Asia Focus

Asia Week Focus

2006-10-24T14:57:00.000+02:00

East Asia

South Korea - An Unmitigated Disaster for Korea in Washington

The South Korean and U.S. defense chiefs in the Security Consultative Meeting in Washington on Friday agreed to complete the handover of wartime operational control of Korean forces to Seoul after Oct. 15, 2009 and no later than March 15, 2012. The two defense ministers in a joint communiqué urged North Korea to refrain from any further action that might aggravate tensions. U.S. Defense Secretary Donald Rumsfeld offered assurances of a firm U.S. commitment and immediate support to South Korea, including “continuation of the extended deterrence offered by the U.S. nuclear umbrella, consistent with the Mutual Defense Treaty.”

On the Proliferation Security Initiative we are so reluctant to join, Rumsfeld told reporters, "the (nuclear) programs of Iran and North Korea punctuate the importance of counter proliferations efforts of that type. And the Republic of Korea's an important country, and needless to say, we've expressed the hope that they will decide to participate (in the Proliferation Security Initiative)." In the background, a senior Pentagon official was denying reports from a South Korean briefing that Gen. Burwell Bell, the commander of the U.S. Forces Korea, was instructed to map out a detailed nuclear defense against nuclear threats from North Korea.

The SCM was so difficult this year that the joint communiqué had to be delayed by seven-and-a-half hours. The atmosphere was so serious, it is said, that the U.S. had to issue an ultimatum that if Seoul insisted any further, the meeting would end without a joint statement. It had a case. Seoul pestered Washington to concede on the timing of the transfer of wartime operational control of its forces and the offer of a nuclear umbrella, the main themes of the meeting, reversing its own demands of only a year or a few months ago. Seoul tried to shirk agreement on the timing of the troop control handover, after saying only recently, in the president’s words, that it could be done “any time.”

Faced with firm U.S. insistence on 2009, however, it kept putting it off, from Oct. 2010 to March 15, 2012. Had this administration and president not brought up the issue for propaganda purposes, pretending the joint exercise of wartime operational control infringed on our sovereignty and stoking anti-American sentiment by doing so, the U.S., for the sake of expanding the strategic flexibility of its forces the world over, would have asked for Korean cooperation and given additional security guarantees in return.

The same is the case with the issue of the U.S. providing South Korea with a more specific nuclear umbrella against North Korea. The government, goaded by the National Security Council under direct presidential jurisdiction, attempted to delete the phrase “nuclear umbrella” at last year’s SCM, but this year it asked for an even stronger guarantee. The U.S. said, what more do you want when you have the Korea-U.S. Mutual Defense Treaty? Seoul deserved the rebuff.

The government boasted it would get a U.S. promise of additional security if we are to exercise sole operational control of our troops. But the joint communiqué mentions only a firm U.S. commitment under the treaty and “immediate support.” It got no more than that for dismantling Combined Forces Command, which in time of war firmly guarantees the reinforcement of five fleets of aircraft carriers, 160 vessels, 2,500 aircraft and 690,000 troops.

Source: The Chosun Ilbo & Digital Chosun Ilbo

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China - Shanghai scandal 'implicates 50'

More than 50 people have been detained in Shanghai's widening pension fund corruption scandal, a Beijing-funded Hong Kong newspaper has reported. Several senior Shanghai officials and businessmen have already been implicated in the alleged misuse of the multi-million dollar fund. One of the country's richest men, Zhang Rongkun, was arrested at the weekend.
On Sunday, President Hu Jintao said the Communist Party was determined to root out corruption.

"We are stepping up efforts to improve the rule of law and a culture for clean and honest government, and strengthen the checks and supervision on power," he said.
He also appealed for party unity at a rare joint public appearance with his predecessor Jiang Zemin.

The first high-profile head to roll in the pensions scandal was Chen Liangyu, an ally of Mr Jiang who was dismissed from his post as chief of the Communist Party in Shanghai last month.

Other leading figures tainted by the case include the head of Formula One in China, Yu Zhifei, who has been questioned by the authorities, and the country's chief statistician Qiu Xiaohua who was dismissed from his post.
Anti-corruption investigation.

Zhang Rongkun, believed to be the 16th richest man in China with a $600m fortune, was arrested by "relevant law enforcement authorities", his own firm Fuxi Investment said in a brief statement on Saturday.

Hong Kong's Ta Kung Pao newspaper reported on Monday that more than 50 other businessmen and government officials were being held over the scandal. It did not give any further details.

As the anti-corruption investigation continues, it seems likely the number of people involved will grow still further, the BBC's Quentin Sommerville in Shanghai says.
More than 100 central government investigators have been sent to Shanghai to investigate money that has disappeared from the city's 10 billion yuan ($1.25 billion) social security fund. The funds were allegedly used to make illegal loans and investments in real estate and other infrastructure deals.
The corruption scandal demonstrates the problems facing those who wish to end graft in China, our correspondent says.
The courts do not operate independently and almost all of those detained in Shanghai have not been seen or heard of since, he adds. There is little independent oversight. Auditors and corruption investigators are limited and the usual checks and balances that expose corruption - such as a free press and regular open elections - do not exist.

Shangai pensions scandal
- Labour and social security chief, Zhu Junyi, sacked
- District governor, Qin Yu, sacked
- City's top Communist Party official, Chen Liangyu sacked
- Municipal committee's vice-secretary general, Sun Luyi, sacked
- Head of city's F1 motor racing circuit, Yu Zhifei, questioned
- Head of China's National Bureau of Statistics, Qiu Xiaohua, (pictured) sacked
- One of China's richest men, Zhang Rongkun, arrested

Source: BBC News

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North Korea - The Internet Black Hole That Is North Korea

The tragically backward, sometimes absurdist hallmarks of North Korea and its leader, Kim Jong-il, are well known. There is Mr. Kim’s Elton John eyeglasses and strangely whipped, cotton-candy hairdo. And there is the North Korean “No! Yeeesssss ... No! O.K. Fear the tiger!” school of diplomacy.

A newer, more dangerous sort of North Korean eccentricity registered around 4.0 on the Richter scale earlier this month — a nuclear weapon test that has had the world’s major powers scrambling, right up through last week, to develop a policy script that would account for Mr. Kim’s new toy.

But whatever the threat — and however lush the celebrations broadcast on state-controlled television from the streets of Pyongyang in the days afterward — the stark realities of life in North Korea were perhaps most evident in a simple satellite image over the shoulder of Defense Secretary Donald H. Rumsfeld during an Oct. 11 briefing. The image showed the two Koreas — North and South — photographed at night.

The South was illuminated from coast to coast, suggesting that not just lights, but that other, arguably more bedrock utility of the modern age — information — was pulsating through the population.

The North was black.
This is an impoverished country where televisions and radios are hard-wired to receive only government-controlled frequencies. Cellphones were banned outright in 2004. In May, the Committee to Protect Journalists in New York ranked North Korea No. 1 — over also-rans like Burma, Syria and Uzbekistan — on its list of the “10 Most Censored Countries.”

That would seem to leave the question of Internet access in North Korea moot.
At a time when much of the world takes for granted a fat and growing network of digitized human knowledge, art, history, thought and debate, it is easy to forget just how much is being denied the people who live under the veil of darkness revealed in that satellite photograph.

While other restrictive regimes have sought to find ways to limit the Internet — through filters and blocks and threats — North Korea has chosen to stay wholly off the grid.

Julien Pain, head of the Internet desk at Reporters Without Borders, a Paris-based group which tracks censorship around the world, put it more bluntly. “It is by far the worst Internet black hole,” he said.

That is not to say that North Korean officials are not aware of the Internet.
As far back as 2000, at the conclusion of a visit to Pyongyang, Madeleine K. Albright, then secretary of state, bid Mr. Kim to “pick up the telephone any time,” to which the North Korean leader replied, “Please give me your e-mail address.” That signaled to everyone that at least he, if not the average North Korean, was cybersavvy. (It is unclear if Ms. Albright obliged.)
These days, the designated North Korean domain suffix, “.kp” remains dormant, but several “official” North Korean sites can be found delivering sweet nothings about the country and its leader to the global conversation (an example: www.kcckp.net/en/) — although these are typically hosted on servers in China or Japan.

Mr. Kim, embracing the concept of “distance learning,” has established the Kim Il-sung Open University Web site, http://www.ournation-school.com/ — aimed at educating the world on North Korea’s philosophy of “juche” or self-reliance. And the official North Korean news agency, at http://www.kcna.co.jp/, provides tea leaves that are required reading for anyone following the great Quixote in the current nuclear crisis.

But to the extent that students and researchers at universities and a few other lucky souls have access to computers, these are linked only to each other — that is, to a nationwide, closely-monitored Intranet — according to the OpenNet Initiative, a human rights project linking researchers from the University of Toronto, Harvard Law School and Cambridge and Oxford Universities in Britain.

A handful of elites have access to the wider Web — via a pipeline through China — but this is almost certainly filtered, monitored and logged.

Some small “information technology stores” — crude cybercafes — have also cropped up. But these, too, connect only to the country’s closed network. According to The Daily NK, a pro-democracy news site based in South Korea, computer classes at one such store cost more than six months wages for the average North Korean. The store, located in Chungjin, North Korea, has its own generator to keep the computers running if the power is cut, The Daily NK site said.
“It’s one thing for authoritarian regimes like China to try to blend the economic catalyst of access to the Internet with controls designed to sand off the rough edges, forcing citizens to make a little extra effort to see or create sensitive content,” said Jonathan Zittrain, a professor of Internet governance and regulation at Oxford.

The problem is much more vexing for North Korea, Professor Zittrain said, because its “comprehensive official fantasy worldview” must remain inviolate. “In such a situation, any information leakage from the outside world could be devastating,” he said, “and Internet access for the citizenry would have to be so controlled as to be useless. It couldn’t even resemble the Internet as we know it.”

But how long can North Korea’s leadership keep the country in the dark?
Writing in The International Herald Tribune last year, Rebecca MacKinnon, a research fellow at the Berkman Center for Internet and Society at Harvard, suggested that North Korea’s ban on cellphones was being breached on the black market along China’s border. And as more and more cellphones there become Web-enabled, she suggested, that might mean that a growing number of North Koreans, in addition to talking to family in the South, would be quietly raising digital periscopes from the depths.

Of course, there are no polls indicating whether the average North Korean would prefer nuclear arms or Internet access (or food, or reliable power), but given Mr. Kim’s interest in weapons, it is a safe bet it would not matter.
“No doubt it’s harder to make nuclear warheads than to set up an Internet network,” Mr. Pain said. “It’s all a question of priority.”

By Tom Zeller Jr.

Source: NYTimes

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South Asia

Pakistan - Musharraf amends ‘bounty’ portion: Urdu translation of autobiography

President Gen Pervez Musharraf has made an amendment to his controversial autobiography In the Line of Fire dropping the portion relating to payment of millions of dollars to Pakistan by CIA for arresting and handing over Al Qaeda suspects to the United States.

The alteration has been included in the book’s Urdu edition titled Sub Sey Pehlay Pakistan that was launched here on Saturday.

The amendment has been made in the opening paragraph of chapter 23 titled Taaqub (Manhunt) that highlights the role Pakistan played in capturing Al Qaeda suspects after 9/11 attacks on the US.

Pointing to the fact that Pakistan had captured 689 Al Qaeda members and handed over 369 of them to the US, the president notes on page 237 of the first edition: “We have earned bounties totalling millions of dollars. Those who habitually accuse us of ‘not doing enough’ in the war on terror should simply ask the CIA how much prize money it has paid to the government of Pakistan.”

In the Urdu edition, the reference to having “earned bounties totalling millions of dollars” and prize money has been dropped.

Within two days of his book launch in New York President Musharraf had admitted having made a ‘mistake’ and indicated that an amendment was in order.

“That is my error. It doesn’t come to government of Pakistan. I should not have written that and I’m going to amend it in the future copy certainly,” he told journalists in New York on Sept 27.

His response to a question whether those dollars were staying in Pakistani economy was: “The money is certainly in Pakistan’s exchequer, in other words in Pakistan, its not anywhere.”

However, on being prompted by Foreign Minister Khurshid Kasuri, the president corrected himself, saying: “In our economy. Not in the exchequer.”

The Urdu version published by Ferozsons is a hard-bound edition containing 411 pages and priced at Rs495. Initially 20,000 copies have been published.

It is believed that Sehba Musharraf and president’s former deputy military secretary Brigadier Asim Saleem Bajwa, who now commands the 111 Brigade, played an active role in the publication of the Urdu edition.

The translation itself is the work of the president’s brother-in-law. Apparently, it was on their advice that the president changed the title which according to him made more sense in the Pakistan context and as he put it: “Pakistan always remains foremost in mind.”

President Musharraf has repeatedly appreciated the ‘hard work and loyalty’ of Brigadier Bajwa, the man without whom he says his book would not have been possible.

While expressing his gratitude for Mr Bajwa again on Saturday at the book launch, the president said: “He has just been promoted.” However, he hastened to add: “But that’s not because of the book!”

By Qudssia Akhlaque

Source: DAWN Group of Newspapers

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Nepal - UN makes Nepal Maoist food pledge

The UN World Food Programme (WFP) has proposed to feed Nepal's Maoist rebels and their families once a peace deal has been signed with the government.
The WFP said it would begin implementing the program as soon as the two sides reach an agreement.

The multi-party government has been negotiating with the rebels since a ceasefire came into force in April.

In recent years, the WFP has been active in impoverished, food-deficit districts in remote areas of the west.

Emergency food
"We are eagerly waiting for the outcome of the ongoing peace process before we begin the operation," WFP Resident Representative Richard Ragan told the Kantipur newspaper.

He said that the package would benefit thousands of rebel fighters and their families, as well as tens of thousands of other people who have been displaced by the insurgency.

Mr Ragan said the UN has already made a policy decision to put the plans into effect.
The UN secretary general has appointed a special representative to oversee the nascent peace process.

UN officials say that over 225,000 people from 10 western districts have benefited from a recent emergency food aid programme in western Nepal.

The BBC's Surendra Phuyal in Kathmandu says that peace talks between the Maoists and the government are now at a crucial stage.

Our correspondent says that the two sides are expected to address the issue of integrating 15,000 to 20,000 armed rebel fighters into the national army and police forces.

They also have to find a solution to the rebels' insistence that they should have the right to bear arms.

More than 13,000 people have been killed and tens of thousands of people have been displaced - mainly from the insurgency-hit districts of western and eastern hills - throughout the 10-year-old insurgency.

Source: BBC News

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Sri Lanka - Sri Lanka parties in talks pact

The Sri Lankan President, Mahinda Rajapakse, has signed an agreement with the main opposition party for a common policy in relation to the Tamil Tigers. The deal comes ahead of talks with the rebels next weekend in Geneva. The two main parties have historically been on differing ends of the political spectrum, but have now agreed to work together on key issues.

Mr Rajapakse's Sri Lanka Freedom Party (SLFP)-led governing coalition needs opposition support.

Independent homeland
It has held discussions with the hardline anti-Tamil Tiger opposition but failed to come to a deal. The priority issue is the conflict with Tamil Tiger rebels. The main opposition United National Party (UNP) has in the past supported talks with the rebels as well as a devolution of power. The Tigers have been fighting for an independent homeland for more than two decades. At least 2,000 people - troops, rebels and Tamil, Sinhalese and Muslim civilians - have been killed in Sri Lanka since late last year, military and truce monitors say.

By Dumeetha Luthra

Source: BBC News, Colombo

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India - Why Afzal shouldn't hang

For centuries, criminals in most countries used to be publicly executed to the applause of mobs drunk with revenge. It's only in the 20th century that capital punishment stopped being a spectacle.

The death penalty revolted many citizens and stands abolished in nearly 130 countries. However, as we move into the age of terrorism and counter-terrorism, revenge and retribution are coming back.

The Latin American writer Eduardo Galeano says: "In a world that prefers security to justice, there is loud applause whenever justice is sacrificed at the altar of security." Galeano believes executions have "a pharmaceutical effect" on the elite. Pharmacy is derived from the Greek pharmakos - "humans sacrificed to the Gods in times of crises."

A section of Indian society wants just such pharmaceutical relief through the hanging of Mohammed Afzal for the Parliament House attack of 2001.

A medieval lynch mob is being mobilised through lurid media stories which say the families of the victims of the attack cannot get justice unless Afzal is hanged. There must be no clemency for a traitor. He must die.

It is unspeakably sad that rank blood-thirst and chauvinist ultra-nationalism are disguised as an innocuous demand for justice. All manner of arguments are cited to claim that the president has no power to pardon Afzal.

However, former Solicitor General TR Andhyarujina has clarified that the power of pardon is not an individual act of grace, but is an integral part of the criminal justice system and India's constitutional scheme. It doesn't interfere with the courts.

The president is entitled to re-appraise a case, and come to a conclusion different from the court's. The purpose of the clemency power is to ensure that "the public welfare would be better served by inflicting less punishment than what the judgment has fixed."

President Kalam, acting on the cabinet's advice, should take a fresh look at Afzal's case. It is his constitutional and moral duty to ensure that there are no grey areas in the evidence on which Afzal was convicted.

Consider the facts. Afzal was not the mastermind or chief conspirator in the Parliament attack. He didn't commit murder or participate in the attack. Yet, he was sentenced to death for murder (Sec 302 of the Indian Penal Code), waging war against the state (Sec 121 and 121A), and criminal conspiracy (Sec 120A & B).

The punishment is, prima facie, excessive and disproportionate.

The investigation was completed in just 17 days by Assistant Commissioner Rajbir Singh of the Delhi police's anti-terrorism "Special Cell." A self-confessed "encounter specialist," Singh stands disgraced for extortion and corruption.

Huge gaps remain in the sequence of events, links between Afzal and the claimed masterminds (Jaish-e-Mohammed's Masood Azhar and Ghazi Baba), and the attackers' identity.

The biggest gaps pertain to the role of the J&K police's Special Task Force to whom Afzal, a former JKLF militant, surrendered. Afzal claims - without being contradicted - that he met Tariq Ahmad at an STF camp. Tariq took him to a police officer, Dravinder Singh, who introduced him to Mohammad alias Burger, named as the leader of the attackers.

Afzal brought Mohammad to Delhi, and helped him buy the car used in the attack. But he says Dravinder and Tariq ordered him to do this. Here, the investigation goes cold. There's no trace of Tariq or Dravinder. In the murky world of Kashmir's insurgency-counter-insurgency, it is hard to pinpoint crime and complicity. And it's a mystery why the police knew nothing about the activities of a closely-monitored surrendered militant. Circumstantial evidence of Afzal's involvement in conspiracy hinges on the recovery of explosives, and crucially, on records of cell phone calls to the five attackers.

However, the police couldn't explain why they broke into Afzal's house to recover explosives during his absence - when the landlord had the key. The cell phone record traced several calls from the five men to number 98114.89429 - allegedly belonging to an instrument seized from Afzal. The instrument had no SIM card. The only identity mark was its IMEI number, unique to each instrument. How did the police discover the IMEI number? There are only two ways: open the instrument, or dial a code and have the number displayed. But the officer certifying the recovery swore that he neither opened nor operated the instrument.

Besides, the claimed dates of purchase of the phone (December 4) and its first recorded operation (November 6) don't match! This large grey area in the evidence puts a big question-mark over the conclusion that Afzal must be awarded the severest punishment.

Afzal's personal deposition describes how he was drawn into secessionist militancy, but got disillusioned. After surrendering he was harassed and subjected to extortion by the STF. The picture that emerges is that of a person who isn't beyond reform.

Afzal's death sentence violates the Supreme Court's guidelines, which say that sentence should be awarded in "the rarest of rare cases" - when a murder is extremely brutal, grotesque or diabolical, or targets a community or caste. This doesn't apply to Afzal.

The judiciary has often distinguished between an act's commission and conspiracy to commit it. Nathuram Godse was hanged for Gandhiji's assassination, but not his fellow-conspirator Gopal.

In the Purulia arms-drop case - India's worst-ever security breach - the state commuted the life sentence of six men. Five ethnic-Russian Latvians were freed at the Russian government's request. Peter Bleach was freed in 2004 at the urgings of British Prime Minister Tony Blair.

The reasons for releasing them involved political relations with foreign governments.
In Afzal's case there are more persuasive reasons. The government must apply the "public welfare" test and take a statesman-like view based on a compassionate and humane vision.

Finally, we must recall the all-important moral argument against capital punishment. It violates a principle at the heart of any civilised society - prohibiting the planned killing of a person. Capital punishment does not deter heinous crime. All legal systems are fallible. It's immoral to extinguish a human life by assuming the opposite.

By Praful Bidwai is an eminent Indian columnist.

Source: The Daily Star

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Southeast Asia

Burma - Burma discusses version of democracy

Burma has been ruled by the military for 44 years, but that could be about to change if the lofty goals set by the country's National Convention are met. Delegates to the convention, which has been meeting for most of this month, said they expected it to finish its work on a new constitution by next year - thereby completing the first stage of the military's so-called "seven stage path to democracy".

This year foreign journalists were given rare access to the opening stages of the meeting.

To get to the Nyaung Hna Pin camp, where the convention is taking place, we drove through flat, flooded fields, a landscape akin to a tropical Holland.
Armed soldiers guarded the entrance, and gave our bus a cursory check for possible bombs.

This might be where Burma's political future is being mapped out, but ordinary Burmese have not been invited.

Only the 1,086 delegates, and their military guards, get to see the process first hand. The delegates are confined to the camp for weeks at a time, with only a karaoke bar and a small outdoor cinema for entertainment.
Unusual 'democracy'

The delegates arrived at the opening session of the convention in full ethnic finery - a requirement to give the impression that the meeting represents all of Burma's people. Inside the hall, I saw crudely printed signs for other groups, labelled Peasants, Workers, Intellectuals and Intelligentsia.

But almost every one of the delegates has been hand-picked by the military, and none felt comfortable talking to foreign journalists.

"It might not produce a democracy that you are used to," Professor Tun Aung Chain told me. "It could be quite different, according to the present situation in the country".

Brigadier General Kyaw Hsan, the information minister, was less equivocal.
"There are 30 countries that still have unelected members of parliament," he said, "Even in Britain, your upper house has unelected members".

I pointed out that in Britain, these were not serving officers in an army that has run the country for nearly half a century, but he brushed that point aside.
The military is running the National Convention, and intends to keep a deciding role over any future government. One clause in the new constitution which is not negotiable is that the president must have had at least 15 years of military service.
A thorn in the side of the military's plans is the National League for Democracy (NLD), the party led by Aung San Suu Kyi, which won more than 80% of the seats in the last election 16 years ago.

It has boycotted the National Convention since 1995, saying it does not want to take part in a process so dominated by the armed forces. In the opening speech at the meeting - against a monumental backdrop reminiscent of party congresses from the old Soviet Union - the NLD got no mention from General Thein Sein, the fourth-ranking officer in Burma who is running the convention.

He merely referred to "destructive elements" whom, he claimed, were using terrorist methods to undermine the convention.

His speech was peppered with claims of dramatic improvements that the country has supposedly enjoyed under military rule. Dialogue with the NLD is ruled out by the generals. They accuse the party of being stubborn, confrontational and under the influence of "foreign powers".

'Accelerating impoverishment'
There is a very different reality away from the remote world of the convention. Rangoon is a dilapidated city, its once magnificent colonial buildings crumbling, and even more recent concrete towers showing signs of neglect. The city feels several decades behind those in neighbouring countries. If there has been any economic progress over the past decade, it is impossible to see.

"The situation is one of accelerating impoverishment for a significant proportion of the population," I was told by Charles Petrie, who heads the UN assistance operations in Burma.

The NLD headquarters in Rangoon seems afflicted by the same decay that you see elsewhere in the city.

The building is dark and quiet. Going there requires some nerve, even as a journalist on an officially-approved visa, as there are military spooks watching and taking note of everyone going in and out.

How much more intimidating it must be for Burmese citizens to go there.
But there are always groups of people gathered at the office, either for political discussions or other classes, surrounded by piled up chairs, bundles of fading documents, and walls covered in portraits of Aung San Suu Kyi - who is just a stone's throw away, kept in isolation in her house by the military.
I have to remind myself that people have been jailed, tortured and killed just for supporting the NLD.

"We are still functioning," said NLD spokesman Henthe Myint. "You can see by the military's anxiety to discredit us that we are still a political force in this country."

It is all too obvious that the years of harassment have ground the NLD down, limiting it to just a token presence in most of the country.

But that shabby office in Rangoon still felt more real than the stage-managed performance we were shown at the National Convention.
The military is confident it will have a new constitution within a year - but it will be a document over which the Burmese people will have no say.

By Jonathan Head BBC South East Asia correspondent

Source: BBC News

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Timor LoroSae - Outbreak of violence halted in East Timor

Dili, East Timor United Nations peacekeepers were brought in Sunday to restore order to the capital of East Timor when fighting broke out between rival ethnic gangs after the discovery of two mutilated bodies.

The fighting - mostly stone-throwing - took place at the Comoro market but was halted by the arrival of about 100 peacekeeping troops. No arrests were made.

A group from the eastern part of the country became incensed after bodies of two men from the Baucau and Lautém districts were found with their arms, legs and heads removed and placed in sacks.

The two were believed to have been killed after approaching a checkpoint set up by a group of western youths in the Aimutin area of Dili.

"We just cannot accept that our friends were killed like animals, like dogs," said João da Costa, 21, a member of the eastern district group, which had set up a checkpoint of its own near the market.

A UN peacekeeper, Emir Bilget, speaking through an interpreter, asked the eastern group to take down the blockade of stones and wood and allow the police to investigate.

"I hope you calm down. The police already know who killed your friends, and now we are seeking testimony from you so that the perpetrators can be taken to court," Bilget said.

Australian soldiers, who lead the UN contingent, arrived and immediately combed the area.

They aborted an attempt to detain one man there after protests from youths shouting, "Australia go out, Australian no good, not neutral."

The peacekeeping force, which also includes soldiers from New Zealand and Malaysia, was deployed in East Timor in May after large sections of the military deserted, but it has struggled to contain sporadic eruptions of violence. The latest fighting follows tit-for-tat murders this month that claimed the lives of two young men - one each from the eastern and western parts of the country.

Source: Agence France - Presse

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Vietnam - Warning on Viet corals

Vietnamese marine scientists warn that one of the country's premier coral reefs has been nearly destroyed by fishing practices using explosives and poison. Up to 85 percent of corals had died around Co To Island, near the World Heritage-listed island seascape of Halong Bay, warned the National Agency of Aquatic Resources Protection and a group of oceanographers.

Besides dynamite and cyanide fishing, corals were also being crushed by ship anchors and smothered by seaweed that has proliferated due to overfishing, said Chu Tien Vinh, head of the agency.

The group of researchers proposed the Quang Ninh provincial fisheries department ban fishing and prevent ships from anchoring around the Co To archipelago.
Vietnam, with a 3,200-kilometer coastline, has boasted a rich and diverse marine ecology with 1,100 square kilometers of reefs, but the World Resources Institute has warned that over 95 percent of it is severely threatened.

Destructive human activities include overfishing, coastal developments for tourism and industry, pollution and sedimentation, and fishing practices such as drift net fishing that scours the ocean floor. Vietnamese scientists last week also called for the setting up of a marine reserve around southern Phu Quoc island, to save the coral and marine life around the island that is now being rapidly developed for tourism.

Source: Agence France – Press

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Central Asia

Iran - Iran invites West to return to nuclear talks

Foreign Minister Manuchehr Mottaki on Saturday invited the major Western powers to return to the negotiating table to resolve the dispute over Iran’s nuclear program.
“We advise them to return to negotiations and not to retry the path that they have already tried,” Mottaki told reporters at a joint press conference after a meeting with Belarusian Foreign Minister Sergei Martynov.

Mottaki stated that Tehran sees no reason for suspending uranium enrichment.
“Enrichment of uranium by the Islamic Republic is legal and one of its rights under the nuclear Non-Proliferation Treaty (NPT),” he said.

All the inspections of Iran’s nuclear facilities indicate no deviation toward weaponization, he added.

Despite intensive talks between Iran and the International Atomic Energy Agency, the European Union on October 17 referred Iran’s nuclear dossier back to the UN Security Council, which is now working on a resolution that would impose economic sanctions against Tehran.

Measures like the Security Council action are tools used to deprive the Iranian people of their rights, Mottaki observed.

“We regard comparing our peaceful nuclear activities with any kind of nuclear weapons test as unacceptable and unrealistic,” he added.

Supreme National Security Council Secretary Ali Larijani and European Union foreign policy chief Javier Solana held a series of talks last month to find a solution to the crisis.

Mottaki expressed regret that the West did not handle the Larijani-Solana talks constructively but added that Iran still believes that the negotiations can continue.
“We hope the Security Council comes to its senses and lives up to its responsibilities. Unfortunately, the council’s record over the past year has not been satisfactory,” he said.

“However, we hope the issue returns to the International Atomic Energy Agency.” Accusations that Iran’s nuclear program is a threat to peace are only being made by the United States to help it reach its political goals, but Tehran expects the Europeans to pursue the issue logically and independently, the Iranian foreign minister said.

Mottaki stated that he and the Belarusian foreign minister discussed issues of mutual interest and prepared the documents for bilateral agreements which are to be finalized during President Mahmud Ahmadinejad’s next visit to Belarus.

He also thanked Belarusian officials for supporting Iran’s right to peaceful nuclear technology. Martynov called his negotiations with Iranian officials positive, saying, “During the talks we discussed international and regional issues and economic, financial, and trade cooperation.”

Tehran and Minsk are in consensus on many international issues, especially on the idea that the world should be multilateral and not unilateral, he said.
Belarus also believes that Iran, as an NPT signatory, has the right to conduct any nuclear activity authorized by the treaty, Martynov noted.

Source: Tehran Times

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Afghanistan - UN warns of Afghan food shortage

Nearly two million people in southern Afghanistan will need food aid this winter because of drought, the UN and Afghan government have warned. They have appealed for more than $40m in emergency funds, in addition to an earlier appeal for $76m. Afghanistan is facing a shortfall in its wheat harvest just after beginning to recover from an earlier drought. The crop failure comes as fighting continues in the south between Nato-led troops and the Taleban.

The food shortage is being blamed on intensified fighting against Taleban insurgents in the troubled southern provinces and expanding cultivation of opium poppies instead of food.

In July, UK charity Christian Aid warned that millions of people in Afghanistan faced starvation after a drought destroyed crops. A survey of 66 villages suggested farmers in the worst affected areas had lost all their produce. Less than half of the $76m in emergency funds sought in July have been received so far.

Source: BBC News

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Australia – Telstra stake purchased by Japanese investors

The Australian government sold a 435 million Australian dollar, or $330 million, stake in Telstra, the nation's biggest telephone company, to individual Japanese investors, Finance Minister Nick Minchin of Australia, said Monday.

A minimum of 120 million shares will be allocated to Japanese investors, Minchin said. The government said Sunday that it had sold half of a planned 8 billion dollar offering in Telstra through stockbrokers and financial planners.

"This is another pleasing indication of the level of interest by the investing community," Minchin said in a statement released in Canberra. "Japanese investors like stocks that offer a good yield."

The government, which owns more than half of Telstra, pitched an offer with inducements like a discount and free shares as it tries to sell a stock that has plunged more than 50 percent since 1999. Investors in the share sale, dubbed T3, get a dividend yield of 14 percent in the first year, more than 10 times the yield of Japanese five-year government bonds.

Overseas investors own 7 percent of shares in Telstra, compared with 73 percent for Telecom Corporation, the largest New Zealand telephone company.

Prime Minister John Howard of Australia on Aug. 25 retreated from plans to sell the government's entire 51.8 percent stake in Telstra, currently worth 23.4 billion dollars, after a slump in earnings and a yearlong clash with management over regulations.

The rest of the government's stake will go into the Future Fund, an investment pool to cover pension liabilities for politicians, defense workers and bureaucrats.

The government has left open the option of increasing the share sale by 1.2 billion dollars through an over-allotment option, known as a greenshoe.

The public offering may be increased to 12 billion dollars if demand is sufficient, the Financial Times reported last month, citing unidentified people close to the sales team.

ABN AMRO Holding, Goldman Sachs JBWere and UBS were hired last year to manage the share sale.

The chief executive of Telstra, Sol Trujillo, cut his earnings forecasts earlier this month, due to rules that allow rivals cheaper access to his network.

Annual growth in earnings before interest, tax, depreciation and amortization are expected to be about 2.5 percent, down from a previous forecast of 5 percent.

Telstra stock has fallen 28 percent since Trujillo took over in July 2005 as he clashed with the government and regulators and cut earnings forecasts. At the same time, customers have shifted from high-margin landline phones to less profitable wireless and Internet services.

By Fergus Maguire

Source: Bloomberg News

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Written: by LuisB

Asia Week Focus

2005-10-06T13:07:00.000+02:00

GEOPOLITICS - INDIA / PAKISTAN

A gradualist approach on Indo-Pakistan issues
India and Pakistan will strive to arrive at a "common understanding" on demilitarisation of the Siachen glacier before the next round of the composite dialogue in January.

A Joint Statement issued at the end of the two-day talks between External Affairs Minister K. Natwar Singh and his Pakistani counterpart, Khurshid Mahmud Kasuri, here on Tuesday suggested a forward movement on Siachen. It listed a number of steps contemplated by both sides to take bilateral ties to a new level.

Siachen, considered a possible confidence-building measure (CBM), is bogged down in differences over the conditions for withdrawal of troops from the glacier as per the 1989 understanding. India's insistence on the demarcation of areas under control by both sides is not acceptable to Pakistan. Islamabad's stand is that withdrawal has to be unconditional and it is not prepared to certify Indian "aggression."

Integrated approach
The latest understanding is to take an "integrated" approach. It involves six identified issues related to the glacier and working towards a common understanding before Siachen is taken up as one of the eight subjects under the third round of the composite dialogue. The six areas are: from where the troops are moving; where they will move to; how to define the areas of disengagement; a regime to monitor the implementation of disengagement; a verification mechanism on dos and don'ts on the glacier and what is to be done about NJ 9842.
According to a senior official privy to the two-day parleys, the decision to move forward on Siachen has been taken in the wake of a direction from the leadership of both countries to expedite a resolution. "We have understood each other's position better though there is no agreement yet," Mr. Kasuri, flanked by Mr. Singh, told a crowded press conference.

Concrete ideas exchanged
Earlier in the day, at a meeting between Pakistan President Pervez Musharraf and Mr. Singh, they welcomed the ongoing discussions on the "framework" to work out a mutually acceptable solution on Siachen. At the joint press conference with Mr. Singh, the Pakistani Minister said "concrete ideas" on Siachen had been exchanged and the two sides would continue discussions for reaching a common understanding.

That the bilateral relations are headed for a leap was also evident from the decision of the India-Pakistan Joint Commission, revived after a gap of 16 years, to take a close look at the possibilities of expanded cooperation in nine different areas. These include agriculture, health, science and technology, information and education.

Gen. Musharraf and Mr. Singh talked about the commitment of both sides to make a "sincere and purposeful" settlement of the Jammu and Kashmir issue as well. They reaffirmed that terrorism would not be allowed to impede a solution and maintained that possible options for a peaceful, negotiated settlement should be explored in a "sincere, purposeful and forward-looking manner."

Expressing satisfaction over the smooth operation of the Srinagar-Muzaffarabad bus service, the statement said experts from the two sides would meet for launching a truck service between the two points and a bus link between Poonch and Rawalakot in Pakistan-occupied Kashmir expeditiously. It was agreed that an expert-level meeting would be held by the year-end to finalise the modalities on the meeting points for the divided families across the LoC.

At the press briefing, the Minister said India had presented draft proposals on visa liberalisation, consular access and allowing more pilgrims to religious shrines on both sides.
Gas pipeline project

Setting at rest apprehensions about the fate of the $7.4-billion Iran-Pakistan-India gas pipeline, in the wake of New Delhi supporting the IAEA resolution against Iran's controversial nuclear programme, the two sides affirmed their commitment to the project, saying it would contribute significantly to the prosperity and development of the two countries. Before leaving for Karachi, Mr. Singh exchanged views with Pakistan Prime Minister Shaukat Aziz on the bilateral relationship.

On Sir Creek, without prejudice to each other's position, they agreed to undertake a joint survey in the marshy land of Rann of Kutch off the Gujarat coast and consider options for the delimitation of the maritime boundary. This will begin before the year-end and its report will be considered at the next round of the composite dialogue.

It was agreed that a meeting of experts would be held here on October 25 and 26 to start the Nankana Sahib-Amritsar bus service at an early date. A technical-level meeting would be held before the end of this year to discuss arrangements for operationalising the Rawalakot-Poonch bus link as early as possible.

WEB DEMOCRACY – CHINA

Beijing shuts down two Web sites in crackdown
Chinese authorities have shut down an online discussion forum that reported on anti-corruption protests in a village in the south as well as a Web site serving ethnic Mongolians, overseas monitors said yesterday.

China routinely shuts down or blocks Web sites that operate outside of government control, but the issue has received heightened international attention recently with the publication of new rules aimed at stifling online dissent.

Radio Free Asia, a US-based broadcaster, said an online forum that covered protests in the village of Taishi has been closed. It said the site had been popular among academics, journalists and rights activists. Residents of Taishi, which is near Guangzhou, have demanded their village chief be sacked and investigated for allegations of embezzlement and fraud.

Several people were reportedly injured in a clash with police last month when they tried to prevent police from seizing accounting ledgers that they said contained evidence of corruption.
The Taishi protest came amid a series of increasingly bold actions by villagers to bring attention to grievances ranging from pollution to illegal land seizures.

Meanwhile, the Paris-based group Reporters Without Borders said an online forum for Mongolian students, called www.ehoron.com, had been closed for allegedly hosting separatist content. Attempts yesterday to view the page called up a message that said: "You are not authorized to view this page."

The press group said Beijing's controls on ethnic minorities were more restrictive than for the rest of China's population. It said the government also temporarily closed the Web site of a law firm in Inner Mongolia, called www.monhgal.com. That site could be accessed yesterday.

LABOUR – JAPAN

Japan plans huge job cuts
Japan decided Tuesday to cut about 33,230 jobs, or 10 percent of its civilian work force, over the next five years.

The move comes after Prime Minister Junichiro Koizumi was voted back into office in a landslide victory last month after campaign promises to cut spending and the size of the government.

Koizumi's cabinet on Tuesday approved the plan to reduce the government work force of 331,000. But the plan, which would cut 5,549 civil servant jobs for fiscal year 2005 and 27,681 jobs from 2006 to 2009, does not factor in separate personnel increases.

Government ministries have asked for more than 5,000 extra employees in the budget for next year. The Japanese daily Yomiuri Shimbun predicted that these increases would mean that the net number of government employees would fall by less than 2 percent, far below the 5 percent net decrease recommended by the Japanese Council on Economic and Fiscal Policy last week. The departments most affected by the plan include the agriculture and health ministries. It does not affect the country's defense forces.

"It is a task politicians should tackle as it would be impossible for bureaucrats," the minister of internal affairs, Taro Aso, said of the job cuts. The reductions would be achieved by natural attrition or relocating employees, a ministry official said.

HUMAN RIGHTS – JAPAN

Japan strengthens controls against human trafficking
Japan's Cabinet yesterday approved legislation to tighten controls on human trafficking as part of its efforts to counter global criticism that Tokyo is lax on the sex trade.

Sex businesses would be fined up to US$8,800 under the legislation if they employ foreign women without the right to work.

