Ferrari-Red Communism and Other Thngs

> Date: Sun, 28 Oct 2012 01:01:54 -0400 (EDT)
> From: “Rachel Ehrenfeld, K.D.M. Jensen” > To: rich.kaplan@cox.net
> Subject: Ferrari-Red Communism and Other Thngs
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> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ >
> EWI Digest Posting No. 305, October 28, 2012
>
> POTPOURRI
>
> MIDDLE EAST:
>
> Anti-Semitic Rhetoric from Egypt, Egypt Needs Democracy
>
> Al Qaeda Calls on Muslims to Kidnap Westerners
>
> INDONESIA:
>
> The Political Failure of Indonesian Islamists
>
> BANKING:
>
> UBS Could Cut Up to 10,000 Jobs
>
> COMMODITIES:
>
> Glencore Reshuffle, Mining Risk
>
> CHINA:
>
> Wen Fortune Controversy,
>
> Chinese Debate America’s Next Leader and Its Own,
>
> The Ferrari-Red Communists,
>
> Dirty Money Cost China $3.8 Trillion over the Past Decade
>
> Ferrari-Red Communists
> (see Item 9)
>
> PLEASE NOTE: YOU CAN WATCH THE VIDEO OF EWI’S JULY 9 CAPITOL HILL BRIEFING ON ECONOMIC > THREATS AND WARFARE AT
>
> http://www.youtube.com/playlist?list=PL80F8C53F783A1741&feature=plcp >
> To: Friends
>
> From: Ken Jensen, Rachel Ehrenfeld
>
>
> *
>
> * For more information on the American Center for Democracy (ACD) and its EWI, please
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> EWI BLOG: Kenneth D.M. Jensen: Potpourri: Ferrari-Red Communists and Other Things
> http://EconWarfare.org [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.x4mmtmgab.wus7micab.3290&ts=S0825&p=http%3A%2F%2FEconWarfare.org] > Thanks to Ganesh Sahathevan and Foreign Policy for item contributions.
> Today’s Digest and Blog report a variety of things. Still catching up with all
> that I’ve collected. Again, this doesn’t mean that the material isn’t important.
> The so-called “Frankenstorm” isn’t here yet, but those of you readers who are
> outside the potential high wind area (which now extends almost as far as Detroit!)
> might keep in mind what may happen with the Digest and Blog as a consequence of, > say, a week without power, the which we’re preparing for. > MIDDLE EAST
> Anti-Semitic Rhetoric from Egypt
> Paul Alster on Fox News offers commentary on the effect in Israel of increased anti-Jewish/anti-Israel > rhetoric from Egypt. His hook is the Morsi “Amen” story:
> “The new tone coming out of Egypt – punctuated by President Mohammed Morsi mouthing
> ‘Amen’ to an Imam’s call for the destruction of Israel – is rattling residents of
> the Jewish state, who claim the Obama administration isn’t taking the ratcheted-up > rhetoric seriously.”
> Egypt Needs Democracy, Not Prestige
> Novelist Alaa al-Aswany, writing on al-monitor.com, offers a breath of fresh air
> out of Egypt. Here’s someone who knows what tyranny and democracy are. The topic
> under consideration is legal convictions of critics of the president and the state:
> “This is the difference between tyranny and democracy. If you searched all of Western
> media for the term ‘prestige of the state,’ you won’t find it, because prestige
> is only for the law. However, in Egypt, the term prestige is very common, and is
> always used to mask injustice and tyranny. The state’s prestige means tyranny in
> the lives of the citizens, and the police’s prestige means suppressing citizens,
> beating them, torturing them and fabricating charges against them if they object.
> The judicial system’s prestige means you do not dare to criticize a judge, even
> if he was involved in election fraud or it was proven that he was linked to state
> security. The president’s prestige means that anyone can be tried or imprisoned
> on charges of insulting the president. The idea of ‘prestige’ spreads like an infection.” > And,
> “In the democratic world there is nothing called “prestige of the state” or “national
> symbols.” These are tyrannical terms. In a democratic system the only prestige is
> that of the law. They only symbols of the state are the citizens themselves. Fundamentally,
> the state was established as a means of protecting citizens’ rights and maintaining > their dignity.”
> Al Qaeda Calls on Muslims to Kidnap Westerners
> AFP reports thus:
> “Al-Qaeda leader Ayman al-Zawahiri has urged Egyptians to restart their revolution
> to press for Islamic law and called on Muslims to kidnap Westerners, the SITE Intelligence > Group said Friday.
> “In a video released on jihadist forums and translated by the US monitoring service,
> Zawahiri also lashed out at US President Barack Obama, calling him a liar and demanding > he admit defeat in Iraq, Afghanistan and North Africa.
> “Criticizing the new Egyptian government — led by a president drawn from the Muslim
> Brotherhood — as corrupt, he said a battle is being waged in Egypt between a secular > minority and Muslims seeking implementation of Shariah law.
> “The Egyptian doctor, the former deputy to slain Al-Qaeda leader Osama Bin Laden,
> said these Egyptians want to see their government liberated from US influence, and > Palestinian victory over Israel, SITE reported.”
> INDONESIA
> The Political Failure of Indonesian Islamists
> Writing for Foreign Policy, Endy Bayuni makes the following observations and more > on the political failure of Indonesian Islamists:
> “Indonesian Islamist politicians must be looking with envy at the victory of Islamist
> parties in Egypt and Tunisia in the wake of the Arab Spring. The Islamist parties
> here have contested three democratic elections since Indonesia turned to democracy
> in 1998, but despite their 14-year head start they pooled only 26 percent of the
> votes in the last election in 2009. Their own fragmentation hasn’t helped; the > election spoils are shared by four political parties.
> “Indonesia is often cited in the West as the ideal model that emerging Arab democracies
> should follow. Muslims officially account for more than 85 percent of its 240 million
> people, making Indonesia not only the country with the largest Muslim population,
> but also often cited as the largest democracy among Muslim-majority nations. Some
> would even describe Indonesia as the ‘largest Muslim democracy,’ although this is
> something of a misnomer considering that Indonesia is not an Islamic state (the
> constitution guarantees freedom of religion) and the Islamists are not anywhere > close to ruling the country.
> “Indonesia had its own spring fourteen years ago with the end of three decades of
> Suharto’s authoritarian rule, which had suppressed political Islam. But even with
> their newfound freedom, the Islamists have been struggling to convince the majority
> of Muslim voters to support their causes, which range from implementing sharia to > making Indonesia an Islamic state.
> “The lion’s share of the votes in all three elections (1999, 2004, and 2009) has
> gone to secular and inclusive parties that campaigned on more popular issues, such
> as anti-corruption, economic prosperity, justice, and freedom. Religion is not a > popular political commodity.”
> BANKING
> UBS Could Cut Up to 10,000 Jobs
> The Financial Times reports that
> “UBS will unveil a split of its struggling investment bank next week in a move that > will prompt the loss of up to 10,000 jobs across the Swiss banking group.
> “Switzerland’s biggest bank by assets will bring large parts of its fixed income
> trading business into a non-core unit leaving a reduced investment bank with equities > trading, foreign exchange and advisory roles.”
> FYI, UBS has some 63,000 employees at the moment.
> COMMODITIES
> Glencore Reshuffle
> Jack Frachy in the FT reports on the latest regarding the Glencore-Xstrata merger.
> We’ve been right on the money about the importance of following Glencore, given
> its immense role in minerals trading and is increasing role as a miner and controller
> of oilfields (hence the urge to merge with mining giant Xstrata). The latest story > is this:
> “Ivan Glasenberg is synonymous with Glencore. Since taking over as chief executive
> in 2002, the 55-year-old South African has driven a transformation of the trading
> house from employee-owned middleman to publicly listed operator of mines and oilfields.
> He has also accumulated a personal shareholding of more than 15 per cent, worth > $6.1bn even after a fall in commodity prices.
> But he may soon surrender his position as Glencore’s largest shareholder. If the
> proposed merger with miner Xstrata is approved by shareholders and regulators,
> Mr Glasenberg is likely to be usurped at the top of the shareholder register by
> Qatar Holding, the sovereign wealth fund that is Xstrata’s second-largest shareholder > after Glencore.”
> That last sentence is the possible denouement of the whole affair that we’ve been
> wondering about. If Qatar succeeds here, it will have major clout in the metals-trading > and mining sector.
> Mining Risk
> Reporting for Mining Weekly, Natasha Odendaal notes that
> “Resource nationalism, skills shortages and insufficient infrastructure continued
> to weigh on the global mining sector, advisory firm Ernst & Young (E&Y) head of > mining Abbey Chikane said on Tuesday.
> “The top three mining risks, which have remained in the top ten of E&Y’s yearly
> ‘Business risks facing mining and metals’ report for over five years, resulted in
> reduced or downscaled project pipelines, hampered production output, delayed projects, > increased capital and labour costs and restricted growth options worldwide.
> “Addressing delegates at the Mining Africa Summit 2012, he noted that resource nationalism,
> which ranked at number eight in 2008, had become more prevalent in 2012, as more
> countries continued to mandate beneficiation and enforce export levies, expand
> state or national resource ownership and impose or increase mining royalties or > taxes.”
> One wonders if the long delay of economic recovery will eventual lead to a substantial > reduction in the private ownership of resource producers.
> CHINA
> Wen Fortune Controversy
> By now, you’ve no doubt heard about the New York Times article alleging that the
> family of Wen Jiabao has amassed a fortune of $2.7bn, some of it coming after he
> assumed power ten years ago. The Times says that the family’s business dealings
> include large, profitable investments in state companies and financial backing from > state enterprises and state contracts for family members’ companies.
> As might be expected, China has accused foreign media of trying to discredit the > country:
> “‘Some reports smear China and have ulterior motives,’ said Hong Lei, foreign ministry
> spokesman, in response to a question about the article. Mr Hong also defended the > blocking of the report as a move in accordance with Chinese law.
> “Chinese censors blocked the New York Times website on Friday morning after it published
> a story which details the investments and business dealings of Mr Wen’s family. > Searches for ‘New York Times’ and Mr Wen’s name were also censored.
> “The drastic response underlines how vulnerable the Communist party feels as it
> prepares to transfer power to the next generation of leaders at a key congress in
> just two weeks amid internal strife, growing clamour for reform and criticism of > corruption.
> “The New York Times article appeared just hours before the National People’s Congress,
> China’s rubberstamp parliament, stripped Bo Xilai, the former party secretary of
> the Chongqing who was purged in March, of his status as a delegate, clearing the > way for his prosecution for alleged corruption and a host of other charges.” > The Ferrari-Red Communists
> Der Spiegel Online has produced a long piece on the Chinese economy. There’s nothing
> particularly new about it, except for what it has to say about the relatively new
> shifts in the China-Germany relationship, about which you may have read elsewhere.
