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Africa Works on New Economic Plan

Abuja, Nigeria - African economists have begun work on a new Western-backed economic rescue plan for the continent after heads of state launched it at the weekend. The plan aims to promote good government in Africa in return for billions of dollars in private Western investment. Twelve African states agreed on Sunday to subject their governments to monitoring for performance and democracy in a radical move to win Western support for the scheme. Officials steering the programme, dubbed the New Partnership for Africa's Development (NEPAD), hailed the decision by the 12 states as proof of Africa's commitment to change. "It shows that NEPAD has taken off on a very positive note," said Isaac Aluko-Olukon, Nigeria's top expert on NEPAD. NEPAD's steering committee met Monday with the Economic Community of West African States, ECOWAS, to discuss regional projects to be carried out under the NEPAD program, Aluko-Olukon said. ECOWAS is one of five African regional blocs that will anchor projects under NEPAD, which is backed by the G8 group of industrialised nations and Russia and the European Union. A major project that will fall in NEPAD's ambit is the $500 million West Africa Gas Pipeline, whose leading consortium members include U.S. oil major ChevronTexaco and Nigeria's leading oil producer Shell. The pipeline will take cheap gas from Nigeria to power electricity plants in neighbouring Benin, Togo and Ghana.

Donors to meet - ECOWAS announced on Monday it will host a major donor meeting on Tuesday in Abuja to agree an assistance package "to enable it fulfil its mandate under the New Partnership for Africa's Development." Participants will include representatives of the European Union, the World Bank, the United States Agency for International Development, the African Development Bank and the Canada Development Agency, an ECOWAS statement said. To win over Western investors long worried about Africa's reputation for corrupt and unstable governments, the African states have pledged to promote good government, human rights and internationally acceptable corporate practices. A NEPAD draft document set the start of the monitoring plan for April 1, 2003, by which time legal documents should be ready and more countries may have signed up voluntarily. Algeria, Angola, Congo, Egypt, Ethiopia, Ghana, Mali, Mauritius, Mozambique, Nigeria, Rwanda and South Africa signed the agreement on Sunday. The U.N. Economic Commission for Africa and the Organization for Economic Cooperation and Development would work jointly on a framework for monitoring how rich nations deliver on their pledges to NEPAD, the document said. The last G8 summit in Canada adopted an Africa Action Plan that identified 112 areas needing G8 support, ranging from manpower development to combating HIV/AIDS and malaria. Nigerian President Olusegun Obasanjo said on Sunday the summit agreed NEPAD would be doomed if Africa did not put an end to its debilitating conflicts, and cited unrest in Ivory Coast, Madagascar and the Central African Republic.

From CNN, 4 November 2002

South African Parliament Passes New Snooping Law

Cape Town - Lawmakers approved a new law Tuesday that gives law enforcement officials more power to intercept and monitor private telephone calls and e-mail. Justice Minister Penuel Maduna said the legislation was needed to fight organized crime, but critics argued that it is flawed, infringes on the rights to privacy and open to abuse. The law was approved in the National Assembly in September. Lawmers in the National Council of Provinces - Parliament's lower house - approved it unanimously. Snooping by government officials is a touchy subject in South Africa because during apartheid, security forces had carte blanche to tap telephone calls and intercept private correspondence. A 1992 law restricted the practice. Among its provisions were that a judge authorize any telephone tapping. But the justice ministry said the existing law made it too hard to pin down evidence against crime bosses, who act through intermediaries. The interception of communications had become integral to combating crime, Maduna said. The new law still requires judicial approval for tapping phones, but exceptions may be made in ''emergency situations'' or when a person's life may be in danger. Kimani Ndungu, head of an anti-censorship unit at the Freedom of Expression Institute in Johannesburg, said the provision was unclear and gave wide-ranging powers to the security forces. ''Our view of the bill is that its unconstitutional,'' he said. "It takes away the right to privacy and to freedom of expression ... and needs to be challenged. It's going to interfere very grossly with media freedom in South Africa." The Media Institute of South Africa has voiced objections to the law, saying people would be reluctant to talk to journalists for fear of their conversations being tapped. The law also compels telecommunications companies to install equipment that makes interception and monitoring possible - which the industry says will cost it millions of dollars.

From MSNBC, 6 November 2002

Japanese Report Urges Economic Reforms

A Japanese government report released Tuesday called for tax and other economic reforms, such as excising colossal bad debts from the nation's banks, in an effort to transform Japan's stagnant economy. The report also warned that a slowing of the United States' economic rebound could endanger Japan's recovery because domestic demand remained weak. Many are worried the nation will lose its competitive edge to China, which is achieving spectacular growth on booming exports, the Cabinet Office said. Japan's economy eked out 0.5 percent growth in the quarter ending in June but only after 12 straight months of contraction - the worst performance since the government began keeping track in the 1980s. The administration of Prime Minister Junichiro Koizumi has been trying to carry out reforms to get Japan back to a stable growth track. But he has faced strong resistance from old-guard lawmakers, bureaucrats and bankers who have a big stake in maintaining status quo politics. Japan has not yet adjusted to the collapse of the "bubble" in the late 1980s that sent inflated land and stock prices crashing, and companies and banks are still plagued by debts, according to the report. "By shaking up the old economic system and building a new system through structural reform, the Japanese economy will be able to take a new path of dynamic growth," the annual report said. Carrying the slogan, "No gains without reforms," the report said money was not flowing to growth sectors and was still being channeled to old-style sectors such as construction. Without giving specifics, it also recommended tax reforms to strengthen economic vitality. It said deflation - a situation when prices and asset value decline and endanger economic activity - was a major cause of the nation's economic problems. The report said Japan's economy bottomed out in early 2002, mainly supported by export growth. Developing private demand through structural reforms is key in deciding whether the recovery becomes "a self-sustained, vigorous one."

From Nando Times-Business, by Yuri Kageyama, 5 November 2002

China Courts Foreign Investors

Pushing hard to court foreign investment, China announced Monday it would let foreign companies buy some government-controlled shares of publicly traded Chinese companies, further opening the country's financial markets. The notice about the currently untradeable shares - known in the industry as state shares and legal-person shares - was issued jointly by the Finance Ministry, the China Securities Regulatory Commission and the State Economic and Trade Commission. The notice, issued Monday but dated Nov. 1, didn't say when it takes effect. Foreign investors can currently only buy shares sold for the foreign market. The latest move would unlock billions of dollars' worth of domestic shares. However, the most coveted shares of Chinese companies - "A shares" - would still be off-limits to foreigners. The Chinese government created state shares in the 1980s to make sure it kept control over its companies as they began to trade publicly during the initial stages of economic reform. Under the revisions, the state shares won't be sold on the open market. Instead, foreign companies can approach Chinese companies trading on China's two stock exchanges to arrange private purchases. The notice said the change was instituted to solicit international "advanced management, technology, and funds" to speed up economic change and help the stock market develop. It said the foreign investors should have strong management and finances, and the ability to improve the running of the listed company. Sale prices would be decided by "open competition," the notice said. The sales would require approval from regulatory authorities. Foreign companies that have previously invested in China can use local currency from their operating profits for the purchases, and other foreign companies must use freely convertible currencies, the notice said.

From Nando Times-Business, 4 November 2002

Jiang's Stark Warning Over Corruption

Beijing - Chinese President Jiang Zemin has warned a landmark meeting of the country's ruling Communist Party that it must take a tough line against corruption or risk its "self-destruction." Speaking on the opening day of the 16th Communist Party Congress in Beijing Jiang told the 2,114 delegates a failure to act against the growing problem of graft could push the party from power. "If we do not crack down on corruption, the flesh-and-blood ties between the party and the people will suffer a lot and the party will be in danger of losing its ruling position, or possibly heading for self-destruction," he said. The Congress is being billed as a political watershed for China, ushering the biggest leadership changes the country has seen in a decade and setting the direction for its economic and political future. (Congress agenda) Held once every five years, the Congress is set to approve a major reshuffle of China's leadership, with Jiang, 76, set to step aside as president and party chief along with other party veterans including Premier Zhu Rongji and National People's Congress Chairman Li Peng. Firm control - In his 90-minute opening speech, far shorter than anticipated, Jiang presented his vision - and what he hopes will be his legacy - of a China powered by capitalist economics but under the firm political stewardship of the Communist Party. That firm control was evident outside with thousands of police and security officials deployed on the streets of Beijing.

At least three small attempts at dissent were reported in the area around the city's Great Hall of the People, but observers said they were quickly stamped on by security officials. In his address, Jiang said it was time for the party to modernize its thinking, open its doors to new economic opportunities and expand its base by taking in members of the new capitalist rich. "We should admit into the party advanced elements of other social strata who accept the party's program and constitution," Jiang told the Congress in terms typically used by the leadership to refer to China's new rich. "We must move forward, or we will fall behind," he said, calling on his fellow cadres to "free our minds from the shackles of outdated notions, practices and systems". Democratic reform ruled out - However, during the speech whcih was televised live across the country, Jiang also stressed that China would not follow Western style multi-party democracy. "We should never copy any models of the political system of the West," he said. He also called for a renewed dialogue with Taiwan, but warned that force could be used against "attempts to interfere in China's reunification." The speech was a seen as laying out a blueprint for China's future as Jiang begins the process of handing power to the next, so-called "Fourth Generation" of leaders. Speaking beneath an outsized hammer and sickle emblem in Beijing's Great Hall of the People, Jiang also stressed the need to ensure the Communist Party remains relevant in the global market place of the 21st century. "Our party must stand firm in the forefront of the times," Jiang said.

Most expect Jiang will be succeeded as Communist Party chief by Vice-President Hu Jintao, 59, who is also widely expected to replace Jiang as president next year. (Profile: Hu Jintao). Economic challenges - However, like his predecessor Deng Xiaoping, analysts say Jiang expected to remain the unofficial power behind the throne for some time to come - a factor that could cause complications for the new generation of leaders. They will be faced with some of the greatest challenges modern China and its communist leaders have yet had to meet. Looking to China's economic future, Jiang said the government should aim to quadruple its gross domestic product between 2000 and 2020. With the country now a full member of the World Trade Organization, he said China would aim to increase its international competitiveness "markedly." However, he pointed to several economic challenges that needed to be urgently addressed, including stagnating income levels in rural areas and escalating unemployment. Over the coming days delegates to the 16th Congress will hammer out a road map for China's future as the Communist Party struggles with the challenge of stimulating continued breakneck growth whilst maintaining stability and keeping its iron grip on power. Addressing delegates, Jiang warned that party must address itself to what he called "a world that is far from being tranquil and the formidable tasks before us." "We must be keenly aware of the rigorous challenges brought about by the ever-sharpening international competition as well as risks and difficulties that may arise on our road ahead," he said.

From CNN, 8 November 2002

Japan Rejects U.S. Food-Tariff Cuts, Jeopardizing WTO Talks

Geneva - The Japanese government rejected as unrealistic a U.S. proposal to cut tariffs on farm products, a stance that may undermine a broader global effort to open markets in industrial goods and services. Developing nations and food exporters, including Brazil, Australia and Canada, want better access to wealthy markets for their farm products as part of negotiations at the World Trade Organization that are also designed to dismantle market barriers in finance, energy and telecommunications services. A U.S. plan would cut all farm tariffs to 15 percent from 62 percent on average over five years, placing a 25 percent ceiling on the duties. Japan, the European Union and Switzerland want to use an average tariff for agricultural goods that would keep high duties on some products. Japan's rice tariffs vary between 400 percent and 500 percent, depending on exchange rates. A WTO agreement with the U.S. and other exporters is only possible by a 2005 deadline "if they come to their senses," said Hidenori Murakami, head of international affairs at Japan's farm ministry. "There is no middle point." Proposals by the U.S. and Cairns Group of 18 agricultural- exporting nations "are not very realistic," Murakami said. Japan's rice-import quota is limited to 760,000 metric tons, or 7.2 percent of domestic consumption. Japan also wants to cut that import quota during the WTO talks. Swiss Back Japan - Switzerland supports the Japanese plan to limit reductions in agricultural tariffs, saying there isn't time to change the rules for negotiating cuts before the Jan. 1, 2005, a deadline set at a WTO meeting in Qatar last year. "We have all the pieces of the puzzle but haven't yet started to put them together," said Luzius Wasescha, the top official for foreign trade at the Swiss economics ministry. WTO members spent three years negotiating rules for tariff cuts before the 1994 Uruguay Round Agreement. "This time we don't have the time," said Wasescha.

From Bloomberg-Politics, by Warren Giles, 20 November 2002

Russia Sets Media Guidelines After Hostage Siege

Russia announced new guidelines for journalists on Monday asking the media to do everything possible to starve militants of publicity during hostage seizures. The press ministry issued the draft guidelines 10 days after a Chechen hostage siege in a Moscow theatre came to a bloody end. It asked the media not to interview militants involved in such attacks or allow them airtime to voice their grievances. "Saving people is more important than society's right to information," the ministry said in guidelines for covering emergencies. The guidelines are not binding on the press, but were issued after the lower house of parliament passed tough new laws limiting how journalists write about militant groups. The Kremlin has been angered by media reports suggesting it failed to pursue talks with the guerrillas before launching a raid which left 118 hostages and up to 50 rebels dead. The hostages were killed by a gas intended to knock out the rebels. The guidelines did not say whether they were aimed at foreign journalists as well. The press ministry was not immediately available for comment. The ministry urged journalists not to indulge in speculation or make their own analysis of such situations without "professional consultation" - a euphemism for relying on the official version of events. They also warned journalists that militant statements on television and radio could contain secret messages. During the three-day siege which ended on October 26, authorities banned the NTV channel from publishing a statement from guerrilla leader Movsar Barayev. Journalists should also avoid publishing confidential information on special forces or information that could help guerrillas, the guidelines said. Oleg Panfilov, director of the Centre for Journalism in Extreme Situations, said the guidelines could become the de-facto legal framework for journalists even though they were not legally enforceable. "Journalists' work will now be harder, because in Russia no one has ever respected the law, and now the print ministry is setting out its new position," he said. Russia has had a patchy record on media freedom since President Vladimir Putin came to power. The few remaining private television channels were effectively neutered after they criticised the government.

From MSNBC, 4 November 2002

EU's Monti Vows 'Radical Changes' After Court Defeats

Brussels - European Competition Commissioner Mario Monti pledged to make antitrust rules fairer to merging companies, drawing lessons from reversals of three merger vetoes by Europe's top appeals court. Independent economic studies, more flexible deadlines and greater rights for companies to counter evidence against them feature atop the European Commission's agenda, Monti told an International Bar Association conference. Monti is under pressure to fix the system after an appeals court shredded the commission's veto of mergers including Schneider Electric SA's 7 billion-euro ($7 billion) takeover of rival French electrical equipment maker Legrand SA. "We will adopt changes, as radical as needed, to ensure that our merger investigations are conducted in a manner which is more thorough and more firmly grounded in economic reasoning and to further strengthen the due-process guarantees," Monti said. The commission, the European Union's regulatory arm, has blocked takeovers worth $200 billion during the past three years, including General Electric Co.'s $47 billion bid for Honeywell International Inc., the first time the EU killed a U.S.-approved merger. As overseer of the EU's 15-nation common market, the commission can block or force changes to mergers of companies with combined global sales of 5 billion euros, even if the companies aren't based in Europe. Court Setbacks - Schneider is considering how to put its takeover of Legrand back together after the European Court of First Instance said Monti's staff mishandled evidence and misgauged the market when it rejected the deal in October 2001. The court also overturned commission vetoes of Tetra Laval's 1.7 billion-euro purchase of packaging-equipment maker Sidel SA and of MyTravel Group Plc's 850 million pound ($1.3 billion) bid for First Choice Holidays Plc. "We should not allow these setbacks to distort our view of the community's merger control policy," Monti said. "We should transform them into an opportunity for even deeper reform than originally envisaged."

The court has yet to rule on General Electric's appeal, which wasn't filed under a new "fast track" process for speeding verdicts. Chief Economist - Monti said he will appoint an "eminent" chief competition economist, call on outside experts to assess mergers that face four-month "phase two" investigations and set up a panel drawn from all commission departments to vet decisions by the antitrust team. The proposal is a response to what critics say is a fundamental flaw in Europe's merger review process: the commission's power to decide on its own whether to halt a merger. In the U.S., agencies such as the Justice Department and Federal Trade Commission have to prove their cases in court before deals are stopped. "The commission is proposing a number of radical reforms, and it's a pity it has taken these court cases to get it to this point," said Alec Burnside, an antitrust lawyer at Linklaters. In all, the commission has prohibited 18 of the 2,107 deals assessed since EU-wide merger-control rules took effect in 1990. Another 80 companies have scrapped mergers during the antitrust negotiations, often to head off a veto. Due Process - Companies will get access to case files at an earlier stage in the process, and be allowed to confront evidence supplied by competitors before the commission issues a "statement of objections" that spells out the antitrust hurdles. Monti's staff will take an extra three weeks to assess concessions offered by companies - typically the sale of units or breakup of exclusive distribution arrangements to lessen dominance of a market. In "complex cases" involving a mix of products and markets, the companies or the commission will be able to "stop the clock" for an additional four weeks to look more closely at individual markets. Merging companies will also be given more time to file for antitrust approval. Currently, a filing has to be on Monti's desk a week after a takeover is agreed on. Consultation with consumers will also be stepped up. Monti will also explore whether companies can obtain "interim relief" after a merger has been blocked. Such a step may require amendments to the EU's governing treaties, making this change less likely in the short term.

From Bloomberg-Politics, by Robert McLeod, 7 November 2002

Turkey's New Government Will Do What's Needed to Push EU Bid

Turkey will do everything it can to satisfy European Union demands and convince the bloc to set a date for membership talks to begin, said the leader of the party that will form the country's next government. Recep Tayyip Erdogan, whose Justice and Development Party won almost two-thirds of the seats in parliament last week, is scheduled to visit Athens and Madrid next week on the first leg of a planned tour of EU capitals. "If, during our contacts in EU capitals, we realize that passing some laws will make it easier for us to get a date for the start of negotiations, then our party will do all it can to pass such laws," Erdogan said, in written responses to questions from Bloomberg News. Turkey is pressing to accelerate its bid for EU membership to attract foreign investment as it tries to recover from the country's worst recession since 1945. The effort comes as the U.S. looks for support from Turkey, the only Muslim member of the North Atlantic Treaty Organization, in preparation for a possible attack against Iraq. The Turkish parliament in August approved a package of laws expanding the rights of the Kurdish minority and ending the death penalty in peacetime in an effort to meet EU demands. The bloc last month said the changes didn't go far enough and military influence over political decisions should be reduced. Erdogan has said he will press EU leaders to set a date for membership talks when they meet Dec. 12 in Copenhagen. Turkey trails the other 12 candidates for EU membership. The 15-nation bloc plans to add eight Eastern European countries, plus the Mediterranean island nations of Cyprus and Malta, in 2004. Romania and Bulgaria may be ready to join in 2007. Cyprus - The status of Cyprus, divided between ethnic Greeks and Turks since a 1974 invasion by troops from Turkey, is among the issues that have stalled Turkey's bid to join the EU.

Talks on re- unifying the island are deadlocked over Turkey's insistence that the international community must recognize the Turkish Cypriot state before other issues are discussed. While Erdogan initially suggested his party might ease that demand, he later reiterated the existing Turkish position. Some analysts said he came under pressure from the military. A spokesman for President Ahmet Necdet Sezer last week said the country's Cyprus strategy was a "state policy" that couldn't be changed overnight. Erdogan said the turn-around was due to the party's recognition that there are two de facto states on the island and that this fact must be acknowledged before the various sides can discuss other alternatives. "The lack of a solution to the Cyprus problem has hurt Turkey for a long time," he said. "Reserving our basic views, we believe we have to look for solutions through a more creative approach." Military Pressure - Erdogan can't risk clashing with the military over Cyprus because his party, which has Islamic roots, needs to prove it can get along with the secular establishment, analysts say. The military, which supports the Turkish Cypriot state, is also the guardian of Turkey's secular constitution and has forced four governments from power in the past 40 years. Erdogan can't become prime minister because he was barred from running for parliament due to a 1998 conviction for inciting religious divisions. His party is considering whether to amend the constitution to allow the appointment of a prime minister from outside parliament. Sezer has said he opposes such a move because constitutional changes shouldn't be "tailored to individuals." Sezer can demand a referendum on any constitutional amendment. In a televised press conference, Erdogan on Monday suggested his party may pursue the amendment over Sezer's objections. "When there is an obstacle to the national will, the job of the political institution or the political will is to overcome this obstacle," Erdogan told reporters who asked him about Sezer's comments. The party won't take any steps that would lead to "tensions," he said.

From Bloomberg-Politics, by Yalman Onaran, 12 November 2002

Portugal Government Workers Strike to Protest Policies

Portuguese government workers launched their first general strike in 10 years on Thursday to protest economic policies, but the prime minister said there was no alternative to his austerity plans and labour reforms. Ports, public transport, hospitals, refuse collection, clinics, fire services, schools and government offices throughout Portugal were paralysed or had services cut back as hundreds of thousands of workers backed the one-day strike, union spokesmen said. Centre-right Prime Minister Jose Manuel Durao Barroso, in office since April, said there was ''no serious alternative'' to his programme of lay-offs, cost cuts and easing labour laws. ''What the government is doing is something that has to be done,'' he told reporters. ''This is good for the country, good for Portuguese workers and good for their families.'' Union leaders said about 85 percent of workers had stayed off the job. The government disputed this, with the Finance Ministry saying about a quarter of public employees and 58 percent of nurses had gone on strike. The General Confederation of Portuguese Workers (CGTP) and the General Workers Union (UGT) labour federations, as well as dozens of other unions, joined forces in the first general strike by public workers since 1992. It was the latest in a series of anti-government strikes, marches and protests in recent months. Nobre dos Santos, leader of the Fesap public workers union, said government workers could strike again if the administration shunned talks with unions over reforms and economic plans. ''We feel that we have to deepen the fight in the defence of workers' interests,'' dos Santos told a news conference. Durao Barroso, a Social Democrat, has vowed to trim the public work force and spending as Portugal tries to close a budget deficit that breached a European Union limit last year. Government personnel costs take up 15 percent of gross domestic product, about 50 percent higher than the EU average. Durao Barroso has also drawn protests over proposed labour reforms that would combat widespread absenteeism, make it easier to fire and hire workers and trim overtime pay.

From MSNBC, 14 November 2002

EU's New Members Should Join on May 1, 2004, Denmark Proposes

Brussels - Denmark will propose that the European Union set May 1, 2004, as the entry date for 10 new eastern members at a meeting of EU foreign ministers it hosts on Monday, a Danish government official said. May 1 is the latest date to give governments time to ratify the entry treaties while sticking to a pledge to admit new members before European Parliament elections in mid-June 2004, the official told journalists. Denmark holds the EU's rotating presidency and intends to wrap up talks with would-be members at a summit on Dec. 12. Leaders of the 10 candidates meet in Poland today to push for the EU to give them more farm and regional aid than currently offered. The 10 planning to join in 2004 are Poland, Hungary, the Czech Republic, Slovakia, Slovenia, Lithuania, Latvia, Estonia, Malta and Cyprus. Romania and Bulgaria aim to join in 2007. Turkey hasn't been given a date to start negotiations. Setting a May 1, 2004, date for enlargement will leave governments to decide when and how to replace the current European Commission and whether to have an interim session of the European Parliament before elections that include new countries. Some countries had expected to join on Jan. 1, 2004. The later date may benefit them financially because the EU pays out much of its aid toward the end of the year while new members would only have to contribute from the day they join, the Danish official said.

From Bloomberg-Politics, by Warren Giles, 15 November 2002

Schroeder, Chirac Choose Opposite Ways to Spur Growth

Berlin - The leaders of Germany and France both faced widening budget deficits, rising unemployment and stagnating economies after winning elections this year. They have chosen opposite escape routes. So far, investors prefer French President Jacques Chirac's path of ignoring European Union deficit rules and cutting taxes. German Chancellor Gerhard Schroeder, whose budget deficit will breach the EU's ceiling this year, is raising taxes and social security payments in a bid to meet the limit next year. ``Germany, like France, must generate growth to collect revenue and cure its budget crisis,'' said Wolfgang Ebbecke, chief executive of the Paris unit of Germany's Andreas Stihl AG, the world's biggest chainsaw maker. "Berlin's methods contradict economic wisdom. France is moving in the right direction." The German economy, Europe's largest, grew 0.3 percent in the third quarter and is unlikely to pick up soon, the Bundesbank said Monday. Business confidence has dropped for five months. By contrast, the Bank of France raised its fourth-quarter growth forecast after executives grew more optimistic last month. France's CAC-40 stock index is down 31 percent this year, compared with a slump of 39 percent in Germany's DAX Index. The DAX was Europe's worst performing benchmark index in the third quarter. As the architect of the EU's budget rules, "it's self- evident that Germany is preoccupied with budget concerns,'' said Michael Turner, who helps manage $12.8 billion at Edinburgh Fund Managers. "France is a lot better off, carrying less emotional baggage and more prepared to take economic problems head on.'' Policy `Poison' - Germany and France together account for about half the economy of the dozen countries sharing the euro. Schroeder's government has raised pensions contributions paid by employers and workers by as much as $136 a month per worker to cover shortfalls in the state pension fund, a step described as ``poison'' by the BDA employers' association.

The German government introduced Monday a new capital gains tax on securities and rented real estate. Last week, it curbed energy tax exemptions for manufacturers and farmers. At the same time, Chirac and French Prime Minister Jean- Pierre Raffarin have cut income taxes by 5 percent this year. Nine million low-income workers received a one-time tax credit of an average 300 euros in October, prompting consumer confidence to rise for the first month in five. They have also passed a law loosening the country's 35-hour workweek. Popularity Plunge - There's no question whose policies are more popular with voters. Schroeder has lost favor at a record speed since winning re-election two months ago with the narrowest margin of victory of any leader since World War II. His approval rating fell to an all- time low this month, according to a poll for broadcaster ZDF. "Schroeder's cabinet is a bunch of cockroaches,'' said Dieter Franzen, who owns a newspaper kiosk in eastern Berlin and voted for Schroeder's Social Democrats in September. "Never again will I support the SPD. Raising taxes and social security payments during an economic downturn defies all logic.'' Germany's biggest companies aren't making predictions about 2003 after many of them lowered forecasts this year. Of the 27 companies on the DAX that have reported third-quarter earnings so far, 18 didn't give a forecast. Three said earnings will decline, while six expect a recovery. Chirac's popularity is near a one-year high while Raffarin's surged to a record of 60 percent, a poll by research group Ifop for weekly Le Journal du Dimanche showed at the weekend. The prime minister, appointed in May, is viewed as someone who "makes things move," the paper said, citing poll results. Deficit Dilemma - Germany's budget deficit this year will probably be 3.8 percent of gross domestic product, the European Commission predicts, above the EU's limit of 3 percent of gross domestic product designed to protect the euro.