Currently there is no penalty.
Prime Minister Junichiro Koizumi's Cabinet will soon send the bill to parliament, which is in session until Nov. 1, said a spokesman for the National Police Department.
Passage is virtually assured as Koizumi's coalition enjoys a strong majority after last month's election. The government could not pass the legislation in the last parliament before Koizumi dissolved it in August for the polls.

Japan has taken a series of measures against trafficking since the US last year put its close ally on a watch list of countries with serious problems.

Japan this year began tightening rules on "entertainer" visas often used to bring in sex slaves, despite protests from the Philippines which worried that legitimate workers would suffer.

In June parliament voted to make human trafficking a specific offense for the first time. The crime carries up to 10 years in prison for selling another person for sex, to take their organs or use them for other commercial purposes. The law also allows authorities to jail a buyer for up to five years and grants victims of trafficking special permits so they will not immediately be deported.

LABOUR – MALAYSIA

Working for Malaysia's workers
Volunteers at Tenaganita, a leading Malaysian-based rights group that works with migrant workers, cheer when grim-looking authorities pay them a visit. They see harassment by officials as an unmistakable sign that they are on the job.

This week though, Tenaganita volunteers were cheering for a different reason - the non-governmental organization's (NGO's) founder and director, Irene Fernandez, had just won the 2005 Right Livelihood Award that is also called the alternative Nobel Prize.

For Tenaganita (Women's Force) volunteers, the award that honors pioneers of "justice, fair trade and cultural renewal", was the best recognition yet of their work - protecting migrant workers and changing attitudes in this affluent country.

"The award recognizes our work and brings into focus the plight of hundreds and thousands of migrant workers who suffer constant abuse, harassment and exploitation," an elated Fernandez told IPS. "The recognition will spur us to work even harder."

Fernandez founded Tenaganita in 1991 and turned it into a premier NGO that helps battered maids, women with HIV/AIDS and Malaysia's plantation workers, sidelined by mainstream development. Though recognized abroad for its work, it is a different matter at home, and Fernandez and her volunteers often find themselves maligned for their commitment to giving a voice to the voiceless.

A one-year jail sentence hangs over Fernandez for publishing "false news". Her passport has been seized, and she needs to apply for temporary release of the document from authorities each time she travels abroad.

It was a report she published in 1995, detailing horrific living conditions, beatings and harassment meted out to migrant workers at detention camps that landed her in trouble. She was charged with maliciously publishing false news and sentenced in 2003 to one year in jail. She has appealed the sentence, but strangely, no date has been fixed for a hearing.

Malaysia's government-controlled media malign her and Tenaganita as "traitors and anti-nationals", but to the many migrant workers, whose cause she untiringly champions, she is a hero.

The prize of two million Swedish kronor (US$257,000) will be shared with Canadian anti free-trade and rights activists Maude Barlow and Tony Clarke as well as Roy Sesana, an advocate for the rights of the Kalahari indigenous people of Botswana, the Right Livelihood Award Foundation said in a statement.

More than 70 candidates from 39 countries were nominated for the award this year. The award, established in 1980, was announced in Stockholm on Thursday by its founder Jacob von Uexkull, a former member of the European parliament. The prizes will be awarded at the Swedish parliament December 9.

Jacob said in an e-mailed statement that Fernandez was honored for her "outstanding and courageous work to stop violence against women, to stop abuses of migrants and poor workers in Malaysia".

"For many people this is no longer an alternative [to the Nobel Prize], this is the new mainstream," he said emphasizing that the laureates do not just offer "hope and inspiration, but actual practical support and solutions".

"She is a very brave woman who has continued to work for poor workers even after she was sentenced to one year in prison," he said.

Fernandez has a three-decade record as a grassroots campaigner, which reads like the history of the NGO movement in Malaysia. She was in on every issue - consumerism, women's rights, education, freedom, democracy, migrant workers and HIV/AIDS. She is also a senior member of the National Justice Party of opposition icon, Anwar Ibrahim.

A visit to her 14th-floor office tells a lot about her ideals. Portraits of Ibrahim and Che Guevara adorn the walls as does a quote from the South American Marxist revolutionary that says: "To Resist is to Win".

"We only live once," she told IPS. "That is why life is precious for each one of us. Life is nurtured, protected, secured but for more and more people, life is being threatened. As globalization grips us, inequalities sharpen, and the divide between the north and south increases. Poverty is one major factor that threatens life.

"In Asia more than 600 million people go to bed hungry. Workers are treated as commodities and not human beings."

Over the past 14 years, Tenaganita has championed the causes of lowly migrant workers, young women trafficked into prostitution, undocumented workers arrested and held for months without trial in detention camps and domestic workers violently abused and raped. It has also brought out the horrors of working women in Malaysia's infamous rubber and oil palm plantations where working hours are long and life dangerous.

"I started as a teacher where I saw the effects of poverty on poor urban students - it was terrible," said Fernandez, mother of three grown children. "The students were hungry, lost, neglected and very depressed."

In 1976, she joined the Consumer Association of Penang (CAP), which then was the leading advocate of consumer issues and growing to be an influential grassroots organization.

"At CAP I had a well-rounded experience forming consumer clubs, organizing workers and farmers, and fighting big multinationals like the giants making infant food formula," she said.

From CAP she moved to another consumer association in 1985 and took up feminist causes, researched and organized women workers, opposed violence against women and raised issues such as domestic violence, exploitation of women in the media and gender bias.

The year 1987 was a turning point for Fernandez and many other activists in Malaysia. This was a time when the government came down hard on a democracy movement, arresting more than 100 opposition politicians, activists and reformists.

Although Fernandez was not arrested, her work was badly affected and fear gripped activists in grassroots organizations. The government-controlled media also portrayed NGOs as enemies of the people.

After a break of a few years, spent reading and soul-searching, she was back in the fray, founding Tenaganita in 1991 as her vehicle for change.

The 1990s was a time of sustained economic boom that saw some three million undocumented workers pouring into Malaysia to work in the factories, construction sites and plantations.

With abuse, maltreatment and exploitation at a high, Tenaganita set up telephone counseling and research and services providing legal aid and representations to the government on behalf of migrant workers.

When she was found guilty of publishing false news by saying that migrant workers' detention centers were overcrowded, food substandard and medical care negligible, activists and others were certain it was a case of the state getting back at her.

"To me, the trial and the conviction are a symbol of our victory and their defeat because it shows we have achieved success in our work and that is why the oppressor is angry and wielding the axe," Fernandez said. "We have to press on."
Write: by Baradan Kuppusamy, in Kuala Lumpur

GEOPOLITICAL – IRAN

Iran faces hard realities after the IAEA vote
Iran’s hardline political leadership is scrambling to find a way to ease growing international pressure related to Tehran’s nuclear program. Iran may even be probing for a way to open direct negotiations with the United States.

The International Atomic Energy Agency (IAEA) adopted a resolution September 24 that cleared the way for the UN Security Council to take up the issue of Iran’s nuclear program. Iran maintains that its nuclear research is designed solely for peaceful purposes, including increasing the country’s nuclear power-generating capacity. Western nations, in particular the United States, suspect that Tehran strives to produce nuclear weapons.

According to the IAEA resolution, Iran must immediately undertake verifiable measures to reassure that its nuclear program is peaceful in nature, including opening up facilities to broad inspections by IAEA experts. Iranian officials lambasted the resolution as “unjust and illogical.” At the same time, Tehran has given no indication that it will comply with the conditions for keeping the matter out of the UN Security Council.

The nuclear program enjoys wide support in Iran and it is unlikely that the country’s political leadership, led by new President Mahmoud Ahmadinejad, will significantly alter the existing research course. Indeed, most Iranian political leaders appear convinced that the issue is destined to land in the Security Council. Tehran’s diplomatic attention is now focusing on an effort to dilute an increasingly likely Security Council resolution on the matter. At a news briefing on October 4, Foreign Ministry spokesman Hamid-Reza Asefi said Iran would use all resources at its disposal to secure its interests, the IRNA news agency reported.

There are several indicators that Tehran is contemplating a radical diplomatic departure, namely an attempt to open up a direct channel of communication with Iran’s longtime nemesis, the United States.

In late September, following the adoption of the IAEA resolution, prominent Iranian political politician Hashemi Rafsanjani traveled to Saudi Arabia, accompanied by former foreign minister Ali Akbar Velayati, to convey a diplomatic message to members of the Saudi royal family. The Saudis have served in the past as a go-between for Iran and the United States. The precise content of the diplomatic message remains a tightly guarded secret. But it is known that Rafsanjani embarked on the mission with the apparent blessing of Iran’s Supreme Leader, Ayatollah Ali Khamenei.

Recent statements by influential experts and commentators with close ties to the hardliner leadership offer clues concerning the message delivered to the Saudis. In a September 28 speech, for example, Hassan Abbasi - a former Revolutionary Guards officer who now heads the National Security and Strategic Research Center, a far-right think tank – called for the normalization of relations with both the United States and Israel.

“It is self-defeating to talk with subservient or second-tier countries and stay away from the principal sources of power,” Abbasi said during his speech at Karaj College. “Why should people get upset with my words? It makes no sense not to have relations with the United States and Israel.”

Prior to the IAEA resolution, Iranian diplomacy had concentrated on trying to drive a wedge between the European Union – led by Britain, France and Germany – and the United States. After Ahmadinejad came to power in June, he reshuffled Iran’s diplomatic team and reoriented Iran’s international focus, trying to cultivate the backing of China, India and Russia. It was hoped that the expansion of Iran’s economic ties with all three countries, in particular in the energy sphere, would translate into increased political support for Tehran’s nuclear aspirations.
This so-called “Eastern turn” proved to be a diplomatic debacle, as China, India and Russia all were unwilling to support Iran in the vote on the IAEA resolution. China and Russia abstained in the voting, while India approved of the September 24 resolution. During his news conference, Asefi indicated that the IAEA resolution might prompt Iran to re-evaluate its economic ties with some countries. “Iran’s economic cooperation with other states depends on political decision, but we should not make any haste,” Asefi said.

Abbasi, the hardliner political scientist, characterized both Iran’s cultivation of the EU-3 and its “Eastern turn” as diplomatic dead-ends. Yet, while Iranian leaders may be sounding out Washington about the possibility of a nuclear deal, there is no sign that US officials are open to dialogue on the matter.

The United States is reportedly exerting pressure on Russia to suspend nuclear cooperation with Iran, including assistance in completing the Bushehr nuclear power facility. [For additional information see the Eurasia Insight archive]. Work on the plant is scheduled to be completed in 2006.

Iran announced October 4 that it is willing to re-open unconditional talks with the EU on the nuclear issue. Those talks broke down in August after Iran resumed the conversion of uranium in violation of a late 2004 agreement with the EU-3. EU officials have said Iran must again suspend the conversion of uranium before talks can begin anew. In addition, Iranian leaders have suggested that if the nuclear issue is referred to the Security Council, Iran might consider withdrawing from the nuclear Non-Proliferation Treaty.

As Iran enters a crucial phase of the diplomatic struggle over the nuclear program, Iranian policy-makers feel that they are operating from a position of relative strength. Iran’s regional geopolitical position is stronger today than it was when Iran’s secret nuclear program first came to light in 2003. In particular, Iran now wields considerable influence in neighboring Iraq, a fact that potentially complicates international efforts to intensify the pressure on Iran over its nuclear program. In addition, Ahmadinejad’s presidential election win has given conservatives control of the country’s entire political machinery.

CIVIL SOCIETY – UZBEKISTAN

Uzbek government exerting pressure on local NGOS to close “voluntarily”
Authorities in Uzbekistan are pressing a campaign to smother the country’s non-governmental sector, reportedly forcing local NGOs to apply for “voluntary” liquidation.

President Islam Karimov’s administration has come to link NGO activity with the so-called “color revolution” phenomenon, in which popular protests toppled entrenched leaders in Georgia, Ukraine and Kyrgyzstan. Uzbek authorities moved to contain international NGOs within months of Georgia’s Rose Revolution in 2003, targeting the Open Society Assistance Foundation (OSAF) office in Tashkent. The foundation’s closure occurred less than a month after Uzbekistan was hit by an abortive uprising carried out by Islamic militants.

The most recent high-profile NGO closure was that of the Internews Network, a California-based media-development organization. Less publicized, but with equally serious consequences for Uzbekistan’s civil society development, the Uzbek government has targeted local NGOs, especially those that operate in the Ferghana Valley, scene of the Andijan massacre in May. The NGO crackdown has significantly expanded in scope during the post-Andijan period, local human rights activists contend.

According to Uzbek sources, hundreds of NGOs, most of them operating with miniscule budgets and small staffs, have been forced to cease activities. In many cases, NGO activists have been forced to “voluntarily apply for self-liquidation.” Those who resist government pressure face “serious trouble,” including possible arrest and imprisonment. Those who comply with the government’s request have not been harassed, according to a source with knowledge of the NGO crackdown, speaking on condition of anonymity.

Abdusalom Ergashev, Ferghana-based human rights defender, said Uzbek authorities are particularly interested in closing down NGOs that have received funding from public or private entities in the United States and/or European Union. Even before NGOs faced pressure to cease operations, they were coming under scrutiny during the weeks and months prior to the Andijan events. The head of one NGO, an entity that offered legal advice to poor Uzbeks in Ferghana Province, reported that immediately following the March 24 revolution in neighboring Kyrgyzstan, Uzbek authorities began freezing NGO bank accounts and tracing wire transfers. Ultimately, the Ministry of Justice ordered the closure of the legal-aid NGO, claiming that its “activities did not fit its charter.” The NGO’s subsequent appeals were dismissed by Uzbek courts.

“Many NGOs’ closures have gone unnoticed,” Ergashev said. “Nobody can challenge their [officials’] decisions. No complaints will ever reach Tashkent. Even if they do, they will be merely returned to local authorities.”

Uzbek authorities have denied targeting local NGOs for closure. Akbar Nabirayev, an official with Justice Ministry’s Department for Public Organization Registration, maintained that the government has merely been fulfilling its regulatory responsibilities. Some NGOs existed only on paper, Nabirayev claimed, adding that the state had an obligation to close such NGOs down. Nabirayev also claimed that official statistics show that out of 4,825 registered non-governmental organizations, only 175 have ceased operations in recent months. Justice Ministry officials claim that many NGOs engage in improper financial practices.

NGO activists maintain that the actual number of NGOs closed down during the post-Andijan period approaches 3,000, including many of the largest and best-developed local non-governmental entities in Uzbekistan. In the Ferghana Valley alone, 1,600 registered NGOs have been forced to cease operations, they assert.

PUBLIC HEALTH – AUSTRALIA

Brisbane to host Asia-Pacific bird flu summit
Australia is bringing together a host of experts from the region to discuss the threat posed by avian influenza.

Foreign Affairs Minister Alexander Downer says a high-level meeting has been organised for the end of the month in Brisbane.
It will bring together pandemic and disaster experts from the Asia-Pacific economic group, APEC.

Mr Downer says the objective of the meeting is to make sure there is a swift and coordinated regional response to contain any outbreak of bird flu.

"We obviously want to make sure that APEC's role is taken further and in terms of coordinating an Asia Pacific response, APEC is by far the best vehicle to do that," he said.

The Federal Opposition says it is worried the regional summit may be too little, too late.
Labor has welcomed the move, but foreign affairs spokesman Kevin Rudd says such a conference should have been held much earlier to ensure countries were better prepared for the risks posed by the disease.

"It's better late than never, but we are concerned that there is so much more to be done, and there is very little time left and most of this year has been wasted," Mr Rudd said.

"My responsibility as the shadow foreign minister is to apply continued political pressure on Mr Downer to do the right thing by the region, we are desperately concerned about the amount of time that has been wasted."
More than 60 people are confirmed or are suspected to have died from bird flu throughout Asia since 2003.
Source: ABC Online, Australia

LEGAL AFFAIRS – SOUTH KOREA

2 executives convicted in Samsung swap
A court on Tuesday convicted two Samsung executives of arranging deals nearly a decade ago to transfer corporate control of the Samsung conglomerate from father to son.

The Seoul Central District Court convicted Hur Tae Hak - a former chief executive of Everland, a Samsung unit that runs the largest amusement park in South Korea - and the unit's current chief, Park Ro Bin, on charges of selling convertible bonds at prices lower than their market value. They sold the bonds to the children of Lee Kun Hee, chairman of Samsung, in 1996, and were indicted in 2003.

The sale is believed to have generated more than 97 billion won, or $93.2 million, in illegal profit for the chairman's four children. Lee's son, Lee Jae Yong, is an executive at Samsung Electronics.

Hur and Park "helped Lee Jae Yong and his sisters make profits, thus incurring losses for the company," Judge Lee Hye Kwang said in a ruling.

Hur was sentenced to three years in prison, suspended for five years, while Park was given a prison term of two years, suspended for three years. The suspended sentences mean that Hur and Park will not serve time in prison unless they commit a crime during the suspension period.

The two men were both on the board that approved the convertible bonds, which enabled Lee Kun Hee's children to acquire shares in Samsung Everland, the unlisted theme park operator, at a low price and paying little in taxes, the official verdict stated.

The theme park company is at the heart of a web-like chain of cross-shareholdings among affiliates of the country's largest business group, which includes the largest memory chip maker in the world, Samsung Electronics.

Samsung Group has 61 affiliates with combined sales amounting to 135.5 trillion won in 2004, equivalent to more than one-sixth of the South Korean annual gross domestic product. According to data from the country's antitrust agency, Samsung Everland owns a stake in Samsung Electronics through affiliates.

South Korean conglomerates have been accused for decades of dubious dealings to help controlling families evade taxes and transfer wealth to heirs.

Although Samsung is the most profitable South Korean conglomerate, it has been plagued by allegations of questionable accounting and business practices among its subsidiaries. The court in its official verdict also said that the two executives had been responsible for an unspecified amount of damages inflicted on Samsung Everland.

LEGAL AFFAIRS – CHINA

Corruption inquiry hits Beijing Media
Shares of Beijing Media, which sells advertising space in a Communist Party-controlled newspaper, slumped Tuesday after the company said six employees, including senior executives, were taken into custody in a corruption investigation.

The company "has suspended the duties of the six employees until further notice" and plans an internal investigation, Beijing Media said in a statement to the Hong Kong stock exchange. The stock was suspended Monday for one day after the business magazine Caijing, based in Beijing, reported the investigation.

Beijing Media, which raised $116 million in a December share sale arranged by HSBC Holdings, is the latest in a series of Chinese listed companies to be embroiled in corruption allegations. The company, which sells advertising in the Beijing Youth Daily newspaper, last month reported a 99.7 percent slump in first-half profit. Government of Singapore Investment Corp. holds an 8 percent stake in the company.

The incident "reflects poor company management," said Selina Sia, a Hong Kong-based analyst with UBS, who has a "reduce" recommendation on Beijing Media's shares. "The company didn't say anything until newspapers reported it. I think it's quite irresponsible."

Beijing Media shares had their biggest one-day fall, closing 19 percent down at 10.50 Hong Kong dollars, or $1.35, after earlier losing as much as 27 percent. The stock has dropped 53 percent this year.

Those taken into custody included two vice presidents and the head and deputy head of the advertising department, Beijing Media said. It said its president, Sun Wei, had taken on management of the advertising business and that it would hire independent advisers to conduct an internal investigation and assess the financial impact.

"With the implementation of the above measures, the board does not anticipate any significant disruption will be caused" to daily operations, it said.

In August, Beijing Media said falling advertising revenue, rising inventory costs and increased bad-debt provisions caused a 99.7 percent slump in first-half profit to 170,000 yuan, or $21,000. It also said it had sold fewer advertisements to developers, its main source of revenue, after the government acted to cool the real estate market in cities like Shanghai and Beijing.

The company's interim report said revenue from Beijing Youth Daily, the main source of its advertising sales, slid 50.2 percent from a year earlier.

Tuesday's statement said Beijing prosecutors had detained two vice presidents, Zheng Yijun and Niu Ming, for questioning, together with Yu Dagong, the head of the advertising department, his deputy Zhu Weijing, and two advertising department officers, Duan Tao and Lu Jianning.

"The board understands that allegations of bribery have been made against" Yu, Zhu and Duan, it said. The company said it had not been informed of the allegations against the other three.
Source: Bloomberg, Hong Kong

ECONOMY – CHINA

Eyewear firm in 290m yuan acquisition
Luxottica, the world's largest maker of eyeglasses, based in Italy, will buy optical retailer Ming Long Optical for 290 million yuan (HK$278.11 million) as part of an expansion into the 16 billion yuan China eyewear industry.

Ming Long Optical, the biggest eyewear chain in Guangdong with 133 stores, will have forecast sales of 115 million yuan this year, according to Luxottica, whose products sell under luxury brands such as Vogue and Chanel. Its second mainland foray brings Milan-based Luxottica's China portfolio to 278 outlets, including 68 in Hong Kong.
In July, the company said it will buy Beijing-based Xueliang Optical for 169 million yuan, according to local reports.

For Italian Luxotica China is the next big market for fashion and premium eyewear, hence is desire to quickly build critical mass to be the leaders on market.

Luxottica, which earned 287 million euros (HK$2.66 billion) last year on sales of 3.2 billion euros, also owns a frame-producing factory in Dongguan, in addition to six plants in Italy. Eyewear firms such as France's Essilor International and Japan's Nojiri Optical have set up factories in China, taking advantage of the country's comparatively cheap labor.

Mainland eyewear production rose 10 percent last year to 16 billion yuan, - with half for export, mainly to the United States, Hong Kong, Japan and Italy. China's large and increasingly well- off population is attracting investors to the domestic market. The investment arm of Netherlands-based HAL Holding in June bought 70 percent of Shanghai RedStar Optical. Eyewear imports to China increased 35 percent to US$1.1 billion (HK$8.58 billion) last year, with Japan, Italy and Hong Kong being the top exporters.

ART & CULTURE – VIETNAM

International photo contest opens in Vietnam
As many as 7,228 photos of 1,416 photographers from 45 countries and territories are being displayed at the third international photo exhibition and contest which is jointly held by the Vietnam Association of Photographic Artists (VAPA) and the International Federation of Photographic Artist (FIAP).

This year, VAP stipulated a new rule for photo rating, including two rounds: preliminary and final rounds. As assessed by the organising board, the quality of photos taken by Vietnamese photographic artists is not much different with those of world’s photographers in term of techniques. The content of photos of Vietnamese photographers also showed their progress in skills. However, photographers from other countries seem to carefully reflect their ideas and are well prepared for this contest. The topics seem to be repeated at this contest; meanwhile there are not many typical and impressive photos.

The good point of Vietnamese photographers is their respect for the reality and the typical features of their photos. However, there is a shortage of romance in Vietnamese photos. Technically accomplished photos catch the eyes of audiences. Poorly created photos are easy to spot compared to previous contests.

The selected photos partly show the real situation of Vietnam’s contemporary photographic art and ranks Vietnam’s photographic art as a contributor to the world’s photographic art. The special award, VAPA-NIKON cup, was given to the art work ‘Warm Stove’ (Bep Nong) of Huynh Minh Tri from Ho Chi Minh City. Two FIAP gold medals were presented to artwork ‘Worry’ (colour photo) of Hoang Trung Thuy and artwork ‘Breakfast’ (black and white) of Huynh Van Danh.

The success of the contest and exhibition is not only shown through awards and organisation. 227 selected photos for the exhibition are really works with high artistic and creative value. The success of the contest also marks a promising time of activities for the newly elect VAPA.

2005-02-25T12:44:00.000+01:00

JAPAN - ECONOMY

Nation-wide core inflation fell to 0.3% y/y in January, but deflationary pressures are slowly receding

In January, the core consumer price index (nation-wide), excluding perishables, was down by 0.2%, and fell by 0.3% on a yearly basis, after –0.2% in December. Overall prices declined by 0.4% over the month, down 0.1% on a yearly basis, the fastest pace of decrease since May 2004. The period of deflation is now lasting for almost seven years.

As usual, “special factors” explain price developments in January. The core CPI was depressed by falling prices for phone, electricity and rice. The impact of phone and electricity rate cuts will depress core inflation throughout 2005. Since October 2004, the positive base effect due to soaring rice prices between October 2003 and September 2004 has disappeared and rice prices lowered nation-wide core CPI by more than 0.20 pp. All in all, core inflation is expected to remain below zero in Q1 2005.

In Tokyo, overall prices were steady in February, falling by 0.5% over the year, after –0.2% in January, and core CPI fell 0.5% y/y, with rice prices contributing 0.25 pp to the decline.

However, deflationary pressures are receding very slowly in all sectors except those where deregulation led to intense price competition. In particular, employee’s income growth turned positive in Q4 2004, for the first time since Q2 2003, recording a 0.4% rise. This trend is likely to continue, since the demand for labour is gradually picking up. Finally, due to bottlenecks in some sectors of the economy, higher costs will be progressively passed onto final prices.
Written: by LuisB

2005-02-24T13:08:00.000+01:00

CINA – LABOUR AFFAIRS

It's Chinese New Year. Will workers get paid?
As travel season begins, the payment of back wages is an economic bellwether.
China is a country on the move - this month especially. The nation's trains, highways, and airplanes will handle an estimated 1.8 billion passenger trips over the next month as part of Spring Festival, a holiday of homecoming tied to the Chinese New Year.

For hundreds of thousands of Chinese migrant workers - the cogs of what has been dubbed "the world's factory" - Spring Festival is not just a rare opportunity for R&R, but a make-or-break payday. Employers often promise to pay by this holiday the back wages owed from months of toil so that workers can return to their families with the fruits of their labor from the year.

But this Spring Festival, payday probably won't come for many of these expectant workers, say labor-rights activists. And some of those who do get their money may take it to purchase a one-way ticket home, adding to a labor shortage fueled partly by poor working conditions. All this makes the Spring Festival a bellwether for those watching China's economy.

The withholding of back pay - which is illegal - has become common practice in China, where an estimated 100 million migrants from rural interior provinces flood the wealthier south and east coasts, filling the factories and construction sites with cheap labor. The Chinese government last year estimated that workers were owed around $12 billion in unpaid wages. Employers withhold pay as a means of keeping laborers in a job.

The Spring Festival travel season began last week, and the official days off this year run from Feb. 7 to 11. Already, the Chinese media is rife with accounts of workers unable to return to their families because their bosses have not and will not pay them. Other reports show the situation is improving, with more workers collecting the pay owed them so they can return home.

Stephen Frost, a researcher at the City University of Hong Kong who studies Asian labor issues, pointed as one example to publicly staged suicide threats by unpaid workers in southern China.

"That's the kind of desperation people are in," says Mr. Frost, who noted workers in the construction sector often are particularly hard-hit on back wages. "The work is tough and if you don't get your money, it's terrible."

In Shenzhen, Liu Kaiming runs a non-governmental organization called the Institute of Contemporary Observation dedicated to helping migrant workers.

"Many people cannot get their salaries," he says. "I cannot say if this year is better or worse, but the working conditions are getting better."

With the increasing profile of labor unions and strikes in China, along with government pressure to stop illegal wage withholding, the situation is likely to improve, says Liu. Many factories in southern China are also short on labor, creating pressure to improve work conditions and pay.

A report from the Chinese Ministry of Labor and Social Security last fall found that millions of migrant workers chose to stay home and subsist on little money, rather than meander through the uncertainty of pay and poor conditions at factories. The shift created what the government said was a shortage of more than 1 million workers in the Pearl River Delta.

Frost says the end of Spring Festival this year could show whether the labor shortage was an anomaly. Manufacturers and others who depend on migrant workers should know at the end of the holiday whether their work force is returning.

The country's two other major worker holidays are the "Golden Weeks" that fall May 1 and Oct. 1. Late in 2004, the central government proposed eliminating the weeks and replacing them with flexible, paid holidays. The move fell through without explanation, however, and Golden Weeks were scheduled for 2005.
Lately, however, most companies and government agencies require working weekends at both ends of each week, leaving the net sum of an extra day off.
Source: The Christian Science Monitor. February 2005
Written: by Kathleen E. McLaughlin

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JAPAN – PUBLIC HEALTH

Japan hit by human variant of mad cow
Japan on Friday confirmed its first case of the human variant of mad cow disease, a fatal brain disease thought to be contracted by eating infected beef.
The Health Ministry said that a man had died last December after contracting variant Creutzfeldt-Jakob disease.

A Health Ministry spokesman, Yuki Ueda, said ministry experts were holding an emergency meeting to attempt to determine whether the case had been caused by eating beef infected with the prions that are thought to cause the disease. He did not elaborate.
Kyodo News reported that the victim was a man who in 1990 lived for several months in Britain, where mad cow first surfaced in 1986. Scientists estimate the time between exposure and the development of symptoms to be 10 to 20 years.
The human variant of the disease has been confirmed or deemed probable in 167 people worldwide, most of them in Britain but also in France, the United States, Ireland, Italy and Canada - though hundreds of thousands of people have likely eaten contaminated beef products.
More than 140 people have died worldwide from definitive or probable variant Creutzfeldt-Jakob disease after eating meat from animals with bovine spongiform encephalopathy, as mad cow disease is formally known. The disease is thought to be transmitted among animals via feed containing brain or other nerve tissue.

About seven million animals had been slaughtered in Britain by the end of June 2004 under a plan aimed at preventing the spread of the disease.
Since it was first discovered in Japan in 2001, 15 animals have been found with the disease, but there have been no human cases.
Tokyo has checked every slaughtered cow before it entered the food supply since finding the first infected animal.
The latest suspected case was found in October.
Confirmation of the case could hinder efforts by the United States to persuade Japan to ease its ongoing ban on U.S. beef imports.
Japan banned American beef imports in December 2003 after the discovery of the first U.S. case of mad cow disease in Washington State.
At the time, Japan was the most lucrative overseas market for American beef, importing $1.7 billion worth in 2003.
Tokyo and Washington tentatively agreed late last year to a resumption of Japanese imports of American beef products from cows younger than 21 months, but the accord was stalled by differences over how to authenticate the age of cattle.
Source: The Associated Press, Reuters. February 2005

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CHINA – ECONOMY

Beijing steps up fight to ease rural poverty
China is promising farmers lower taxes and higher subsidies in its latest effort to raise rural incomes and ease burdens that have sparked violent protests.
The new policy, announced this week by state media, aims to help spread prosperity to China's countryside, most of whose 800 million people have been left behind by a boom that has turned eastern cities into economic powerhouses.
The government of President Hu Jintao, who took office in 2003, has made improving the lives of the rural poor a priority after two decades in which Beijing focused on building up export industries.
Rising tax burdens have led to violent clashes between farmers and local authorities, causing both alarm at social unrest and embarrassment for leaders of a Communist Party founded on improving the lot of mainland peasants.

The new policy, titled ``No 1 Document of 2005,'' does not give financial details but promises new spending on rural education and health programs and on irrigation and other infrastructure.

``Only by doing this can we support more population with less land, meet the growing consumption demand, open more space for agricultural adjustment of structure and boost farmers income,'' the People's Daily said Monday. ``The development of agriculture and rural villages will naturally be on a new stage if a big breakthrough is made in these areas.''
Financial details are likely to be announced by the finance minister when the national legislature holds its annual meeting next month.

While incomes in mainland cities have soared, those for farmers have risen slowly, if at all. China's annual income has passed US$1,000 (HK$7,800) per person, according to the government, but many rural families get by on a fraction of that.

The yawning gap between rural and urban incomes - and the growing social tensions that it has caused - are expected to be a key issue at the parliament session.
The policy promises higher crop subsidies and ``steadily increasing investment in agriculture'' this year, though it does not say how much or how it compares to previous government spending. It pledges to improve farmers' land-use rights - a critical issue at a time when China also faces growing rural anger at the seizure of farmland for real estate development.

Many farm families have no formal title to their land and receive little or no compensation when it is seized.
The policy promises to extend a strategy announced last year of eliminating many basic taxes. But it avoids what experts say are two key issues for raising farm incomes - the rights of rural families to own land and to move in search of work.

Farm families are not allowed to own land, controlling it instead through long-term leases that prevent them from using it as collateral for bank loans.
Rural and urban residents also are classified separately by the government. Millions of people move to cities every year looking for work, but many areas periodically detain and send home those who lack residency papers.

A 2003 World Bank report said the single most effective step the mainland could take to raise farm incomes would be to let farmers move to cities in search of better-paid work.
Allowing such migration would raise rural incomes by as much as 16percent by letting the farmers who remain behind acquire more farmland and compete more efficiently, the report said.
Source: AP. February 2005
Written: by Joe McDonald

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NEPAL – DEMOCRACY AFFAIRS

Crisis in Nepal
If electoral democracy was suspended in Nepal in 2002, the sacking of Prime Minister Deuba and the assumption of total autocratic powers by the King now have totally buried any semblance of constitutional governance in Nepal.

Constitutional governance takes years to build but may collapse in a day. Following the end of the rule of the Ranas in 1951, governance in Nepal was conducted through a number of interim advisory governments. No sooner was the multi-party Constitution adopted in 1959, it failed. B.P. Koirala led the Nepali Congress Party to an electoral victory. But by 1960, King Mahendra suspended Parliament and took control. On the basis that Nepal was not quite ready for a parliamentary democracy in which political parties competed for power; a new panchayat-based Constitution was created in 1962. Amid years of indifferent governance, political agitation led to a constitutional referendum in 1980. As a result, the King agreed to direct elections but without political parties.

Increasing discontent led to Nepal's new Constitution of 1990, which created a parliamentary democracy with a Bill of Rights and an independent judiciary. In 1991, G.P. Koirala led the Nepali Congress Party to victory and became Prime Minister. But in 1994, he was defeated in a no-confidence motion. He lost the elections and a communist Government was ushered in. It also fell soon. The period 1997-2001 saw many governments - the result of party splits and infirm coalitions. Over the 1990s, the Maoist rebellion intensified. Talks for a truce failed in 2001 when a state of Emergency was declared, which is remembered for its flourishes of state lawlessness.

Amidst all this confusion, on June 1, 2001, King Birendra and his family were killed by Crown Prince Dipendra, who also died after inflicting gun shot wounds on himself. King Gyanendra ascended the throne. As violence increased, Prime Minister G.P. Koirala resigned. Even though the Assembly was dissolved in 2002, no elections were called. Veritable musical chairs followed of successive Prime Ministers with Sher Bahadur Deuba, who was Prime Minister between 2002 and 2003, being reappointed in June 2004. Meanwhile, the rebels blockaded Kathmandu. Finally, on February 1, 2005, King Gyanendra sacked Prime Minister Deuba and declared an Emergency to assume all powers of governance for three years.

From 1951, Nepal's experiments with constitutional democracy have been disfavoured by history. The present crisis is riddled with a constitutional impasse. Normally, a Prime Minister who is willing to act as one cannot be dismissed unless he has lost his majority. The question of Prime Minister Deuba losing his majority did not arise as there have been no elections since 2002. King Gyanendra has relentlessly sacked Prime Ministers since he was enthroned in 2001 - trying his hand with various alternatives including royalist supporters. If the sacking of Mr. Deuba was unconstitutional, the legality of the King's assumption of Emergency powers is even more doubtful. Under Nepal's Constitution, an Emergency can be imposed if a "grave crisis" such as war, external aggression, armed rebellion or extreme economic disarray threatens the sovereignty and integrity of the country. Nepal is in a state of crisis. In the absence of elections, there being no Parliament, the question of the House of Representatives approving of the Emergency by a two-thirds vote does not arise. Constitutionally, an Emergency beyond a period of one year is not envisaged. An arbitrary declaration of Emergency for three years goes beyond the pale of constitutional governance. If electoral democracy was suspended in Nepal in 2002 (from when elections have not been held), the sacking of Prime Minister Deuba and the assumption of total autocratic powers by the King in 2005 have totally buried any semblance of constitutional governance in Nepal for a long time to come.

Constitutional lawyers have problems dealing with situations of this nature. The sacking of Prime Ministers is not unknown even under constitutional governance. In 1963, the Privy Council in appeal found the sacking of the Nigerian Prime Minister invalid. But Malaysian courts found the removal of a provincial Premier in 1966 valid. In India, Governor Dharam Vira's dismissal of Chief Minister Ajoy Mukherjee in West Bengal in 1967 was not interfered with by courts. Mulayam Singh's complaint that Governor Motilal Vohra had sacked him unfairly in June 1995 was sent to a Supreme Court constitution bench where the issue died an obsolescent death. But in all these cases, a justification for the dismissal was a refusal to test that government's majority.

But ingenuity has never failed lawyers and judges in such situations. In a sense, a new justificatory trend emerged in Pakistan in 1958 when President Ayub Khan scrapped the Constitution of 1956 to assume total powers. In Dosso's case (1958), the Pakistan Supreme Court used jurist Hans Kelsen's theory that a revolution can be justified when the basic norm underlying a Constitution disappears and a new system is put in its place. Dosso's case became the new basis for a new jurisprudence for usurpers. As a result, every usurper or dictator who destroyed an old Constitution could claim the right of constitutional governance under a new basic norm of his own creation. But in such situations what was the new basic norm? In Asma Jilani's case (1969), Pakistan courts took the view that the doctrine of necessity could be the constitutional basis for a new usurper regime. As Pakistan went through usurper after usurper, this usurper jurisprudence was consolidated — no less in Begum Bhutto's case in 1977. This consolidation became even more startling when President Pervez Musharraf assumed power in 1999 and administered a new oath to his judges preventing them from challenging his usurpation.

Pakistan's `usurper jurisprudence' was not alone in pursuing this kind of constitutional subversion. Judges from Ghana followed this approach in Sallah's case in 1966 and those from Nigeria in Laknami's case in 1969. Such an issue reached English courts in the aftermath of Ian Smith declaring independence in Rhodesia (now Zimbabwe). But in Madzimbamuto's case (1969), British judges refused to follow the change-in-basic-norm theory and declared Mr. Smith's regime unconstitutional — although one dissenting judge seemed to give some legal basis to the Smith regime under the doctrine of necessity. But while it was possible for British judges in Britain to take this stance from far away London, it requires courage for local judges located in the crisis country to challenge this kind of unconstitutionality in the face of a military or dictatorial takeover.

As far as Nepal is concerned, it remains to be seen what Nepalese courts will do if asked to deliberate on the actions of King Gyanendra. In the past, the lawyers of Nepal have been courageous in taking constitutional issues to court. Nepal's judges could declare King Gyanendra's takeover unconstitutional. This would mean restoring Prime Ministership to Mr. Deuba who will in any case not be responsible to any Parliament. It would, of course, be easier for them to invoke Kelsen's theory of a change in the basic norm to legitimise King Gyanendra's usurpation of dictatorial power. In this, it would find support from the doctrine of necessity invoked by Pakistan's courts to justify virtually all or any kind of unconstitutional violation. A doctrine to justify revolution has been trivialised to help dictators. The rule of law is ill-served by such constitutional acrobatics.