> The title “Ferrari-Red Communists” comes from the author’s contention that now > the word “Ferrari” has become a red flag for the Party.
> This stems from the following story:
> “Early one morning, seven months ago, a man driving a Ferrari in Beijing lost control
> over the car, possibly while engaged in sexual activity. The driver, who was allegedly
> naked, was killed immediately, while his female companions reportedly survived,
> but were seriously injured. The police covered up the circumstances of the accident.
> But soon the Internet was filled with rumors that the driver could have been the > son of a prominent individual.
> “In early September, it was apparently no longer possible to conceal the details,
> or someone deliberately leaked them to the public. The dead driver of the Ferrari,
> Ling Gu, 23, was the son of a top official and a graduate of Peking University.
> His father is the long-standing secretary of party leader and President Hu Jintao.
> After the incident, he lost his influential job as head of the main office of the
> Central Committee and was demoted to an insignificant position. He was replaced
> by Li Zhanshu, a close associate of the new ’emperor’ designate. Was the scandal > misused as a tool in the power struggle in Beijing?”
> This is not, of course, the first Italian sportscar-related scandal, but, unlike > the others, it seems to be taken very seriously.
> Dirty Money Cost China $3.8 Trillion over the Past Decade
> This news I knew very well, as it comes from Global Financial Integrity, of which
> I happen to be an Advisory Board member. Rather than including GFI’s recent press
> release, I thought it would be interesting to include the Reuters story on this > news that came to me to from Australia, thanks to Ganesh Sahathevan in Sydney.
> Reuters says that “the lost funds between 2000 and 2011 significantly exceeded the > amount of
> money flowing into China as foreign direct investment. The International Monetary > Fund calculated FDI inflows at roughly $310 billion between 1998 and 2011.” > How was money smuggled out of China? GFI says
> “Trade mispricing was the major method of smuggling money out of China, accounting
> for 86.2 percent of lost funds, the GFI report found. This scheme involves importers
> reporting inflated prices for goods or services purchased. The payments are transferred > out and the excess amounts are deposited into overseas bank accounts. > “Trade mispricing is most common for nuclear reactors, boilers, machinery and > electrical equipment, the report said.
> “The bulk of the money ends up in tax havens – on average, 52.4 percent between
> 2005 and 2011. Much of this money eventually makes its way back to China as foreign > direct investment for a double hit to the economy.”
> A couple of thoughts: While China leaks money like no one else in the “developing
> world,” to use Raymond Baker’s designation, China may want it that way. If there’s
> any country where it’s citizens’ (mostly Party members) private money abroad can
> be turned to the political advantage of the state, it’s China. China’s capitalists
> are hardly independent plutocrats beyond the reach of the state. One might also
> mention that private enrichment of the Party elite is one of the elements that > makes the Chinese political system work.
> No one should take those comments to be an expression of disdain for GFI’s basic
> concern that the international dirty money regime-and particularly transfer pricing-is > hardest on developing countries.
> CONTENTS
> MIDDLE EAST
> ITEM 1: Paul Alster: Israel rattled by rise in anti-Semitic rhetoric from Egypt
> http://www.foxnews.com/world/2012/10/26/israel-rattled-by-rise-in-anti-semitic-rhetoric-from-egypt/
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.ynr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.foxnews.com%2Fworld%2F2012%2F10%2F26%2Fisrael-rattled-by-rise-in-anti-semitic-rhetoric-from-egypt%2F] > ITEM 2: Alaa al-Aswany: Egypt Needs Democracy, Not Prestige
> http://www.al-monitor.com/pulse/politics/2012/10/egypt-prestige-nation.html [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.znr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.al-monitor.com%2Fpulse%2Fpolitics%2F2012%2F10%2Fegypt-prestige-nation.html] > ITEM 3: AFP: Al-Qaeda leader calls on Muslims to kidnap Westerners
> http://www.google.com/hostednews/afp/article/ALeqM5gANprSwhdza_PeEBA02JC9eoWVGg?docId=CNG.d5a0551e7ed5dafcddf47b4ced10401b.c51
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.9nr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.google.com%2Fhostednews%2Fafp%2Farticle%2FALeqM5gANprSwhdza_PeEBA02JC9eoWVGg%3FdocId%3DCNG.d5a0551e7ed5dafcddf47b4ced10401b.c51] > INDONESIA
> ITEM 4: Endy Bayuni: The political failure of Indonesian Islamists
> http://transitions.foreignpolicy.com/posts/2012/10/25/the_political_failure_of_indonesian_islamists
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.8nr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Ftransitions.foreignpolicy.com%2Fposts%2F2012%2F10%2F25%2Fthe_political_failure_of_indonesian_islamists] > BANKING
> ITEM 5: Daniel Schafer: UBS could cut up to 10,000 jobs
> http://www.ft.com/intl/cms/s/0/f8fee112-1f98-11e2-841c-00144feabdc0.html#axzz2AR6490uS
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.7nr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.ft.com%2Fintl%2Fcms%2Fs%2F0%2Ff8fee112-1f98-11e2-841c-00144feabdc0.html%23axzz2AR6490uS] > COMMODITIES
> ITEM 6: Jack Frachy: The Glencore shareholder reshuffle
> http://www.ft.com/intl/cms/s/0/3415ea88-1f36-11e2-b2ad-00144feabdc0.html#axzz2AR6490uS
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.6nr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.ft.com%2Fintl%2Fcms%2Fs%2F0%2F3415ea88-1f36-11e2-b2ad-00144feabdc0.html%23axzz2AR6490uS] > ITEM 7: Natasha Odendaal: Mining Risk
> http://www.miningweekly.com/article/global-mining-risks-holding-back-projects-2012-10-23?goback=.gde_3306057_member_178180030
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.5nr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.miningweekly.com%2Farticle%2Fglobal-mining-risks-holding-back-projects-2012-10-23%3Fgoback%3D.gde_3306057_member_178180030] > CHINA
> ITEM 8: Kathrin Hille: China accuses foreign media over Wen
> http://www.ft.com/intl/cms/s/0/f1401562-1f35-11e2-b2ad-00144feabdc0.html?ftcamp=published_links%2Frss%2Fasiapacific%2Ffeed%2F%2Fproduct#axzz2AR6490uS
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.4nr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.ft.com%2Fintl%2Fcms%2Fs%2F0%2Ff1401562-1f35-11e2-b2ad-00144feabdc0.html%3Fftcamp%3Dpublished_links%252Frss%252Fasiapacific%252Ffeed%252F%252Fproduct%23axzz2AR6490uS]
> ITEM 9: Erich Follath, Wieland Wagner The Ferrari-Red Communists: China at a Crossroads > in Shift from World’s Factory to Industrial Power
> http://www.spiegel.de/international/world/fast-industrializing-china-faces-tough-choices-a-863331.html
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.aor6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.spiegel.de%2Finternational%2Fworld%2Ffast-industrializing-china-faces-tough-choices-a-863331.html] > ITEM 10: REUTERS: Dirty money cost China $3.8 trillion 2000-2011 – report
> http://au.news.yahoo.com/thewest/business/a/-/world/15222813/dirty-money-cost-china-3-8-trillion-2000-2011-report/
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.bor6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fau.news.yahoo.com%2Fthewest%2Fbusiness%2Fa%2F-%2Fworld%2F15222813%2Fdirty-money-cost-china-3-8-trillion-2000-2011-report%2F] > FULL TEXTS
> ITEM 1a: Paul Alster: Israel rattled by rise in anti-Semitic rhetoric from Egypt
> http://www.foxnews.com/world/2012/10/26/israel-rattled-by-rise-in-anti-semitic-rhetoric-from-egypt/
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.ynr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.foxnews.com%2Fworld%2F2012%2F10%2F26%2Fisrael-rattled-by-rise-in-anti-semitic-rhetoric-from-egypt%2F] > Published October 26, 2012
> HAIFA, Israel – The new tone coming out of Egypt – punctuated by President Mohammed
> Morsi mouthing “Amen” to an Imam’s call for the destruction of Israel – is rattling
> residents of the Jewish state, who claim the Obama administration isn’t taking the > ratcheted-up rhetoric seriously.
> Lip reading by the Anti Defamation League and the Middle East Media Research Institute
> confirmed Morsi’s approval of a prayer delivered by influential Imam Futouh Abd
> Al-Nabi Mansour last Friday, in which he stated, “Oh Allah … grant us victory
> over the infidels. Oh Allah, destroy the Jews and their supporters.” Israelis already
> nervous by the rise of Morsi’s Muslim Brotherhood say it is the latest example of > a disturbing trend.
> “There is no question that the rise to power of the Muslim Brotherhood has prompted
> open expressions of anti-Semitism in ways that were never publicly expressed during
> the Mubarak period,” Efraim Zuroff of the Simon Wiesenthal Center’s Israel office
> told Fox News.com. “The Obama administration is treating this far less seriously > than it should be.”
> “The Obama administration is treating this far less seriously than it should be.” > – Efraim Zuroff, of the Wiesenthal Center
> The rise to power this summer of Morsi’s Muslim Brotherhood prompted fears that
> the anti-Israeli, and anti-Semitic party, would be set on a collision course with
> its near neighbor, jeopardizing the peace treaty which has held firm between the
> previously warring nations since 1979. But while the rhetoric has been heated,
> the new Egyptian leader has also proven to be more pragmatic than some expected,
> thus far placing the national interest ahead of his own and his party’s religious > ideology.
> The party that propelled Morsi to power, however, has made no secret of its contempt
> for Judaism and Christianity. When Mohammed Badie in 2010 became leader of the Muslim
> Brotherhood – and consequently President Morsi’s spiritual guide – he stepped up
> his attacks on Israel even while Hosni Mubarak still held an iron grip on power > in Egypt.
> Determined to recapture Jerusalem and the Al Aqsa (Golden Dome) Mosque, Badie told
> his followers, “Every Muslim is obliged to wage Jihad in order to restore it (Jerusalem)
> to Muslim rule”. Of the Jews he added, “Allah would free the world of their filth
> and corruption…Jerusalem will be regained only through Jihad, not through negotiations.”
> Badie’s continued use of inflammatory and racist language against Jews recently
> prompted the Wiesenthal Center, an internationally renowned human rights organization,
> to insist that President Obama condemn the Supreme Guide of the Muslim Brotherhood
> and, if necessary, cut off ties with the organization, until he withdraws his comments.
> No clear condemnation of the organization has yet been issued by the U.S. administration.
