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Archive for March 29th, 2010

Despite US Pressure, Beijing Stands Firm in Currency Spat

Posted by Admin on March 29, 2010

Despite US Pressure, Beijing Stands Firm in Currency Spat

by: Kit Gillet  |  Inter Press Service

Beijing – China may be under international pressure, especially from the United States, over the valuation of its currency, but is unlikely to back down in the short term given its worries about its export sector and the jobs that depend on it.

Thus far, the lines have been drawn in the disagreement between China and the United States over the yuan – and neither side seems willing to back down.

China pegged its currency at approximately 6.8 to the dollar in July 2008, mainly to aid the country’s export industry that was badly hit by decreasing global demand and the financial crisis.

On Mar. 15, 130 members of the U.S. Congress signed a letter urging the White House to label China a currency manipulator in its Apr. 10 treasury report, which would be the first step in imposing trade tariffs on Chinese export goods.

The letter stated, “The impact of China’s currency manipulation on the U.S. economy cannot be overstated.” It went on to suggest that the current exchange rate gave an unfair subsidy to Chinese companies at the direct expense of their U.S. counterparts.

China’s Commerce Minister Chen Deming has said the country would “not turn a blind eye” if it was labelled a manipulator, and that it might, in that eventuality, seek to litigate under the global legal framework.

Both countries’ leaders have also weighed in on the issue.

Yet China is unlikely to allow a rapid appreciation of the yuan, which some suggest is undervalued by as much as 40 percent.

“China believes that that a modest revaluation of its currency would have a scant effect on U.S. trade deficits, and that once it made an adjustment, it would be pressed again and again to do more,” wrote Jeff Garten, Juan Trippe professor of international trade and finance at the Yale School of Management, in a recent note.

As the world’s largest exporter, China’s growth depends substantially on its export sector. Any strong revaluation could hurt this industry, which accounted for roughly 27 per cent of Gross Domestic Product in 2009.

“It is in nobody’s interest – China’s, the United States’ or other countries’ – to see big ups in the renminbi (yuan) or big downs in the dollar,” Vice Commerce Minister Zhong Shan told the U.S. Chamber of Commerce in Washington on Wednesday.

“There is no need for us to discuss if it (the yuan) should be appreciated. What we should be concerned about is when and how it is,” Wu Xiaoqiu, assistant president of Renmin University and director of China’s Finance and Securities Institute, said in an interview with IPS. “The government needs to consider the competitiveness of companies in labour-intensive sectors,” he said.

The leading business publication ‘The 21st Century Business Herald’ reports that several government ministries, including the ministries of commerce and information, have been conducting pressure tests to gauge the impact of appreciation in key labour-intensive sectors, but none of their findings have yet been made public.

“Most export companies would rather have the yuan appreciate in one go rather than face the uncertainty of guessing the timing and the degree of gradual appreciation,” said Zhang Bin, a researcher at the Institute of World Economics and Politics, Chinese Academy of Social Sciences.

But Zhang expressed concern that some exporters might report fake figures in order to protect their own interests.

China’s export industry suffered in the wake of the economic crisis, and while numbers picked up near the end of last year, Chinese officials are now suggesting that March 2010 could be the first month since 2004 that the value of the country’s imports exceeded that of its exports.

Cheaper competition from developing nations such as Vietnam and Bangladesh, along with a 2008 labour law that increases wages across China, has already hurt the Chinese export industry. Talk of a revaluation is seen by some as a hurdle too far.

“In the words of some of our members, the United States is ‘sharpening its knives and has a murderous air about it,’” said Zhang Yujing, president of the China Chamber of Commerce for Import and Export of Machinery and Electronic goods, at a press conference last week. “I expect many companies won’t be able to bear an appreciation now.”

Zhou Dewen, vice president of the China Middle and Small Enterprises Association, told the ‘Oriental Morning Post’ that the Chinese government should withstand pressure from abroad for at least two or three years.

“If the government fails, a large amount of middle and small Chinese enterprises, which have suffered from the ongoing financial crisis, will be closed and the workers will lose their jobs,” he said in an interview published in the ‘Post’ this week.

Not all share Zhou’s pessimistic view.

“An appreciation will hurt exports. But if appreciation is gradual and modest (we are talking about five to six percent here), I think the impact should be relatively small,” Wang Tao, head of China Economic Research for Union Bank of Switzerland (UBS) Investment Bank here, told IPS.

Wang suggested that yuan appreciation, along with more flexibility, can help promote domestic consumption in China, and divert investment from export-oriented industries.

Chinese exporters are estimated to make a return of three to five percent on sales. Any substantial appreciation of the yuan could see the closure of many factories and would add to China’s unemployment rate, which a recent China Academy of Social Sciences report put at 9.4 percent.

It would also force the raising of export prices, which would in turn affect U.S. consumers, by far the largest buyer of China-made products.

Decades of free spending by U.S. consumers has left the U.S.-China trade deficit standing at roughly 227 billion dollars, down from a high of 268 billion dollars in 2008.