But where does Nepal go from here? The actual situation in Nepal is serious and drifting out of control. When King Gyanendra used the Emergency powers in November 2001, the situation worsened in ways that forfeited the confidence of the people. Quite apart from the constitutional violations, the present situation was hardly the time to compound a military crisis into a constitutional disaster. It is in the overall interests of Nepal that the King recalls his orders sacking Mr. Deuba. Declaring a three-year Emergency is neither necessary nor prudent. On February 2, 2005, he swore in a Cabinet of loyalists. What is needed is to create consensus national governance, which will take Nepal into a democratic framework. When Mr. Deuba asked President George W. Bush for support to fight the Maoist rebels in 2002, America pledged $20 million to this cause. It remains a moot question as to what the Government of Nepal expects from America now — and, even more so, what America led by President Bush will threaten to do. This is the time for the King of Nepal to return to first principles of democratic governance and not invite further chaos in an already troubled nation. Constitutions require an inner morality to make them function.
Written: by LuisB. February 2005

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MIDDLE EAST – POLITICAL AFFAIRS

Attacking Iran 'not on US agenda'
Condoleezza Rice has insisted that attacking Iran is not on the US agenda "at this point in time".
She was speaking in London following meetings with Tony Blair and Jack Straw, on her first overseas trip as US secretary of state.
She said the US would use diplomacy to deal with Iran's nuclear programme.
But she attacked its human rights record and claimed it was harming prospects for peace in the Middle East by supporting terrorism.

Diplomatic tools
Ms Rice described the half hour meeting with Mr Straw and Mr Blair as "productive" and hailed the strength of the US/UK friendship, saying America had "no better friend and no better ally".
Asked if she envisaged circumstances in which the US would attack Iran, she said: "The question is simply not on the agenda at this point in time."
She added: "We have many diplomatic tools still at our disposal and we intend to pursue them fully."
But she said the Iranian people "deserved better", and condemned the regime's "abysmal human rights record".

'Supporter' of terrorism
She told BBC's Breakfast with Frost that America's primary goal is "to deal with Iran's destabilising influence" on the international scene which is "one of the most important barriers" to the Israel-Palestinian peace process.
Iran is "the key supporter" of rejectionist groups like Hezbollah, she said.
"We need unity of purpose, and unity of message to Iran to stop those activities."
Attention has been focused on Iran's civilian nuclear programme amid fears that the Tehran regime is trying to build a nuclear bomb.
Mr Straw hailed efforts by the UK, Germany and France to secure a diplomatic resolution to the crisis, insisting that Washington had been "very supportive of the process".

Healing divisions
He later told BBC's the World At One: "As Condoleezza Rice and indeed President Bush have said, they are backing the diplomacy which is being led by France, Germany and the UK."
As a result of agreements reached, all of Iran's uranium enrichment and related activities, apart from some "very limited compliance", have been suspended, he said.

On Iraq, Mr Straw highlighted the success of the country's recent elections as helping heal world divisions over the war.

Ms Rice's week-long tour of Europe and the Middle East includes talks with the Israeli and Palestinian leaders.

She also confirmed her attendance at a Palestinian conference in London next month.

During the rest of the trip, Ms Rice is expected to give a staunch defence of President George Bush's stated aim of spreading freedom and democracy around the world in what is seen as a bid to mend relations with nationals opposed to the Iraq war.
After leaving London, she flew to Germany for talks with Chancellor Gerhard Schroeder.
Her whistle-stop tour is also scheduled to include stops in Belgium, Luxembourg, Turkey, Italy and Poland.
Ms Rice will round off the trip by making a major speech on US-EU relations in Paris.
Source: BBC News. February 2005

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CHINA – ECONOMY

Profits stall at China's Lenovo
Profits at Chinese computer firm Lenovo have stood still amid slowing demand at home and stiffening competition.
The firm is in the international spotlight after last year signing a deal to buy the PC division of personal computer pioneer IBM.
Lenovo's profit for the three months to December was HK$327m (US$42m; £22m), less than 1% up on the year before.
Chinese PC sales have risen by a fifth in each of the past two years, but are now growing more slowly.
The company is still by far the biggest player in China, with more than a quarter of the market.
But Western firms such as Dell and Hewlett-Packard are also mounting a more solid fight for market share in China, and Lenovo's sales were down 3.7% by revenue to HK$6.31bn.

End of an era?
If the $1.75bn agreement Lenovo signed with IBM on 8 December goes through, it will mark the end of an era. IBM pioneered the desktop PC market in the early 1980s, although strategic mis-steps helped lose it its early dominance. In any case, margins in PC market are now wafer thin, and profits have been hard to come by for most vendors except direct-sales giant Dell.
But investors have been less than impressed with Lenovo's move, designed to take it out of China and further onto the world stage.
Its shares are down 20% since the announcement two months ago, largely because of the unprofitability of the unit it is buying.
There have been rumours that the deal could be in trouble because US government agencies fear it could offer China opportunities for industrial espionage.
The reports of the possibility of an investigation into the risk sent Lenovo's shares up 6% in late January.
Source: BBC News. February 2005

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JAPAN - ECONOMY

Toyota sees 1 trillion yen year as profit rises 3.5%
Toyota Motor Corp. said Thursday its group net profit in the October-December period rose 3.5 percent from a year earlier to 296.5 billion yen, clearing the way for its profit for the year to March to exceed 1 trillion yen for a second consecutive year.
The nation's largest automaker's brisk performance was backed by lower costs and higher global sales.
Toyota raised its global sales projection for fiscal 2004 to 7.29 million, up 70,000 units from November, mainly due to higher success in North America and Japan. But the automaker is doing well everywhere.
"The number of vehicles we sold increased in every region" from a year earlier, Senior Managing Director Takeshi Suzuki told reporters in Tokyo.
Sales in the quarter rose 5.9 percent to 4.64 trillion yen, and operating profit climbed 5.3 percent to 422.9 billion yen.
Toyota cut costs by 40 billion yen, mainly from parts procurement, which more than offset the negative impact of the yen's appreciation against the dollar, which pushed down operating profit by 10 billion yen.
The positive factors also absorbed a 39 billion yen increase in expenses for research and development and expanded overseas production bases.
For the full year, the company expects to cut only 170 billion yen in costs, compared with the 200 billion yen it initially projected. Suzuki blamed the shortfall on rising materials costs, including steel, but said the impact fell within range of the company's expectations.
In terms of volume, Toyota's global sales in the quarter, including sales by mini vehicle subsidiary Daihatsu Motor Co. and truck maker Hino Motors Ltd., totalled 1.84 million vehicles, up 8.2 percent from the previous year.
Domestic sales grew 3.5 percent to 573,000 vehicles, led by the success of the new models, including the Isis minivan and the Mark X luxury sedan.
In North America, the automaker sold 576,000 cars, up 2.6 percent, thanks to the high popularity of the Sion series with younger drivers and Lexus luxury cars.
In calendar 2004, Toyota sold 2.06 million cars in the United States alone, achieving its target of 2 million.
In Europe, the automaker sold 249,000 cars in the quarter, up 14.3 percent, on strong demand for the Corolla compact series. European sales in 2004 came to 916,000 units, marking eight consecutive years of gains.
In fiscal 2003, Toyota posted a net profit of 1.16 trillion yen, becoming the first Japanese firm to top the 1 trillion yen mark.
Source: Daily Shinbum
Written: by LuisB. February 2005

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TAIWAN – NATIONAL AFFAIRS

How can Taiwanese trust Beijing?
Recent events indicate how much the people of Taiwan long for an improved cross-strait relationship against a backdrop of prolonged military threats from China and international isolation. The slightest gesture of warmth or lessening of hostility on the part of Beijing is enough to incite wishful thinking among some people in Taiwan, which makes these people highly susceptible to Chinese unification propaganda.

The first recent event that gave false hope to people in Taiwan is the fact that the governments on the two sides of the Taiwan Strait have finally reached an agreement to make possible non-stop charter flights for the Lunar New Year holiday period. Although Beijing has repeatedly made it clear that this year's charter flights are an isolated incident, many still wholeheartedly believe that it was the beginning of a new-found friendship between the two sides of the Taiwan Strait. They turned a blind eye to the fact that Taiwan had actually taken grave national security risks to make the flights possible. It is truly worrisome that some groups within Taiwan will use this as a stepping stone to push for permanent cross-strait links, without thinking twice about what kind of price the people of Taiwan would have to pay.

The second event that brought hope to the naive is the arrival on Tuesday of a delegation from China to pay their respects to the late top negotiator Koo Chen-fu, former chairman of the Straits Exchange Foundation. Sun Yafu, vice chairman of China's Association for Relations Across the Taiwan Strait (ARATS) and director of its Taiwan Affairs Office, and Li Yafei, secretary-general of ARATS, came in their unofficial capacities as personal envoys of Koo's Chinese counterpart, ARATS chairman Wang Daohan.

During their brief stay, they refrained from making any official statements on the future of cross-strait relations and avoided meeting government officials, except for a brief meeting and handshake with SEF Chairman and Mainland Affairs Council (MAC) Vice Chairman Johnnason Liu and SEF Secretary-General Jan Jyh-horng around the end of the memorial service on Wednesday. In fact, they deliberately arrived close to the end of the service to avoid meeting President Chen Shui-bian, who attended earlier.

Despite this window-dressing gesture of good will, Beijing has not slowed its pace even slightly in getting its anti-secession law enacted. In fact, the Chinese National People's Congress will finish enactment of this law by the end of March. The intended target of the law is obviously none other than Taiwan. Few can overlook the fact that the anti-secession law will give Beijing a legal basis to move against Taiwan in the event of any action Beijing interprets as an act of "Taiwan independence." The hostility and implications of the anti-secession law is so strong and unsettling that the US has openly voiced concerns on more than one occasion.

This could explain why Beijing agreed to the Lunar New Year charter flights and dispatched Sun and Li to Taiwan. However, the tokenism of these two small gestures amounts to virtually nothing in the face of the enormous hostility behind the anti-secession law. This is not to mention the fact that, throughout the process, Beijing did not forget to continue increasing the number of missiles targeting Taiwan. The president recently announced that the number of missiles had grown to 706. Under the circumstances, one cannot help but wonder how anyone in Taiwan can believe that Beijing is sincere about improving its relationship with Taiwan.
Source: The Taipei Times. February 2005

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2004-11-25T23:06:00.000+01:00

CHINA - SPACE COOPERATION

China's space chief to visit NASA
The head of China's space agency will visit NASA Administrator Sean O'Keefe next week; a move one U.S. expert said could mean increased cooperation between the two countries.
The December 2 meeting with Chinese National Space Agency Administrator Laiyan Sun had been under discussion for months, O'Keefe said on Tuesday.

"It's not a major milestone by any means, it's more of an evolutionary thing," O'Keefe said of the meeting, which a NASA official called a courtesy visit.
He stressed international cooperation was part of President George W. Bush's vision for space exploration, which includes human missions to the moon and eventually to Mars.

"It is not a specific agenda, more an opportunity to exchange views and get more familiar with what our respective (space) agencies are doing," O'Keefe said.

The meeting comes barely two weeks after Chinese representatives joined a NASA workshop in Washington on international space cooperation, and just over a year after China's first successful human space flight, which concluded on October 16, 2003.

China has never worked directly with the U.S. space program and is not among the nations working on the International Space Station. But there are strong signals the Chinese want to cooperate with NASA.

'Small steps forward'
The Chinese Shenzhou spacecraft has a built-in docking rink that would allow it to park at the $95 billion station.

China's launch complex in Inner Mongolia is on the same parallel as NASA's Kennedy Space Center, which would let the Chinese share an orbit with the space station.

Joan Johnson-Freese, who chairs the National Security Decision Making Department at the U.S. Naval War College, said the Chinese meeting with O'Keefe, coupled with China's participation in the NASA workshop, was good news.

"NASA could not make these moves on their own," Johnson-Freese, an expert on international space cooperation, said in a telephone interview. "It's an acknowledgment from higher up that ignoring the Chinese and their capabilities in space is not conducive of anything good in the United States.

"We would be much better off working with the Chinese than having the Chinese work with everybody but us," she said.

China has long wanted to participate in the space station, Johnson-Freese said, but NASA declined its contributions.

"The United States has always used cooperation in areas like space science ... to build bridges with countries," she said. "I think this will be small steps forward."
Source: Reuters. November 2004

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CHINA - MEDIA

Foreign media scramble for China's pay TV
Many of the world's biggest cable TV networks, including HBO and Nickelodeon, are taking advantage of newly relaxed laws governing media investment to set up de facto channels in China.

Nearly all the new ventures are tie-ups where a foreign player supplies program-developing expertise or actual programs for use on a specific channel being developed for digital TV by a Chinese media company.
Most of the partnerships are seizing on new rules that go into effect next week allowing foreign firms to own up to 49 percent of joint ventures engaged in program production. Such ventures were previously off-limits to foreigners.

The foreign networks have effectively found a back-door into China's potentially lucrative TV market by taking advantage of those new rules, along with Beijing's desire to quickly develop the nation's digital TV infrastructure, observers say.

Until now, only four foreign media firms have been allowed to operate TV channels in China's tightly controlled media market, and all four were limited to the affluent southern province of Guangdong for widespread broadcasts.

The new wave of channels will be limited to distribution over a handful of national digital platforms being rolled out by some of the country's biggest media firms, most notably the top two, China Central Television (CCTV) and Shanghai Media Group (SMG). Recently National Geographic Channel, which has formed a China-targeted channel, World Geographic, with CCTV.

Viacom Inc.'s Nickelodeon got the show rolling as early as March, when it announced a deal to supply 90 minutes of daily programing for a children's channel being set up by CCTV.

Since then, Time Warner Inc.'s HBO and National Geographic have entered into similar tie-ups. Sony Corp., owner of the Animax TV channel, is also in tie-up talks for a new cartoon channel being developed by Hunan Broadcasting Group, China's fourth biggest media firm.

Channel building
Discovery Communications, which operates the Discovery channels, has an existing relationship with Shanghai Media Group and has "a long-standing goal" of providing its product to China viewers on a full-time basis, a spokeswoman said.

ESPN Star Sports, a joint venture between the Walt Disney Co.'s ESPN and News Corp.'s Star Group, is also believed to be in discussions for a similar tie-up.

All of the players are seeking entry or expansion in a media market that is still highly fragmented but has the potential to become one of the worlds largest. Print and TV ad revenue totaled an estimated $18.7 billion last year, and is expected to grow at double-digit rates for the foreseeable future.

China previously gave highly limited broadcast rights to a small group of foreign-owned channels, including ones backed by News Corp., Time Warner and Viacom, in an effort to control their influence while domestic players developed.

But now the government is relaxing its grip in an effort to meet ambitious goals it has set for developing the domestic digital TV industry, observers say.

China now boasts about 100 million cable TV subscribers, the vast majority with older analog service. But with the recent roll-out of newer digital distribution systems, Beijing has set a target of 30 million users within the next few years.

To do that, observers say, it will need compelling programing like the kind that foreign media firms make.

Many of the new channels are still works in progress, but the recently launched World Geographic offers a glimpse into the kinds of offerings likely to emerge.

World Geographic began trial broadcasts in August, whose National Geographic Channel is a joint venture between National Geographic, News Corp. and General Electric's NBC unit.

The channel willingly gave up the better known National Geographic moniker as required by Chinese wary of letting foreign brands get wide recognition so early in the game.
Write: by LuisB. November 2004

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JAPAN - POLITICS

Koizumi, Putin fail to settle differences
Prime Minister Junichiro Koizumi and Russian President Vladimir Putin confirmed Sunday a plan to continue talks on the long-running territorial dispute over four Russian-held islands, but failed to narrow their differences over the issue at a meeting in Santiago.

During the 45-minute summit meeting at a Santiago hotel on the sidelines of an annual summit meeting of the Asia-Pacific Economic Cooperation forum, Koizumi emphasized the need to resolve the issue quickly and conclude a peace treaty to formally end World War II, saying, "Improving Japanese-Russian relations through concluding the peace treaty will serve the strategic interests of both nations."

Putin admitted the importance of solving the issue, saying, "It's necessary to solve the territorial dispute and conclude the peace treaty." Both leaders confirmed that they would continue discussions through reciprocal visits of foreign ministers.

The government held steadfast to its views on the peace treaty and territorial dispute over the northern territories--Etorofu, Kunashiri, Shikotan and the Habomai group of islets.

The differences over the issue between Japan and Russia grew after Putin said on Nov. 15 in Moscow that he would seek a resolution to the dispute based on a 1956 Japan-Soviet declaration that called for the return of only two of the four islands--the Habomai islets and Shikotan.

Sources said neither leader made progress on a solution during the meeting.

Meanwhile, Koizumi proposed a new schedule for Putin's visit to Japan during the 2005 Aichi World Exposition, which will begin in March. Putin accepted Koizumi's proposal, saying "It's a wonderful idea." Based on the proposal, Putin's visit is set to be postponed until March.
Source: Yomiuri Shimbun. November 2004
Write: by Yuzuru Endo / Correspondent

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PAKISTAN - PEACE

Pakistan, India vow cooperation
India and Pakistan agreed on Tuesday to press on with a frayed peace process as Pakistani Prime Minister Shaukat Aziz began talks with leaders in New Delhi during a rare visit across the border.

“Both sides felt the composite dialogue should continue to move forward,” Indian Foreign Ministry spokesman Navtej Sarna told reporters after the first round of talks between Shaukat Aziz and Indian Foreign Minister Natwar Singh. “Prime Minister Aziz said the delegation he has brought reflects the commitment of Pakistan’s civil society to this process,” Sarna said.

The two countries’ foreign secretaries, Pakistan’s High Commissioner Aziz Ahmed Khan, Indian High Commissioner to Pakistan Shankar Menon and senior officials were also at the meeting.

Aziz smiled and shook hands with Singh after he landed at Delhi airport, but made no comments.

He later met former Indian Prime Minister Atal Behari Vajpayee, whose offer of friendship to Pakistan in 2003 began the normalisation of ties between the nuclear-armed rivals. Aziz also met opposition leader LK Advani.

Sarna said the talks between Aziz and Natwar Singh were “friendly, positive and forward-looking.” “SAARC issues were discussed. It was felt that although a good start had been made in Islamabad, there was potential for further regional cooperation,” he said.

Talking to journalists after meeting Vajpayee, Aziz said that Pakistan had committed itself to continuing the dialogue process. He said the people of both countries wanted the resolution of disputes between them and hoped that he would push forward the peace initiative begun by Vajpayee.

“We discussed how to improve bilateral ties between the two countries,” Advani said after the meeting. He said that he would visit Pakistan in January or February.

Aziz, who is on a tour of the region as outgoing chairman of the regional South Asian Association for Regional Cooperation (SAARC), arrived in Delhi mid-afternoon accompanied by six ministers.

Aziz is due to meet Prime Minister Manmohan Singh on Wednesday. Singh on Tuesday phoned Aziz on his arrival at his hotel. He said that that he was looking forward to improving ties between the two countries.

Analysts said the faltering peace process and discord over Kashmir were likely to dominate the first visit by a Pakistani premier in 13 years. The two sides also are expected to discuss a long-running plan to build a pipeline to bring gas from Iran to energy-hungry India that will traverse through Pakistan.

In his first official visit to Kashmir last week, Prime Minister Singh rejected redrawing borders as a solution, effectively scuttling a suggestion by President Pervez Musharraf that the disputed state could be divided into seven regions — any one of which could be demilitarised and placed under a United Nations mandate or under joint control or given independence.

In response to Singh’s statement Musharraf said that the “vibes” from New Delhi were not good. But Aziz during a visit to Sri Lanka on Monday struck a more conciliatory chord.

“My visit tomorrow will improve the atmosphere of relations between the two countries,” Aziz said. “The relations have improved considerably... It is very sportsmanlike across the board.

Aziz will conclude his visit by meeting Indian President APJ Abdul Kalam. He returns to Pakistan on Wednesday night.
Source: News agencies. November 2004
Write: LuisB

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INDONESIA - ECONOMY

Reflections on the near-term economic outlook in Indonesia
National elections and a change in government are a wonderful time for reflection and stocktaking and Indonesia's recent set is no exception. It is a useful, as well as a fun undertaking to try and identify the most important lessons of yesterday and guess the problems we'll face tomorrow. From the standpoint of the economy, one clear picture emerges: Indonesia has shown both stability and moderate growth for the past few years and most forecasts suggest more of the same.

This picture contains both good and bad news. Stability has meant that Indonesia has weathered a number of shocks over the past several years. The country has had to endure terrorist attacks in Jakarta, its financial and political capital; and also in Bali its center for tourism.

The country faced a fall-off in trade and travel due to international strife and also regional problems such as SARS and Avian Flu. The elections themselves, until fairly recently were a source of concern - not all elections in such a large, developing country as Indonesia have gone as smoothly or as peacefully.

The robust performance with respect to these and other shocks has allowed Indonesia to put the 1997 Economic Crisis and the political upheaval of the end of the Soeharto regime firmly behind itself. Since 2001 the annual growth rate in GDP has risen from less than 4 percent to between 4.5-5 percent. This has allowed per capita income to rise and the incidence of poverty to fall. Millions of people have been made better off - at least a little. This growth has come on the back of strong household and public sector spending.

It has not come alongside strong investment spending - year after year, firms have failed to spend to open new plants or even to maintain old facilities. Currently, the investment-to-GDP ratio is nearly two full percentage points below its level in 2001.

Indeed, perversely this is one of the reasons the economy has been relatively stable: There have been so few investors that there has been no one to scare when shocks hit. While stability has been welcome, it has meant on average lower growth. More worrisome, potential growth is lower: Failure to invest in new plants, to buy new equipment, and to maintain existing facilities means that the economy will be limited in its ability to grow in the future. A lack of investment today, stunts growth possibilities tomorrow.

The reason for a lack of foreign investment is well known. Foreign investors, in particular, have been reluctant to risk new funds in view of the well-publicized problems in governance, in protecting their rights amid a corrupt and poorly functioning legal and judicial system. Any firm contemplating new investments is going to think of the experiences of Manulife and Prudential. Indonesian firms similarly have severely limited their new commitments over the past few years. They too worry about ensuring the safety of their investments.

The picture of a relatively stable economy with low investment has been quite clear for several years. During the election it has made for focused discussion on the need to encourage investment by improving governance. Arguably, it was the image of Susilo Bambang Yudhoyono as the candidate more likely to attack corruption that helped give him the victory.

Ironically, it may also be the election that makes it harder to see the economy in this fashion. It would not be unusual for an election such as this, bringing in a reform-minded candidate, after a long period of little investment that sparks a mini-boom in business spending. It would not take too much for many firms to increase their capital spending - many businesses are likely to need to spend something just to keep their production facilities going.

The Asian Development Bank's 2004 Asian Development Outlook projected only a very modest increase in investment expenditures, supporting an overall 4.8 percent rise in GDP. If that investment spending increased to 10 percent, it would boost GDP growth by more than one full percentage point. A 10 percent increase in investment spending sounds large by recent standards, but it would still put business spending 20 percent below the levels seen in 1996 and 1997, before the Economic Crisis.

I am not saying we will definitely have this pickup in business spending; many things can combine to frustrate this. (Although if it does occur, remember where you heard about it first.) We can all dream up external or internal shocks that combine to lower growth. Missteps in monetary or fiscal policy, if they occur, could also be costly.

But if the "boomlet" does come, let us be clear that it does not reflect a resolution to the many problems Indonesia has been struggling with for the last few years. An economic boomlet that stands on a cyclical upswing in investment, encouraged by a calm election and prospects for reform, will be short-lived unless these reforms actually come about. When firms have accomplished their priority spending targets, when this higher spending works its way through higher household income and expenditures, growth will again slacken.

Only when palpable changes in the investment climate emerge will there be sustainable higher levels of spending and sustainable higher growth. A boomlet will give the Government some breathing room, but the longer-term reforms will still be needed to turn a boomlet into a period of prosperity.
Write: LuisB. November 2004

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KAZAKHSTAN - NATURAL RESORCES

China’s mounting influence - Xinjians’s thirst threatens Kazakh water resources
Xinjiang's growing thirst for water is raising fears of a major catastrophe in Kazakhstan.
Mels Eleusizov heads the Kazakh nongovernmental organization Tabigat (Nature). He said the Irtysh and Ili rivers, which both originate in mountainous areas of Xinjiang before crossing into Kazakhstan, are being increasingly drained to serve China's needs.

"For Kazakhstan, the most alarm concerns two rivers - the Ili and Irtysh," Eleusizov said. "The new infrastructure and factories in Xinjiang consume a lot of water. The drinking water needs are increasing, too. If China continues to increase water consumption in the area, it will certainly affect the water resources on our side."

The Ili flows through Xinjiang into southeastern Kazakhstan and terminates in Lake Balkhash.

The Irtysh rises in China's Altai Mountains and also crosses into northeastern Kazakhstan, before flowing through Lake Zaysan to the Russian city of Omsk and then into the Ob River.

The increasing usage of river water in Xinjiang, which has relatively few water resources of its own, is inherent in Beijing's aim of attracting ethnic Han Chinese to the region and developing the local economy.
Ann McMillan, a scholar at Griffith University in Queensland, Australia, has been researching the interdependency between Xinjiang and Central Asia.

"There's actually a lot of concern coming out in China in the government [media]," McMillan says. "There have been reports about the water table dropping, especially around Urumqi, the capital of Xinjiang. So they are aware that they've got major problems. And they've even started charging for water in some places. But for their development to go ahead, they need water. So you've got a 'Catch 22' situation."

The Irtysh and Ili are crucial sources of fresh water for the Kazakh population. Both also play a vital role in the economy, providing water for the industrial, agricultural. and fishing sectors.

Myrzageldy Kemel is a member of the Kazakh parliament's Committee on the Protection of the Environment and Ecology. He talked about the environmental consequences of the increasing usage of the Ili's water:

"If the level of the [Ili] River decreases, the environment along the banks will be affected drastically," Kemel said. "Local citizens will suffer a lot. Now, nobody is paying attention to this, although in about 50 years [the situation] might be even worse than in the Aral Sea."

The Aral Sea has lost three-quarters of its volume since 1960, when Soviet-era planners began diverting its feeder rivers to irrigate cotton fields. The Aral Sea is widely acknowledged to be one of the world's worst man-made environmental disasters.

The United Nations Development Program (UNDP) has warned that Kazakhstan's largest lake, Lake Balkhash, is in danger of drying out if Astana does not adopt better water management practices or else gain Chinese cooperation over the usage of the Ili, the lake's main contributor.

The current construction by China of a canal - 300 kilometers long and 22 meters wide - to reroute water from the Irtysh is also of great concern.

Abai Tursunov is a professor at the Kazakh Institute of Geology and Geography in Almaty. He said he is worried about the environmental impact when the canal becomes fully operational, which is estimated to be in 2020.

"The completion of the canal will affect us drastically," Tursunov said. "Power stations will be very much affected. Nobody is raising the issue, but gradually all of this can lead to major environmental problems."

Hydropower stations and factories are located along the Irtysh, while the Irtysh-Karaganda canal makes agriculture possible in central Kazakhstan. The river also provides drinking water to the capital, Astana, as well as to three other major cities - Karaganda, Semipalatinsk and Pavlodar.

Chinese authorities have provided little information on the canal project. But speaking to RFE/RL's Kazakh Service, China's ambassador to Kazakhstan, Zhou Xiao Pei, tried to be reassuring: "We currently use 10 to 20 percent of the [Irtysh's] waters. We are building a new infrastructure. [But] we are going to use no more than 40 percent [of the water]."

In 2001, Kazakhstan and China signed an agreement aimed at facilitating cooperation on trans-boundary water management. Through consultations, the two states agreed to share information concerning the Irtysh.
Zhakybay Dostay, also of the Kazakh Institute of Geology and Geography in Almaty, said the talks have led nowhere so far.

"The [joint Kazakh-Chinese intergovernmental] commission meets every year without results," Dostay said. "They just give figures, make statements and sign documents. The problems remain."
Kazakh President Nursultan Nazarbaev visited Xinjiang in September. But there is no indication that he raised the issue of trans-boundary rivers with Chinese officials.
Write: by Antoine Blua. November 2004

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CHINA - FINANCE

Air China IPO to raise up to $1.1 billion
Air China, the biggest Chinese international carrier, plans to raise as much as 8.7 billion Hong Kong dollars, or $1.1 billion, in its initial public offering to buy aircraft and pay debt, bankers involved in the sale said Wednesday.

The Beijing-based company is offering 2.805 billion shares at between 2.35 dollars and 3.10 dollars each, which is 8.8 times to 11 times the 2005 profit forecasts by banks arranging the sale, said the bankers, who asked not to be identified.

Air China will benefit from a rally in Hong Kong shares that pushed the city's benchmark stock index to its highest in almost four years, said Andy Mantel, managing director of Pacific Sun Investment Management.

The acquisition of a 10 percent stake by Cathay Pacific Airways of Hong Kong and a decline in fuel prices from a 14-year high last month may also lift investor confidence.

"The timing is right to list on the market and the Cathay Pacific investment will help," Mantel said. "A lot will still come down to pricing."

The range is 1.2 times to 1.5 times the company's book value in 2005, the bankers said. Cathay Pacific, Asia's sixth-largest carrier by sales, trades around 1.3 times its book value. Singapore Airlines, Asia's most profitable carrier, trades around 1.2 times, according to research from Merrill Lynch.

"Air China has better earnings prospects because of improved asset quality after the pre-IPO restructuring," said Agnes Deng, a manager at Standard Life Investments. "Much of its growth still comes from domestic routes, which international airlines have no access to," justifying a higher book value.

To attract investors, Air China is citing an expected increase in demand for air travel and air freight, buoyed by China's average 9 percent annual economic growth during the past decade.

The Hang Seng index has climbed 20 percent in the past six months; partly as an influx of mainland Chinese tourists helped revive Hong Kong's economy.

Air China plans to fix the price of its shares in the week of Dec. 6 and start trading in Hong Kong and London in the week of Dec. 13, the bankers said.

China International Capital and Merrill Lynch are arranging the sale. China International's spokeswoman in Beijing, Feng Danyun, and a Merrill Lynch spokeswoman, Connie Ling, declined to comment.

Chinese citizens will make an estimated 100 million trips abroad every year by 2020, an average annual growth rate of 12.8 percent, or triple the pace of global industry expansion, according to the World Tourism Organization, a United Nations agency.

Higher jet fuel prices are threatening to erode the profitability of Chinese airlines even while traffic is increasing. China's dominant jet-fuel supplier raised the price at which it sells to domestic airlines by 10.8 percent, the Xinhua press agency said in August.

Air China plans to spend 18.7 billion yuan, or $2.3 billion, buying 46 aircraft by 2006 and building an airport terminal, according to Merrill Lynch's research on the sale. Chinese airlines have been expanding their fleets as rising urban incomes make travel affordable to more people.

Air China may face increased competition after the nation's Civil Aviation Administration this year rolled back a 2002 ban on new domestic carriers. International airlines permitted to add routes to China this year include Cathay Pacific, United Airlines, Air France-KLM Group and Deutsche Lufthansa.
Source: Bloomberg News. November 2004
Write: by Cathy Chan

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INDIA - BUSINESS

Calvin Klein lands in India
Calvin Klein hit the headlines in the US way back in 1979 with the launch of his designer jeans - rather the commercial for his jeans featuring the 15-year old heartthrob of the time, Brook Shields - with the catch line: "You know what comes between me and my Calvins? Nothing" The jeans sold 200,000 pairs in the first week.

Well, it may be 25 years too late, but Klein, the marketing genius, the person, the designer known to provoke, the brand name considered one of the most valuable alongside Pepsi, Coca-Cola, IBM and Nike, has finally arrived in India. Klein, the man, is on a mission. "I've come to make connections. Be it fashion, fragrances or accessories, India is a market that needs to be explored. With over a billion beautiful people, the possibilities here are enormous," he says.

Named by a top US magazine as one of the 25 most influential people in America, Calvin the Conqueror - as Women's Wear Daily dubbed him once - says he is looking at retail and distribution as possibilities and was also, in the process, discovering the most extraordinary craftsmanship in India. Although the Calvin Klein brand ranging from jeans to coats, underwear to fragrances and home decor to watches is now part of the Phillips-Van Heusen Corporation, Klein continues to be creatively associated with his brand and advises on global expansion plans. Indeed, as head of the eponymous designer company that generates global revenues of more than US$2 billion a year, the presence of the man who lends his name to the Fortune 500 company and dictates the way the well-dressed world turns out, is a significant occurrence.

It shows India has progressed beyond being a land of cyber-coolies (call center executives, as they have come to be called) and a low-income, low-cost destination to a vibrant economy where the best and the most expensive designs created by top fashion labels can find a market. India's $200 billion retail market is still small compared to rivals such as China, Malaysia and Thailand, but according to estimates by McKinsey, the market size is expected to grow to $500 billion in the next five to six years.

The coming of Klein comes in the wake of another top American fashion designer, Tommy Hilfiger, who has also set up shop in India. The creator of one of the most recognizable fashion labels was in India earlier this year to launch his exclusive stores in the urban centers of Delhi, Gurgaon, Mumbai and Bangalore, bringing the biggest fashion brand to this part of the world.

"The Indian economy is soaring. I think the Indian people love brands. We have a partnership with Arvind and Murjani [as per current Indian laws, an Indian partner is a statutory requirement] and it doesn't get better than that. We are also powerful as a brand to move into a country and do well. We back it up with great stores, wonderful advertising, products and newness at the same time as in the rest of the world. There isn't another American designer on this soil. It is because maybe they don't understand it, maybe they don't know or maybe they don't care. I understand it. I care about it and I am excited about it,'' Hilfiger said in an interview on his coming to India, of course before Klein decided to move in too.

But apart from the business side, there has been another aspect to the Klein visit - the creative part. The czar of fashion has been quietly soaking up local sights, sounds and snips, traveling incognito with a few Indian friends. He has visited the local emporia and the crafts museum in the capital, absorbing various traditional Indian techniques and threads with cloth (ikat, tanchoi, chikenkari, baluchari) as well as the use of bright colors - the raspberry reds, the fuschia pinks and the sun-dried yellows. Clearly, Klein does not want his foray into India to be a one-way process and he wants to take back some of the Indian creations to expand his horizon. "The way you guys put colors together is amazing," Klein told reporters at the crafts museum, "the feel, texture, warp and weft - its exquisite."

Klein's interest is a further reflection of the fact that Indian influence is beginning to be felt at fashion hot spots around the world. American designers who have sporadically been inspired by Indian motifs in the past are embracing the eastern look - saris (traditional Indian dress worn by women), bandgala (high-neck jacket for formal occasions), choli (embroidered blouse), lehenga (Indian wrap-around), kurti (loose cotton tops) and more.

According to Rohit Bal, one of India's leading fashion designers, the West is looking at Indian fashion more seriously. "Some critics say there is too much hype about Indian fashion. Every time I show my clothes in the West, the positive feedback is that 'it's beautiful; it's like being reborn as a princess'. But the negative feedback is 'oh my god, I cannot carry off such clothing'. What we are witnessing is a conversion of this negative feedback into a positive one."

Another tricky question, though, is whether Klein will water down his signature ads for the more conservative Indian audience. "It is not a question of watering down, but we will definitely be careful about cultural sensitivities," says Klein. "At the same time, I feel there are a whole lot of Indians who do not think too differently from Americans. That should make the task easier."
Write: by Siddharth Srivastava is a New Delhi-based journalist. November 2004

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NORTH KOREA - INTERNAL AFFAIRS

The case of Kim Jong-il's missing portraits
If you love a good, multi-layered mystery, and convoluted Asian machinations with international implications, then you'll love this one.

Speculation among North Korea watchers is feverish and rampant, and experts are trying to figure out what's going on with the world's last grand personality cult in the world's most reclusive kingdom. Some of the ubiquitous portraits of North Korea's Dear Leader Kim Jong-il are disappearing, reportedly at his direction, from some but not all public places in Pyongyang. Furthermore, the standard honorific "Dear Leader" has been dropped in many cases.

Reports on North Korea's leader Kim Jong-il's order to remove his portraits from some public places in Pyongyang are prompting rife speculation worldwide. Some analysts have said "Dear Leader" Kim might have been shifted from the top position, signaling the beginning of his downfall at a time of unprecedented economic and international political problems. Some said it could be preparation for the transfer of power to one of Kim's sons. Some said Pyongyang is just switching old portraits for new ones bearing a better, older likeness, while others conjectured Kim has just decided to show the world that the Hermit Kingdom will humanize a bit and open up a bit toward the outside world. This suggestion of possible humanism, humility and almost certain pragmatism comes at a time when North Korea, like the rest of the world, is increasingly conscious of the hardline United States administration, in advance of the still-unscheduled next round of six-party talks on defusing the Pyongyang nuclear crisis.

Nobody is sure about what is really going on. Is this an authentic downsizing of the larger-than-life personality cult, an effort to win friends and influence people, or the result of a power struggle by those dissatisfied with Kim Jong-il's refusal to undertake reforms and make concessions at a time of unprecedented international pressures, a barely sustainable economy, and now a Japan that is considering economic sanctions over its citizens abducted by North Korea years ago?

"Those portraits' removal aims to get more sympathizers with Pyongyang from international society, especially targeting South Korea's pro-North politicians and younger people by showing the world the softening of a personality cult at home," Lee Young-hwa, the representative of Rescue the North Korean People! (RENK), a Japan-based citizens' group supporting North Korean asylum seekers in China since early 1990s, told Asia Times Online. Lee is also an economics professor and third-generation Korean resident in Japan.

Many are surprised to learn that this is not the first time Kim, now 62, has ordered his own portraits to be taken down from public buildings. This goes back to the summer of 2002. It first happened in Japan in the Chongryon society, an organization of North Korean residents who for years boasted iron-clad solidarity for their motherland. The purpose for the removal of Kim's portraits from public spaces in Japan had been to emphasize Koreans' unity, North and South, as the same race. At that time the move sought to soften, dilute, even diminish the ideology of a personality cult and to play up Kim's conciliatory stance toward South Koreans - putting people before ideology. Kim specifically ordered Chongryon (the General Association of Korean Residents in Japan) to remove his portraits from North Korean schools in Japan in order to win more pro-North Korea supporters from ethnic Koreans, to make them future Chongryon members and encourage them to enroll their children in Chongryon-affiliated schools.

Kim now seems to have decided to do the same thing domestically, especially when Pyongyang faces a profound international predicament, ranging from its stubborn refusal to do away with its nuclear-arms program to Tokyo's fury over its citizens abducted over the years by North Koreans. He may well have been trying to attract more South Korean supporters for his dynasty, just by showing some limited, possibly just cosmetic, flexibility in his Stalinist nation. It might be Pyongyang's typical divide-and-rule strategy in dealing with South Korea, the United States and Japan, this time counting on pro-North supporters in the South.

The Russian news agency Itar-Tass was the first to report on Tuesday that many paintings of Kim were being removed from their usual positions, alongside those of his father, North Korea's founder Kim Il-sung. Adding fuel to the speculation on Thursday, Radiopress, the Japanese monitoring agency of North Korean media, reported that North Korea's official media on Wednesday dropped the glorifying description of "Dear Leader" from Kim's title. Radiopress said the North's Korean Central Broadcast, the Korean Central News Agency and other media simply described him as "general secretary of the Workers Party of Korea, chairman of the DPRK [Democratic People's Republic of Korea] National Defense Commission, and supreme commander of the Korean People's Army".

In the latest development, a North Korean diplomat who defected to the South last year said on Thursday that Kim himself ordered the portraits removal as early as last year, according to the Korea Times. On the same day, Japanese media reported that Kim's portraits have been removed only from certain public places - those frequented by foreign guests, including the People's Culture Palace - not from all public places in Pyongyang or across the country.

Whenever Kim actually decided to take down his portraits, at least some of them, he appears to have believed that without de-emphasizing his personality cult, leavening his rigid ideology and thus getting more support from South Koreans - especially from the pro-North ruling Uri Party members in Seoul - he cannot effectively confront the US and Japan over Pyongyang's nuclear-weapons program and its past abductions of Japanese citizens.