> “They are giving Egypt’s new leadership tremendous latitude when it comes to things
> like this, despite the fact that these are the type of issues on which they should
> be held accountable,” Zuroff said. “It was hoped that the Arab spring would bring
> about a rise in democracy, but that simply hasn’t been the case. The undercurrent
> of Islamism from people who down the line would want to apply Sharia law in its > most fundamental sense is a serious cause for concern.”
> In Jerusalem, the Israeli government is without doubt monitoring developments in > Egypt very closely.
> “We have no illusions about the Muslim Brotherhood ideology,” a senior Israeli diplomatic
> source told FoxNews.com. “There is a sense of wariness here and an additional injection
> of uncertainty, but there have been a number of indications since the election that
> are positive. On security issues there has been co-operation and dialogue, and of
> course, President Morsi’s letter to President Shimon Peres – which they originally
> denied sending but have recently admitted they did send – is another positive sign.”
> Morsi’s letter, which introduced the new Egyptian ambassador to Israel, referred
> to Peres as “a great and good friend” and has been ridiculed by some members of
> the Muslim Brotherhood as a sell-out by their leader. A senior figure in the Brotherhood,
> Ahmed el-Hamrawi, reportedly resigned earlier this week in protest at Morsi’s cordial > communication with the Israeli president.
> On Thursday, Egyptian intervention was credited with persuading militants in Hamas-controlled
> Gaza to cease a barrage of rockets into Israel that numbered more than 80 the previous
> day, striking eight houses and causing injuries to Israel civilians. Israel responded
> with targeted airstrikes that killed two Palestinian militants. The Muslim Brotherhood
> is acknowledged as the parent organization and spiritual base from which the radical > Hamas movement originally sprang.
> “We see the rise of Islamism, but so far it is the Egyptian flag and not the Muslim
> Brotherhood flag that is noted next to the new president,” the Israeli source said.
> “The impression, so far, is that Morsi is placing Egypt’s national interest ahead
> of an Islamist agenda and seeking to do what is best for his country, a nation with
> serious economic challenges and security concerns, as was clearly demonstrated by
> the murder of 16 Egyptian soldiers on the Sinai border this summer by Islamic militants > with strong Palestinian/Gaza connections.”
> But in a related point, on Thursday Israeli Vice Prime Minister Moshe Yaalon, speaking
> on Israel radio, voiced rare recent criticism of Egypt’s efforts to rein in Jihadists
> in Sinai, saying, “It’s a question of Egypt deciding to assert its sovereignty against > terrorists… It hasn’t happened yet.”
> Paul Alster is an Israel-based broadcast journalist who blogs at http://www.paulalster.com > and can be followed on Twitter @paulalster
> ITEM 2: Alaa al-Aswany: Egypt Needs Democracy, Not Prestige
> http://www.al-monitor.com/pulse/politics/2012/10/egypt-prestige-nation.html [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.znr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.al-monitor.com%2Fpulse%2Fpolitics%2F2012%2F10%2Fegypt-prestige-nation.html] >
> Mohamed Morsi with Alaa al-Aswany (right)
>
> Friday, Oct 26, 2012
> This happened many years ago. I was a recent graduate, working as a resident physician
> in the oral surgery department at the University of Cairo, training as a surgeon.
> One day I was performing surgery on one of the patients, when a teacher from the
> department – well know for his viciousness – passed by. He waited until I had finished
> the surgery and then said to me: “The way in which you conducted the surgery was > wrong.”
> I entered into a long scientific debate with the teacher, defending my point of
> view, but he insisted that I what I had done was wrong. During the discussion, a
> professor from the department appeared, so I asked him to intervene and decide
> which one of us was correct. I explained my point of view to the professor without
> specifying whose opinion was whose. I was surprised to see him look towards the > teacher and ask him, “What do you think?”
> The teacher told him his opinion and then the professor said, “You are right.”
> I felt defeated and angry. The next day, I took a well-known surgical book and went
> to the professor’s office. As soon as he saw me with the reference book, he said
> sarcastically, “You’re bringing this book to back up your opinion? I know that > you are right.”
> “Yet sir, you told me that my opinion was wrong.”
> The professor looked and me, and then as if he was saying something very wise, said,
> “You are still a resident, he is a well known lecturer who is at least 10 years
> older than you. I can’t tell him that he is wrong in front of you. I must maintain > his prestige.”
> I saw no point in speaking with the professor, so I thanked him and left. A few
> months later I was given the opportunity to travel to the United States to study
> at the University of Illinois, and was fortunate enough to work with one of the
> most important histology professors in the world, Dr. Dennis Weber. We were a group
> of masters and doctoral students doing research and were supervised by Dr. Weber.
> After a month, he brought us together and said, “Listen up. I want to hear your
> ideas. If there is anything annoying you at work or if you think that I have made > a mistake please tell me.”
> The situation was more than I could comprehend, so I delighted in my silence. However,
> my colleagues intensified their criticism of Dr. Weber, and each one of them demonstrated
> their criticisms by giving practical examples from our research work. The great
> scientist remained calm, recording all of their observations. At the end, he responded
> to each criticism one by one, and explained the work plan to us in detail. He admitted
> that there were some shortcomings, but vowed to fix them. He then thanked us and
> ended the meeting. I spent days observing Dr. Weber’s relationship with the students
> who had criticized him harshly, and discovered that his kind treatment of them had > not changed.
> I remember these two incidents together. At Cairo University, the professor is always
> right, even if he makes a mistake, in order to preserve his prestige in front of
> the young doctors. At the University of Illinois, an important professor asks for
> negative feedback regarding his work, and then listens, explains, admits to his > shortcomings and promises to fix them.
> This is the difference between tyranny and democracy. If you searched all of Western
> media for the term “prestige of the state,” you won’t find it, because prestige
> is only for the law. However, in Egypt, the term prestige is very common, and is
> always used to mask injustice and tyranny. The state’s prestige means tyranny in
> the lives of the citizens, and the police’s prestige means suppressing citizens,
> beating them, torturing them and fabricating charges against them if they object.
> The judicial system’s prestige means you do not dare to criticize a judge, even
> if he was involved in election fraud or it was proven that he was linked to state
> security. The president’s prestige means that anyone can be tried or imprisoned
> on charges of insulting the president. The idea of “prestige” spreads like an infection.
> After Egypt found itself with a Muslim Brotherhood president, a sense of prestige
> was transferred to leaders of the Brotherhood so that they began dealing with the
> people with superiority and arrogance. A few days ago Essam el-Erian, a Brotherhood
> leader, was speaking on TV with one of Egypt’s most renowned anchorwomen, Gihan
> Mansour. When the debate heated up, Erian accused Mansour of bribery and said that > she would be arrested for attacking the Brotherhood.
> In the democratic world there is nothing called “prestige of the state” or “national
> symbols.” These are tyrannical terms. In a democratic system the only prestige is
> that of the law. They only symbols of the state are the citizens themselves. Fundamentally,
> the state was established as a means of protecting citizens’ rights and maintaining > their dignity.
> In a tyrannical society, the ruler is the symbol of the state because he is like
> the chieftain of a tribe. He knows our own interests better than we do, and decides
> on our behalf and commands us. Thus, we obey, and often he is unjust and corrupt,
> but we do not dare to hold him accountable, because that would be infringing on > the prestige of the state and challenging national symbols.
> In democratic countries, the ruler is a servant of the people in every sense of
> the word. The simplest citizen – even a street sweeper – has the right to hold the
> president accountable and to criticize him without being punished. In fact, in democratic
> countries the law protects normal citizens from libel and slander, yet does not
> protect the head of state. If you said to your neighbor, in front of witnesses,
> “You’re a liar and a hypocrite,” your neighbor could file charges and receive compensation.
> However, if you appeared on television and said that the prime minister is a liar > and a hypocrite, you will not be punished by the law.
> The law allows for anyone to criticize government officials – regardless of how
> harsh or biting that criticism may be – in order to preserve public interests. In
> Egypt, it appears that President Morsi enjoys trying and imprisoning Egyptians on
> charges of insulting the president. There is an Egyptian citizen named Bishoy al-Beheiri
> who will spend two years in prison because he insulted President Morsi on Facebook. > It’s as though the president is someone sacred and untouchable.
> President Morsi himself grew up within the Muslim Brotherhood, an organization whose
> members grow up with a sense of absolute obedience to the supreme guide and kiss
> his hand. We saw in the video recording how members of the Brotherhood crowded
> around until the lucky one among them was able to put the shoes on their pure, precious
> leader’s feet. Whoever is raised in this type of atmosphere will be able to endure > a culture of tyranny.
> After President Morsi succeeded in removing the military council from power, he
> invited a number of public figures to the presidential palace. I was one of them.
> I asked the president a specific question: Why did you honor Field Marshall Tantawi
> and Lt. Gen. Anan, when revolutionary forces are demanding that they be tried for
> the massacres committed during their era? Is your honoring them some sort of agreement > that ensures their safe exit so as to guarantee that they will not prosecuted?
> President Morsi answered enthusiastically: I want to assure you all that, following
> the revolution, there is no person immune to prosecution, not even Field Marshall > Tantawi or Lt. Gen. Anan.
> This is what the president said in front of many witnesses and, as usual, he did
> the opposite of what he said. Last week, there were many statements made against
> Tantawi and Anan, accusing them of unlawful gains and inflated wealth – given that
> they are public employees with a fixed salary. They were also accused of being responsible
> for the deaths of Egyptians in the massacres that occurred during their reign. These
> are all serious accusations that require legal prosecution, but the army issued
> a statement condemning the referral of Tantawi and Anan to trial, considering it
> to be an infringement upon the prestige of the armed forces and an insult to national > symbols.
> President Morsi was overcome with fear, and the next day made an announcement: He
> would never allow insults directed at the army, either towards its current or its
> past leaders. The president also stressed that he wanted to reassure the military
> that its allocation, budget and projects would remain untouched. The rationale behind
> the army’s statement, which objected to the prosecution of Tantawi and Anan, simply > means that Egyptians are not equal before the law.
> As long as you are a senior officer in the army, you have the right to do whatever
> you please, and no one can hold you responsible for your actions, because you are
> a symbol of the nation. Thus, any army commander has the right to order his soldiers
> to kill protesters, throw their bodies in dumpsters, pulverize them with armored
> vehicles, violate the honor of women and throw them in the streets. Moreover, none
> of us have the right to hold them responsible for these crimes, in order to maintain
> the prestige of the military. Any army commander has the right to acquire palaces,
> buy extensive amounts of land and accumulate a vast wealth, yet no one can dare
> ask him where all of that came from, for he has become a national symbol that cannot > be questioned.
> In Egypt – a country where half of the population lives below the poverty line –
> the armed forces set up projects costing billions of dollars that we know nothing
> about. These large amounts of money are influencing army leaders, but we don’t know
> anything about the exact amounts, their sources or how they are being distributed. > It is as if the army has become a state within a state.