The deficit will narrow to 3.1 percent of GDP next year, the commission forecasts. France, the second-largest country in the euro region, will probably post a deficit of 2.7 percent of GDP this year, rising to 2.9 percent in 2003, the commission said. The commission issued an ``early warning'' for the budget next year, when the government plans to continue with tax cuts to revive growth. ``Margins of maneuver are virtually zero,'' said Omar Habashe, an economist at Credit Agricole SA in Paris. "Already the tax cuts are becoming more timid. Next year they can only afford to cut by 1 percent - that's a drop in the ocean. Public opinion will probably suffer next year: unemployment will probably continue rising.'' The biggest challenge both Chirac and Schroeder face is reducing unemployment. In Germany, joblessness rose to 4.12 million, the highest in almost four years in October. French unemployment climbed to a two-year high the previous month. Unemployment - Schroeder has promised to cut unemployment by speeding up job placements, tightening eligibility for unemployment benefits and granting tax breaks for low-paid, part-time work. Executives say his proposals don't tackle the roots of unemployment - only the symptoms. For Chirac and Raffarin, easing labor laws and cutting wage costs carries the risk of protest and strikes. The last government made up of Chirac's supporters was brought down by 3 1/2 weeks of public-sector strikes in 1995. The then prime minister, Alain Juppe, was forced to withdraw reforms of the civil service retirement system. "Ultimately, both leaders' fate hangs on unemployment and their success in lowering it,'' said Uwe Andersen, a professor of politics at the University of Bochum in Germany.

From Bloomberg-Politics, by Catherine Hickley, 20 November 2002

EU Votes for Tobacco Ban

Strasbourg, France - Plans for a widespread ban on tobacco adverts have been passed by the European Union Parliament. The measures, which still needs further ratification from member states and the bloc as a whole, would outlaw adverts in newspapers and magazines, on the Internet and at international sports events throughout the EU. EU Health and Consumer Affairs Commissioner David Byrne said the bill would give "a clear sign" to the tobacco industry that the EU took the health of its citizens seriously. In a first assessment, the EU Parliament, meeting in Strasbourg, France, voted 311 to 202, with 39 abstentions, to accept the tough new restrictions on Wednesday. Byrne said he expected EU governments to ratify the bill as it stood, allowing the ban to take effect in July 2005. "There is too high a level of tobacco advertisement in EU. This will help reduce tobacco consumption by removing messages that smoking is cool," he told The Associated Press. Byrne said he was confident the new rules would stand up to a court challenge - unlike the EU's previous attempt to control tobacco advertising. The European Commission, the EU's executive office, is trying to get the rules approved as an internal trade measure, which would require the backing of most of the 15 EU nations, rather than unanimity. Germany, backed by tobacco and advertising companies, succeeded in overturning the previous ban at the European Court of Justice when it agreed the restrictions were a public health law, which require unanimous support. The new bill proposes an end to the free distribution of tobacco products as a promotional tool. It does allow tobacco companies to advertise in cinemas, on billboards, posters or via indirect adverts, such as clothing lines. Under the earlier ban, the EU had prohibited tobacco adverts in cinemas and on billboards. TV advertising and sponsorship by tobacco companies are already banned. The bill also said the sponsoring of sporting events such as Formula One auto racing "is to be prohibited." Tobacco giant Philip Morris has said it welcomed restrictions that limit children's exposure to cigarette advertising, but said regulations should "permit such marketing to be directed toward adult smokers." More than half a million Europeans die of tobacco-related diseases each year, according to EU statistics.

From CNN, 20 November 2002

Swiss Referendum to Test Humanitarian Tradition

Zurich - Switzerland's age-old reputation as a haven of neutrality for political refugees hangs on a Sunday referendum which would force the government to accept asylum laws critics say would be the toughest in Europe. Swiss citizens will vote in the referendum on laws proposed by the right-wing Swiss People's Party (SVP) to effectively bar any chance of asylum to the 95 percent of refugees who currently arrive in Switzerland by way of a third nation. Under Swiss system of direct democracy a referendum obliges the government to accept legislation. The SVP are seeking laws which will allow Swiss authorities to immediately reject any application for asylum by a person who arrives in Switzerland from a "safe" third nation where they could have legally applied for asylum. The proposal rides a wave of unease about a potential increase in the number of refugees turning up at Switzerland's borders now that the European Union is tightening its rules. "The idea is that in today's system we have to bear refugees that most of the time managed to pay illegal networks (to get into the country). They are not the ones who suffer most," SVP Vice President Jean Fattbert told reporters. Recent opinion polls suggest that 43 percent of the population would vote for the initiative and 37 percent against. Under the SVP's proposals Swiss authorities would attempt to return failed asylum seekers to the country from which they had arrived and critics say that will strain relations with Switzerland's French, German, Italian and Austrian neighbours.

Some critics of the current asylum laws say Switzerland's generosity makes it a prime target of so-called "asylum shopping" where would-be asylum seekers travel across European Union and other countries considered safe for asylum in order to get to a nation which shells out the best benefits. The SVP initiative also proposes slashing social support for asylum applicants and barring them from taking on work. Sanctions would also be raised against airlines that bring refugees without papers into Switzerland. "The initiative brings no solutions," Jurg Schertenleib of the Swiss Refugee Council said. "It just means that the existing system would be dismantled and it would lead to chaos." "UNWORKABLE PROPOSAL" Swiss voters will decide whether to accept or reject the proposals, which have been condemned by aid groups, the Swiss government and the United Nations as unworkable and damaging to human rights. "Refusing to hear asylum seekers' claims simply because of the route they have taken is unacceptable," Ruud Lubbers, U.N. High Commissioner for Refugees (UNHCR) said earlier this month. "No other European country has gone that far. I would find it extremely worrying if Switzerland, with its strong humanitarian tradition, were to transform itself into the most unwelcoming country to refugees in Europe."

The SVP says since only 10 percent of asylum applications are successful, the majority of the some 20,000 refugees arriving in Switzerland each year come for economic reasons. Foreigners already account for some 20 percent of the Swiss population and the debate has been fuelled by the arrival of more black Africans in German-speaking areas who have been cast by some Swiss media as a drug-dealing scourge. One asylum seeker in Zurich, who declined to be named, said he arrived in Switzerland from southern Sudan two months ago, adding he had come to escape the conflict between the government and rebels which has raged since 1983. "I did not come here for money, I came for my own safety," he said. "We get two francs a day so I can't afford to buy cigarettes and the clothes I am wearing a friend gave to me." His friend, also from Sudan, said they were being housed in a dormitory while their applications were being processed but complained about the conditions. "It is really shit," he said. "We sleep on the floors, we go to the railway station for a shower and the soup is like water." Some Swiss authorities have banned asylum seekers from town centres amid increasing concern among residents. "I live next to the centre for refugees and it is a horror," one Geneva resident told Reuters. "I have to say that in the end we need limits." (Additional reporting by Vincent Fribault in Geneva).

From MSNBC, by Tom Armitage, 22 November 2002

Putin Vetoes Legislation that Would Restricted the Media

Russian President Vladimir Putin vetoed legislation Monday that would have sharply reduced the news media's ability to report on counterterrorism operations and rebel activities. The legislation - amendments to the country's media laws - would have prohibited the media from reporting any information seen as hindering anti-terrorist operations, including description of tactics. It also would have banned the broadcast or publication of rebel statements and any propaganda perceived as justifying extremist activity. During a meeting with senior Russian media leaders, Putin said he asked leaders of both houses of parliament to form a conciliation commission to work on new legislation governing terrorism coverage. "It's important to find a balance between restrictions and providing full information to society," Putin was quoted as saying. Major Russian media had vigorously protested the measures, which both houses of parliament overwhelmingly approved in the wake of the hostage-taking by Chechen rebels in a Moscow theater last month. Thirty organizations, including Russia's two main state-controlled television channels and their independent rivals, signed a letter last week urging the president to reject the measure. Many journalists said the restrictions could be used to shut down any news organization that irks authorities. They also complained that the restrictions could be used to further restrict coverage of the war in Chechnya - which Russian officials routinely refer to as a "counter-terrorist operation."

The Kremlin had bitterly criticized reporting by some Russian news media of the Moscow theater siege, believing it had been favorable to the rebel cause and threatened rescue operations. During Monday's meeting with journalists, Putin reiterated his displeasure with the hostage coverage. "Television pictures from one channel a few minutes before the storming, when the movement of special forces was shown, could have led to an enormous tragedy," Putin said in televised comments. He accused some media of acting irresponsibly to "boost their ratings" and make more money during the theater siege. "The main weapon of terrorists is not grenades and bullets, but blackmail, and the best means of such blackmail is to turn a terrorist act into a public show," Putin said, according to ITAR-Tass. Chechen rebels seized the theater on Oct. 23, and Russian special forces stormed the building three days later, killing 41 militants. At least 129 hostages have also died from the effects of a narcotic gas used to knock out the rebels. During the theater siege, authorities complained to Echo of Moscow radio after it aired a live interview with a hostage-taker and posted the text of that interview on its Web site. Officials also briefly shut down a Moscow television station during the crisis, accusing it of broadcasting information of possible escape routes for the hostage-takers.

From MSNBC, 25 November 2002

Senate Shift Could Mean New Tack on Tech Issues

Washington - Republican control of both houses of Congress, and the leadership changes it will bring about, could have the biggest impact on efforts by Sen. Ernest "Fritz" Hollings (D-S.C.) to bring "opt-in" privacy protections to online commerce as well as force hardware makers to build copyright protections into their products. Hollings' legislative efforts got the ire of the tech industry, which will be happy to see Sen. John McCain (R-Ariz.) return as chairman of the key U.S. Senate Commerce Committee. "McCain is certainly more tech-industry sensitive then Hollings," said John Palafoutas, vice president of the tech industry group AEA, in Washington. But Hollings "is still a force to be contended with and for anything to happen in that committee Sen. McCain is going to need Hollings' cooperation." The differences between McCain and Hollings were obvious on privacy, where McCain has previously backed an opt-out approach to privacy legislation. Hollings wanted opt-in, or customer consent. But while the Senate Commerce Committee will likely see a shift in approach, the same can't be said for the Senate Banking Committee, which is expected to take up renewal of the state preemption provisions of the privacy protections in the Fair Credit Reporting Act (FCRA). The FCRA allows sharing of certain kinds of data among business affiliates; states are prohibited from setting their own data sharing rules. That particular provision, which expires at the end of next year, has the potential to become the leading financial privacy issue of 2003. In this case, a change in leadership may not make a difference. Paul Sarbanes (D-Md.), the current chairman of the banking committee, may be replaced by Richard Shelby (R-Ala.), who is also a very strong advocate for privacy protections. "Shelby is one of the most ardent pro-privacy senators of either party," said Evan Hendricks, editor and publisher of Privacy Times. "Privacy is in much better shape there [in the banking committee] than anywhere else." But the Senate Commerce Committee has been the key committee for tech legislation.

It was there that Hollings began his effort, through Senate bill 2048, to force technology makers to build in mechanisms to stop piracy. That measure, widely attacked, already faced problems. "If it wasn't already going nowhere, I think with the Republican control of the Senate it would be even less so," said Rhett Dawson, president of the Information Technology Industry Council. The Republicans, said Dawson, "are even less enthusiastic about having Congress get in the middle of technology choices" than the Democrats. Tech industry officials, however, said no tech bills will get passed without Democratic support, particularly because of the 60-vote rule in the Senate. Ari Schwartz, associate director of the Center for Democracy and Technology, said McCain worked to get bipartisan privacy legislation adopted, and he believes that debate will resume. "There are a significant number of members ... that are for stronger privacy rules." In April, Hollings introduced an online privacy bill requiring opt-in, or consumer consent, before a business could sell or share some types of personal information. Technology association and business trade groups, by contrast, have supported opt-out laws because consumers often don't take advantage of them (see story). For example, the 1999 Gramm-Leach-Bliley financial modernization bill included a number of opt-out privacy protections. Gramm-Leach-Bliley gave customers the right to stop financial service firms from selling or sharing their personal data with third parties. All customers had to do was opt out. But critics charged that the privacy notices were full of legal jargon, fine print and difficult to understand. Less then 5% opted out of data sharing. But the new Congress will have to deal with a spreading backlash over financial privacy protections. In August, San Mateo County, Calif., approved a measure forcing financial services in that county to get a customer's permission, or opt in, before sharing data with third parties. The county also now gives customers an ability to opt out of data sharing with a company's affiliates - something Gramm-Leach-Bliley doesn't even address. In June, voters in North Dakota overwhelmingly voted to tighten financial privacy laws. Vermont officials have also imposed similar restrictions.

From ComputerWorld, by Patrick Thibodeau, 6 November 2002

Court: Disability Law Doesn't Apply to Web

Washington - A lawsuit contending that Southwest Airlines Co. violated the Americans with Disabilities Act (ADA) because its Web site was inaccessible to the blind has been rejected by a federal judge. But the advocacy group that filed the suit and a blind individual plan to appeal the decision. The group Access Now Inc. and Robert Gumson contended that Southwest's online virtual ticket counters are "extremely difficult" -- but technically possible - to use. At issue: Web site accessibility and whether sites created by companies fall under the aegis of the ADA law. In one of the first court decisions on the applicability of the ADA to the Internet, a U.S. District Court judge in Florida said the ADA concerns physical spaces, not virtual ones, and left it up to Congress to decide whether to broaden the law to include cyberspace. But in a footnote to her 12-page decision, Judge Patricia Seitz expressed surprise that a customer-focused company like Southwest didn't "employ all available technologies to expand accessibility to its Web site for visually impaired customers who would be an added source of revenue." When asked about the dispute, Southwest spokeswoman Christine Turneabe-Connelly acknowledged that some screen readers - software that converts on-screen text to audio or refreshable Braille display - may have had problems with the company's Web site and said that Southwest is "exploring some possibilities" to make "our Web site more user-friendly" for the blind or visually impaired. "We do everything we can, obviously, to make this Web site user-friendly. That's always been our focus for every customer," said Turneabe-Connelly. Problems with Web site accessibility aren't uncommon, and accessibility is strictly a matter of whether a Web site designer "programmed it for people who are blind," said Access Now President Edward Resnick.

Many companies rush to create Web sites without considering accessibility and may later balk at spending money to retrofit their sites. As a rule, building in accessibility during a Web site's design costs only a quarter of the amount needed to retrofit a site later, said Jennifer Vollmer, a research analyst at Meta Group Inc. in Stamford, Conn. Accessibility "should be part of the overall Web content strategy," Vollmer said. "It should be a no-brainer. But it has not just been a priority for companies." Web accessibility can be provided without sacrificing a site's features. The Worldwide Web Consortium (W3C) has published accessibility guidelines, and many involve simple rules, such as using markup and style sheets properly; avoiding the use of color alone to signal something; and allowing viewers to stop or pause moving, blinking, scrolling or auto-updating objects or pages. In 1998, Congress amended the federal Rehabilitation Act to require U.S. agencies, government contractors and others receiving federal money to make electronic and IT services accessible to people with disabilities (see story). The rule is known as Section 508. The ADA, however, was approved in 1990, before the Web was an issue for lawmakers. Improving accessibility also means improving the awareness and training of programmers, said Gerry Santoro, an assistant professor of information sciences and technology at Pennsylvania State University. "In general, programmers write for themselves" and are interested in only designing a system that works, said Santoro. "The same is true of Web designers; they tend to design for themselves," he said.

From ComputerWorld, by Patrick Thibodeau, 5 November 2002

Brazil's President-Elect Begins to Forge National Development Pact

President-elect Luiz Inacio Lula da Silva called on Brazilians to join in a "social pact" to spur development and end hunger in Latin America's largest country. Silva, the landslide winner of Brazil's Oct. 27 election, met Thursday with about 100 business, finance and labor leaders in Sao Paulo to hammer out a consensus on the pact's goals. "I am convinced that Brazil's problems are more political than economic," Silva said after the meeting. Thursday's meeting was part of an effort to secure support for Silva's proposed reforms of the tax system, social security, land distribution and labor laws. His first commitment, he said, is to end hunger in Brazil. "I don't have the right to make mistakes," said Silva, a union boss who is set to become the nation's first lefist leader in decades. "But never in my life have I been so optimistic." It's a daunting task. Former President-elect Tancredo Neves and ex-President Itamar Franco tried and failed to forge a similar social pact. "We have to create jobs, increase domestic demand and exports. Everyone has to make some type of effort so things succeed in this country," steel magnate Jorge Gerdau said in an interview on the Web site of Silva's Workers Party. Later in the day, Silva met with former-Rio de Janeiro Gov. Anthony Garotinho and former-Ceara Gov. Ciro Gomes. Both men were presidential candidates who lost to Silva in the first round on Oct. 6 and threw their support behind him in the run-off. Silva held open the possibility that both men could participate in his government, spokesman Andre Singer said following the meeting.

From MSNBC, 8 November 2002

Homeland Security Bill Clears House

Washington - The House of Representatives Wednesday passed a bill to create a Cabinet-level homeland security agency, and congressional leaders told President Bush they expect to have the measure on his desk by next week. The bill, passed by the House in a 299-121 vote, is a compromise measure, meant to break an impasse over labor rights and civil service protection for the estimated 170,000 workers in the proposed Department of Homeland Security. The same bill is also expected to pass in the Senate, which took up the measure Wednesday afternoon but has not voted on it yet. "I have every expectation we can finish within the week - within a week, not this week," said Senate Majority Leader Tom Daschle, D-South Dakota. The proposed agency would combine workers from 22 agencies, including the Border Patrol, Coast Guard and Customs Service, into one Cabinet department with a $37 billion budget. Congressional sources said the new compromise would give Bush the flexibility he needs to hire and fire workers in the new department, while giving unions a right to challenge new rules. But the measure introduced Wednesday drops previous provisions to create an independent commission to investigate intelligence lapses before the September 11, 2001, terrorist strikes. Negotiations on creating an independent September 11 commission are continuing, several administration and congressional sources said. "What you don't want is something that is designed to generate an October 2004 surprise," said one senior congressional source involved in the negotiations. The stated goal of such a panel would be to review what government agencies knew - or perhaps should have known - prior to September 11 about the threat of a terrorist strike on the United States. Negotiators hope to resolve the issue early in the new Congress, which convenes in January, several sources said. The White House initially opposed an independent review, but ultimately gave the idea public backing after it was clear there was bipartisan support in Congress and after several family members of September 11 victims criticized the White House for opposing the review.

One of the most vocal of those family members, Stephen Push, said Wednesday that there are thousands of unanswered questions about the attacks on New York and Washington. "Without the independent commission to understand what went wrong on 9/11, we are not going to be able to fix the problems that allowed these terrorists to kill 3,000 people a year ago," said Push, whose wife was killed in the attack on the Pentagon. Three moderate senators, John Breaux, D-Louisiana, Ben Nelson, D-Nebraska, and Lincoln Chafee, R-Rhode Island, crafted the compromise on workers' rights with Lott and the White House. "We believe this new proposal represents improvement in the personnel flexibility provisions [from the original GOP proposal]," Breaux, Chafee and Nelson said in a written statement. Under the tentative agreement, if the department or the White House wants to make a change in the rules governing its employees, it must first inform union representatives. The federal employees union then has 30 days to offer proposed changes to the new rule. If the two sides do not come to an immediate agreement, the department's secretary could declare an impasse, which would trigger two actions: The department would send proposed changes and union objections to Congress for review; and the two sides would enter a 30-day mediation process with an independent board. If that mediation process failed and no common ground was found between the government and the employees, the secretary could go ahead and implement the proposed changes. The House of Representatives had already passed a White House-backed version of the measure, but Senate Democrats said that version would give Bush too much power and undercut civil service protections for workers. The version the House is to vote on Wednesday will supercede the earlier one. According to congressional sources, provisions allowing guns in planes' cockpits and smallpox vaccinations are also included in the proposal. Correspondents John King and Kate Snow, and Producer Dana Bash contributed to this report.

From CNN-Politics, 15 November 2002

Congress Creates 'Safe Haven' for Children on Internet

Washington - Congress approved legislation Friday to create a safe haven on the Internet for children, where parents can be assured Web sites are free of pornography and other material not suitable for youngsters. The measure would make a ".kids.us" Internet domain that would be available within a year and monitored by a government contractor to ensure the material is appropriate for children under 13. The bill won unanimous approval from the Senate on Wednesday and the House on Friday. It now goes to President Bush, who was expected to sign it. The House also sent Bush a bill Friday allowing small Internet music broadcasters to pay lower copyright royalty fees, something those businesses say is key to their survival. If they grow sufficiently, they would no longer be entitled to pay the lower fees. The Internet domain measure was backed by child advocates. "Kids need a safe place to go on the Internet," said Sen. Byron Dorgan, D-N.D., who introduced the bill in the Senate. "This is our nation's best chance to guarantee kids an online experience that is fun and age-appropriate from start to finish." Web sites wishing to register in the "dot-kids" area within the United States Internet domain would have to agree to display only child-friendly material. The sites would be prohibited from linking to Internet sites outside the kids area. Instant messaging or chat rooms also would be banned unless they are certified as safe, protecting children from Web predators.

The legislation defines Web content as harmful to children if it depicts sex or nudity, is clearly sexual in nature or "lacks serious, literary, artistic, political or scientific value for minors." Critics, including some civil liberties groups, say the new domain will do more harm than good. In a letter sent to lawmakers before the bill passed, Alan Davidson, associate director of the Washington-based Center for Democracy and Technology, said the legislation has good intentions but "would be ineffective at protecting children." One problem, Davidson said, is that the age range is too broad - material suitable for a 12-year-old may not be right for a younger child. If the material is restricted for the youngest children, older kids won't be interested, he said. "Many parents will find that limiting their children's Internet activity to '.kids.us' will not be a solution to keeping them safe online," Davidson said. "And the company administering the domain would be required to make decisions for millions of children that would be better made by families." Congress wants that company to be NeuStar Inc., a Washington firm that has managed the ".us" country domain for a year. The company has another three years in its contract and would get a two-year extension if it agrees to manage the children's domain, a Dorgan aide said. The Commerce Department's National Telecommunications and Information Administration would oversee NeuStar, which would monitor the domain and remove anything it finds objectionable. There would be procedures for Web site operators to contest decisions to remove their content.

Davidson said a huge amount of Web site policing would be needed and would likely fall short of what parents expect. He said Internet safe areas developed and run outside the government would be more effective. James Casey, policy director for NeuStar, said the company is up to the task. "We have to make sure we do it right for the children," Casey said. The Internet broadcasting bill mirrors an agreement worked out earlier by webcasters and the recording industry, which wants royalties for songs broadcast over the Internet. The legislation would let the recording labels and artists who hold copyrights set their own royalty rates for webcasts rather than use the standard imposed by the U.S. Copyright Office in June - 70 cents for every song heard by every 1,000 people. Internet radio - either simulcasts of traditional over-the-air radio or Internet-only stations streamed over the Web to computers - is becoming popular as more people get high-speed connections. But many webcasters are small and highly specialized, reaching only hundreds or thousands of people. They complained the rates imposed by the Copyright Office would be more than they could afford, forcing them out of business. The bill authorizes SoundExchange, the organization collecting payments on behalf of the music industry and artists, to reach rate agreements with small webcasters based on an Internet broadcaster's revenue.

From Nando Times-Technology, by David Ho, 15 November 2002

Copyright Law Gets a Second Look

Foes of the Digital Millennium Copyright Act have a second chance to tweak a section of the controversial law. On Tuesday, the U.S. Copyright Office began accepting comments from the public on the law's "anticircumvention" section, which limits people's ability to bypass copy-protection mechanisms. Comments are due by Dec. 18. When enacting the DMCA in 1998, Congress ordered the Copyright Office to conduct regular reviews of one portion of the law. The Librarian of Congress, who oversees the Copyright Office, may exempt specific groups from being covered by part of the DMCA. In October 2000, two exemptions were set: Filtering researchers could study blacklisting techniques, and obsolete copy-protection schemes could be legally bypassed. Those exemptions expire in October 2003. But the DMCA includes two broad prohibitions--on bypassing copy-protection technology and on distributing a program that bypasses that technology--and the Librarian of Congress is permitted only to offer exemptions to the former. Because it won't affect researchers or companies that publish software code that circumvents copy-protection technology, the practical impact of the new rulemaking is limited. It could not have helped 2600 magazine, for instance, which the movie studios successfully sued for distributing a DVD-descrambling utility. Ben Edelman, a filtering-software researcher at Harvard University's Berkman Center, sued in July to overturn the second section of the DMCA. Companies that make filtering software typically include an encrypted list of sexually explicit or otherwise banned Web sites, and a researcher who distributes code that circumvents that copy protection could run afoul of the DMCA, Edelman asserted. When reviewing the DMCA, the Librarian of Congress is required to consider the impact that the anticircumvention sections have "on criticism, comment, news reporting, teaching, scholarship, or research (and) the effect of circumvention of technological measures on the market for or value of copyrighted works."

From News.com, by Declan McCullagh, 20 November 2002

Government Computer Systems Lack Security, GAO Reports

Some of the U.S. government's most important computer systems continue to suffer significant security lapses despite renewed focus protecting them against terrorist attacks, congressional investigators said Tuesday. In a report to a House panel, the General Accounting Office said it found "pervasive" weaknesses in federal technology systems at the 24 largest departments and agencies. Among the worst problems were weak protections at nearly all agencies against insiders attempting sabotage or personally profit by destroying or stealing sensitive information. The failures put at risk federal payments, taxpayer data and medical records. "Critical federal operations and assets remain at risk," the GAO said. The GAO, the investigative arm of Congress, prepared its latest report for a hearing Tuesday by the House Government Reform subcommittee on government efficiency. The panel praised security efforts by the Social Security Administration but harshly criticized the Transportation Department. That agency's inspector general, Kenneth Mead, cited some improvements over last year, but he acknowledged that the Transportation Department "still has a long way to go to adequately secure its computer systems." Mead said hackers could sneak into the agency's computer systems through some unsecured connections or telephone lines, and that Transportation officials failed last year to report to U.S. investigators three successful hacker break-ins to their Web sites. Investigators said serious problems persist among govenrment plans to continue operating during attacks or interruptions, and these plans "are particularly important in the wake of the terrorist attacks of September 11." There was some good news: Security was slightly better overall than in past years, and investigators said many of the latest problems were discovered during broad audits aimed specifically at finding such lapses. As these audits become more intense, even more faults likely will be discovered, the GAO predicted. One expert said part of the blame falls on software designers who rush to sell their products without making sure these programs are resistant to hackers. "We continue to see the same types of vulnerabilities in newer versions of products that we saw in earlier versions," Richard Pethia of the federally funded CERT Coordination Center said in prepared testimony. "Until customers demand products that are more secure or there are changes in the way legal and liability issues are handled, the situation is unlikely to change."

