February 27, 2006

Bush, America, China and India

Mercury News has a perspective on India on the eve of Bush's visit. Comments in italics.

Bet on India for long term


By Clyde Prestowitz

Since this month's announcement of the trade deficit with China, Washington and Wall Street have been fretting over the $200 billion gap and the continuing transfer of even high-tech manufacturing to the Middle Kingdom. Amid the worrying, President Bush is preparing for a trip to Asia this week. But he'll be stopping short of Beijing, visiting the Asian behemoth that is sometimes considered an also-ran in the race for up-and-coming superpower: India. And he'll be following on the heels of Prime Minister Wen Jiabao of China and French President Jacques Chirac.

Wen Jiabao came to India in 2004 or so. Lumping the 2 visits together is a little misleading.

All three men are paying their respects for the same reason: Despite the world's laser focus on China's stunning rise, India, already a nuclear power, is not yet out of the race for economic leader. It may well overtake both the United States and China to become the world's largest economy within the next 45 years, a feat that could have a profound impact on everything from where the world's next new thing is invented to the balance of international power.

When everybody talks about China, it's about how fast it is growing, when it will become a superpower, when it will overtake japan. When everyone talks of india, it is all ifs, 'India has the potential to become a superpower', 'India can overtake China'. China and India cannot be mentioned in the same breath. China is already flying at 100 miles/hr while India first needs to get its train on track. "is not yet out of the race for economic leader". This statement highlights that point.

How profound? Well, big enough that in the midst of the war on terror President Bush is trying to reverse longstanding prohibitions on U.S. sales to India's nuclear development programs. His goal is to enlist New Delhi as a major new ally that can serve as a counterweight to China and Iran. Such an alliance would represent a major shift in America's foreign-policy calculus that had for decades favored Pakistan over India.

This would be encouraging to hear were it not the exact opposite of what is actually happening. After 9/11, Bush literally became pakistan's cheerleader. They embroiled themselves in such an incestuous relationship that only the dumbest observers would disagree.

Of course, India won't displace China overnight. Although the GDPs of the two countries were roughly the same in 1990, China today is far ahead of India, with an economy that's twice as large and growing faster. But China has vulnerabilities over the long term, including some of the very factors that now appear to be making it super-competitive.

The same lack of the rule of law and due process that allows it to quickly bulldoze homes for skyscrapers, for example, has also led to corruption, rising inequality and social unrest. Conversely, India's apparent weaknesses -- a cumbersome democracy, lack of central planning and unrestrained population growth -- could be long-term advantages.

When we speak of China's land problems and peasant problems, bad news gets amplified in the press. China is contemplating land ownership for its farmers and peasants. Will it happen? Maybe but China needs to come up with accelerated solutions in this matter. It has the potential to become a very thorny issue after 2010.

Export-led strategy

By now the China story is familiar. Using their power to mobilize and direct resources, China's authoritarian leaders have adopted a variation of the Japanese and Asian Tiger export-led growth strategy. Strong incentives have been created to produce national savings of more than 40 percent of GDP (U.S. savings are in the negative numbers), and the money has been guided into investment in massive public infrastructure projects and export-oriented manufacturing companies. Foreign investment has also been assiduously courted in "strategic'' targeted industries.

Those investments, combined with inexpensive but hardworking and literate labor (China has virtually 100 percent literacy), have made China the global location of choice for production of everything from textiles to semiconductors. It passed the United States last year to become the world's biggest exporter of advanced technology products even as America was recording a $70 billion trade deficit in this category, which it has always dominated. Indeed, China's performance has been so impressive that Cisco CEO John Chambers has predicted that China will become the information-technology center of the world sometime between 2020 and 2040.

While nothing is forever, the International Monetary Fund believes that China, which has been growing at a 10 percent annual rate, can maintain at least 7 to 8 percent annual growth for the next 10 to 15 years. If so, it will surpass Japan to become the world's second-largest economy in 2016 and could be on a par with the United States by 2040. In fact, in terms of domestic purchasing power, China's economy could effectively be as large as America's by 2025. It is already the world's largest market for more than 100 products such as cell phones, cement and machine tools. According to the McKinsey Global Institute, all urban homes have at least one television set and a washing machine, while about 60 percent also have both mobile phones and air conditioners.

By any measure, that is an impressive record, and although India's economy is growing nicely at 6 to 7 percent annually, it will not be able to match China in the short to medium term. Nearly 40 percent of India's population is still illiterate. Its democratic system is not nearly as good as China's authoritarian system at mobilizing resources and quickly building massive public infrastructure such as highways. And at 25 percent of GDP, India's savings rate is only a little over half that of China's, while its rate of investment is less than half China's 50 percent of GDP. Only 40 percent of urban Indian households have a color television and about 20 percent have washing machines, while mobile phones and air conditioning are still available mostly to the wealthy.

A little clarification on mobile phones. It's getting a lot more ubiquitous in India than the article suggests. Definitely not anywhere near china but also not limited to the wealthy only

But China has vulnerabilities that call into question the sustainability of its growth and even of its economic system over the next several decades. While they sound impressive, the high savings and investment rates are dangerously excessive. Japan and Korea, which had similar rates, wound up building excess capacity, wasting capital and eventually suffering from the huge costs of collapsing bubbles.

China is now wasting vast amounts of capital by building too many factories whose production will be far in excess of market demand with resultant financial losses. One measure of this is the fact that with double the investment, China's GDP is growing only a couple of percentage points faster than India's. This means its efficiency of capital use is only about half that of India's, which points to another weakness.

This is an interesting point and in 2000-2002, there were many a naysayer who said that China was doomed because of 50 %+ NPA's in its state-owned banks. It's 2006 and China is chugging along just fine. What they didn't reckon is that China was earning hand over fist from its exports. The NPA issue is huge and China needs to deal with this in a more capitalistic way. Next, infrastructure growth is very impressive in China. Wherever highways are needed, they are being built. The only question is, it the infrastructure investment really balanced? When China builds, its really on a massive scale. Low margins, high volume. At the time of the 2 % revaluation of the remnimbi, I read on some website that manufacturers(maybe in the textiles-hosiery are already getting squeezed. Their margins were 0.02 % or so. Any revaluation of the remnimbi would kill them. Margins are tight, USA is bellowing about revaluation, the Chinese govt is worried about providing jobs to its millions of peasants. A revaluation of 5-8 % might be tolerable, anything above that would be hard on manufacturing.

Capital wasted

China's banking and financial industry remains unsophisticated and subject to non-market government ``guidance'' that generates the excessive lending and non-performing loans that waste capital. And the proposed solutions to this problem only threaten to make it worse. As one top Hong Kong official recently told me, China's financial authorities think the solution to bad lending practices is to try to ``unify thinking,'' coming up with bureaucratic directives on lending rather than letting interest rates and market forces do their work.

The authoritarian Chinese approach to growth has another drawback: the possibility that it will birth a backlash. I remember executives at Scott Paper Company, where I once worked, lauding former Philippines President Ferdinand Marcos for his ability to get things done. But they didn't see what was happening to real people in the Philippines and what those people would eventually do to Marcos.

China's leaders can move quickly because they don't have to worry about democratic procedures. But corruption is rampant with officials, for instance, arbitrarily seizing farmers' land for factory projects. Such actions helped ignite thousands of protest demonstrations last year. The difficulties that Google, Yahoo and Microsoft have experienced, as a result of their connection with China's Internet policing, are harbingers of the dangers that could lie ahead for foreign investors in China.

Finally, China's demographics are worrisome. In another 10 years, the one-child policy will begin to bite as China's population starts to age rapidly and, eventually, to shrink. At some point, the age pyramid will become sharply inverted, with too few young people trying to support too many seniors. If China doesn't run into problems sooner, this will be the ultimate barrier to its continued economic growth. In short, China will get old before it gets rich.

This is indeed a problem for China. This has been discussed in an earlier post in this journal(http://logtk.blogspot.com/2005/11/chinas-great-population-plight.html) Already, farmers are allowed to have a second child if their first one is a girl. Maybe in 10 years, this will be extended to the urban populace.

India, in contrast, enjoys many hidden, long-term advantages. Although its literacy rate is much lower than China's, its Indian Institutes of Technology rival MIT and are far better than such schools in China. It is estimated that only 10 percent of Chinese engineers have the skills required to work in a global company, while the comparable number for India is 25 percent. By one count, India's pool of well-qualified professional graduates will be twice as large as China's by 2008.