> Our respect and pride for the armed forces is steady and deep, but protecting those
> who make mistakes merely because they are in the military is despotic behavior that
> should not be accepted in a respectable state. If President Morsi believes that
> trying Tantawi and Anan undermines the prestige of the army, then why did he agree
> to the trial of Ahmed Shafiq, who was an air force commander and thus considered
> to be a national symbol like Tantawi? If this is Morsi’s logic then why does he
> support the trial of Mubarak? Is he too not a national symbol? Is is okay to try
> Gamal and Alaa Mubarak as well? Are they not considered national symbols (albeit > small ones), just like their father?
> From now on, let us learn that there are no national symbols. The only symbol of
> the nation is the citizen. The state does not have prestige; rather, it derives
> its prestige from the force of law, not from protecting murderers and the corrupt.
> The image of President Morsi is now clearer than ever. Morsi is a man who makes
> promises but never fulfills them. He says nice things and then commits ugly acts.
> President Morsi is intent on maintaining the Muslim Brotherhood as an organization
> outside of the law and above accountability. We know nothing about the Brotherhood’s
> budget, and don’t know if they receive funding from within Egypt or from abroad.
> We do not even know if President Morsi makes decisions by himself, or is he receiving
> instructions from the Brotherhood’s supreme guide, who may well be the de facto > ruler of Egypt.
> It is now clear to us what is the most dangerous. The president made an agreement
> with the military council, ensuring the latter’s safe exit and guaranteeing that
> its members would not be prosecuted. Thus, the president ignored the blood of the
> martyrs and gave amnesty to those who do not deserve it. Once again the Brotherhood
> had abandoned the revolution, and sold the revolution’s principles for the sake > of power.
> The Egyptian revolution was carried out for the sake of truth and justice. The revolution
> will not allow anyone to be above the reach of the law, no matter his position in
> the government. The revolution will continue until it has fully achieved its objectives. > Democracy is the solution.
> ITEM 3a: AFP: Al-Qaeda leader calls on Muslims to kidnap Westerners
> http://www.google.com/hostednews/afp/article/ALeqM5gANprSwhdza_PeEBA02JC9eoWVGg?docId=CNG.d5a0551e7ed5dafcddf47b4ced10401b.c51
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.9nr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.google.com%2Fhostednews%2Fafp%2Farticle%2FALeqM5gANprSwhdza_PeEBA02JC9eoWVGg%3FdocId%3DCNG.d5a0551e7ed5dafcddf47b4ced10401b.c51]
> WASHINGTON – Al-Qaeda leader Ayman al-Zawahiri has urged Egyptians to restart their
> revolution to press for Islamic law and called on Muslims to kidnap Westerners, > the SITE Intelligence Group said Friday.
> In a video released on jihadist forums and translated by the US monitoring service,
> Zawahiri also lashed out at US President Barack Obama, calling him a liar and demanding > he admit defeat in Iraq, Afghanistan and North Africa.
> Criticizing the new Egyptian government — led by a president drawn from the Muslim
> Brotherhood — as corrupt, he said a battle is being waged in Egypt between a secular > minority and Muslims seeking implementation of Shariah law.
> The Egyptian doctor, the former deputy to slain Al-Qaeda leader Osama Bin Laden,
> said these Egyptians want to see their government liberated from US influence, > and Palestinian victory over Israel, SITE reported.
> “The battle isn’t over, but it has started,” Zawahiri said, urging “every sincere
> person in Egypt” to “wage a popular campaign to incite and preach in order to complete > the revolution, which was aborted.
> “The revolution in Egypt must continue and the Muslim Ummah must offer sacrifices
> until it achieves what it wants and until it snatches from the corrupt forces … > the dignity and honor of Egypt.”
> Massive protests erupted on January 25, 2011 and toppled former Egyptian president
> Hosni Mubarak after more than 30 years of iron-fisted rule. He was replaced by the > Islamist Mohamed Morsi after elections earlier this year.
> Zawahiri said liberating Omar Abdul Rahman, an Egyptian cleric jailed in the United
> States for his role in the 1993 World Trade Center attack, and inmates at the US > prison at Guantanamo Bay was an “obligatory duty for every Muslim.”
> “I call upon Muslims to capture citizens of the countries that wage wars against > Muslims,” he said.
> “Our captives or Sheikh Omar Abdul Rahman will not be liberated except through force, > for it is the only language that they understand.”
> In that vein, he made a reference to Warren Weinstein, a relief worker with USAID > who was captured in Lahore, Pakistan in August 2011.
> Zawahiri also called Obama a “professional liar.”
> “Obama must admit he and his allies are standing in the defeated line, and that
> Osama bin Laden, may Allah have mercy on him, and the rest of the Mujahedeen and
> the Muslim Ummah are standing in the victorious line, whether anyone likes it or > not.”
> In a second, 58-minute video, also summarized and translated by SITE, Zawahiri called
> upon Egyptians to take part in protests “against the Israeli embassy and against
> normalization and the peace treaty with Israel, and against the Israeli occupation
> of the land of Palestine, and against any concession and surrender to it, and against > every siege in Gaza.”
> He also asked Morsi — whom he described as a president with no authority — specific
> questions, including what his positions were on “the jihad to liberate Palestine,” > as well as Sharia rule and Egypt’s participation in the US “war on terror”. > ITEM 4a: Endy Bayuni: The political failure of Indonesian Islamists
> http://transitions.foreignpolicy.com/posts/2012/10/25/the_political_failure_of_indonesian_islamists
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.8nr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Ftransitions.foreignpolicy.com%2Fposts%2F2012%2F10%2F25%2Fthe_political_failure_of_indonesian_islamists] > Thursday, October 25, 2012
> Indonesian Islamist politicians must be looking with envy at the victory of Islamist
> parties in Egypt and Tunisia in the wake of the Arab Spring. The Islamist parties
> here have contested three democratic elections since Indonesia turned to democracy
> in 1998, but despite their 14-year head start they pooled only 26 percent of the
> votes in the last election in 2009. Their own fragmentation hasn’t helped; the > election spoils are shared by four political parties.
> Indonesia is often cited in the West as the ideal model that emerging Arab democracies
> should follow. Muslims officially account for more than 85 percent of its 240 million
> people, making Indonesia not only the country with the largest Muslim population,
> but also often cited as the largest democracy among Muslim-majority nations. Some
> would even describe Indonesia as the “largest Muslim democracy,” although this is
> something of a misnomer considering that Indonesia is not an Islamic state (the
> constitution guarantees freedom of religion) and the Islamists are not anywhere > close to ruling the country.
> Indonesia had its own spring fourteen years ago with the end of three decades of
> Suharto’s authoritarian rule, which had suppressed political Islam. But even with
> their newfound freedom, the Islamists have been struggling to convince the majority
> of Muslim voters to support their causes, which range from implementing sharia to > making Indonesia an Islamic state.
> The lion’s share of the votes in all three elections (1999, 2004, and 2009) has
> gone to secular and inclusive parties that campaigned on more popular issues, such
> as anti-corruption, economic prosperity, justice, and freedom. Religion is not a > popular political commodity.
> The large electoral victories in the post-Arab Spring elections give the new rulers
> in Egypt and Tunisia a relatively free hand in pushing their Islamist agenda. Turkey, > another Muslim-majority democracy, is also ruled by an Islamist party.
> In Indonesia, all four Islamist parties represented in the House of Representatives
> squeezed themselves into power by joining the coalition government under President
> Susilo Bambang Yudhoyono. But with minimal voter support, the Prosperous Justice
> Party (PKS), the National Mandate Party (PAN), the United Development Party (PPP),
> and the National Awakening Party (PKB) are treated as junior partners in the coalition,
> leaving them little room to push their Islamist reforms. The PKS, which shares the
> same ideology as the Muslim Brotherhood in Egypt, is the largest of the four, winning
> 7.8 percent of the votes in 2009 and now has three seats in Yudhoyono’s cabinet. > The other Islamist parties have two seats each.
> Any suggestion that the election victories for Islamists in the emerging democracies
> in North Africa would somehow rub off on Indonesian voters seems more like a pipe > dream.
> Recent opinion polls indicate that the Islamist parties may be further marginalized
> in the next elections in 2014, with none making it in the top five most popular
> parties among voters. The field is still dominated by parties that project themselves
> as nationalists and inclusive such as President Yudhoyono’s Democratic Party, the
> Golkar Party, and the Indonesian Democratic Party of Struggle (PDI-P). Even two
> new and up-and-coming parties, the Greater Indonesia Movement Party (Gerindra) and
> the National Democratic Party (Nasdem), are more popular among voters than the Islamist > parties.
> Some westerners, who tend to be more concerned about the rise of the Islamists in
> Arab countries and what this means for the Israel-Palestinian conflict, ask why
> the secular Arab parties couldn’t have prevailed the way secularists have in Indonesia.
> In Indonesia, among the Islamists, the question tends to be posed the other way
> around: Why haven’t the Indonesian Islamist parties managed to triumph like their > Arab brothers, given that 85 percent of the people are Muslims?
> One factor is the constant infighting that has dogged the Islamists. They may share
> the same ideology, but not everyone is on board with the move to sharia or the transformation
> of Indonesia into an Islamic state. The PKB and the PAN, for example, are trying
> to project themselves as inclusive parties and count non-Muslims among their constituents.
> They are considered Islamic because they are backed primarily by major Islamic organizations,
> respectively the Nahdlatul Ulama and Muhammadiyah, but have never really pushed > the Islamist political lines like the other two.
> Initiatives to unite the Islamist parties into one single big coalition to contest
> the elections tend to crash as soon as the talk turns to the issue of leadership.
> Everyone insists on leading the party, and more importantly, on securing the presidential > nomination for one of their own leaders.
> Corruption is another major factor that affects their public image, with voters
> likely to punish the Islamist parties more harshly than the equally scandal-ridden
> secular parties. The simple reason is that the Islamists come across as greater
> hypocrites when their foibles are juxtaposed against their supposedly moral messages.
> More important, however, is the voting behavior of Indonesians. While most Indonesians
> of all religious persuasions run their lives observing religious rituals and traditions,
> not everyone agrees in mixing religion and politics. Some may be persuaded that
> they are obliged by their religion to vote for Islamist parties, but their number
> has not been large enough to give the Islamists enough political power to run the > country.
> The nearest they ever come was in Indonesia’s first democratic election in 1955,
> when together they pooled more than 40 percent. An informal coalition between the
> two largest Islamist parties, Masyumi and Nahdlatul Ulama, did not last long as
> each had a different agenda. The Islamist parties were suppressed throughout the
> Suharto years, but when they were allowed to contest elections in a more democratic
> Indonesia after 1999, they learned that conditions have changed and that a more
> democratic and educated society has even less appetite for mixing politics and religion.