After Kim's order in late August 2002, Chongryon directed all of the pro-Pyongyang 110 Korean elementary and junior high schools across Japan to remove his portraits; most of this took place in September 2002. Behind this move was the dwindling number of North Korean residents in Japan. Currently about 600,000 North and South Koreans are said to live in Japan. More than 500,000 are said to be South Koreans, while only 100,000 are North Koreans. Until the 1960s the numbers from each Korea had been almost the same. But recently, many Koreans have changed their nationality from North to South. Moreover, not a few Koreans have become naturalized Japanese citizens in recent years.

As a result of all these factors, enrollment in pro-Pyongyang schools is falling year by year. This trend was fueled by expensive tuition, due to the lack of subsidies from the Japanese government. North Korean parents therefore are reluctant to send their children to those schools, seeking instead to enter them in Japanese public schools.

Moreover, the eruption of the abduction issues - Pyongyang agents abducting Japanese over the years - also accelerated Japan's trend toward anti-North Korea sentiment. Faced with this threatening of Korean national self-determination, Kim ordered Chongryon to take down portraits at schools in August 2002, to make things more comfortable for South Korean parents and to lower their resistance to sending their children to pro-North schools in Japan.

Faced with recent mass movements of refugees from North Korea - more than 460 in July - Kim might have wanted to play down the personality cult to stem the outflow, with some so desperate to leave the worker's paradise that they even climb the walls of various embassies and consulates in China, to Beijing's great embarrassment. Moreover, the decision to lower the profile of the dictator in the reclusive communist state is in line with the extremely adverse situation that North Korea has created for itself. In the past four years, US President George W Bush has applied increasing pressure to thwart North Korea's nuclear-weapons program and chronic human-rights violations. This approach appears to have been reinforced by his appointment of the tough and pragmatic Condoleezza Rice as new secretary of state in his second administration once Colin Powell leaves that post.

As for Japan, Pyongyang has continued the risky cat-and-mouse game of diplomacy with Tokyo as its economy continues to deteriorate - in a bid to run up the amount of potential Japanese economic aid and post-World War II reparations for past wrongs. Today in Tokyo, however, not a few lawmakers and citizens are asking the administration of Prime Minister Junichiro Koizumi to consider economic sanctions on North Korea. The anti-North Korea attitude has become even more acute after a Japanese delegation's week-long stay in Pyongyang did not yield good news about the fate of abducted Japanese. Instead, they brought back to Tokyo the ashes of at least two persons, including Megumi Yokota, who was kidnapped in 1977 at age 13
North Korea now can only rely on South Korean President Roh Moo-hyun's center-left, pro-Pyongyang administration. South Korean political circles are sharply divided into conciliatory pro-North progressive camps of the Uri Party and antagonistic conservatives of the main opposition, the Grand National Party. Capitalizing on these divided political circles, Kim basically appears to have adopted a conciliatory strategy toward South Koreans by downsizing the personal cult of ideology.

Professor Lee Young-hwa, who said Pyongyang is trying to get more Seoul sympathizers, also pointed out that Kim once ordered his portraits alongside those of his father Kim Il-sung to be taken from public buildings in 1978, four years after Kim Il-sung officially nominated his son as his dynastic successor. Lee, an associate professor of economics at Kansai University, said that at the time Kim Jong-il was testing his people's loyalty to him: those who actually took down his portraits as ordered were said to have been punished and sent to gulags, or prison camps, often meaning death. This is one of the major reasons, Lee said, that Koreans cannot take what appears to be Kim's direct order at face value this time around. They are cautious: wanting to obey their leader who says take down his pictures, but also aware that obedience may carry a price.

Moreover, concerning the removal of the glorifying - though some find it odious - honorific "Dear Leader" from Kim's title, Lee said that also signifies Kim's efforts at conciliation toward South Korea. "Recently North Korea has intensified its media campaigns towards [the] South Korean audience, especially in Hangul [the Korean alphabet] on the Internet," said Lee. Now North Korea is coming to realize that the "Dear Leader" title inspires disgust among Korean audiences, especially the young.

Still, Lee said he could not exclude the possibility that Kim just wants to replace his old portraits with new ones because the old standard portraits depict a man in his 20s. Then again, maybe he wants to test his people's loyalty to their Dear Leader, again.
Write: by Kosuke Takahashi is a former staff writer at the Asahi Shimbun and is currently a freelance correspondent based in Tokyo. November 2004

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JAPAN - BUSINESS

Kirin to purchase 25% stake in Chinese brewer
Kirin Brewery, Japan's biggest beverage maker by sales, said Wednesday that it would spend ¥3.9 billion, or $37.6 million, for a 25 percent stake in Dalian Daxue Brewery.
Kirin said it planned to double the Dalian-based brewer's yearly production capacity to 400,000 kiloliters, or 106 million gallons, by December 2008.

"China's beer consumption is rising," said Naomichi Asano, the Kirin vice president. "Our purchase will help us expand our Chinese market share."

China, which became the world's biggest beer producer in 2002, brewed 25.1 million kiloliters last year, according to Kirin. Japan produced 6.53 million kiloliters, down from 6.93 million kiloliters in 2002.

China will produce 39.2 million kiloliters by the end of 2010, according to Takashi Kadokura, an economist with Dai-ichi Life Research Institute.

Japanese companies such as Kirin and Asahi Breweries are expanding overseas and diversifying their alcoholic and nonalcoholic products to attract consumers amid shrinking domestic demand for beer.
Kirin said it would complete the acquisition by the end of the year using its own cash. The purchase will not affect this year's earnings.

"This investment is part of the overall plan to increase our production capacity in China," Asano said. Kirin may invest more in three northeastern Chinese provinces around Dalian, he added.

Kirin plans to spend ¥100 billion on overseas M&A by December 2006, Kazuyasu Kato, the managing director, has said. It plans to double overseas sales by 2010 by buying foreign breweries, he added.

In October, the Nihon Keizai newspaper reported that Kirin planned to invest as much as ¥10 billion to double its beer output in China to one million kiloliters a year.
Source: Bloomberg News. November 2004
Write: by Issei Morita

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SINGAPORE - AUTO INDUSTRY

Singapore purchases stake in carmaker
The Government of Singapore Investment Corp. has bought about 5 percent of Proton Holdings, signaling rising investor confidence in Malaysia's largest carmaker after it announced an alliance with Volkswagen.

GIC, as the Singapore company is known, said in filings to the Malaysian stock exchange late Tuesday that it had bought a combined 27.7 million shares on Nov. 9. It did not reveal the price paid for the stake, which was worth 249 million ringgit, or $65.5 million, at the close of trading Tuesday, compared with 256 million ringgit on the day GIC bought the stake.

Proton's agreement to assemble Volkswagen cars, announced last month, is raising investor interest in the Malaysian carmaker, which had been seeking an overseas partner since Mitsubishi Motors of Japan ended a 21-year alliance in March.
Proton shares have risen 6.4 percent since Oct. 21, when the Volkswagen alliance was reported by the German newspaper Handelsblatt.

GIC's interest "could be because of the tie-up with Volkswagen, so they see greater potential from them," said Sharifah Sheila, a fund manager at Prudential Unit Trusts. Prudential's view on the stock is "more positive than before," she said.
The Singapore government investment agency is charged with achieving "good long-term returns on state assets placed under our charge by investing internationally," according to its Web site.

GIC and Temasek Holdings, another Singapore state-run investment company, have been acquiring stakes in some of Malaysia's largest companies. Relations between the countries, which were united between 1963 and 1965, have improved since Abdullah Ahmad Badawi replaced Mahathir bin Mohamad as Malaysia's prime minister a year ago.

On Nov. 10, Temasek and CIMB, Malaysia's biggest investment bank, said they would form a 1 billion ringgit fund to invest in properties in Malaysia.

In March, Temasek paid 1.6 billion ringgit for 5 percent of Telekom Malaysia, Malaysia's biggest phone company. Two months later, Telekom and Singapore Technologies Telemedia, a Temasek unit, agreed to jointly buy 33 percent of the closely held Idea Cellular, an Indian company.
GIC owns 6.1 percent of the Malaysian builder Gamuda and bought 5 percent of the auto group UMW Holdings in January.

Proton will assemble two Volkswagen models for Malaysia's car market by the end of next year and is forecast to sell 15,000 cars by 2006, the German automaker said last month. Proton may jointly develop new models with Volkswagen and share technology as part of the agreement, Proton said later.
Write: by Stephanie Phang and Khoo Hsu Chuang. November 2004

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2004-10-28T20:46:00.000+02:00

JAPAN - GEO ECONOMICAL POLITICAL

Both sides to blame for cool Japan-China ties
Japan would be wrong to counter Chinese nationalism with chauvinistic nationalism of its own. Japan must keep reminding China that the two nations have a shared destiny in East Asia.
Japan's relations with China are deteriorating. Anti-Japanese sentiment led to rioting during the recent Asia Cup soccer tournament in China, while mutual feelings continue to sour over the disputed Senkaku Islands and an offshore natural gas exploration project in the East China Sea.
And, thanks to Prime Minister Junichiro Koizumi's stubborn refusal to forgo visits to Yasukuni Shrine - which the Chinese view as a symbol of Japan's remorseless justification of its war of aggression in Asia in the last century - summits between the two countries have been put on hold indefinitely.
Some questions about recent surge of nationalism in China and how Japan should deal with it introduce some basic questions;

Q: Would it be correct to say the anti-Japanese sentiment that flared in China during the Asia Cup soccer tournament was symbolic of the deteriorating relations between the two nations?
A: Let’s qualify that by saying those Chinese who displayed blatant hostility toward Japan were not in the majority, and that their behaviour was confined mostly to the stadiums where Japan's games were held. In other words, it isn't that everyone in China hates Japan and the Japanese. That said, it is also a fact that the younger generation is anti-Japanese. One of the Asia Cup sites was Chongqing, a city which the Japanese Imperial Army bombarded mercilessly 60 years ago. Twenty years of ``patriotic education'' have instilled strong anti-Japanese feelings in younger Chinese.

Q: Why is China's ``patriotic education'' so anti-Japanese?
A: It goes back to 1985 when Prime Minister Yasuhiro Nakasone called for a ``total settlement of postwar accounts'' and paid an official visit to Yasukuni Shrine. The Chinese leadership was outraged, and lamented that the nation's younger generation was ignorant of the history of China's war of patriotism and resistance against Japan.

The purpose of patriotic education was to justify the Communist regime by teaching that the Chinese people were liberated and given independence by Mao Tse-tung and the Chinese Communist Party. The teaching stressed the history of China's victory over Japan, and this was further reinforced in the mid-1990s when Jiang Zemin was general secretary of the Chinese Communist Party.

The education system was obviously too biased against Japan. It's a fact that Japan invaded China. However, there was a period from the late 19th century to the early 20th century when Japan tried to cooperate with East Asian countries including China and modernize themselves so that they could resist the Western powers. And after World War II, Japan emerged as an economic superpower and contributed to the development of East Asia.

Yet, all that is taught in China is the history of Japanese military aggression. I wish, for the International benefit, the Chinese leadership would rectify this excessively anti-Japanese and jingoistic education. In this sense, it is good that moves have been made to control the nation's anti-Japanese elements since Hu Jintao became president.

Q: Still, with all exchanges between the two leaders now on hold, in the present relationship can only be called abnormal?
A: Could certainly say the relationship is extremely unbalanced. Economically, Japan has a mutually complementary structure. Cooperation between China and Japan is indispensable to East Asian solidarity. The two nations have even cooperated in the area of security concerning the North Korean nuclear problem.
But nothing is going right on the political front, and the images the Chinese and Japanese hold of each other are getting worse. A 1998 agreement on mutual visits by top leaders was shelved after Koizumi became prime minister. Both Tokyo and Beijing must understand how serious it is not to have political exchanges.

Q: Koizumi has made no visible effort to improve the situation. It’s seeing in positive action to bilateral relationship?
A: The Koizumi administration cannot be criticized enough for its lack of a realistic China policy. There is no question that the administration places priority on domestic politics in continuing to insist on Yasukuni visits. If Koizumi wants to visit the shrine, he should visit there on Aug. 15 and explain his reasons in no uncertain terms. It is simply absurd to go two days before or on New Year's Day.

Q: Nothing will move forward so long as Koizumi keeps visiting Yasukuni?
A: The relationship is unlikely to improve unless Koizumi changes his ways.

Q: The idea of building a national memorial facility for the war dead (as an alternative to Yasukuni)?
A: Yasukuni is the nation's central facility to honor the war dead, but it cannot become a state facility under the Constitution. Since this is the case, I believe it is a good idea to create an alternative facility. If Koizumi were capable of showing a little consideration for the feelings of non-Japanese people, he could stop going to Yasukuni and start visiting this new facility instead.

Q: What could be done to improve Japan's overall relations with China?
A: The root of the animosity is miscommunication or misunderstanding. The relationship between Japan and China is not just about who invaded whom; the history being taught is self-serving on both sides.
Even if the Chinese and the Japanese cannot share a perception of history, they should at least be able to understand their differences. The important thing is to research history jointly and communicate the findings to posterity.
Japan would be wrong to counter Chinese nationalism with chauvinistic nationalism of its own. It is a fact that Japan did terrible things to China and other Asian nations. Japan must never forget this. It must also keep reminding China that the two nations have a shared destiny in East Asia
Write: by LuisB. October 2004

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JAPAN - ECONOMY

Earnings Improve at Japanese Electronics
Most major Japanese electronics makers reported improved earnings for the third quarter on Thursday as cost cutting pushed up profitability and demand surged for new digital products.
Among the manufacturers reporting higher results were Sony Corp., Matsushita Electric Industrial Co. Ltd. and Fujitsu Ltd. But NEC Corp. said group income tumbled to about a third of what it was a year earlier.
The companies said flat-panel TVs and digital cameras sold well, but demand was down for cathode-ray tube TVs and audio equipment.

They remained cautious about the months ahead, citing worries about global growth. Japanese corporate profits are almost certain to be hurt by any slowdown in Japan and in the United States.

Tokyo-based electronics and entertainment giant Sony said profit in the July-September quarter jumped 61.6 percent on improved profitability at its mobile phone joint venture and gains in its movie business, led by "Spider-Man 2."
Sony's profit totaled 53.2 billion yen ($500 million) for the quarter, up from 32.9 billion yen a year ago. Sales dropped 5.3 percent to 1.702 trillion yen ($16 billion), from 1.797 trillion yen on falling revenue from the company's electronics and video-game businesses.

Declining sales of PlayStation 2 video-game machines - as well as price cuts in Japan, the United States and Europe, and an outsourcing of their production to Chinese companies - also hurt Sony's earnings.

Matsushita not only reported a heftier profit but also growing sales as the Osaka-based maker of Panasonic products focused on new digital products, such as flat-panel TVs, digital cameras and DVD recorders under a revival plan.

Matsushita reported a 14 percent jump in net profit to 23.4 billion yen ($220 million) from 20.4 billion yen a year earlier. Sales surged 18 percent to 2.2 trillion yen ($20.7 billion) from 1.9 trillion yen.
Fujitsu, based in Tokyo, reported a profit of 3.6 billion yen ($33.8 million) for the July-September period, bouncing back from its year-earlier loss of 18.7 billion yen.
NEC did not fare as well, with profit for the quarter at 4.25 billion yen ($40 million), down from 14.8 billion yen a year ago.

NEC also lowered its full fiscal year forecast, citing possible shrinking demand for mobile phones and computer chip products, to a group net profit of 60 billion yen ($564 million), down from its earlier forecast of a profit of 70 billion euros ($658 million).

Sony raised its profit outlook for the year to 110 billion yen ($1 billion), up 24 percent from fiscal 2003, and above its July forecast of 100 billion yen ($940 million).

But it acknowledged continuing problems in its electronics sector and lowered its sales projection to 7.35 trillion yen ($69 billion), down 2 percent from the previous year.
Source: The Associated Press. October 2004
Author: by Yuri Kageyama

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CHINA - ENERGY

China-Japan oil race inevitable
The race for Russian pipeline and for oil in East China Sea, unveiled the "energy race" between China and Japan to the world. Analyst says the inevitability of the competition has long existed.
Japan, an economic power poor in energy resources, Japan has to depend on import for almost all energy resources: oil, coal and natural gas. According to authoritative statistics, averagely Japan imported daily almost four million barrels in 2002 and over 4.5 million in 2003. The fact is that its unduly heavy dependence on oil, more than 50 percent of its total energy consumption, has been a serious limitation.
The limitation has long pushed Japan into the international energy market. To date, Japan has left its steps among the newly discovered oil fields including those in Western Serbia, Caspian Sea, Middle Asia and North Africa. With its economic and technological advantages and through purchase and merging etc, Japanese enterprises such as Mitsubishi have settled down, acquiring large amount of the oil around the world.

Japan has been kept on edge by China's increasing oil demand in the past two years. Objectively speaking China is a country with relatively rich energy resources. However, in terms of make-up, China is currently rich in coal but short in oil and gas. China's oil consumption has been growing at an annual rate of around six percent over the past decade while that of the output was only 1.5 percent. However, China surpassed Japan to be the second oil importer in the world.

An indisputable fact is that both China and Japan are confronted with the same scarcity of energy and an surprising convergence.

Files say that presently, the provision from the Middle East accounts for 50 and 87 percent of total imports of China and Japan respectively and the route is the same: through the Strait of Malacca, South China Sea to the two countries.

Analyst points out the converging dependence on foreign supply, the same sources of oil and gas import, plus relativity in geopolitics and geo-economics all inevitably lead to China-Japan competition in the international oil market, which will turn more fierce and cruel as China's four big oil companies go overseas.

Sources say when China National Offshore Oil Corp. (CNOOC) bought Australian project of Northwest Shelf project, Mitsubishi and Mitsui tried hard to object China’s participation. When China National Petroleum Corporation (CNPC) entered Sudan and took the oil pipeline project, it suffered strong objection from Japanese side including government. Moreover, in the international tendering of Iran's oil and gas, Japan again became a major rival of CNPC.

It is no exaggeration that Japan is almost shadowing China wherever there is oil.
Concerning the conflict, China Business Times comments that the competition for Russian pipeline and exploration in East China Sea is only a prelude of the game between China and Japan in the arena of international energy.

Zhang Qiyue, spokesperson of China's Foreign Ministry, told a press conference recently that China and Japan have both expounded their stances and related concerns on the demarcation of East China Sea. Both sides think that different views do exist and advocate seeking a just solution of the problem through negotiations on the basis on the United Nations Convention on the Law of the Sea.
Correspondent found that the issue concerning East China Sea is so complicated that high-level officials of China and Japan failed to make a breakthrough on significant questions therefore consultations will continue.
Source: People's Daily Online. October 2004

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INDIA - POLITICAL AFFAIRS

Maharashtra: Congress gets Chief Ministership
The Congress eventually had its way today and retained the Chief Minister's post in Maharashtra. The Nationalist Congress Party (NCP) settled for the Deputy Chief Minister's post and got three more Ministries as compensation for letting go its claim to the top post in `Mantralaya.'
After 11 days of intense bargaining, the Congress and the NCP tonight sorted out the leadership tangle in the State. Announcing this, the Congress leaders, Ahmed Patel and Margaret Alva, and the NCP leader and Union Civil Aviation Minister, Praful Patel, said here that the "1999 formula would continue."
The NCP would now get two Cabinet Ministers and one Minister of State more than its earlier share. In the previous Government, the NCP and the Congress shared the portfolios equally.
Both parties said that the Chief Minister would decide which Ministries would go to the NCP. However, sources suggested that the NCP might get the Cabinet posts of the Ministries of Forest and Environment and Labour held by the Congress earlier. The Minister of State was yet to be decided.
In addition, the NCP would get two more portfolios. It would also retain the Speaker's post as per the formula.

`Choice open'
Leaders of both parties also announced that their legislature wings would meet in Mumbai on Friday to elect their leaders.
Asked whether the incumbent Chief Minister, Sushil Kumar Shinde, would be given a second term, Mr. Ahmed Patel said, "It is open." The NCP, too, did not offer any names amid indications that senior leader Vijay Singh Mohite-Patil was also being considered for the post of Deputy Chief Minister.
The Congress had been insisting since October 16, when the election results were declared, that it be allowed to lead the coalition again since it had more legislators. The Congress, which won 69 seats on its own, claimed to have 74 legislators by including those who contested from its share of the seats. The NCP staked its claim on the ground that it had emerged as the single-largest party with 71 seats.
During the negotiations, the NCP sought two Deputy Chief Ministers for giving up its claim to the Chief Ministership. The Congress turned down the demand and instead offered three Ministries from its quota. This was accepted by the NCP even though initially it said it was "not enthusiastic" about the offer.

`No give and take'
Mr. Praful Patel said the party was happy with the agreement and the larger interest of providing a secular government in Maharashtra had guided it in resolving the issue.
The negotiations entered a crucial stage today when the NCP State leaders, R.R. Patil, Vijaysinh Mohite Patil, Ajit Pawar, Chhagan Bhujbal, Jaywant Patil and Padamsinh Patil, arrived here for talks with the NCP president, Sharad Pawar, and senior leaders, including Mr. Praful Patel, Tariq Anwar and D.P. Tripathi. They held three rounds of talks before Mr. Praful Patel went to meet the Congress president, Sonia Gandhi, along with Mr. Ahmed Patel.
Later, Mr. Ahmed Patel and Ms. Alva arrived at Mr. Pawar's residence where the agreement was finalised. Thereafter, Ms. Gandhi and Mr. Pawar spoke on telephone. Mr. Pawar also spoke to the Prime Minister, Manmohan Singh, to inform him of the developments.
Source: The Hindu. October 2004
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NEPAL - INTERNAL AFFAIRS

Nepal ceasefire deadline expires
A nine-day truce between the Nepalese government and the country's Maoist rebels has ended.
Prime Minister Sher Bahadur Deuba has ruled out unilaterally extending the ceasefire.
Both the rebels and the government suspended armed operations to coincide with Nepal's biggest Hindu festival.
The BBC's Sushil Sharma in Kathmandu says the end of the truce has raised fears of a possible escalation in violence between the two sides.

Favourable atmosphere
National and international human rights groups, the media and Nepalese citizens have urged the government and the rebels not to resume hostilities.
They say extending the truce could create a favourable atmosphere for the resumption of peace talks.
The rebels have not commented on their next move.
A key coalition partner, the United Marxist-Leninist (UML), wants the truce extended to force the rebels to reciprocate the gesture.
Violence has surged since peace talks collapsed last year over a key rebel demand for a constituent assembly to draw up a new constitution that, the rebels believe, would pave the way for a communist republic.
The government has been defending the present constitution that guarantees a constitutional monarchy in a multi-party parliamentary democracy.
More than 9,000 people have died during the Maoist insurgency which has lasted nearly nine years.
Source: BBC News. October 2004
Picture: Fighting between the security forces and the rebels escalated this year

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PHLIPPINES - INTERNAL AFFAIRS

Arroyo faces big test with corruption issue
A corruption scandal in the Philippine military could prove to be the biggest test for the administration of President Gloria Macapagal Arroyo, officials and analysts said on Thursday. How she handles it, they said, could determine whether ambitious economic reforms she wants to put in place will succeed.

The main challenge for Arroyo, the officials and analysts said, is not only how not to get distracted by the scandal as she tries to fix the economy but also how to resist the influence of a military hierarchy that, according to them, Arroyo feels indebted to.

"This scandal is one of the biggest tests of any Philippine president, and it will define the Arroyo presidency," a former top military official said. "How she will handle the interest groups in the military that support her is the real test."

He said Carlos Garcia, the financial comptroller of the Philippine armed forces, could be part of an organized group within the military that is accused of corruption.

The scandal broke last month after U.S. customs officials disclosed an attempt by the sons of a Filipino general to smuggle $100,000 into the United States late last year. Subsequent investigations revealed that the Garcia and his family had on previous occasions brought into the United States hundreds of thousands of dollars in cash.

Investigators said Garcia also had more than $3 million in cash in several bank accounts and had acquired several properties in the United States and the Philippines, whose value far exceeded the general's yearly salary of about $7,200.

While Arroyo has ordered court-martial proceedings against Garcia, analysts said the president has been dealing with the scandal warily - for example, deferring a decision on firing or investigating Garcia's former superiors who are now in Arroyo's cabinet.

Arroyo was swept to power in 2001 by a military-supported uprising against then president, Joseph Estrada. The military's support for Arroyo led to Estrada's ouster.

"If she forces strong legal action that results in a court-martial conviction, she risks unraveling the top military brass and their system of entrenched enrichment, which could lead to alienation - and that is what Arroyo has always worried most about," said Scott Harrison, managing director of Pacific Strategies and Assessments, a U.S. security and risk-analysis company.

If Garcia emerges unscathed, it could spark massive protests and kill remaining investor confidence, which could cripple Arroyo's ability to deal with the country's fiscal problems, Harrison said.

Arroyo has promised to fix the country's fiscal and debt problems before her term ends in 2010, relying on foreign investments and foreign loans.

Analysts, however, have said that, with the scandal spawning instability and rumors of another mutiny, the president's task won't be easy.

The Garcia scandal has ceased to be all about the general. "It opened cans of worms," said the retired military official. The congressional hearings, which began two weeks ago, initially tried to look into his alleged ill-gotten wealth but has shifted its attention to the procurement procedures in the military, allegedly a major source of corruption.

Early this week, a senator, Miriam Defensor Santiago, exposed what she called the "Gang of 12" that has been running the scams inside the armed forces. The military denied the charge.

The scandal has angered the military establishment, which has been calling on legislators to stop what they described as a "fishing expedition." Arroyo’s party allies had also asked their colleagues in Congress to stop the hearings.

But Senator Aquilino Pimentel, a leader of the opposition, said Arroyo and her party mates should not meddle in the investigation because it "would only contradict her assurance that the government will get to the bottom of the scandal and to put the guilty parties before the bar of justice."
Source: International Herald Tribune. October 2004
Author: Carlos H. Conde

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CAMBODIA - INTERNAL AFFAIRS

Cambodia set to crown new king
Cambodia is preparing to crown its new king on Friday, amid an array of official festivities.
King Norodom Sihamoni, a former dancer, was chosen to succeed his father Norodom Sihanouk after he announced his abdication earlier this month.

The main streets in Phnom Penh have been adorned with Cambodian flags and portraits of the new monarch.

The government has also declared a national holiday on Friday in honour of the coronation.
The royal family had asked that preparations for the ceremony be relatively low-key. But even so, Cambodians are looking forward to an eventful few days.
Thursday was the first of three days of festivities to mark the official handover.
At the Royal Palace in the centre of Phnom Penh, King Sihamoni took part in a ceremony which had both Buddhist and Hindu elements.
Flanked by family members, the new king lit incense, bowed three times and placed chains of jasmine flowers on a special pillow.
Eight white-robed priests made offerings of fruit and flowers to the heavens, according to a palace official.

"On this very auspicious day... may all divine spirits guarding the throne bless his majesty, King Norodom Sihamoni, with a healthy and long life," said palace astrologer Din Prohm.

Smooth transition
The finishing touches were being made for Friday's main enthronement ceremony.
A huge portrait of King Sihamoni has replaced one of his father and mother in front of the palace gates, and buildings have been festooned with banners.
The succession process began earlier this month, when former King Sihanouk abdicated due to ill health.
There was no legal provision in the event of a monarch's abdication, and laws had to be rushed through parliament to enable a throne council to convene and choose a successor.
It soon became obvious, though, that King Sihamoni was the front-running candidate.
One of his great strengths is the fact that he is seen as apolitical.
While Cambodian kings used to have great authority, the position is now largely symbolic and wields no real power.

But it remains an important position because of the reverence Cambodian people give to the royal family.
Since he was announced as the new monarch just a fortnight ago, the nation's officials have launched a huge public relations campaign to inform Cambodians about King Sihamoni.
He has spent much of his life outside Cambodia - as a ballet dancer and teacher, as well as Cambodia's ambassador to the UN cultural agency, Unesco - and is much less known than Prince Ranariddh, who heads the royalist political party Funcinpec.

Former King Sihanouk, in contrast, is widely known and revered after 60 years on the throne.
He is still likely to remain influential even after his son is officially inaugurated, and the Cambodian government has already declared that he will be known as The Great Heroic King Sihanouk.
Note from LuisB: Rules on Cambodian succession: Nine-member throne council approved nomination. A law for deciding succession had to be rushed through King Sihamoni was former king's preferred candidate.
Source: BBC News. October 2004
Picture: King Sihamoni has already taken part in some official ceremonies

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THAILAND - DEFENSE

Thailand-Australia extend agreement on military cooperation
Thailand and Australia will extend an agreement on bilateral military cooperation, reported the Thai News Agency on Wednesday. Thai cabinet approved the extension of the agreement at its weekly meeting here on Tuesday, with an official notice on the extension to be sent to Canberra soon. Under the agreement, the Thai and Australian Defence Ministries will cooperate in procurement projects and in exchange of services to support the military of the two countries
Write: by LuisB. October 2004
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TIMOR LORO SAE - ECONOMY

Timor Sea gas on East Timorese PM's agenda
East Timor's Prime Minister will visit Australia this week, where he is expected to discuss new demands for Timor Sea gas to be processed in East Timor.
The proposal is up for discussion at talks in Dili to resolve the dispute over oil and gas revenues.
East Timor is now demanding that gas from the Greater Sunrise field be piped onshore to a proposed multi-billion dollar LNG plant in East Timor, rather than be processed offshore or in Australia.
Mari Alkatiri will travel to Perth on Friday where he is expected to discuss the proposal with commercial partners, Woodside and ConocoPhilips.
He could threaten to delay any deal until there is a commitment to build the LNG plant in East Timor.
The Northern Territory Government has campaigned equally to have the gas processed in Darwin.
The joint venturers have warned that without agreement by Christmas the Greater Sunrise project could stall for years.
Write: LuisB. October 2004
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IRAN - SECURITY

Iran steps up confrontation with Europe on nuclear deal
Iran yesterday stepped up its confrontation with European countries as its Supreme Leader threatened to break off negotiations over its suspect nuclear weapons programme.
Senior officials from Britain, France and Germany yesterday held negotiations in Vienna with an Iranian delegation to persuade Iran into indefinitely suspending uranium enrichment ahead of a deadline in one month. It could be used to produce a nuclear weapon.

The EU countries are warning that Iran must comply with the demand in time for the next governors' meeting of the International Atomic Energy Agency on 25 November or face being referred to the UN Security Council for punishment. Initial reports after the talks sounded positive, as both sides spoke of some progress and agreed to meet again next week. But a British official said ominously: "I don't think we're that close yet" to an agreement.

Last night, making his first comments on the dispute on which he has the final say on behalf of Iran, the country's Supreme Leader, Ayatollah Ali Khamenei, rejected a long-term suspension of uranium enrichment. "If there is any form of threat in the talks, it will show a lack of logic on the part of [Iran's] partners in the negotiations. In that case, the great Iranian nation and the Islamic Republic of Iran will reconsider the very basis of negotiations and co-operation," he said.
Iran has heightened tensions by testing a long-range missile on 20 October, while hardliners in parliament have introduced a bill to force the government to resume enrichment and halt snap UN inspections of nuclear facilities. There are fears that the Iranians will try to wring every possible concession right up to the IAEA meeting.

The Iranians also have their eye on the American elections next Tuesday, in the hope that a Kerry administration would adopt a less hard line than George Bush, who wants the Security Council to take action against Iran. Iran has insisted its nuclear programme is for peaceful purposes.

In their "last chance" offer to Tehran, the three European countries are offering Iran the acquisition of a light water research reactor and resumed trade negotiations with the EU, in return for compliance. The EU states would also back the Russian Bushehr nuclear reactor project in Iran and Russia's guarantees of reactor fuel.

They privately recognise that there is not enough support among Security Council members to impose sanctions, and there are fears that sanctions could prove counter-productive if the Council is not united.

The International Institute for Strategic Studies said last week that in the cases of Iran and North Korea, "the US and its allies may not have sufficient instruments of enticement or coercion to achieve disarmament. The threat of effective sanctions is difficult to realise and military options are unappealing."

An independent expert said the deal being offered by the Europeans was favourable for Iran, adding that the Iranians would rather accept European technology than Russian.
Author: Anne Penketh, Diplomatic Editor. October 2004

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NEW ZEALAND - FINANCE

New Zealand lifts rates again
New Zealand's central bank has again moved to ease inflation pressures, raising its key interest rate by 0.25 percentage points to 6.5 percent - a level last seen in May 2000.
But the bank signalled that 6.5 percent was the peak and no further rate rise is likely.
Announcing the increase Thursday morning, Reserve Bank of New Zealand Governor Alan Bollard said the country's economy was still performing strongly and recent domestic economic data "has delivered positive surprises."
He said resources would remain stretched for some time yet, and there were still inflation pressures.

"However, the recent monetary policy tightenings still have to work their way through the economy, and the high exchange rate will also have its effect. Given this, we believe that the current settings of monetary policy are now doing enough to ensure price stability as defined in the Reserve Bank's Policy Targets Agreement," Bollard said.

Thursday's rate rise, the fifth since late April, was widely expected after a period of inaction from June 2003-April 2004, when the official cash rate stayed at 5.0 percent.
In a commentary Thursday after the announcement, HSBC Australia/New Zealand chief economist John Edwards said New Zealand's cash rate now matched Poland's as the highest in the OECD group of advanced nations.

"If 6.5 percent is indeed the top, as we think it will prove to be, it logically follows that the next move will be down," Edwards said.

The New Zealand rate rise increases the disparity with its biggest trading partner Australia, which has kept its benchmark interest rate unchanged at 5.25 percent since December 2003.
The New Zealand stock market's Top 50 index is up 1.26 percent to 2813.50 in Thursday afternoon trade.
The New Zealand dollar is trading at 68.85 U.S. cents, down from a high of 70.97 U.S. cents on February 17 this year. That was close to its record high of 71.14 U.S. cents set on January 8, 1997.
Source: CNN. October 2004
Picture: Bollard said Thursday the New Zealand economy was still performing strongly.

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SOUTH KOREA - ECONOMY

Samsung nearly equals Motorola phone sales
Samsung, the South Korean handset maker, increased its sales of mobile phones by 51 percent in the third quarter, putting it in a virtual tie with Motorola as the world's No. 2 cellphone maker, according to a report released on Wednesday by Strategy Analytics, a research firm.

Samsung sold 22.7 million phones from July through September, compared with 15.5 million a year earlier, according to preliminary figures tracked by Strategy Analytics. The rise gave Samsung a 13.54 percent share of the global handset market, compared with 13.9 percent for Motorola.

"For the last seven years, Samsung has been steadily closing the gap on Motorola and is now closer than ever," said Neil Mawston, a Strategy Analytics researcher based in Milton Keynes, England, who wrote the report. Samsung had gained market share by moving faster to manufacture affordable handsets with color screens, cameras and foldable, clam shell designs, he said.

Samsung's rapid advance mirrored gains by another South Korean handset maker, LG Electronics, which according to Strategy Analytics overtook Sony Ericsson in the third quarter as the world's No. 5 handset maker, with a 7.0 percent market share, compared to Sony Ericsson's 6.4 percent. Siemens, based in Germany, remained at No. 4 with 7.45 percent of the handset market.

The industry leader, Nokia, sold 51.4 million handsets in the quarter, down from 55.3 million a year earlier. Its market share fell to 30.6 percent from 34.6 percent, according to Strategy Analytics. Motorola's sales rose 4 percent to 23.3 million handsets in the third quarter from 22.4 million a year earlier.

Across the industry, Strategy Analytics said handset makers sold 168 million cellphones during the third quarter, up 25 percent from a year earlier. It reaffirmed its forecast that handset makers would sell 670 million handsets this year, up from 517 million in 2003, but said sales growth would slow to 8 percent in 2005 from 30 percent this year.
Source: International Herald Tribune. October 2004
Author: by Kevin J. O'Brien

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2004-09-19T17:52:00.000+02:00

NORTH KOREA - NATIONAL AFFAIRS

Envoys see N Korea mystery site
Foreign diplomats have visited a large construction site in North Korea which Pyongyang said was the cause of a mysterious cloud last week.
The diplomats were told a hydroelectric dam was being built and the cloud was due to explosions to clear the area.
But South Korea stoked confusion on Friday when it said the diplomats were taken to a place well to the east of the originally suspected location.
Seoul also said it now believed the cloud was not caused by an explosion.
Lee Bong-jo, South Korean Vice-Minister for Unification, said: "We believe that there was no explosion in the place where intelligence authorities had previously suspected that there were signs of an explosion.
"We believe that the explosion described by North Korea took place in Samsu County, about 100 kilometers (60 miles) from the originally suspected site, and has to do with a hydroelectric project," he said.
The South's National Intelligence Service said earlier this week that the unusually shaped cloud could have been a natural formation.
South Korean media first reported the cloud last weekend, prompting concern about an accident or possible nuclear test, although this has now been discounted.

- Mystery mounts
12 Sep: S Korea media reports 'mushroom-shaped' cloud over Kimhyungjik county, N Korea
13 Sep: N Korea says dam-clearing blast caused cloud
15 Sep: S Korean spy agency says cloud may have been natural
16 Sep: Foreign diplomats taken to dam near Samsu
17 Sep: S Korea says no evidence of explosion at Kimhyungjik

Confusion
The diplomats from Britain, the Czech Republic, Germany, Mongolia, Poland, Russia and Sweden travelled to the north of the country on Thursday.
The group, which included British Ambassador to North Korea, David Slinn, were allowed to stay for 90 minutes and take photographs.
They were told that North Korea had carried out two large explosions, on Wednesday and Thursday last week.

British Foreign Office minister Bill Rammell said the information gathered now needed to be assessed by technical experts.
But hopes that the visit would clear up the confusion were dashed when South Korea said the site the diplomats were taken to was some distance from the site of the mysterious cloud.

The diplomats were taken to a location near Samsu, east of Yongjo-ri in Kimhyungjik county, which South Korea originally reported as being the location of the cloud.
North Korea has accused South Korea of using the issue to distract attention from its own difficulties regarding unauthorised nuclear research.
Seoul was forced to admit earlier this month that its scientists had experimented with small quantities of enriched uranium and plutonium.
The admission has added further problems to international efforts to persuade North Korea to give up its nuclear ambitions.
Source; BBC News. September 2004
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JAPAN - INTERNATIONAL AFFAIRS

China's defence spending worries Japan
But Foreign Minister Kawaguchi says both countries are keen on closer cooperation and steers clear of calling Beijing a security threat Japan's Foreign Minister Yoriko Kawaguchi yesterday expressed concern over China's burgeoning military expenditure, but stopped short of describing China as a security threat to her nation.

She glossed over a question by reporters as to whether she agreed with a report earlier this week, that said that a private panel of advisers to Prime Minister Junichiro Koizumi had identified China as a military threat to Japan.
Instead, she said that in her latest talks in Beijing with Chinese leaders, both sides stressed the need for closer cooperation.

'If we work together, there is so much we can accomplish for peace and stability,' she said.

'As China is our next-door neighbour, we look at its military budget very closely. We have been telling China to be more transparent about its military budget because it is important to the peace and stability in this region.'
Diplomatic ties between Japan and China have cooled in the past few years, with the Chinese blaming Mr Koizumi's annual trips to the controversial Yasukuni Shrine for the impasse.