A clarification. IITs' are not all that better than universities in China. One has to only look at rankings published for top 100 engineering colleges and Indian colleges do not fare that well. China on the other hand, has universities that are really good for research. The IITs' are really considered a stepping stone to the US or Europe. Many of the graduates who study in Chinese universities are now staying back to do their masters/Phd's and are doing research. Government, military and industry are actively funding such initiatives. In India, there is a total disconnect between government and usable research. The numbers of Chinese students in the US has dropped because the Chinese now feel that they have reasonably well educational, research and job opportunities in China. In India, anything beyond software and your skills are underemployed and underpaid. I, for a fact know that Chinese universities are extremely competitive.

India's banking and financial institutions are well established and have long been lending on the basis of market-based analysis, which helps explain their more efficient use of capital. And although India's democratic system can be cumbersome and slow, it is stable. That makes investment less risky than in an opaque, authoritarian environment.

True. India's banks are less saddled with NPAs. But as stated in a different journal entry, India's banks are not that big. And its easy to remain nimble when small. What will happen when Indian banks approach the size of their Chinese counterparts is a matter open to discussion. http://logtk.blogspot.com/2005/11/indian-banks-are-really-not-that-big.html

On top of this, English is the common language of Indians. This makes it easier for India to fit into an international business system whose lingua franca is English, as does the return in recent years of many skilled business people from the large Indian diaspora in America and Europe.

A real advantage for India. China has mandated that all its primary school children learn english. 150 million are learning english. But how effective is learning english for such a large populace? Difficult. Especially when you are not exposed to an english speaking environment like rural areas and small towns. The Chinese have real difficulty with speaking english.
However, India's urban population is the only one able to take advantage of english. And many Indians that I have come across have not so insignificant problems with grammar, spelling and speaking english. Given an opportunity, they lapse into their mother tongues. Not really helpful. And then there is the question of the rural population. When 40 % of India's population is illiterate, english does not even come into the equation. And for Indians to take advantage of their english speaking skills, you need active co-operation from the government. We have a government that is complacent about teaching english in primary public schools. The govt, instead of being proactive to Indian industry's needs boggles down growth with infrastructure problems and corruption. In 5-8 years, when other countries have started developing a critical mass of english speakers, India will lose the race because of its politicians. China is really serious about developing its english competency. English is the 2nd language for a majority of youngsters there. It is considered 'hip' and they go to great lengths to therefore learn the language. Chinese officials stated a year or two ago. 'We will start competing with India in the software field in the next 5-8 years as the only advantage India has left is english. Once we cover this gap, we are going to be the leaders in software and manufacturing. If only Indian politicians were so forward thinking and hungry...

Another possible advantage is India's business culture. India's growth has been mostly a matter of the government deregulating and getting out of the way of aggressive, private-industry entrepreneurs, many of whom had experience in Silicon Valley. And these entrepreneurs have been focused on high tech and services.

As a result, India's growth has so far been based not on doing standard manufacturing less expensively, as China has done, but on developing innovative new services and high-tech products. In the long term, that entrepreneurial culture is likely to have more staying power and productivity. To be sure, India has its insularities and even hostilities toward business, a hangover from India's socialist past, but the new wave of development is changing these views quickly.

You cannot have manufacturing without having an active high tech industry to support it. Stated elsewhere in the article, China is already the world leader in exporting advanced technology. Those who think India is stronger in software than China are living in a fools paradise. When China can effectively manufacture stuff and ship it half way across the world and still do it profitably, why does one think that they are not doing this in the software field? As for manufacturing, the less said about India, the better. For more, read http://logtk.blogspot.com/2005/10/reforms-in-india-democracys-drawbacks.html

Young workforce

Finally, India's demographics are very favorable. Its population is still growing and will surpass China's around 2035. That, combined with steady growth, means India's GDP will probably surpass China's in the latter half of this century. Moreover, half of India's population is under the age of 25, which means that India will have no problem paying for elders' future health care and pension costs.

In sum, if you are a short-term investor, China is probably where you should put your money. But if you are in it for the long haul, you might want to bet on India. That certainly seems to be what George Bush is doing as he heads out this week to make nice with his newest international friend.

20+ years is a long time in investment terms. Prudent investors will put their money where they can see tangible benefits. With such a closed economy, accruing benefits from India is a long time coming.


February 18, 2006

Clash of the uncivilised

Europe lives with twin fears: the loss of jobs because of Chinese goods and Indian services, and Muslim immigrants. Many European countries have a small but significant Muslim minority. And as Europe peers into the future and sees declining populations, the prospect of more immigrants (many of them inevitably Muslims from neighbouring regions) raises many doubts — as also questions about the implications of multi-culturalism. Assimilation then becomes the key word, because Europeans do not see their continent as a melting pot, nor as a cultural smorgasbord. Hence the French decision that schoolgirls cannot wear scarves to school because it is a religious symbol, any more than Sikh boys can wear turbans. Even the Danes, among the usually accommodative Scandinavians, have in recent years had to confront the issue, with immigration and assimilation featuring in the last election campaign. The Danish newspaper cartoons depicting Prophet Mohammed therefore have a history and background, and were a deliberate challenge; they were not an accident, nor the product of a loony editor. After all, many other publications on the continent chose to reproduce those cartoons, knowing that they would cause offence. The intention was to assert the right to free speech, in the face of political correctness, and to say that intimidation as a response from Islamists will not and should not lead to submission. From the Danish government's point of view, the doctrine of free speech could hardly be jettisoned, although the prime minister did eventually find it necessary to apologise.

In India, attuned as the system is to numerous cultural and religious influences over the centuries, and to making space for everyone so as to continue living together, no newspaper editor in his right senses would publish such cartoons — and not just because of the fear of riots. But the question does arise: why do depictions of Mohammed result in riots, and not the display of Shiva's likeness on women's underwear or shoes in America? Is it that the Hindu (despite memories of colonialism and disparagement of a patently rich culture) is more law-abiding and protests — as he does — within the constraints imposed by the law, or that religious passions are not so easily aroused, or that pundits/mahants don’t play the same role as mullahs?

It might be argued that, unlike India, the Islamic countries feel under attack and are in any case less successfully coping with the challenges of modernisation. There are the aggravations of Palestine and Iraq, with Iran now building up as a fresh flashpoint. Memories go back to the Crusades, and to the scant respect that Christian missionaries showed to native beliefs and cultures as they went around carrying the white man’s burden. But while it is easy to understand the anger on Arab street, the resulting outburst was not spontaneous because the cartoons were first published more than four months ago and no one initially took note. The eventual rioting and attacks on embassies, some reports have suggested, were egged on by governments in Syria, Iran and elsewhere — which have been under American pressure and which may therefore have welcomed a confrontation on this issue because it is to their advantage in terms of domestic mobilization of public opinion. In other words, this was a state response to the European challenge, carefully calculated. Viewed thus, the whole episode does begin to look like a manifestation of the long-forecast ‘clash of civilizations’. Except that it is not very civilised to deliberately offend another person’s religious feelings, or to go and burn down another country’s embassy.

Taiwan's quake-stricken areas rise from the ashes


Staff writer

TAIPEI -- The world still remembers the month of September for the terrorist attacks in New York. For most Taiwanese, however, the month will stay long in memory for another tragedy -- the devastating earthquake that hit central Taiwan on Sept. 21, 1999.

Some six years have passed since the major quake, popularly known in Taiwan as the "921 Earthquake," struck. Today, Taiwan can boast of its unique achievement of successfully turning one of its worst natural disasters in the 20th century into an advantage, having steered the hardest-hit local communities to economic recovery .

Symbolic of such efforts are the preservation of some heavily devastated facilities as memorials site to attract tourists, and the creation of a new industry to replace the farming industry.

At 1:47 a.m. on Sept. 21, 1999, an earthquake with a magnitude of 7.6 struck Chichi township in central Taiwan's Nantou County, and devastated much of central Taiwan, killing 2,455 people and injuring 11,305, making it the second-worst temblor to hit Taiwan in the last century.

According to the 921 Earthquake Post-Disaster Recover Commission of the central government, 38,935 buildings were completely destroyed, 45,320 partly wrecked, 102 bridges broken and 37 roads damaged. Damage to the entire economy exceeded (US)$ 11.25 billion. The Taiwan government allocated NT$ 212.3 billion (about $ 6.54 billion) in recovery funds, of which 94 percent had been expended by August 2005.

Since Taiwan is located on the boundary between the Eurasia and the Philippine Sea plates, earthquakes had struck several times in the past. The 921 Earthquake was the most destructive since the 1935 Hsinchu-Taichung earthquake, which hit western parts of Taiwan with a magnitude of 7.1 and caused the death of 3,276 people.

In the 1999 quake, central Taiwan bore the brunt of the damage. With Chichi township in Nantou county as the epicenter, neighboring counties such as Taichung and Changhua were also heavily affected.