From The Nando Times, by Ted Bridis, 20 November 2002

EPA Proposals Would 'Roll Back' Pollution Laws, Critics Say

Washington - Plans by the Bush administration to relax clean air rules affecting refiners such as ChevronTexaco Corp. and power plant owners such as Southern Co. would "roll back" existing pollution laws, lawmakers and state officials who oppose the move said. The Environmental Protection Agency has scheduled briefings for today on regulatory changes that would allow utilities, oil refiners and manufacturers to upgrade plants without installing new pollution controls. The revisions to a program under the 1977 Clean Air Act were proposed in June. "These rollbacks of the Clean Air Act are unacceptable and endanger public health," said Massachusetts Representative Edward Markey, the senior Democrat on the Energy and Commerce Committee's Energy and Air Quality subcommittee. State attorneys general from New York and as many as eight other states, most in the Northeast, plan to sue to block the revisions. The rule changes are a response to industry complaints about enforcement efforts under the Clinton administration, which sued 51 coal-fired power plants in the 1990s alleging the owners failed to apply for government permits when they replaced equipment or modified their facilities. Plant owners, such as ChevronTexaco and Cinergy Inc., argued that the system forced them to apply for government permits to perform routine maintenance. "There has been general agreement among most of these stakeholders that the regulations can and should be improved," the EPA said in a letter sent this week in response to congressional inquiries about the rule changes. Reducing Pollution - EPA Administrator Christie Whitman has said the revisions will reduce pollution by encouraging maintenance, while easing the regulatory burden on plant owners. None of the EPA's planned changes require congressional approval. Some of the rules would go into effect immediately and others would be subject to a public comment period.

A coalition of attorneys general from Northeast states is preparing to sue the administration, said Marc Violette, a spokesman for New York Attorney General Eliot Spitzer. "We believe it's going to be a significant and very damaging weakening of the Clean Air Act," Violette said. "We're planning to prepare legal action in federal court to block the administration effort to gut the Clean Air Act." A coalition of 28 trade groups representing companies ranging from automakers to refiners to papermakers lobbied for the changes, saying they would remove the threat of government sanctions for routine maintenance and upgrades of equipment. Company Complaints - Companies such as Atlanta-based Southern, the largest U.S. power producer, say they have been unfairly targeted with lawsuits and costly paperwork for routine repairs such as replacing tubes, pumps, fans and air heaters. "They have wanted to undertake efficiency programs, install more efficient turbine blades and so on, and have been told by EPA they cannot do that," said Dan Reidinger, a spokesman for the Edison Electric Institute, which represents companies that generate 70 percent of the nation's electricity. The rules will help remove "the cloud of uncertainty that's hanging over the head of virtually every power plant company in the country right now." The "New Source Review" program requires plant operators to install the latest pollution control equipment whenever they expand or modify their facilities. About 19,000 plants fall under program, the EPA said. Cutting Emissions - Environmental groups and health experts credit the program for cutting emissions from coal-fired power plants, a major source of air pollution.

Markey and other Democrats such as Senators John Edwards of North Carolina and Joe Lieberman of Connecticut have said the changes would gut the Clean Air Act and lead to more premature deaths, asthma attacks and smog linked to emissions from power plants. The changes were first proposed in 1996. Among those to take effect immediately is one that would allow facilities that have installed state-of-the-art pollution equipment to avoid additional permits. Another would set a single emissions limit for a plant, instead of monitoring emissions at each smokestack or part of a plant. Companies would thus be able to add or replace parts provided the plant's total emissions remained below the cap. A third change would alter how emissions are measured to let companies make minor repairs without new emissions controls. Facilities will be able to choose any consecutive 24-month period in the previous decade to represent their typical amount of emissions, instead of the current measurement of what a plant would emit if it were operated 24 hours a day year-round. The administration is also taking public comment on a proposed change that may not take effect for years that would clarify the definition of "routine maintenance and repair," a priority for companies who say the current definition creates uncertainty. President George W. Bush's energy task force in May 2001 ordered an EPA review of the program. An EPA report released in June 2002 concluded that it is too confusing and has deterred energy companies from investing in improving their efficiency or reliability in delivering electricity.

From Bloomberg-Politics, by Alex Canizares, 22 November 2002

The Economic Impact of War

The potential fallout is murky. What happens to oil prices? Might war trigger a new recession? Would a swift victory help revive confidence? It is Feb. 7, 2003, just after American troops have seized several Iraqi airfields to be used as staging areas. Suddenly, Scud missiles-armed with both chemical and conventional warheads-strike the airfields. Hundreds of Americans die. The whole U.S. battle plan is thrown into disarray. The Iraqis (it turns out) abandoned their airfields with little resistance precisely to make them easy targets We Don't Know if there will be a war or, as this story suggests, how it might unfold. But the fact that we don't know now overhangs the economy. It weighs on confidence. Companies hesitate to make commitments. The uncertainties can't be dispelled by low interest rates or lofty reassurances. At a recent congressional hearing, Democratic Rep. Pete Stark quizzed Federal Reserve chairman Alan Greenspan. Stark: [President Bush has] an obsession, it appears, to plunge us into a war. [On] the assumption that we will be there one or two years and $100 billion [or] $130 billion a year ... what effect would this have on our economy? Greenspan: The numbers you quote are clearly very much on the high side ... I would be very doubtful if the impact on the economy is more than modest, largely because this is not Vietnam or Korea. Korea ... had a really monumental effect, because the economy was so much smaller. Well, maybe. Since 1950, the economy's gross domestic product has grown from $1.7 trillion to $9.2 trillion in 2001 (figures in inflation-adjusted 1996 dollars). A war would probably last some months, and the Congressional Budget Office estimates the federal budget costs from $6 billion to $13 billion a month: not crushing for so wealthy a society. But the true economics are murkier. What happens to oil prices? Might war trigger a new recession? Would a swift victory revive confidence? Because no one knows, "scenario building"-the next best alternative-is now in vogue.

Anthony Cordesman of the Center for Strategic and International Studies in Washington reports the following: Saddam's Army totals about 375,000 men; the Air Force has 316 planes, maybe half operational; the air defenses are "dense"; weapons of mass destruction are unknown. For a CSIS conference, Cordesman provided three war scenarios, and economists judged the consequences. The "benign case" anticipates rapid victory. Much of Saddam's Army surrenders or defects. Because uncertainty lifts, the economy fares better than under a "no war" scenario. The temporary loss of Iraqi oil is no big deal. Iraq's production now represents about 2 percent to 2.5 percent of world oil use. Saudi Arabia and other Persian Gulf suppliers offset the loss. Their surplus capacity is about 6 percent of global oil consumption, says analyst Adam Sieminski of Deutsche Bank. The United States might also release oil from strategic reserves, By contrast, Cordesman's other scenarios-though deemed less probable-are scarier. In the "intermediate case," fighting lasts up to three months. Iraqi attacks slightly damage other gulf oilfields. Oil prices, now about $25 a barrel, hit $42 by early 2003. In the worst case, Iraq badly damages other oilfields. Production drops by at least 5 million barrels a day, out of a total global consumption of 77 million barrels a day. Oil prices hit $80 a barrel. Intense urban fighting incites the U.S. antiwar movement. Social unrest spreads in the Middle East. In the intermediate case, unemployment (now 5.7 percent) reaches almost 6.5 percent by late 2003.

In the worst case, it goes to 7.5 percent. Untruth by Robert Samuelson - Another dark assessment comes from Yale economist William Nordhaus, writing in The New York Review of Books. He says that a worst case (including a long-term occupation and reconstruction of Iraq) could cost $1.6 trillion over a decade. Only about half this total would be federal budget costs; the rest would reflect slightly higher oil prices and slower economic growth. "It seems likely," he says, "that Americans are underestimating the economic commitment involved in a war." (One omission in his math: in the next decade, U.S. GDP should exceed $100 trillion; even his cost is less than 2 percent of the national income.) Life after major wars is not like life before them. They change-for better or worse-the political, economic and psychological landscape in basic ways. A quick and successful war against Iraq might transform the Middle East by empowering Arab moderates. A long and messy war might destabilize the region and, by showing that U.S. power is exaggerated, abet terrorism, tensions and conflicts around the world. Pax Americana would recede; a power vacuum would develop. The wisdom of war depends on the answer to these questions and one other: what's the alternative? If it's peace and prosperity, then war makes no sense. But if fighting now prevents a costlier war later, it makes much sense. To be blunt: if Saddam gets nuclear weapons and threatens his neighbors (Saudi Arabia, Kuwait) or drops one on Tel Aviv, prompting Israeli retaliation, we'd face a horrendous war. The economy's fate ultimately hinges on these issues. It's a cop-out to say that they are a matter of judgment and that we don't know and, probably, can't know the answers. But that is what candor compels.

From MSNBC, 25 November 2002

Bush to Offer Stimulus for U.S. Economy, O'Neill Says

Manchester, England - President George W. Bush will offer a new plan to help accelerate the "bumpy" U.S. economic recovery that's now underway, Treasury Secretary Paul O'Neill said. Forecasts are for growth to slow in the fourth quarter to around half the 3.1 percent annual rate of expansion between July and September. That's slower than the 3 to 3.5 percent range O'Neill once predicted for yearend growth.
"Early next year President Bush will propose new action for economic growth and job creation," O'Neill said in a speech to the U.K.'s Confederation of British Industry. He didn't specify what actions Bush may suggest. With a Republican-controlled Congress taking office in January, Bush has said he will seek to make last year's $1.35 trillion tax cut permanent. The administration has been getting advice on other possible steps. Businesses are seeking a 75 percent write-off for equipment purchases and changes in rules that will require them to pay billions of dollars to shore up their pension plans. Investors want to end the so-called double taxation of dividends. On Capitol Hill, Republicans may try to speed up parts of last year's tax cut for individuals that are being phased in and to make permanent provisions that are set to expire. Democrats want to increase the minimum wage, extend jobless benefits, and temporarily suspend Social Security taxes to put cash into workers' pockets.

Targeted Cuts - O'Neill has suggested he prefers targeted tax cuts to broad- based reductions because only some parts of the economy are weak. "The tougher part has been building broad-based momentum throughout the economy," he told the U.K. business leaders. "Some sectors have been doing well, such as housing and auto manufacturing, while others, such as commercial airplane manufacturing and airline services have lagged." O'Neill said he was also continuing to craft proposals to pare the length of the U.S. tax code and free-up billions of dollars for investment. Tax avoidance, and the cost of complying with the tax system, means the U.S. could recover an additional $400 billion annually if the tax system were simplified, he said. "There's a lot to be gained," O'Neill said. Bush's Call - O'Neill, who again called the U.S. tax system "an abomination," said Bush shares his view that the tax code is too complicated. He stopped short of saying the president would endorse a complete overhaul, however. "The president got elected, I didn't," O'Neill said. "The president is the final authority on how far we should go on the spectrum of simplification and fundamental tax reform." The economy has been further buffeted by external shocks, including the collapse of the "dot-com fantasy," the terrorist attacks on New York and Washington, and corporate fraud. "Pile those on top of a slowdown already present when President Bush took office, and you have a recipe for a bumpy economy," O'Neill said.

O'Neill cited low inflation, lean inventories, rising incomes, a 5.7 percent unemployment rate and the largest annual gain in productivity since 1983 as evidence of economic strength. A creation of a homeland security department, terrorism risk insurance and the lowest Federal Reserve interest rates for 41 years had helped underpin the economy, he said. `Engines of Growth' - "Our policy proposals have been aimed at reigniting the engines of growth," he said. "The United States has been working its way back to steady growth and we've made progress. We've been making a recovery throughout this year." He called on other nations to take steps to boost demand in their economies. "The future of global growth depends on other nations around the world expanding their economic freedom as well, so that the United States isn't the sole engine for the world economy," he said. O'Neill is on the last stop of a 10-day trip which included stops in Afghanistan, Pakistan, and India. The Treasury secretary said private companies around the globe could aid the economic expansion by harnessing the best business practices of rivals. "There is such a large gap between the productivity of the very best performers in every industry and everyone else," he said. "This gap represents productivity improvement potential that requires only initiation, not the discovery of knew knowledge," he said. Asked why the U.S. hadn't joined the U.K. in endorsing the Kyoto treaty on climate change, which calls for industrial nations to cut emissions by 5.2 percent from 1990 levels by 2012, O'Neill said he thought the treaty was a "mistake because it seeks to regulate the environment at the national level."

From Bloomberg, by Simon Kennedy and Iain Rogers, 25 November 2002

Homeland Act Set To Become Law

Washington - President Bush is poised to sign legislation creating a new Department of Homeland Security, launching the biggest government reorganization in more than 50 years. The president will name Tom Ridge, the current homeland security chief, to head the department and Navy Secretary Gordon England to be his deputy at the bill-signing ceremony Monday afternoon. It's a huge shift in a bureaucracy that is often slow to change, reports CBS News Correspondent Peter Maer. The new department will take charge of the Coast Guard, Secret Service and 20 other agencies. There are already questions about office space and even speculation about the emblems on uniforms. The new Cabinet department - an idea Mr. Bush initially opposed - will swallow agencies with combined budgets of about $40 billion and employ 170,000 workers, the most sweeping federal reorganization since the creation of the Defense Department in 1947. The White Hosue acknowledged the new department will face "growing pains" and will not be fully operational for at least a year. "Wrinkles will have to be ironed out," presidential spokesman Ari Fleischer said. The president planned to "thank Congress for its bold and historic action in creating a new department largely along the lines of his proposal," said Gordon Johndroe, Ridge's spokesman. The department will have "one primary mission - protecting the American people, and it will allow 170,000 people to work more efficiently and effectively than ever before." Mr. Bush proposed the new department last June, saying it was needed to provide a united front against the terrorist threat to the nation.

The plan came at a time when the administration was facing questions on what it knew about the terrorists before they struck on Sept. 11, 2001. The bill became snarled in partisan disputes on Capitol Hill, with Democrats refusing to grant the president the broad powers he sought to hire, fire and move workers in the new department. Mr. Bush would not yield, and made the disagreement a political issue, railing against Democrats as he campaigned for Republican candidates through the fall. Democrats reversed course after their Election Day loss of Senate control was attributed partly to the homeland security fight. Signing the homeland security bill ends an odyssey for legislation that started inching through Congress nearly a year ago against Mr. Bush's opposition, only to see him offer his own version after momentum became unstoppable. The road to passing the homeland security bill was tortuous to the end. Senate Republican leader Trent Lott of Mississippi phoned House Speaker Dennis Hastert, R-Ill., in Turkey and won his pledge that Congress next year will reconsider three provisions that moderates opposed. One provision permits federal business with American companies that have moved their operations abroad to sidestep U.S. taxes. Another measure legally shields drug companies already sued over ingredients used in vaccines. Democrats said this includes claims that mercury-based preservatives have caused autism in children. Also re-examined will be a section that helps Texas A&M University win homeland security research money. The district of incoming House Majority Leader Tom DeLay is near Texas A&M.

From CBS News-Politics, 25 November 2002

U.S., EU Lead Push for WTO Accord on Drugs for Poor

Sydney - Trade ministers, led by the U.S. and European Union, moved closer to an agreement with developing countries on how to give them better access to drugs to fight AIDS and other deadly diseases. The 25 ministers gave a push to World Trade Organization talks in Geneva later this month that would back changes to WTO rules, allowing poor nations without a drug industry to import cheaper generic copies of patented medicines. Drugmakers such as Roche Holding AG, Pfizer Inc. and Merck & Co. are concerned that the loosening of patent protections may cut their revenue and undermine their ability to research new strains of diseases. "We are nearly there. There are minor adjustments which need to take place," EU Trade Commissioner Pascal Lamy said. "I didn't expect such a concentration before coming here. I think this is doable." Ministers at the one-day meeting in Sydney represented about 80 percent of the world economy. An agreement hinges on whether poor countries that can't make their own drugs can bypass patents in order to import medicines from generic producers. The WTO's 145 members are running up against an end-of-year deadline for a deal. "Everyone endorsed the need for urgently meeting the deadline," said Arun Shourie, an Indian minister. "I think on public health you will see a breakthrough." Licenses - Existing WTO rules allow developing countries to make their own copies of patented drugs under "compulsory licenses," in response to health crises such as HIV/AIDS or malaria. None has yet taken advantage of the clause. "The WTO says developing countries can use compulsory licensing, and the rules are pretty good," said James Love, director of Consumer Project on Technology Debate, a group that has lobbied for reduced drug costs. "But you have to do it in an inefficient way."

Generic drugmakers such as India's Cipla Ltd. make copies of medicines, taking advantage of intellectual property laws that protect processes rather than products, allowing them to reverse- engineer drugs using alternative methods. India will have to adopt stricter patent laws by 2005, in line with its WTO commitments, that will stop companies copying products. Lesotho, Senegal and Nigeria were among developing nations with ministers at the Sydney meeting. Sub-Saharan Africa has the world's largest infected population - 28 million people with AIDS or the HIV virus - according to UNAIDS, which coordinates United Nations action to fight the disease. Generic Drugs - "I'm very worried that if it's not a solution that's workable, countries may have given away their existing rights," said Ellen 't Hoen from Doctors Without Borders, a Nobel-peace prize winning humanitarian organization. The deal "is a setback in the fight to put public health before corporate profit," said the organization in a joint e- mailed statement with aid agency Oxfam. Generic drugmakers "would be under enormous pressure" from the U.S. and EU "not to help out." The text backed by the trade ministers is also aimed at ensuring the generic drugs exported to a developing country aren't then diverted to wealthy markets. "We are not totally there yet," said U.S. Trade Representative Robert Zoellick. "It's something we can and will do by the end of the year." Companies that developed brand-name drugs say that any weakening of existing patent protections threaten their research by undercutting revenue.

That may leave patients with fewer treatment options as diseases develop resistance to existing therapies. "Protection of intellectual property and of patent rights is essential for us because this is the basis on which we develop new drugs," Roche spokesman Horst Kramer said. "If you didn't have the patents 20 years ago, we would not have most likely a single HIV drug today." Basel, Switzerland-based Roche doesn't patent new HIV drugs in Africa and the 50 least-developed countries and won't initiate legal action against manufacturers who violate patents on its HIV medications, Kramer said. "If someone in an African country would like to produce them as generics, okay for us," Kramer said. Research companies will support a deal that maintains patent protections allowing the "development of new drugs and AIDS vaccines," Harvey Bale, director general of the International Federation of Pharmaceutical Manufacturers Associations, said in an e-mailed statement. The organization represents companies including Novartis and Pfizer. "We are going to send a very strong instruction back to Geneva to conduct the fine-tuning process that needs to be undertaken and resolve this issue by the deadline," Australian Trade Minister Mark Vaile said. "The spirit is there to deliver this commitment by the end of the year."

From Bloomberg-Politics, by Warren Giles, 15 November 2002

Senegal's President Names Party Ally as New PM

Senegal's President Abdoulaye Wade named the number two in his ruling party as prime minister on Monday, shortly after sacking Prime Minister Mame Madior Boye and the entire government of the West African country. Wade had been expected to dissolve the government and appoint someone from his own Senegal Democratic Party (SDP) as prime minister and the number two, Idrissa Seck, was a hot favourite. Seck, 43, who was previously minister of state without portfolio and cabinet director of Wade's office, told reporters after meeting the president that he would start forming a new government on Tuesday, after a series of consultations. "My mission...will be to conduct my new mission and open all ears to all signs, all talents and abilities," he said. Earlier on Monday, state radio had quoted a presidential decree dissolving the current government, adding that the outgoing government would continue in a caretaker capacity until the appointment of a new administration. "The position of Mame Madior Boye as prime minister has been ended," state radio quoted the decree as saying. "As a consequence the duties of other ministers have also ended." Boye, the first woman in the former French colony to be appointed prime minister, had been in the job since May 2001. She does not belong to any party. Senegal's defence and transport ministers resigned last month after the Joola disaster, in which a ferry carrying more than twice as many people as it was designed for capsized in September with the loss of more than 1,000 lives. Anger against the government has been growing since the extent of overloading was revealed and a disaster inquiry report delivered to the president on Monday suggested that the death toll could be even higher than initially thought. The head of the Senegalese inquiry told a news conference on Monday that while officially 1,034 people were on board the Joola, which sank leaving only 64 survivors, the actual number of passengers was probably much higher. The ferry, which was built to carry just 550 passengers, capsized within a matter of five minutes after it was caught by gusts of wind and heavy rain, according to survivors.

From MSNBC, 4 November 2002

Senegal's New Prime Minister Picks Cabinet to Tackle Economic Problems

Dakar - Senegal's prime minister picked a new Cabinet Thursday, completing a purge linked to a disastrous ferry accident and the country's economic woes. President Abdoulaye Wade's hand-picked prime minister and close aide, Idrissa Seck, named a 31-member Cabinet dominated by members of Wade's party, seen as an attempt to strengthen the government's hand in tackling the West African nation's economic problems. Seck took office after Wade fired the Senegal's first female prime minister, Mame Madior Boye, and her whole Cabinet on Tuesday and appointed in her place. The firings came just hours before release of a government-commissioned inquiry into the Sept. 26 sinking of the state-run MS Joola ferry, which killed at least 1,200 people. Senegal's armed forces minister resigned shortly afterward. The government is the third since the 2000 election of Wade, a longtime opposition leader who broke the former governing party's 40-year hold on power. Wade's election brought widespread expectations of change in Senegal, a stable nation - one of few in sub-Saharan Africa never to suffer a coup - but one suffering from high unemployment and widespread illiteracy. Now, two years after Wade's election, complaints over unemployment and illiteracy remain, and drought and the rapid privatization of the vital peanut sector have hit hard at the economy.

From MSNBC, 8 November 2002

Good Governance

Cape Town - South African President Thabo Mbeki has sought to allay Western fears that Africa's commitment to good government is crumbling, telling G8 and European Union leaders that an aid-for-democracy deal is intact. "Good governance on our continent, comprehensively understood, is of fundamental interest to the peoples of Africa", Mbeki said in a letter to Canadian Prime Minister and G8 Chairman Jean Chrétien. "As part of our commitment ... we will do everything we can to defeat any tendency on our continent that is hostile to our realization of this goal", Mbeki added. The letter was published in South Africa's Business Day newspaper on Monday. But the South African President said that African Governments would not volunteer to be monitored by their peers under the New Partnership for Africa's Development (NEPAD). Instead, he added, Governments would be subject to compulsory peer reviews under the new African Union. The G8 and the EU have linked promises of more aid to NEPAD, a blueprint for Africa's economic recovery that promises higher democratic and human rights standards. NEPAD signatories are expected to hold each other responsible for meeting tough standards of democracy.

From Reuters, AFP, DPA, 18 November 2002

Violence Challenges Nigerian Democracy

Kaduna, Nigeria - At least 105 people have been killed in riots in Nigeria stoked by Muslim fury over the country's staging of the Miss World pageant next month, Red Cross officials said on Friday. Hundreds have also been injured in the riots in the northern city of Kaduna, where youths have torched churches and mosques. Trouble flared on Wednesday over a report in This Day, an independent newspaper, which claimed the Prophet Mohammad would have married one of the Miss World beauty queens. The Kaduna violence has triggered tension in other parts of predominantly Muslim northern Nigeria. Below is a list of some of the most significant clashes since President Olusegun Obasanjo took office in 1999: 1999 May 29 - On the day Obasanjo takes office, fighting flares between ethnic Ijaws and Itsekiris in the Niger Delta over a local government headquarters. Up to 200 killed before troops intervene. July 18 - Clashes between Hausas and Yorubas in southwestern Shagamu follow a dispute over traditional rites. More than 60 reported dead before order restored. July 22 - Shagamu riots trigger fighting between Hausas and Yorubas in northern Kano. At least 70 reported dead. Aug 5 - Scores reported dead in clashes between Ijaws and the Ilaje Yoruba clan over oil-rich land in the Niger Delta. Aug 11 - Newspapers report up to 200 dead as army intervenes to end clashes between Kutebs and Chambas in northeastern Taraba State. Sept 9 - At least 16 dead in fighting at Lagos port involving Yoruba separatist Oodua Peoples Congress. Oct 4 - Okrikas and Elemes fight for control of land near Nigeria's biggest oil refinery at southeastern Port Harcourt. Death toll up to 30. Nov 21 - Troops storm Niger Delta village of Odi to eliminate ethnic Ijaw youth gang blamed for killing 12 policemen. Witnesses say more than 60 killed. Nov 25 - More than 100 killed in rioting between Hausas and Yorubas over control of a market in commercial capital Lagos.

2000 Feb 21 - Three days of rioting between Hausa Muslims and Christians leaves more than 100 dead. May 20 - Second bout of Muslim-Christian bloodletting erupts in Kaduna and several hundred feared dead after three days of fighting. Oct 15 - Four days of fighting between Yoruba militia Oodua Peoples Congress and Hausas leaves more than 100 dead. May 27 - Fighting erupts between the Urhobo and Itsekiri ethnic groups near the oil town of Warri in the Niger Delta. June 21 - Kano, Nigeria's most populous northern state, adopts Islamic sharia law but defuses fears of violence by delaying its application until November. June 25 - Scores are reported killed in fighting between minority Tiv and some Hausa-speaking ethnic groups in central Nasarawa state. Oct 18 - At least 100 people die in three days of ethnic warfare around Lagos between a Yoruba militia and Muslim Hausa-Fulanis. 2001 Sept 7 - Christian-Muslim violence flares after Muslim prayers in the city of Jos, with churches and mosques set on fire. According to a September 2002 report by a panel set up by the central Plateau state government, at least 915 people are killed in days of rioting. Oct 14 - At least 200 people are killed in two days of anti-American riots in Kano, residents say. Churches, mosques and shops set on fire. Oct 22 - Soldiers kill more than 200 people in four northern villages after 19 soldiers are found hacked to death. 2002 Jan 2 - More than 20 people are killed and scores injured in a reprisal attack on a central Nigerian village by ethnic Hausa-Fulani militiamen. Feb 5 - At least 100 people killed and 430 wounded in four days of fighting between Hausas and Yorubas in a Lagos suburb. Nov 22 - Red Cross says at least 105 people killed in riots over Nigeria's staging of the Miss World pageant.

