agencies including the Federal Bureau of Investigation and the Environmental Protection Agency.
The Department of Defense, which employs 3.2 million people and is the biggest employer in both the US and the world, would take the biggest hit in dollars terms. The president has already requested that Congress reduce the defense budget by at least $487bn, so the fiscal cliff cut of $550bn is not dramatically worse. Still, the chief worry is that the defense department will have to lay off employees, which will add to the nation's unemployment problem, as well as avoid signing new contracts for equipment and supplies. Many of those contracts are important to both big companies like Boeing and Northrup Grumman as well as a host of smaller, minority-owned businesses.
The economic impact
fiscal cliff boehner Can Boehner and Obama reach a solution? Photograph: J Scott Applewhite/AP
While the fiscal cliff seems dire, most lawmakers agree it is necessary to cut the federal budget. The Congressional Budget Office, or CBO, estimated that if the US continues on its current path, the country's debt will grow sharply to become equal to its economic output by 2021, and will be nearly double GDP by 2035. Right now, the country's debt is only 70% of its economic output.
The fiscal cliff would immediately cut the budget deficit almost in half. Whereas the US government was in $1.1tn of debt in 2012, the CBO estimated that would be only $612bn in 2013 after the fiscal cliff.
But many experts predict that the tax rises will cause US consumers to shut their wallets, to the tune of a 1.7% drop in spending, according to a prediction from the National Economic Council and the president's Council of Economic Advisors report. That spending slowdown, in turn, will mean less money flowing to businesses and a corresponding economic slowdown. Similarly, experts fear the government spending cuts will drag the US deeper into an unemployment crisis. The government is one of the country's biggest employers, and budget cuts will likely mean layoffs that will add to the tally of 12 million Americans currently without work.
Still, many economists argue that the fiscal cliff is more of a slope: the consequences will get worse as the year goes on. The immediate effect of the fiscal cliff is likely to be slight at first, for a number of reasons.
The first is that Americans won't feel the full hit of the tax hikes until early 2014, when they have to write their 2013 tax check to the government. That's when they will see their full tax bill. The payroll tax cut is smaller and thus less visible.
The second reason is that there is always the possibility of more delay, or even repeal: Congress can create a new budget, and new laws, at any time.
The third reason is that America is facing several other economic crises at the same time, the most dramatic of which is the battle to raise the debt limit. The US is predicted to default on its bills by March 2013, and the time before that is likely to be marked by panic in the stock market and downgrades to the value of US debt.
12/31/2012 04:30 PM
A Generation of Uncertainty: Companies Prepare for Future that Can't Be Predicted
By Dietmar Hawranek, Martin Hesse and Alexander Jung
The heads of major German companies admit that they have no idea what the future holds in store economically. Next year, the situation could rapidly improve or decline. For many companies, the goal is to become as flexible as possible to prepare for any eventuality.
There are people who should know what the future holds for the German economy -- for business trends and jobs, for exports and the euro, and for the price of oil and other commodities.
No, the focus here is not on economic analysts and their oracles, who are all too often off target. Instead, this story is about German CEOs who have managed to steer their companies so successfully that they apparently have a knack for predicting the future.
One of them has his office on the 22nd floor and, on a clear day, he can gaze all the way to the Alps. Norbert Reithofer, CEO of BMW, has led the Munich-based carmaker from one record sales year to the next. But before he talks about the economy, Reithofer prefers to tell his visitors about a swan -- a black swan.
People used to believe that there were only white swans. But then a black species of swan was discovered in Australia, Cygnus atratus. Reithofer has recommended that his fellow board members read "The Black Swan: The Impact of the Highly Improbable," by Nassim Nicholas Taleb. The book describes seemingly impossible events that nevertheless occur. Taleb contends that these so-called "black swan events" have an enormous impact because no one expects them -- such as the collapse of the Lehman Brothers investment bank in 2008, which sparked the global financial crisis.
"I don't know what will happen in 2013," says Reithofer. At a time of extremes, he says, predictions have become impossible. While some markets are on the verge of collapse, such as in Southern Europe, others promise robust growth, like Brazil, Russia, India and China. But he admits that even these promising regions can transform into crisis areas overnight -- for instance, if governments put the brakes on car sales with new laws or tariffs.