For instance, the Chelungpu Fault, which extends some 100 km through Wufong township in Taichung county, ruptured in some areas in the quake's aftermath. Among those devastated by the rupture was Kuang-Fu Junior High School in Wufong township. It physically elevated the school's track and field facility by 2.5 meters, crushed its classrooms and destroyed a swimming pool.

Instead of rebuilding the school facilities, the Ministry of Education, the 921 Earthquake Post-Disaster Recover Commission and the city residents agreed to turn the school into a memorial, eventually known as the 921 Earthquake Museum.

Keeping the damaged school facilities would not only preserve the memory of tragedy but also increase the people's understanding of natural phenomena and remind them of the need for disaster preparedness.

The museum preserves part of the ruptured fault line and the damaged facilities, and at the same time serves as an educational showcase that explains nature's earthquake cycles and disaster alert systems. Museum officials say that the memorial attempts to help people understand the tough realities brought about by natural disasters and earthquakes' impact on communities, as well as to remind visitors of the importance of taking precautions against future disasters.

Today, many tourists and students from Taiwan as well as from foreign countries such as Japan visit the museum, which opened in September 2004. As many as 460,000 people visited the museum in 2005. The average number of visitors per day was 1,000. Last year, about 40 percent of them were students and about 3 percent were foreigners, according to Christine Lin, a guide of the museum.

Michael Reilly, one of the recent visitors, came to Taiwan as a member of the U.S. Urban Search and Rescue teams in 1999. He said that after seeing the "tremendous" damages, he realizes the "excellent" progress Taiwan has made in its recovery program. Especially the museum impresses him because it is used for educational purposes.

Reilly said that the lives of the 2,000 people who perished have not been wasted. "The memories (of the earthquake) will be preserved," he said.

Chichi township in Nantou county is another place hit hardest by the 1999 quake. According to the report from the 921 Earthquake Museum, 36 were killed, 50 were injured, 238 buildings collapsed, and 134 other buildings were partially destroyed in Chichi.

A Buddhist temple under construction in this small town also fell victim to the disaster. It had taken 10 years to build about 80 percent of the temple, when the quake struck. The structure's colorful ornaments were shattered and the orange-colored rooftop crashed down to the first floor. Now this temple has been preserved as a memorial site and is contributing to the community as a popular tourist attraction. Many motorcyclists stop by to look at the rubble inside and the rooftop.

Peter Liu, a local volunteer guide, said the community has changed since the earthquake.

"Chichi town was a small farming community. After the earthquake, the town has turned out to be a sightseeing spot," he said. "Some 60 percent of the residents have changed their jobs to something related to tourism."

Cases of local farmers in Chichi shifting to other jobs after the quake were not rare.

"Most people in this area once lived on farming, but the earthquake devastated their paddy fields, their houses," said Chu Shi-ping, director general of the Department of General Affairs of the central government. "It was a big shock to the community."

How to get over the effects of the destruction was one of the central government's top-priority policy matters. The government assisted farmers in finding part-time jobs. To this end, the government launched a three-stage plan. The first stage was to provide training to local farmers, so they have better skills than before. In the next stage, they could start businesses with their newly acquired skills. The third stage was to attract tourists, according to Chu.

The Dahu Wineland Resort, a strawberry winery in the town of Dahu in Miaoli county in western Taiwan, is one of the model cases arising from this project.

Strawberry is a principal agricultural product of the area because of its climate. The winery suffered relatively minor damages in the quake. The Council of Agriculture, the 921 Earthquake Post-Disaster Recover Commission and the Miaoli county government joined hands in encouraging the local farmers' association to promote the local strawberry-related business.

Today,the employees at the resort produce not only strawberry and its wine, but make specialty food products, such as sausages with strawberry-wine flavor and strawberry-based cuisine. These days, about 60,000 people visit the place on weekends, according to Huang Jung-chiang, CEO of the Dahu Area Farmer's Association.

"This facility has helped the local economy to recover by developing the strawberry-related business," said Huang.

Since the quake, the Taiwanese people have worked very hard to rehabilitate the island's economy, said Tony Ong, deputy director of the International Information Department of the Government Information Office.

"In Chinese, we have a proverb saying, 'a disaster brings risks and opportunities,' " he said.

The post-earthquake recovery shows how well Taiwan has seized on the opportunities.


February 17, 2006

Boycott the Cartoon Protestors

 At the entrance of JC road, Bangalore there was the charred remains of a wooden pole and a cloth flag, no doubt either it being a Danish or American flag. When my friend saw that, he immediately realized that the protests had come to bangalore as today was friday, these muslims' "prayer day".

As he proceeded through JC Road at 2.30pm, in front of Canara Bank on J.C Road, the friend saw about 250 muslim protestors shouting slogans against America and displaying green flags inconveniencing fellow motorists travelling on that road. The normal travel time through the whole of JC road takes 5 min in the afternoon. Today, because of the actions of these inconsiderate muslims, it took him 30 minutes.

These stupid protests against the Danish cartoons have finally come to Bangalore. It seemed that the muslim populace might have averted the brainlessness displayed by their fellow brothers in other parts of the world and kashmir, but no, idiots of a group bunch together. They had to show their solidarity with idiots around the world and immaturity to fellow bangaloreans.

The protestors, scruffy fellows, looked like semi-hooligans with hot blood raging through their veins and no brains in their heads.

Some of the younger protestors(numbering about 15-20) entered the Janardhan Silks complex and tried to create some tomfoolery but 1-2 older protestors asked to come out of the complex. From their actions, it seems these protestors were out to make a nuisance of themselves and their religion. Fellow motorists around the friend too were shaking their heads at these poor protestors. None of the motorists sympathized with them or their actions.

Later, the friend found out some interesting information about these protestors.

-The friend found out that these protestors were "encouraged" with gifts(monetary and inkind) by the arab countries(saudi arabia) and egypt to conduct this protest(s) in bangalore. The egyptian embassy has taken the active role in spreading the protests.

-He said that saudi money was given to egypt on the advice of mullahs close to the saudi govt. Egypt was asked to co-ordinate these actions without anybody being able to point a direct finger at the active involvement of the saudi government.

-Less than a month back, the saudi king was the jan 26, republic day "guest of honor" in India. He declared that Saudi Arabia had a special bond with India. The saudi government was surprised by this statement. Since then, the saudi govt has been actively trying to downplay the king's words and the protests were a way of downgrading the king's statements.

-Some of the people in protest have links with terrorist and extremist groups in saudi arabia, yemen and pakistan. The organisers of today's protest are also linked with the same organisations that provided funding and logistical support to the gunmen responsible for the killing of a scientist in the Indian Institute of Science(IISc) campus 2 months back.

-To conduct the protests in India, the egyptian govt sought the help of the pakistani govt to activate their contacts in the ISI in Bangalore.

-Egypt has taken the lead role in threatening governments around the world asking their newspapers not to publish the cartoons otherwise their embassies would be in "trouble" too.

These muslim protestors in Bangalore need to be photographed and be "shamed" publicly. Civilized citizens of bangalore and other parts of the world need to boycott these idiots and their services if they are to be taught a lesson.

Kobe Airport, Kansai Airport, Osaka(Itami) Airport

KOBE -- In what its supporters hope is not an ill omen, Kobe's new airport opened in fog early Thursday morning.

The 310 billion yen airport, financed almost entirely by the city of Kobe, is the Kansai region's third, after Itami airport and Kansai International Airport, both in Osaka Prefecture.

Built on an artificial island off Kobe, the new airport will handle 27 round-trip flights a day to Tokyo's Haneda airport, Sapporo, Sendai, Kagoshima, Kumamoto, Niigata and Naha, Okinawa Prefecture.

Authorities expect 3.4 million passengers will use the airport in its first year, climbing to 4.2 million annually by 2010.

The airport has long been a bone of contention in Kansai, as long-term demand for the Kobe facility is uncertain.

Many in the central government and foreign airlines opposed its construction, arguing that priority should be given to building a second runway at Kansai International Airport, which sits less than 40 km away.

But those concerns didn't matter to the hundreds of people on hand from early Thursday for an opening ceremony held in the main terminal building and presided over by Kobe municipal and Hyogo prefectural officials and airline representatives.

A mist hung over the airport, creating concerns the inaugural flights would be delayed. But the first aircraft, a Japan Airlines flight to Tokyo's Haneda airport, departed on time at 7:05 a.m.

The larger worries for passengers Thursday morning were not flight delays but a nearly 40-minute delay on some JR trains running between the eastern Kobe suburbs and Sannomiya Station in central Kobe due to a suicide on the tracks.