From MSNBC, 22 November 2002

China Unveils New Leaders

Beijing, China - Vice President Hu Jintao has taken over the reins of China's ruling Communist Party - replacing Jiang Zemin - in the biggest leadership shuffle the country has seen in over a decade. The key decision-making body in the world's most populous nation - the newly-expanded nine-member Politburo Standing Committee (PSC) - was also announced in Beijing's Great Hall of the People on Friday. But in a clear sign that the man who headed the party for 13 years plans to pull the strings in retirement, six close Jiang allies are represented in the PSC, and he has been re-elected to head China's powerful military commission. The changes, which confirm long-standing speculation after months of secretive jockeying for power, come after Jiang and five other senior leaders stepped down from their party positions. Prime Minister Zhu Rongji and party number two, veteran hardliner Li Peng, also gave up their posts. While 76-year-old Jiang remains in office as president until March, Hu is widely tipped to take over when he retires. 'Fourth Generation' - The 59-year-old Hu will now head a so-called 'Fourth Generation' nine-member leadership body stacked with close allies of his predecessor. They will be charged with guiding China through sweeping changes launched by the late Deng Xiaoping. In a carefully regimented transfer of power, the new generation of leaders are: Vice-President Hu Jintao, Vice-Premiers Wu Bangguo and Wen Jiabao, Jia Qinglin, Zeng Qinghong, Huang Ju, Wu Guanzheng, Li Changchun and Luo Gan. The changes, made after the conclusion of China's 16th Communist Party Congress, also allow the addition of Jiang's so-called "Three Represents" theory into the party's constitution. The move is seen as formalizing Jiang's legacy as leader, incorporating once unthinkable capitalist ideology into a party seeking to make itself relevant to the needs of a fast growing country. Jiang army role - Hu pledged on Friday to push ahead with economic reforms but gave no specifics on how he would tackle a plethora of problems, ranging from joblessness to an ailing banking system. "The whole party and people from all ethnic groups will unite more closely and concentrate on construction and development so as to continue pushing forward China's reform, opening up and modernization drive," Hu said. Xinhua, China's state media outlet, also reported that Jiang would remain head of the Communist Party's Central Military Commission (CMC), which commands the army. Xinhua did not say how long Jiang would stay on as head of the body. Jiang's predecessor, Deng Xiaoping, remained CMC chairman for two years after leaving the party's Politburo Standing Committee in 1987.

From CNN, November 15, 2002

New Pakistan Prime Minister Faces Balancing Act

Islamabad - Pakistan's newly elected civilian prime minister, due to take the oath of office on Saturday, appears caught between a powerful pro-Western president and a strong opposition led by hardline Islamists, analysts said. Mir Zafarullah Khan Jamali of the pro-military Pakistan Muslim League was elected prime minister with a thin majority on Thursday and will become the first civilian head of government since General Pervez Musharraf's October 1999 military coup. Jamali will have to work in the shadow of Musharraf, a strategic member of the anti-terror coalition led by the United States. Musharraf, president for another five years with the power to dismiss parliament, will resist any changes in the foreign and economic policies that have endeared him to the West. But Jamali cannot antagonise a powerful opposition dominated by hardline Islamists, some of whom were closely linked with Afghanistan's former Taliban leaders and who are demanding Islamabad close U.S. bases and introduce Islamic laws. "Jamali and his government will have to pull off a very delicate balancing act," political analyst Aqil Shah told Reuters. "He has hardline Islamists on one hand who will make foreign policy a focal point of attack." Shah said although Jamali has a bumpy ride ahead, there was also realism within the opposition that their survival depends on making parliament work. A close aide to Jamali told Reuters that Jamali was well aware of the tightrope he had to walk. "He has his feet on the ground, he will try to take everybody along," he said. COMPROMISES AHEAD - As a sign of the compromises that might come, the new parliament offered a brief funeral prayer on Thursday for Mir Aimal Kansi, a Pakistani executed in the United States last week for the 1993 murders of two CIA employees. Hailed as a hero at home, Kansi's funeral on Tuesday in his native city of Quetta, capital of Jamali's southwestern Baluchistan province, was the largest such gathering in living memory, residents said.

The prayer in parliament was the sort of gesture that might worry foreign observers, but Western diplomats say action and cooperation in the war on terror is more important than words. The Islamist alliance rode a wave of anti-American sentiment to make surprising gains in the October election, winning an unprecedented 60 seats and taking control of two provincial assemblies. Even though they have been excluded from government, they will form a formidable opposition and will try to embarrass the government whenever they can. Western diplomats expect some fiery anti-American debates in parliament. "Making (anti-U.S.) statements is one matter but they do not want to destablise the whole thing," Jamali's aide said. "They will also want to work towards the next election." The aide argued that the liberal Pakistan People's Party of exiled former Prime Minister Benazir Bhutto was also unlikely to challenge Jamali over foreign policy. However, there is one issue on which the opposition is united and where Jamali can expect a tough time - how much power should Musharraf have. Both Bhutto's party and the Islamists have vowed to overturn constitutional changes introduced by Musharraf this year to enhance his powers and institutionalise the role of the military through a national security council. Some analysts say Musharraf himself might have to compromise, and accept some watering down of his powers to allow his allies in parliament to remain in power. "This can only be done by negotiating a permanent peace with parliament as a duly elected civilian president with some of the stabilisation power he seeks," the popular weekly Friday Times said in its front-page editorial on Friday. "The alternative is constitutional gridlock and political instability."

From MSNBC, by Tahir Ikram, 22 November 2002

Musharraf Ally Elected Prime Minister of Pakistan

President Pervez Musharraf's candidate was elected prime minister Thursday, easily defeating a pro-Taliban candidate in a signal Pakistan will keep supporting the U.S.-led war against terrorism. Parliament's election of Zafarullah Khan Jamali to lead the first civilian government since Musharraf's bloodless 1999 coup relegated a coalition of hardline Islamic parties to opposition benches, where they likely will be fierce critics of the pro-U.S. stance. The vote paves the way for formation of a coalition government of the pro-army faction of Jamali's Pakistan Muslim League, dissident members of former Prime Minister Benazir Bhutto's party and independent members of parliament. Jamali, 58, made clear that Pakistan will continue supporting the fight against terror. "Pakistan has become a frontline state, will remain one," he said in a speech after his election. "Pakistan is going ahead as a respectable country." Jamali received 172 votes in the 342-member National Assembly, or lower house of parliament. Fazlur Rahman, an Islamist leader who openly supported the Taliban and has said he wants to curb Pakistan's alliance with America, received 86 votes. Shah Mahmood Quereshi, of Bhutto's Pakistan People's Party, received 70. His candidacy hurt Rahman, who expected support from Bhutto's party. Jamali will be sworn in by Musharraf on Saturday. "Dear countrymen, it is a matter of pride for me that I, who belong to a small village, by the grace of God, and with your cooperation, was elected leader of this House," Jamali said in his speech. Jamali, a moderate and one of Pakistan's most seasoned politicians, is a powerful figure in southern Baluchistan province - one of the regions where religious parties won power in October's elections. A former field hockey player and promoter, he was elected a member of the National Assembly in 1977 and held the post of Baluchistan's chief minister three times.

Jamali's rivals conceded defeat without protest, but the Islamic parties immediately challenged him to reassert parliament's authority by leading a rejection of constitutional changes made by Musharraf. Those changes gave Musharraf authority to fire the legislature and retake executive control. Many lawmakers claim the changes have no validity until they are ratified by parliament. "As a leader of the house it is the responsibility of Jamali ... to prove that the house and constitution are supreme and sovereign," said Qazi Hussain Ahmad, a religious party leader. Musharraf has promised to give parliament the day-to-day running of the country and to use his power to fire the government only if a crisis arises. Jockeying for position in a ruling coalition has been intense since the elections, and its exact makeup is yet to be revealed. Jamali urged lawmakers to be patient while his government finds it feet. "Transfer of power is going on smoothly," he said. "I appeal to members of the parliament to be patient. Rome was not built in a day." Under Pakistani law, Jamali must win a vote of confidence in the National Assembly within 60 days. Quereshi promised that his party would act responsibly during the transition to civilian rule. "We are moving from a military dictatorship to an elected government," he told the assembly. "We assure that in this transition period we will support democratic norms." The Islamic coalition has criticized Musharraf for his alliance with the United States. Since the Sept. 11 attacks, Musharraf has supported the U.S.-led military campaign in Afghanistan, worked with U.S. security forces to hunt Taliban and al-Qaida fugitives and cracked down on domestic extremist groups. The religious alliance won control of two provincial legislatures bordering Afghanistan that are of strategic importance to the United States in its effort to capture al-Qaida and Taliban fugitives.

From MSNBC, 22 November 2002

China Strives for a - Wince - Middle Class

At the 16th Communist Party Congress earlier this month, outgoing President Jiang Zemin cited a main goal for China as being what he termed xiao kang - or a well-off life. The 5,000-year-old phrase refers to a condition of prosperity, and evokes something similar to the "car in every garage, and chicken in every pot" adage in the United States. While the gap between rich and poor here quickly widens, China's leaders are engaged in a delicate dance of words and concepts as they try to create a stable middle class without actually using words loathed by Chairman Mao for their petty bourgeois implications. "We can't use the term 'middle class' because it implies civic and political cultures that we aren't ready for," says a party official, speaking privately. "We have to use the term 'middle income,' " he continues. "Our Constitution one day will say it is the government's job to legally protect private assets. But we are not yet at that point." In an era of privatization, China is tailoring policies to benefit the "middle- income" group - an ideal set of educated consumers who will earn between $3,000 and $12,000 a year. Such changes include expanding teachers' salaries and pension and healthcare plans for urban residents, as well as tax breaks, loans, and new advantages for entrepreneurs. One reason China's leaders want at least an approximation of a middle class is to provide a steadying social anchor between the great chunk of China's wealth, held by several hundred families, and the rest of the population. Roughly 70 percent of 1.3 billion Chinese are peasants who earn about $100 a year. Along with the deterioration of state industry - workers once championed as ushers of a glorious revolution, but now idle - the current social dynamics are troubling. "The main reason to focus on developing a middle group is social stability," says the party official. "The income gap is the core of our concern." Another reason is economic self-sufficiency. In the past decade, China has attracted some $800 billion in foreign investment - used to build Beijing and Shanghai into metropolises rivaling any in Asia.

Yet for China to progress, planners here say, what is needed is a middle-income group capable of buying Chinese products and slowing China's dependency on overseas capital that seeks cheap labor. But what China wants, and what China can say it wants, are two different things, analysts say. While entrepreneurs are welcomed into the Communist Party to keep an eye on new wealth, that's not the same as talking about the creation of a middle class - since no officials are ready to suggest that workers are no longer "the vanguard" of the people. Lu Xueyi, a top scholar in Beijing with the Chinese Academy of Social Sciences, pointed out in a working session at the Party Congress, "In Western countries, those at a middle-income level are called the middle classes. Politically, they are in line with the government of the day and the ruling party. Economically, they are steady consumers and a major force in economic life. They make stable investments in education and are producers and consumers of advanced culture. In this way, larger middle-income groups lead to more stable societies." But such ideas are still controversial. Dr. Lu's new book, "The Analysis of All Classes in China," was pulled off the shelves this year. In a call to the official publisher, a person who would not give his name said, "The book does not correctly define the workers as the leading class. It sets the middle class ahead of workers." At a restaurant near the upscale Pacific Century Plaza in downtown Beijing, two young businessmen both hope China will develop a middle class, but offer very different thoughts about it. "The wealth gap is so great in China today, and the contradictions between the city and the country are growing so badly, that we need a middle class," says one Shanghai-born, US-educated financier at a Chinese company. "We can't have reforms, political or economic, without an educated, rational middle group. I think it is happening." The other young man, working on a computer spreadsheet for his marketing firm, says, "We will not have a middle class outside Beijing and Shanghai anytime soon. I feel this is just a saying to add color to the Party Congress. Chinese don't have a mentality for middle class. Changing that won't be easy ... at the most, 1 percent of China is middle class, by any Western definition."

Officials here say the range of middle-income earners runs from 5 percent to 7 percent. They argue that joint ventures in China's leading cities have slowly begun to incubate a middle-income aspiration. Yet whether the "joint venture culture" will translate to the creation of an independent Chinese middle class is questioned. "Last year, about 90 percent of the taxes paid in Beijing were from employees of joint ventures," says one British-based executive. "I'm all for a middle class. How you get there is the question." For several years, the buzz in big cities is for more private schools, more appliance purchases, more children studying piano and English, more trips to movies. "To me, middle class means Chinese who go on vacation, own a car and an apartment, belong to a sports club, and think about 'life quality,' " says the marketing firm manager. "OK. But this will take more than slogans." Such comfortable aspirations also cut strongly against most of the history of communist China, which was built on dreams of revolution. "In 1949, Mao told peasants, who really didn't know much about Marxist theory, that revolution meant getting rid of landlords and landowners. Mao then began a workers' revolution, in which workers were the heroes, and would be a stable force," says one older scholar. However, since China has gone through liberal economic reforms, workers are no longer regarded in anything but name as the leading force. More and more, they have become the unemployed force as state-owned companies close or restructure. "We are fed up with class questions," the scholar says. "Until the late '70s, middle class meant petty bourgeoisie. It meant one was not a proletarian, not revolutionary, and not patriotic." China's push for a middle class, some analysts say, also benefits China's image abroad. They argue it projects a picture of stable investment, a potential market, and wards off fears of a current lack of contract law, and the storied problems of Chinese businesses taking advantage of joint-venture partners.

From Christian Science Monitor-Asia Pacific, by Robert Marquand, 25 November 2002

Latvia Nominates Next Prime Minister

Einars Repse, a former head of the Central Bank who campaigned against corruption, was nominated Tuesday to be the next prime minister of this former Soviet republic. The nomination by President Vaira Vike-Freiberga was expected after Repse's center-right New Era party won the most legislative seats in last month's elections in Latvia. New Era, which has 26 seats, plans to form a government with the center-right First Party, the centrist Green and Farmer's Union and right-wing Fatherland and Freedom - giving the coalition a 55-seat majority in the 100-seat Saiema legislature. The parliament was expected to confirm Repse as prime minister within a week, but a date for the vote has not been set. "We have a hard job to do but not an impossible one," Repse told reporters earlier Tuesday when it became clear the president was about to nominate him. Repse, 41, is a fiscal conservative who pledged during his campaign to end corruption in the pro-Western nation of 2.4 million people and to push for membership in NATO and the European Nation within the next few years. He chose Latvia's ambassador to France, Sandra Kalniete, as his foreign minister. His first choice, Jewish community leader Grigorijs Krupnikovs, withdrew his name after he was accused of once cooperating with the KGB, the former Soviet secret police agency. Latvia and the other two Baltic states, Estonia and Lithuania, regained independence as the Soviet Union collapsed in 1991.

From UK-Guardian Unlimited-Wire, 5 November 2002

Turkey on Verge of New Era

The AK will have a clear majority in parliament - The Islamist-based Justice and Development Party (AK) has won a crushing victory in Turkey's general elections, paving the way for single-party rule for the first time in 15 years. The recently-founded AK has begun the task of forming a new government after securing a clear majority in parliament with 34.2% of the vote. But the party faces a battle on several fronts for acceptance within the political establishment. A prosecutor is seeking to ban AK on the grounds that its leader, Recep Tayyip Erdogan, is a former convict and therefore not eligible to be leader. And Mr. Erdogan's own future as potential prime minister will be decided at a hearing of the constitutional court in two weeks' time. AK will also be under close scrutiny from the army, regarded as the guarantor of Turkey's secular constitution. The election result will be an issue when the head of Turkish military, General Hilmi Ozkok, arrives in Washington for talks later on Monday. World reaction to the result has been muted. US Under-Secretary of State Marc Grossman said Washington "looked forward to working with the new government". The European Union was cautious, encouraging Ankara to implement reforms required before negotiations on EU membership can begin. In contrast, the prime minister of Turkey's old rival Greece, Costas Simitis, was the first foreign leader to congratulate Mr. Erdogan, who in turn said he was planning to visit Athens within the next seven to 10 days. 'No forced Islam' Outgoing Prime Minister Bulent Ecevit handed in his resignation to President Ahmet Necdet Sezer on Monday afternoon, but was asked to continue as a caretaker until a new government was in place.

Mr. Ecevit - whose Democratic Left Party won only 1.2% of the vote - earlier expressed fears that AK could threaten Turkey's secular constitutional order. "I hope this party respects the secular and democratic regime," he said. Election night in pictures Mr. Erdogan has insisted that his party stands for democratic freedoms and human rights and will not impose Islam on anyone. Speaking to reporters on election night, Mr. Erdogan promised a "more meaningful and different era in terms of basic rights and freedoms". Many of Mr. Erdogan's supporters, however, want the party to stay true to its Islamist roots. The BBC's Nick Thorpe in Ankara says the AK victory has great significance for the region, with the threat of war hanging over Iraq on Turkey's eastern border. Large majority Asked about the possibility of a war with Iraq. Mr. Erdogan told Turkish television: "We do not want blood, tears and death." The AK party will have 363 of the 550 seats in parliament - just four seats short of the two-thirds needed to change the constitution, but enough to form the next government on its own. It was one of only two parties to cross the 10% threshold required to enter parliament. The staunchly-secular Republican People's Party was the only other party to win representation, with 19.3% of the vote, giving it 178 seats. Economic crisis Mr. Erdogan's success came amid widespread anger at the government, whom many Turks blame for the economic crisis of the past two years. He warned of the need to re-examine the International Monetary Fund's plans for the Turkish economy. Turkey's financial markets welcomed the AK victory, with stocks surging and the currency recovering about 1% against the dollar compared with Friday's rate. Elections were called 18 months early after the coalition government collapsed due to bitter in-fighting and Mr. Ecevit's prolonged illness.

From BBC, 4 November 2002

EU Enlargement Unlikely by January 2004, Verheugen Says

Brussels - The European Union is unlikely to be ready to admit 10 more countries at the start of 2004, Enlargement Commissioner Guenter Verheugen indicated. The European Commission will announce "in a couple of days" its proposed date for the mainly eastern European states to join the 15-nation bloc, Verheugen said. While the EU is committed to admit new members before European Parliament elections from June 10 to June 13, 2004, Verheugen said governments will need time to ratify the expansion. "We would be very, very reluctant to put undue pressure on the parliaments," Verheugen said in a speech at the Brussels- based European Policy Centre. "It won't work and it will create a very negative reaction." EU governments are aiming to wrap up talks with the 10 applicants before a summit in Copenhagen in December, after which all countries will need to approve the plan. Enlargement will boost the EU's population by 75 million people to 450 million and create the world's largest trading bloc. Verheugen called for leaders in both the 15 current and 10 candidate member states to mobilize "sufficient political support" for enlargement. All 25 parliaments will need to approve it. Some countries, including Poland, Hungary and Slovenia, will also hold referendums. "It would be very dangerous if European public opinion would feel that this enormous project is finalized without proper information," he said. Poland is heading calls for the EU to sweeten its financial aid offer to make it easier to win domestic support for EU entry. Existing members plan to deny them full access to farm-support payments for a decade after they get in. Verheugen said there is "no way" that the EU will scrap its phase-in of subsidies. The candidates for membership in 2004 are Poland, Hungary, the Czech Republic, Slovakia, Slovenia, Lithuania, Latvia, Estonia, Malta and Cyprus. Romania and Bulgaria aim to join in 2007. Turkey hasn't been given a date to start negotiations.

From Bloomberg-Politics, by Adrian Cox, 12 November 2002

New Turkish Government Takes Office

Turkey's Justice and Development Party (AKP) took office Monday after the president approved the cabinet list with little to surprise nervous financial markets and Turkey's Western allies. The Justice and Development Party (AKP) won a landslide victory in Nov. 3 polls. The government will have to work fast to win the confidence of financial markets and foreign allies as it works to implement the country's $16 billion IMF rescue pact and bids to join the European Union. Prime Minister Abdullah Gul said Ali Babacan, a 35-year-old Western-educated former financial consultant, would be economy minister in a move likely to reassure markets. Yasar Yakis, a career diplomat who has been accompanying AKP leader Tayyip Erdogan on trips to Rome, Cyprus and Greece in the past week to drum up support for Turkey's EU bid, will be foreign minister. Tayyip Erdogan, leader of the AKP, cannot be prime minister or a cabinet minister due to a previous conviction for inciting religious hatred. The defense minister, whose influence is balanced by that of Turkey's powerful generals, will be Vecdi Gonul, a former Interior Ministry undersecretary known to be a friend of President Ahmet Necdet Sezer. Observers say the AKP is unlikely to change NATO member Turkey's policy on Iraq which faces the threat of war from the United States. Turkey is expected to provide support to Washington if the United States does go to war. BABACAN SEEN PRO-IMF Turkey's IMF economic rescue program is aimed at overcoming the damage caused by the country's financial crisis in 2001 and markets have been eagerly awaiting the naming of the economy minister who will be crucial to market confidence. The fresh-faced Babacan, who at 35 is one of the youngest AKP deputies, is untried in government. He has been in the private sector since earning an MBA in the early 1990s in the United States, where he also worked as a financial consultant. "It's a positive development.

He's one of the masterminds of explaining the party's economic program," said Hakan Avci, strategist at Global Securities. "Maybe you could argue that Babacan doesn't have much experience in state affairs but he's coming from the private sector." Observers say Babacan is pro-Western, embracing Turkey's European Union ambitions, and has said the AKP government would stick by the basic principles of Turkey's IMF pact. Babacan, until now AKP's coordinator for economic affairs, recently pledged the AKP would keep the banking watchdog independent from political influence, saying regulation of the sector that was at the heart of two devastating financial crises was "one of the most important" factors in Turkey's economic recovery program. "Obviously Ali Babacan sticks out. He's somebody that understands the markets and has proven his ability to communicate his ideas effectively," said Tolga Ediz, emerging markets analyst at Lehman Brothers in London. The government takes office from the moment the president approves the list, though it then needs to win a confidence vote which should be a formality given AKP's large majority in parliament. Abdulkadir Aksu, a former police official from the southeast, will be interior minister. He will have a key role in pushing through key human rights reforms needed to meet EU membership criteria. Gul named three deputy prime ministers, Ertugrul Yalcinbayir, a lawyer who moved to the AKP from the conservative Motherland Party, Abdullatif Sener who was finance minister in a 1996 Islamist-led government, and Mehmet Ali Sahin, an Istanbul deputy among the founding members of the AKP. Ali Coskun, who had been among those tipped as a possible economy minister, was given the trade and industry portfolio. "Ali Coskun is a businessman so he understands the way business works, its costs and export policy. He also has very good links with the chambers of commerce," Ediz said. The finance minister will be Kemal Unakitan who was an adviser of Erdogan when he was mayor of Istanbul. Erkan Mumcu, another former Motherland Party deputy tipped as an outside chance for a top job, will be education minister.

From ABC News-World-Wire, 18 November 2002

Croatia Must Do More on Democracy Reforms

Zagreb - Croatia must do more to meet European standards of democracy, according to a report due out on Tuesday that could have an impact on the Balkan state's EU membership aspirations. The Organisation for Security and Cooperation in Europe (OSCE), a pan-European human rights body, would say in its report that Croatia must first of all secure the rights of ethnic Serb refugees and help them return to their homes, a Western diplomat, who had seen the text, said on Monday. The report will almost certainly serve as the basis for an assessment which the European Union's executive, the European Commission, is due to make early next year on Croatia's progress in meeting commitments made in an EU association accord - a prelude to membership. ''What we ask is whether there is clear determination by the government to tackle those issues; if efforts are aimed at real reforms,'' the diplomat told Reuters on condition of anonymity. Croatia's reformist coalition government must meet various political criteria for eventual EU membership. The former Yugoslav republic is performing well on the macroeconomic, fiscal and monetary fronts. The toughest task lies in persuading ethnic Serb refugees driven out during the Balkan conflict of the 1990s that they are now welcome to return to their homes and will enjoy full rights. The bloodshed remains too vivid a memory, some say. The OSCE has been monitoring democratic standards in Croatia since late 1996. Croatia has been implementing the EU association accord for a year and aims to be ready for full membership of the bloc in 2007. The diplomat said the case of the ethnic Serb refugees was an overriding issue and one that the government had ''omitted from a list of priorities it adopted in July.'' ''There should be much stronger government endorsement of refugee returns,'' the diplomat said.''There is a common international front and the same message is given by everyone - OSCE, EU, NATO, European Commission.'' Other issues facing Croatia's coalition are reforms of the judiciary and state television.

From MSNBC, by Zoran Radosavljevic, 18 November 2002

Egyptian Islamist Group Faces Key Leadership Question

Following the death of its supreme leader last week, the Muslim Brotherhood may take democratic steps. In Egypt, public demonstrations are discouraged. They rarely number more than a few thousand people. So the sight of 100,000 mourners marching from mosque to cemetery last week for the funeral of Moustafa Mashhour, the Muslim Brotherhood's supreme guide, was unusual. The massive public display showed that the Brotherhood - Egypt's largest opposition force - still maintains widespread support despite long-time repression by the government. With the leadership void left by Mr. Mashhour's death, the Brotherhood, which is known for its social activism as well as a radical brand of Islam, is at a crossroads. Despite a government crackdown over the past few years, the Brotherhood's appeal has grown, in large part due to younger members who are more committed to democracy and human rights in Egypt. If a younger leader gets the nod, it could signal a significant shift in focus, as well as more openness for this organization and possibly for other opposition groups as well. "We are not going to rush into any decisions concerning the choice of anyone for the leadership," says deputy leader Mamoun Al Hodeiby, who is from the old guard and will likely succeed Mashhour. But lately, there has been a great deal of talk about the need to pass the torch to the younger set. One candidate could be Abdel Moneim Aboul Fotouh, who, at 53 years old, is a member of the "middle" generation. As the leader of the Cairo University student union, he confronted then-President Anwar Sadat on national television and condemned his regime as corrupt. Mr. Fotouh and his colleagues are credited with restoring the organization following the intense repression of the years under Gamal Abdel Nasser in the 1950s, when hundreds of its radical members were imprisoned and executed.

After years underground, the Brotherhood was allowed back into the public sphere during the 1970s under Mr. Sadat. The movement, with the help of Aboul Fotouh, gradually rebuilt itself in the universities and among professionals. "From the end of the 1970s until today, we cannot think about the Muslim Brotherhood without the contribution of this 'middle generation,' " explains Dia Rashwan, an expert on Islamist movement from the Al Ahram Center for Political and Strategic Studies in Cairo. While the leadership was still from the old group that was used to meeting in secret rooms and plotting clandestine actions, this new generation came out of student politics and gained skill in negotiating with other movements and winning support. The younger members also modernized the organization's ideology, issuing a manifesto supporting democracy, women's right to work, and education. Yet aside from admitting Fotouh to the Guidance Council, there seems to have been little effort to include more younger members in the leadership. "It will take some time," says Essam Al Erian, another member of the middle generation who was active in student and syndicate politics. "Our society has its traditions." Together with Fotouh, Mr. Erian was part of 20 Brotherhood members imprisoned by the government in 1995 for five years in what signaled a new wave of repression of the group. Despite renouncing violence in the 1970s and getting its members elected to parliament in the 1980s, the Brotherhood was accused of having links to violent Islamist organizations.