> For now and the foreseeable future, the Islamist parties will continue to play second > fiddle to the secular and inclusive parties in Indonesia.
> ITEM 5a: Daniel Schafer: UBS could cut up to 10,000 jobs
> http://www.ft.com/intl/cms/s/0/f8fee112-1f98-11e2-841c-00144feabdc0.html#axzz2AR6490uS
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.7nr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.ft.com%2Fintl%2Fcms%2Fs%2F0%2Ff8fee112-1f98-11e2-841c-00144feabdc0.html%23axzz2AR6490uS] > Last updated: October 26, 2012 8:41 pm
> UBS will unveil a split of its struggling investment bank next week in a move that > will prompt the loss of up to 10,000 jobs across the Swiss banking group.
> Switzerland’s biggest bank by assets will bring large parts of its fixed income
> trading business into a non-core unit leaving a reduced investment bank with equities > trading, foreign exchange and advisory roles.
> The non-core operation will be headed by Carsten Kengeter, current co-head of the
> investment bank, and will be wound down over time, two people close to the situation > said.
> The split will lead to another reduction in risk-weighted assets of up to ?100bn
> and will trigger the loss of thousands of jobs in the group’s back office over > the next few years.
> The job cuts will amount to almost a sixth of the bank’s workforce of 63,500 at
> the end of June. They will not happen all at once and the precise number is still
> unclear as the exact impact on back-office functions has not yet been determined.
> It comes on top of another – still ongoing – programme announced last year to cut > 3,500 jobs.
> The move highlights how banks around the world are trying to adapt to a radically
> changed regulatory and market environment that has left them with lower returns
> and much higher capital needs for certain business areas and national subsidiaries.
> The strategy, hammered out in several executive board meetings in New York this
> week and set to be announced next Tuesday, will trigger a large reduction of complexity
> and costs in the bank’s support functions such as its information technology department.
> “There were several options on the table but UBS has decided on the most radical > one,” one person familiar with the plan said.
> The plan was devised by Sergio Ermotti, who came in a chief executive last year
> in the wake of an alleged rogue trading scandal that left UBS with a $2.3bn loss > in the investment bank.
> The restructuring is a drastic next step in a strategy unveiled almost a year ago
> by Mr Ermotti to give UBS’s often troubled investment bank a support role for the > bank’s market-leading wealth management.
> The unit had brought the Swiss lender to its knees during the financial crisis,
> forcing UBS to retrench faster and earlier from the area than most of its rivals.
> The investment bank has been drastically trimmed in the past 12 months by Mr Kengeter,
> who as chief executive of the unit cut its risk weighted assets by half and pushed > through a retreat from a number of fixed income trading areas.
> This summer, Mr Ermotti brought in dealmaker Andrea Orcel to become co-head of the
> investment bank alongside Mr Kengeter. Mr Orcel will take sole charge of the remaining > investment bank.
> UBS’s investment bank is trailing far behind the 26 per cent return on allocated
> equity that the bank is achieving in core areas such as wealth and asset management. > ITEM 6a: Jack Frachy: The Glencore shareholder reshuffle
> http://www.ft.com/intl/cms/s/0/3415ea88-1f36-11e2-b2ad-00144feabdc0.html#axzz2AR6490uS
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.6nr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.ft.com%2Fintl%2Fcms%2Fs%2F0%2F3415ea88-1f36-11e2-b2ad-00144feabdc0.html%23axzz2AR6490uS] > October 26, 2012 8:37 am
> Ivan Glasenberg is synonymous with Glencore. Since taking over as chief executive
> in 2002, the 55-year-old South African has driven a transformation of the trading
> house from employee-owned middleman to publicly listed operator of mines and oilfields.
> He has also accumulated a personal shareholding of more than 15 per cent, worth > $6.1bn even after a fall in commodity prices.
> But he may soon surrender his position as Glencore’s largest shareholder. If the
> proposed merger with miner Xstrata is approved by shareholders and regulators,
> Mr Glasenberg is likely to be usurped at the top of the shareholder register by
> Qatar Holding, the sovereign wealth fund that is Xstrata’s second-largest shareholder > after Glencore.
> As revealed in the latest version of the scheme documents, published on Thursday,
> Qatar Holding would own 8.45 per cent of the new company if the merger goes ahead
> on the current terms. Mr Glasenberg would have a fractionally smaller stake, with > 8.27 per cent.
> That is the result of Mr Glasenberg’s eleventh-hour decision last month to bow to
> Qatar’s demands for a higher price and raise his offer from 2.8 to 3.05 Glencore > shares per Xstrata share.
> The equation is finely balanced. Mr Glasenberg may succeed in retaining – or regaining
> – his place as the largest shareholder if he continues to reinvest his dividends
> in Glencore shares as he has done in the past and Qatar does not increase its stake > any further.
> And the exact size of Qatar’s shareholding will depend on whether or not a small > number of Xstrata options that it has sold are exercised.
> But even if he is overtaken as Glencore’s largest shareholder, Mr Glasenberg, who
> joined the firm in 1984 as a trainee in Johannesburg and embodies the shrewd qualities > that have made the group’s traders famous, is unlikely to lose control.
> With the new deal, he will become chief executive of the merged company within six > months of completion.
> Moreover, many of the largest shareholders will be his long-standing lieutenants.
> While Blackrock, the fund manager, would hold a 4.41 per cent stake according to
> the documents published on Thursday, most of the next largest shareholders would > be senior Glencore executives.
> Daniel Maté and Telis Mistakidis, co-heads of copper, lead and zinc, would own 3.13
> and 3.11 per cent of the new company, respectively. Tor Peterson, head of coal,
> would have a 2.75 per cent stake, and Alex Beard, head of oil, would own 2.40 per > cent.
> ITEM 7a: Natasha Odendaal: Mining Risk
> http://www.miningweekly.com/article/global-mining-risks-holding-back-projects-2012-10-23?goback=.gde_3306057_member_178180030
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.5nr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.miningweekly.com%2Farticle%2Fglobal-mining-risks-holding-back-projects-2012-10-23%3Fgoback%3D.gde_3306057_member_178180030] > 23rd October 2012
> JOHANNESBURG (miningweekly.com) – Resource nationalism, skills shortages and insufficient
> infrastructure continued to weigh on the global mining sector, advisory firm Ernst > & Young (E&Y) head of mining Abbey Chikane said on Tuesday.
> The top three mining risks, which have remained in the top ten of E&Y’s yearly ‘Business
> risks facing mining and metals’ report for over five years, resulted in reduced
> or downscaled project pipelines, hampered production output, delayed projects, increased > capital and labour costs and restricted growth options worldwide.
> Addressing delegates at the Mining Africa Summit 2012, he noted that resource nationalism,
> which ranked at number eight in 2008, had become more prevalent in 2012, as more
> countries continued to mandate beneficiation and enforce export levies, expand
> state or national resource ownership and impose or increase mining royalties or > taxes.
> Mining companies were weighing up the risk-reward ratio and would take into account > any potential policy changes when developing future project plans, he said.
> While beneficiation could be a possible alternative of nationalisation, the high
> cost of establishing refineries and smelters; shortages of power, infrastructure > and skilled labour and limited returns hampered beneficiation efforts.
> South Africa, Zimbabwe, Indonesia, Brazil and Vietnam, besides others, had developed > beneficiation strategies.
> The E&Y report, released earlier this year, suggested mining companies continue
> to engage with governments, develop an understanding of the value a project could
> bring to the host government and negotiate appropriate trade-offs that preserve > the value to both mining companies and governments.
> This included encouraging governments to take a broader view of the return from
> natural resource development, as well as negotiating tax incentives and offsets.
> Cost inflation and maintaining a social licence, which had also featured in the
> E&Y business risk report’s top ten for the past five years, ranked number four and
> six respectively in 2012. Sharing the benefits entered the list at number nine. > ITEM 8a: Kathrin Hille: China accuses foreign media over Wen
> http://www.ft.com/intl/cms/s/0/f1401562-1f35-11e2-b2ad-00144feabdc0.html?ftcamp=published_links%2Frss%2Fasiapacific%2Ffeed%2F%2Fproduct#axzz2AR6490uS
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.4nr6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.ft.com%2Fintl%2Fcms%2Fs%2F0%2Ff1401562-1f35-11e2-b2ad-00144feabdc0.html%3Fftcamp%3Dpublished_links%252Frss%252Fasiapacific%252Ffeed%252F%252Fproduct%23axzz2AR6490uS] > Last updated: October 26, 2012 2:07 pm
> China has accused foreign media of trying to discredit the country as the Communist
> party braces itself against the fallout from a New York Times report that alleges
> the family of premier Wen Jiabao amassed US$2.7bn in assets partly after he rose > to power.
> “Some reports smear China and have ulterior motives,” said Hong Lei, foreign ministry
> spokesman, in response to a question about the article. Mr Hong also defended the > blocking of the report as a move in accordance with Chinese law.
> Chinese censors blocked the New York Times website on Friday morning after it published
> a story which details the investments and business dealings of Mr Wen’s family. > Searches for ‘New York Times’ and Mr Wen’s name were also censored.
> The drastic response underlines how vulnerable the Communist party feels as it prepares
> to transfer power to the next generation of leaders at a key congress in just two
> weeks amid internal strife, growing clamour for reform and criticism of corruption.
> The New York Times article appeared just hours before the National People’s Congress,
> China’s rubberstamp parliament, stripped Bo Xilai, the former party secretary of
> the Chongqing who was purged in March, of his status as a delegate, clearing the > way for his prosecution for alleged corruption and a host of other charges.
> The New York Times’ English-language and Chinese-language sites were blocked in
> China less than two hours after the story was published online. The move echoes
> Beijing’s treatment of Bloomberg after the newswire published an article on June
> 29 describing the wealth accumulated by relatives of Xi Jinping, vice president > and the man expected to succeed Hu Jintao as party chief and president.
> Bloomberg’s site remains blocked in China in an exception to Beijing’s treatment
> of most other mainstream foreign news websites. The Chinese authorities phased
> out blanket blockages of many western news websites several years ago and normally
> only blocks individual sites or even individual articles for short periods of time.
> The New York Times story details how several members of Mr Wen’s family, including
> his mother, his wife and his son have grown wealthier over the past 20 years, and
> how some of his relatives’ business operations grew stronger after he reached the > centre of political power in Beijing 10 years ago.
> It alleges that Mr Wen’s relatives amassed assets worth at least $2.7bn, although
> it does not include any hint that the premier himself has accumulated wealth, benefited > personally from his family’s riches or helped them obtain them.