Several JR passengers heading out of Kobe airport on the Portliner train, which connects Sannomiya station to Kobe airport in just 16 minutes, appeared worried they would miss their flights.

By late morning, much of the mist had lifted and flights from JAL, All Nippon Airways and Skymark were departing and arriving on time.

Passengers were in good spirits despite the weather.


Reading the article from the japantimes reminded me of the article I read on findarticles a while back. Very relevant as to why kobe airport is handling only domestic flights.

Kansai airport: a beautiful loser: Kansai international airport is stunning—but sinking into debt and desolation. Care for a date? - Upfront

AESTHETICALLY, THE MAIN TERMINAL building of Kansai International Airport (KIX) is one of the most appealing structures of its kind--not just in Japan, but anywhere in the world. Designed by Italian architect Renzo Piano, the four-story structure is a 1.7 kilometer-long aluminum and glass frame topped off with a roof which arcs in the shape of an undulating wing. Over the past few years, using the airport has become an increasing pleasure--if you enjoy the misfortune of others. Fewer and fewer airlines are landing at or taking off from KIX, due to a steep decline in passenger demand. Peak travel times aside, the place often feels virtually deserted. Indeed, when catching a recent red-eye to Bangkok, I felt like the only traveler in the whole airport. Designed to offer a liberating sense of space and freedom, the terminal's strength becomes its weakness when deprived of its lifeblood--the myriad passengers who should be scurrying to and fro, forming the background hubbub and endless shuffle of any truly international airport.

KIX has been newsworthy ever since its conception as an offshore airport in Osaka Bay in August 1974. As civil engineering feats go, the airport is prize-winningly impressive: located on a 1,300-acre, man-made island linked to the main island of Honshu by a 3.5-kilometer railway suspended over the water. Whether it really is "one of the three man-made objects which can be seen from space," as some locals like to brag, is a matter for astronauts. For the layman, arriving and departing at the airport is a treat--similar, though for different reasons, to the thrill associated with coming in low over Kowloon when landing at the old Kai Tak Airport in Hong Kong.


But since opening for business in September 1994, the airport's operator, Kansai International Airport Co. (KIAC), has lurched from crisis to crisis. KIX opened its runways just as the Japanese bubble hangover started to kick in. Projected operating costs and profits had been based on what turned out to be over-optimistic forecasts calculated in much healthier economic times. By 1996, foreign airlines, already grumbling about the highest airport landing fees in the world, began scaling back their operations. Before the end of the decade, numerous big-name carriers had ceased flying into KIX entirely. In the mid 90s, there were three daily non-stop flights to London aboard three different airlines. Now there is just one. There are still no flights to New York. As one veteran foreign travel agent based in Osaka put it: "The idea of turning KIX into a hub for Asian destinations will remain unfulfilled. Period."

Even with such ominous clouds on the horizon, stage-two construction plans (which call for the building of an additional 4,000-meter runway on a new artificial island by 2007, at a projected cost of [yen] 170 billion) were initiated in 1999.


The following year, it was announced that the reclaimed airport island was sinking into the murky depths faster than expected. As the debts from lower-than-expected revenues started to deepen as well, vast amounts of money suddenly had to be spent on keeping the existing structure from being literally submerged. By the end of the year it was estimated that some [yen] 27 billion had been spent on shoring up the passenger terminal.

Figures for 2001 revealed that KIX was again in debt, as it has been during each year of its operations--but this time to the tune of [yen] 15 billion. Overall, the airport has interest-bearing debts of a staggering [yen] 1 trillion. These are supposed to be paid off by 2027, though some economists project that it will be nearer to the year 2035, a time so far in the future it is almost impossible to imagine what demands will then be made on the nation's transport infrastructure.

KIAC officials somehow continue to put a brave face on things. Their grin-and-bear-it attitude persists, even though the expected number of take-offs and landings at the airport in 2007 has been revised to 136,000 by the Land, Infrastructure and Transport Ministry--well below the KIAC-projected 160,000 necessary to justify the construction of the second runway. The government doesn't expect this figure to be reached until sometime around 2012. And the numbers were reached prior to any accounting of the long-term effects of Middle Eastern turbulence and rogue Asian viruses.


Affected by both the recent invasion of Iraq and the SARS double whammy--plus the lingering post 9-11 fear of flying--Japan Airlines (JAL) has reduced flights to numerous Asian destinations amid declining demand. A Taiwanese doctor who later contracted SARS was found to have visited Kansai in May, just before falling ill. This was the closest Japan got to SARS, but the media hysteria was enough to put most Kansai residents off traveling abroad. So desperate had things become for certain Asian airlines that it was possible to fly, during the peak summer holiday season, from KIX to Australia for less than [yen] 60,000 roundtrip. The damage caused to KIX's finances has been heavy.

The old Osaka International Airport in the city of Itami, just outside Osaka's municipal boundaries, handles only domestic flights today. It was supposed to have been shuttered for good once KIX became operational. This hasn't happened, and though there is still talk of eventually transferring a higher proportion of domestic flights to KIX, Itami remains far more convenient than KIX for the majority of Kansai residents. The airlines know this; so do the business travelers shuttling to and from Tokyo.

"I actually find the Shinkansen more convenient, as I can read or work while traveling," says Shimizu Naoko, an editor at a gourmet food magazine in Osaka and a frequent visitor to Tokyo. "But if I do fly, then I much prefer to use Itami. It's quicker--and a lot cheaper--to get there from where I work."

And with a new airport pegged for Kobe, KIX's problems only seem worse. "Kansai's new international airport should not have been built where KIX is now," says a local travel agent. "It should have been built in the same location as the new Kobe airport [planned in 2005] and called Kobe/Osaka Airport. Then, none of this fiasco need have occurred."

As with every large-scale construction project in Japan, there have been all sorts of alleged financial irregularities at KIX. Last year rumors swirled that there had been substantial bid-rigging by developers of the second runway. This was followed last December by serious allegations that an aide of ex-Defense Agency chief Kyuma Fumio had raked in some [yen] 50 million in highly suspicious profits from work related to an airport construction project between 1999 and 2001.

With the seemingly endless litany of woes piling up, the last thing officials needed to hear was that All Nippon Airways Co. (ANA) intends to return more than 2,000 square meters' worth of rented office space to KIAC this October. Representing an annual revenue loss of some [yen] 400 million, the move came as part of ANA's own cost-cutting efforts and pushed the airport into further desperation.

At the end of June was the announcement that the new president of KIAC would be Atsushi Murayama, previously a vice-president of Matsushita Electric Industrial and the first person from the private sector to be put in charge of airport management. Previously, KIAC's top managers have all been ex-transport ministry officials, which did little to assuage the public's fears regarding bureaucrats and government cash. Murayama has the unenviable job of dealing with an enormous mountain of debt--so large that radical measures are just about the only options. He has promised to restructure the company, but the jury is still out over whether he has the management clout to do so. Murayama says he is keen "to make people say, 'Let's visit Kansai Airport' to shop or go on dates." This has met with some surprise from locals. "It's not as if there's anywhere to go to eat there!" says Yuri Yamazawa, a 34-year-old Osaka resident. "Sure, there are restaurants, but nothing special. Maybe if there were branches of famous restaurants people would go to eat, but even then, only local people from rural Wakayama. KIX is a long way from anywhere."

"There are international airports that prosper for the first time with only four or five runways," Murayama adds, possibly in an attempt to justify the ongoing construction of the airport's widely derided second runway. But if Murayama is talking of further expansion plans, he should be committed to an asylum. Perhaps they should just fill in the whole of Osaka Bay and be done with it.

And yet, even with all of the strife and turmoil surrounding it, somehow Kansai's airport rises above it all, a rare example of a massive Japanese construction project that, artistically at least, has been a success, basking in worldwide acclaim. Badly located, unloved by foreign airlines and hopelessly mired in the debt-ridden swamp of Osaka Bay, KIX nevertheless remains one of the world's most attractive white elephants ever built.


The campus crusade for guys

Worried about the steadily declining number of male students, some colleges and universities appear to be practicing affirmative action for men.

By Sarah Karnasiewicz

Feb. 15, 2006 | Child psychologist Michael Thompson has devoted his professional life to advocating for America's boys. As the bestselling author of "Raising Cain," he's logged thousands of hours as an educational speaker and makes frequent appearences on national television as an authority on troubled young men. But Thompson is also the father of a 20-year-old daughter. And when asked if, given their much-maligned status in schools these days, boys ought to be given a leg up in college admissions, his answer is blunt: "I'd be horrified if some lunkhead boy got accepted to a school instead of my very talented and prepared daughter," he says, "just because he happened to be a guy."