Since that time, many more Brotherhood members have been imprisoned. While 17 members, running as independents, were elected to the 454-seat legislature, most experts say that government interference at the polls prevented many others from gaining office. The middle generation has been making its mark through various social services such as affordable health clinics and education programs. The government, however, has targeted this dynamic stratum of the organization. In the past seven years of crackdowns, the government has imprisoned only younger members of the group, leaving the aging and passive leadership alone. For this reason, many experts say that the organization will stay nominally under the control of the old group as long as the government keeps a watchful eye. "It's not easy to create a new Muslim Brotherhood, especially when they live under such internal government pressure," Rashwan says. With President Hosni Mubarak getting on in years, the country appears to be in a state of flux, with no clear leader to succeed him, and a dynamic Brotherhood might invite too much attention from a nervous military. Still, a compromise position may be reached, giving the position of deputy supreme guide - the position previously held by Hodeibi - to someone from the middle generation, though no one from the brotherhood would confirm this. But the role that the middle generation is already playing - such as their success in the recent elections - is having an impact, no matter who the leader is. "[In] a big organization like the Muslim Brotherhood, the policies cannot be drawn by one person it is an institution," Erian says. "The vast majority of the organization is under 30 or 40, and I think the majority that rules and regulates everything is from the same generation."

From Christian Science Monitor-Middle East, 22 November 2002

President-Elect Brings New Style to Brazil's Capital

Beards are in. So is red, and the five-pointed star of the Workers Party symbol. Call it the "Lula style." Although his inauguration is months away, President-elect Luiz Inacio Lula da Silva -- known popularly as Lula - already is making his mark. Since his landslide victory on October 27, the former union boss has become a trendsetter in the nation's capital. Suddenly, it seems everyone wants to look like Lula. Although his trademark beard is no longer angry and black like in his union days, Silva's neatly trimmed, salt-and-pepper model is inspiring a legion of imitators. "The Lula style is starting to catch on with men, who let their beard grow and then trim it at least once a week," said Paulo Monteiro, a barber at a Brasilia shopping center. "That's good for us, because we have more work." Silva also underwent a wardrobe change in his fourth try for the presidency, trying to undo his radical image. Dark, well-cut suits and sober ties replaced T-shirts and Mao caps, and the new look also has caught on. Evaristo Moraes, a salesman in a men's clothing store, said sales were picking up for what he called "Lula style" suits. While the store usually caters to executives and civil servants, he said, "in recent days even young people accustomed to wearing casual clothes have shown interest in dark suits."

The future first lady, Marisa da Silva, also is inspiring fashions. Many Brasilia women are copying her short blond hairstyle and penchant for red and white -- the colors of the Workers Party, known by its Portuguese initials PT. "At first we didn't know what (the style) was, until some of our clients brought in magazines and newspapers with photos of the wife of the president-elect," said Ana Dulce Ferreira, a beauty salon worker. Workers Party accessories are available for sale on the party's web site, including pens, watches, caps and T-shirts emblazoned the party's red star. Silva's informal style also is popular after eight years of President Fernando Henrique Cardoso, a former sociology professor who often used difficult words that had Brazilians scurrying for the dictionary. During his first address to the nation as president-elect, Silva paused to open a bottle of water and joked that the presidential staff wasn't yet used to pouring it for him. As the press corps stared, he looked around and said: "You can't be so serious." Arriving for a meeting with Cardoso at the presidential palace, Silva was greeted by a raucous, cheering crowd. He rolled down the window of his bulletproofed car and leaned out to wave. "His style is informal and he doesn't accept walking separated from the people," said PT congressman Jorge Bittar. "He's a man used to being with people, talking, getting to know their problems and surely he will maintain this same style when he takes office January 1."

From CNN, 6 November 2002

The Secret of New Brazilian Leader's Success: Democracy from the Ground Up

Ribeirao Preto - When the people of this prosperous city in sugar-cane country talk, the government listens. Each year, City Hall asks its citizens how it should spend their tax money. A new highway? Better sewage? More kindergartens? Today, as President-elect Luiz Inacio Lula da Silva prepares to take office in January, this city 185 miles northwest of Sao Paulo has become a showcase for the innovative style of governing of his leftist Workers Party - a form of grass-roots democracy in a country with bitter memories of military dictatorship. "Things couldn't be better," said Diva Palucci, retired hairdresser in the low-income neighborhood of Vila Tiberio. "For years I was one of Brazil's millions of excluded," Palucci said, beating an omelet for her grandson in their sparsely-furnished two-room house. "But two years ago, City Hall started listening to us, and today we have a community center, a sewage system, two health centers and a police station." For Brazilians like Palucci, who is 57 and lived through the 1964-1985 dictatorship, simply being able to speak out has a special meaning. "We would never dare open our mouths for fear of being arrested as subversives," Palucci said. "Our voices were never heard. Our needs were ignored. "Now, for the first time, we can say that the voice of the people is truly the voice of God," she said, using an old Brazilian saying. e change came with the election of Mayor Antonio Palocci, now one of Silva's top aides and head of his transition team. Palocci instituted the "participatory budget," a hallmark of the Workers Party, known by its Portuguese initials as PT. ery year, residents meet in neighborhood councils to decide what they want included in the city budget, and elect delegates to bring the wish lists to city officials . "It transforms representative democracies into participative democracies and leads to greater transparency and accountability in the handling of public funds," said Eduardo Cesar Marques, a political scientist at the University of Sao Paulo. "It's a form of government by consensus, a concept which (Silva) will introduce into the federal government in the form of a social pact."

On Thursday, Silva met with scores of business and labor leaders to start seeking consensus on reforming taxes, social security, land distribution and labor laws. Over the years, the Workers Party, or PT, has earned a reputation for solid, clean administrations that combine social programs and balanced finances. The party controls nearly 200 of Brazil's cities and towns, including Sao Paulo, South America's largest, and has the most seats in Congress. While life hasn't changed dramatically in this city of 500,000, many residents note improvements. "Crime has dropped, there are more paved roads, and neighborhood health centers stay open longer and tend to more people," said Luis Antonio Silva, who earns a living guarding cars parked in front of a bingo hall. Acting Mayor Gilberto Maggioni, a wealthy businessman who took office when Palocci stepped down, said the business class no longer sees the party as an enemy. "The PT has shed its radical past, and we have shed our traditional conservatism," he said. "The PT now accepts capitalist principles, and we no longer cling to our unbridled greed for profits. We understand the importance of social responsibility and the need to improve income distribution." Among the city's social programs that Maggioni thinks could be adopted nationally is one aimed at getting poor youths into school and off the streets. It includes a circus school, music classes and crafts courses. "The program is all about prevention," said program coordinator Fernando Luiz Dezerto. "We offer children an alternative to a life of crime and drugs." Some 3,000 youths have either learned a trade or returned to school since the program began two years, Dezerto said, adding that 6,000 boys and girls between the ages of 8 and 14 are currently enrolled. Aguinaldo Pereira, a 14-year-old who dreams of becoming a circus star, says he owes his life to the program. "I was starting to smoke and sell pot and refused to go to school," he said. "Then my cousin told me about the program, and now I'm back in school and learning to become a professional acrobat." Pereira said his cousin stayed in the streets, got involved with drugs and was shot dead in a gang fight. "The program saved my life," he said.

From MSNBC, 11 November 2002

Jamaica PM Urges New Parliament to Fight Crime

Prime Minister P.J. Patterson called on Jamaica's new parliament to make crime-fighting a top priority as lawmakers were sworn into office on Thursday. Fifty-nine of the 60 members of the House of Representatives and 20 of 21 senators took their oaths of office. Patterson's ruling People's National Party won 34 House seats in national elections on Oct. 16 while the opposition Jamaica Labour Party took 24. Patterson reiterated a pledge made after the election to commit his administration to battling crime, which hampers foreign investment and the Caribbean island's critical tourism industry. Jamaica has one of the highest murder rates in the world, averaging three killings a day last year. About 900 people have been slain so far this year in a nation of 2.7 million. ''We must band together to take the fight to the criminals whenever they are and how determined they may seem to be,'' Patterson told the new legislators. ''The actions that must be taken to stem the tide of crime are already in train. We must give the security forces our full support. The fight against crime is one that we must win.''

From MSNBC, 14 November 2002

Colombia's New Battle: Its Image

This week, the government distributed e-mails detailing its progress on human rights. Heroes and villains are often hard to distinguish in Colombia. But the new government here is working overtime to make sure that its citizens and the international community know the difference. For years, human rights groups have attacked the state and the armed forces for alleged violations of international human rights norms. Rights advocates say that the government has had ties to rightist paramilitary groups that engaged in brutal massacres over the course of the country's 38-year-old civil war. Some of these ties have been proven true. Yet despite what it views as a dramatically improved human rights record, the government continues to be lumped together by many rights groups with paramilitaries and leftist guerrillas, who regularly kidnap and kill civilians. Now President Alvaro Uribe Vélez is out to change this perception. Mr. Uribe has mounted a public-relations campaign to tell the government's side of the story. The success of this campaign could have a profound effect on public support of the war against rebel groups and the country's ability to secure international funding for its armed forces. "We're designing an offensive, a strategy," to answer to the criticism leveled by human rights groups, Vice President Francisco Santos said recently. E-mail offensive - This week, that offensive moved into full swing as the vice president's office began distributing, via e-mail, a list of its human rights accomplishments, along with violations by the rebel militias. A presidential spokesman said such data would be sent to reporters weekly. The e-mail attempts to reassure rights groups that the state is cognizant of possible violations in the "Zones of Rehabilitation" - two areas in the militia-infested states of Arauca and Bolivar-Sucre created by Uribe in September. The Army and police were given broad judicial powers to combat rebels inside these zones. Rights groups have been critical of government activity there, questioning whether a distinction can be made between civilians and combatants, and whether there was a proper mechanism for complaints.

The government said that with the support of the Swiss Embassy, the UN Commission for Human Rights will intensify its presence in the two zones. The e-mail also notes the sentencing two weeks ago of a former Army intelligence director to 40 years in jail for the kidnapping and killing of a businessman. And it contains details regarding alleged "massacres" by two armed groups, and their use of explosives directed at the civilian population. The Army has joined the PR front as well. It is running weekly advertisements in two newsmagazines, Semana and Cambio, that detail its human rights training efforts. In the ads, the outlawed militias are invariably referred to as "narcoterrorists." "It seems to me that public relations are fundamental," said Maj. Paulina Leguizamon, the head of human rights' efforts for the Armed Forces. The cost of sending the wrong message on human rights has a high price tag for Colombia. The nearly $2 billion in American aid sent to the Colombian military since 2000 is conditional upon on its meeting certain human rights standards. In September, the US released $46 million in aid only after it certified that the units receiving it were free of rights violations. Three Army units have been denied funding, and the US is threatening to withhold money from a large Air Force unit accused of being involved in a 1998 civilian bombing. Carlos Franco Echavarria, vice-presidential adviser and head of the president's human rights office, is leading the PR campaign. For Mr. Franco, the stakes are high. "We are defending democracy in Colombia," Franco insisted in an interview. First, says Franco, the government must be certain that its institutions are complying with international human rights regulations. He points to the fact that in 1997, the government received 3,000 complaints of human rights violations against the military. That number was down to 500 in 2001. Franco also says that the state must reply in an "opportune manner" to criticisms, and that Colombia's ambassadors must be ready to answer complaints by rights groups abroad. The relationship between rights groups and the Uribe administration has been strained since Uribe's declaration of a state of near emergency in early August. That announcement was followed by the controversial creation of a network of paid informants to snoop on guerrilla and paramilitary movements, along with the establishment of the two rehabilitation zones.

And rights groups were upset after a 5 a.m. raid of a pro-peace group's offices by the Army and secret police at the end of October. "In general, we have been very skeptical, even very frustrated with some of the policies that the government has chosen to take up," says Eric Olson, the advocacy director for the Americas program for Amnesty International. Denouncing the government in even sharper terms is José Miguel Vivanco, the executive director of Human Rights Watch's Americas Division. In a Nov. 8 press conference in Bogotá, Mr. Vivanco presented a report slamming Attorney General Luis Camilo Osorio for firing nine prosecutors who were working on human rights cases, since taking office in July 2001. The report claims that 15 more quit under pressure, and calls on the US State Department not to certify aid to Colombia because Mr. Osorio is "obstructing" important probes into military officials. Osorio released a statement saying he is "committed to fighting against those who violate human rights," but that his office won't "investigate anyone without basis, despite the criticisms that may be generated." (Uribe cannot fire Osorio.) Popular president - The administration is aiming to better its relations with rights groups, both here and abroad. It intends to meet with domestic groups every two months and with international groups every six months. Mr. Uribe personally received a delegation from Human Rights Watch earlier this month. Despite lingering international skepticism, Uribe's policies are popular at home. A recent Gallup poll showed him with an approval rating of 74 percent after his first 100 days in office, higher than any president in the past decade. Eighty percent say that the president is "respectful" of human rights, and 79 percent have a favorable opinion of the armed forces, compared to 5 percent for the paramilitaries and 2 percent for the guerrillas.

From Christian Science Monitor-Americas, by Rachel Van Dongen, 20 November 2002

Tough Task Ahead for Ecuador's New President

Lucio Gutierrez has won at the ballot box the power that eluded him after leading an army putsch, but Ecuador's president-elect must now deliver on his promises to tackle a corrupt establishment and improve the lives of millions of poor people who voted for him. Gutierrez, 45, was an unknown army colonel when he led his troops in support of an uprising by native Indians that swept President Jamil Mahuad from power in 2000. After six months' detention, he emerged as a political figure whose vehement denunciations of a corrupt political class won the support of many of the 60 percent of Ecuadoreans who live in poverty and brought him victory in Sunday's election. He plans to provide cheap housing and free health care in a nation that defaulted on foreign debt in 1999 and whose delicate finances are dependent on the speedy conclusion of a new loan deal with the International Monetary Fund. Gutierrez told a news conference on Sunday night he would form a team with the outgoing administration of President Gustavo Noboa to start negotiations with the IMF shortly. Apart from a few congressmen from his political movement, together with support from Indian and far-left parties, Gutierrez will find few allies in an unruly Congress notorious for corruption. Since the retired colonel plans to cut back the number of legislators and change the way judges and electoral officials are named, he admits he will likely face a hostile reception. "This is the most difficult time, because now we have to start to turn what the people want into reality," said a subdued Gutierrez after his victory.

His success, as Ecuadorean voters rejected traditional political parties, fits a recent pattern in Latin America, where anti-establishment leftists like Hugo Chavez in Venezuela and Brazil's Luiz Inacio Lula da Silva have won power. Gutierrez's opponent in the presidential runoff, banana billionaire Alvaro Noboa, who is not related to the outgoing president, tried to play on fears the career army man could split Ecuador as Chavez, another coup leader-turned-president, has done in Venezuela. Unlike the combative Venezuelan former paratrooper, Gutierrez, who defeated Noboa by 54.3 percent to 45.7 percent in the runoff, is already compromising. "My government is going to be one of national unity. It will include honest businessmen, honest bankers and social movements," Gutierrez told local television, where he appeared with his wife and one of his two daughters on Sunday night. Consensus Government - He says he plans to spend the time before he is sworn into office on Jan. 15 trying to form a consensus with members of Congress on plans to end prematurely some of the lawmakers' careers. He also wants to include businessmen and native Indians in discussions on how to govern. All this in one of Latin America's most unstable countries, where political passions quickly boil over into the streets and where the last two elected presidents have been toppled before their terms ended following popular uprisings.

Hundreds of thousands of Ecuador's 12 million people have emigrated to the United States and Spain since 1999, mostly fleeing chaos and poverty. Ecuador's economy, which experienced a banking collapse, rampant inflation and a foreign debt default in the late 1990s, is now healthier and grew faster than any other in Latin America last year. Gutierrez has been busy compromising in economics too. Before his surprise victory in October's first-round vote, he unnerved foreign investors, who fretted he was far to the left, by suggestions such as dropping the U.S. dollar, which Ecuador adopted as its currency in 2000. But he took off the olive-green military-style suit he wore in his campaigning in favor of a conservative suit and traveled to Wall Street. He made a relatively good impression, analysts say, and reassured financiers Ecuador would meet all its obligations as well as seek a new loan from the IMF. Now that he is to be president, Gutierrez says he has taken off the military suit for good. Political analysts say Gutierrez, whose dark features helped him win votes in a nation dominated by a white minority, runs the risk of alienating his natural support base - the poor and the Indians - if he compromises too much.

From MSNBC, 25 November 2002

Congo President Suspends Officials Named in U.N. Report on Diamond Plundering

President Joseph Kabila has suspended every official accused in a U.N. report on the plunder of Congo's gold, diamond and other riches, presidential aides announced. The suspensions come a week after the war-riven central African nation announced a judicial inquiry. "All those who hold elements of proof showing the involvement of these personalities in the looting of Congolese resources must get in touch with the state prosecutor," Kabila aide Evariste Boshab said in a statement broadcast on state TV late Monday. A U.N. report to the Security Council on Oct. 21 accused dozens of officials and others linked to the armies and governments of Congo, Zimbabwe, Rwanda and Uganda of taking advantage of a four-year war to funnel out billions of dollars in Congo's diamonds, gold and other mineral wealth. The suspended officials include National Security Minister Mwenze Kongolo, the government's key negotiator at peace talks, Katumba Mwanke, and the head of the national security agency, Didier Kazadi Nyembwe. Boshab said the state prosecutor would open a judicial inquiry. He did not say how long the officials would be suspended. The suspension follows Kabila's firing last week of the head of the state diamond-mining company, Charles Okoto. Congo was the world's third-largest exporter of diamonds in the rough before 1998, when a six-nation war broke out on its soil over east Congo's harboring of armed militias that threatened regional security. The war saw Rwandan and Ugandan armies backing Congolese rebels. Zimbabwe, Angola and Namibia sent troops on behalf of the Congo government. A series of peace deals have led to the withdrawal this year of most of what had been tens of thousands of foreign combatants in Congo. The U.N. report said those responsible for the plundering have made extensive postwar arrangements to keep draining Congo's mineral wealth without compensation to public coffers.

From MSNBC, 12 November 2002

National Service Marked for Malaysian Youth

Malaysia has proposed introducing compulsory national service for all 18-year-olds beginning in 2004. Under the program, about 400,000 young Malaysians - men and women - will be sent to training camps at any one time and will have to compete basic military drills during a six month stint. Defence Minister Najib Tun Razak, who chairs Malaysia's national service Cabinet committee, revealed the proposal on Tuesday. "The program will stress on generally accepted universal values, which would be acceptable to all races," Najib was quoted as saying by Malaysia's The Star newspaper. The objectives of the national service are to increase flagging patriotism amongst young Malaysians, emphasize racial harmony and mould individuals into better human beings, he said. Najib added that 18 was not too young an age as it was important to "catch them young." "Once people move on with age, they become firmly rooted in their attitude and beliefs and are difficult to change," Najib said. Only those deemed medically unfit would be exempted from the universal conscription, while those overseas when called to serve could apply for deferment for a few years. The program's costs, infrastructure and curriculum have yet to be worked out with the government still to present the plan to political parties, the public, and non-governmental organizations.

From CNN, 12 November 2002

Nine Out of 10 Teenagers See Korea as Corrupt Society

About 90 percent of teenage students consider Korea a corrupt society and believe politicians are the leaders of the pack, a survey showed yesterday. The poll, conducted by Transparency International-Korea, revealed that 92.2 percent of 3,017 middle- and high-school students surveyed agreed they live in a corrupt society. One out of every seven respondents ranked Korea higher than 20th among 100 countries in terms of severity of corruption. Asked to select the most corrupt group, 89.6 percent picked the politicians, followed by journalists with 63.3 percent, businesses 61.6 percent, lawyers 52 percent, teachers and education officials 49 percent, public servants 44.5 percent, financial institutions 37.8 percent and police 37 percent. The respondents were allowed multiple choices. The survey showed, however, that teenagers have very low corruption awareness themselves, pollsters said. Up to 47.3 percent said they do not need to observe a law if nobody is watching them. About 27 percent answered they would offer bribes if it would help resolve problems, and 35 percent said they would ignore corrupt behavior if reporting it would be a hassle. More than 27 percent said they would turn a blind eye to their own or their relatives' corruption, while 16.8 percent said they are willing to violate the law and risk a 10-year prison term if it would allow them to earn as much as 1 billion won. On the people who report wrongdoings of friends and colleagues, 14.3 percent said they do not understand why whistleblowers do what they do and 5.7 percent said they would even bully them. Asked why they think corruption exists in society, 64.3 percent cited a lack of punitive deterrents and 26.5 percent pointed to people's belief that observing the law only results in disadvantages. (jihoho@koreaherald.co.kr)

From The Korea Herald, 23 November 2002

Berlusconi to End 11-Month Foreign Minister Role

Italian Prime Minister Silvio Berlusconi is ending his 11-month stint as interim foreign minister and giving the job to a cabinet ally with little diplomatic experience, government sources said on Wednesday. The long-awaited move, to take place on Thursday, will free Berlusconi to concentrate on pressing domestic problems, such as a stagnating economy, and give Italy a full-time foreign minister as it prepares to take on the rotating European Union presidency in July next year. Berlusconi told reporters he would drop the dual role on Thursday and although he did not name his successor as foreign minister, political sources said it would almost certainly be Franco Frattini, currently the civil service minister. Frattini, 45, wrote recent conflict of interest legislation that critics say was tailor-made to allow Berlusconi to retain his massive media empire despite his political responsibilities. Berlusconi, 66, took over as foreign minister in January when respected diplomat Renato Ruggiero quit the post in a row over Italy's commitment to closer European integration. Although he was criticised at the time for concentrating too much power into his hands, Berlusconi proved surprisingly successful in the job, swiftly easing concerns among allies about Italy's pro-European credentials. Clearly relishing the post, his biggest coup came when he hosted a signing ceremony of a new partnership deal between NATO and Russia that drew 20 heads of government to Rome in May.

He has since criss-crossed the globe attending international conventions from New York to Johannesburg and striking up firm friendships with both the U.S. and Russian presidents - or George and Vladimir as he enjoys calling Bush and Putin respectively in public. Pressures Build - Many allies believed that he would not be able to stand the pace for more than a few weeks, and Berlusconi himself complained that he was having to work 19-hour days to keep up. However, pressures within his own centre-right coalition prevented him from handing over the reins more quickly, with some partners demanding a full-scale cabinet reshuffle and others eyeing the coveted foreign ministry job for themselves. Frattini, who is a member of the Forza Italia (Go Italy) party that Berlusconi himself founded, was always considered a front-runner but he did his cause no good in July when he announced that the job was his. Irritated by the display of over-confidence, Berlusconi cast around for another possible successor before finally returning to Frattini, sources said. Berlusconi himself always said in public that he needed to hold onto the portfolio to oversee a radical overhaul of the foreign ministry to make it more business orientated. A former ski instructor, Frattini is a civil service expert who has swung from the far left of the political spectrum to become a Berlusconi confidant. Put in charge of Italy's sprawling state bureaucracy after Berlusconi's general election triumph last year, he won praise for his handling of the sensitive secret service portfolio in the wake of the September 11 attacks on U.S. cities. However, he has almost no foreign exposure and is not known as a linguist.

From MSNBC, 13 November 2002

Blair Squares Up to Striking British Firefighters

Angry British firefighters walked out on an eight-day strike on Friday, blaming the government for wrecking a last-minute pay deal and leaving the armed forces to provide emergency cover. Prime Minister Tony Blair flew into a storm on his return from a NATO summit in Prague but said he was ready for a fight with a service he accused of living in the past, prompting fears of a long winter of industrial unrest. Ripples from the firefighters' action will spread. Commuters were among the first to feel the effects as safety fears closed stations on the capital's crowded underground rail system. Firefighters had been pressing for a massive 40 percent pay rise but were set in the early hours of Friday morning to agree to an employers' offer of a 16 percent package, only for ministers to scotch the proposal at the last minute. "When a real chance of peace was possible the government has intervened to block that offer," said a furious Fire Brigades Union (FBU) leader, Andy Gilchrist. Army chiefs have already warned their forces are stretched to the limit at a time when contingency planning is under way for a possible military offensive in Iraq. The strike also comes as Britain is on heightened alert for possible terror attacks. About 19,000 army, navy and airforce personnel - a tenth of British forces - have been drafted in as cover, using outdated "green goddess" fire engines up to 50 years old. Ten people died in fires or on the roads during the first firefighters' strike although none of the deaths was attributed to the two-day stoppage last week. To make matters worse, last-ditch talks are under way to stop a strike by key workers at seven of Britain's major airports which could ground planes across the country next week.

Britain is not alone in facing industrial discontent. French truckers rejected pay offers on Friday aimed to avert nationwide blockades. And farm union leaders urged their members to lift barricades blocking around 60 food depots after a breakthrough in a row with supermarkets over food prices. SPOILING FOR A FIGHT? Other UK workers from train drivers to teachers have taken or are considering strike action, sparking fears of a rerun of the 1978-79 "Winter of Discontent" which condemned a previous Labour government to 18 years in opposition. Some in government are said to want a showdown to prove Blair is not under the unions' thumb. Certainly, his official spokesman dropped his usual measured tones to attack the FBU. "If people think the government and the country can be held to ransom through strike action, can be bounced with half-baked, uncosted proposals in the middle of the night...then they are not living in the real world," he told reporters. The FBU said a deal had been on the table and it was ready to suspend its action. But at the last moment, the government stepped in, saying there was no pledge to reform the service. Ministers have consistently said any significant pay rise had to be matched by modernisation and efficiency savings. "Firefighters' working practices are completely outdated ...set in formaldehyde for 25 years," the spokesman said. "The blockage in this dispute is the FBU's inability to consider change and until it does there ain't going to be much progress."