The result is that there have been no exchanges of visits between both countries at the highest level since Mr Koizumi became Premier in April 2001.
But Ms Kawaguchi said the perception that he had no contact with Chinese leaders was not true.

'There are many international meetings at which he has had bilateral meetings with top Chinese leaders and I am certain he will continue to do so,' she said.
She also revealed that a bilateral eminent persons group would be meeting soon to discuss ways of enhancing people-to-people ties.

Such discussions have become more urgent following the overt and widespread display of anti-Japanese sentiments by Chinese soccer fans during recent Asian Cup matches held in China.

Asked about Japan's position on rising tensions across the Taiwan Strait, Ms Kawaguchi said her government has urged both sides to resume their talks and to refrain from 'raising their voices'.

'Any conflict over the strait is harmful to peace and stability in this region and we would like that not to happen,' she said.

Turning to Japan's bid for a permanent seat on the United Nations Security Council, she underlined the need for her government to move now. 'With the UN carrying out reforms, it is a good chance for Japan to become a permanent member. If we do not make full use of this opportunity, we will not have another one for a long time.'
Prime Minister Koizumi is due to address the UN General Assembly in New York early next week to declare his country's desire to secure a permanent council seat.

Japan's claim is based on its financial contribution to the UN - amounting to one-fifth of the world body's budget, and the size of its economy, which is second in the world.

But while the United States has indicated that it will support Japan's bid, there are concerns that Beijing may withhold its endorsement, especially given the frigid state of its political ties with Tokyo.
Write; by Kwan Weng Kin
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SOUTH KOREA - ECONOMY

High-tech companies start to feel impact of China
China`s surging economy has starting ringing alarm bells here.
The growth of the market in China, Korea`s largest trade partner, has provided tremendous opportunities for Korean companies, but with China`s economic development also has come a huge bundle of risks.

As China has become an ever-more-capable manufacturer, it has also become a big competitor, leading to worries that Korea is fast losing its international competitiveness. This is especially true in one of Korea`s key industries - high-tech products - where China is making deep inroads.

High-tech electronic parts, semiconductors and wireless communication equipment comprise nearly 40 percent of Korea`s export basket, and an international Chinese onslaught in those fields could leave Korean companies battered, economists say.
The fears have only gotten worse with the latest projections by influential private think tank Samsung Economic Research Institute, which has forecast that although overall exports this year will gain 30 percent from the level of 2003, there will be a slowdown in growth for exports of high-tech products - because of a low-price offensive by China.

For the moment the surging Chinese economy is fueling steady demand for parts, components and intermediate goods from Korea. Also, investment by Korean companies in China has the effect of increasing trade. But in the medium term, a strain on Korea could become very visible, economists warn.
A Chinese push to make the parts and components for its export goods at home has the potential to shut out components exported from Korea, says Park Bun Soon, a research fellow at the Samsung research institute.
And as more and more multinational companies increase investments in China, that also will inevitably hurt Korea`s exports, as well as sales by Korean plants in China, he says.

Those developments "will provoke fiercer competition against Korea`s core products such as automobiles, electronics and semiconductors. Not only could Korea`s exports to China be curtailed, but even exports to third countries will be squeezed by severe price competition," Park says.
As China`s assembly lines expand, its export product lines will probably start to look more and more like Korea`s: cars, computers, mobile phones and semiconductor chips.

"China is rapidly building its own steel, shipbuilding, electronics and semiconductor industries that happen to be Korea`s major export items. This will have a major impact on the future of the economy, as China`s market today represents a big export destination," said Park.

John Weiss, director of research at the Asian Development Bank Institute, concurs. In the institute`s latest discussion paper, he analyzes the impact of China on its neighbors and finds that trade-orientated Korea, with a high volume of high-tech exports, will be at risk in the medium to long term.

"The countries with the more sophisticated trade structures, with a high share of high-technology exports, are those where the direct threat is greatest, where they will lose market share while China gains," he says.

China`s high-tech exports this year are on pace to surpass last year`s shipments, valued at $110.3 billion, which comprised one-fourth of total overseas sales. High-tech exports from January to July totaled $83.8 billion, a gain of 58 percent from the same period of 2003. During the 2004 period, high-tech shipments accounted for 38 percent of total exports, according to China`s Ministry of Commerce.

The Chinese Government is focused on developing this sector and is doing all it can to enhance the business climate, Jiang Yaoping, the country`s vice minister for information industry, said at the ITU Telecom Asia 2004 fair held in Busan earlier this month.

He stressed that China has realized the importance of the high-tech industry and is pushing ahead with its development. At present, together with the Beijing New Technology Experimental Zone, there are 53 new state-level high-tech zones in the country which seek to encourage companies in the sector.

"China is promoting the sector right across the country, and domestic players will be seen as serious international players," he said.

Chinese companies participating in the event showed the same confidence, asserting that they are ready to take on the world.

Ding Ming Feng, vice president of prominent telecom equipment provider ZTE Corp., said Chinese companies have already started making their presence felt abroad.
"We have emerged to compete against some of the world`s leading manufacturers in the high-tech sector," he said, noting that ZTE beat international competitors to be selected by Greece to supply broadband Internet access systems during this year`s Olympic Games.

Another Chinese company muscling its way into world markets is Huawei Technologies Ltd., China`s largest telecom vendor. Huawei officials participating at Busan said its international sales are projected to jump to $2 billion this year from $1.05 billion in 2003. The company had already reached $1.1 billion at the end of July, surpassing the full-year 2003 level.

Overseas sales are the strongest growth segment for the company, which had overall revenue of $3.83 billion in 2003 and is aiming at $5 billion this year.
Nonetheless, while China may soon be a tough competitor, Lee Chang-kyu, a research fellow at the Korea Institute for International Economic Policy, says that, "at least for now, any threat is far outweighed by the opportunity created by the booming Chinese economy."

In order for Korean companies to survive, however, they will have to keep advancing the level of their manufacturing to goods with higher added value and use cutting-edge technologies," Lee said.

Sino-Korean bilateral trade was valued at $43.9 billion for the first eight months of 2004, ahead of Korea`s trade with the United States, which stood at $40.2 billion, and Japan, at $ 38.3 billion. Korean exports to China totaled $28 billion during the eight-month period, comprising 19 percent of all Korean exports. Korean exports to the United States and Japan totaled $ 24 billion and $12.4 billion, respectively.

From January through July, Korean investment in China totaled $4.12 billion, according to Chinese government data, exceeding the $3.45 billion in investment from Japan. Last year, Korean companies signed deals in China at a rate of 12 a day. Some 22,000 Korean companies now have investments in China, which employ about one million Chinese workers, says the Korea International Trade Association.
Semiconductors is one area where Korean companies are increasingly using China as a platform but with probable future consequences.

By 2010, analysts predict, China will be the world`s biggest semiconductor market. The country is already investing in full-scale production facilities, and Chinese wafer production is expected to expand from 4 percent of the global share in 2003 to 9 percent by 2007, hitting Korean exporters hard.
Korean companies have also been doing semiconductor work in China, but have confined their operations mostly to back-end processing such as assembly and tests.
Now, however, the companies are steadily moving their production to China as well, to gain a foothold for penetrating the Chinese market and to capitalize on China`s cheap labor.

Shifting more production from Korea to China, however, has the potential to lead to what is called industrial "hollowness" in Korea, which would have a deep impact on export figures.
Write; by Rambabu Garikipati. September 2004
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NEPAL - ECONOMY

Businesses reopen in Nepal as union removes ban
Around 60 companies in Nepal, including luxury hotels and the subsidiaries of multinational firms, have re-opened for business after a trade union linked to the country’s Maoist rebels withdrew its threats against them.

The pro-Maoist All Nepal Federation of Trade Unions called off its ban in return for the government agreeing on Friday to free two of its leaders and to make public the whereabouts of other missing union leaders by October 22.

In return, the companies, which the union had accused of unfair labour practices, have agreed to resolve all outstanding issues including the level of minimum wages through collective bargaining.
Twelve large companies, including Kathmandu’s Soaltee Crowne Plaza, the country’s oldest hotel, and Surya Nepal, a tobacco joint venture between India’s ITC and the UK’s BAT, had shut down in mid-August. Another four dozen companies had closed their doors a week ago.
“We are glad that people can finally get back to work, because the closure was uncalled for and wrong,” said Iswar Pokhrel, minister of industry, commerce and supplies. “We welcome the re-opening, and we will abide by our commitments.”

According to Rajendra Khetan, director of the Khetan Group, billions of rupees have already been lost and additional costs are likely, for servicing and restarting manufacturing equipment, tracking down raw materials in transit and reassuring customers.

“We don’t have a firm commitment that there won’t be another closure,” he said.

It took three human rights activists a month of exchanging notes on the telephone, via email and by fax to obtain written commitments from the union.

“They have assured us they won’t repeat a closure in the near future,” Malla K Sunder, one of three facilitators, told the Financial Times. “We hope there won’t be another closure if all sides abide by their commitments.”

There is, however, a second threat looming over the Nepali capital of Kathmandu. Last month, another Maoist group that had enforced a week-long blockade of the city in the middle of last month had said it was only postponing the siege until September 24.

“They could be preparing for a major attack, which they may need if only for psychological reasons before coming to negotiations,” said Sudheer Sharma, editor of the Nepal news magazine. “They might be waiting for a big one.”
Write; by Binod Bhattarai in Kathmandu. September 2004
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MALDIVES - NATIONAL AFFAIRS

Maldives regrets EU block on aid
The authorities in the Maldives have expressed regret over a proposal by the European parliament to block an aid package worth $2m.
The European parliament says dissidents jailed in the Maldives should be released immediately.
It also called on the Maldivian government to end a state of emergency, and asked the EU to warn tourists about the islands' poor human rights record.
Almost 100 people were jailed when riots broke out there last month.
They were protesting at what they described as the dictatorial regime of President Maumoon Abdul Gayoom.

- Maldives basics
1,200 islands in archipelago
Population is around 300,000
One-party rule since 1978
Low-lying islands vulnerable to rise in sea-levels

Denied access
The Maldivian government says it "remains wholly and totally committed to the process of democratic and constitutional reforms" and hopes to lift the state of emergency "in a matter of weeks".
"In the days and weeks to come, the Maldives government intends to continue dialogue with members of the European parliament in the hope of bringing about a better understanding and increased levels of dialogue," a statement released by the government said.
On Thursday the EU parliament passed a resolution calling on all 25-member states to "immediately cease all non-humanitarian aid... and to impose an immediate travel ban in order to prevent members of the [Maldivian] government and other officials... from entering the EU".
Last week, EU diplomats based in Colombo said they were denied access to dissidents while on a fact-finding mission to the capital, Male.
Source; BBN News. September 2004
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SRI LANKA - NATIONAL AFFAIRS

Sri Lanka talks still deadlocked
The latest attempt by Norway to kick start the stalled peace process in Sri Lanka has ended without any sign of progress.
Norwegian envoy, Erik Solheim, failed to make a breakthrough in meetings with the government and Tamil Tiger rebels.
Mr Solheim held separate discussions with President Chandrika Kumaratunga and the leader of the rebels' political wing, SP Tamilselvan.
Direct talks between the two sides have been suspended since April last year.
Walkout
A presidential spokesman said the government was unhappy at the Tamil Tigers' indecision over whether to resume peace talks.
For their part, the rebels said Mr Solheim had not brought any constructive message from the government.
The Tigers walked out of talks in April last year, saying the government had not honoured pledges.
Peace hopes diminished further this year following a rift in the rebel movement.
The main rebel faction blamed the government for supporting the breakaway group, led by Colonel Karuna, and using it to fight a covert war.
The Tigers began their armed campaign for a separate state in the north and east more than 20 years ago.
Source; BBC News. September 2004
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INDONESIA - INTERNAL AFFAIRS

Jakarta court puts media freedom behind bars
A Jakarta court on Thursday sentenced a leading magazine editor to a year in jail for libel in a case seen as a landmark for press freedom in Indonesia, a country supposedly in the era of reformasi. The verdict deals a harsh blow to press freedom and reinforces Indonesian courts' reputation for bizarre decisions, a key barrier to investment.

The court found three journalists from Indonesia's most respected news magazine Tempo guilty of libel, but, citing Indonesia's 1999 Press Law, the three-judge panel ruled that only editor-in-chief Bambang Harymurti should be punished.

The ruling adds fuel to the controversy over using the criminal code rather than the press law in media cases. Thursday's verdict ignored Supreme Court Chief Justice Bagir Manan's advice to judges not to criminalize media cases, as well as an appeals court ruling on Tuesday that overturned two previous convictions in related cases against Tempo because the suits were not brought under the press law. (None of the suits against Tempo have been brought under the press law).

Business magnate Tomy Winata has filed at least seven lawsuits against Tempo, most related to an article published on March 3, 2003, headlined "Ada Tomy di Tenabang?" (Is Tomy in Tanah Abang?). The article examined pervasive rumors of Winata's involvement in a February 2003 fire that gutted Jakarta's Tanah Abang, an aged textile market complex on the city's increasingly fashionable outskirts.

Redevelopment under fire
The article included reporter Ahmad Taufik's account of redevelopment plans for the market filed by an associate of Winata's from a source inside the city government. After the fire, Tanah Abang merchants told Taufik they had been asked to approve a redevelopment plan and that many market tenants had balked. In Indonesia, fires are a common tool for convincing reluctant occupants to leave property that tycoon's desire, and, in an earlier article for Tempo's daily newspaper, Taufik reported that merchants suspected arson in the blaze. City officials have not investigated the cause of the fire.

Taufik's March 3 article also included Winata's denial of involvement with the redevelopment plans, backed by additional quotes from Central Jakarta Mayor Hosea Petra Lumbun and the president of the company that operates Tanah Abang. The article raised the possibility that business rivals had tried to taint Winata by associating him with the Tanah Abang plan. Expert testimony at the trial declared the March 3 article overall favorable to Winata.

But Winata didn't think so. On March 9, thugs identifying Winata as their "boss" stormed Tempo's office, destroyed equipment and assaulted Taufik and another employee while police reportedly looked on. Winata has denied any connection to the incident, though he admits police called to ask his advice on handling the episode.

Two days later, Winata filed a complaint against Tempo that led to this latest trial. Taufik, Harymurti and the article's copy editor were charged with criminal defamation and publishing false information that led to a public disturbance. Prosecutors demanded two-year jail sentences for the trio with the stipulation that, if convicted, Harymurti begin his sentence immediately, even if he files an appeal. The court denied that motion, and Harymurti remains free pending appeal.

Denial allowed to ride
The closely watched trial was at times reduced to a farce. Both Winata and Mayor Lumbun testified they never talked to Tempo, despite authenticated tape recordings and phone records confirming such conversations. Their denials were a key plank in the prosecution's case, but judges refused to delay their verdict until the results of Tempo's perjury complaints against the two men were revealed.

But the real farce is that a criminal trial over a news article took place at all in Indonesia's era of reformasi, a period that began after former president Suharto's authoritarian rule was brought to an end.

For three decades Suharto's government shackled the press. Tempo, along two other popular news magazines, was shut down in 1994 after reporting a disagreement between the military and future president BJ Habibie over the purchase of defective East German naval vessels. Tempo didn't resume publishing until 1999, after Suharto's fall.

In the wave of post-Suharto reforms, Indonesia passed a press law that provides a public forum for grievances against the media. Under the press law, complainants are guaranteed a right of reply to articles, a press council mediates disputes, and, if mediation fails, aggrieved parties may file charges against the publication, with a maximum fine of Rp500 million (US$58,000).

However, there is no requirement that the public use the press law for its grievance against the media. Indonesia's compliant police, prosecutors and courts have made it easy for those with power to short circuit the press law and seek criminal and civil judgments with far higher fines against publications and individuals, along with jail time for journalists.

Presidential leadership
President Megawati Sukarnoputri led the way, endorsing a lawsuit last year against two editors of the Rakyat Merdeka (People's Freedom) newspaper for caricatures and articles that she called offensive. The editors were convicted and currently are appealing the verdict. Megawati and her rival in Monday's presidential run-off election, Susilo Bambang Yudhoyono, have not commented on Thursday's verdict.

Tempo and its employees have faced at least nine suits, none brought under the press law. Winata has brought seven of these cases and won favorable lower court verdicts in four out of the five decided so far. A libel verdict centering on an article on Winata's possible involvement in a proposal for a casino in Southeast Sulawesi handed down in January levied a fine of $1 million, not the equivalent in rupiah, the first time an Indonesia court had fined a defendant in a foreign currency. Experts cited the dollar denomination as an attempt to add to the publication's hardship. Tempo lawyers said the verdict smacked of collusion between the court and Winata. The same court earlier dismissed charges against David Tijoe, who led last March's assault on the Tempo office.

The US dollar fine was not the first time the courts had taken extraordinary measures in a Tempo case. A day after the March 9 assault on Tempo's headquarters, Tempo founder Goenawan Mohamad made comments targeted at Winata that spurred him to launch a civil defamation case against Goenawan. As a result, prosecutors sought possession of Goenawan's home in hopes of selling it to guarantee for a possible future fine.

In all, Tempo has been sued for the equivalent of nearly $100 million, and current judgments under appeal total more than $45 million, in addition to possible jail time for employees.

Under Suharto, the government could sign an order to shut down publications and jail journalists, or worse. Now the government says the media is free, but journalists still face criminal prosecution and violence as in those days, with the added twist that publications face the threat of bankruptcy through ruinous fines. Until Indonesia's government takes Chief Justice Manan's advice to force litigants to use its press law in media cases and stops tolerating violence against the media, claims of a free press will remain bankrupt.
Write; by Gary LaMoshI. September 2004
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THAILAND - BUSINESS

Thai herbal cream's sweet smell of success
Anti-ageing cream - the fruit of govt research in traditional Thai herbs - chalks up sales of 10,000 jars in five days. The Thai government seems to have hit on a winning formula in a fight against nature, combining traditional herbal ingredients with nanotechnology to produce a cream billed as 'anti-ageing'.
The product surpassed all expectations at Bangkok's recent Herbal Fair - 10,000 jars were sold in five days.

And if that sales trend continues, it may find its way onto shelves overseas, officials say.

The cosmetic cream took three years to develop by the Government Pharmaceutical Organisation (GPO), which has 40 researchers working on a range of products.
Apart from the mainstay Anti Retro Viral (ARV) cocktail used by HIV/Aids sufferers, their work rarely makes the news.

But that all changed last week when thousands of women queued up at the GPO stall to fork out 1,300 baht (S$50) for a 50g jar.
The cream's main ingredient is turmeric, used for centuries in South Asia and Thailand as a flavouring agent in curries - and as a beautifying skin application and internal herbal medicine.

As a medicine, it has anti-oxidant properties and is already being sold in the form of pills and capsules.

The active ingredient is curcumin, which is believed to help keep dry, aged and damaged skin well-moisturised.

The GPO's marketing of the cream dovetails with the government's strategy of promoting traditional Thai herbs in medicine and well-being.
One aspect is spas, while another is research - India and Thailand recently signed a Memorandum Of Understanding to cooperate on research in traditional herbs.
With an investment of around 500 million baht in its research facilities, the GPO has been self-sufficient, thanks mainly to its ARV cocktail.

Now, the cosmetic market beckons, but GPO managing director Thongchai Thavichachart told The Straits Times he still had his feet firmly on the ground.
'We first have to be strong in the local market, then we will go overseas,' said the paediatrician.

He calls the cream the 'national champion' of Thai herbal products and is ready to franchise marketing plans.

The GPO also wants to boost incentives for researchers, among other things.
'We have joint research in five PhD programmes in the UK, and we are now looking at strengthening the whole chain from research to product development and production to marketing,' said Dr Thongchai.
Write; by Nirmal Ghosh. September 2004

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KAZAKHSTAN - POLITICAL AFFAIRS

Media bias mars Kazakhstan’s election campaign
Reports of widespread media bias are raisings doubts about the fairness of Kazakhstan’s parliamentary elections on September 19. Despite regulations meant to ensure equal media access, television coverage continues to heavily favor pro-presidential parties, while opposition candidates struggle to gain access to the airwaves.
Media monitoring conducted by the non-governmental organization Elections and Democracy illustrates the case for concern. The report shows pro-presidential parties have increasingly dominated television news coverage of the campaign.

Within the first few weeks after the campaign season’s official August 30 kick-off, for instance, Otan (Fatherland), the party endorsed by President Nursultan Nazarbayev, was the subject of roughly 22 percent to 30 percent of all television news campaign reports, while Asar (All Together), the party headed by Nazarbayev’s daughter, Dariga, received 15 percent to 24 percent of the coverage. By contrast, the centrist party Ak Zhol (Bright Path) received between 11 percent and 18 percent and the main opposition Democratic Choice of Kazakhstan (DCK) less than 8 percent. One notable exception to this trend: the commercial station Channel 31, which provided the roughly balanced coverage of the parliamentary race, according to Elections and Democracy.

Unequal television coverage of political parties is nothing new for Kazakhstan. In the 1999 parliamentary elections, nearly 60 percent of all campaign stories were dedicated to Otan.
A new election law passed this spring was supposed to prevent a repetition of that scenario with a requirement that the media provide equal coverage of all parties during the official campaign season. But the final regulations, critics contend, were released late in the campaign process and thus could not be effectively enforced.

Several factors drive Kazakhstan’s lopsided media coverage. First, the national media is a "party press," in which almost every media outlet has a party affiliation. DCK and Ak Zhol do not control TV stations and, therefore, are at a disadvantage in terms of television coverage. The TV market is almost fully monopolized by Otan and Asar, the country's two largest political parties. For instance, Khabar, run by Dariga Nazarbayeva, and KTK overwhelmingly favored Nazarbayeva’s Asar party, giving its candidates more than half of their coverage time of political parties. The two stations’ coverage of Ak Zhol, a sometime partner for presidential initiatives in parliament, was generally negative.

In July, Dariga Nazarbayeva temporarily stepped down from the management of Khabar to focus her energies on Asar’s campaign, but some opposition members say her influence over programming remains considerable. On September 8, a 40-person protest staged by the DCK-Communist Party bloc occurred in front of Khabar’s headquarters to demand equal candidate access to the state-funded station. In late August, DCK candidate Marzhan Aspandiyarova filed a lawsuit against Khabar and Nazarbayeva for similar complaints.

At the same time, many well-known broadcast journalists are also running for office. The election law requires these journalists to refrain from covering any election in which they are candidates, but television stations have nonetheless continued to feature them in their reports on candidates running for office. Critics contend that this serves as an indirect form of party endorsement. For example, two prominent Asar candidates, Artur Platonov and Oksana Vassilenko, both former KTK journalists, are still included in the station’s news broadcasts, only now as "candidates."

Political parties also control Kazakhstan’s newspapers, and more prominent parties are often affiliated with several, but the government’s presence there is less concentrated. As a July 23 National Democratic Institute report stated, "The printed press is diverse, but has a limited circulation, which places a greater burden on broadcast media."

One of the few areas in television coverage where all ten of Kazakhstan’s parties have received equal access has been televised debates. Though the OSCE has criticized the debates’ 50-minute format as "restrictive," the exchanges have been accessible to all parties and broadcast on state-run TV. After pressure from non-governmental organizations, political parties and various international bodies, three additional debates have been broadcast on Kazakhstan 1 and Khabar TV.

In-fighting between Otan and Asar has occasionally complicated coverage plans for television stations that support the Nazarbayev administration. Whereas in 1999, all media outlets were pro-Otan, the appearance of Asar has split coverage, with Nazarbayeva’s party proving an active competitor for airtime with Otan. The result has been television coverage of only those parties with which a station is affiliated.

In Almaty, for instance, on September 6 the cable network Alma-TV stopped broadcasting the Yuzhnaya Stolitsa station. Supposedly, "technical reasons" prompted the cancellation. However, Alma-TV is affiliated with Dariga Nazarbayeva’s media holding group Alma-Media, while Yuzhnaya Stolitsa tends to favor Otan.
In general, pro-presidential parties are much better financed than their competitors - a situation that allows these parties greater access to advertising. Though election advertising may seem cheap by US standards, in a country with an estimated per capita income of $1,914, television spots require deep pockets. A one-minute ad on Khabar, a national broadcaster, costs $2,000, while the Astana TV station ASTV charges about $2,200 for a two-minute ad. The bill run up by an aggressive ad campaign can mount quickly: the DCK leadership has already accused Asar of spending about $10 million on its parliamentary campaign, well in excess of campaign spending limits.

As elsewhere in the former Soviet Union, the attention allotted to well-financed, well-connected parties also stems in part from journalists’ own lack of income. Reporters routinely write paid articles ordered by candidates to strengthen their position or discredit their opponents. Such articles are not labeled as advertising. In the words of one local media observer, election season in Kazakhstan is when journalists can "really profit from their jobs."

In addition, there have been reports of local officials meddling in media coverage. In the Northern Kazakhstan oblast, for example, the Department of Internal Politics sent a letter requiring newspapers to publicize an Otan write-in campaign. According to the free speech watchdog Adil Soz, the letter described the required format and layout of the desired features and instructed journalists to write about the "functioning of the party as a highly respected organization."
Write; by Olivia Allison. September 2004
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PHILIPPINES - ECONOMY

Manila seeks donations from top taxpayers
President Gloria Macapagal Arroyo said Thursday that she would ask the Philippines' top taxpayers to pay an extra 1 million pesos each to help the government plug its budget deficit.

Speaking before a group of businessmen in this southern city, Arroyo said she would use "friendly persuasion" to persuade the country's top 50,000 taxpayers to volunteer the amount, roughly $17,850, to make a "strong start" in her campaign to raise funds.

Manila's deficit stands at nearly 200 billion pesos. Arroyo has termed the nation's fiscal position a crisis and, without yet resorting to the force of law, has repeatedly urged Filipinos to take what measures they can to address the issue.

The 50 billion pesos that could be generated from wealthy taxpayers would help to narrow the budget deficit this year and also reduce a national debt of 3.36 trillion pesos. Interest payments on this debt account for almost one-third of the budget.

Jose Concepcion Jr., chief executive of Swift, one of the country's largest food companies, said Arroyo's plan was good but added that she should strive to collect taxes more effectively and stamp out corruption.

"If one wants to provide assistance to the state, that's probably a generous act," he said of Arroyo's latest appeal. "But I really think that what is important now is to be able to have individuals pay their taxes. We know who they are, we know the amounts they're not paying. We should force them to contribute to help the deficit."

Last month, the government instituted austerity measures - like forgoing lavish receptions at government functions - to help ease the problem.

The government has also pushed the Congress to pass eight tax laws that could generate an additional 80 billion pesos, and It has begun a drive to collect one peso from each of the country's 84 million people.

While these measures have been welcomed in some quarters, a recent survey by Pulse Asia, a Manila pollster, indicated that 78 percent of Filipinos opposed the new taxes. Critics of the government contend that belt-tightening programs, particularly the move to reduce so-called pork-barrel funds available to Congress, could cut into the delivery of basic social services.

"I know the pain of suffering and I'm no stranger to unpopularity, even if I have to prescribe the bitter pill," Arroyo said in her speech Thursday. "This is the time for shared goals and shared burdens," she added.

Arroyo's campaign, however, has focused attention on corporations owned or controlled by the government, whose executives have been paid salaries and allowances that seemed incongruent with her austerity campaign.

During a Senate hearing this week, Emilia Boncodin, the budget secretary, revealed that some of these executives were paid as much as 9 million pesos a year, salaries considered scandalously high here in view of the budget crisis.

The administration, embarrassed by the revelation, said it would review salaries and allowances at state enterprises, many of which are consistent money-losers. Their problems are a major factor in the ballooning of the country's debt..

Filipinos have also come to expect the government to improve its tax collection procedures, which have been among the least effective in Asia. An estimated 120 billion pesos is lost each year to tax evaders; critics of the government have asserted that Manila needs better revenue collection, not new taxes.
Source; International Herald Tribune. September 2004
Write; by Carlos H. Conde
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2004-07-26T17:43:00.000+02:00

INDONESIA - INTERNAL SECURITY

Bomb blast shakes Indonesian election commission
A bomb has exploded in the offices of Indonesia's election commission just before officials were due to announce the result of this month's presidential election.
No one is believed to have been injured and there has been no serious damage.
Police say the explosion damaged a women's toilet on the first floor of the central Jakarta offices. The blast occured while most people were attending prayers. The building was then evacuated. Until now there had been no incidents of violence throughout Indonesia's parliamentary or presidential elections.
Electoral officials were already running behind schedule in their attempts to announce the final count of the first-round presidential elections.
They were evacuated from the building and the counts suspended officials have only one province to recount before announcing the result.
With about 85 per cent of the vote counted, ex-general Susilo Bambang Yudhoyono had 34 per cent of the vote, compared with 26 per cent for the incumbent Megawati Sukarnoputri and 22 per cent for another ex-general, Wiranto.
Write; Yuumei/LB, July 04

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PHILLIPINES - POLITICAL AFFAIRS

Arroyo tackles ballooning budget
Philippine President Gloria Arroyo has outlined her government's agenda at the start of a new six-year mandate. In a state of the nation address, President Arroyo admitted the most urgent problem is a big budget deficit. The president identified five key points of her new government program: job creation; anti-corruption measures; social justice; education, and energy independence. In her address Ms Arroyo asked the Philippine congress to pass new tax measures to cut the ballooning budget deficit. President Arroyo also mentioned her government's foreign policy, which she said focussed on protecting the vital interests of the nation, including the eight-million overseas Filipino workers. She said this led to the safe release of Filipino Angelo de la Cruz from his Iraqi captors.
Write; Yuumei/LB, July 04

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CHINA - WEATHER

Yangtze flood waters rising
Officials in China say water levels in the Yangtze River are reaching warning levels. Runoff from heavy downpours in the provinces of Hunan and Jiangxi is moving down the Yangtze to Wuhan, the capital of Hubei province. Flood crests in Wuhan are expected to surpass warning levels. Officials in Hubei are urging workers to be on guard against potential floods and to reinforce all reservoirs, dykes and embankments. In Jiangsu province, China's third largest river, the Huaihe, has caused reservoirs to overflow, sending industrial waste downstream and creating a 30-kilometre belt of contamination. In the province of Yunnan, bordering Vietnam, at least 36 people have died this month in floods, landslides and mudflows. Army helicopters are trying to deliver supplies to Yingjiang County.
Write; Yuumei/LB, July 04

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MALAYSIA - FINANCE

Islamic banking gains favour in Malaysia
Malaysia's government says it will gradually award full Islamic banking licences to all banks. It's part of efforts to grow the segment and encourage the expansion of such services offshore. Last week, the country's second largest bank Bumiputra-Commerce Bank and RHB Bank announced they have obtained prior approval from the finance ministry to set up full-fledged Islamic banking operations. Malaysia's central bank says it will issue three new licences to foreign banks this year to fast-track the liberalisation of the Islamic financial sector to make the country a key Islamic financial hub in Asia.
Write; LuisB, July 04

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COOK ISLANDS - ECOLOGY

Cook Islands goes green to stay clean
The Cook Islands is trying to solve its rubbish problem by encouraging the recycling of plastics.
Health officials want islanders to take plastic bags and other containers to a waste centre rather than burn them. The only plastic containers that cannot be accepted for recycling by the centre are those that have been used to store weed killer or other poisons. Aluminum and tin cans and glass bottles will also be re-cycled and the islands' major supermarkets are now using bio-degradable bags and are looking at introducing reusable bags.
Write; by LuisB, July 04

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HONG KONG (CHINA) - BUSINESS

AirAsia's CEO flies humbly high
As governments race to liberalize their airspace amid the explosive growth in Asian budget carriers, one man and his airline are ahead of the curve.
Entrepreneur and businessman Tony Fernandes and Malaysia's AirAsia are already shaking up the region's airline industry with a simple concept - everyone should be able to fly.
The fledgling carrier is a huge success story, in a region that had only one low-cost airline five years ago. Now there are 13 budget airlines in existence or about to launch, including Virgin Blue, Valuair, Tiger Airways and One-Two-Go.
AirAsia expects to carry nearly eight million passengers next year, almost double the estimate for this year. Fernandes puts his success down to a hands-on approach.
"It was strange when I first came to the airline. The pilots freaked out because they suddenly saw their CEO pushing the ladder (to the plane)," Fernandes told CNN.
"The pilots cannot get over the fact that I have a cup of coffee with the guys who carry the bags. My secretary will (even) go out and help clean the planes if we are running into a delay."
Three years ago Fernandes had no involvement with airlines whatsoever. As a Warner Music executive in New York, he hobnobbed with celebrities from across the world.
But after a decade in the music industry, he decided to pursue his childhood dream - running an airline.
"On the way back to London, I saw easyJet on the television. I thought this looked interesting," says Fernandes.
"So I went up to Luton airport and spent two days there watching easyJet in action. I talked to staff and passengers - and thought, right, this is something I want to do."
Without any prior experience, Fernandes and some close associates purchased Malaysia-based AirAsia in 2001.
The airline had been struggling for a number of years. It was operating to only two domestic destinations and was heavily in debt.
Three years ago, Air Asia was relaunched as a budget airline and now flies to Singapore, Indonesia, Malaysia, Thailand and Macau.
Last year it made a profit of $5.3 million and expects to do substantially better this year.
The company is also planning a $200 million initial public offering in September or October this year. Fernandes believes the open culture at the airline has driven growth.
"There is tremendous camaraderie here - with no hierarchy and a family environment. We cannot ever change that. As soon as we change it we will lose our focus," he says.
"We have marketing and finance people, engineers, cabin crew and pilots all in one office. It means effective communication. You open the office door and you see our planes. If people need help, we all go out there and carry bags (on to the plane)."
He also believes that Asia's budget carriers are opening up the travel market to a new generation of consumers.
Hong Kong, the second busiest airport in Asia, now faces fresh competition from nearby Macau. AirAsia started flying to the former Portuguese territory on July 5, saying that Hong Kong's airport fees were too expensive.
Source; CNN, July 04
Write; by Lorraine Hahn and Ja Wuttithamrong

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FOCUS

AUSTRALIA - TELECOMUNICATIONS

Broadband rollout for 99 towns
Nearly 100 Australian towns have moved a step closer to broadband Internet access today, as Telstra announced it would make more local exchanges ADSL-capable under a Government subsidy scheme.
The Federal Government announced last year that it would spend more than $100 million subsidising broadband services for regional and remote Australia under the HiBIS program.
Communications Minister Helen Coonan has announced today that three companies have registered under the scheme and two more, including Telstra, have approval to do so.
Telstra says more than 106,000 customers in 99 towns, most in rural areas, will now gain access to broadband ADSL services for the first time.
The 99 towns selected are those with the highest registered demand for ADSL services.
"More affordable broadband, in line with prices available in metropolitan areas, will now be available for rural, regional and remote Australia, helping businesses and individuals living in those areas stay connected," Senator Coonan said in a statement.
Other firms approved to start providing broadband services under HiBIS are:
- Canberra-based RBBS, which will provide two-way satellite services in high-cost areas across Australia;
- DCS Internet, which will provide wireless broadband services in eastern Victoria;
- E-wire, which will provide cable modem services in parts of WA's south-west; and
- Wideband Services, which will provide wireless broadband services in eastern Victoria.
Source; Australian Broadcasting Corporation, July 04

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JAPAN - BUSINESS

Limits on arms exports
Nippon Keidanren should keep this noble ethic.
Nippon Keidanren, the Japan Business Federation, has proposed reviews of restrictions regarding arms exports as well as the principle of the peaceful use of outer space.
Its thinking is that, with the development and shared use of cutting-edge arms technology being advanced beyond national borders, to allow Japan to become isolated in such an era runs the risk of its lagging behind in weapons capability. This is seen as an impediment to national security.
Nippon Keidanren is clearly apprehensive of any change in military threats to Japan and of the economic situation, which it considers to be the cause of a continued decline in arms procurement by the Self-Defense Forces. It, therefore, feels that the future of the arms industry may be in peril.
To date, Nippon Keidanren has twice proposed changes in the three arms-export principles, which prohibit exports to former communist bloc nations, countries under U.N. arms embargoes and those involved in, or likely to be involved in, international conflict.
Within the government and the ruling Liberal Democratic Party as well, last year's Cabinet decision to introduce a missile defense system prompted work aimed at revising those principles. The goal of this latest proposal, obviously, lies in advancing that trend.
In Europe, there is increasing development of military technology and joint use of arms involving collaboration between industrialized nations. This is also true of the Japan-U.S. missile defense development project, which under the present approach promises to lead to supply of parts to the United States. Under the current rules, however, such transactions are banned.
We earnestly question, however, if actual conditions are grounds for modifying the three principles.
It has been nearly four decades since they were adopted. The benefits to the global community during those years, of Japan's trust and reputation as a ``peaceful nation,'' are immeasurable. Though Japan has often been said to lack a clear foreign policy, it has maintained its ability to speak out on the fields of arms control and disarmament.
It would be tragic to ignore the arms export restrictions in the future. Yohei Kono, speaker of the House of Representatives and veteran LDP legislator, has criticized the Nippon Keidanren proposal, labeling it ``a threat to Japan's very presence in the international community.'' We could not agree with him more.
The business world is also concerned that failure to enter joint development of state-of-the-art armaments will cause Japan to fall behind in other areas of technological development, which would affect demand for consumer goods. We strongly suggest, however, that equal attention be devoted to the downside of making changes in long-help principles of national behavior.
In terms of missile defense, questions remain about how effective the deployment of such a system would be. On this front, it will be vital to proceed with a close eye on the linkage with the situation surrounding North Korea's nuclear development program. Under current conditions, we cannot support hasty changes in arms commitment.
Within the ranks of Nippon Keidanren, there appear to be certain factions with an interest in moving into broad-ranging exports of munitions, other than the advanced technologies.
During calendar 2003, worldwide military expenditures totaled $880 billion, up about 20 percent from a decade ago. In a growth market of this caliber, ``made in Japan'' weapons might sell well. Such business dealings, however, represent a clear step down the dark road to becoming a reviled ``merchant of death.''
Nippon Keidanren head Hiroshi Okuda, also chairman of Toyota Motor Corp., has used the avenue of private sector business to help build Toyota into one of the world's super blue-chip companies. While Nippon Keidanren membership also includes companies in the defense business, we see no need to bow to their every commercial interest.
The forward of the Nippon Keidanren Charter of Corporate Behavior, a document prepared under the auspices of Okuda himself, reads, ``Members should contribute to the sound development of society by supplying quality products and services and in doing so, members must reinforce the importance of business ethics.''
We hope that Nippon Keidanren will keep this noble commitment uppermost in mind, and play its part in helping to chart the course to a future for Japan
Source; The Asahi Shimbun, July 04

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KAZAKHSTAN - POLITICAL AFFAIRS

To tout reform, Nazarbayev uses opposition minister
President Nursultan Nazarbayev’s surprise appointment of moderate opposition leader Altynbek Sarsenbayev as minister of information has raised expectations for a comparatively free and fair parliamentary ballot in Kazakhstan this September.
Sarsenbayev, who is co-chairman of the centrist opposition party Ak Zhol (Bright Path), was named to the post on July 12 after apparently securing assurances from President Nazarbayev that he would carry through with a political reform initiative announced last month at a congress of the pro-presidential Otan (Fatherland) Party.

"He guaranteed that the elections would take place honestly and openly, in accordance with the country’s legislation," Sarsenbayev told a July 13 press conference in Almaty. In a July 15 interview with the newspaper Vremya, Sarsenbayev stressed that he had "laid out to the president the position of our party and the democratic forces" on all questions concerning the upcoming elections.