But that may be just what is happening. Amid national panic over a growing academic gender gap, educators have begun to ask, might it be time to adopt affirmative action for boys?

The statistics are revealing: Fewer men apply to colleges every year and those who do disproportionately occupy the lowest quarter of the applicant pool. Thirty-five years ago, in the early days of widespread coeducation, the gender ratio on campuses averaged 43-57, female to male. Now, uniformly, the old ratios have been inverted. Across races and classes -- and to some extent, around the Western world -- women are more likely to apply to college and, once enrolled, more likely to stick around through graduation.


February 16, 2006

Death of a Cane Toad

Cane Toads (Bufos Marinas?) are an obnoxious, brown, warty type of
frog (OK, toad) that inhabit vast areas of Australia.  Their
introduction and proliferation in Australia is a classic example of
ecology gone wrong.  In the beginning, there were no cane toads in
Australia.  Sugar cane was introduced to its fair shores, along with
the sugar cane came the cane beetle, a nasty, brown insect about 3/4
inch long.
"How do we stop the cane beetle," ask the scientists, "the little
fuckers are eating all our sugar cane."
"Ahhh," says someone clever, "Why not look around the world to see
what eats cane beetles, then introduce them into Australia and the
problemo is solved!"
They found a natural predator in the cane toad, which came from Hawaii
of all places.  In 1935, 55 pairs (as in 110) cane toads were released
in the small North Queensland town of Gordonvale.  Unfortunately,
Australia did not have any predators that liked to eat the toads,
probably due to the poison glands on the back of their neck.
Similarly, the cane toads found that there was much more interesting
and tasty stuff to eat than boring old cane beetles.
The result was a plague of biblical proportions.
As a consequence, every man, woman and child living north of Sydney
has grown up knowing the extreme pleasure of killing cane toads.
Motorists swerve to hit them, cricketers hoist them for a six
(equivalent of home run for you 'Merkins) over the boundary, weekend
gardeners chase them down with a lawn mower.
The following, is some of the many varied ways I have dispatched these
nasty little buggers while I lived in Queensland.  Perhaps some other
Aussies can add to the list, what about you Hawaiians out there?
The Thong Slap (TS) is not fatal to a cane toad, but is an important
component of many of the other means of disposal.  To perform a TS,
one quickly removes their thong (rubber, sandal-like footwear) and
slaps a toad hard on the head.  This stuns the toad and stops it from
hopping all over the place.
#1) Take golf clubs out into the back yard, usually only a 2-wood,
6-iron and 9-iron.  Find a toad and dispatch with club of your choice.
If the toad is sitting upright, use the driver.  Extra points are
awarded for lofted shots over the house and on to the street.  Hitting
a "slice" tends to result in separate pieces of toad.
#2) Take a field hockey stick and dispatch as above.  Remember not to
raise the head of the stick above shoulder height, otherwise a penalty
may ensue.
#3) Using a cricket stump, first smash the toad with the blunt end,
then reverse the stump and impale it with the pointed end.  Shake the
toad off the pointed end and repeat if necessary.
A special class devoted to common garden tools.  Favorite tools are
the shovel (hit with flat side, then chop up with blade), the mattock
(chopping only), the pitch fork (see how many you can collect) and the
axe (slice and dice).
Another special class, covering those instruments not involved with
clubbing.  Some nice effects can be gained with tennis rackets (small
toads only - great for perfecting that two-handed backhand), darts
(nothing like a moving bullseye) and football boots.
#1) Take you mother's best carving knife outside and see if you
*really* can throw it like a Bowie knife.
#2) After performing a TS, flip the toad over and use an Xacto knife
to practice your vivisection techniques.  See how much you can remove
and still get the toad to hop away.
#3) Perform TS, throw toad into the air and try to hit with a machete.
More points are awarded if the pieces are equal in size.
#1) One of my all-time faves: Perform a TS, then throw the toad out
onto a bust street.  Bet with friends how many cars will miss it
before it goes POP.
#2) Go to the local cricket field late at night.  Using repeated TS's,
gather a large quantity of stunned toads.  Arrange in a line and then
run over them with the heavy roller used for the cricket pitch.  Try
to get them feet first so all the guts pop out the mouth.
#3)  The two footed jump.
#4) The brick target-toss.  TS a toad, then step some distance back
and lob bricks at it.
#1) The air rifle.  Try to get those difficult lung shots so they hop
around blowing red frothy bubbles.  Try a hard to get glancing head
shot, that leaves the skull exposed and the toad still alive.
#2) Target shooting.  TS a number of toads and then pin them to the
clothesline with pegs.  Keep shooting till they break off.
#3) Get some long wooden cotton swabs that you use to clean VCR heads.
Sharpen the end of the stick, then soak the swab in alcohol (or
gasoline).  Load backwards into air rifle (so sick comes out first)
and shoot toad.  Light the swab as it hops away so remaining shots in
the dark are easier.
#1)  Douse toad in kerosene and light.
#2) Rummage through doctors trash cans for discarded syringes with
needles.  Inject toads with various chemicals and note results.  DDT
based insecticides work well.
#3) Put toad in jar with pool chlorine.  Add vinegar so chlorine gas
is produced.  Cap jar and watch toad turn white.
#4) Fill a bucket with boiling water.  TS toads, then drop in for
instant gratification.
#5) Put football inflation needle on the end of a bike pump.  TS a
toad, then insert needle into toad's bum.  Pump vigorously and see
which organs are expelled through the mouth.
#6)  Tie toads to the back of your bike, then go off for a fun ride!

February 15, 2006

Price Caps Ail Venezuelan Economy

Moves to Curb Inflation Hurt
Profits for Some Businesses,
Spur Shortages, Black Market
February 15, 2006; Page A6

CARACAS, VENEZUELA -- After 21 years in the milk business, Ismael Cárdenas Gil is throwing in the towel.

Mr. Cárdenas, who heads Alimentaria Internacional, can no longer make a profit selling imported powdered milk under government-imposed price controls. As a result, he has cut back his imports to "practically zero."

"The controls have been very harsh. The numbers don't work out to import milk and sell it here," Mr. Cárdenas says.

His plight is becoming more common in Venezuela, with President Hugo Chávez meddling in the economy to advance his populist-leftist agenda as companies selling price-regulated products watch their profits disappear. While government controls have slowed the growth of inflation, Venezuela's rate is still the highest in Latin America. The controls also have led to frequent product shortages and the emergence of a thriving black market. Some farmers and retailers are skirting the rules or have stopped selling certain goods altogether rather than sell them at a loss.

The problems facing Venezuelan businesses and consumers serve as a cautionary tale for the growing ranks of Latin American populists pushing for a heavy government hand in the economy. The administration of Argentine President Néstor Kirchner, whom Mr. Chávez has helped by buying more than a billion dollars of the country's debt, has taken to strong-arming businesses into price-cap agreements on sundry goods to slow galloping inflation, which doubled to 12% last year.

Bolivia's recently elected president, Evo Morales, has made no mention of price controls but is clearly pursuing a state-centered economic model. In Costa Rica's recent presidential elections, voters punished the leading pro-trade candidate in what appears to be a backlash against Central America's free-trade pact with the U.S.; the rival candidate wants to renegotiate the deal. Costa Rica's electoral board is in the midst of a recount.

In Venezuela, Mr. Chávez is taking advantage of the country's massive oil-revenue windfall to fund a governing philosophy he has dubbed "socialism for the 21st century." His goal is to increase social spending and curb inflation through a mix of price caps, a fixed exchange rate and fixed interest rates.

But some Venezuelan businesses hurt by the price controls are beginning to balk. Last week, corn growers marched outside the presidential palace, protesting government controls they say have dried up demand for their corn. While the farmers are getting a decent price, processors are refusing to buy the corn because they can't sell it at what they consider an acceptable markup. The country's largest food company, Alimentos Polar, has warned it may have to halt production of corn flour for such reasons. In early December, coffee producers challenged the new price ceilings, paralyzing deliveries and causing an acute coffee shortage for weeks.

As the world's fifth-largest oil exporter -- the state-run oil company supplies about 15% of U.S. petroleum imports -- Venezuela has amassed a hoard of cash that has allowed it to import goods and sell them at a loss through the state-run Mercal supermarket chain, subsidizing Mr. Chávez's pricing policies. Enforcement of price controls is being stepped up as Mr. Chávez readies a December re-election bid.

The predominance of the state, Mr. Chávez says, aims to protect the poor majority from "greedy capitalists" and "speculators." He has threatened to expropriate plants of those who shut down operations, while government troops have seized stockpiled grain to stop shortages.