From MSNBC, by Mike Peacock, 22 November 2002

Government Recruits Recent College Grads

Federal Government Makes Recruitment Push to Fill Homeland Security Jobs - Before getting her bachelor's degree in business and accounting last June from the College of Charleston, Alicia Valentino took a look at the private-sector job market and opted for graduate school. But barely six months later, Valentino may change course. With federal agencies stepping up campus recruiting because of openings in the Homeland Security agency and an anticipated wave of retirements, Valentino is considering getting a job with the government while pursuing her degree. "The pay is not that bad with the federal government, and with the private sector being what it is, I think I'd rather have a stable job, especially in accounting, where you could wind up working for a WorldCom or Enron," said Valentino, who interviewed with four federal agencies at a recent job fair. Despite complaints about the length of the application process, many students are giving government employment a serious look. The Partnership for Public Service, a nonprofit group that promotes civil service careers, said that with at least 50 percent of the existing federal work force eligible for retirement by 2007, there should be more than enough positions to go around. The partnership estimates the government needs to fill 250,000 jobs. Students and career counselors hurting from consecutive years of sub-par hiring are happy to see the government on campus. "The poor students in college this year, everything changed during their college education.

They came in at a high, economically, and they're leaving with all the rules changed," said Nancy Cathcart, a career counselor with Champlain College in Burlington, Vt. Recruiters from federal law enforcement agencies showed up at Champlain to interview criminal justice majors at an October job fair. Other schools that have held career fairs this fall, including Charleston and Drake University in Des Moines, Iowa, report government interest in students with an array of majors. The State Department has intensified its recruiting since the Bush administration took over, said Diane Castiglione, director of recruiting. "In the Foreign Service we change our positions every couple of years, so it gives you the best of both worlds: You can get a new job without losing a job," Castiglione said. "You have that stimulus of change, excitement and new challenges and interesting work with the stability of not having to go out and find a new employer every couple of years." The government is getting help in its recruiting effort from the Partnership for Public Service, seeded last year with a $25 million contribution from a private lawyer grateful for past work with the Justice Department. So far, the partnership has brought 380 colleges and universities together with 60 agencies.

The group's president, Max Stier, said that in addition to providing long-term stability, government jobs 85 percent of which are outside of Washington also appeal to a mindset created by the terrorist attacks. "Young people today are looking for an opportunity to make a difference rather than to make a dollar," he said. But for the government to appeal to more young people, it must shorten the application process and the time from the hiring date to the start of work, said Brenda Davis, director of career development at Alabama A&M University in Normal, Ala. Civil service examinations and security checks slow down the process, she said. Shirley Lecque, a senior at Charleston interested in an accounting career with the Air Force Auditing Agency, agreed with Davis. "The application is so long, it's like reading a book," said Lecque, drawn to a government job by tales of classmates with accounting degrees now working as bank tellers. Acknowledging that gaps of up to six months between a job offer and the start of employment pose a "tremendous problem," Stier said the partnership is working with the government to accelerate the process. Stier said the partnership hopes to remove the stigma attached to government service. "It's been a bipartisan sport to run down the federal government for some time," he said. "We have an opportunity to change that."

From ABC News-Business-Wire, 20 November 2002

E. African Newspaper Marks 100 Years

Nairobi, Kenya - The East African Standard, one of Africa's oldest, continuously published newspapers, marked its 100th anniversary Friday. Inaugurated at the completion of the East African Railway from the Indian Ocean port of Mombasa to Lake Victoria in 1902, the African Standard, as it was then known, was launched by A.M. Jeevanjee, a Karachi-born trader. He consolidated his fortune when he moved to Mombasa and became the supplier of the British colonial railway project that was built largely by laborers brought from British-ruled India. Jeevanjee sold the paper in 1905 to two British businessmen, who changed the name to the East African Standard and in 1910 moved its headquarters to Nairobi, which became the capital of the British protectorate known as Kenya. A few months before independence in 1963, the British-based Lonrho Group bought the newspaper. In 1977, it became a tabloid and the name was changed to the Standard. In 1995 Lonrho sold its controlling interest to the Standard Newspapers Group Limited, a company in which prominent Kenyan politicians are believed to have considerable interests. The name was changed back to the East African Standard. In 1997, the group purchased the Kenya Television Network, or KTN, the country's second television broadcaster and the first competitor to the government-run Kenya Broadcasting Corporation, or KBC. KTN now broadcasts via satellite to Nairobi, Mombasa, Nakuru, Eldoret and Kisumu, the Lake Victoria port where the railway ended in 1902. The East African Standard's principal media rival, the Nation Media Group, publishes the Daily Nation, Sunday Nation and Taifa Leo, a Swahili-language daily. The daily dates to the immediate pre-independence period, and the group's major shareholder is the Aga Khan. The group established radio and television broadcasting operations in 1999.

From UK-Guardian Unlimited-Wire, 15 November 2002

Kenya Voter Register Includes a Million Dead-Study

Nairobi - More than one million dead Kenyans are still registered on the country's electoral roll, raising fears that their names will be used by one of the parties to rig the vote in December 27 elections. According to the independent Institute for Education in Democracy (IED), 15.8 percent of the 1,177 people taken as a representative sample in a recent audit of the 10.5 million electorate have died since the last elections five years ago. "Since 1997, the register has not struck off the dead people," said Koki Muli, the director of Nairobi-based IED. "This is a situation that has potential for being abused." Analysts say the figure could be even higher due to AIDS which kills about 500-700 Kenyans a day. The head of the Electoral Commission Samuel Kivuitu admitted that the voter register included some names of dead people, but said the figure was far less than a million. An election official told Reuters it was 200,000 people. "It has not been easy to know how many people have died because the register of deaths records are not that accurate," Kivuitu told reporters in Nairobi. He said the commission had previously removed the names of people who were recorded dead, only to find that those same people personally appeared at its office later demanding their names be returned in the list.

President Daniel arap Moi, 78, is constitutionally bound to step down when Kenya holds elections on December 27, and Kenyans will elect only their third president since independence from Britain in 1963. The ruling Kenya African National Union (KANU) party has picked political novice Uhuru Kenyatta as its candidate to battle it out with opposition candidate Mwai Kibaki, who is suppported by a coalition of several parties. Analysts say the opposition could give KANU its stiffest challenge since it took power nearly 40 years ago. The opposition has often accused KANU of rigging polls by stuffing ballot papers carrying the names of dead people into the ballot boxes to inflate their count. Election observers have in the past complained that a lot of dead people have "turned up to vote" at elections. Kivuitu said new rules being introduced for the coming polls would make it impossible for politicians to cheat in that way. Under the new rules, every voter must present a national identity card which will be verified by election officials. Local people will be allowed to check the ballot papers and verify names during counting, and votes will be counted where they were made. In previous elections, votes were taken to another station before being counted, leaving plenty of time for rigging. "It is not going to be easy for dead people to vote, the dead will remain dead," Kivuitu said.

From MSNBC, 15 November 2002

Kenya Election Campaign Begins

Kenya's two main presidential candidates officially launched their campaigns Monday, addressing huge crowds after filing their nomination papers to be the third president in this East African nation's history. Ruling party candidate Uhuru Kenyatta, accompanied by President Daniel arap Moi, presented his party nomination to the Electoral Commission and then drove a few miles to a downtown park, where tens of thousands of supporters gathered to kick off the race. The main opposition leader, Mwai Kibaki, filed his papers a few hours later and then headed to his rally at a nearby soccer stadium. The candidates were accompanied by hundreds of supporters wearing party T-shirts and hats and chanting slogans and waving flags. Flatbed trucks decorated with party posters and carrying dancers and singers drove through the city of 3 million people, encouraging residents to attend the rallies. Monday's events were the first time both presidential candidates have held large rallies simultaneously in downtown Nairobi, within hearing distance of each other. Many businesses in downtown Nairobi closed, fearing that the two highly charged rallies, so close together, would turn violent. Sound trucks and pickups loaded with young male supporters cruised the streets, and Kibaki supporters threw stones at cars with Kenyatta posters. The two men are competing to replace Moi, who has ruled Kenya since 1978 but is constitutionally barred from running again. Moi designated Kenyatta to run as the ruling Kenya African National Union candidate, and Kenyatta was later confirmed at a party convention. Kenyatta is the son of Kenya's first president, Jomo Kenyatta. But Kenyatta's nomination caused a split within KANU, and numerous senior leaders defected and formed a new party, which later joined a coalition of opposition parties known as the National Rainbow Coalition.

The 13 parties that make up the coalition united behind Kibaki, a veteran opposition leader. Both presidential candidates have pledged to repair Kenya's faltering economy, fight rampant corruption and cooperate with international donors, who have cut funding to Kenya because of bad governance. Kenyatta insists that the ruling party, led by a new generation of leaders, can solve the country's problem. "We are fed up with the politics of abusing each other. These politics don't give anything to Kenyans... young people are now suffering," Kenyatta said. "(Moi) knows the younger generation is suffering. That's why he is giving the younger generation the power to lead." Moi has repeatedly blamed multiparty politics for the country's problems, but his rhetoric met with a lukewarm response. "It's not KANU that brought problems to Kenya, it's the opposition that doesn't want Kenyans to benefit," Moi said. But as he spoke after Kenyatta, hundreds of supporters began filing out of the park. Kibaki has blamed Moi for the country's problems and said that only the opposition can effectively reform the government. The December 27 election is the third since multiparty politics was restored in 1991 and is considered the most competitive. Opposition parties split in 1992 and 1997, allowing Moi to win re-election with less than 50 percent of the vote. Kenyan television stations, both private and public, covered the delivery of the nomination papers and the rallies live, a first in the country's history. The state-run Kenyan Broadcasting Corp., the only station with nationwide reach, broadcast Kenyatta's and Moi's speeches live, but did not broadcast anything from the opposition rally. Six other opposition candidates are expected to register for the presidential race, but none is considered capable of winning the election.

From CNN, 18 November 2002

Chinese Province Requires Net ID

Cards will identify Internet cafe users to police - A Chinese province has required Internet cafe users to buy access cards that identify them to police, further tightening official monitoring of who uses the Internet and what they do online, a police spokesman said Monday. The system was installed in all 3,200 Internet cafes in the central province of Jiangxi last month, said the spokesman, who works with the police computer crime division in the provincial capital of Nanchang. "This system gives us more power to prevent crimes and identify criminals on the Internet," said the spokesman, who wouldn't give his name. Although China has 45 million regular Internet users, the communist authorities are intent on preventing the Net becoming a forum for free speech. They also block access to gambling, pornography and extremist Web sites. Sites run by foreign media, religious and human rights groups are also blocked. In addition, webmasters are warned to cut off subversive talk in Internet chat rooms while a special police force filters e-mail and searches the Web for forbidden content. Internet cafes have spread from the cities to small towns across China, although most Chinese access the Internet at home or at work. Embraced for their commercial potential, the cafes are also viewed as possible havens for gambling, pornography and online gaming. Internet cafes were closed in Beijing and many parts of the country after a deadly fire at one in the capital's university district earlier this year. Authorities have used the disaster to tighten supervision and say they will reopen the cafes only under stricter scrutiny - including barring all minors. Jiangxi's system requires customers to register their names, ages and addresses, information which is then loaded into a police database, the police spokesman said. They get an access card, which is swiped on an identifying machine when they go online. That sends a signal to police, who continuously monitor the Web for people attempting to reach barred sites. Police can also block access to selected cardholders. More than 200,000 users have obtained such cards so far, the official said.

From MSNBC-Technology, 4 November 2002

China Web Portals Rocket Again - Business Prospects Improve for Netease, Sohu, Sina

While U.S. Web portals have fallen out of favor with many investors, their Chinese counterparts have enjoyed a recent surge in activity not seen since the go-go days of the late 1990s.Over the last few days, the "Big Three" Chinese Web portals - Sina, Sohu and Netease - have seen double-digit percentage gains in their share prices on the back of improved business prospects. On Wednesday, shares of Netease jumped 35 percent, or $1.54, to a 52-week high of $5.99 after the Beijing-based portal reported an operating profit, excluding a special charge related to litigation. Moreover, its trading volume rocketed from a daily average of 85,000 to 550,000 by late afternoon trade. Its rivals Sina (SINA: news, chart, profile) and Sohu (SOHU: news, chart, profile), meanwhile, enjoyed more modest gains of 5 to 6 percent. It may not seem like much, but both firms as well as Netease have seen their share prices climb well over 30 percent since Sohu surprised the markets by turning its first net profit two weeks ago. In explaining the recent surge, analysts point not only to signs that the portals are either turning a profit or sharply reducing losses, but also to their success in reducing their reliance on online advertising and successfully diversifying away into the business of mobile messaging. Read previous story. And then there is China's booming economy, which continues to grow at an 8 percent clip while the rest of the world just slogs on. "I would say it's a combination of enthusiasm for what will in short order be the largest economy in the world and a belief that one of the portals will emerge as a profitable and sustainable venture along the lines of Yahoo (YHOO: news, chart, profile)," said Matt Ocko, managing director of Calif.-based venture capital firm Archimedes Capital.

"Given recent price movement's it's akin to betting on multiple horses in the hopes that one will pay off and offset losses on the other horses. I think it's unlikely that there will be more than 2 dominant players," said the analyst who also tracks Internet developments in China. Late Tuesday, NetEase.com (NTES: news, chart, profile) posted a third-quarter operating profit of $3.3 million, excluding a charge of $4.4 million related to the settlement of class-action litigation. Including the charge, the company lost $1.1 million, or 4 cents a share, narrower than its loss of $7.7 million in the same period a year earlier. Revenue surged 93.3 percent to $9 million in the three months ended Sept. 30. NetEase.com attributed the results to strong growth in demand for its fee-based services, principally wireless short messaging services (SMS). Analysts cite several reasons for SMS' increased popularity. With fixed-line phones hard to come by in China, cell phones have become standard gear for your average caller. And that's a huge market. According to industry estimates, the number of cell-phone users in China is three times larger than that of Internet users. At rival Sina.com, revenue jumped 71 percent to a record $10.3 million in its fiscal first quarter from $6.1 million a year earlier -- almost, but not quite, allowing the company to break even. Read story. Its net loss for the July-September first quarter shrank to $559,000, or 1 cent a share, from a loss of $5.3 million, or 13 cents a share, in the same period last year. Two weeks ago, rival Chinese portal operator Sohu.com surprised markets by turning its first net profit -- just $112,000 on the back of fee-based mobile services and advertising in the three months through September - but a quarter earlier than the company had expected.

From CBS Marketwatch, by Allen Wan, 6 November 2002

'Wake-Up Call' Regional Summit Called

Manila, Philippines - At least 19 countries will be taking part in a conference on terrorism and its effects on tourism in the wake of last month's bombings on the Indonesian resort island of Bali, Philippine officials said Wednesday. The two-day meeting, which begins Friday in Manila and will be mostly behind closed doors, aims to create "doable projects to counter terrorism," said a statement issued by the Department of Foreign Affairs, which is organizing the conference with the security council and the tourism department. In a conference paper obtained by The Associated Press, the organizers said the talks would be a "wake-up call to mobilize all resources to minimize the impact of heinous crime against tourism not only in Bali but within the region." Philippine Foreign Undersecretary Lauro Baja said participating countries include the United States, Canada, Australia, New Zealand, Japan, South Korea, China, United Kingdom, Hong Kong and the 10 members of the Association of Southeast Asian Nations. During the conference in Manila, Indonesian experts will present a post-Bali assessment, including the police investigation and intelligence gathering. Ambassador Francis Taylor, the U.S. State Department's coordinator for counterterrorism, is scheduled to present a paper on building institutional capabilities and regional cooperation for combatting terrorism. "The big difference in this international terrorism conference is that we are going to identify doable projects," Philippine National Security Adviser Roilo Golez told reporters. "We are not talking only about a memorandum of understanding or a resolution that is going to be implemented in a general way." He also noted that the meeting, announced over the weekend by officials attending the ASEAN summit in Cambodia, brings together "the best lineup I've seen" in any terrorism conference. The conference will be chaired by Golez, Philippine Foreign Secretary Blas Ople, and Tourism Secretary Richard Gordon.

From CNN, 7 November 2002

Australia Seeks New Anti-terror Powers - Police

Kuala Lumpur - Australia is pursuing new ways to combat terrorism, its police chief said on Tuesday while in Malaysia to discuss an anti-terror pact that Australian police also plan to sign with Singapore and Thailand. "There is a bill before the Australian parliament, that if passed, will provide detention powers to our Australian security intelligence organisations," Mick Keelty, Australia's federal police commissioner, told reporters after a meeting with Malaysian police chief Norian Mai. "But it is difficult in these sort of situations to strike a balance between the rights of an individual and the rights of a nation," he said in the capital of Malaysia, where preventive arrests are legal. Australia, whose government strongly supports Washington's war on terrorism, was brought into the frontline last month when around 90 of its citizens died in bombings in Bali, Indonesia. Canberra has since proposed a series of counter-terrorism measures, adding to an original bill tabled in June that human rights groups, political opponents and other critics already deemed excessive. Malaysia and Singapore both have colonial-era Internal Security Acts allowing detention without trial, legislation Australian governments and rights groups have previously criticised. Both are holding dozens of suspected Muslim militants without trial, most of them said by police to be part of the Jemaah Islamiah group regional authorities link to the al Qaeda network accused of last year's September 11 attacks on the United States. Regional authorities now say Jemaah Islamiah is responsible for the Bali blasts.

From MSNBC, 12 November 2002

Tokyo Studies Switch to Open-Source Software

Eager to catch up with nations switching to computer systems other than Microsoft's Windows, Japan will study the possibility of using open-source software such as Linux at the government level. The public management ministry is earmarking 50 million yen ($410,000) for a panel of scholars and computer experts, including Microsoft officials, to finish the study by March 2004, Tatsuya Kawachi, a ministry deputy director, said Wednesday. Japan lags behind Germany, the United States, China and other nations looking into or using open-source software such as Linux, which can be used and modified for free. Although Tokyo does not disclose a breakdown, government computer systems mostly use Windows, a closed system. Members of the government panel have not yet been selected, but they will travel to see how other countries chose and use operating systems, Kawachi said. Concerns about costs and security from heavy reliance on Windows have been growing here. Ruling party politicians have been urging the government to consider other operating systems, which may offer lower costs and better security. But Kawachi said the Japanese government cannot decide on hearsay and wants "an objective study" on the options. The study will not recommend a system, leaving that decision up to ministries and local governments.

From Nando Times-Technology, 20 November 2002

Singapore Relents on Chewing Gum Ban - on Doctor's Orders

Singapore, the tightly regimented city state that prohibits acts ranging from spitting in public to leaving lavatories unflushed, has relaxed its ban on one antisocial pursuit: chewing gum. The import, manufacture and sale of gum was outlawed 10 years ago as part of a campaign to keep the city squeaky clean. The authoritarian government argued that lumps of discarded gum were difficult to prise off the streets, while gum stuck in subway doors was delaying Singapore's otherwise super-efficient trains. While the country has become slightly more laid back in recent years, locals are not jumping for joy at the latest pronouncement. The ban has been only partially rescinded, allowing gum to be chewed by people with a prescription. The move was grudgingly agreed to as part of a free trade deal with the United States, which insisted on "a modest entry point" for American gum manufacturers. Singapore's chief negotiator, Tommy Koh, said yesterday that "sugarless gum prescribed by doctors and dentists as having therapeutic and medicinal benefits will be sold in pharmacies". The ban has been the source of many jokes about Singapore, which also imposes heavy fines for dropping litter or urinating in lifts. The country's elder statesman, Lee Kuan Yew, once said: "If you can't think because you can't chew, try a banana."

The issue had been a sticking-point between Singapore and America during two years of negotiations to finalise the trade deal. Mr. Koh hailed the agreement as a difficult compromise, saying: "In the interest of resolving all outstanding issues in the spirit of goodwill that exists between the two delegations, we were extremely ingenious." But even smokers prescribed nicotine-substitute gum are not yet salivating, for the new trade regime will not come into effect until 2004. Some locals said that allowing gum to be available on prescription only was ridiculous and called for the ban to be scrapped. "It's a small step towards a good change," said Toru Umatani, a 37-year-old fund manager. A year after the ban was introduced, authorities said the number of wads of chewing gum found at railway stations had plunged to an average of two a day, from 525 pieces before the ban. Chewing-gum addicts have not been entirely deprived over the past decade - they have simply crossed the border to neighbouring Malaysia and bought their supplies there.

From UK-The Independent-Pacific Rim, by Kathy Marks, 20 November 2002

Hi Tech Voting: Dream Or Nightmare?

Touch-screen and other high-tech voting machines are making their full-scale debut in more than 200 counties across the country, with officials anxious to avoid the kind of snags that created Florida's primary mess in September. Election officials have spent countless hours training poll workers and educating voters on how the digital tallying machines work. But analysts expect some trouble Tuesday - if problems experienced during primaries and early voting are any indication. The closer an election, the greater the impact of any troubles. And while counties are buying systems for better reliability, what they may be getting is the complete opposite because machines lack paper backups, said Kimbell Brace, president of Election Data Services, a research company in Washington, D.C. "The reliability of the election is only as reliable as the machine can be," Brace said. Machines alone aren't to blame. Inadequate training for poll workers and poor planning were blamed for troubles in Florida and Maryland during the Sept. 10 primaries. In Montgomery County, Md., for instance, election judges were told to drive memory cards from touch-screen machines to election headquarters even though the machines were designed to send the results they contained by computer modem. Instead of removing just the cards, some judges hauled entire machines to election headquarters. The results of a tight congressional race weren't known until 1 a.m. County officials have since hired an additional 1,000 poll workers and equipped most polling stations with modems. For Tuesday's elections, 510 of the nation's counties - or 16 percent - are using electronic voting systems, up from 293 counties in 2000, according to Election Data Services. Georgia accounts for most of the increase. The state spent $54 million to buy 19,000 machines for its 159 counties. The two counties that used the new machines during Aug. 20 primaries said things went well. In a third county, where the machines were used only for demonstration, they froze up. The nation's largest county to go all-electronic is Harris County, Texas, which includes Houston. Harris tried the system, which uses a dial to highlight names rather than a touch screen, during early voting. Other states with counties debuting high-tech equipment include Florida, Louisiana, Maryland and Mississippi. Colorado and North Carolina have counties debuting machines for early voting only.

Many of the counties rushed to replace outdated equipment to avoid a balloting fiasco like the one that besmirched the 2000 presidential vote in Florida. And that meant that machines were deployed more quickly than reasonable, analysts say. Doug Lewis of the Election Center, a training organization for election administrators, said new equipment usually debuts in odd-number years to work out kinks through smaller elections. For the Florida primaries, Miami-Dade and Broward counties failed to adequately train poll workers on new touch-screen machines, which also took longer to boot up than anticipated. Thousands of votes weren't counted until days after the election. Hoping to make Tuesday go more smoothly, Broward had paid county employees rather than volunteer poll workers take charge of preparing and troubleshooting machines. Miami-Dade also planned to boot the machines several hours earlier. But voter unfamiliarity with the machines also dogged the Broward balloting and could again. County officials are bracing for long lines and the likelihood polls will have to stay open hours late. Florida Secretary of State Jim Smith said lines are a small price to pay for democracy. "(Tuesday) night I'm confident we're going to be able to say that we had a good election, all our polls opened on time, that the equipment worked properly," Smith said. Wake County, N.C., meanwhile, is trying to track down nearly 300 people who cast early ballots because their choices weren't properly recorded by new touch-screen machines. In another early-voting problem, some machines weren't correctly calibrated in Dallas County, making votes for Democrats appear as Republican votes. Most voters were able to recast their ballots. Neither Wake nor Dallas were using the new equipment Tuesday. Yet their troubles could point to possible difficulties elsewhere. And any problems could foreshadow a greater mess in 2004, when more states will have high-tech machines thanks to a new $3.9 billion federal law to help states replace outdated equipment. Not that problems are inevitable everywhere. And in Colorado's Mesa County, the novelty of touch-screen machines was even credited for higher turnout in early voting. But Mark Radke of Diebold Election Systems, which supplied machines for Georgia and Maryland, acknowledges that no matter how good the technology, there is always bound to be some trouble. "Anytime you deal with this many poll workers involved and this large a deployment, you're always going to have an issue or two come up," he said.

From CBS News-Politics, 5 November 2002

Celebration Of Business Innovators And Ideas

Since 1917, Forbes has embraced an unshakeable belief in the spirit of free enterprise. To celebrate our 85th anniversary, we will publish on Dec. 5 a special report that spotlights 85 people, companies and ideas that have had significant impact on our lives over the past 85 years. It will be a refreshing look at the best in business. We promise a provocative and comprehensive challenge to anyone who thinks the age of prosperity is behind us. This preview is intended also to solicit your suggestions on who and what you, our readers, think some of those innovative 85 people, companies and ideas should be. Use our 85th Anniversary discussion board to submit your suggestions. Or vote in our online polls. Look for a new poll each week until December. To remind you of some of the breakthroughs in those years, we've prepared an interactive business-history timeline, which recalls the 85 years that span the Model T and the Internet though past Forbes issues, and also retells a little of our company history.

From Forbes, 4 November 2002

Microsoft Launches Tablet PC Drive

New York - Hoping to write a new chapter in the saga of pen-based computing, Microsoft on Thursday officially unveiled Windows XP Tablet PC Edition. Executives representing more than 20 companies manufacturing devices using the software joined Microsoft Chairman Bill Gates here for the launch. Acer, Fujitsu, Hewlett-Packard and Toshiba are among the companies making the new tablet PCs, which are similar to notebook PCs. Most of the devices allow the input of data with a stylus in addition to or instead of a keyboard. Microsoft and other software developers, including Autodesk, Corel and Groove, have either updated existing programs or released new applications to support the Tablet PC operating system. Microsoft, for example, released an update to Office XP that supports the Tablet PC software's handwriting and "inking" technologies. More sophisticated enhancements will come with Office 11 sometime next year. "The shipment of the next release of Office 11 will go even further in support for ink. There's lots of work being done to support that," Gates said. Manufacturers appear to have taken a conservative approach with this generation of tablets. The products are geared more for vertical markets, such as insurance or health care, and niche uses, such as workers collaborating on projects. Designs vary from Fujitsu's slate to Toshiba's convertible, which looks more like a typical notebook but "converts" into a tablet. The majority of designs are clearly focused on businesses, not on consumers. Analysts have offered dim projections on early sales. Gartner says that portables running the Tablet PC operating system would account for a mere 1 percent--or about 425,000 units--of worldwide notebook shipments next year. Analyst IDC predicted U.S. shipments of 575,000 tablets out of an estimated 13 million notebooks.