At the Otan congress, Nazarbayev had declared that the September 19 ballot would serve as a "test" for the country’s commitment to political reform. He spoke out in favor of a ministerial cabinet that reflected the political composition of parliament and for parliament to play a greater role in determining the make-up of the Central Election Commission and Constitutional Council. Such concepts have long been championed by Ak Zhol and other opposition groups.

At a July 21 meeting with media executives, Nazarbayev renewed calls for a free-and-fair vote. “We must hold transparent, honest and legitimate elections,” the Interfax-Kazakhstan news agency quoted Nazarbayev as saying. “Press freedom must be subordinate to public interests.”
Though this is the fourth time he has served as information minister, Sarsenbayev’s appointment surprised many analysts. A former ambassador to Russia and close confidante of Nazarbayev, Sarsenbayev had in more recent times been one of the government’s most outspoken critics. Last autumn, after warning that family-run political dynasties had no place in Kazakhstan, Sarsenbayev resigned as the country’s ambassador to Moscow. Named the co-chairman of Ak Zhol in November 2003, he had since become the target of an information campaign believed to have been organized by presidential advisor Ermukhamet Ertysbaev.

Sarsenbayev’s appointment appears to be part of an on-going presidential election strategy. Over the past several months, Nazarbayev and his daughter, Dariga, leader of the pro-presidential party Asar, have consistently incorporated opposition ideas into their own policies and campaign proposals. Recently, this tactic was put to most noticeable use in March during debate over the election reform bill. A similar about-face occurred in April, when Nazarbayev vetoed a restrictive media law also criticized by his daughter, Dariga.

Sarsenbayev indicated that he sees himself as a mediator in an existing feud between government and non-state-controlled media in Kazakhstan. Existing tension between the press and government, Sarsenbayev noted in his press conference, stem "from the negative disposition of the authorities themselves. Therefore, my strategic aim as minister is the removal of the negative insistence on conflict [with the press] within the government itself. The economic conditions in our country allow us to live peacefully. Therefore, we should change the psychology of our relations."

One of the latest clashes involved a forged edition of the opposition paper Assandi Times. The paper, and a sympathetic publication, Navigator, an online journal financed by the Democratic Choice of Kazakhstan party, charged that the government had planned the forgery in a bid to discredit the opposition. Under threat of a lawsuit, Navigator apologized for making the claim.

However, government-media tension has increased again in recent days, fueled in part by the death of a Navigator editor, Askhat Sharipzhanov, stemming from a traffic accident in Almaty. Some Kazakhstani media outlets have said the circumstances surrounding the incident are suspicious, prompting speculation that Sharipzhanov was murdered.

At least in theory, opposition viewpoints could gain a wider hearing under Sarsenbayev’s new media policy. The minister has told reporters that he planned to guarantee that all political parties are given the standard 15 minutes on television and 10 minutes on radio as specified by law.

This issue could prove important to the fate of the opposition in the parliamentary ballot since Asar draws its strength in large part from the extensive media properties owned by Dariga Nazarbayeva, including Khabar, the country’s largest television network. Opposition groups have complained that the majority of news programming on Khabar is given over to coverage of the pro-government movements, Asar and Otan. In an attempt to deflect such criticism, Nazarbayeva has suspended her role as head of Khabar from July 1 until
September 30, after the conclusion of the elections.
Sarsenbayev has also stated that he would help draft a new media law designed to better protect journalists’ rights. In recent years, international human rights and media monitoring organizations have expressed concern with lawsuits, harassment and physical abuse targeted against independent journalists. [For background see the Eurasia Insight archive]. The pro-government Kazakhstanskaya Pravda reported Sarsenbayev as saying that the revised media law would act as a stop-gap measure to end such attacks.

But the prospective bill would go beyond defense of journalist rights. Sarsenbayev also foresees a shake-up of the country’s media market. "Indeed, it isn’t a secret that the majority of media are registered not under the names of their true owners, but under false names and companies. I propose that this become one of the main directions of work for the Ministry of Information in the near future,” Sarsenbayev told reporters. “Besides that, we should develop a competitive environment for the creation and development of new [media] companies."

Already Sarsenbayev has put his statements on media rights to work. The day after his appointment, the new information minister recalled government lawsuits against the independent newspapers Nachnyom s Ponedelnika, Delovaya Nedelya and Turkistan, arguing that they lacked merit. In an unusual show of official contrition, Deputy Minister Ardak Doszhan later made an official apology to Nachnem s Ponedelnika.
At the same time, though, the opposition’s political powers remain relatively checked. Otan and Asar, the country’s two largest political parties, are poised to dominate the country’s election committees - a key consideration given misgivings raised during past elections about the objectivity of these committees.

For now, many local observers see the ultimate test of Nazarbayev’s commitment to free and fair elections in 2004 as whether or not equal access on Khabar will be granted to opposition parties, including Ak Zhol, the Communist Party of Kazakhstan and Democratic Choice of Kazakhstan. If so, they say, Nazarbayev will have demonstrated his commitment to true democratic reform. For Sarsenbayev, the test case is no less challenging. Once "correct relations" have been established between the government and media, he said, he will be ready to resign. "I trust that I will be Kazakhstan’s last information minister."
Write; by Ibragim Alibekov: Editor’s Note: Ibragim Alibekov is the pseudonym for a Kazakhstan-based reporter and analyst. July 04
Picture; President Nursultan Nazarbayev

2004-07-14T20:52:00.000+02:00

TIMOR LOROSAE – INTERNAL AFFAIRS

Former E. Timor governor to start jail term Friday over 1999 atrocities
A former East Timor governor who was convicted of human rights abuses during the territory's bloody 1999 breakaway from Indonesia will begin serving a three-year sentence later this week, his lawyer said Wednesday.
Prosecutors were expected to take Abilio Soares to a special prison cell at Jakarta's Cipinang prison on Friday, said lawyer Otto Cornelis Kaligis.
Soares, an ethnic Timorese appointed by Jakarta, will be the first to go to prison out of six people who were ordered jailed by an Indonesian human rights court last year.
Three army officers, a former Dili police chief and a militia leader remain free pending appeals. The Supreme Court recently rejected Soares' appeal.
The rights court acquitted 11 security force members and one civilian over the Indonesian army-backed militia violence against independence supporters which cost at least 1,400 lives.
Soares has complained he is a scapegoat.
"Prosecutors told the human rights court on Monday about their plan to put him to jail. Abilio then said 'Why don't you shoot me to death instead?'" Kaligis said, quoting his client Soares.
Kaligis said Soares believed he had been made a scapegoat for the military and police since "not a single prosecuted police officer is serving a jail term" for the 1999 attacks. (*)
Source; AFP, July 04

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AFGANISTAN – POLITICAL AFFAIRS

Majority of Afghans back president Karzai and his government, poll shows
About two-thirds of Afghans think that Hamid Karzai, the president, is doing a good job and more than half approve of his government, a public opinion poll showed yesterday,Victoria Burnett reports from Islamabad. Mr Karzai enjoys most support among the predominantly ethnic Pashtun population in eastern Afghanistan, where 92 per cent of people approved of his performance. But the president's approval rating dropped to 20 per cent in the north-west and 35 per cent among southern Pashtuns. The results of the survey of 804 people, sponsored by the Asia Foundation and conducted in the spring, came days after the Afghan electoral commission announced presidential elections on October 9. Eight out of 10 Afghans surveyed said they wanted to vote in elections, but 87 per cent said women would need their husband's permission and 18 per cent of men said they would not allow their wives to vote. Security was what most worried 40 per cent of the people polled, followed by the economy, which 29 per cent of interviewees said topped their list of concerns.
Source; FT, July 04
Write; by Victoria Burnett
Picture; Mr Karzai: still battling ethnic infighting and funding woes

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CAMBODIA – INTERNAL AFFAIRS

King reappoints Cambodian PM
Cambodia's King Norodom Sihanouk has officially reappointed Hun Sen as the country's prime minister.

Correspondents say this is an important step forward in ending the long-running crisis which has left Cambodia without a proper government for nearly a year.
Hun Sen's Cambodian People's Party (CPP) won last year's general election, but without enough seats to rule alone.

After long months of negotiations, the CPP finally struck a deal with the royalist Funcinpec party last month.

The widely-revered king is in self-imposed exile in North Korea, after being sidelined throughout the 11-month political deadlock.
He had earlier refused to sign the bill to allow Hun Sen's reappointment, and analysts say his change of heart could be a sign that he is willing to support the political process again.
"(I) appoint Hun Sen as the Prime Minister of the royal government of Cambodia," the king wrote in a document signed on Wednesday.

"The Prime Minister has the duty to propose forming of government and seek the approval from the National Assembly."

The appointment gives Hun Sen his third elected term. He has already been prime minister for almost 20 years, making him one of the world's longest serving leaders.
The move should also clear the way for a new government to be formed.

Stalled schedule
The lengthy political wrangling has already prevented Cambodia from taking some important actions, including preparation to join the World Trade Organization and concluding plans for a genocide trial to try former Khmer Rouge leaders.

But despite Wednesday's announcement, the political skirmishes seem far from over.
On Tuesday Cambodia's acting head of state, Chea Sim - who is also head of the CPP - left the country for what was officially termed "health reasons".
But he is thought to have refused to sign the bill to endorse Hun Sen as prime minister, and opposition groups say that troops and police had surrounded Chea Sim's house to force him to leave.
Source; BBC News, July 04
Picture; Cambodia's parties agreed to a power-sharing agreement in June

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CHINA – INTERNAL AFFAIRS

Beijing knows best: Tung
Chief Executive Tung Chee-hwa sparred amiably with lawmakers yesterday, the last day of the four-year term of the incumbent Legislative Council, but the answer was the same: ``No''.
During a lively question-and-answer session, Tung made it clear that despite the July 1 protests he still believes China knows best when it comes to democracy.

``I identify with the central government that its arrangement [on universal suffrage] is for the good of the long-term interests of Hong Kong,'' he said in response to sharp questioning from The Frontier's Emily Lau.
She was demanding to know why Tung would not serve as an advocate for Hong Kong people who want to see full democracy here in time for the 2007-08 electoral cycle.
Hong Kong, Tung said, has to see things from Beijing's standpoint. ``How will Hong Kong's development affect the interests of our country and the safety and well-being of our mainland compatriots?

``We have to take into account our country's point of view. This is the basic principle,'' he said.
While the policy gulf between Tung and the political opposition remains as great as ever, yesterday's session lacked the vitriol of past exchanges.
Tung, in a deep blue suit and a crimson tie, appeared relaxed and even cracked the odd joke with lawmakers.
Addressing this group of legislators for the last time, he expressed thanks for their work.

``Everyone says that I am nostalgic. I am indeed nostalgic. I sincerely hope that I will be able to see most of you here again in October.''
Elections in September will return a new council, with 30 of the 60 seats filled by direct election and the remainder from more conservative functional constituencies.
Pro-democrat parties are hoping to gain a majority in the next Legco and to use the body to push a reform agenda on Beijing.
In April, the National People's Congress Standing Committee ruled that universal suffrage could not be granted in Hong Kong by 2007-08 and gave no timetable for further changes in the political structure.
In yesterday's session, democrats called on Tung to fight for democracy, but he said that under the Basic Law, he was accountable to the central government.

``After the NPC Standing Committee makes a decision, the chief executive has a statutory duty to implement the decision and be accountable to the central government,'' he said. Tung said he had no power to demand that Beijing overturn its decision.

``If you continue to take this attitude, aren't you worried that you are planting a time bomb for your administration?'' democrat Andrew Cheng asked. ``Mr Tung, how many people do you want to see marching in the streets before you line up with them and urge the central government to give us democracy?''

Tung said he had relayed Hong Kong people's aspirations to the central government, but that was all he could do.
Liberal Party leader James Tien lowered the heat of the debate when he asked Tung to help democrats obtain home-return permits to visit the mainland. Tien joked that he would especially like his opponents in the hotly contested New Territories East constituency - Andrew Cheng and Emily Lau - get permits that would allow them to stay away the entire campaign period. ``Allow them to visit the mainland until September 13 [the day after the Legco elections], that will be very good,'' he joked.

``You all have to be careful. The Liberal Party and the chief executive are conspiring together,'' Tung answered, causing loud laughter in the chamber.
Source; The Standard, July 04
Write; by Cannix Yau
Picture; The Monument to the People's Heroes in the foreground and The Mao Zedong Memorial Hall seen behind

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UZBEKISTAN – INTERNAL AFFAIRS

US freezes aid to Uzbekistan
The United States has frozen aid to Uzbekistan because of what it calls a lack of progress in democratic reforms.
US state department spokesman Richard Boucher said Uzbekistan had made some encouraging progress over the past year on human rights, but Washington was disappointed by a lack of progress towards democracy.
Mr Boucher added that the US still wanted to co-operate with the country.
Uzbekistan has received tens of millions of dollars in US aid since 2001, when, after the September 11 attacks, it allowed American forces to use an airbase near the Afghan border.
Last month US officials said Uzbekistan's overall human rights record remained very poor, referring to what it described as serious abuses and deaths under detention.
Source; BBC World Service, July 04

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AUSTRALIA – ECONOMY

Australian Dollar Gains as Consumer Confidence at 10-Year High
The Australian dollar traded close to its highest in nine weeks after a surge in consumer confidence raised the possibility of an increase in interest rates.
Consumer sentiment rising to a 10-year high and a report yesterday showing business confidence rebounded in June, have increased the likelihood the Reserve Bank of Australia will lift rates for the first time this year, boosting the appeal of local assets.

``The jump in consumer confidence has increased the possibility of a rate hike this year,'' said Lawrie Dryden, head of currency and asset allocation in Sydney at State Street Global Advisors, which manages $33 billion. ``It's added to reasons'' to buy ``the Australian dollar.''

Australia's dollar bought 72.53 U.S. cents at 5:00 p.m. in Sydney, from 72.45 cents late in Asia yesterday, when the currency rose as high as 72.85, the strongest since May 7.
The Reserve Bank of Australia has kept its target cash rate at 5.25 percent this year amid signs spending and borrowing had slowed, following two rate increases late in 2003.

Futures traders increased bets the Reserve Bank will raise interest rates later this year. The implied yield on the December 90-day bank bill futures rose to 5.59 percent from 5.56 percent yesterday. The December contract traded at an average yield of 55 basis points above the central bank's overnight cash rate in the past year.

The median forecast in a Bloomberg News survey of 23 economists is for a quarter-percentage point rate rise by March next year. Nine economists forecast an increase this year.

Consumers
The consumer confidence index rose 4.5 percent from June to 119.5, the highest since July 1994, according to a Westpac Banking Corp. and Melbourne Institute survey released in Sydney. A reading above 100 shows optimists outnumber pessimists. From a year earlier, sentiment gained 2.9 percent.

``This can be good for the Australian dollar,'' as it ``means more spending and a healthier economy,'' said Stephen Koukoulas, chief strategist at TD Securities Ltd. in Sydney.

A report yesterday showed business confidence rebounded last month from a one-year low, spurred by extra consumer spending after the government paid out a total of A$2.2 billion ($1.6 billion) to some families in June as a tax benefit.

Australian government bonds were lower across all maturities. The 6.25 percent bond maturing in April 2015 fell 0.189, or A$1.89 per A$1,000 face amount, to 103.963, pushing the yield 2 basis points higher to 5.75 percent. A basis point is 0.01 percentage point.

``With consumer sentiment at a record high the bond market is concerned this tips the balance toward a rate hike at some stage,'' said Warren Hogan, chief economist and head of bond strategy at Credit Suisse First Boston in Sydney.

Retail Sales
Australia's dollar, also known as the Aussie, will extend gains should U.S. retail sales meet expectations later today, said Robert Rennie, currency strategist in Sydney at Westpac Banking Corp. The currency will rise to 73 to 73.5 cents this week, he said.

Any signs of a slowing economy may encourage the Federal Reserve to raise its interest-rate target for overnight loans between banks at a ``measured'' pace. The gap between Australian and U.S. interest rates narrowed to 4 percent last month.
U.S. retail sales dropped 0.8 percent in June following a rise of 1.2 percent in May, according to the median estimate of 68 economist surveyed by Bloomberg News. Excluding vehicles, sales probably rose 0.2 percent after rising 0.7 percent the previous month.

``Our economist sees the ex-auto component of retail sales falling 0.2 percent,'' said Rennie.

``We therefore expect more U.S. dollar weakness and arguably this will be supportive for the Aussie as well.''
Source; Bloomberg, July 04
Write; by Chris Young in Sydney

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SOUTH KOREA – ECONOMY

South Korean growth forecasts are cut
A South Korean state research agency and Morgan Stanley on Wednesday both cut their economic growth estimates for South Korea for this year and next, saying that a forecast rebound in domestic demand is taking longer than expected to materialize.

The agency, the Korea Development Institute, lowered its 2004 growth forecast to 5.2 percent from an April estimate of 5.5 percent, it said in a quarterly report released in Seoul. Morgan Stanley cut its projection to 4.6 percent from 4.9 percent. The central bank and investment banks including Citigroup, ING Groep and UBS have also trimmed growth forecasts in recent weeks.
Growth more than halved to 3.1 percent last year as South Koreans were forced to cut spending after a credit binge left many unable to meet their debt payments. One in 13 of the nation's 48 million people were three months or more behind on interest payments at the end of May.

"Korea's domestic demand is weaker than we previously thought and is likely to stage a weaker recovery in 2005," Andy Xie, an economist at Morgan Stanley, said in a report. "The high level of household debt continues to weigh down consumption, while strong exports have not translated into domestic demand."

The government predicts that the economy will expand about 5 percent in 2004, less than the 6 percent target it set itself at the start of the year, and the Bank of Korea is forecasting 5.2 percent growth. The bank last week cut its second-half estimate to 5 percent from 5.6 percent.

The state agency said it expected consumer spending, which makes up more than half of South Korea's economy, to rise 0.7 percent this year, less than its April prediction for a 3.3 percent increase. Corporate investment in plant and machinery is expected to climb 6.1 percent, compared with 8.5 percent previously, it said.

The Korea Development Institute lowered its second-quarter economic growth estimate to 5.7 percent from 6.1 percent, its quarterly report showed.
Source; Bloomberg News, July 04
Write; by Yoolim Lee and Heejin Koo

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JAPAN – NATURAL CATASTROPHE

Floods wreak chaos in north Japan
At least five people have died and thousands have been ordered to evacuate after heavy rains caused flooding north of the Japanese capital Tokyo.
Victims were drowned or trapped under landslides, which covered their homes in Niigata prefecture, according to local officials.
More than 400mm (16 inches) of rain have fallen in the region since Monday night, and more is feared.

Local authorities have requested military help in the rescue operation.
Residents have been seen shovelling mud out of their homes, and many roads remain blocked. Some were said to be choked by falling telephone poles and trees.
Japan's Meteorological Agency said more heavy rain was likely. Parts of Niigata are forecast to receive another 160mm of rainfall by Thursday morning.
The rain has already broken records for the Niigata region.
Many elderly people have been affected by the floods, with some forced to await rescue on upper storeys of buildings or rooftops.

The five who died were said to be aged between 72 and 83:
- In Sanjo, one man died when his house flooded
- Two women were found dead in the same town, one in a flooded field and the other near local government offices
- A farmer died after a mudslide destroyed his house in Tochio
- A woman was found dead in Izumozaki after her house was destroyed by a landslide.
On Tuesday, military helicopters reportedly rescued 66 children from their nursery school in Nakanoshima.
"I was scared," a little girl told Reuters news agency. "When I looked out of the window, it looked like a river out there."
About 1,000 children were forced to spend the night inside their schools.
Source; BBC News, July 04

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JAPAN – LEGAL AFFAIRS

Japan warns Microsoft over patents
Japan's anti-monopoly watchdog handed Microsoft a warning on Tuesday, demanding that the American software giant remove what it said was a restrictive clause from contracts with electronics makers.

Microsoft said it would contest the decision.

Toshihiro Hara, an official with the Fair Trade Commission, said the warning was the first in the world against the clause, which he said in effect prevented Japanese computer makers from demanding damages or royalty fees even when rivals violated patents for important technology.

Such concerns have increased over the past several years as Japanese manufacturers add consumer-electronics features to Windows-installed computers, Hara said.

"There are concerns the clause may discourage motivation to develop audiovisual technology and may hinder fair competition in that technological field in our nation," he added.
.
Although the commission is not certain patents have been violated, it said several major Japanese makers suspected such violations and have objected to the provision since December 2000. Hara refused to give the makers' names.

Microsoft said it had omitted the conditions from new contracts. The Redmond, Washington based company also maintained that the disputed provisions were legal under Japanese, U.S. and European Union law.

"We have also been offering a different type of contract that does not include the provision and we are not forcing the provision to PC makers," said Takashi Hirano, an executive officer at Microsoft's Japan unit. "It is regrettable that the FTC did not recognize these points."

Microsoft is willing to go to court if it does not get a satisfactory result at the FTC hearing, Hirano said.

Analysts said Japanese authorities were trying to curb possibly monopolistic behavior in an effort to give more opportunities to alternatives such as the open-source Linux software system.

The European Commission found in March that Microsoft abused its "near monopoly" with Windows software.

In the United States, an appeals court last month approved a landmark antitrust settlement that Microsoft negotiated with the Justice Department.
Source; AP, Reuters. July 04
Picture; Microsoft officials said they would investigate

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INDIA – HEALTH / AIDS

Fighting India's Aids apathy
India is looking at ways to contain the spread of the Aids epidemic - but many of its citizens don't want to talk about the issue. The world's second most populous country has one of the highest infection rates - and more than five million HIV/Aids cases. To counteract the spread of the virus, the government recently launched its biggest anti-Aids initiative to date. But efforts are hampered by the fact that most Indians still find sex and Aids taboo subjects.

Stigma
In a corner of the St Katherine's Home in Bombay (Mumbai) a group of children are enjoying their playtime. But despite their singing and laughter these are not typical five-year-olds - all of them are HIV positive.
They were infected by their parents before they were born and were brought here sick and, in some cases, close to death. In a society where families are the main source of support, they are looked after by nurses and nuns.
Sister Shanti has 30 children in her care at this orphanage.
She says the hardest part for her is when people turn their back on children as young as these.
"It disturbs me when people discriminate against them.
"They have this disease through no fault of their own. They too have a right to live," she says.

Ignorance
For years many in India ignored the growing threat of Aids. Many simply could not imagine it was something that could affect them.
Down a crowded street in the heart of Bombay is the Unison clinic, one of the few in the city that deals with HIV patients.
Ram Kewar is on one of his regular visits - he is among 20 HIV-infected people who come here every day.
He was infected by the virus a few years ago and since then has passed it on to members of his family.
He says he had never even heard of the disease, far less about how it can be transmitted.
"I thought it was just my fate to have got it. It was only much later that I found out why it had happened to me."
The new Indian government has identified Aids as one of its priorities.
But the biggest problem is combating ignorance - and that includes people who are very influential.
Sanjay Nirupam is a politician belonging to the right-wing Shiv Sena party, an ally of the former Indian government and the main opposition party in Bombay.
He believes the issue is being overplayed.
"One always hears about Aids and how it's this big problem. But I have personally never come across anyone with Aids or seen anyone dying of the disease," he says.
"I think it's just hype."

Taboo topic
But it's a problem, which is not just confined to the poor or uneducated, or even the conservative.
It spreads across Indian society.
In a trendy Bombay cafe young men and women draw on cigarettes and sip long cocktails.
They are part of cosmopolitan Bombay's elite - upwardly mobile, liberal and well-informed.
This is one section of Indians who are more open to talking about Aids - but they would never think of doing so at home.
"It has to do with sex and that's something which is an absolute taboo," says twenty-something Rocky Bhatia.
"Most families simply will not bring it up."

Sign of hope
But there's hope at the other end of the social divide. Falkland Road right in the heart of the city is Bombay's red light district. For years activists have worked closely with the sex workers operating out of tiny rooms and filthy alleyways off this busy street. It's a move that is now paying dividends. Monica is a sex-worker who has seen many of her colleagues die.
In the past decade, Aids has claimed the lives of thousands of sex workers. Now they are learning to be more careful. Volunteers regularly visit every brothel handing out boxes of condoms and carrying out regular medical tests.
"If a customer refuses to use a condom we return his money and turn him away," says Monica.
"It doesn't matter how much money he offers us. Our lives are more important."
It is a small sign of success for a problem that needs to be tackled on a much larger scale.
Otherwise, it is estimated that in the next 10 years India could have more Aids cases than all of Africa.
Source; BBC News, July 04
Write; by Sanjoy Majumder, correspondent, in Bombay
Picture; India is home to one in seven HIV-positive people

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PAKISTAN – INTERNAL AFFAIRS

After Me… Me
So, how long before a presidential form of government? Not very, as another PM is sworn in, for the interim.
It can now be said unequivocally: Pakistan has a revolving-door democracy; PMs come and go, the President calls the shots. Just glance at last week's events in Islamabad. Prime Minister Mir Zafarullah Khan Jamali resigned (read: was sacked), Chaudhary Shujaat Hussain was appointed his successor. This is for an interim period during which the military establishment will find a safe seat from where to get 'miracle man' and finance minister Shaukat Aziz elected to the National Assembly. Then Hussain will resign to let Aziz replace him. But rumour is that even this revolving door will be closed permanently, and a presidential form of government ushered in.

Musharraf's choice of Aziz symbolises his deep distrust of the political class. As a technocrat who served the Saudi royal family and princes of the uae, and also worked with the World Bank in Washington, Aziz is expected to be indifferent to the country's democratic aspirations. But already the members of the ruling Pakistan Muslim League-Q have started to ask: can Aziz find a safe seat from where he can get elected to the National Assembly?

The speculation has been sparked because PML-Q president Hussain did not mention Aziz in his speech of thanks after he was elected leader of the National Assembly (that is, in effect, the PM). He subsequently made amends at a party meeting after the presidency called reminding him of the script he, Jamali and Musharraf had agreed upon. Hussain has also been requesting the media not to refer to him as 'interim PM'. Reason: the Constitution does not recognise such a post.

The whisper campaign against Aziz has a sharp edge: his detractors say he belongs to the Ahmadi sect, declared non-Muslim here, and consequently can't be PM. Urdu dailies even headlined this rumour, goading Aziz into publicly denying it. His proximity to Washington has riled the Muttahida Majlis-e-Amal (MMA), an alliance of right-wing Islamist parties. With Musharraf already toeing Washington's line, Pakistan, MMA leaders say, will now have a PM whose thinking is anything but 'home-grown'.

MMA leader Qazi Hussain fired the first salvo saying, "The nomination of Aziz is a contempt of not only Parliament but the whole nation." MMA leaders say they are wary of Aziz because he will do Washington's bidding and roll back Pakistan's nuclear programme. Worse, Aziz's antecedents have prompted the Lahore High Court Bar Association to resolve that it will oppose him as PM due to his propensity to promote the US economic agenda.

Musharraf can sell Aziz to Washington and London as the man of 'western values' who is largely credited with having pulled Pakistan out of an economic quagmire. In reality, though, he is a 'non-political face' of Jamali, appointed to defend the President in the National Assembly. Indeed, Jamali was ousted because he would rarely intervene in the National Assembly debates, which routinely ripped apart every policy of the army headquarters.

As rumours about Jamali's imminent ouster gathered force in the last three weeks, Musharraf retaliated against the PM's 'betrayal' through complete silence. Jamali was reduced to pathetically appealing to the media to desist from such speculation. The loss of face was decidedly his, but it also devalued Pakistani democracy.

Democracy here will continue to be undermined as long as no systemic measures are taken to balance the trinity of forces in Pakistan. As Senator Aitizaz Ahsan explains, "Our constitutional history is the story of conflict between three elements - the civil and military bureaucracy, the judiciary and the fundamentalists. Only those politicians prepared to display abject subservience to this trinity can survive. Those who choose to challenge or even to question the trinity, there's death, imprisonment or exile.Unless the political and civil society address this distortion in our political-constitutional structure, there is little hope."

Most have already given up hope. They fear once Aziz is anointed as PM, he'll call for a snap poll. Musharraf will help him engineer a two-third majority. The Constitution will be amended to usher in the presidential form of government. That's been the denouement to all democracy dramas army generals have scripted in Pakistan.
Source; Outlook India, July 04
Write; by Mariana Baabar

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FOCUS

JAPAN – GEOPOLITICAL

Unfinished Business
Even with his popularity waning, Junichiro Koizumi might get one last chance to leave a good mark on Japan.
Yasuko Imatomi feels like she has heard this song before, and she's not singing along anymore. The 41-year-old Tokyo homemaker has been a longtime supporter of Japan's dominant Liberal Democratic Party (LDP), and until fairly recently she counted herself as a fan of its silver-maned, silver-tongued leader, Prime Minister Junichiro Koizumi. But here in the city's Shibuya neighborhood, as Koizumi and other party members begin campaigning for the July 11 Upper House election, Imatomi is a lot more cynical than she was three years ago when Koizumi first took office. As "Jun-chan" and company promise, yet again, to enact broad structural reforms that will overhaul Japan's calcified political and social systems, Imatomi says Koizumi has been making the same pledges for years and has far too little to show for it. "I'm having doubts about just how far he is willing to push his promises," she says. "I'm planning on voting for a different party this time."

In the past few weeks, people like Imatomi have turned into a big, unforeseen headache for the Prime Minister. As little as a month ago, Koizumi was flying high and seemingly unassailable. In rapid succession this spring, he made a bold dash to North Korea to fetch family members of repatriated Japanese citizens abducted by the Hermit Kingdom in the 1970s; deftly sidestepped a pension scandal that had crippled the Democratic Party of Japan (DPJ), the nation's primary opposition party, by taking down its two most senior members; and headed off to the G-8 summit on Sea Island in the U.S. state of Georgia, where he was lavishly fêted at a private breakfast with American President George W. Bush. His burst of statesmanlike coups led many pundits in the Japanese media to declare that this week's election was over before the campaigning had even begun. The polling, they opined, would be just another formality as Koizumi, alone atop the Japanese political landscape, would lead his LDP to a runaway victory and begin his final two years in office with a clear mandate to pursue his most important initiatives and secure his place in history.

But something happened on the way to the landslide. Once boasting an approval rating of 87%, Koizumi's power base has always been his overwhelming public mandate. But popular support has suddenly dissipated at a crucial juncture in his career. Due to two critical missteps, Koizumi's approval rating has fallen from 54% to 40% (one of his lowest scores ever) in the past five weeks. According to recent opinion polls, voters have taken a dim view of his surprising declaration at the G-8 summit that he had decided without consulting (or even informing) the Diet to keep Japanese troops in Iraq indefinitely. They are likewise annoyed by the way the LDP rammed through a pension-reform bill last month that raised citizens' premiums and lowered their payouts while doing little to solve the system's fundamental flaws. Many see the pension bill as an underhanded and secretive move reminiscent of Japan's behind-closed-doors political tradition, one not in keeping with Koizumi's new era of openness and transparency. And others have called the Iraq decision slavish toadying to American dictates that puts Japanese lives at unwarranted risk. "These things have made people lose confidence in Koizumi fast," says Takao Toshikawa, a veteran political commentator and the editor in chief of the newsletter Tokyo Insideline.

The election that was supposed to be a Koizumi walkover has thus become a hotly contested battle, one that has breathed signs of life into the DPJ, which most commentators had declared all but dead. Rather than a rubber stamp for a Koizumi mandate, July 11 has now become a key measure of public confidence (or lack thereof) in the Prime Minister's performance and an important indicator of how the final years of his term may play out. With 121 seats up for grabs, the LDP's declared goal is to capture at least 51. While outright control of the government is not at stake even if it falls well short of that objective (the LDP-led coalition still retains a handsome majority in the far larger and more powerful Lower House), a disappointing performance could embolden some of Koizumi's bitterest enemies from within the LDP to call for a change of leadership. There is a precedent for this, if not a tradition: after four out of five of the most recent Upper House elections, the Prime Minister has been forced out within 54 weeks. As campaigning heats up, most politicians and observers say the chances of a catastrophic LDP drubbing followed by Koizumi's ouster are remote. But there is no doubt now that the LDP's performance will set the tone for the duration of Koizumi's tenure.

Unfinished business: it's the cloud that continues to hang over Koizumi's government. While he is already one of the longest-serving Prime Ministers since 1945, there can be little doubt that a man who has repeatedly vowed to "change Japan" - even if it requires destroying his own party - aspires to be remembered as a pivotal figure in Japanese history. And while Koizumi has made significant strides in areas such as banking reform and foreign affairs, if his administration were to end tomorrow, he would be remembered mostly for his charisma - and for a litany of promises unfulfilled. Will Koizumi go down in history as a leader who, like Ronald Reagan or Margaret Thatcher, invigorated and modernized the government and, for better or worse, reoriented the attitudes and expectations of its citizens about the role the state plays in their lives? Koizumi has a daunting task ahead of him in the next two years if he is to secure that kind of stature. Most experts point to three primary areas - Japan's political structure, long overdue economic structural reforms, and the country's dysfunctional relationship with China - where he must devote his efforts if he is to be noted not just as one of the longest-serving Prime Ministers but as one of the best.

Executive Power
From the very beginning of his term in office, Koizumi has been Japan's most independent and "presidential" Prime Minister. Conducting himself as if he were an opposition leader, he routinely rails against his own party, which has held a virtually unbroken monopoly on power for almost 50 years. Thanks to his overwhelming popularity, Koizumi has been able to work outside the LDP's famous, and famously arthritic, faction system, neutralizing it in significant ways. Early on, for example, he broke with tradition and rankled the Old Guard by picking Cabinet members he thought were most qualified for their jobs, rather than filling the posts by quota with members from each faction. Over the past three years, he has similarly built an administration that introduces far more legislation into the Diet than most Prime Ministers before him have. He routinely and unapologetically makes unilateral decisions, whether it's to open a dialogue with North Korea without consulting Japan's Ministry of Foreign Affairs or deciding to keep troops in Iraq without checking with anyone at all. In a country where a secretive ruling élite brokered deals behind closed doors, Koizumi has made the government more open and the executive branch more accountable. The citizenry may be upset that Japanese troops are still in Iraq, but no one doubts where the buck stops.
Unfortunately, it is unclear whether the government will revert to politics as usual as soon as Koizumi leaves office. Sheila Smith, a Japan specialist at Hawaii's East-West Center, gives Koizumi credit for introducing "a whole new vocabulary for the LDP, one that includes responsiveness and transparency. The next person will not be able to retreat from that." At the same time, Smith readily admits that the next PM might not be up to the job. "There aren't many Koizumis out there," she says.

Curiously, this is a situation that Koizumi seems uninterested in remedying. Not only is there no leader with Koizumi's panache waiting in the wings, but virtually every political expert in Japan agrees that Koizumi has made no attempt to groom a generation of young politicians capable of carrying on his good works. "Koizumi may have cut through LDP factional politics," says former LDP lawmaker Raizo Matsuno, "but he's not interested in creating a successor." Take 49-year-old LDP secretary-general Shinzo Abe, Koizumi's heir apparent. Abe is a young, good-looking, impeccably credentialed reformer handpicked by Koizumi to be the party's No. 2 man. He appears on many of the LDP's election posters and has been delegated to take the lead on certain issues, such as the North Korea abductees. But those who know both men say he is far from Koizumi's tight-knit inner circle and could hardly be called a protégé. Many commentators, such as newsletter editor Toshikawa, say that Koizumi brought Abe into the fold not so much to nurture him as to keep him on a short leash. While Abe will doubtless be a powerful force in Japanese politics in the future, it is unclear whether his style will approach anything that could be called Koizumiesque. And though Koizumi has put the LDP faction machine in idle, its engine continues to hum.

Economy
One of the apparently unqualified successes of Koizumi's time in office has been Japan's surprisingly robust economic rebound. After fading in and out of recession for more than a decade, the country has posted two consecutive quarters of annualized GDP growth in excess of 6% (making it the world's fastest-growing mature economy), and results for the quarter ended June 30 are expected to be equally impressive. Japan's Nikkei 225 stock-market index, meanwhile, has surged 56% since its 20-year lows reached last April, corporate profits and confidence are stronger than they have been in a decade, and household spending, consumer confidence and employee bonuses are all on the rise.

Koizumi has garnered the most praise for filling high economic and policymaking posts with effective leaders. Financial Services Minister Heizo Takenaka, for example, has forced ailing Japanese banks—once seen as the single greatest threat to the nation's financial stability—to radically overhaul their balance sheets. Thanks to Takenaka's get-tough measures, nonperforming loans at major Japanese banks have fallen from 8% in 2001 to 5.2% at the end of March 2004; debt-rating agency Standard & Poor's has just lifted its assessment of several Japanese banks for the first time in 21 years. Meanwhile, Toshihiko Fukui, who was appointed Bank of Japan governor in March 2003, has been much more successful than his predecessor in stifling Japan's pernicious, decade-long bout of deflation through unconventionally loose monetary policies.

Even with such savvy appointments, many critics maintain that Koizumi has still mostly been lucky - that the economy has been buoyed primarily by forces beyond his control. While Koizumi has not attempted to kick-start growth via wasteful public-spending projects the way many of his predecessors did, much of Japan's economic revival is the result of self-initiated restructuring by many of the country's world-class multinational businesses. (Meanwhile, Japan's highly inefficient domestic industries, such as mom-and-pop retailing and food production, bumble along as unprofitably as ever.) And the voracious appetite of Chinese industries for basic materials, not to mention that country's growing consumer demand, has proved to be a surprising and welcome salvation to a broad swath of Japanese manufacturers and exporters that only recently had been sounding the alarms about China's ability to "export deflation" or "hollow out Japanese industry" by taking over factory jobs once handled by domestic workers.

Regardless of the immediate causes of Japan's recovery, questions remain about its sustainability. Koizumi came to power as an economic reformer. Yet his three pet reform initiatives - privatizing the postal system, reforming the quasi-governmental highway-development companies, and overhauling the pension system - have barely left the drawing board since he made some of them central campaign planks as far back as 2001. In interviews with the Japanese press last month, Koizumi said that privatizing the postal system - an oddball governmental institution that not only delivers mail but also acts as the country's largest savings bank and as an insurance company - was his highest priority. An increasingly skeptical populace has been hearing that same promise for more than three years, and few believe he has enough political capital left to force unwilling LDP members to make the radical legislative changes necessary. Editor Toshikawa says, "He simply doesn't have the clout to carry out these privatization schemes. And if the LDP doesn't get 51 seats [in the Upper House election], he might abandon postal reform altogether."

Even those who are sanguine about Japan's recent economic performance warn that as long as structural reforms and a pension overhaul remain uncompleted, the country's fundamentals will continue to decay. The soaring stock market, they say, has papered over lingering inefficiencies at many companies, giving a much-needed (though potentially short-lived) boost to their asset levels. Similarly, Japan faces the worst demographic time bomb in the industrialized world - a problem that Koizumi and the LDP's pension reforms have done little to address. Many say Koizumi has lost any taste he may have had for the battles necessary to effect change. "The whole pension system needs to be taken apart and rebuilt," says Kazuhiko Nishizawa, an analyst at the Japan Research Institute in Tokyo, "but the administration isn't thinking that far ahead."