> But the New York Times says that the family’s business dealings included large,
> profitable investments in state companies and financial backing from state enterprises > and state contracts for family members’ companies.
> The report could damage Mr Wen’s standing in the party. Although he is set to retire
> after next month’s congress, he has been one of the most important proponents of
> political reform in the party and is likely to seek to retain influence in driving > that agenda after he steps down, as have many other Chinese politicians.
> ITEM 9a: Erich Follath, Wieland Wagner: The Ferrari-Red Communists: China at a Crossroads > in Shift from World’s Factory to Industrial Power
> http://www.spiegel.de/international/world/fast-industrializing-china-faces-tough-choices-a-863331.html
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.aor6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fwww.spiegel.de%2Finternational%2Fworld%2Ffast-industrializing-china-faces-tough-choices-a-863331.html] > 10/26/2012
> The Chinese are seen as victors in the global financial crisis, and as both a hope
> and a threat to German industry. Beijing wants to be more than the world’s factory.
> But the country’s economic engine is showing signs of stalling and it is uncertain > what direction it will take in the future.
> A visit with Mr. Huang, one of the richest and most controversial men in the People’s
> Republic of China, is full of surprises. Take, for example, the four pairs of climbing
> boots lined up like exhibits behind the door to his office. “I was at the South
> Pole and North Pole, and twice on Mt. Everest with these,” says Huang, pointing
> proudly to a series of photos that serve as proof of his adventures. There are Buddha
> statues and various animals in the adjacent rooms, including rhesus monkeys and
> pygmy rabbits in cages, as well as small sharks swimming in circles in a large aquarium > leaning against a wall.
> “I love nature,” says Huang Nubo, 56, a businessman with an estimated net worth
> of at least $1 billion (?772 million). The founder and chairman of the Beijing Zhongkun
> Investment Group, Huang discovered a market niche: He builds resorts with an emphasis
> on sustainable design. His company benefits from the new wanderlust and “green” > consciousness of the affluent Chinese upper and middle classes.
> He tells the short version of life story while a Siam cat purrs on his lap. He was
> orphaned at 13, and in 1960 his father committed suicide after a quarrel with a
> party secretary. His mother later died of grief. He attended Beijing University,
> joined the Communist Party to further his career and became an official in the
> party’s propaganda division. Then he withdrew from politics and founded his company.
> “As an entrepreneur, you have more freedom than you do in politics, and you can
> usually move around more,” says Huang, whose party connections certainly didn’t
> hurt his growing business. But, as he points out, “Chinese society has developed
> unevenly, which isn’t good. Too many people are losing out.” This is why Huang
> gives a substantial portion of his profits to the needy. With charitable donations
> of about $5 million a year, he is seen as one of the country’s most generous philanthropists. > Distrust over Global Buying Spree
> Huang has trouble understanding why his latest project is so controversial. “I’m
> hurt by the mistrust with which I and the entire Chinese nation were met.” He is
> talking about Iceland and, more specifically, about an almost virgin piece of land
> in the northeastern part of the island, complete with waterfalls and snow-covered
> peaks, called Grimsstadir a Fjöllum. Huang fell in love with this wildly romantic
> stretch of wilderness during a visit to Iceland. He wanted to acquire 30,639 hectares
> (about 120 square miles) of land and invest about $200 million in the property.
> The plans included a 120-room hotel, a golf course and a riding facility, which > could all be reached via a new airport built specifically for the site.
> Some of the public in Iceland, a NATO country, saw the potential deal as a sellout
> and even envisioned looming geopolitical problems. One commentator even likened
> the entrepreneur to Dr. No, the villain of the 1962 James Bond film of the same
> name. Huang’s party connections were brought up, to support the theory that it was
> merely a cover for sending an agent to Iceland. Many had their suspicions about
> the “noticeable” proximity of the Grimsstadir site to a deep-water port. Was this
> man really working for the Communist Party and planning to build a base for Chinese > polar ambitions?
> Huang has lost his initial enthusiasm for the Iceland project, and now he is retreating
> more and more into his third passion, next to making money and conquering nature:
> writing poetry. Several volumes of his prizewinning verses have already been published.
> At night, after the employees have gone home, he sits among his sharks and pygmy
> rabbits, writing verses like: “Whose smiling face would be no mask / And whose > heaven no exile.”
> The fears of some Icelanders make sound like paranoia, but they are not unfounded.
> China and its entrepreneurs are acquiring all kinds of assets all over the world,
> and in many cases their actions are strategic in nature, including the acquisition
> of farmland in Mozambique, copper mines in Afghanistan and ports in Greece. China
> is on a global buying spree, and it sees the current economic crisis in Europe and
> the United States as an historic opportunity to energetically press ahead with its
> offensive. The financial services firm PricewaterhouseCoopers estimates that China’s
> so-called red capitalists spent $23.9 billion on shares in foreign companies in
> the first half of 2012, or three times as much as in the same period last year.
> The commodities sector is a case in point. In Mid-July, the state-owned energy giant
> Sinopec spent $1.5 billion for almost half of Canadian company Talisman Energy’s
> oil and gas rights in the North Sea. Almost concurrently, CNOOC, another Chinese
> energy giant, bought the Canadian firm Nexen for more than $15 billion. Planners
> in Beijing hope that these deep-water drilling specialists will help them achieve
> the breakthrough in industrial policy that they need to expand in the Pacific. CNOOC
> is the main Chinese player in oil and gas exploration in disputed waters that are
> also being claimed by neighbors Vietnam, the Philippines, Malaysia and Japan, with > which there is even talk of possible war over the claims.
> China’s Engine Begins to Stall
> The one side of the Chinese economy is characterized by an unbroken and even growing
> thirst for expansion. The other side is the domestic economy, which hasn’t been
> doing very well for some time. There is even talk of a “bubble” that could burst,
> and of the “Chinese party” coming to an end as a result. China’s engine is beginning
> to stall, with the economy falling well short of the 10-percent average annual growth
> rates in the last decade. In the months from July to September, the economy grew
> by only 7.4 percent, and it was the seventh quarter in a row in which the growth
> rate declined. In July, exports grew by only 1 percent before increasing again.
> While these numbers sound impressive in times of European stagnation and American
> record debt levels, they are disconcerting for the People’s Republic, because other
> indicators are also disappointing at the moment. The Shanghai Stock Exchange Composite
> Index fell to a three-year low, and growth in industrial production fell short of
> expectations. Entire industries are suffering from weak demand. With labor costs
> on the rise, industries like shipbuilding and small manufacturing of products like > Christmas decorations are no longer as lucrative as they once were.
> The country is experiencing a dual set of developments. Its top companies, like
> computer maker Lenovo, machine builders Sany and Huawei, a company that experts
> believe has just overtaken Sweden’s Ericsson as the global market leader in telecom
> equipment manufacturing, are celebrating their triumph. Meanwhile, other industrial > firms must largely reinvent themselves in a painful process.
> China is shedding its image as the world’s factory. The current economic model is
> “urgently in need of change,” states a highly critical March report by the World
> Bank — which, astonishingly enough, was co-produced with the Chinese government.
> The report was presented by World Bank President Robert Zoellick. According to the
> report, China will jeopardize its previous successes unless it implements fundamental
> reforms, and it will have to curb the near-monopolistic influence of state-owned
> companies and curtail the power of those interest groups that benefit from “special
> relationships with decision-makers.” The report concludes that “China has reached > another turning point.”
> Part 2: A New Era for China
> China’s current problems are in full evidence in Dongguan, a major city in the Pearl
> River Delta and home to the world’s largest shopping mall. Very few consumers can
> be found in the 660,000-square-meter New South China Mall, and even most of the
> stores along the central, Venice-like Canal Grande have gone out of business. Chinese
> gondoliers dose in the evening sun, and the stone “San Francisco Bridge” looks deserted.
> The mall was planned without taking the real needs of the population into account,
> and now it has to be reconfigured. Specialization instead of megalomania is the
> order of the day, as it is throughout Dongguan, which was the country’s third-largest > exporting city, falling well behind Shanghai and Shenzhen.
> Until recently, armies of migrant workers were making vast quantities of cheap consumer
> products, from watches to mobile phones, for the European and US markets. They worked
> and lived in a vast thicket of factories and dormitories in the southern Chinese > exporting province of Guangdong, near Hong Kong.
> But now the Dongguan model is fast becoming outdated, after hundreds of low-wage
> operations have gone out of business. This is partly a result of reduced consumption
> in the crisis-ridden United States and Europe, but it’s also because the People’s
> Republic, following in the footsteps of Japan and South Korea, is transforming itself
> with giant steps into a more mature and rapidly aging industrial society. The consequences
> are rising wages and higher costs, labor shortages in some industries and stricter
> worker safety and environmental regulations. Many manufacturers of shoes and toys > have already moved to cheaper countries, like Vietnam and Cambodia. > ‘A Concept Worldwide, Even for Nobel Laureates’
> China’s forward thinkers are tasked with moving mountains, sometimes quite literally,
> to safeguard the future. A huge, reddish-brown area that is currently taking shape
> on the outskirts of Dongguan on excavated land is to become a “launch pad into the
> high-tech age of the People’s Republic,” and the name Donggan will become “a concept
> worldwide, even for Nobel laureates,” says Zhang Bingyun, a nuclear scientist and
> the prophet of a new era. In less than six years, he and hundreds of other scientists
> plan to put China’s first spallation neutron source into operation. There are currently
> only four such facilities worldwide, in the United States, Great Britain, Switzerland > and Japan.
> “We will make enormous progress in the development of new materials, but also in
> biotechnology and genetics,” Zhang predicts. His hope is that private high-tech
> companies will set up shop in Dongguan and enhance existing products. For now,
> however, only the government is building facilities in the area. The Communist Party
> planners want their investment to expedite much-touted “indigenous innovation,”
> or creativity on command. They’re also hoping to find a Bill Gates for the command > economy.
> The construction site is also a battlefield of the ideologues. Behind the scenes,
> the party’s planners are at odds over the question of what the country needs. Does
> it need more easily regulated state capitalism and masses of workers, sent from
> the countryside to the cities to enable the country to produce goods more and more
> effectively for the rest of the world? Or more private companies with high-tech
> potential, which are difficult to control and can easily become political trouble > spots that could undermine the Communist Party’s claim to absolute power? > A Vicious Circle
> The political and economic mix that fostered China’s economic miracle in the last
> three decades was ideally suited to catapult a poor, underdeveloped nation forward.
> But it isn’t suited to developing an increasingly affluent and industrialized country.
> A fundamental flaw of the current model is that the bureaucrats manipulate the flow
> of money and set key prices — like interest rates and the currency’s external value
> — and pump cheap money into the economy as they see fit. This keeps state-owned
> companies alive that should have gone bankrupt long ago. Private households, compelled
> to exercise caution in a country with a poor and rudimentary healthcare and pension > system, are hording money instead of boosting domestic consumption.