From News.com, by Joe Wilcox and Sandeep Junnarkar, 7 November 2002

Government IT Workers Closing Skills Gap

Government IT workers in the U.S. outscore their private-sector counterparts on knowledge of Unix, Linux and Microsoft Corp. software but still lag in networking, databases and Internet technologies, according to a study conducted by a company that tests IT skills online. A comparison of the scores of 4,110 government and 7,096 private-sector employees who were tested in eight areas indicates that government IT workers are closing a skills gap that has existed for years between themselves and private-sector IT workers, the study's sponsor said. The study was conducted by Brainbench Inc. in Chantilly, Va., and released last week. The federal, state and municipal government IT workers outscored their private-sector counterparts in the key technology disciplines of Unix and Linux skills and in Microsoft technology administration skills and Microsoft application skills. Private-sector IT services workers outscored government workers in the five other technology areas, which were networking technology skills, database technology skills, Internet technology skills, programming language skills and entry-level technology skills. The report can be downloaded for free from Brainbench's Web site (download PDF). The study was designed to measure the relative IT skill levels of government and private-sector IT services workers. Brainbench drew the more than 11,000 test results needed for the study from its database of more than 5 million online tests taken during the past two years. People voluntarily take the tests at Brainbench's Web site. Brainbench grades them and returns them to the user. Government IT workers are showing significant strengths in some important technology areas, especially Unix and Linux, Brainbench President and CEO Mike Russiello said in a statement. Increased focus on the skills gap by the U.S. federal government's Chief Information Officer's Council and the National Academy of Public Administration have played a role in helping to close this gap, he said.

From ComputerWorld, by Gretel Johnston, 8 November 2002

White House Opens Doors On Web

The White House Has Opened Its Doors for Guided Tours by President Bush and The First Lady - But Only in Cyberspace. A multimedia Web site, to be inaugurated Wednesday, also includes video tours of the West Wing by Vice President Dick Cheney and his wife, Lynne. Launched to coincide with the 100th anniversary of the West Wing, the site substitutes for the public White House tours that were curtailed last year after the Sept. 11 attacks. Bush's seven-minute Oval Office tour, recorded in June, shows the president pointing out features such as the rug that "helps make this room an open and optimistic place," a bust of Winston Churchill on loan from the British government and paintings of Texas, "because that's where I'm from and where I'm going." Others making appearances on camera include chief of staff Andrew Card, senior adviser Karl Rove, press secretary Ari Fleischer and White House curator William Allman. First lady Laura Bush takes her virtual visitors around the diplomatic reception room, often the first stop for visiting dignitaries. Wallpapered with scenes of American landmarks, the legacy of Jacqueline Kennedy's famous White House redo, the room contains the fireplace where President Franklin D. Roosevelt held many of his fireside chats during World War II. Cheney, recorded last Friday, recounts the history of the vice president's office in the Eisenhower Executive Office Building next door to the White House. Originally used by the secretary of the Navy more than a century ago, the room contains intricate ship models. Inside the drawer of Cheney's desk, where President Theodore Roosevelt sat before moving his office to the West Wing 100 years ago, are the signatures of previous vice presidents. The camera pans down to Al Gore's name just below Harry Truman's. Panoramic images take viewers on a 360-degree spin around 16 rooms, including the Oval Office, the vice president's office and the dining room. The site - http://www.whitehouse.gov/life - works with Real Player software and will soon run on Windows Media Player, said White House spokesman Jimmy Orr. It may extend beyond the West Wing in the future and include the Rose Garden and Air Force One, he said. White House public tours were stopped after the Sept. 11 attacks and were reopened later only to school and youth groups, veterans' associations and guests of White House employees or lawmakers.

From CBS News-Politics, Nov. 12, 2002

Government Probes Possible Biotech Crop Mixing

Washington - The government is investigating whether a biotechnology company broke federal rules by mixing genetically modified crops with soybeans in Iowa and Nebraska. The Agriculture Department announced late Wednesday that ProdiGene Inc., of College Station, Texas, may have violated federal rules in September when it failed to completely remove corn kernels remaining from a biotech corn crop planted in Iowa last year. Federal officials had ordered the company to burn 155 acres of the corn. ProdiGene is a company that produces plant-made pharmaceuticals and industrial products. The government has strict guidelines for planting and removing such crops to make sure those products do not mix with the food supply or mingle with neighboring crops. On Tuesday, the Food and Drug Administration said it was ordering ProdiGene to destroy 500,000 bushels of soybeans grown in Nebraska rather than sell them for food because the soybeans were contaminated with biotech corn. The bushels have been quarantined at an elevator in Aurora, Neb. Cindy Smith, deputy administrator for USDA's Animal and Plant Health Inspection Service, said inspectors told the company before it harvested the Nebraska crop that it needed to remove the leftover, or "volunteer," corn. "They did not follow those procedures well enough for us to be confident that there were no standing, volunteer corn," she said. The government was able to block the contaminated crops from tainting the food supply, Smith said.

She said USDA and ProdiGene officials are holding meetings to determine the penalties the company would face for violating the Plant Protection Act, which regulates the transportation and planting of genetically engineered plants. Under the act, the company can be fined up to $250,000 per violation, or up to $500,000 for one proceeding or lose its permit for planting genetically modified crops. The department refused to disclose what was in the corn that officials feared could contaminate food, said Jim Rogers, a USDA spokesman. Officials said, though, that it was experimental corn, not yet approved to go on the market. When a company applies to the government for a permit to grow a test plot of biotech crops, it can label some information as confidential to protect trade secrets, including what is grown in the plant. Anthony G. Laos, president and CEO of ProdiGene, said the biotech corn at the center of the investigation contains DNA from a protein that is not toxic. The protein "addresses persistent digestive health conditions," Laos said. Laos also said that the Iowa situation "has been fully resolved to the complete satisfaction of the U.S. government." But Rogers said the Iowa and Nebraska incidents are being treated as "one proceeding" in the investigation. ProdiGene has been working with corn genetically designed to contain enzymes for medical or manufacturing purposes. One of its varieties contains trypsin, an enzyme that can be used in leather tanning or to produce insulin.

From Nando Times-Business, by Emily Gersema, 14 November 2002

Regulators Ask Fifth Third About Charge

New York - Federal regulators are examining a $54 million charge that Fifth Third Bancorp <FITB.O> took in the third quarter, sending shares of the Midwest bank down more than 10 percent on Friday. The Cincinnati-based bank said in a quarterly earnings filing with the Securities and Exchange Commission on Thursday it had received a supervisory letter from the Cleveland Fed, as well as the Ohio Department of Commerce related to procedures for accessing the books, the separation of duties, procedures for reconciling transactions and the hiring of outside consultants. The regulators also put a hold on future acquisitions - including Franklin Financial Corp <FNFN.O> - until the supervisory letter was withdrawn, the bank said. Fifth Third received the letter on Nov. 7.The SEC also wrote to Fifth Third in a letter received on Nov. 12 that it was conducting an informal probe into the charge, and into possible weaknesses in financial controls at the bank's treasury and trust operations. Fifth Third said it planned to fully assist the government in its inquiries. Shares of the bank were down $6.55 to $55.98 on Friday. Third had said in a Sept. 10 SEC filing it decided in the third quarter that some "mostly treasury related aged receivable and in-transit reconciliation items" were impaired. It said then it expected to realize an after-tax expense of $54 million related to the impairment.

From ABC News-Business-Wire, 15 November 2002

Government Web Sites Open To Hack Attacks

Some of the U.S. government's most important computer systems continue to suffer significant security lapses despite renewed focus protecting them against terrorist attacks, congressional investigators said Tuesday. In a report to a House panel, the General Accounting Office said it found "pervasive" weaknesses in federal technology systems at the 24 largest departments and agencies. Among the worst problems were weak protections at nearly all agencies against insiders attempting sabotage or to personally profit by destroying or stealing sensitive information. The failures put at risk federal payments, taxpayer data and medical records. "Critical federal operations and assets remain at risk," the GAO said. The GAO, the investigative arm of Congress, prepared its latest report for a hearing Tuesday by the House Government Reform subcommittee on government efficiency. The panel praised security efforts by the Social Security Administration but harshly criticized the Transportation Department. That agency's inspector general, Kenneth Mead, cited some improvements over last year, but he acknowledged that the Transportation Department "still has a long way to go to adequately secure its computer systems." Mead said hackers could sneak into the agency's computer systems through some unsecured connections or telephone lines, and that Transportation officials failed last year to report to U.S. investigators three successful hacker break-ins to their Web sites. Investigators said serious problems persist among government plans to continue operating during attacks or interruptions, and these plans "are particularly important in the wake of the terrorist attacks of September 11." There was some good news: Security was slightly better overall than in past years, and investigators said many of the latest problems were discovered during broad audits aimed specifically at finding such lapses. As these audits become more intense, even more faults likely will be discovered, the GAO predicted. One expert said part of the blame falls on software designers who rush to sell their products without making sure these programs are resistant to hackers. "We continue to see the same types of vulnerabilities in newer versions of products that we saw in earlier versions," Richard Pethia of the federally funded CERT Coordination Center said in prepared testimony. "Until customers demand products that are more secure or there are changes in the way legal and liability issues are handled, the situation is unlikely to change."

From CBS News-Politics, by Ted Bridis, 19 November 2002

Argentina Renews Malnutrition Fight

Children targeted for help after at least eight die - President Eduardo Duhalde on Tuesday launched a nationwide campaign to combat rising infant malnutrition, days after reports that at least eight children died of hunger in an impoverished northern province. The deaths - which have garnered front-page coverage here - have alarmed Argentines, who have long seen their country as being South America's "bread basket." Argentina is the world's fifth-largest exporter of agricultural products, many of them grown in the vast, fertile Pampas region. Called "Operation Rescue," the medical and food emergency program will begin November 25 in Tucuman, one of the areas hardest hit by the country's protracted economic crisis. The program will be a "house-to-house campaign among the poorest families to detect cases of infant malnutrition," said Hilda "Chiche" Duhalde, the president's wife and director of the government's social programs. A team of 120 pediatricians and 200 health care workers will be dispatched to the province, bringing mobile hospital units to the populations most at risk, she said. "Tucuman is the tip of the iceberg because all of the provinces are experiencing similar problems, some worse than others," she said. The president's wife is scheduled to arrive in Tucuman to oversee the emergency operation program in the coming days. Since November 14, eight infants have died in Tucuman, along with two more in the northeastern province of Misiones. Tucuman is an agriculturally rich area known for producing many of the country's best citrus and sugar products. But the region has been reeling from the economic crisis and related social problems like much of the Argentine countryside. A report by the Center for Infant Nutrition Studies in Argentina suggested 20 percent of Venezuelan children are malnourished. A painful four-year recession has aggravated existing social problems, leaving 22 percent of Argentines out of work and half living in poverty in this nation of 37 million. In Tucuman, official figures show that 64 percent of the population lives below the poverty line.

From CNN, 20 November 2002

Amazon, Google Lead New Path to Web Services

After much hype, confusion and skepticism, a handful of Internet companies are trying to do something that has stubbornly eluded the high-tech industry: Turn the vague concept of "Web services" into a reality for the greater Internet. Amazon, Google and other Web companies have begun giving developers direct access to their databases so developers can create their own "front doors" and other paths to information, such as book listings and search results. These custom APIs (application programming interfaces) allow developers to tailor such content to their specific needs. The experiments, which might seem technical and obscure, carry broad ramifications. Their concept turns the idea of the graphics-based Web on its head, bypassing its heavily designed home pages and sending developers straight to back-end corporate operations. In opening this new public path to their operations, companies hope to find new ways to generate business and validate the strategy behind Web services. "The biggest surprise to me is that it continues to grow," said Nelson Minar, software engineer at Google, the popular search engine company. "I was afraid it would be a flash in the pan. But I think part of what is contributing to that is that a lot of people are just now learning Web services." Although definitions vary, Web services generally link servers over the Internet so companies and individuals can share data in new ways beneficial to all involved. For example, a rental car company might share its inventory database with an airline so that travelers planning a trip online could easily rent a car on the airline's Web site, saving time and money for everyone. To make such arrangements work, developers must be able to write applications that can be easily linked to one another, regardless of programming language or operating systems. Several companies, including Microsoft and Sun Microsystems, have been pushing Web services, but the concept has yet to take hold throughout the Internet.

Many companies are beginning to use Web services to link internal business systems and exchange data with other companies, but few consumer-oriented sites have tried the technology on the commercial Internet. While the industry shows interest in expanding Web services, research firm IDC reported recently that full-scale adoption could be at least a decade away. Microsoft made a much-ballyhooed announcement of a consumer Web services plan dubbed .Net My Services, but confusion from business partners and complaints from privacy advocates thwarted the ambitious program last year. Now, however, the idea is getting new life through recent initiatives, such as those by Google and Amazon, whose grassroots approach to Web services stand in marked contrast to Microsoft's top-down strategy. Google is giving developers direct access to its search database, bypassing its Web site and allowing them to design their own ways to use the valuable technology. Amazon has allowed similar access to its inventory database, releasing free developer kits that have enabled others to produce faster searches of "light" versions of the company's catalog, as well as other experiments. Yahoo and eBay have also begun to give developers access to their services, though neither company has made the program available for general use. "The developers are creating solutions with Web services and sharing with one another. We have discussion boards, they help each other debug one another, post code," said Colin Bryar, director of Amazon's Web services and associates program. "There are actually sites that are directories of Web services using the Amazon API." Business benefits, burdens - That is all well and good for the developers and consumers, but what are the companies getting out of these new arrangements? The move has actually been burdensome to Google, overloading its servers on particular queries at times, and could take away traffic from the company's Web site.

Neither Amazon nor Google will comment about their plans for Web services because they are in such early stages, but both companies apparently think that the idea is worth trying out for the possibility of creating new opportunities in the future. Already, some say, their experiments are showing signs of fundamentally changing how people shop or do research online. "Individuals outside the company, the customers, gain even more power than they already had," said Erik Benson, a developer who has created some tools using both the Google and Amazon APIs. "Now, not only do we have all the feedback mechanisms created by the Internet, but we can also physically create the features that we want a company to make, without having to wait for a business case, a lengthy development process, or anything else other than our own learning curve." And that, the companies hope, will translate to more business in the long run - for little cost right now. "In a way, Amazon and Google are outsourcing their user interface development, with the developers working for free," said Alex Shapiro, chief technology officer of TouchGraph, a developer of Web applications. "In exchange for letting others easily access their data, these companies perpetuate their brand, spread good vibrations through the developer community, and allow others to experiment with all kinds of innovative solutions without taking on any risk. In turn, the developer gets to act as the portal to Google's/Amazon's data, thereby benefiting through the advertisement for whatever tangential services that they offer." Shapiro wrote an application that lets Web surfers browse data through a unique graphical interface, as opposed to a list. The feature has been applied to both the Google and Amazon databases, presenting intriguing pictures of how books and Web sites connect with one another. Google launched its program in April, allowing - developers to sign up for a key to use its service, although it specifies that it can be used only for noncommercial applications.

Google also provides discussion boards for developers to help one another. "People have been trying for a long time to use Google as a Web service anyway," Minar said. "We felt it was a good way to provide that." Another application combines the Amazon service with a Weblogger API to let users create a link to an Amazon product page on a Weblog in just one step. Amazon launched its Web services program in July. Its initiative is tied to the company's "Associates" program, which allows people to place links to Amazon on their sites and get a cut of any resulting sales. One developer has created an entire store on the Web using Amazon's service. The store looks like a standard camera shop, with product descriptions, comparison pages and a search function, all of which come from Amazon's catalog. For Amazon, the allure of such arrangements is easy to see. No matter how the Web service is used, it comes back to one thing: a link to Amazon's product page. Click that link, and the customers using the Web service can then go buy the book, CD or movie they've been reading about. "(It's) starting to drive unit sales, but it's very early in the process," Amazon's Bryar said. "We're getting feedback that it's a more effective way to drive unit sales. It increases clickthroughs for our associates, which in turn sells products, and the associates are getting more money." Moreover, if the Amazon Web service becomes the standard for any book-related application, the company's reach will spread even further. "If people (become interested in a product) not by going to a retail site but by going through a Web site, then the retailer who's under that application is going to capture those sales," said Frank Gillett, a principal analyst at Forrester Research. "You're not going to stop what you're doing and go find another retailer to buy the product."

From CNET News.com, by Margaret Kane, 20 November 2002

Online Sales Surge in 3Q

Washington - E-commerce Sales Jump 7.8% from 2Q, Post Biggest Year-to-Year Gain Since 2001 1Q. - Sales of U.S. online retailers rose in the third quarter and posted their best year-to-year performance since the first quarter of 2001, the government said Friday. In its quarterly report on e-commerce trends, the Commerce Department said third-quarter online sales increased 7.8 percent from the previous quarter to $11.06 billion. Compared with Sales jumped a hefty 34.3 percent from the year-earlier quarter, their largest year-to-year gain since the first three months of 2001, when sales rose 42.0 percent. Unlike most economic indicators released by Commerce, the data are not adjusted for seasonal or holiday-related variations, a problem that limits its usefulness. Commerce has been separately tracking e-commerce sales only since late 1999. The share of overall retail sales over the Internet remained small, only 1.3 percent in the third quarter, up from the second quarter's 1.2 percent. That share is likely to increase, however, if online sales continue to grow at a faster pace than their brick-and-mortar counterparts. In contrast with the 7.8 percent jump in e-commerce sales in the third quarter, traditional retail sales rose only 0.3 percent. The Commerce report is based on a survey of about 11,000 retailers. It does not, however, cover some common services available online, such as airline and concert ticket purchases or online brokerage activities. The Commerce Department defines e-commerce as sales of goods and services over the Internet or other electronic network or by e-mail. Payment does not have to be made online.

From CNNfn, 22 November 2002

IBM to Unveil New Web Services Tools

IBM plans to announce on Monday the newest version of its application server software intended to make it easier to build Web services programs. As previously reported, IBM WebSphere Application Server version 5 will feature additions designed to let developers more quickly build applications from multiple Java components. The application server and its companion development toolset, WebSphere Studio Version 5, is geared toward providing the infrastructure to let a company integrate its business processes, whether they're internal or involve interactions with partners and customers. Application server software - a $2 billion market according to IDC - is used to run Web-based business software, which lets companies build applications that access databases and other back-end software. In this area, IBM competes with BEA Systems, Microsoft, Oracle and Sun Microsystems. IBM said that WebSphere version 5 will serve as the underlying platform for its server software, including its DB2 database software and its Lotus Notes and Domino e-mail and communications software. The other major players in the application server software market are pursuing a similar strategy, bringing together an increasing number of tools to let users work on both development and integration. Analysts said IBM's WebSphere has an advantage over offerings from competitors because the software is tightly integrated with IBM's development tools. Some of this version's additions include broad support for Web services standards and new autonomic computing features - technology for creating computing systems that can configure, tune and repair themselves.

The software is also designed to lay the foundation for grid computing, which IBM touts as a way for businesses to buy computing power on demand, similar to the way electricity and other utilities are purchased. "Support for Web services is a must-have feature; it is not a distinguishing feature for the product," said Stephen O'Grady, an analyst at RedMonk. "Other vendors have some elements of automation like notification, but IBM is doing more around self-healing than others," said O'Grady. "The autonomic features could distinguish it from the pack." The new WebSphere version supports Web services technologies based on the latest Java 2 Enterprise Edition (J2EE) standard. The company said the software also supports many technologies that will be part of future releases of J2EE. Other features designed to make it easier to build Web services programs include the following: o Web Services Invocation Framework (WSIF), a technology created by IBM for developing Web services across a variety of network and transport protocols, from HTTP (Hypertext Transfer Protocol) to instant messaging. o Axis 3.0, new Web services technology that Big Blue says can process Web services requests three to four times faster than is currently possible. o Web Services Gateway, designed to provide a more managed and secure environment for Web services across the Internet. o A private UDDI (Universal Description, Discovery and Integration) repository, intended to let a company search for Web services within the organization and then combine them. o Web services workflow, designed to let developers build networked applications that link multiple business processes. IBM said that WebSphere version 5 supports the Windows, Linux, IBM eServer zSeries and iSeries, AIX, Solaris and HP-UX operating systems. The software will be available for download beginning Tuesday, IBM said. It will be priced at $8,000 for a single-server configuration and at $12,000 for the multiserver version.

From News.com, by Sandeep Junnarkar, 25 November 2002

Pentagon Drops Internet ID Plan

A Defense Department agency recently considered-and rejected-a far-reaching plan that would sharply curtail online anonymity by tagging e-mail and Web browsing with unique markers for each Internet user. The idea involved creating secure areas of the Internet that could be accessed only if a user had such a marker, called eDNA, according to a report in Friday's New York Times.EDNA GREW OUT of a private brainstorming session that included Tony Tether, president of the Defense Advanced Research Projects Agency (DARPA), the newspaper said, and that would have required at least some Internet users to adopt biometric identifiers such as voice or fingerprints to authenticate themselves. A DARPA spokeswoman said on Friday that the idea, which had been proposed by the agency, was no longer being considered. "We were intrigued by the difficult computing science research involved in creating network capabilities that would provide the same level of accountability in cyberspace that we now have in the physical world," spokeswoman Jan Walker said in a telephone interview. Walker said it was a "decision by DARPA management" not to pursue the idea, which was explored at a two-day workshop in California in August and which drew sharp criticism from the group of computer and privacy experts that DARPA convened to review the proposal. Depending on how eDNA might have been implemented, Congress could have enacted a law requiring Internet providers to offer connectivity only to authenticated users, or government regulations could have ordered that fundamental protocols such as TCP/IP be rewritten or new ones created to handle authentication techniques.

Friday's report comes as a DARPA unit, the Information Awareness Office (IAO), has come under fire for its plan to create a prototype of a massive database that would collect information about everything from Americans' credit card purchases to veterinary records and public information. Run by John Poindexter, the retired vice admiral who was an adviser to President Ronald Reagan and who became embroiled in the Iran-Contra scandal, the IAO also was involved in the eDNA review. At the same time, the government has had notable success in strengthening its oversight of Internet activities. Earlier this week, the Senate passed a bill, expected to be signed by President Bush this month, to create a Department of Homeland Security in a massive reorganization of federal agencies. A portion of the bill, the Cyber Security Enhancement Act, expands the ability of police to conduct Internet or telephone eavesdropping without first obtaining a court order, and grants Internet providers more latitude to disclose information about subscribers to police. Also this week, a secretive federal court removed procedural barriers for federal agents conducting surveillance, giving them broad authority to monitor Internet use, record keystrokes and employ other surveillance methods against terror and espionage suspects.

Defense Official: No Privacy At Risk - On Wednesday, Defense Department undersecretary Pete Aldridge defended the Total Information Awareness (TIA) program to reporters, saying "there are no privacy issues" at stake with a prototype under development. DARPA was just creating a system that would be turned over to police and intelligence agencies for operational use when complete, Aldridge said. "The purpose of TIA would be to determine the feasibility of searching vast quantities of data to determine links and patterns indicative of terrorist activities," Aldridge said. "This is an important research project to determine the feasibility of using certain transactions and events to discover and respond to terrorists before they act." For the last few years, the federal government has fretted about Internet anonymity, which can exist in a weak form when people connect from behind firewalls or through large Internet providers, or in a strong form when technologies such as anonymous remailers or Zero Knowledge's now-moribund Freedom network are used. In March 2000, then-Attorney General Janet Reno complained about law enforcement's "inability to trace criminals who hide their identities online" at an event to release a report on unlawful conduct online that suggested restrictions on anonymity. Former FBI director Louis Freeh also called for the Internet industry to keep records on customers' activity, saying the bureau would "encourage the Internet provider industry to maintain subscriber and call information." In 1995, the U.S. Supreme Court said in the McIntyre vs. Ohio Elections Commission case that broad restrictions on anonymity violate the First Amendment's guarantee of freedom of speech: "Anonymity is a shield from the tyranny of the majority."

From MSNBC, by Declan McCullagh, 22 November 2002

Millions Vulnerable to MS Web Flaw

A software bug in a common component of Microsoft Web servers and Internet Explorer could leave millions of servers and home PCs open to attack, security researchers said Wednesday. The vulnerability, found by security company Foundstone and confirmed by Microsoft, could allow an Internet attacker to take over a Web server, spread an e-mail virus or create a fast-spreading network worm. "There are millions of systems and clients that will be affected by this," said George Kurtz, chief executive of Foundstone. "This is huge." The flaw, in a component of Windows that allows Web servers and browsers to communicate with online databases, seems to be as widespread as the flaw that allowed the Code Red and Nimda worms to spread. It likely affects the majority of the more than 4.1 million sites hosted on Microsoft's Internet Information Service (IIS) software. In addition, millions of Windows 95, 98, Me and 2000 PCs could also be vulnerable to the software bug. Microsoft rated the flaw as critical under its new vulnerability evaluation system that is intended to lessen the number of flaws that receive a "critical" rating to help administrators identify the most important vulnerabilities to patch. "There is a possibility that it might be wormable," said Lynn Terwoerds, security program manager for Microsoft's security response center. "It is clearly critical...we want the patch uptake to be really high." Microsoft has posted information about the flaw and how to secure Windows PCs and Web servers in an advisory on its TechNet site. Getting all system administrators to patch their systems will be extremely difficult. Recent research has shown that, in the case of the Linux Slapper worm, only about 40 percent of administrators patched their systems in the 7 weeks before the Slapper worm was released into the Internet. After the worm started spreading, a new surge of patching resulted in another 25 percent to 30 percent of systems being patched. However, the remaining third of computer systems remains vulnerable. While a worm or attack program that uses this particular vulnerability hasn't appeared on the Internet yet, it's only a matter of time, said Foundstone's Kurtz, who urged system administrators to patch immediately. "Sometimes the security tsunamis of the world prompt people to patch things, and that's not good for security," he said. "It is good to be proactive."

From News.com, by Robert Lemos, 20 November 2002

China Opens Stock Market to Foreign Fund Managers

China opened its $500 billion stockmarket to overseas institutional investors, allowing them to buy yuan-denominated stocks for the first time as it seeks funds to modernize its industries. Foreign banks and funds with at least $10 billion in assets and approval from the Chinese government will be allowed to buy Class A shares in the Shanghai and Shenzhen markets from Dec. 1, the China Securities Regulatory Commission and People's Bank of China said in a statement. Overseas investors will also be allowed to buy bonds. The announcement, on the eve of a congress of China's ruling Communist Party that's expected to pick new leaders, gives overseas investors access to Asia's second-biggest capital market after Japan's. Yet many investors may be deterred by the valuations of Chinese stocks and a requirement that they must keep their funds in the market for three years. "There aren't many quality companies worth investing in, said Liu Yang, a fund manager at Atlantis Investment Management, which manages $1 billion in the Asian region. "I can't see the benefit of investing in the Chinese market, where corporate government is poor and stocks are expensive." Overseas investors have until now been limited to B shares priced in U.S. and Hong Kong dollars, and to Chinese stocks in Hong Kong, New York and elsewhere.