Mr. Cárdenas, the milk importer, has responded to the regulations by cutting his staff to a dozen employees, from 280 in 2001. He is using his office space to start a construction company and is looking to produce agricultural goods not included in the long list of price regulations. "We're not idle," he says.

Mr. Chávez turned to price and capital controls after a two-month nationwide strike in 2003 that ravaged the economy. While his populist agenda was warmly received, some Venezuelans more recently have shown misgivings. In late 2005, highly publicized state expropriations led to a drop in Mr. Chávez's poll ratings, with approval numbers dropping to less than 50%.

Economists warn that the government is defying conventional economics and using a discredited tool -- price controls -- to curb inflation, rather than implementing tighter monetary and fiscal policies. Last year, inflation ran at just more than 14%, while the economy grew 9.4%.

The recent closure of the main highway connecting Caracas to its principal airports and seaports because of a problem with a bridge is threatening to push up prices further, making it harder for businesses to stay within price limits. Efraín Velazquez, head of the National Economic Council, expects inflation to rise this year as increased transport costs are passed on to consumers.

Venezuela has a checkered history with government intervention. Mr. Chávez's predecessor, Rafael Caldera, imposed price and foreign-currency controls in 1993 following a domestic banking collapse that crushed the economy. The controls caused supply shortages and company closures while artificially containing inflation. When Mr. Caldera was forced to scrap the controls in 1996 to meet conditions for an International Monetary Fund loan, inflation shot up to 103%. The economic fallout hurt Mr. Caldera's legacy -- no one from his Convergence party challenged Mr. Chávez in the 1998 presidential campaign -- and the party slipped into obscurity.

The coffee strike in December has been the most vocal so far. Roasters shut their plants after the government raised the price of green coffee that farmers sell to roasters by 100% while leaving processed-coffee prices unchanged. After weeks of protests, the government agreed to raise retail coffee prices by 60%. But Pedro Obediente, a retired university professor living in Caracas's hilly suburbs, says he is still looking for his favorite brand. "I haven't found Café El Peñón, which is what I like," he says, referring to one of the country's largest roasting companies.

Businesses increasingly are finding ways to get around the price caps, and some stores violate the price controls outright. Top cuts of beef can sell for 30% more than the government-set price in Caracas supermarkets. Some businesses have turned to selling more-expensive imported meat instead of the regulated local cuts; others refocus their efforts on producing goods that fall outside the regulations. Milk producers, for instance, have boosted their output of unregulated goods, such as yogurts and cheeses.

Others simply bite the bullet. "Sometimes," says Juan Luis Bustamante, vice president for the Unicasa supermarket chain, "we just sell meat at a loss so we can keep people coming through the door."

Iran Plays Growing Role in Iraq, Complicating Bush's Strategy

Tehran's Influence on Politics,
Daily Life Could Give It
Leverage in Nuclear Debate
Help for Shiite TV Stations
By JAY SOLOMON in Washington, FARNAZ FASSIHI in Baghdad, Iraq, and PHILIP SHISHKIN in Amarah, Iraq
February 14, 2006; Page A1

Bush administration officials who promoted war with Iraq envisioned Americans reshaping the country in their own image after the war. Instead, the reshaping is increasingly being carried out by Iran -- the same nation that has provoked a diplomatic furor over its nuclear ambitions.

Iran's influence is most apparent in Iraqi politics, where a Shiite-dominated coalition has just nominated a prime minister with close ties to Tehran, but it also emerges in many areas of Iraqi life that get less notice. Iranian businessmen are some of the largest investors in restoring Iraq's shattered infrastructure. Nonprofit groups from Iran are providing basic health services that crumbled in the chaos following the U.S.-led invasion. Iraq's Shiite media are getting training from experts across the border.

"America occupies Iraq, but Iran influences us," says Sheikh Kashef al-Qhatta, a prominent Shiite cleric and political analyst based in Baghdad.

While Tehran has little motive now to throw Iraq into further turmoil, its ability to do so could undermine the Bush administration's attempt to stop Iran's nuclear program. The U.S. and European nations are pushing Iran to freeze the program, which they fear is aimed at producing a nuclear weapon. Iran says its program is peaceful.

If Iran wished to make life difficult for the U.S. and its troops in Iraq, it might draw on the support of Iraqi Shiite leaders. One who has battled U.S. forces in the past, Muqtada al Sadr, pledged on a visit to Tehran last month to back Iran in any military showdown with the U.S. Tehran also has helped finance and train Shiite militias and paramilitary units in Iraq such as the Badr Brigades.

"They believe they can just pin us down in Iraq," says George Perkovich, a national security analyst at Carnegie Endowment for International Peace, a Washington think tank, who visited Tehran last year.

Iran's influence inside Iraq also is threatening to exacerbate Shiite-Sunni tensions across the Middle East. Muslims from the Sunni branch of Islam have long dominated Arab politics. In Iraq, Saddam Hussein and his Sunni-led ruling clique controlled a nation that is only an estimated 20% Sunni Arab. Now Sunni Arab leaders such as Jordan's King Abdullah II have voiced concerns about a possible "Shiite crescent" stretching from Iran to the Arabian Gulf.

Bush administration officials say they are working to counter gun-running by Iranians into Iraq or any effort by Tehran to install theocratic Shiite rule in Baghdad. The Pentagon has increased border surveillance along the Iran-Iraq border, these officials say. The U.S. says it is ready to work with a permanent government led by Ibrahim al-Jaafari, who currently holds the prime minister's post on an interim basis.

U.S. officials and some who study the Middle East say the danger of Iran gaining sway in Iraq may be mitigated by differences between the two nations. Iraq's population is primarily Arab, while Iran's is majority Persian and Farsi-speaking. The countries fought a long war in the 1980s. "The political dynamics in Iraq should check the direct influence from Iran," said an administration official. "Iraqis are in control over Iraq's political destiny."

Wayne White, who headed the State Department's Iraq intelligence team during the war and now is an adjunct scholar at the Middle East Institute, a Washington think tank, says Iraq's Shiite parties aren't going to take dictation from Tehran just because they are Shiite. "Over the long run, they could operate quite separately from the Iranians," he says. "You're not seeing it now because the political situation in Iraq is not mature."

Still, Iran's influence in Iraq today runs counter to the scenario many Bush administration strategists presented in the months heading into the March 2003 invasion of Iraq. At the time, policy makers saw a democratic Iraq as a base for promoting Western-style democracy in neighboring countries such as Iran, Syria and Saudi Arabia. Some advocates of the war said a post-Saddam Iraq also would provide a military platform to pressure Iran to drop its nuclear program.

"Iran was always the big enemy, and Iraq the cakewalk," says Karen Kwiatkowski, a retired Air Force lieutenant colonel who served in the Pentagon's office of Near East and South Asia in the months heading into the war.

Despite Washington's concerns with Tehran, U.S. military planners did little to stop Iran from spreading its influence in Iraq after Saddam Hussein fell, say American and Iraqi officials. Teams of Iranian medical workers, volunteers for charity groups and religious missionaries streamed across Iran's border into Baghdad and Iraq's predominantly Shiite south.

A nonprofit group called "Reconstruction of the Holy Shrines of Iraq" was established in Iran, with ties to the Tehran government. On its Web site, it now boasts of 300-plus construction, cultural and religious projects it has completed from Baghdad to Basra in the south.

Posters of Ayatollah Ruhollah Khomeini, the founding father of Iran's Islamic revolution, quickly adorned the walls of Shiite neighborhoods, and Iraq's supermarkets suddenly were full of Iranian goods, especially food and health products.

On the political front, teams of Iranian volunteers traveled to Iraq to instruct Shiite activists in mobilizing mosques and clerics for a big turnout. At some Baghdad mosques, local Shiite leaders started voter-education lectures by playing a taped message in Arabic by Iran's conservative supreme leader, Ayatollah Ali Khamenei.

Many of the Shiite politicians and Islamic scholars who quickly rose to lead post-Saddam Iraq -- such as Prime Minister Jaafari and Ayatollah Abdul Aziz al-Hakim -- are men who were persecuted under Mr. Hussein's rule and exiled to Tehran. Mr. Jaafari was nominated Sunday by the Shiite-dominated ruling coalition to serve a full four-year term once a new government is inaugurated in the coming weeks. Many Sunnis accuse Mr. Jaafari of tolerating human-rights abuses of Sunni prisoners and failing to control Shiite militias.

Iran was the first country in the Middle East to formally recognize the first post-Saddam Shiite government last summer.

Iraq's most prominent Shiite religious leader, Grand Ayatollah Ali Sistani, maintained close ties with Tehran during Saddam Hussein's rule and today channels millions of dollars monthly into Islamic research centers and theological schools in Iran, according to his Web site, demonstrating the growing convergence of Iran's and Iraq's religious elite.