Chinese state media and many of its politicians have suggested that the U.S. government is merely looking for someone else to blame for its current woes. “They should not blame the problems they have by finding a scapegoat in China,” China’s new ambassador to the United Nations, He Yafei, told a briefing in Geneva earlier this month.

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Pentagon Wants $33 Billion More for War in Afghanistan

Posted by Admin on March 29, 2010

Pentagon Wants $33 Billion More for War in Afghanistan

by: Gordon Lubold   |  The Christian Science Monitor

Washington — The Pentagon wants $33 billion in additional funding to pay for the war in Afghanistan this year and train the Afghan military, but members of Congress want to make sure they’re not writing a blank check.

Defense Secretary Robert Gates and Secretary of State Hillary Rodham Clinton appeared before Senate appropriators to defend the war supplemental, which is on top of the $708 billion baseline budget submitted to Congress in February.

Most of the war supplemental – a separate account used to pay for war costs – will pay for Afghanistan operations. Of that, $2.6 billion is to train the Afghan national security force, seen as a long-term endeavor that Congress worries could become a burden over time.

When Can US Forces Leave?

“The question is, how long is that going to have to continue to the point where we can kind of say we’ve done our thing,” asked Sen. George Voinovich (R) of Ohio. “Five years, ten years, 15 years?”

That question is atop many lawmakers minds as they consider what the Obama administration has said from the start will take years to accomplish.

The Iraq security forces, now nearly 665,000 strong, took at least six years to build. But Iraq had more resources, and American trainers were already working within a culture in which a formal military existed under Sadaam Hussein. Afghanistan’s modern history has never had a formal military structure, and there are even fewer resources in Afghanistan to support one.

Despite contributions from NATO countries, that still leaves the US holding much of the bag when it comes to training the Afghan indigenous force.

While President Obama has pledged to begin removing American troops from Afghanistan in 2011, the training mission will likely continue long after that.

“We are in this intense phase that will be several years,” Ms. Clinton said in answer to Mr. Voinovich’s question. “Obviously, I don’t know that either of us could put a timeline on it. What we’re trying to do simultaneously is clear territory from the Taliban, be able to work more closely with the Afghan army, and at the same time create more capacity.”

Although NATO allies contribute to the training effort – Germany, for example, the third largest contributor of forces to Afghanistan, is almost uniquely charged with training operations in the north – the US will shoulder much of the burden for the long-term.

US Commanders Concerned About Afghan Forces

“I know many of you have concerns about the Afghan security forces,” Mr. Gates said in his opening statement. “I share those concerns, as do our military commanders.”

Gates noted that the Afghan army has made “real progress” over the last year, and that many Afghan soldiers are making enormous sacrifices for their country. But Gates emphasized that the US can get out of Afghanistan faster if the training piece of the mission is done right, and that will likely take time. And while much praise goes to the Afghan army, the police force – seen as widely corrupt – will be a much harder fix.

“As you consider this request, I would emphasize that successfully accomplishing the training mission represents both our exit strategy and the key for long-term stability in Afghanistan,” Gates said.

But as a reminder of the cost of training indigenous militaries, the $33 billion funding request includes $1 billion still needed to strengthen Iraqi security forces, a force many consider to be all but fully trained as the US prepares to remove all its combat forces by August.

Gates said the money will help to “ensure that the Iraqis are fully prepared to assume internal security responsibilities.”

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Talking to Taliban and Tribal Warlords

Posted by Admin on March 29, 2010

Talking to Taliban and Tribal Warlords

Sunday 28 March 2010

by: J. Sri Raman, t r u t h o u t | News Analysis

Across the sands

Across the sands

From October 7, 2001, until about a year ago, the world was hearing of the “war on terror” in the Af-Pak region as one on Taliban and tribal warlords allied to them. No longer. What assails our ears increasingly over the recent period is talk of a campaign to woo and win over a section of the same “enemies of civilization.”

All the avowed “anti-terror” warriors are engaged in the campaign. The US administration and the Afghanistan government are publicly committed to this policy change, with powerful quarters emulating the example despite protestations of uncompromising opposition to terrorism. Voices from within India, meanwhile, suggest pressures for a similar attempt by New Delhi. South Asia’s biggest power is being nudged to do business with forces officially regarded until the other day as implacably fundamentalist foes.

The campaign is approaching its culmination, with the highest international forum extending far-from-hidden support to the process. The United Nations, too, is now involved in not-so-secret talks with those considered not long ago as too terrorist for such UN-conferred legitimacy.

In one sense, it all began with President Barack Obama’s moves for a new Afghanistan strategy. Weeks before the strategy was announced on March 27, 2009, Obama said in a newspaper interview that the US “was not winning the war in Afghanistan and opened the door to a reconciliation process in which the American military would reach out to moderate elements of the Taliban, much as it did with Sunni militias in Iraq.”