> Last year, the party had no choice but to intermittently cool down the boom that
> had been created artificially with government funds for infrastructure projects,
> especially in the real estate market. Real estate prices had risen to dizzying heights.
> It’s a vicious circle, because a significant portion of the Chinese economy depends
> on the construction boom. In 2011, concrete makers and steel mills saw a sharp drop
> in demand. At the same time, expiring tax incentives reduced the Chinese desire
> to buy new cars. Cheap domestic brands like BYD (“Build Your Dreams”) were especially
> hard-hit by the slump. BYD’s consolidated profits declined by more than 90 percent
> in the first two quarters of 2012, compared to the same period last year, and even > executives were selling their company stock.
> Structural Problems
> Prime Minister Wen Jiabao has recognized that there are structural problems in China’s
> economy, which lead to “unstable, unbalanced, uncoordinated and ultimately unsustainable > development.”
> But when he boldly linked thoughts of restructuring the economy with political liberalization
> two years ago, the state media didn’t publish his remarks, and Wen didn’t even object.
> He will not stand for office again at the upcoming 18th party congress in Beijing,
> which will mark a change in China’s leadership and possibly even set a new political > course for the country.
> When it comes to foreign operations, the party’s policy is to encourage activity
> that can best be described as “swarming out.” China is also active in the entertainment
> industry. The Dalian Wanda Group, a Chinese conglomerate, acquired AMC Entertainment,
> an American chain of movie theaters, for $2.6 billion in May 2012. And American
> sports fans no longer have to worry about whether the Chinese should be allowed
> to invade their sanctum, because it’s already happened. In late July, the computer
> company Lenovo, which had already acquired IBM’s PC division in the past, became
> the technology sponsor of the National Football League. A state-owned company in > Beijing has also acquired Italian luxury yacht maker Ferretti.
> Mickey Mouse is already part Chinese, while Donald Duck is becoming a Peking duck.
> Both Disney and director Steven Spielberg’s animation factory DreamWorks felt compelled
> to seek partners in Shanghai so as not to miss out on the important market in the > Far East.
> Emulating Germany and Buying a Little of It Too
> On their long march to the top of the global high-tech industry, China’s capitalistic
> communists have their sights set on one goal in particular: Germany. While a few
> backward-looking party strategists warn against too much influence from countries
> in the West, domestic pioneers like economist Li Daokui openly encourage their fellow
> Chinese to emulate the “outstanding German model.” Li becomes very enthusiastic
> when he thinks about Berlin. Despite the global financial crisis and the troubles > facing the euro, he feels that all key indicators are positive for Germany.
> China has the world’s largest foreign-currency reserves, a $3-trillion treasure
> chest, from which it’s currently scooping money to buy up companies all across Germany.
> For the Chinese, the weak euro is turning a buying spree into a bargain hunt, with
> acquisitions of German companies in recent years growing from 84 in 2009, when the
> People’s Republic first unseated Germany as the world’s top exporting nation, to > 158 in 2011.
> The Chinese are primarily interested in acquiring the latest technical knowhow.
> A handful of German auto parts suppliers have fallen into Chinese hands in the last
> few months. In late August, it was announced that a subsidiary of the Chinese construction
> equipment maker Shandong Heavy Industry had acquired Kion, a forklift manufacturer
> based in the western German city of Wiesbaden. And after lengthy debates, the Düsseldorf-based
> operator of mobile wireless network provider E-Plus hired the Beijing company ZTE
> to expand its network. According to industry insiders, ZTE undersold the bids of > Western top dogs Ericsson and Nokia Siemens Networks by almost half.
> But probably the most strategically important investment of the year for the Chinese
> was their January acquisition of a traditional German industrial company, the world
> market leader in its industry. When Chinese construction equipment giant Sany acquired
> Putzmeister, a maker of concrete pumps based in Aichtal near Stuttgart, it was the
> first time Chinese buyers had managed to absorb one of the “hidden champions” of
> the large group of German small and midsized companies known collectively as the
> Mittelstand. All in all, the Chinese paid about half a billion euros for one of > the pearls of German industry.
> Sany Chairman Liang Wengen, 56, orchestrated the deal. One of the most successful
> Chinese pioneers operating in Germany, his net worth of $8.1 billion makes him one
> of the five richest men in China. Liang is a completely different type of person
> than the colorful entrepreneur-poet Huang. Levelheaded, goal-oriented and always
> very close to the reins of power, Liang is a self-made man. A former bamboo basket
> weaver in his native Hunan Province, he worked his way up through a weapons factory
> and later developed his own, small factory for welding equipment. He joined the
> party early on, and in addition to receiving an award for being a “model private
> entrepreneur,” he was named an “Architect of Socialism with Chinese Character.”
> Liang is the kind of business leader with whom politicians feel comfortable, and
> who they like to have at their side. For instance, he was allowed to accompany
> Xi Jinping, the current vice president and designated new party leader and future
> president of China, to the United States. At the upcoming party congress, Liang
> is expected to be the first private businessman to be appointed to the party’s Central > Committee, the illustrious circle of China’s most powerful men and women. > Part 3: ‘German Industry Has No Choice But to Join Forces with Chinese’
> Sany, which employs almost 70,000 workers, is headquartered in Changsha, famous
> as the city where Mao Zedong studied for six years. The former Chinese leader was
> also born near Changsha. Dozens of souvenir chops sell small images of Mao, and
> an oversized statue of the Great Chairman stands in downtown Changsha, his outstretched > right hand seemingly setting the country’s direction.
> But little remains of Mao’s egalitarian ideas. The new person he once set out to
> create is no longer in demand, but rather the person who can frequently afford > to buy something new.
> The modern building where Sany President Xiang Wenbo has his office is called Dangwei
> Lou, or Party Committee Building, because Xiang is also a Communist Party leader.
> But the office is furnished at least as luxuriously as the executive suite of a
> major German company, with heavy, dark mahogany furniture and modern art on the
> walls. The floor-to-ceiling window offers a view of a park landscaped with bamboo > and a decorative pond. There are four Maybach limousines in the parking lot.
> Xiang is bursting with self-confidence, but also with patriotic zeal. He was behind
> a nationalist Internet campaign that successfully derailed a plan by the Carlyle
> Group, a US private equity firm, to acquire a majority stake in his Chinese competitor,
> the Xugong Group. “We can sell everything, just not our country,” Xiang blogged > polemically at the time.
> Why, then, should Germany “sell itself” to China, and why is the Putzmeister deal > any different?
> Xiang chuckles to himself, and answers the question in a roundabout way. “I am convinced
> that German industry has no choice but to join forces with major Chinese companies
> like Sany,” says the Sany president. He explains that while Germany has the superior
> technologies, China controls an enormous market. German companies, he says, need > that market to expand and generate profits.
> German Success in China Comes with a Price
> It’s true that China became a lifeline for many German businesses, especially during
> the years of the worldwide recession, 2008 and 2009. Thanks to a massive government
> economic stimulus program, China remained liquid, allowing chemical manufacturers
> like BASF and, most of all, German automakers VW, BMW and Daimler to actually grow > their earnings. Volkswagen already sells more cars in China than at home.
> But this success has its price. Beijing expects foreign companies to produce locally,
> bring along their knowhow and form joint ventures with domestic partners. Almost
> all the companies listed on Germany’s DAX blue-chip stock index are active in China.
> The Germans’ high-tech expertise is often “fed” into Chinese companies, which have
> copied the patents so that trains, cars and machine tools and the original products
> are often as identical as two peas in a pod. Recently, the Chinese company FAW reportedly
> recreated an entire VW transmission in Changchun in northern China. This practice > can turn partners into dangerous competitors, and it also creates bad blood.
> China’s dumping activities are an equally serious problem for Western companies.
> The government subsidizes individual, future-oriented industries with so much cash
> and loans that they are able to displace their competitors in the world market by
> charging rock-bottom prices. The solar-panel industry is a case in point. Ten years
> ago, the United States produced 27 percent of solar panels worldwide, while the
> Chinese made only 1 percent. Today the American share of the global market is only
> 3 percent, while the Chinese make about 65 percent of solar panels. The Chinese
> manufacturers are embroiled in ruinous competition, and the party is likely to allow
> only three or four major companies to remain on the market. When Washington imposed
> punitive tariffs, Beijing set off a minor trade war by retaliating with measures > of its own against US goods in other industries.
> Merkel Avoids Making Public Criticism
> The cheap Chinese solar panels also did serious damage to German solar companies,
> costing thousands of jobs. But during a visit to Beijing in late August — the second
> this year, with almost half the cabinet at her side — Chancellor Angela Merkel
> avoided any sharp criticism of her hosts, at least publicly, addressing neither > human rights issues nor economic problems.
> Merkel suggested that the solar dispute ought to be resolved through negotiations,
> and the large delegation of German business leaders traveling with the chancellor
> also proved to be tame and timid. Outgoing Premier Wen Jiabao told members of the
> delegation that they could write to him if they had any problems, as if he were
> an advice columnist. A few days later, it became clear just how isolated the chancellor
> is with her soft-line approach, when the European Union refused to be palmed off
> with vague offers to negotiate and launched an anti-dumping probe into Chinese > solar manufacturers.
> Sebastian Bersick, professor of international relations at Fudan University in Shanghai,
> says: “It wouldn’t be smart for Germany to expand its bilateral relations with China
> to such an extent that its success ends up alienating other EU member states.” The
> government in Berlin, says Bersick, should rethink its “sino-centered approach”
> and diversify its interests. Are China and Germany entering into a partnership that’s > “too close for some,” as the New York Times writes?
> German Firms Expand in China
> In fact, German companies are expanding in China more than ever — and this with
> Beijing’s blessing. Chemical producer Lanxess has just broken ground on a new ?235-million
> synthetic rubber plant in Changzhou, near Shanghai. But not all DAX-listed companies
> are entirely pleased with their Chinese operations. The new BASF numbers are reportedly
> disappointing, and the mood is somber at the company, where everyone is hoping that > a new leadership in Beijing will bring greater transparency.
> The liberals’ greatest hope is Wang Yang, 57. The party chief for Guangdong Province
> is China’s most interesting politician at the moment. He advocates increasingly
> opening up China’s economy to private enterprise, and to do so he wants to “open
> the cages and replace the birds.” He has included the typically American pursuit
> of happiness in the five-year plan for his province, and he was strayed from convention
> by mediating in citizens’ protests in ways that favor the demonstrators. He is also
> willing to grant more freedoms to entrepreneurs. When asked whether this development
> could end the monopoly of the Communist Party one day, Wang, whose nickname is “Little > Marshall,” says nothing.