One influential Tehran-funded group working inside Iraq is the Organization of Ahl-ul-Bait, whose leaders include Iranian mullahs and a former Iranian foreign minister. It has dispatched ambulances, doctors and teachers over the border to Iraq. According to its Web site, Ahl-ul-Bait has held book fairs in Shiite cities such as Najaf and has created a union to promote the shared interests of Iranian and Iraqi Shiite merchants.

The influx from Iran also has brought in a steady stream of guns and munitions, say U.S. intelligence officials. "Tehran has been responsible for at least some of the increasing lethality of anticoalition attacks," the director of national intelligence, John Negroponte, told the Senate this month. He said Tehran is helping Shiite militants build improvised explosive devices.

Mr. White, the former State Department official, says he received reliable reports about significant quantities of arms coming in from Iran in the months after Saddam Hussein's fall. The Pentagon didn't have enough troops to police both the Syrian and Iranian borders, Mr. White says. The U.S. move to disband Iraq's army after the invasion resulted in large sections of Iraq's borders being practically unpoliced.

"Everyone knew there was gun-running and that it was coming through al-Amarah," says Mr. White, referring to the capital of Maysan province in southeast Iraq. "The eastern border with Iran was totally out of control."

Tehran has consistently denied charges that it is distributing munitions in Iraq or is seeking to ensnare Iraq in the dispute with the West over the Iranian nuclear program. Iran "gives special importance to restoring stability and security in Iraq," Iran's second-highest diplomat in Baghdad, Hassan Kazemi Qomi, said this week, according to Iran's state Islamic Republic News Agency. "An insecure Iraq can be turned into a convenient arena for terrorism that can exported to neighboring states, which Iran does not like."

Since last October, British commanders -- working with Iraqi border guards, Bedouin tribesmen and other local leaders -- have been dispatching teams of paratroopers in Land Rovers to survey and seal a 155-mile-long stretch of border separating Maysan province from Iran. It is a varied landscape of marshes, desert and rocky cliffs.

The eventual British goal is "to disrupt anything that's coming across the border, such as weapons and munitions, that can be used against multinational forces" in Iraq, says Maj. Chris Titcombe, who led a patrol last year. The British military is encouraging the Iraqi Department of Border Enforcement to take the lead in these operations, say British officials.

The British say they are seeing an increasing number of "shaped charges," sophisticated explosive devices that are triggered via an infrared signal and can pierce armor. These devices first appeared in Maysan last summer and later were used near Basra in attacks against British forces. Local commanders and coalition officials say they have no evidence linking them directly to Tehran, but they say the technology is similar to that used by Hezbollah, a radical Shiite group in Lebanon funded by Tehran.

Iran has also influenced Iraq's media. When Iraqi Shiites set up two broadcast television stations called al-Furat and Miladi after Mr. Hussein was toppled, they received technical help from Iranians, according to Iraqi journalists and government officials. "Everything from A to Z was done by Iran," says Khazzal Ghazi, an Iraqi correspondent for al-Alaam, an Iranian satellite news channel.

Al-Alaam, which airs in Arabic, is itself a major influence in Iraq. Unlike Western media organizations holed up in Baghdad, al-Alaam has bureaus and correspondents in every one of Iraq's 18 provinces, including those dominated by Sunnis.

Even in the northern Kurdish region of Iraq, which is dominated by Sunni Kurds and is generally pro-American, Iran enjoys economic influence. Iraq's first trade and commerce fair after the fall of Saddam Hussein was sponsored by Iran's minister of commerce and was held in Sulaimaniyah, part of Iraq's Kurdish region, in September 2003. Today, construction materials such as cement, glass and bricks are imported from Iran and distributed by Kurdish businessmen throughout Iraq, according to local Iraqi and Iranian businessmen.

Tehran has signed two contracts to provide electricity to Iraq from the Iranian provinces of Ammarah and Diyalah. Tehran and Baghdad have discussed establishing a pipeline taking Iraq's oil to Iranian ports for export. The moves have irritated U.S. officials, though they have no direct way to block them.

In November, Iraq's national security adviser, Mowaffak al-Rubaie, a secular-minded Shiite, traveled to Iran and signed a memorandum of understanding with the Iranian government. The memorandum stated that both countries would refrain from supporting or funding groups that aim to create trouble or overthrow the other's regime. The following month, Shiite-based parties won a plurality of seats in National Assembly elections.

One newly elected legislator is Khudeyr al-Khuzaee. He fled to Iran during Saddam Hussein's rule, lived in Tehran for two decades and taught at a state university before returning to his home country after the American-led invasion. "We have one criterion: Any country that is closest to our people and our interest is our best friend," Mr. Khuzaee says. "And right now that country is Iran."

Japan's appetite for CO2 credits hits fever pitch


Staff writer

Carbon dioxide -- plants absorb it, we exhale it and millions of tons of it are being traded on markets worldwide.

And in those markets, Japan is looking to buy, buy, buy. Carbon dioxide is the hot commodity and futures are soaring.

As the Kyoto Protocol fetes its first anniversary Thursday, Japan's appetite and need for emissions credits are growing at a furious rate.

What worries Environment Ministry officials, however, is whether Japan will be able to find enough sellers, and if so, how high a price will have to be paid to get the credits it needs in time.

Prices now average $ 5.63 to $ 5.90 a ton, according to the World Bank and think tanks. Futures for 2010 worldwide are averaging between $ 10.96 and $ 23.30, with highs above $ 30.

"So many decisions still need to be made, it's hard to read future demand, but Japan could face a supply crunch by 2012" for emissions credits, said Makoto Katagiri, president of Natsource Japan Co., the Japanese branch of a global energy advisory services company.

A supply crunch would mean higher prices, he said. "The race is on around the world to cash in on expected demand."

Japan is a large contributor to that demand -- except that what the government and companies are looking for is a lack of carbon dioxide.

Reduced or unreleased carbon dioxide in one country translates into credits, or the right to emit the greenhouse gas, in another.

The credits are essential for Japan to meet its promise under the Kyoto Protocol to reduce emissions in 2012 by an equivalent of 6 percent of 1990 levels.

In the next fiscal year, the government plans to use 17.6 billion yen -- some of which comes from oil tax revenues -- to buy emissions reduction credits.

Economy and environment officials hope to get the same amount or more to buy credits next year as well.

The additional funds would further cement Japan's status as a huge buyer of emissions credits.

Already, Japan -- companies and government-affiliated banks -- buy roughly 20 percent of the booming Kyoto credit market, through the Clean Development Mechanism, according to the World Bank.

That is why the Singapore-based fund Asia Carbon is looking for a Japanese partner to set up an exchange in Japan by summer.

The fund would pool supplies of emissions reductions credits throughout Asia for Japanese companies to buy.

The problem, government and company officials half boast, is that Japan has the world's most energy-efficient economy. This makes lowering greenhouse emissions an even tougher challenge.

Japanese companies are snatching emission credits and credit futures, to reduce the risk of credit price surges as 2012 draws near, and to avoid being surprised by future regulations to reduce emissions further, Katagiri said.

The carbon credits business has boomed since the ratification of the Kyoto Protocol.

According to the International Emissions Trading Association, a U.N.-affiliated nongovernmental organization, and Oslo-based think tank Point Carbon, companies and governments will be hunting for rights to emit 788 million to 1.1 billion tons of carbon dioxide between now and 2012.

Demand could grow still more if rich countries, including Japan, fall further behind their schedules to meet their commitments.

The government's conservative estimate has Japan falling short of emission targets by 1.6 percent of the total emission values of 1990, which amounts to 100 million tons of carbon dioxide equivalents. Japan's emissions grew in 2004.

Demand for emissions credits is expected to rise worldwide through 2012.

Estimates by the World Bank and private think tanks say Western Europe, Japan and Canada together may need somewhere between 2.5 billion and 3.0 billion tons of credits in the five years through 2012 to meet their commitments under the Kyoto Protocol. That comes to between 300 million to 800 million tons per year.

"Even 40 percent of the amount needed is going to be hard to reach," said Hitoshi Kurihara, manager of the public-private emissions investment team Japan Carbon Finance.

He estimates that the Kyoto Protocol could cost Japan as much as 2 trillion yen in carbon credits.

In carbon markets worldwide, sellers sell their right to emit carbon dioxide to those that emit more than their allowance, either under the Kyoto Protocol or under a local framework, such as the European Emissions Trading Scheme or the Chicago Climate Exchange.

Sellers can also sell certificates representing emissions reduced through technology or energy efficiency and emissions offsets when they capture carbon in biomass.