Around the same time, speaking at NATO headquarters in Brussels, Vice President Joe Biden claimed that “at least 70 percent” of Taliban guerrilla fighters were “mercenaries” who could be “persuaded” to lay down their arms and join the “peace process.”

These signals could not but have strengthened the hands of those in Pakistan who were never excited about engaging in a serious conflict with Afghan insurgents – particularly the Taliban, perceived as largely a creation of Pakistan during the days of the Soviet war in Afghanistan. Officially, of course, Pakistan is supposed to have abandoned all its reservations about an all-out “war on terror” with its offensive in the Swat region in May 2009. Ties with the Taliban, however, are still cherished in powerful quarters.

Shahbaz Sharif, the younger brother of former Prime Minister Nawaz Sharif, caused much more than a ripple recently when he issued an appeal to the Taliban as the chief minister of Punjab, Pakistan’s largest and leading province closely identified with the country’s army. Shahbaz requested his “friendly” terrorists to spare Punjab because his party, the Pakistan Muslim League – Nawaz (PML-N), had “something in common with them” (opposition to former President General Pervez Musharrf).

The appeal came in the wake of 12 terror attacks in less than a year, which left hundreds killed, including women and children, in Punjab’s Lahore, considered the country’s cultural capital. It has led to an outrage.

In a newspaper article captioned “The terror is next door, Mr. CM,” leading cultural activist Naeem Tahir says: “Rarely had he (Shahbaz) been noticed as much as he was noticed this time. Explanations followed, but these explained nothing. Everyone, including parliamentarians, journalists, government functionaries and the general public tried to figure out the meaning of this request.”

“Did he mean to suggest” – asked Tahir – “that the terrorists should spare Punjab and try Balochistan? Or Sindh or, for convenience of proximity to the Punjabi Taliban, try the capital Islamabad?” No convincing answer has been forthcoming.

Meanwhile, the Pakistani army has undertaken an agitprop operation alleging links between India and the Taliban. Military aircraft drop pamphlets in North Waziristan on ties between the Taliban and India’s external intelligence agency, the Research and Analysis Wing (RAW). The pamphlets also talk of relations between Israeli intelligence outfit Mossad and Indian consulates in Afghanistan.

Until recently, the official Indian stand was against attempts to differentiate between “good Taliban” and “bad Taliban.” Of late, however, New Delhi has signaled its willingness to try out the line. The policy draws support from the thinking of the country’s security establishment over more than a decade of experience in the Af-Pak region as well.

A case for some ties with the Taliban is argued, for example, in an over-a-decade-old document authored by a former RAW official who is an informed and influential security analyst today. B. Raman, now a well-known columnist as well, talks in this paper titled “Bin Laden, Taliban and India” of the al-Qaeda leader’s ambiguous stance on Pakistan’s chief adversary.

Noting that the Taliban had issued no “call for killing Indians or Hindus,” Raman says: “The past anti-India comments of Osama and the Taliban were restricted to supporting the right of the Kashmiris to self-determination … It has repeatedly denied Indian allegations that its volunteers were active in Kashmir.”

Raman quotes the Taliban’s “most comprehensive statement to date on this subject (September 20, 1998)” as saying: “Afghanistan and India had friendly relations in the past. We don’t have any diplomatic ties now, but we won’t mind resuming relations with India as, at least, we won’t have to contend with an enemy India…. We obviously support the jihad in Kashmir… It is also true that some Afghans are fighting against Indian troops in Kashmir. The Taliban has not sent them…. We have no intention of exporting our jihad or revolution to any country.”

Raman’s counsel: “… India should test out the sincerity of the Taliban’s interest in a non-adversarial relationship with India by maintaining a line of communication with the Taliban leadership through their office in New York. Its professions of innocence should be tested out and not dismissed out of hand.” He adds: “The USA too, while taking strong action against the Taliban’s support to Osama and its violation of human rights, has at the same time maintained a dialogue with the Taliban leadership through their New York office and during the visits of US officials to Islamabad.”

Whether the counsel is heeded at last remains to be seen. Meanwhile, however, Afghanistan’s President Hamid Karzai has opened talks with the country’s second-largest militant group linked to the Taliban. The Hizb-e-Islami has reportedly submitted to Karzai a 15-point plan for possible peace talks. The main point envisages withdrawal of all foreign forces from July this year, to be completed within six months.

At the helm of the Hizb-e-Islami stands Gulbuddin Hekmatyar, a warlord and former prime minister classified as a terrorist by the US and the UN. This, however, has not stopped the world body from joining the bandwagon and initiating its own parleys with the insurgents.

First came former UN special envoy Kai Eide’s secret talks with Taliban leaders during his two-year tenure (from March 2008) in Afghanistan. The process was made public on March 25, 2010, with Staffan de Mistura, special UN representative in Afghanistan, meeting the men of UN-blacklisted Hekmatyar.

We do not know where the process will lead. It will be a strange end to the “war on terror,” however, if it leaves the Taliban and tribal warlords tyrannizing over their wild terrain and threatening peace over a larger South Asian region.

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