> Even a reformer like Wang knows that anyone who sticks his neck out too far can
> jeopardize his own prospects of advancement. Wang differs markedly from Bo Xilai,
> the former party leader in the southwestern city of Chongqing, who had called for
> more government control and a revival of Marxism. At the party convention in November,
> Wang stands a chance of being elected to the Politburo Standing Committee, the group
> of the country’s top nine leaders that will shape China’s future. But Wang, who,
> ironically enough, was Bo’s predecessor in Chongqing, could also fall victim to
> Bo’s friends in the Communist Party, who want to deny his rival the chance to rise > to the top out of revenge.
> Part 4: ‘Accessories of Power and Corruption’
> In China, with its lack of legal certainty, it’s possible to plunge precipitously.
> In both politics and business, there is a thin line between success and failure,
> and between a successful corporate leader who enjoys the party’s support, like
> Sany Chairman Liang, and someone whose connections aren’t quite as good, and who > once took one step away from the correct path, someone like Wu Ying.
> She was considered China’s Wonder Woman, a woman who succeeded at everything she
> did. A farmer’s daughter and former hairdresser with strong entrepreneurial instincts,
> she built a chain of beauty salons. In 2005, with assets of more than $500 million,
> she was already among the wealthiest people in China — and had not even celebrated
> her 26th birthday yet. But her career ended suddenly, after she had illegally borrowed
> money from private individuals in return for the promise of high returns, and was > unable to pay back a large portion of the funds.
> She was sentenced to death for financial fraud in December 2009, but the severity
> of the punishment was even criticized in the official press. In May 2012, the courts
> reduced her sentence to death with a two-year reprieve, the same sentence that was
> recently handed down to Bo Xilai’s wife, although she was convicted of a capital
> crime for the murder of a British businessman. In the Chinese justice system, that > two-year reprieve means the sentence will likely be commuted to a life term.
> At least the excitement over young entrepreneur Wu prompted leaders in Beijing to
> violate an ideological taboo. They announced that private shadow banks were to be
> legalized. The new rule was to initially apply only to Wenzhou, the port city that
> the great reformer, former Communist Party Chairman Deng Xiaoping, also used for
> especially bold experiments. Premier Wen even seemed to want to take things a step
> further, by proposing that the state-owned banks’ de-facto monopoly be lifted. Some > already envisioned the dawn of a new era.
> But now the enthusiasm has given way to a more sober assessment, even in Wenzhou.
> “Where is the real relief for smaller private companies like ours?” asks Zhou Dewen,
> chairman of the local small-business association. Lending has proven to be tenuous,
> says Zhou, while there is still considerable resistance to fundamental reforms in
> Beijing. And, once again, the prime minister has been exposed as little more than > a figurehead and feel-good politician.
> Many Chinese Embittered
> A grimly smiling old man is sitting between stacks of American and Chinese business
> publications and books (15 of which he authored) in Beijing, in an apartment in
> the district were senior party officials live. Mao Yushi, 83, is a business guru > hated by many and deified by some.
> He doesn’t mince words. He describes Mao Zedong as a “totalitarian” ruler, and calls
> the Marxist theories that are still taught at Chinese universities “hopelessly outdated.”
> China’s progress is solely dependent on other countries, Mao Yushi says coolly.
> “That’s where all technological innovations and progressive ideas come from.” In
> his view, China urgently needs to become politically liberalized, and the Communist
> Party should compete with other parties. “We have no human rights guarantees, no
> democratic institutions and no economic planning certainty. That’s why many of
> our most talented entrepreneurs emigrate, even though China is still a fabulous > place to make money.”
> Mao Yushi has low expectations for the upcoming party congress. The party elite,
> fearful of losing its privileges, will not take the necessary step of strengthening
> the private sector, he says. “Things would be different if Deng were still alive.
> He was open to new ideas, and he was a flexible man for whom solutions to problems
> were paramount, not an ideology.” In May, Mao Yushi was awarded the Milton Friedman
> Prize for Advancing Liberty in Washington. He is a man who no longer needs to make > allowances for anything or anyone.
> He is worried about the gradual aging of and growing income disparity in Chinese
> society, and the social tensions that could arise as a result. Based on the so-called
> Gini coefficient, which measures the inequality of wealth distribution in a country,
> the differences between rich and poor are even more dramatic in China than in India.
> In China, more than one in four people lives on less than $2 a day. At the other
> end of the spectrum, the country will be the world’s largest market for luxury > goods by 2015.
> Provocative Displays of Wealth
> Many Chinese are embittered over blatant corruption, in a country where the relatives
> of politicians are usually the ones who become multi-millionaires, often without > any discernible effort.
> When the members of the Beijing Sports Car Club, founded in 2009, meet once a week
> in their own, exclusive lounge near the city’s football stadium, they like to show
> off their toys, the Lamborghinis and Ferraris parked on a well-guarded parking lot.
> Zhang Kuan, 32, the chairman of the club, is eager to show off his dark-gray McLaren
> MP4-12C, a car worth hundreds of thousands of dollars, which he picked up in person
> at the Tianjin customs port in May. The club’s 700 members also travel on luxury
> trips together, to places like Las Vegas and London. It’s an insular group, and
> when they race at night, it’s usually against each other. During the day, members > are often spotted in the company of fashion models.
> Cigar smoker Zhang bought his first car, a VW Santana, in 1999. Things went uphill
> very quickly for him after that, and he made a fortune with “investments, real estate
> and insurance,” as he put it, somewhat vaguely, in an interview with Time in June.
> In addition to his Lotus, Zhang, who also has good political connections, owns several
> sports cars, including a fire-red Ferrari. He also collects luxury watches. “My
> father’s generation isn’t as keen on the things that interest me,” says Zhang. “For
> him, luxury means the entire family getting together. But for people my age, it’s
> always the latest toy that counts. That’s how we express ourselves and live our > dreams.”
> Ferrari Becomes a Red Rag for the Party
> The provocative display of wealth troubled almost no one until recently, and certainly
> few government officials. But the word “Ferrari” recently became a red rag for many
> politicians, and it’s even blocked on the Chinese Internet. Things aren’t going
> well for the Communist Party and with preparations for its party congress. After
> the murder and corruption affair of former Chongqing party chief Bo Xilai and his
> wife, a new scandal surrounding an Italian sports car, its driver and an accident > he had threatens to cast a shadow on the carefully planned political show.
> Early one morning, seven months ago, a man driving a Ferrari in Beijing lost control
> over the car, possibly while engaged in sexual activity. The driver, who was allegedly
> naked, was killed immediately, while his female companions reportedly survived,
> but were seriously injured. The police covered up the circumstances of the accident.
> But soon the Internet was filled with rumors that the driver could have been the > son of a prominent individual.
> In early September, it was apparently no longer possible to conceal the details,
> or someone deliberately leaked them to the public. The dead driver of the Ferrari,
> Ling Gu, 23, was the son of a top official and a graduate of Peking University.
> His father is the long-standing secretary of party leader and President Hu Jintao.
> After the incident, he lost his influential job as head of the main office of the
> Central Committee and was demoted to an insignificant position. He was replaced
> by Li Zhanshu, a close associate of the new “emperor” designate. Was the scandal > misused as a tool in the power struggle in Beijing?
> For Dali Yang, a professor of political science at the University of Chicago, one
> thing is clear: “Chinese politicians are extremely concerned about the fact that
> the party is being so closely associated with expensive cars and watches, these
> accessories of power and corruption. They want to do everything in their power > to prevent public anger from turning towards them.”
> Translated from the German by Christopher Sultan
> ITEM 10a: REUTERS: Dirty money cost China $3.8 trillion 2000-2011 – report
> http://au.news.yahoo.com/thewest/business/a/-/world/15222813/dirty-money-cost-china-3-8-trillion-2000-2011-report/
> [http://r20.rs6.net/tn.jsp?t=lk4w4blab.0.bor6aclab.wus7micab.3290&ts=S0825&p=http%3A%2F%2Fau.news.yahoo.com%2Fthewest%2Fbusiness%2Fa%2F-%2Fworld%2F15222813%2Fdirty-money-cost-china-3-8-trillion-2000-2011-report%2F] > -Thanks to Ganesh Sahathevan-
> WASHINGTON, Oct 25 (TrustLaw) – China has lost $3.79 trillion (2.35 trillion > pounds) over the past decade in money smuggled out of the country, a massive > amount that could weaken its economy and create instability, according to a > new report.
> And the outflow – much of it from corruption, crime or tax evasion – is > accelerating. China lost $472 billion in 2011, equivalent to 8.3 percent of > its gross domestic product, up from $204.7 billion in 2000, Global Financial > Integrity, a research and advocacy group that campaigns to limit illegal > flows, said in a report on Thursday.
> “The magnitude of illicit money flowing out of China is astonishing,” said GFI director
> Raymond Baker. “There is no other developing or emerging country that comes even > close to suffering as much in illicit financial flows.”
> The lost funds between 2000 and 2011 significantly exceeded the amount of > money flowing into China as foreign direct investment. The International
> Monetary Fund calculated FDI inflows at roughly $310 billion between 1998 and 2011. > Illicit capital flows rob a government of tax revenues and potential > investment funds. Capital flight on this scale can be politically > destabilizing by allowing the rich to get richer through tax evasion, GFI > said.
> China has a low level of tax collection given the size of its economy,
> according to the IMF. Beijing has recognized that corruption and bribery is a significant > problem, an issue brought into sharp focus recently by the Bo
> Xilai scandal. The country has announced a major crackdown as it prepares for its > once in a decade leadership transition.
> GFI calculates how much money leaks out of a country unchecked by analyzing > discrepancies in data filed with the IMF on import and export prices between > trade partners and calculating discrepancies in a country’s balance sheet. > The developing world overall lost $903 billion in illicit outflows in 2009,
> with China, Mexico, Russia and Saudi Arabia in that order showing the largest losses, > it said.
> Trade mispricing was the major method of smuggling money out of China, > accounting for 86.2 percent of lost funds, the GFI report found. This scheme
> involves importers reporting inflated prices for goods or services purchased. The
> payments are transferred out and the excess amounts are deposited into overseas > bank accounts.
> Trade mispricing is most common for nuclear reactors, boilers, machinery and > electrical equipment, the report said.
> The bulk of the money ends up in tax havens – on average, 52.4 percent between 2005
> and 2011. Much of this money eventually makes its way back to China as foreign direct > investment for a double hit to the economy.
> FDI benefits from special tax breaks and subsidies, essentially setting up an elaborate > form of money laundering for Chinese businesses, GFI added. > (Reporting By Stella Dawson. Editing by Andre Grenon)
>
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