China
While Koizumi came to power as a domestic reformer, his greatest successes have so far been in foreign affairs. He boldly dispatched troops to Iraq (the first shipment of Japanese troops to a foreign land without the United Nations' blessing since World War II), and has maneuvered to be a major participant in the multinational engagement with North Korea to abandon its nuclear weapons program. For all his aplomb on the geopolitical scene, however, Koizumi has allowed Japan's crucial relationship with China to languish. "While pursuing closer ties with the U.S. and attempting to normalize relations with North Korea, Koizumi has abandoned China," says Jun Iio, a professor at the National Graduate Institute for Policy Studies in Tokyo. Since taking office, Koizumi has lived up to his promise to visit Yasukuni Shrine, which honors Japan's military war dead, at least once a year - meaning the Prime Minister, regularly like clockwork, offends China, whose citizens were brutalized by Japanese soldiers during World War II. Beijing has declared that Koizumi is unwelcome as long as the visits continue. So while trade between China and Japan has been booming, diplomatic relations are stalled.

Fixing that may mean making compromises about Yasukuni Shrine and more fully addressing other aspects of Japan's past war conduct, such as the Nanjing Massacre. Any admission of wrongdoing would be very unpopular with many of Koizumi's most conservative supporters, but political experts maintain that such compromises are the only way to get more fruitful dialogues with China rolling. "China is strengthening its presence throughout East Asia, but Japan and China have so many unresolved, complicated issues," says Terumasa Nakanishi, professor of international politics at Kyoto University.

From the day he burst onto the political scene, Koizumi was the outsider in his own party, relying on charm and public support to push his often-maverick agenda. But as his popularity rating now hovers near an all-time low, his antagonistic relationship with many of his colleagues may have boxed him in on everything from structural reforms to international relations. While Koizumi's tenure has already been an unqualified, if modest, success on a number of fronts, he has an exceedingly tough climb ahead of him if he is to achieve all of his goals before leaving office. According to Glen Fukushima, ex-president of the American Chamber of Commerce in Japan, what was once a river of goodwill that allowed Koizumi to float, almost miraculously, above the politics-as-usual fray, has begun to evaporate. That has created a vicious circle that threatens to snuff out his attempts to salvage a lasting political legacy. "His failure to implement what he has said he would do," Fukushima says, "has led to a decline in his popularity - which makes it difficult for him to do what he needs to." Back in 2001, as Japan's Prime Minister came to power on a wave of confidence and public optimism, he declared himself "Junichiro Koizumi, the lionhearted." As he heads into a tight election and perhaps his toughest season of policy battles, Koizumi has an opportunity to prove whether he deserves that nickname not just because of his leonine mane, but because of the power of his convictions and the tenacity of his fight.
Source; Time Asia, July 04
Write; by Jim Frederick / Tokyo. With reporting by Coco Masters, Toko Sekiguchi and Michiko Toyama/Tokyo
Picture; Can Koizumi finally translate his promises into lasting reforms?

2004-06-24T14:33:00.000+02:00

HIGHLIGHTS

CHINA – LEGAL AFFAIRS

China's middle class rebels
Doves coo in their cages overlooking the stone courtyard, and the shouts of a man collecting goods for recycling reverberate along the narrow alleyways.
On the surface, this maze of enclosed courtyards, one-storey houses and narrow stone passageways seems to be a picture of traditional Chinese life.
But against this peaceful backdrop a drama is being played out, pitting tradition against modernity, and individuals against the power of the state.

Beijing's old city is being swallowed by the urban sprawl of shopping malls and six-lane highways. Whole blocks are being razed as China moves to create a city of the future to host the 2008 Olympics.

In one area undergoing redevelopment, I met 47-year-old Liu Changshan by chance. He invited me to visit his house, which is facing demolition. It stands alone in a wasteland of broken bricks, the only remaining structure in the entire block.

He described his emotional ties to his property.
"My mother and father got married here," he said. "They bought this place before 1949. We're six children and we all grew up here.
"Now my mother and father have both passed away. I can't bear the thought that this house will be destroyed."
But Mr Liu is refusing to go for financial reasons. He said the compensation offered was not enough to buy a new place, even in the suburbs.
He will get $1,000 per square metre, less than half the market value of the site. And the personal cost is enormous - he has already sacrificed his 20-year-long marriage.

"My wife is someone who works hard, she couldn't live in these conditions. We really felt strongly for each other but every day we argued about our situation. I knew we couldn't go on, so we had to separate, then we divorced."

Mr Liu is among those paying the price for the city's facelift. One Swiss non-governmental organisation estimates 300,000 people have been evicted in Beijing to make way for Olympic projects.

But officials have argued that figure is too high, and they insist those relocated benefit by having an average of 40 sq m more space per family.
Officials turned down my requests for an interview.

'Benefits'
Lawyer Lester Ross often represents developers. He believes that many residents are happy to take the compensation and move.
"In many instances, people are going to benefit because a great deal of the housing in Beijing, as well as other cities and rural areas, is very substandard," he said.

In the past, he has had to tackle problems caused by forced evictions by subcontractors working for the city government. But he believes the attitude is changing.
"One of the reasons why construction proceeded so fast is because they have been able to disregard what are considered to be basic rights of people who are residents or who maintain small businesses.
"If you just bulldoze them out of the way, then of course new construction can go on much faster. Beijing, in particular, is concerned now with the greater attention that's coming with the Olympics. Beijing doesn't want the great construction that's under way to be tarnished by public protests," he said.

'Damage done'
Recently the government announced it will demolish fewer buildings in a bid to tackle growing discontent.
But if Ye Guozhu is anything to go by, the damage may already have been done. His family's house was knocked down with their possessions still inside.
Unhappy with the compensation offered, his brother appealed to the authorities but got nowhere. Desperate, he tried to commit suicide in Tiananmen Square and was given a two-year jail term.

Mr Ye is deeply embittered by the experience.
"This unchecked demolition over the past few years has changed the way that people think about the party and the government. Now people think our government isn't governing for us. They're bandits and hooligans. It's a very deep problem. People have already lost confidence in the government," he said.

He now liaises with others who have lost their homes. His movements are monitored by the authorities and I was detained when I visited him, an indication of just how nervous the government is.

And he is not the only one who has turned against a government he once supported.
"These demolitions aren't being carried out properly. They're not taking account of people's rights. Everybody thinks that," said Liu Changshan, the man whose house faces demolition.
Then he pulls back some blue plastic sheeting to show me six huge containers of petrol lined along the walls.
"I'm prepared to take this fuel and pour it over my body. If they knock my house down forcibly, I'll set myself on fire," he said.

It is a sign this urban renewal is spawning a new generation of revolutionaries. It is ironic that in a communist country that has jettisoned so much of its ideological baggage, homeowners are now being thrust into the position of rebels, defying their government to defend their own property.
Source; BBC News, June 04
Write; by Louisa Lim, BBC correspondent in Beijing
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JAPAN – LABOR

Inflated fertility rate used for pension bills
Ministry allegedly sat on lower figure
Health, Labor and Welfare Ministry officials said Tuesday they had estimated a record-low fertility rate in 2003 of 1.29 almost two weeks before the contentious pension reform bills were pushed through the Diet on June 5, based on a rosier figure.
The government's pension reform package was based on a more optimistic fertility rate of 1.32 for the year, forecasting it to eventually recover to around 1.39. A figure above 2.08 is needed to sustain the population.

Opposition lawmakers had demanded that the latest figure for 2003 be disclosed before the government-sponsored pension bills were passed.
Some have speculated that the ministry intentionally delayed the announcement of the figure because the government's pension reform plan was based on a more optimistic scenario.
The revelation that the government had already estimated the actual figure to be lower than that used in its pension reform package could fuel further public distrust of the system.
Responding to a written request from Takashi Yamamoto, a House of Councilors member of the Democratic Party of Japan, the welfare ministry said the head of the division in charge of demographic statistics reported an interim result of the latest data to the head of the ministry's statistics and information department on May 24.

But the ministry only released the data on the afternoon of June 10, after major newspapers reported the figure in front page stories that day.
The total fertility rate is a calculation of the average number of children that a woman will bear during her lifetime.
A senior official of the ministry's statistics division said Tuesday the interim figure was "around 1.29." He claimed the figure was tentative and not ready for official release.
Chief Cabinet Secretary Hiroyuki Hosoda meanwhile defended the ministry.
"You need to analyze various factors even after figures are obtained," he told a regular news conference. "Usually it takes several days before publication."
The government's fertility rate forecasts have been consistently overoptimistic for more than two decades, forcing it to repeatedly revise down pension premium revenue assumptions.
A higher birthrate prediction is politically favorable for the government, which has been trying to bathe its social security plan in a rosy glow.
Pension reform will be one of the key topics in the July 11 Upper House election. Welfare minister Chikara Sakaguchi declined to say whether the ministry intentionally delayed the release of the figure.
Source; The Japan Times, June 04
Writer; by Reiji Yoshida
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TAIWAN – DEFENSE

Taiwan urged to buy US weapons
Arms budget; According to the delegation visiting Washington, US officials said that if Taiwan does not treat its national defense seriously, then the US won't either
US Deputy Secretary of Defense Paul Wolfowitz has expressed serious concern about Taiwan's ability to protect itself against possible attacks by China, and urged Taiwan to strengthen its defenses with the proposed arms purchase, according to a Taiwanese legislator visiting Washington.
According to Democratic Progressive Party (DPP) Legislator Lee Wen-chung, Wolfowitz said that if Taiwan does not treat its national defense seriously, then the Americans won't either.
Wolfowitz said that if Taiwan did not take action as soon as possible to strengthen its defenses, China would be encouraged to invest more on military equipment, Lee told the Taipei Times after he and a multi-party legislative delegation headed by Legislative Speaker Wang Jin-pyng (王金平) spent a day in Washington discussing Taiwan's arms procurement budget with top defense and State Department officials.
The 15-member delegation was briefed by 25 US military and civilian officials during a breakfast meeting on the first day of a three-day visit on Monday morning, and then went off to separate meetings at the Pentagon and the State Department.
Although Wang is from the pan-blue camp, he still showed support for the purchase.
"The balance of military power on the two sides [of the Taiwan Strait] is necessary to the area's peace, stability and prosperity," Wang said.
The delegation was to attend a congressional meeting yesterday to discuss the prospects for a measure before the US Congress to enhance military relations between the US and Taiwan through greater joint activities and mutual visits by top officials who are currently barred from such visits by long-term US policy.
That measure, proposed by Senator Sam Brownback, is expected to come up for a vote this week. The House recently approved a parallel bill.
On Monday, American officials were "vague" about the US' commitment to help Taiwan fend off an attack from China, Chinese Nationalist Party (KMT) Legislator Sun Kuo-hua told the Taipei Times.
After the US officials insisted that it would be in Taiwan's best interests to buy the weapons stipulated in the special budget package - diesel submarines, P-3C anti-submarine aircraft and Patriot anti-missile systems - the legislators received somewhat unsatisfactory answers to their questions, Sun said.
When asked if the US would come to Taiwan's defense against China if it were to buy all the weapons, the US side was "vague," Sun said, "because they couldn't say they wouldn't come to our defense, because if they said that, Beijing would say, `Okay, let's attack.'"
"I think the United States is keeping that deliberately vague," he said.
Washington has long been pressuring Taiwan to buy the robust weapons package US President George W. Bush promised in April 2001.
Meanwhile, Pentagon officials were still unable to provide details on the design and cost of the eight diesel submarines included in the package, Sun said.
"We didn't even see a configuration for the submarines ... there's a lot of uncertainties in the cost estimates," he said. "The United States Navy doesn't know."
Sun indicated that Washington was still looking toward various European countries to provide the designs.

But the US officials "gave no indication where the subs will come from" and could not provide a price estimate, Sun said.
"They could only give a rough estimate. We want them to be more accurate," he said.
"How can we approve the cost in the budget if we don't know?" he said.
US shipbuilding companies, "cannot build diesel submarines," because they have not manufactured any for more than 40 years, Sun said.
Source; Taipei Times, June 04
Write; by Charles Snyder and Debby Wu
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JAPAN – ECONOMIC AFFAIRS

China, Japan at odds over offshore gas project
Tokyo worries about sovereignty in the East China Sea.
China-Tokyo is expressing concern about a potentially lucrative natural gas field being developed by China near the border of Japan's exclusive economic zone (EEZ) in the East China Sea.
Japanese officials say the project may infringe on Japanese sovereignty, while China says it seeks joint development with Japan.
On Monday, Foreign Minister Yoriko Kawaguchi met her Chinese counterpart, Li Zhaoxing, here and expressed her concern.
Kawaguchi, who is visiting China for a regional ministerial conference, asked Li for information on the Chunxiao project because officials in Tokyo believe the area being drilled by China may cross over to Japan's EEZ, Japanese government officials said.
``There is a possibility the area marked off by China for drilling could be on Japan's side of the border dividing the two countries' EEZs,'' Kawaguchi said, according to officials.
She said it was possible the underwater gas field extends beneath the sea floor into what Japan considers its side of the boundary, and that Japanese natural resources could be tapped by China.
The Chinese foreign minister did not address Kawaguchi's requests for details. Instead, Li said the two sides should continue to stay in touch on the issue.
Li suggested that Japan and China ``shelve their differences'' and jointly develop the gas field.
In Tokyo, Shoichi Nakagawa, minister of economy, trade and industry, said Tuesday in a regular news conference that the government has no plans to jointly develop the natural gas field near Japan's claimed EEZ.
Nakagawa said he plans to inspect the site from a Japan Coast Guard aircraft.
Tokyo and Beijing dispute the boundary of the EEZ in the East China Sea. Tokyo contends that it is drawn at equal distances from the shores of the two countries. But China maintains the border is where the continental shelf ends.
The rig used in the Chunxiao project sits on the Chinese side of the line that Tokyo insists is part of its own EEZ.
Li's suggestion for a joint venture may be interpreted as an attempt to offset criticism from Tokyo, analysts said.
Officials noted that Japan could not join the project anyway, as it is almost finished. Western companies have been helping China.
``China has not given a direct answer to Japan (over its concerns). They just want to buy time,'' said a senior Foreign Ministry official.
Source: The Asahi Shimbun, June 04
Write; by Noriko Akiyama

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INDIA – POLITICAL AFFAIRS

The boys from Bihar
Some members of the new government are an embarrassment
When Sonia Gandhi, leader of the Congress party, last month turned down the chance to become India's prime minister, she robbed the opposition of its first line of attack: a xenophobic campaign against her Italian origins. A second front, however, opened at once over an issue where Congress finds it harder to take the moral high ground. Several ministers in the coalition government are tainted by criminal charges filed against them.

The new Prime Minister, Manmohan Singh, is revered both as a successful former finance minister and as an incorruptible public servant. But he has never won a direct election. Many elected politicians have far dirtier hands. Under rules that came into force last year, candidates in Indian elections now have to reveal their criminal past. According to a tally by Outlook, a weekly magazine, no fewer than 100 of the 542 present members of the lower house face criminal charges.

They include ten of the 25 MPs from the Rashtriya Janata Dal (RJD) party, Congress's biggest coalition partner. The RJD's fief is Bihar, which, with more than 80m people, is India's third most populous state, and the one where crime and politics are most inextricably linked. A notorious gangster, Mohammad Shahabuddin, was re-elected to parliament last month for the RJD. The fact that he is notionally in prison - in practice, in a comfortable hospital - and was described in a police report last year as a “cold-blooded murderer and hard-core criminal” was, apparently, not an insurmountable obstacle.

The RJD's leader, Laloo Prasad Yadav, stood down as Bihar's chief minister in 1997, when he was arrested on corruption charges, but installed his wife as his proxy. He still faces charges related to one of the biggest frauds on the Indian state ever uncovered, involving the “purchase” by the Bihar government of billions of rupees-worth of non-existent fodder.
Mr Yadav, who, rather bizarrely, has become the new railway minister, claims the charges against him are all concocted by his political opponents. Similar claims are made on behalf of his party colleague, Mohammad Taslimuddin, the minister of heavy industries, accused of crimes including attempted murder, intimidation and extortion.

Privately, senior Congress figures say how much it pains the prime minister to welcome such people into his government. In public, Mr Singh points out that they have never been convicted of any crime, and Congress accuses the opposition Bharatiya Janata Party of hypocrisy. Its government, whose six-year tenure ended last month, included a number of politicians facing criminal prosecution for involvement in a riot in 1992 when a mosque was demolished at Ayodhya, triggering widespread communal violence.
Bihar is only the most egregious example of a national phenomenon. Criminals bribe and intimidate their way into office for the protection it affords and the opportunities it offers for recouping their investments. Jayaprakash Narayan of Lok Satta, an electoral-reform lobby group, quotes an estimate of 20m rupees ($440,000) as the cost of standing for election in Bihar.

There is some hope that if the new government carries out its promise to introduce the state funding of elections, politics may attract a nicer class of person. Mr Narayan also argues for a system of proportional representation to break the link between constituency and candidate. Perhaps more pressing is the need for an overhaul of the criminal-justice system, which at present seems to produce fewer convictions than ministers.
Source; The Economist, June 04
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INDONESIA – MEDIA

TV can be friend or foe
While presidential candidate Amien is drawn to the medium, others shun it for being too revealing of shortcomings

Debates and dialogues featuring presidential candidates are saturating local television channels nearly every night, but not all the five contenders are getting equal exposure.
Dr Amien Rais has been a daily fixture, making appearances on talk shows expounding on themes ranging from politics and the economy to football.
But incumbent President Megawati Sukarnoputri has so far shunned TV debates, agreeing only to appear on taped interviews.
So far, Dr Amien's polished style - mixing humour with serious remarks - shows him to be the best communicator among the five candidates.
While some observers argue that he benefits from such exposure, others doubt the appearances will win him more votes.
Viewers who prefer the stern mien of a military man might be more inclined towards retired generals Susilo Bambang Yudhoyono and Wiranto.
Mr Bambang, another regular of presidential debates, has faced Dr Amien in at least three debates when other candidates have failed to show up at the last minute.
While Mr Wiranto gladly appears on talk shows or dialogues, he is reluctant to show up alongside other candidates in a debate.
However, while media exposure might boost their bids, some candidates have chosen to stage no-shows, citing reasons like illness or fatigue.
But commitments to take part in televised debates are no guarantees that they will turn up eventually, Mr Riza Permadi, news director of new TV network Trans TV, told The Straits Times.
Last week, the more established SCTV also cancelled a debate between Mr Wiranto and Dr Amien when the former pulled out at the last minute, citing fatigue from constant travelling.
Mr Hamzah Haz also called in sick an hour before a debate on Trans TV that was to set him and his running mate against the Wiranto- Salahuddin Wahid pair.
But Ms Megawati is by far the most media shy.
Trans TV has so far failed to get Ms Megawati to appear on its weekly presidential debates because it refused to concede to her demand to replace a team of panelists comprising analysts and human rights activists with journalists.
Ms Megawati is the only candidate who has not agreed to participate in Trans TV's fourth - and last - presidential debate next Monday.
Analysts attribute the president's coolness to live appearances to her lack of media savvy.
Said University of Indonesia political communication expert Deddy Hidayat: 'Ms Megawati's communication skill is among the worst of the five candidates.
'From the interviews we have seen so far, she appeared authoritarian and temperamental, especially when she is being asked critical questions.'
Regardless of candidates' desire for air time, however, analysts doubt whether the debates have any significant effect in winning voters over.
For one, the TV debates have been criticised for being too 'clinically clean' - candidates are not allowed to confront each other as they field questions from teams of panellists or members of the audience.
Often, the debates also get fairly pedestrian, with candidates saying similar things.
And their answers could also exhibit more style than substance.
Said media analyst Hinca Panjaitan: 'Both the panellists and the candidates like to use big words and show off their sophistication. This may backfire on them by alienating uneducated viewers.'
Source; Singapore Press Holdings, June 04
Write; by Devi Asmarani
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NEW ZEALAND – CIVIL RIGHTS

MPs under pressure as civil unions lose support
Frantic lobbying has begun at Parliament to keep plans for civil unions alive as the number of MPs expected to vote for it tomorrow begins to slide.

Days ago the Civil Union Bill had been expected to comfortably clear its first reading tomorrow and go to a select committee for public scrutiny.
But last night, numbers in favour of the bill had dropped, as some Labour and National MPs indicated they had major reservations.
The bill offers civil unions as an alternative to marriage, for gay and straight couples.
A second new law, the Relationships Bill, would end discrimination against same-sex and de facto couples but is not expected to be voted on until next week.
An indication that numbers are tighter than expected has come with Prime Minister Helen Clark's clear support for civil unions.
And yesterday Labour's first openly gay MP, Chris Carter, argued passionately for the two bills.
If they were voted down, he said, New Zealand risked its reputation as a society tolerant of diversity.
He also reminded fellow Labour MPs that introducing civil unions and ending discrimination against gays was party policy.
At least 60 of Parliament's 119 MPs will have to back the bill for it to be sent to a select committee.
Last week, the bill was thought to have support from 70 to 73 MPs. That may now be down to 63 or 64 votes.
Up to 10 Labour MPs oppose the bill. Their votes will be critical, as will any move by MPs to abstain.
Those in Labour thought to oppose civil unions include critics of the law decriminalising prostitution last year, such as Taito Phillip Field, Dover Samuels, Clayton Cosgrove, Damien O'Connor and possibly Harry Duynhoven and Janet Mackey.
Two who backed prostitution laws, but are against civil unions, are Cabinet ministers Paul Swain and John Tamihere.
Most of those MPs also form a conservative cabal within Labour, and were unhappy at Helen Clark's February Cabinet reshuffle, which saw David Benson-Pope inherit the Civil Union Bill from his sacked predecessor Lianne Dalziel.
Complicating the debate is the civil unions' companion legislation, the Relationships (Statutory References) Bill, which would end discrimination against couples who are not married, both straight and gay, and in de facto or civil union relationships.
NZ First yesterday said two of its 13 MPs had indicated their support of the Civil Union Bill to a select committee. Only a handful of National MPs are expected to do the same.
United Future's eight MPs oppose the bill. The nine Green MPs and two Progressive MPs support it.
Act's eight MPs are split, and independent Donna Awatere Huata remains undecided.
Source; New Zealand Herald, June 04
Write; by Helen Tunnah, deputy political editor

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ECONOMY – ASIA MARKETS

Opening to yawns: a rookie's challenge
China's new stock market for smaller and riskier companies will be little more than a name and a number as trading begins Thursday. Investors may not provide the support it needs to become an independent entity.

The so-called second board at the Shenzhen stock exchange is opening with a roster of eight companies. Their six-digit tickers begin with 002, setting them apart from Shenzhen's 000 series and the 600 used in Shanghai, the bigger of mainland China's two exchanges. The stocks will trade on the same electronic system and be subject to the same regulations as stocks on Shenzhen's main board.

Ophelia Tong won't be a buyer. The investment director of Hong Kong-based HT Capital Management said she did not pay attention to smaller exchanges such as Hong Kong's Growth Enterprise Market or even Shenzhen's main board. "What's the point?" she said. "It's insignificant."

Without commitment from investors, the new forum may not draw enough money or listings to avoid the fate of similar initiatives. Nasdaq Stock Market pulled out of its Nasdaq Japan venture in 2002 after two years of losses, and turnover on Hong Kong's GEM, which opened in 1999, has slumped.

Some investors say creating the second board may detract from China's efforts to stamp out financial scandals at companies such as Guangxia (Yinchuan) Industry, fined last year for the nation's biggest securities fraud.

"The primary concern for fund managers is corporate governance and the quality of the assets," said Ho Kok Hua, a fund manager at APS Asset Management in Singapore.

Securities scandals helped make Shanghai and Shenzhen stocks the world's worst performers last year even as China had the fastest economic growth among major nations. Shanghai's composite index rose 10.3 percent while its Shenzhen counterpart fell 2.6 percent.

This year, the Shanghai index has fallen 4.3 percent and Shenzhen is down 2.8 percent. The benchmarks are among the 10 worst performers this quarter out of 60 global indexes tracked by Bloomberg.

Shenzhen's second board adds another pool of stocks to China's array of Class A and B shares, Hong Kong-traded H shares and listings in Singapore and New York.

The first batch of companies, which raised 2.3 billion yuan, or $278 million, in share sales, include Zhejiang NHU, a producer of food additives and health care products, and Zhejiang Jinggong Science Technology, a maker of construction and textile machinery.

Initially, their shares will trade through existing main-board platforms and will be included in the Shenzhen Composite index, according to the exchange's Web site.

The new market will evolve into an independent entity "when the time is ripe," the Web site says.

Companies will be subject to the same regulations, including rules on earnings reports, as main-board stocks. Like other Class A shares, they will be denominated in yuan and open only to domestic investors and a few overseas fund managers approved by China's government.

Li Mingzhong, a spokesman for the Shenzhen exchange, said a second-board index would be created when there were more listed companies.

The board is aimed at companies with a technology focus, the exchange said in a statement on its Web site.

None of the share sales by the first eight companies and 10 more that plan to join them in coming weeks has exceeded 30 million shares. Li, the exchange spokesman, said that was not an explicit limit.
Source; Bloomberg News, June 04
Write; by Sara Webb and Janet Ong
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NEPAL – SOCIAL AFFAIRS

No sign of abducted Nepal workers
The authorities in Nepal say they have no idea of the whereabouts of 140 cement workers abducted by Maoists.
The employees were taken from a state-run cement works in Udaipur district on Tuesday and a search by security forces has brought no clues.
There has been no word from the rebels, who are fighting to replace Nepal's monarchy with a communist republic.
In the past, rebels have made abductees attend political and cultural programmes before freeing them.
Thousands of people, including students and teachers across the kingdom, have been taken to remote rebel hideouts and later released after a few days.
About 9,000 people have died in the eight-year struggle between the Maoists and Nepal's security forces.
Source; BBC News, June 04

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FOCUS

MALESYA – INTERNAL AFFAIRS

Still Malaysia's reigning king of controversy
In the space of less than a fortnight, former Malaysian premier Mahathir Mohamad has managed to land himself in four political controversies. That's quite a feat for someone who is supposed to have retired.

Controversy number one arose after President Robert Mugabe of Zimbabwe said in an interview in May that the Malaysian and Chinese governments had provided partial funding for his US$5 million oriental-design, 25-bedroom mansion near the capital, Harare. He did not make it clear whether the supply of rare timber for paneling in the mansion, under construction for more than five years, represented the full extent of Malaysia's involvement.

Mugabe's comments sparked a public outcry in Malaysia, and it took Mahathir 15 days to shed some light on the issue, which appeared to have caught the Malaysian government and cabinet unaware.

"Yes, I think we did" supply timber for the mansion, Mahathir finally told reporters on June 10, but added that this was the "usual practice" in promoting Malaysian timber abroad. Mugabe has often said he regards Mahathir as a close friend, and the two men share many similarities, including a strong anti-Western rhetoric that has been undermined by autocratic rule at home.

After Mahathir's admission, Malaysia's opposition parties and public interest groups responded by calling for an immediate probe into the gift of timber.

"Mahathir is also accountable to the public for his action," said P Ramakrishnan, president of the social reform group, Aliran. "He must come clean by providing facts and figures to justify why a guy like Mugabe, who is regarded as a tyrant and a despotic dictator, deserves this 'gift' from Malaysians."

No sen in sight
Barely had the dust settled when Mahathir caught media attention again on June 17. This time, he was widely reported as saying he was "not getting even one sen" from serving as adviser to national petroleum corporation Petronas and national car maker Proton, as well as to the development authorities of two resort islands - Langkawi, off Mahathir's home state of Kedah, and Tioman, off the peninsula's east coast.

He said he was only receiving the pension for serving as prime minister for more than 22 years. This amounted to half of his last-drawn monthly salary of RM20,000 ($5,260), he was reported as saying in the pro-establishment Star, the country's top-selling English-language newspaper.

"I don't get a single sen at all," he said. "I am provided an office by Petronas." Mahathir said he needed to explain this matter because there had been talk that he was receiving huge allowances from these particular firms and agencies, the Star reported.

A day later, Mahathir was forced to "clarify". In a report by Utusan Malaysia, a paper linked to his former party, the ruling United Malays National Organization, Mahathir said he did receive taxable monthly allowances from Petronas after all. "However, the amount he received was totally far off from the hundreds of thousands of ringgit he was alleged to have received," said the report. It was not known who made those allegations and what prompted the about-turn.

Protection payment takes a hit
As if that was not enough, Mahathir stirred up a third hornet's nest when he called for a review of the honorarium of the annual RM10,000 ($2,600) paid by the northern state of Penang to neighboring Kedah for the historical acquisition of Penang Island and the accompanying strip of land on mainland Penang known as Seberang Perai, formerly province Wellesley.

In the late 18th century, Kedah, under the rule of Sultan Abdullah, offered to lease Penang to England's East India Company in return for protection against possible attacks from Siam (now Thailand) and Burma (Myanmar) and future uprisings by his own relatives. English country trader Captain Francis Light representing the East India Company formally took possession of Penang Island in 1786. Seberang Perai was leased to the English in 1800. However, Sultan Abdullah discovered too late that the compensation and the "protection" Kedah was to receive was much less than he had expected.

In calling for a review of the payment, also on June 17, Mahathir said the amount was no longer realistic. "Kedah should ask Penang for a review of the payment," he said. "We must make a demand because with RM10,000, now you can't even buy a house, or else we ask that Penang and Seberang Perai be returned to us," Mahathir said.

Those with longer memories were left puzzled as to why Mahathir was raising this issue now after stepping down last October after 22 years in power. They point out that when a request was made in 1994 for the payment to be increased to RM10 million, Mahathir himself had dismissed it. "The royalty payment is only a condition ... it is history, and we are only continuing with what is history. It has become meaningless," he said then. These critics also point out that subsequent historical events - Kedah becoming part of independent Malaya in 1957 and of the Federation of Malaysia in 1963 - had superseded the earlier agreement with the British.

Water under the bridge
In another salvo, Mahathir also said Kedah should think about charging Penang for the raw water it had received for free over the years. He pointed out that Singapore and Malacca state had to pay their neighbor Johor for water "but Kedah, a poor state at that, supplies raw water for free to a rich state like Penang."

In a way, Mahathir's admission of Kedah being poor is an admission of his administration's failure to raise socio-economic conditions in the state, which remains among the poorest in the country. Penang, by contrast, is one of the most developed states, and its Penang Water Authority (PBA) is widely regarded as one of the most efficient, supplying the public with water at a price that is among the cheapest in the country.

It would not have escaped Mahathir's attention that the PBA's exemplary track record has cast other water authorities in the country in an unfavorable light.

"Water has become a commodity and every state government wants to make money from the sale of water," says economist Charles Santiago, who noted that Kedah was also in the midst of privatizing its water resources. Penang, he said, has been profitable in water and "what Mahathir was saying is that since you are profitable you pay for your water."

But Santiago pointed out that the government had played a clear role in providing access to water as an important component of development, resulting in 95% of the Malaysian population having access to affordable, piped water.

Though both Kedah and Penang are governed by the ruling coalition, United Malays National Organization holds the reins in Kedah while its coalition partner, the multi-ethnic but Chinese-dominated Gerakan, leads the Penang government. Gerakan President Datuk Seri Dr Lim Keng Yaik holds the water portfolio in the federal cabinet, which was previously held by a staunch Mahathir loyalist, Samy Vellu, president of the Malaysian Indian Congress.

These unnecessary controversies are the last things current Prime Minister Abdullah Badawi needs as he seeks to distance himself from his predecessor. It only goes to show that, even in retirement, the former premier has a knack for ruffling feathers, whether international or domestic, and stirring emotions over the lack of transparency and accountability that characterized his administration. Perhaps after more than two decades in power, it was too much to expect Mahathir to lie low and confine himself to sailing, carpentry or horseback riding.
Source; Asia Times Online Ltd. June 04
Write; by Anil Netto
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2004-06-08T19:07:00.000+02:00

HIGHLIGHTS

SOUTH KOREA – DEFENSE

S Korea cautious on US troop cuts
South Korean officials have responded cautiously to a US proposal to cut by a third its troops based in the country.

Officials said more negotiations were needed, and South Korea needed time to prepare "countermeasures".
China indicated that it welcomed the plan, saying it hoped it would contribute to regional stability. But South Korean opposition, civic groups and analysts said the relatively quick timescale for the pull-out could jeopardise security.

The US has proposed withdrawing 12,500 of its 37,000 troops by 2006.

The US has said it needs to modernise its forces, but the move may leave some South Koreans feeling vulnerable to North Korea.

"There still need to be negotiations," Defence Minister Cho Young-kil said on Tuesday.
"In response to the US-presented broad idea, our idea is also going to prepare a countermeasure in a broad framework," a government official said on condition of anonymity.
"I think the direction of our response will be decided this week after concluding a careful review of the US proposal and collecting various opinions," he said.
The main opposition Grand National Party was less sanguine, calling the US plan "shocking and surprising".
"The number of troops Washington wants to cut came as no surprise, but the timing is rather faster than expected," Professor Kim Tae-hyo at the Institute of Foreign Affairs and National Security told The Korea Herald.

The Pentagon says its commitment to defend the South will not be affected and the use of longer-range weapons and better technology will compensate for the reduction in numbers.
But the South does not want big changes until the resolution of the dispute over North Korea's development of nuclear weapons, says the BBC's correspondent in Seoul, Charles Scanlon. It would prefer the pull-out to happen gradually over 10 years.

Plans are already under way to redeploy the US troops, which will remain in South Korea, and the two sides held a second day of Future of the Alliance talks on that issue in Seoul on Tuesday.

At present nearly half the 37,000 US troops in South Korea are stationed north of Seoul, a throwback to the 1950-53 Korean War.

Their forward position puts them in range of North Korean artillery and US officials have said that pulling troops back south of the capital would strengthen the military's hand.
The US also wants to move the main US army headquarters from its current location in central Seoul to free up money for better military technology and infrastructure.
Source; BBC News, June 04

US TROOPS IN SOUTH KOREA
US to pull out 12,500 troops
Significance largely symbolic: S Korea has 690,000 troops, N Korea 1.1m
US plans to pull remaining troops back from DMZ

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CHINA – HUMAN RIGHTS

Chinese protests on the rise
More than three million people took part in protests in China last year, according to official statistics.
The figures confirm police reports that demonstrations within China are growing in size and number, and becoming better organised.
The report, in Outlook magazine, blames dissatisfaction with government policy.
The main problems, it says, are wage disputes, social welfare problems, the restructuring of state-owned enterprises, and evictions.
These problems amount to a list of the fallout from China's reform process.
Many protests in China happen far from the public eye, but these figures show they are on the rise.

The Ministry of Public Security says last year there were more than 58,000 "mass incidents" -the term they use to describe public protests - involving three million people: that is an increase of almost 15% over the year before.

Western experts say that as protests increase, Chinese police are trying different strategies to contain them, sometimes even making economic concessions to demonstrators - moves that may even encourage others to stage protests.
And one Western academic has warned that, when it comes to the growing unrest, China's leaders will face riskier dilemmas than at any time since the massive protests in 1989.
Source; BBC News, June 04
Write; by Louisa Lim in Beijin

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INDIA/PAKISTAN – BILATERAL AFFAIRS

India and Pakistan ministers to meet
Natwar Singh, the Indian foreign minister, is to hold talks with his Pakistani counterpart during a two-day regional meeting in Islamabad on July 21-22.
Mr Singh would attend the seven-nation South Asian Association for Regional Co-operation, said Masood Khan, the foreign ministry spokesman. He would be the first cabinet minister from the new government to visit Pakistan.
Pakistani and Indian officials are due to meet in New Delhi next week to discuss ways to improve nuclear security. Farhan Bokhari, Islamabad
Source; Financial Times, June 04
Write; by Farhan Bokhari

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VIETNAM – INTERNAL AFFAIRS

Vietnam Gov'ts to Enforce Net Crackdown
Vietnam has ordered local governments nationwide to closely monitor Internet use and enforce regulations aimed at cracking down on "bad information" sent or read on the Web, an official said Tuesday.
The move comes after the communist country sentenced several dissidents to long prison terms over the past two years for using the Internet to criticize the government and promote democracy.

The Ministry of Culture and Information last week instructed the People's Committees in all 64 city and provincial governments to closely monitor all online information, a ministry official said on condition of anonymity.
Under the new regulations, part of government policy announced in March, Internet cafe owners can be fined or jailed for allowing clients to download or send "bad information" on the Internet, the official said.

That includes allowing access to sites ranging from those deemed pornographic to those accused of disseminating state secrets.
Internet cafe owners must also document what Web sites their clients visit and for how long, and all users must present identification cards before logging on.
There are an estimated 5,000 Internet cafes in Vietnam. About 4 million people out of Vietnam's population of 81 million regularly use the Internet.
Source; The Associated Press, June 04

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NEW ZELAND – POLITICAL AFFAIRS

N.Z. Labour Regains Voter Support After Budget, TV3 Poll Shows
June 6 (New Zealand's governing Labour party, buoyed by a big-spending budget, regained its lead over the main opposition National party, according to a poll conducted for TV3 News in Auckland.
Voter support for Labour rose to 43 percent from 42 percent in March. National fell to 40 percent from 42 percent, according to the poll results, which were e-mailed to Bloomberg News.

Labour last month pledged NZ$14.1 billion ($8.8 billion) of new spending the next three years aimed at boosting the income of families and encouraging more people into work. The government hasn't led in the TV3 poll since January.
In February, National took the lead in the poll for the first time since October 1996 after leader Don Brash attacked the government for policies he said favor native Maoris over other New Zealanders.

Clark remains most preferred prime minister with 35 percent support from Brash with 26 percent support, according to the TV3 poll of 1,000 voters. The poll was carried out from May 27 to June 3 by Auckland-based TNS and has a margin of error of 3.1 percent.
Separately, consumer confidence was unchanged after falling in March to its lowest since April last year, according to the poll. The proportion of people expecting the economy to improve the next three months was steady at 40 percent. Still, 30 percent expect the economy to deteriorate from 28 percent in March.
Source; Bloomberg, June 04
Write; by Tracy Withers in Wellington, New Zealand

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AUSTRALIA / NEW ZELAND – LABOUR

Economist warns of looming labour shortage
A small dip in newspaper job ads has not dented hopes that the 5.6 per cent unemployment rate is about to fall to a 23-year low.
The ANZ job ads series, which counts the number of ads in metropolitan newspapers, fell 2.8 per cent in May.

But the drop followed an exceptional year of employment growth and also masked a rise in the use of internet advertising, where ad numbers have risen 51 per cent since May last year.
ANZ measured a monthly rise of 3.4 per cent if newspaper and internet ads were measured together. The rival Olivier internet job ads survey recorded a monthly rise of 4.7 per cent.
Scott Haslem, an economist with UBS, said forward indicators such as the job ads surveys suggested unemployment would soon fall to its lowest rate since 1981.

Tony Meer, an economist with Deutsche Bank, said Australia, Britain and New Zealand were on the cusp of a historic demographic shift that would create a labour shortage over the next 10 years.

"By the end of this year, or early next year, we'll have an unemployment rate in the low 5s or high 4s," he said. "You have to go back well over three decades ago to find a sustainable unemployment rate below that."
Unemployment was last at 5.6 per cent in 1989, before the 1990 recession, but has not fallen consistently below that mark since the mid-1970s. In 1981 the unemployment rate dipped briefly to 5.4 per cent.

Robert Olivier, a director of the Olivier Group recruitment firm, said the labour market was looking increasingly like a sellers' market. "Employers are finding it increasingly difficult to attract top candidates," he said. "It also means there will be pressure on organisations to raise salaries in their June reviews."