The Age of Unpredictability
Wolfgang Reitzle, CEO of the Munich-based Linde Group, agrees that the age of predictability is over. His company, which produces gases for the petroleum, chemical and food industries, has continuously increased its profits -- and its stock market value has jumped six-fold over the past 10 years. But Reitzle says: "It has never been more difficult than today to give a precise prediction of future economic development."
For nearly a decade preceding the Lehman Brothers' bankruptcy, economic development was characterized by high growth and minimal fluctuations. "Now it's the other way around," says Reitzle, who notes that there is currently only minimal growth, but this is accompanied by extreme turmoil on the markets.
It's not just companies like BMW and Linde that find it increasingly difficult to plan and make strategic decisions. Banks and insurance companies along with consumers and depositors now only have one certainty: There are no certainties anymore.
Today's economic situation is better than the prevailing mood, though -- at least according to a survey by the Cologne Institute for Economic Research. But what good does that do us? If companies and consumers react to the gloomy economic mood -- if they invest less and consume less -- they can cause the actual situation to rapidly deteriorate.
To make matters worse: While the worldwide network of financial markets and the Internet boosts growth during an economic boom, it also exacerbates downward trends during a crisis. Insecurity has become the prevailing state of mind in Western industrial societies.
Admittedly, there has been growing confidence over the past few weeks that the economy will recover in 2013. But major setbacks are possible at any moment -- for instance, Silvio Berlusconi could return to power in Italy, the conflict in the Middle East could escalate or growth in China could slow. And what will happen if President Barack Obama's administration simply fails to break the bitter deadlock over the US federal budget?
An Anti-Crisis Program
The question is thus no longer how much uncertainty there is, but rather how companies deal with this uncertainty.
BMW CEO Reithofer is transforming his company into an extremely flexible organism. The idea is to prevent the auto manufacturer from getting into serious difficulties due to unforeseeable events -- in other words, the emergence of black swans.
What happens, for example, if sales plummet by 20 percent within one year? Most companies would quickly find themselves in the red. They lay off workers and reduce investments. Later, they emerge weakened from the crisis. To prevent that from happening to BMW, Reithofer and his works council, the powerful body representing employees inside the company, have worked out an anti-crisis program.
At first glance, the name "anti-crisis" might sound as if the company simply intends to ban all economic downturns, but the program is actually based on a down-to-earth approach: In the future, the working hours of the BMW workforce will fluctuate to a greater degree in sync with sales. Workers will continue to receive their negotiated monthly salaries. Overtime hours will merely be credited to a working time account -- and deducted during production cutbacks.
Working three shifts a day, BMW can produce vehicles round the clock at its plants. That would be one extreme situation. At the other end of the scale, during a crisis, the company could completely shut down the plants for up to five weeks, without even a single employee losing their job or a portion of their wages. During this time off, workers have to take the majority of their annual vacation time. That's the price they have to pay to ensure that their jobs remain secure, even during a downturn.
Such an agreement offers an automotive company a number of advantages. During a crisis, it doesn't have to spend money on the severance payments and social plans that are required by German law when firing workers. And when the upswing comes, BMW still has its qualified personnel on board.
There are also plans for the carmaker's production plants to become just as flexible as its workers. If there is a change in demand, the assembly line can be quickly retooled to switch from producing SUVs to sedans, and vice versa. BMW also aims to become virtually immune to currency fluctuations and import duties. Consequently, the Munich-based company is expanding its plants in the United States and China, and building a new production site in Brazil.
In 2012, the best year in the company's history, the BMW boss launched a number of initiatives to prepare the carmaker for such an emergency situation. Reithofer argues that it's all part of good corporate management. When things are going so well, he says, the willingness to change is particularly weak, while the forces of inertia are particularly strong. "That demands a lot of energy," he admits.
Reliable Forecasts 'Virtually Impossible'
Reitzle takes a similar approach to managing the Linde Group. The CEO says that it's no longer possible to approve a five-year plan in the belief that the company will actually attain such goals. "That no longer works." He says today's companies need "an entirely different kind of flexibility".
This means that various divisions in a corporation have to be managed in highly diverse ways. In growth regions, he says it's important to play an offensive game and make major investments. By contrast, cutbacks are necessary in stagnating markets.