The idea is to heighten incentives to reduce carbon dioxide emissions. One of the greenhouse gases, carbon dioxide warms the planet by trapping sunlight in the atmosphere.

About 390 million tons of carbon dioxide were traded worldwide in 2005, up from 9.65 million tons traded in 2004.

The Kyoto Protocol also is bringing Japan and the rest of Asia closer through projects aimed at reducing emissions, said Akira Kitazawa, head of business development at Mitsui & Co.

The Japanese government has so far approved about 30 projects throughout Asia, projected to reduce carbon dioxide emissions by 24 million tons per year.

February 14, 2006

Twelve Easy Pieces(of Sliced Apple)

For years, suspicion has been growing in the orchards of the Wenatchee Valley in Washington State and in the food industry at large that fruit, nature's original hand-held convenience food, is simply too poorly designed for today's busy eater. The apple, for instance: whatever it has meant to Americans over the years — from mom's pie to the little red schoolhouse — getting our mouths around one has also apparently meant some unspoken aggravation. Next to a banana or a grape, it's a daunting strongbox of a fruit, prohibitively so for anyone with braces or dentures; and even if you can break in, there's no guarantee a given apple will eat as sweet as it looks.

Nearly half of Americans now consume most of their meals away from home or on the go, utilizing an expedient fleet of Go-Gurts, drinkable soups and cereal bars, while bags of prewashed salad and baby carrots await us at home. Given how many foods we've been able to tweak or outright reinvent to fit into our harried lives, who could take seriously the Granny Smith — which, not unlike the bayonet or the daguerreotype, is by contemporary standards a cumbersome and unreliable technology? What appeal could an apple have left but nostalgia, the kind of thing you'd find at Restoration Hardware beside a galvanized watering can?

"A bowl of apples is like a piece of art," says Tony Freytag, marketing director at Crunch Pak, an apple-processing company. "It's display. People won't touch it. But you put out a tray of cut-up apples — that's food."

Since helping found Crunch Pak in 2000, Freytag has become one pioneer in a rapidly growing industry: packaging bags of ordinary-looking, fresh slices of apples that, bathed in an all-natural flavorless sealant, won't turn brown or lose their crisp for up to three weeks. Last year, McDonald's stocked 54 million pounds of presliced apples, to sell with caramel dip or in salads, and this increased visibility boosted enthusiasm for them in school cafeterias and among time-strapped, health-conscious parents nationwide. Crunch Pak now slices and packs apples under its own name for Wal-Mart and nearly a dozen other chains, under the in-house brand at Whole Foods and for the organic bagged-salad giant Earthbound Farm. In loose one-pound bags (about $2.99), eight-packs of two-ounce snack pouches (about $3.99) or six-ounce cupholder-ready canisters (about $1.99), they have slipped onto refrigerated shelves among packages of herbs and cantaloupe cubes.

February 10, 2006

Self-doomed to failure

An unsparing new report by Arab scholars explains why their region lags behind so much of the world

WHAT went wrong with the Arab world? Why is it so stuck behind the times? It is not an obviously unlucky region. Fatly endowed with oil, and with its people sharing a rich cultural, religious and linguistic heritage, it is faced neither with endemic poverty nor with ethnic conflict. It shook off its colonial or neo-colonial legacies long ago, and the countries that had revolutions should have had time to recover from them. But, with barely an exception, its autocratic rulers, whether presidents or kings, give up their authority only when they die; its elections are a sick joke; half its people are treated as lesser legal and economic beings, and more than half its young, burdened by joblessness and stifled by conservative religious tradition, are said to want to get out of the place as soon as they can.

Across dinner tables from Morocco to the Gulf, but above all in Egypt, the Arab world's natural leader, Arab intellectuals endlessly ask one another how and why things came to turn out in this unnecessarily bad way. A team of such scholars (it is indicative of the barriers to freely expressed thought that there are almost no worthwhile think-tanks in the Arab world) have now spent a year putting their experience to diagnostic use in the “Arab Human Development Report 2002”, published this week by the United Nations Development Programme (UNDP).

With Nader Fergany, an Egyptian sociologist, as the chief author, the report carefully dissects and analyses the Arab world's strengths and failings. The strengths, alas, consume little space; the failings are what interest the writers. Inbuilt caution holds them back from naming too many names, but they explain honestly and convincingly how and why they think their world has gone wrong.


February 7, 2006

Europe's New Dissidents

BRUSSELS -- Four months ago, Denmark's Jyllands-Posten newspaper published 12 caricatures of the prophet Muhammad. At first, the cartoons elicited little interest.

But in December Danish Muslims circulated them in the Islamic world. They added two particularly inflammatory drawings that had never been published by the paper -- one involved a pig's nose and the other an indecent act with a dog. Street protests erupted from Lahore to Gaza. Libya, Syria, Saudi Arabia and Kuwait withdrew their ambassadors from Copenhagen, calling for an apology and punishment of the editors. Danish products are being boycotted in the Middle East, where state-controlled media speak darkly of a conspiracy against Islam. Palestinian terrorists have declared Danes and other Europeans as legitimate targets. Journalists at Jyllands-Posten have received death threats. Danish flags, whose design is based on a Christian cross, are being burned. So much for religious respect.

For four months, Danish Prime Minister Anders Fogh Rasmussen and Jyllands-Posten staunchly refused to apologize. But this week, with little support from the rest of Europe against this orchestrated assault on Denmark's press freedom, the paper caved in, much to the government's relief.

Were the cartoons disrespectful? Certainly. In Islam the drawing of any image of Muhammad is forbidden and so religious Muslims might feel offended. As might millions of Christians when Jesus is depicted as gay or defiled in a thousand other ways every day. But that's what letters to the editor are for.

Moreover, the cartoons didn't mock Islam as such but its abuse by militant Muslims. One cartoon showed Muhammad with a turban in the form of a bomb. The issue, though, is much larger than the question of how to balance press freedom with religious sensibilities; it goes to the heart of the conflict with radical Islam. The Islamists demand no less than absolute supremacy for their religion -- and not only in the Muslim world but wherever Muslims may happen to reside. That's why they see no hypocrisy in their demand for "respect" for Islam while the simple display of a cross or a Star of David in Saudi Arabia is illegal. Infidels simply don't have the same rights.

The murder in 2004 of Dutch filmmaker Theo van Gogh by a Muslim fundamentalist in Amsterdam demonstrated the kind of risks critics of Islam are exposed to these days -- even in Europe. Fundamentalists can find good cover -- and followers -- among the millions of Muslim immigrants on the Continent. Jyllands-Posten decided to publish the cartoons after complaints from an author that he could not find an illustrator who dared to draw images of Muhammad for his book. It was this atmosphere of fear and intimidation that the newspaper wanted to highlight. The Muslim reaction to these pictures only confirmed how relevant the topic is.

Using their combined economic muscle, death threats and street protests, a combination of state and nonstate actors are slowly exporting to Europe the Middle East's repressive system. What Jyllands-Posten's editors are enduring is not unlike what dissidents under communism had to go through. The Islamists can't send the journalists to a gulag but they can silence them by threatening to kill them. Bomb threats twice forced the journalists to flee their offices this week.

Reminiscent of Stalinist show trials, the paper was in the end forced to show public remorse. The cartoons "were not in variance with Danish law but have indisputably offended many Muslims for which we apologize," the paper said Monday. "I would have never chosen to depict religious symbols in this way," the previously defiant Mr. Rasmussen added. But just like the original show trials, the "admission of guilt" won't cut the Danes much slack. Muslim organizations in Denmark rejected it as not "sincere" and the death threats, protests and boycotts continue.

Just as was the case with communism, Islamic totalitarian impulses find their apologists in the West. Last Monday in Qatar, former President Bill Clinton decried the "totally outrageous cartoons against Islam." EU trade commissioner Peter Mandelson said the journalists "have to understand the offense caused by cartoons of this nature."

The support shown in the past few days by newspapers around Europe reprinting the cartoons is very welcome. But the vast majority of Europe's media didn't join the battle. And so in the end, it was too little, too late, coming just after the Danes were forced to "confess."

"Those who have won are dictatorships in the Middle East, in Saudi Arabia, where they cut criminals' hands and give women no rights," Jyllands-Posten's editor in chief, Carsten Juste, told the AP.

But what really sealed the Danes' fate -- and possibly Europe's -- was the lack of solidarity from other governments. The European Union likes to call "emergency meetings" for the most trivial topics, from farm subsidies to VAT rates. But when one of their smallest members came under attack for nothing else than being a European country, for defending the values and norms the EU is based on, there was nothing but silence from Europe's capitals. That silence has been heard and understood in the Muslim world.