Ninety per cent of jobs created in the 12 months to April were full-time, said the federal Minister for Employment and Workplace Relations, Kevin Andrews.
He was responding to a report in yesterday's Herald that said more than half of all jobs created in the past 16 years had gone to casual workers, and more than a quarter of workers were employed on a casual basis.

Casuals were "an essential and legitimate part of a flexible labour market", he said, adding that they received loadings of up to 30 per cent above normal wages to compensate for the lack of entitlements.
Mr Andrews warned that if a Labor government was elected it would force employers to pay casual workers for sick leave, holidays and redundancies - a move that would force businesses to lay off staff.

Labor's workplace relations spokesman, Craig Emerson, described Mr Andrews's claims as "another Liberal lie".
"Labor policy is to give regular, long-term casuals the choice to request a conversion to permanent employment with employers being able to say no if it's reasonable to do so," he said.
Mr Emerson said the ABS definition of full-time work included casual and permanent full-time employees.
The most recent ABS survey of casual employment showed almost 45 per cent of new jobs created between August 2002 and August 2003 were casual.
Source; The Sydney Morning Herald
Write; by John Garnaut and Aban Contractor

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JAPAN – ECONOMY

Rising Japanese bond yields a 'positive sign'
Heizo Takenaka, Japan’s economy and financial services minister, on Tuesday sought to quell concern about rising long-term interest rates, describing a three-and-a-half year spike in 10-year bond yields as a positive sign of the strength of the economic recovery.
"Yields can rise when the economy is getting better and they can also rise when the credibility of JGBs [Japanese government bonds] is deteriorating," he told journalists. "I do not see the yield rise as negative at all. Rather I see it as a positive sign."
On Tuesday, the yield on the benchmark 10-year JGB rose three basis points to 1.7 per cent, its highest since early 2001 when the Bank of Japan began its current ultra-loose monetary policy.

Mr Takenaka was reacting to investor concern about the danger a sharp rise in long-term interest rates could pose as the economy recovers and as inflationary expectations gradually take hold.

Pessimists worry that rising interest rates could cause problems on a number of fronts, making it harder for the government to service its debt, raising private borrowing costs, and reducing the value of bond holdings held by commercial banks.
Hajime Takata, chief strategist of Mizuho Securities in Tokyo, said there was a possibility that long-term interest rates would overshoot, damaging the economy and causing big losses for institutions holding government bonds.

Mr Takata, who has long warned of the dangers of a collapse in the government bond market, said the risks of bond market turbulence became more acute as the economy pulled out of its long deflationary phase.

"This is like a prisoner dilemma situation," he said. "With 97 per cent of government bonds held by Japanese, Japanese people have no way of escaping from the interest rate risk." He said the government should adopt a policy to minimise the risks, issuing more floating-rate bonds and, perhaps, getting the Bank of Japan to buy more long-term JGBs.
Peter Tasker, consultant economist at Dresdner Kleinwort Wasserstein, said such fears were exaggerated. Bond yields were rising, he said, because the prospects for nominal growth and inflation were improving, precisely what Japan had long been waiting for.
Any negative impact caused by falling bond prices, Mr Tasker said, would be more than compensated for by stronger growth and rising equity prices.

Economists said that, even if banks, which have been big purchasers of government bonds, suffered losses on their fixed-income portfolios, they would be able to compensate by gaining wider spreads on lending. Regional banks' balance sheets are more skewed to bonds than the big city banks, which are still big holders of equity.

Economists were also not unduly alarmed at the higher interest rate payment that the government might face on refinancing public debt, now about 140 per cent of gross domestic product. As bond yields rose, so would the tax take, they said.
Nonetheless, the government said it remained vigilant against excessive interest rate rises. Sadakazu Tanigaki, finance minister, said: "We need to watch movements in long-term interest rates closely."

Mr Tanigaki also said the ministry would continue to diversify its bond issuance. The government has held two auctions of inflation-linked bonds, both of them heavily oversubscribed.
Source; FT, June 04
Write; by David Pilling in Tokyo

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CHINA – CULTURE

Greatest archeological discovery since new China
Of the archeological activities on Western Zhou over the past 70 years, Qishan graveyards may be the only large relics of Zhou population ever found. From the burial sites the walls, oracles and advanced buildings and graves are discovered and the oracles reading "Duke of Zhou (Zhou Gong)" appeared many times there.
After a number of on-site investigations, researches and discussions carried out by many famous archeologists the Western Zhou large burial site has received wide attention and was regarded as belonging quite likely to the family of the Duke of Zhou. This greatest archeological discovery as such ever since the founding of new China proves immeasurably precious to the research on China's civilization and for carrying on and developing China's excellent traditional culture.

The large Western Zhou burial site is located in the ruins of the Duke Zhou Temple in Qishan County of Shaanxi Province. Archeological team composed of Shaanxi Archeology Institute and Peking University, has discovered 19 large graves: nine with four grave tunnels, four with three and two respectively and two with one grave tunnel. There are another 13 funerary pits. Over 700 oracle bone pieces were discovered outside the graves, 420-word oracle identified, four slates with characters reading "Duke of Zhou" ever found, over 1500-meter-long wall and sites of foundations of six large buildings of rammed earth.

After three days of careful investigation Professor Zou Heng from Peking University said, it is the only large community of Zhou people, in which the Western Zhou walls, oracles, advanced buildings were all discovered ever since the archeological activities on the Western Zhou Dynasty were started over 70 years ago. That referring to the Duke of Zhou appeared many times on oracle bones indicates that the site is the feud of Duke Zhou and the burial site belongs to his family. The 78-year-old Zou, dubbed "No.1 archeologist on China's Shang and Zhou dynasties", is the discoverer of the capital ruins of the States of Yan and Jin of the Western Zhou Dynasty and instructor for exploring and excavating Lord Jin's grave of the Western Zhou Dynasty.

Yin Shengping, former curator of Shaanxi History Museum, a noted expert in Western Zhou history, said, king-level graves discovered previously only had one or two tunnels, and it is the first time for us to discover four-grave-tunnel graves in the feud of the Duke Zhou. Duke Zhou was a person honored as King of Zhou and is fully qualified to use the funeral treatment of the highest level. It is no wonder that graves with four tunnels were discovered in his family burial site.

Named Dan and surnamed Ji, Duke Zhou is the founder of Zhou Dynasty, and once assisted King Zhou Wu and afterwards serving as regent for seven years, he gave the power back to King Zhou Cheng. He initiated feudalistic system, and formulated the rites and composed music, thus laid the political and cultural foundation of the Chinese nation. Confucius turned his thought more humanized and worldly, and on the basis he formed the Confucianism, which has been passed on for thousands of years, becoming the most fundamental cultural tradition in Chinese society. "Dreaming of Duke Zhou" still remains a catchword nowadays.

Doctor Zhang Tian'en, director of Shang and Zhou Office of Shaanxi Archeology Institute who devoted for years to seeking tombs for kings of the Western Zhou, held that the title of Duke Zhou is hereditary and lasted for five to six hundred years. Although Zhou Gongdan's eldest son was given the State of Lu in the east but Western Zhou practiced the system of returned burial, i.e. one must be buried in the mother town when he died. As descendents of Duke Zhou given provincial enfeoffment must also be buried in the family graveyards, therefore, many graves appeared with four tomb-tunnels.

Researcher Yuan Zhongyi, former curator of Qinshihuang Terracotta and Horses Museum, said, the size of the four-tunnel graves are generally a bit small, so they are not likely to be of the graves for kings but more likely to be graves of the family of Duke Zhou. As to whom they actually belong, that depends on the final determination after excavation.
Source; People's Daily Online

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FOCUS

INDONESIA – INTERNAL AFFAIRS

Indonesia's shameful export
Poverty, ignorance and unenforced laws fuel an industry that has sold 70,000 children into prostitution overseas

The talk in Jakarta
It is not something any government likes to make public, but the figures say it all: Indonesia is one of the world's largest exporters of sex workers, mainly children.
The Unicef says as many as 70,000 Indonesian children have been sold across the country's borders as sex commodities. They are employed in countries such as Malaysia, Thailand, Japan, Australia, Hong Kong and Singapore.
Similarly, nearly half of the 400,000 estimated sex workers in Indonesia are children under 18 years old.

This grim reality has mostly been ignored, buried deep in local newspapers. In this instance, it is the lack of discussion about the problem that is disturbing. That is, until unique cases like the most recent arrest of a 'madam' emerged.
Twenty-seven-year-old Arum was arrested last month for operating a network of prostitutes from her humble food stall in a densely populated neighbourhood in South Jakarta.
Reports said she had recruited girls, mostly students between the ages of 14 and 16, to work for her by first luring them to buy items from her, on credit. These included mobile phones, clothes and shoes.

When the girls ended up with huge debts, she then made them escort older men.
The girls would meet their customers in the daytime, after school, before going home.
Arum's case was special, as she did not operate in a typical 'lokalisasi' or red-light district area.

A report by the Jakarta office of the International Labour Organisation-International Programme on the Elimination of Child Labour (ILO-Ipec) said a large number of children in the country are trapped in the worst forms of child labour, mainly prostitution.
These children come from both urban and rural areas.
Poverty is the trigger in most cases. Government reports say between three million and six million children had been left, without parental care, to eke out a living after the 1997 economic crisis.

In some rural areas, parents are also known to sell their children for money to recruits for the sex industry.

Yet it is the large cross-border syndicates, which recruit girls through deceptive means, that are running a lucrative business of prostitution and people trafficking in an industry that generates millions of rupiah a year in the country.
With the authorities, such as some police and immigration officials, on their payroll, the syndicates target Indonesia as a place for recruitment as well as a destination for sex tourists.
Activists point out the government's glaring lack of effort to tackle this problem. The government last year came up with a national plan to combat the trafficking of women and children.

But with a lack of capacity and resources, the plan was criticised as just 'lip service'. For instance, there is no budget to implement the plan.

'If we want to fight organised crime groups that are making a lot of money, we have to be willing to spend some money,' said Mr Aris Merdeka Sirait, the secretary-general of the National Commission on Children Protection, in Jakarta recently.
The government has drafted a law that mandates severe punishment for exploiters of children. But the enforcers, either out of lack of knowledge or collusion with the suspects, often ignore the law and prosecute the cases using the regular criminal code.
For activists like Mr Aris, nothing is more frustrating than seeing the stacks of cases they submit to the police receive little follow-up.

'We get hundreds of cases and data on child prostitution, but if you'd ask me a year later how many of those have been successfully prosecuted, you'd be disappointed to hear the answer,' he said.

The government only started to act when people began talking about the country's corruption problem. So, until more people start talking about it, this problem of teen prostitutes will see little change.
Source; Singapore Press Holdings, June 04
Write; by Devi Asmarani

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MALAYSIA – INTERNALL AFFAIRS

Malaysia; The elusive Islamic state
Muslims the world over often affirm that Islam is a religion of peace based on submission to God. Yet opinions vary considerably as to how this Divine Will should be actualized.

Cut off from centuries of classical Islamic and legal scholarship, which requires one to understand not just Arabic but the context and evolution of Islamic history in the first place to be able to render a sound juristic verdict, the legal sensibility of Muslims has been severely compromised.

Muslims in Malaysia, not unlike those in the Middle East, have resorted to appreciating Islam through the narrow prism of al Halal wal Haram fil Islam - which means abiding by the "lawful and prohibited acts in Islam", and which is detailed in a book of the same name by Yusuf Qaradawi.

In this philosophy, submission to God is reduced to a series of dos and don'ts - a binary moral code. This approach was systematized by Qaradawi, dean of Islamic law at Qatar University, and the methodology gained currency in the Middle East, and subsequently in Southeast Asia.

Since 1960, when Qaradawi wrote his book in Arabic, his narrow approach toward Islam has predominated. In Malaysia, his influence is deep, even among the governing Muslim elites. When former deputy premier Anwar Ibrahim was the president of the International Islamic University, Malaysia, he spent considerable time with Qaradawi, expressing his support for the latter's fiqh al aliyyah (introducing Islamic law according to priorities).

In his governmental post of deputy to Prime Minister Mahathir Mohamad, Anwar was able to bring some of Qaradawi's ideas into public policy. Eventually Anwar was dumped from the government and jailed on charges of sodomy and corruption; however, the thoughts and practice of Qaradawi have not been totally excluded from government policy, including the reductionist elements.

Islamic scholars and thinkers in Malaysia continue to look to Qaradawi for various Islamic interpretations and verdicts, such as on the legality of suicide terrorism. More important, the inspiration of Qaradawi is integral to the conceptual blueprint for an Islamic state as held by the opposition Parti Islam SeMalaysia (PAS), which controls the Kelantan state government.

PAS's Islamic state is based on the permissible and the prohibited as outlined by Qaradawi. Observe the "Islamic state document" produced by PAS last year, the first of its kind in the history of the party, after much demand from Malaysians as to what a PAS-style Islamic state would actually represent.

In this document, it was clearly stated that PAS would implement "the Shariah [Islamic law] to achieve the five imperatives of the Shariah; therein to protect a Muslim's beliefs, life, intellect, dignity and property".

In seeking to fulfill these five imperatives, the document read: "In implementing the Shariah all vices and crimes that pertain to the above stated aspects would be controlled. Man-made laws have been [proved] a failure in securing the security and dignity of the human race."

From this line of reasoning, it is clear that punitive logic is not far from the implementation of Shariah as envisaged by PAS.

In fact, despite promising to keep true to the five objectives, what is known as Maqasid al-Shariah, PAS is totally silent on the jurisprudential methodology and tradition that would be employed on how these objectives can be fulfilled.

Yet anyone who is vaguely informed on Shariah is aware that the recourse to different methods or schools of thought on Shariah - whether it be mazhab Shafii (as is customary in Malaysia and Indonesia) or mazhab Maliki (as is common in Northern Africa) - can produce variations to each law.

PAS stated that the reason for the creation of an Islamic state is a Fardhu Ain (necessary Islamic obligation). To justify the creation of an Islamic state, PAS quoted the Islamic maxim: "Something becomes obligatory if an obligatory injunction fails to be fulfilled without it."

Going by the above assertion, Islamic law, in the words of M B Hooker, an Islamic-law specialist based in Australian National University, is a creature of "executive institution", something that the Islamic state must create.

Hence, rather than based on Islamic scholasticism, where religious scholars debate on each point of law before it is deployed or introduced, it is now the Islamic state that will decide how Islamic laws are best made.

It is in this context that Parvez Manzoor, a Muslim scholar based in Stockholm University, argues that the Islamic state can become an "all-watchful Hegelian state". This is because it carries within it the administrative, theological and bureaucratic reach, to sanction and approve every mode of behavior.

How one practices Islam in Malaysia, according to PAS, should boil down to observing the prescriptions (the dos) and proscriptions (the don'ts) of the Islamic state, and the kind of restrictive Shariah conceived by it. Therefore, the intermingling of men and women is banned, as are art events deemed offensive.

Although Islamists inspired by the clarity of Qaradawi's work often point to the validity of his approach, since there is a phrase in the Koran that encourages Muslims "to advocate virtue and forbid vice", they fail to note that even Qaradawi himself openly acknowledged the difficult and unprecedented nature of reducing Islam to a set of positive and negative deeds.

That this warning is not heeded is largely due to a shallow understanding of Islamic history, combined with even poorer understanding of Islamic law, and the methods with which laws are derived.

In seeking to create an Islamic state to police and punish, the very position of Islam itself is made controversial, especially in a modern and multiracial society such as Malaysia, where up to half of the population are non-Muslims.

Due to the tendency to assume that a punitive Islamic state is the norm, when Islamists in Malaysia do propose a legislative agenda, they are often predisposed to an approach that rarely questions the spirit and ethics laden in Shariah to satisfy the five imperatives.

Rather, the jurisprudence is based on sanctions and injunctions of the Islamic faith, which in fact is the most simplistic, if not crudest, rendition of Islam into contemporary context.

Herein lies the irony in Malaysia: Despite the clarion call of PAS to create an Islamic society guided by moral awareness, the current approach dilutes it. Instead, it is heavily tilted toward creating an all-powerful Islamic state rather than one fostered on ethical precepts.

Nevertheless, it remains PAS's contention that an Islamic state must come into existence first before an ethical Islamic society could come to be. Morality, in other words, comes after power.

Although the ruling party of Malaysia, the United Malays National Organization (UMNO), is arguably "softer" on the importance of Islamic state, even its Islamization program is not without punitive elements, in some cases even on par with PAS. Islamic laws passed by states ruled by UMNO have been just as strong and harsh.

The only way out for Malaysia is for scholars and students of Islam to be more sensitive to the context of Islamic history, rather than to adopt it wholesale, as is the preferred approach in Islamic institutes and universities thus far. Unless Islamists in Malaysia combine a perceptive reading of Islamic history and Islamic jurisprudence, the reliance on a punitive approach will continue to predominate.
Source; Asia Times Online Co, Ltd. June 04
Write; by Yukiko Ohashi

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2004-06-03T15:44:00.000+02:00

HIGHLIGHTS

CHINA - GEOPOLITICA

China approves changes to draft resolution on Iraq
China has welcomed modifications to a draft resolution on Iraq made by the United States and Britain.
The Chinese government says it hopes the United Nations Security Council can reach a consensus on a resolution at an early date, to stabilise the security situation in Iraq and promote the process of reconstruction.
The draft resolution would give international backing both to a caretaker Iraqi government and the US-led multinational force that will remain in the country after June 30.
The latest version outlines a rough timeline for US-led troops to leave Iraq "upon completion of the political process" to create a constitutionally elected Iraqi government.
France and Russia - who along with the US, Britain and China are permanent members of the Security Council - have voiced reservations about the modified draft resolution.
Source; Chinese foreigner office, May 04

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CHINA – HUMAN RIGHTS

Amnesty calls on China to conduct inquiry into Tiananmen massacre
The human rights group, Amnesty International, says China should conduct an independent inquiry into the 1989 massacre of pro-democracy demonstrators in and around Tiananmen Square.
In a strongly worded statement issued on the eve of the 15th anniversary of the June 4 incident, Amnesty says those found responsible should be tried and brought to justice. The London-based organisation is also calling on the government to release all those who are still held in connection with the Tiananmen crackdown and who never received fair trials. The group has records of more than 50 people it believes remain imprisoned in China for their part in the protests. It says this represents a fraction of the true figure, never released by Chinese authorities.
Source; Amnesty International, May 04

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INDONESIA – INTERNAL AFFAIRS

Poll predicts huge loss for Indonesia's President Megawati
A new poll in Indonesia suggests President Megawati Sukarnoputri is facing a devastating defeat in the country's first direct presidential election next month.
The poll suggests former cabinet minister Susilo Bambang Yudhoyono could snatch a victory by gaining more than 50 per cent in the first round of voting.
Our Indonesia correspondent, Tim Palmer, reports the poll, conducted by the Japanese LSI agency across Indonesia, suggests the momentum behind Mr Yudhoyono, known as SBY, continues to grow.
The poll gives Mr Yudhoyono 49.8 per cent of the vote - close to the simple majority needed to sweep the election at the first round.
President Megawati trails by more than 30 per cent and now appears locked in a battle for second place with former general, Wiranto, of the Golkar party.
The poll shows both have about 14 per cent of the vote.
A second placed candidate would head into a second round election in September if no candidate wins more than 50 per cent in the first poll.
Source; National news agencies, May 04

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INDONESIA – ECONOMY

World Bank report shows millions of Indonesians living in poverty
The World Bank says weak growth in investment and exports is hampering efforts to lift millions of Indonesians out of poverty.
In a report to a meeting of international aid donors, the World Bank says despite a recent fall in poverty levels, more than half the population still lives on less than $US2 a day. The World Bank says services to the poor are among the worst in the region. Unemployment rose to 9.3 percent last year and some two-thirds of the jobless were aged 15-24. Indonesia's maternal mortality rate is twice as great as in the Philippines and five times greater than Vietnam. The report says severe malnutrition among infants had increased from 6.3 percent in 1989 to eight percent in 2002.
Source; The World Bank, May 04

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FIDJI ISLAND – PUBLIC HEALTH

HIV/AIDS pose major threat to Fiji
Fiji's Minister for Health, Solomoni Naivalu, says HIV/AIDS poses a national security threat.
The first four cases of HIV infection were reported in 1989 - by December 2003, there were 142. Mr Naivalu says there could be as many as 4,000 unreported HIV infections based on the rate of increase between 2001 and 2002. He says the disease in Fiji is displaying trends experienced by countries that are now undergoing catastrophic problems. Mr Naivalu predicts there will be more deaths, increased poverty and more orphans. He says a wide range of social, economic and cultural factors have led to an environment in which risky sexual behaviour is widespread He was speaking to delegates at the Seventh Commonwealth Women's Affairs Ministers meeting in Nadi.
Source; FHM, May 04

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VIETNAM – INTERNAL AFFAIRS

Vietnamese crime boss executed by firing squad
Vietnamese mafia boss Nam Cam and four others have been executed by a firing squad, following a corruption scandal that exposed links between organised crime and the communist government.
Nam Cam, also known as Truong Van Cam, was found guilty last June of ordering the assassination of a rival underworld figure and bribing state officials to protect his criminal network. He was handed two death sentences. An appeal against the conviction was rejected and a bid for presidential clemency was turned down. Nam Cam ran gambling dens, restaurants, brothels and protection rackets in Ho Chi Minh City until he was arrested in December 2001.
Source; National news agency, May 04

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AFGHANISTAN – INTERNATIONAL AFFAIRS

Aid group suspends work in Afghanistan after five workers slain
Aid agency Medecins Sans Frontieres (MSF) has announced it will temporarily stop all operations in Afghanistan following the murder of five of its workers.
The five aid workers were killed on Wednesday in a gun attack on their vehicle in Baghdis province in northwest Afghanistan. The victims have been identified as a Belgian woman, a Dutchman, a Norwegian man, and two Afghan men. A spokeswoman for MSF says the agency's activities will be suspended nationwide. She says there is no clear motive for the killing or any indication of who was behind the murders. Foreign aid workers are regularly targeted in the south and east of the country, but until now not in the north. MSF is a non-political organisation, which provides health care primarily in war zones and other impoverished nations. It has been working in Afghanistan since 1979.
Source; MSF data, May 04

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BURMA – NATIONAL CRISIS

Burma cyclone toll rises to 220: Red Cross
The Red Cross says the death toll from last month's cyclone on Burma's west coast has risen to 220, with 14,000 people homeless.
Red Cross officials say an unknown number of people are missing from the cyclone - the worst to hit the coastal communities of Rakhine state in nearly 40 years. The aid agency is set to launch an international appeal for the cyclone victims, which it expects to raise about $US120.000. The United Nations Children's Fund (UNICEF) said recently Burma had made a surprise plea for international assistance after the cyclone, which struck on May 19 but was not reported until last week. The AFP news agency says Burma's military government is known for under-reporting natural disasters and accidents and rarely seeks foreign help. UNICEF has already begun relief missions to the affected area.
Source; AFP, May 04

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SOUTH KOREA – INTERNAL AFFAIRS

South Korean Olympic official jailed on corruption charges
International Olympic Committee (IOC) vice-president Kim Un-Yong has been sentenced to two years and six months in prison on corruption charges.
In the district court in the South Korean capital, Seoul, Kim, 73, has also been ordered to pay $US677, 000 in part restitution of embezzled funds. The AFP news agency quotes court officials as saying that Kim was found guilty of diverting $US2.8 million from South Korean sports organisations. He was also accused of accepting bribes from business contacts. Kim resigned from the leadership of the World Taekwondo Federation in January and also stepped down as a national legislator. The IOC has suspended him from his post as vice-president and opened its own investigation into his activities.
Source; AFP, May 04

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FOCUS

NEPAL – NATIONAL AFFAIRS

King reappoints prime minister to avert political crisis
Nepal's former Prime Minister Sher Bahadur Deuba has been reappointed in an apparent bid by the King to avert a political crisis.
King Gyanendra sacked the prime minister two years ago for alleged incompetence and took charge of government, sparking massive pro-democracy protests. Opposition parties and Maoist insurgents have been demanding that King Gyanendra accept an 18-point plan to limit his powers - or face the abolition of the monarchy.

Presenter/Interviewer: Mike Woods
Speakers: Dr Chitra Tiwari, independent analyst and Nepal specialist

TIWARI: You know his options are very limited and offers are running out. He probably will have to strike some sort of deal with the parties because parties are also getting more support from international agencies, even you know India, United States, Great Britain, Australia and othe countries. They say that the political parties must come together as a pre requisite you know to peace with the Maoists in the future. So if the King does not listen to these ideas.... to these opinions probably he might be in danger in the days to come.

WOODS: THe political alliance containing the five parliamentary parties have submitted an 18-point road map limiting the King's power, calling for transparency from the Royal household. The King either accepts that or sees the monarchy abolished. Wouldn't his advisers be telling him that some monarchy is better than no monarchy at all?

TIWARI: Well I would think so but again remember the Nepal is declared as a Hindu kingdom and I am of the opinion that you know in Hindu, monarchy and constitutional monarchy are two different concepts...they can't go together but somehow the people are making that mistake there. A Hindu monarch does not receive his powers from the constitution but he receives his powers from the religious texts.

WOODS: What sort of guarantee does the Alliance...the Political Alliance have, that should a republic come to fruition, that the Maoists would participate in a democratic republic and not see a bigger prize...that being more power?

TIWARI: They have been telling the parties that they would abide by the spirit of the competitive politics and they would participate in politics along with other parties in the event Nepal is declared a republic. But you know as a revolutionary party...as a party you know that led the republican movement, I would think that they would definitely have some say...they would definitely you know emerge as the largest party in the new set up. But given the international situation. given the you know antipathy towards you know Maoists coming from India and from other countries, the Maoists will have to make some adjustment with the political forces... with the political parties, so I believe they cannot do away the multi-party system there even if they want to.

WOODS: Do you believe that the monarchy can survive in Nepal? And if so how quickly must the King move to ensure that survival?

TIWARI: I think you know he can still survive there if he agrees you know for the change in the constitution.... a constitution you know that will be approved by the assembly. You know the election to constitute assembly does not mean necessarily that it is against the monarchy. You know once you have elections you know the tide could go anywhere.... to any side. So still you know the King has a place there, he will have time you know to bargain with the republicans. If he does that he will survive, if not if he goes into confrontation with the political parties on the one hand and the Maoists on the other then I'm afraid his future is bleak.
Source; ABC, May 04

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FRENCH POLYNESIA – INTERNAL AFFAIRS

Fate of government in the balance
In French Polynesia, people are awaiting the first meeting of the newly elected Assembly, to determine whether there will be a change of government.
In a surprise result, the opposition Union for Democracy won 27 seats in last month's Assembly elections, against 28 seats for the ruling Tahoeraa party of President Gaston Flosse. Now the opposition coalition has won the support of two minor parties, gaining a one-seat majority in the Assembly. With such a tight result, the fate of the Flosse government is still uncertain.

Presenter/Interviewer: Nic Maclellan
Speakers: Jean-Marc Regnault, University of French Polynesia, Tahiti

MACLELLAN: With 29 seats in French Polynesia's 57-seat Assembly, the opposition Union for Democracy hopes to form a new government.

This coalition unites pro-independence parties - Oscar Temaru's Tavini Huiraatira and Jacqui Drollet's Ia Mana Te Nunaa - together with autonomy parties like Here Ai'a, Emile Vernaudon's Ai'a Api and the trade union O Oe To Oe Rima.

Now the opposition has gained support from Nicole Bouteau, a former government minister, and Philip Schyle, President of the autonomy party Fetia Api.

Jean-Marc Regnault, lecturer at the University of French Polynesia in Tahiti, says the opposition's electoral success was unexpected.

REGNAULT: "I think that the surprise was immense on all sides. Only a few activists close to the independence party seriously thought they might win.

"I think that amongst the political leadership and outside commentators, no one was expecting it.

"Even the general public was surprised, because at the start of counting, the results came from the outer islands - the Australs, the Marquesas and the Tuamotus - where Gaston Flosse won a significant majority. So no one thought it was possible for him to lose.

"When the final results were tallied, it completely astounded those who won and those who lost."

MACLELLAN: Except for a brief period in the early 1990s, President Gaston Flosse and his Tahoeraa party have governed French Polynesia for over twenty years.

President Flosse has long been supported by his political ally French President Jacques Chirac, who held a France-Oceania summit in Tahiti last July.

But Jean-Marc Regnault believes that there is a mood for change amongst ordinary Tahitians.

REGNAULT: "There's a very deep gulf between the government and the political elite who benefit from being in government, and the vast bulk of the population who don't benefit from the current set-up.

"The public seemed a bit irritated with a leader who seems just too sure of himself, and also seeing the French President visit here last July as if he was entering a conquered nation.

"There was also the issue that the President had organised for the winning electoral ticket to get a bonus of 33 per cent of the seats. For many citizens voting here, this seemed a bit like over-kill, as if Gaston Flosse was too sure of his victory.

"This desire to crush the opposition seem to create a mobilisation amongst the people to give a lesson to Gaston Flosse."

MACLELLAN: Both President Flosse and independence activist Oscar Temaru have announced that they will be candidates for the Presidency to be decided on June 10. But with just one seat difference in the Assembly, the Union for Democracy will need to guarantee support from all its members.

This week, New Zealand Foreign Minister Phil Goff stated that the post-election transition should be managed without any violence, an indication of concern that opposition activists might protest if President Flosse returns to power.

Jean-Marc Regnault says that people are waiting quietly for events to unfold.

REGNAULT: "Until now, the country has been surprisingly calm. You might have thought the victors would celebrate their victory, or start issuing demands that they want this or that.

"But there's been none of this. The country is very calm, with people happy to discuss amongst themselves the events that are unfolding.

"But as people have expressed a desire for change, and if this was thwarted by a political manoeuvre, it would certainly be unacceptable for a certain number of activists.

"Even though as a university academic I can't be partisan, it's clear that Gaston Flosse manipulated the elections - through the short electoral campaign and the bonus seats for the winners, he clearly tried to manipulate the result.

"So it would be extraordinary if, after having lost the vote, he now tried to change the results by buying one or two members of the opposition."

MACLELLAN: Jean-Marc Regnault stresses that President Flosse has not yet given up the fight.

REGNAULT: "Since yesterday, Gaston Flosse has made a number of statements that are extremely worrying for democracy. He's announced that he's trying to have the elections annulled, based on pretexts that have got no validity.

"He's also made some very serious statements. He said that he's held a discussion with France's Overseas Minister and that France will no longer give money to French Polynesia if the independence movement takes power.

"There are two options: either the Minister really said this, which would be really serious because France respects the rule of law and should accept an election result. This would be an intervention by the French State that is unusual, or even illegal, I would say.

"But if the Minister didn't say this, Gaston Flosse is making threats and he must take full responsibility for the consequences of what might happen. I think there are some people who are playing with fire."
Source; ABC, May 04

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2004-06-01T12:40:00.001+02:00

HIGHLIGHTS

INDIA – BUSINESS – TECHNOLOGY

Microsoft building for first time in India
Microsoft continues to extend its presence in India: no longer content only to lease space, Microsoft has acquired its first plot of land in Hyderabad with plans to construct a three-building complex that will house at least 1,000 employees. While Microsoft portrayed the move as "thoughtful and deliberate," other industry insiders described it as a "wake-up call" for Microsoft’s 27,000 employees in the Seattle area:
"Every employee Microsoft hires overseas means they're placing an employee at Redmond in direct competition with someone that makes a fraction of their wage." Whether these fears are "overblown" or not, the fact remains that big-name U.S. technology companies continue to establish a permanent presence in India as part of a broader cost-cutting strategy.
Source; Seattle Post-Intelligencer, May 04

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SOLOMON ISLANDS – ECONOMY

Pacific fisheries agency seeks new role
The Pacific Islands Forum Fisheries Agency is to re-examine the way it operates.
Most Pacific states and nations with major tuna fishing fleets have ratified a new Pacific tuna convention, to take effect on 19 June.
The Honiara-based fisheries agency was set up a quarter of a century ago by Pacific Island Forum members to exercise greater control over their combined fishing resources.
But with a new commission to oversee the convention soon to be established in the Federated States of Micronesia, the agency is re-examining its role.
At the agency's annual board meeting in Kiribati last week, Forum government officials agreed to accelerate the development a new strategic plan.
That plan will include helping Pacific island nations meet their obligations under the convention. The agency also reported that staff working conditions in Honiara had improved dramatically since the arrival of the Regional Assistance Mission to Solomon Islands, RAMSI, and last July.
Source; FFA, May 04

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TONGA – POLITICAL AFFAIRS

Tongan anger saddens NZ inquiry official
The deputy chair of a New Zealand parliamentary inquiry into relations with Tonga says she is saddened by the attitude of the Tongan government towards her committee.
Tonga's former-acting prime minister, Clive Edwards, recently labelled the New Zealand committee an interference in the kingdom's internal affairs and said it would not be welcome if it tried to come to Tonga. The deputy head of the committee, Winnie Laban, says she hopes Tonga changes its mind about letting them in.
"We are a bi-partisan parliamentary select committee, and the intent and spirit of the inquiry is looking at our relationship with Tonga," she said.
"This was an opportunity for us to reflect on New Zealand's part in the relationship (and) Tonga's part in the relationship."
Source; ABC, May 04

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ECONOMY – ENERGY MARKETS

Oil prices rise in Asian trading in wake of Saudi attacks
World oil prices have surged in Asian trading in the first market reaction to the weekend attacks in Saudi Arabia.
Singapore dealers say, in early trade, the benchmark New York light sweet crude for July was at $US40.38 a barrel, up from $US39.88 at the close of trading in the United States on Friday.
The AFP news agency says with the US markets closed for a public holiday on Monday, the hike in Asian trading is the first indication of heightened fears about a disruption to world oil supplies following the weekend attacks in Saudi Arabia. Suspected al Qaeda militants killed 22 people, including 19 foreigners, in the attacks at oil company offices and a housing complex in the eastern Saudi city of al Khobar. The al Khobar attack is the second in a month on a hub of the oil industry in Saudi Arabia, the world's largest crude exporter. The surge in oil prices comes despite Saudi Arabia issuing assurances after the al Khobar attack that supplies would not be affected.
Source; AFP, May 04

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JAPAN – POLITICAL AFFAIRS

Japan's lower house approves bill to ban NKorean ships
Japan's House of Representatives has approved a bill to ban North Korean ships from calling at Japanese ports if they are deemed a threat to the country's security. The approval paves the way for the enactment of the legislation. Kyodo news agency says the new legislation will give the government a second tool to press North Korea to resolve the abduction and other issues.
It follows February's revisions to the foreign exchange law to enable the government to impose economic sanctions without United Nations authorization. North Korea has admitted its agents kidnapped at least 13 Japanese citizens in the 1970s and 1980s. While many have been allowed to return home, Tokyo wants a proper investigation into the Cold War abductions. The ruling Liberal Democratic Party, its coalition partner, the New Komeito party, and the main opposition Democratic Party of Japan reached an agreement last month to pass the bill, and make it a special law, so it can be abolished in line with changes in the international situation.
Date; May 04

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FOCUS

CHINA – ECONOMY

China booming property market sets records
Beijing is introducing measures to rein-in economic growth but it appears that even tough new banking regulations haven't been able to dampen China's newly found passion for the property market. In both Beijing and Shanghai real estate is the hottest investment around, and official warnings of bursting property bubbles are to no avail.

Presenter/Interviewer: James Panichi
Speakers: Scott Barrack, SPACE director; Guy Hollis, China country head, Jones Lang

LaSalle; Bernie Shuttleworth, ANZ senior economist
PANICHI: Shanghai's heritage flats and houses were built between the 1800s and 1950, and feature hardwood floors and European-style high ceilings. Not surprisingly, they've become a prime target of the insatiable appetites of property investors. Scott Barrack is the director of SPACE, a Shanghai real estate agency.

BARRACK: The first people to go in and really starting buying these things were the local Chinese, but that was driven indirectly or directly by the fact that three or four years ago you had an influx of westerners into Shanghai, who were coming here on expat packages and wanted these old places. Recently now, people have started to feel a little more comfortable with foreigners and now you've got, I'd say, half western and half Chinese who are purchasing these, primarily for the purpose of investment, a little bit more now for individual living.

PANICHI: So, clearly the demand for these houses is on the rise, but to what extent are prices also rising?

BARRACK: Quite significantly. About two and a half years ago, when we first starting getting in the sales market, I purchased a property and a friend of mine purchased a property at the same time and we both paid about US$ 1,000 a square metre. Now, these same properties at the moment... well, I know one of them is for sale for US$ 3,000 plus a square metre. And that's in about two, two and a half years.

PANICHI: In other words, property investments in mainland China continue to boom. In fact, both Beijing and Shanghai are now selling over 20 million square metres of real estate each year. That's in spite of a raft of government measures to dampen enthusiasm, including raising the equity requirement for bank loans from 10 to 30 per cent. According to some observers, the problem is that the growth of city populations appears to be unstoppable. Guy Hollis is China country head for property consultancy Jones Lang LaSalle.

HOLLIS: Property is something that all Chinese seem to love and people are very keen. But the government have got a problem here, in as much as there's mass urbanisation going on China in the moment and the figures that are published -- and these aren't government figures, they're not our figures, they are actually from the European Commission on mortgages -- and they say something like 340 million Chinese are going to urbanise in the next 25 to 30 years, which is roughly the population of the United States. So, that bottom end of the market -- they've got to keep building into that market. And the government give tax-breaks to developers, they give incentives to developers and they also give tax incentives to buyers to buy into that market because that's the mass-market. So, while you slow down the economy, they've got to keep providing housing at that end. The bit they want to stop is developers building speculative schemes at the top-end of the market.

PANICHI: But the value of commercial properties, as well as that top end of the residential market, continues to grow. And the phenomenon may be spreading. In Hong Kong, the property market appears to have woken from its slumber. In the first land auction for 20 months, local developers snapped up two public sites for a total of US$ 380 million -- well above the reserve price. And because investors from Hong Kong and Taiwan are playing a large part in Shanghai's property boom, the previously disparate Chinese markets now appear closer than ever. But does that mean Hong Kong property prices will start to look increasingly like the prices of Shanghai? Guy Hollis.

HOLLIS: I don't know. I mean, Hong Kong is a different market. It's a small, enclosed market and it tends to work in smaller cycles. Shanghai works on more traditional cycles, more five-to-ten-year cycles, it seems to be, as it is maturing. But what is driving Shanghai is the foreign, direct investment and all the industrial growth that's bringing all of the jobs in and around Shanghai and Shanghai is becoming the financial centre for China, which is the Chinese government's policy.

PANICHI: So, on the one hand government policy has to reflect the need for residential developments in Shanghai, while on the other it has to drag an economic growth rate of around 9 per cent - to which the property market contributes - back down to more manageable levels. The good news is that if the market is substantially overvalued -- as many observers believe it is -- a sudden downturn may not have a lasting economic impact. Bernie Shuttleworth is a senior economist with Australia's ANZ Bank.

SHUTTLEWORTH: The bubble is in prices of new, luxury apartments that are largely targeted at investors, many of them from outside China, from places like Hong Kong and Taiwan. Now, if that bubble bursts, the investors will be hurt, the property developers will be hurt and it could very easy add to the bad debt situation of the banks. But bear in mind that the major banks are all government owned, and in a sense it's on the government's balance sheet and I don't think that would lead to a banking collapse.
Source; ABC, May 2004

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2004-06-01T12:40:00.000+02:00