And everything has to be continuously better, faster and more efficient. The High Performance Organization (HPO) program has just been approved, and Reitzle is already introducing HPO II, which aims to save up to €900 million ($1.2 billion) over the next four years. Some executives are grumbling over this. Why now, they ask, when everything is going so well, should we become even better, and leaner?
Reitzle says he doesn't understand such an attitude. On the one hand, he says the corporation has to give itself sufficient leeway to take advantage of opportunities and buy out competitors -- such as the recent acquisition of the US company Lincare, which Linde purchased for some €3.6 billion. On the other hand, he says it's also necessary to work with early warning systems "to be prepared for the worst-case scenario." Ideally, he says, a company cannot be seriously threatened by any crisis, no matter how surprising it may be. Or, as Reitzle puts it: Linde will then be "indestructible."
And it's more than just a certain number of companies listed on Germany's DAX index of blue chip companies that are bracing themselves for the next crisis. Many small and medium-sized companies, Germany's so-called Mittelstand, are also preparing for an uncertain future. One such firm is Phoenix Contact.
The company is a "hidden champion," one of the many German global market leaders that very few people know. Working out of its headquarters in Blomberg in eastern Westphalia, it sets global standards for electrical connection technology. Phoenix Contact makes one-quarter of all the electrical connectors used in switch cabinets or other devices around the world.
Using a Lull to Gain an Edge
Over the past 12 years, the company has more than tripled its annual sales to over €1.5 billion. But now that growth is starting to falter. According to CEO Roland Bent, sales have declined in China and, not surprisingly, they are in a slump in Southern Europe. So what is the head of the company doing? He's investing.
In 2013, the company will open an experimental laboratory in Blomberg. It's also building a nearby center for trainees. There are 360 of them -- more than ever before. And, to top it all off, Phoenix Contact is investing tens of millions of euros in the development of a charging plug for electric cars.
Such perseverance -- one could also call it stubbornness -- is typical of this company. Even during the current crisis, it's sticking to the strategy that it thinks is right. Phoenix Contact is using the temporary lull to gain a technological edge on the competition.
During the recession in 2009, for instance, Phoenix engineers purchased a device that was revolutionary at the time: a 3-D printer to produce prototypes of pin and socket connectors. This allows the company to hand its clients a model made of plastic, instead of merely showing them an image on a monitor.
Phoenix Contact is consistently taking an anti-cyclical approach: While others are tightening their belts, the company is going on the offensive. This family-owned company can only afford to do this, though, because it is independent -- especially of shareholders and banks. Phoenix Contact doesn't require any outside capital.
In the current climate of uncertainty, many German global market leaders are adopting a mindset similar to that of executives at Phoenix Contact. They seek their own way through the maze of the financial and euro crises. A reliable forecast, says Phoenix Contact CEO Bent, is "virtually impossible" anyway.
The uncertainty over the future economic development has also rattled people who are looking to invest their money. These days, savings accounts produce virtually no interest. After deducting losses due to inflation, the account balance actually shrinks. Anyone who saves their money gets the short end of the stick. But what alternative remains?
Many people purchase an apartment, a house, precious metals or stocks. In some cases, prices have risen considerably. In urban centers such as Munich, Hamburg and Berlin, apartments and buildings are worth one-fifth more than they were two years ago. The price of gold has nearly doubled over the past five years. Last week, the DAX reached its highest level in five years.
But it can't go on like this forever. Responsible financial consultants admit to their clients that there are no safe tips for investments. They recommend diversifying and putting money into different types of investments. This at least makes it possible to spread the risk of suffering losses.
While investors, company CEOs, and small and medium-size companies increasingly accept that they no longer know how the economy will develop, the new sense of uncertainty has apparently made little impression on one group of professionals: economic analysts. They continue to make forecasts as if there were a mathematical formula to calculate the future. And they don't allow themselves to be bothered by the fact that their previous predictions were frequently off the mark.
Even the United Nations is warning of a worldwide recession. In its report "World Economic Situation and Prospects 2013," the UN writes: Economic growth could be close to zero. But the experts also predict that growth could be 2.4 percent, or even 3.8 percent, depending on the assumptions made. Everything is possible.
It's also interesting to note that the black swan has meanwhile extended its natural range of distribution. It's now endemic to New Zealand. A few specimens have even been sighted in the Netherlands.
Translated from the German by Paul Cohen