The B-share market, a 10th the size of the A-share market, languished until the government opened it to domestic investors in 2001. 'Unreasonable' The announcement is "good news," said Henry Lee, who manages about $80 million at Hendale Group Ltd. in Hong Kong. "But China should relax the $10 billion requirement. That is unreasonable, as only a handful of the big players will qualify." The price of Chinese stocks may be a barrier. "The A shares are too expensive," said Nelson Lee, who helps manage $2.3 billion at BNP Asset Management Asia in Hong Kong. The biggest stock on the Shanghai market is China Petroleum & Chemical Corp., the nation's largest oil refiner, whose A shares trade at 18 times last year's earnings. By contrast, its Hong Kong traded stock sells for 6.7 times. Lee said he may consider buying shares in Baoshan Iron & Steel Co., the fourth-biggest company on the Shanghai exchange, and Shanghai Pudong Development Bank, the seventh-biggest. Today's statement didn't put any cap on investments and didn't disclose whether dividends and capital gains may be remitted overseas while the principal is locked up. Zhou Xiaochuan, chairman of the China Securities Regulatory Commission, told a seminar in Singapore on Oct. 21 that Beijing may let approved fund managers invest between $50 million and $250 million each in yuan stocks, according to a summary produced by event sponsor Deutsche Bank AG.

Commission officials declined to comment on the report. Close Watch - China's rules are modeled after similar investment programs in Taiwan, South Korea and Malaysia, which also had restrictions aimed at weeding out overseas investors seeking short-term profit. The thresholds in the South Korean and Taiwan programs weren't as high as the $10 billion China proposes, said Tony Robinson, chief investment officer at Attica Asset Management in London, which has $200 million in assets. Qu Hongbin, an economist at HSBC Holdings Plc in Hong Kong, said investors would have to contend with close observation by the People's Bank. "China's central bank will keep a close watch to monitor capital flows," Qu said. Rules to open Class A shares to overseas investors have been promised by the Chinese government since 2000, when it was negotiating entry into the World Trade Organization. Cost aside, investors may worry about corporate governance and regulatory issues. A 10th of China's 1,200 publicly traded companies were found to have doctored accounts in a survey conducted by securities regulators in March. By allowing foreign funds to buy shares, securities regulators may be hoping that the increased scrutiny of profits will prod companies to improve their management, competition and financial discipline. Some investors can't wait to get into the market. Victor Lim, who helps manage $50 million at Pointworth Management Ltd. in Singapore, is banking on China having a change of heart about the assets rule. "We will be submitting an application to the CSRC and the central bank to be a qualified institutional investor," he said.

From Bloomberg-Politics, By Eugene Tang, 7 November 2002

Takenaka Calls Banks' Large Bond Holdings 'Unhealthy'

Tokyo - Japan's Financial Services Minister Heizo Takenaka stepped up pressure on banks to start lending again, saying it was "unhealthy" for them to hold a fifth of outstanding government bonds. The country's top banking regulator, who is leading a charge to force banks to write off $432 billion in bad loans, said banks "should take risks, earn returns and help the economy expand." The central bank has made trillions of yen available to banks to encourage them to end a six-year slide in lending and help Japan out of its third recession in a decade. Instead, banks have used that money to buy government bonds, pushing yields below 1 percent. That leaves them at risk of capital losses if bonds plunge. "We must say this is an unhealthy situation," Takenaka told a parliamentary committee. Japanese banks held 81.4 trillion yen ($673 billion) in government bonds as of the end of August, according to the Bank of Japan, the most since the central bank started releasing figures In October 1993. The central bank also helps absorb government debt sales, buying 1.2 trillion yen in government bonds from lenders per month. "Japanese banks and the Bank of Japan are now the only supporters of the government bond market," said Jai Tiwari, a fixed-income analyst at IDEAglobal. Warning - Even a Bank of Japan policy maker warned of the risk of rushing to boost bond purchases. Teizo Taya, one of nine board members, yesterday said the central bank shouldn't rush to increase its monthly bond purchases from lenders because buying more government debt might eventually drive up interest rates and hurt the economy.

Some analysts say that a continuous expansion of the central bank's monthly bond purchases would eventually push up yields because it could allow the government to increase the national debt, which is already approaching 140 percent of gross domestic product. That might call into question Japan's ability to pay its debt and prompt investors to sell government bonds. Prime Minister Junichiro Koizumi wants Japanese lenders to halve the ratio of bad loans to total lending by March 2005. Takenaka last week announced a plan to encourage banks to step up the disposal of bad loans. He wants lenders to assess lending based on borrowers' ability to generate cash from operations, set aside more money to cover any future losses and reduce the inclusion of tax credits in their listed capital. Bonds Fall - The steps may prompt banks to further cut lending to reduce the risks of creating new bad debt, analysts said. Takayoshi Taniguchi, deputy finance minister, told the same parliamentary committee today that the Ministry of Finance will keep trying to diversify buyers of national debt. Japanese bonds are headed for their first losing week since September after government warnings that slowing economic growth is eroding tax revenue, sparking concern it will sell more debt. Any new bond sales would prompt Koizumi to break his pledge to keep this fiscal year's bad debt sales at 30 trillion yen. The No. 243 bond, which carries a 1.1 percent coupon and matures in 2012, rose 0.135 to 100.985 as of 4:50 p.m. Tokyo time. Its yield fell 1.5 basis points to 0.990 percent. A basis point is 0.01 percentage points. Japan already plans to sell 104.8 trillion yen of bonds to private investors in the fiscal year that started April 1. Sales to private investors may rise to about 115 trillion yen next fiscal year, analysts said.

From Bloomberg-Politics, by Mayumi Otsuma, Chris Cooper and Mikako Nakajima, 8 November 2002

Japan Growth Threatened by Sagging Exports, Government Says

Japan's recovery from its third recession in a decade is in danger as exports falter and share prices drop, the government said, lowering its assessment of the economy for the first time in a year. "Concern over the future of the U.S. and other economies and sluggishness of domestic stock prices has become more severe," the government said in its monthly economic report. It lowered its assessment for the first time since November 2001. Slowing U.S. demand for Japanese computer chips, video games and other goods is sapping growth in the world's second-biggest economy. That may force Prime Minister Junichiro Koizumi to approve extra spending and abandon his pledge to cap new bond sales at 30 trillion yen ($251 billion.) Koizumi's drive to speed write-offs of an estimated 52.4 trillion yen of bad loans at banks is likely to inflict more pain on Japanese companies and workers before it brings the economy back to health. Bankruptcies are likely to rise as lenders cut off delinquent borrowers, economists said. "The economic situation is dire, and Koizumi has no choice but to compile an extra budget to lessen the pain," said Toshiyuki Hara, senior market economist at Mizuho Securities Co. "Exports aren't helping the economy anymore, and we'll probably be in recession by the end of this year or early next year." The yen was at 119.50 to the dollar at 6:37 p.m. Japan time, after climbing to a two-month high of 119.11 yesterday. Japan's economic growth probably slowed to an annual 1.8 percent pace in the third quarter from 2.6 percent in the second, figures to be released tomorrow will show, economists say. On a quarterly basis, growth probably slowed to 0.5 percent, seasonally adjusted, from 0.6 percent.

Bad Loans - Today's government report lowered the assessment of four of five components: exports minus imports, production, jobs, and prices. Business spending, which the report said was "starting to bottom out," was the only component to be raised. Japanese companies such as Advantest Corp. are cutting jobs as exports sag, keeping the unemployment rate at 5.4 percent, just below a record high. That, and 17 months of declining wages, is threatening the economic recovery by reducing consumer spending. "Unemployment is still at very high levels, and there is continuing weakness in wages," the report said. "There is deepening concern over the downward pressure on final demand." Advantest, the world's biggest maker of memory-chip testing equipment, said last month it would fire 600 people after announcing a fiscal first-half loss. Companies such as Nikon Corp. are cutting sales forecasts as demand falters in the U.S., Japan's biggest overseas market. Exports, which accounted for more than half of second-quarter growth, fell for a fourth month in September. U.S. Demand Slows - U.S. consumer spending will probably grow at a 1.1 percent annual rate in the fourth quarter, the slowest pace in more than nine years, according to the Blue Chip Economic Indicators survey.

Nikon, the world's biggest maker of machines used to print circuitry onto silicon wafers, cut its annual sales forecast 5.9 percent for the year ending March 31 because customers such as U.S.-based Intel Corp., the world's biggest chipmaker, are spending less on new factories and equipment. Koizumi wants to cut Japan's dependence on exports by getting UFJ Holdings Inc. and other banks to write off bad loans so they can start lending again. Bank lending hasn't risen for more than six years, depriving the economy of the fresh credit it needs to grow, even as the central bank cut short-term interest rates almost to zero in March 2001. This year's 20 percent drop in the Nikkei 225 Stock Average is making it harder for banks to lend by inflicting losses on their stock investments, cutting their capital. The Bank of Japan in September announced a plan to buy some of $200 billion of shares held by banks to reduce their losses. The government has created an agency to help bring troubled companies back to health, and officials are considering extra spending in the fiscal year to March 31 to help companies weather bad-loan write-offs. Finance Minister Masajuro Shiokawa said today that a decision on an extra budget would depend in part on how much tax revenue has been reduced by the slowing economy. In the first half of the fiscal year, tax revenue was 13.3 trillion yen, 28 percent of the government's full-year projection.

From Bloomberg-Politics, by Daisuke Takato, 12 November 2002

Treasury Secretary Praises Afghan Progress Toward Introduction of New Currency

Islamabad, Pakistan - Treasury Secretary Paul O'Neill, visiting Afghanistan on Monday, praised the progress the country has made in introducing a new currency. He then flew to Pakistan, where he called on all nations to keep money out of the hands of terrorists. During a visit to the Afghan central bank, he watched as officials put new bank notes in circulation and shredded old ones, and on arriving in Pakistan, O'Neill said he looked forward to meeting with President Gen. Pervez Musharraf. ''The issue of fighting and trying to identify the finances of terror is an ongoing thing and it is going to be with us forever,'' O'Neill said. ''All of the nations of the world will have to work together to identify terrorists or possible terrorists and then do everything we can to make sure they don't have the access to money to pursue their evil ideas.'' During his one-day visit to Afghanistan, O'Neill commended President Hamid Karzai's administration, saying Washington remained committed to rebuilding the country regardless of a possible war in Iraq. Afghanistan's central bank introduced new bank notes on Oct. 7 to stabilize the monetary system and make it easier to carry out transactions that once required bundles of currency.

But delays in distributing the money across the nation forced authorities to extend to Jan. 2 the deadline to trade in old notes for new ones. ''I am very impressed at what has been done with the new currency ... it is a very, very good step in putting Afghanistan on the road to a modern financial system,'' O'Neill said. ''It may seem like a simple thing but it's not so simple with the recent history and the problems. So I think the people in the country should take great pride in their leaders and in the progress that's being made, even while acknowledging there's still a great deal to do,'' he said. During his one-day trip, O'Neill held talks with Karzai as well as Finance Minister Ashraf Ghani and central bank governor Anwar ul-Haq Ahady. He said future aid to Afghanistan should be channeled mostly through the government rather than humanitarian organizations - a key demand of Karzai's administration. ''I believe as time goes on that it is important that money that's coming to Afghanistan from the developed world be largely placed through the government because I think that way it will be properly coordinated,'' O'Neill said. Karzai said during a donor conference in Kabul in October that international aid this year had totaled about $890 million, but he complained that $800 million had gone to aid agencies and the United Nations, with only $90 million going to the government. Earlier Monday, O'Neill inspected construction work that started this month on a major new road that will link Kabul to the western city of Heart. The U.S. government has pledged $80 million to help rebuild the 745-mile road, while Saudi Arabia and Japan pledged $50 million each. O'Neill will visit India on Thursday.

From MSNBC, 18 November 2002

Germany, France Urge EU to Shift Focus From Budgets to Economy

Berlin - Germany and France urged the European Union to pay closer attention to employment and inflation and focus less on budget deficits and debt when evaluating the dozen economies sharing the euro. The two countries, which together account for more than half the region's economy, are in danger of overstepping European budget deficit limits as economic growth slips to the weakest pace since 1993's recession. "We need to achieve a more complex coordination of economic policies," German Finance Minister Hans Eichel told a press conference after meeting his French counterpart Francis Mer. "For instance inflation - here Germany is the anchor of stability. The euro-12 group must discuss this." Germany and France are leading efforts to revise the "growth and stability pact," an agreement to cut budget deficits devised by Germany to protect the euro. Smaller countries ranging from Spain to Finland are opposed to diluting the accord, saying higher deficits may prevent the European Central Bank from cutting interest rates to spur growth. The European Commission estimates that the economy will grow less than 1 percent this year. Dwindling economic growth and rising unemployment has eroded tax revenue while pushing up welfare costs, hindering efforts to reduce deficits. Finance ministers from the dozen euro countries are meeting later today in Brussels to discuss the deficit rules - which Italy and Portugal are also struggling to meet.

Portugal became the first country to overstep EU's deficit limit of 3 percent of gross domestic product last year. 'Refining' the Rules - France's Mer said he and Eichel will seek to "progressively introduce" broader economic criteria into assessments of national economies. The two countries want to "refine" the pact without "questioning" its principles, he said. German unemployment, near a three-year high of 4.1 million, will probably show a further increase in a jobless report for October, due to be released on Thursday, a survey of analysts by Bloomberg News showed. Every 100,000 unemployed cost Schroeder's government about 1.8 billion euros ($1.8 billion) in benefits. The number of jobseekers in France, which rose to a two-year high of 2.43 million in September, may also increase further in coming months. Confidence among French manufacturers fell to an eight-month low last month, government reports showed last week, suggesting that businesses will continue to slash costs to restore their margins. The European Commission, the EU's executive arm, has recommended extending a deadline for member states to balance their budgets by two years to 2006. Eichel, who said he wants to take advantage of the leeway, expects the German deficit to exceed the EU's limit of 3 percent of gross domestic product this year. France pledged to start cutting its structural deficit by half a point from 2004, one year later than the 11 other countries that use the euro, saying it wants to trim taxes and raise military spending this year and next.

From Bloomberg-Politics, by Andreas Cremer and Francois de Beaupuy, 4 November 2002

ECB Rebuffs French Calls for Looser Inflation Mandate

Zurich - The European Central Bank rebuffed calls from a French government think-tank that the bank should support economic growth in the 12 nations sharing the euro by loosening its inflation-fighting mandate. "It would be a mistake to change the basic principles of the monetary constitution," ECB board member Eugenio Domingo Solans told reporters. "The basic principles are sound and we should not change them." The central bank should adopt an inflation target range of 1- to-4 percent, a Conseil d'Analyse Economique report said, compared with a two percent limit at present. The recommendation is backed by Prime Minister Jean-Pierre Raffarin, The British Broadcasting Corp. said on its Web site. Raffarin's office declined comment. The ECB last week left borrowing costs unchanged at 3.25 percent, the level it's been at for a year, as inflation stayed above the central bank's limit for a third month in October. This year, growth in the region will be the slowest in almost a decade, the European Union forecasts. The bank also signaled for the first time that policy makers were split over whether to follow the U.S. Federal Reserve in reducing interest rates last week. The Fed lowered its rate on Tuesday by a half a percentage point to 1.25 percent, the lowest since July 1961. The yield on the French two-year note dropped three basis points to 2.962 percent. The yield on the German two-year note shed four basis points to 2.989 percent. Money Supply - In their report to the French prime minister, Patrick Artus, chief economist at Caisse des Depots et Consignations, a French state-owned financial institution, and Charles Wyplosz, an economics professor at the Graduate Institute of International Studies in Geneva, also said that the central bank must abandon its M3 money supply inflation gauge and replace it by "specific but flexible inflation targeting."

The bank, which has done a "satisfactory" job of setting borrowing costs, should also pay closer attention to changes in asset prices such as real estate and stock markets, the economists said. They recommended that the number of ECB policy-makers, which currently consist of six executive board members as well as the heads of central banks of the 12 nations sharing the euro, be reduced to improve decision making. A restricted body comprising the executive board and a set number of central bank governors sitting in rotation should be adopted, Artus and Wyplosz said. The problem will get worse if more countries adopt the euro. "The ECB will make its proposals about the decision-making process" in due course, Domingo Solans said. German Support - The French government is seeking support from the German government on the think tank's proposals, in exchange for France's support for German proposals for loosening the Stability and Growth Pact, the BBC said. The ECB has sounded alarm bells over expanding budget gaps in Europe's largest economies and calls from Germany, France and Italy for a loosening of EU budget rules that limit deficits to 3 percent of gross domestic product. Germany is set to breach that limit this year. France's deficit will flirt with it. Both reforms will require "arduous" negotiations with EU member states, the BBC said, and neither will happen soon enough to limit the current economic slump. A change in the mandate of the ECB, whose main task is to maintain price stability, would require agreement among the 15 EU nations, because it's been enshrined in successive EU treaties. The ECB itself defined price stability as below 2 percent over the medium term, and has said deflation isn't compatible with its definition of price stability. Some economists said the ECB's mandate is good enough. "If there's a substantial risk to the economy, you can still support growth even with the mandate," said Lorenzo Codogno, an economist at Bank of America Corp. in London. The inflation problem is partly due to government policies, he said. "The ECB is very unlikely itself to change its definition of price stability," said David Mackie, an economist at J.P. Morgan Chase & Co. in London.

From Bloomberg-Politics, by Francois de Beaupuy, 11 November 2002

France Keen to See U.K. in Euro, Overhaul Pact, Lawmakers Say

London - France is keen to see Britain join the euro and back efforts to overhaul Europe's deficit rules, according to U.K. legislators who met with French finance ministry officials. Members of the Treasury Select Committee of the U.K. parliament last week met French finance minister Francois Mer and officials from his department. France backs Britain's early membership of the currency shared by 12 European Union nations, committee members said. France is pushing for changes to the Stability and Growth Pact -- which limits government deficits to 3 percent of gross domestic product - to allow longer-term measures of government debt, and other measures of economic performance such as inflation, to be considered. Britain supports that position, though it remains outside the euro. "Everybody seemed to be keen to get Britain in," said George Mudie, a committee member from Britain's ruling Labour Party. "There was an admiration of Britain's system of more flexible rules on public finances." U.K. Chancellor Gordon Brown has pledged to balance his books over the economic cycle rather than observe a set annual limit. His preference for what he calls a more "prudent" interpretation of fiscal guidelines may be an obstacle to British euro membership. Adding Weight - Brown's Treasury is making an economic assessment of the case for joining the euro, and will report by June. If the case for membership is proven, ministers will call a referendum, though polls say most voters want to keep the pound. Brown last week hinted that the pact's effect on the European economy will play a part in his assessment. The International Monetary Fund forecasts the 12 euro economies will grow 0.9 percent this year and the U.K. will expand by 1.7 percent.

Having Britain inside the euro would add weight to arguments from France, Germany and the European Commission that the euro rules should be relaxed, a call the European Central Bank has so far resisted. France yesterday also backed a call for a looser inflation- fighting mandate for the ECB, to support economic growth, the British Broadcasting Corp. reported. To aid British entry, France would urge that the U.K. shouldn't be subjected to a two-year period of semi-fixed exchange rates that euro rules demand before full euro membership, according to Nick Palmer, another Labour legislator who met Mer. Easing Entry - Under single currency rules, potential new members are required to join the Exchange Rate Mechanism two years before joining the euro. In the ERM, a currency can fluctuate 15 percent either side of a central rate against the euro. The Maastricht Treaty governing European economic and monetary union says that a potential member of the euro has to belong to the ERM for two years before locking into the euro. "The will is there to make it easy for us to join," Palmer said. "There's a feeling that Britain should join at an early stage." Instead of the two-year entry period, France would argue that the EU should count a period of broad currency stability prior to membership of the single currency as a membership qualification, Palmer and Mudie said. Avoiding full ERM discipline would boost the political argument for euro membership among British voters, because of the U.K.'s last experience with European exchange rate controls. In 1992, the pound fell out of the Exchange Rate Mechanism, a semi-fixed exchange rate system that preceded the euro. Interest rates peaked at 15 percent in a failed effort to maintain sterling's value, stifling economic activity and pushing the country into a recession.

From Bloomberg-Politics, 12 November 2002

European Rules Cost Fund Managers $14 Bln a Year, Report Says

London - Money management companies are losing up to $14 billion a year in business as differing regulations across the European Union inhibit their ability to sell mutual funds, according to a report by Datamonitor Plc. Companies often have to produce different funds for each country, Datamonitor analyst Oliver Guirdham said. That pushes up costs and curbs sales, he said. "The legal work getting funds registered across Europe is very expensive," Guirdham said in an interview. European governments are trying to standardize the selling of fund products to boost the funds available to their citizens and encourage them to save more for their retirements. EU member states are in the process of implementing new rules making it easier for funds registered in one country to be sold throughout the 15-nation bloc. A unified market will increase competition and reduce the price of funds for European consumers, Guirdham said. Governments are trying to speed this up by introducing classes of funds with reduced prices. A report published in July by Ron Sandler, former chief executive of the Lloyd's of London insurance market, said U.K. financial companies should cap their fees and sell easier to understand products.

From Bloomberg-Politics, by David Clarke, 22 November 2002

Accounting Board Has No Budget, No Staff, and a Cloudy Future

New York - Nine days before the first scheduled meeting of the Public Accounting Oversight Board, the group has no budget, no office, no staff -- and maybe no leader. Four separate investigations are focusing on Securities and Exchange Commission Chairman Harvey Pitt and his appointment of former FBI Director William Webster as chairman of the group, intended to restore investor confidence after the collapse of Enron Corp. and WorldCom Inc. President George W. Bush may fire Pitt if the SEC finds he misled commissioners before the vote to elect Webster, a senior administration official said. Whether Pitt and Webster stay or go, it's unlikely that effective oversight of the accounting profession will be in place as soon as the law requires, some investors said. "What you wanted to see was progress in establishing a foundation -- a chairman and board members that inspired confidence and a budget that enabled them to do something, and a staff," said Michael Granof, an accounting professor at the University of Texas. "You don't see any of that." Corporate annual reports, which are required to be audited, will begin to be published in February and March, and "you wanted to see the board get up and running before" then, Granof said. Whither Webster - Investigations of the selection process focus on Pitt's failure to tell the four SEC commissioners that Webster was chairman of the audit committee of U.S. Technologies Inc., an Internet company whose president has been accused of fraud in shareholder lawsuits. Webster's job won't be safe if Pitt leaves, accountants said. Pitt, as well as SEC Chief Accountant Robert Herdman, who handled the initial vetting of candidates for the accounting board, have canceled four speaking dates this week. Pitt canceled a speech in New York today, and Herdman canceled three speaking engagements this week. "If Harvey doesn't make it, Webster isn't going to make it either," said Eric Sussman, an adjunct faculty member at the Anderson Graduate School of Management at the University of California at Los Angeles. That may hobble the new accounting board, created to ensure that auditors are ethical, independent, and produce high-quality work, before it gets started. Pitt and the two other Republicans on the SEC opposed John Biggs, the former chairman of TIAA-CREF, the nation's biggest teacher's pension fund, because of perceptions that he would crack down on the nation's accounting profession. For example, Biggs promoted reforms such as rotating audit firms every five to seven years and expensing stock options.

Possible Candidates - Biggs or another experienced money manager may wind up with Webster's job, investors said. Possible candidates include Peter Lynch, former manager of Fidelity Investment's flagship Magellan Fund; Robert Pozen, former president of Fidelity; John Neff, former manager of Vanguard Group's Windsor Fund; and John Bogle, Vanguard's founder, said Herbert Denton, chief executive of Providence Capital, a money manager based in New York. "All understand accounting and how Wall Street works, and they have a vested interest in having the system work properly," Denton said. Accounting Experience - Webster had been criticized for a lack of accounting experience before it was known that he served on U.S. Technologies' audit committee, which fired auditor BDO Seidman after it criticized the company's internal controls. "I've always said I would step down if I felt it would impair the work of the board in getting it going," said Webster, questioned outside his office yesterday. The board is supposed to register all accountants who audit public companies, create auditing standards and decide how audits should be reviewed, a task that until now was left to the accounting industry. The registration of auditors is required by law to occur by the end of April. "Dates for two meetings have been set - I'm not aware of anything else that's been done," said Willis Gradison, a former Republican congressman from Ohio, and a member of the new board. It was Webster, he said, who coordinated everyone's schedules to set the first two meeting days, on Nov. 13 and Dec. 2. Bush hasn't yet approved the $776 million budget increase for the SEC that Congress mandated this summer. That money would be used, in part, to pay the board members, rent offices and hire staff. Some institutional investors said Webster has no choice but to resign. "Webster is doomed," said Beth Young, a consultant for unions and other investors on corporate governance issues. "It is exactly the kind of director apathy that led to the scandals we've seen: If you don't like what auditors say, you fire them." Even investors who didn't criticize Webster's behavior at U.S. Technologies say the selection process was tainted and the former head of both the Federal Bureau of Investigation and the Central Intelligence Agency, needs to step aside. "He has to understand we are dealing with the intangible of investor confidence," said Richard Moore, the treasurer of North Carolina who is the sole trustee of the state's $55 billion public pension fund. "And how on earth would he carry out his board function with such a cloud over his head?"

From Bloomberg.com, 5 November 2002

Toronto-Dominion to Add C$600 Million in Loan-Loss Provisions

Toronto-Dominion Bank, the country's second-largest bank, said it will set aside an additional C$600 million for loan-loss provisions. The provisions are for "higher than anticipated impaired loan formations," the bank said in a Canada NewsWire release. The bank said it will have a fiscal fourth-quarter loss of 31 Canadian cents to 36 cents a share.

From Bloomberg-Financial, by Sean B. Pasternak, 4 November 2002

International Accounting Board to Propose Expensing Options

The International Accounting Standards Board will issue a proposed rule today that would require companies to treat stock options as an expense, to the dismay of some of Silicon Valley's tech companies. The U.S. counterpart, the Financial Accounting Standards Board, has signaled repeatedly that it intends to move quickly to propose its own rule. The proposals have been dreaded in the valley and other high-tech regions, which have bitterly fought expensing. Such a change is expected to slash corporate profits, hammer stock prices and force companies to reconsider how they dole out stock options, making it more difficult for start-up companies to go public. The IASB rule is open for public comment through March 7, with a goal of implementing the rule in 2004. The London-based IASB, which has representatives from nine countries, placed options expensing at the top of its agenda since its founding in 2001. "The real importance is not so much what the IASB has done, but the fact that FASB is then going to revise the U.S. standard," said Ellie Kehmeier, a tax director for Deloitte & Touche in San Jose. She predicts the FASB will make its rule effective in 2004 or "2005 at the latest." Details of the IASB's proposals began to leak out Wednesday night. The New York Times reported that one proposal would require options doled out by companies that aren't yet publicly traded to be valued higher, a rule that could hurt Silicon Valley start-ups by delaying profitability and initial public offerings.

Another proposal would allow companies to account for their options over their expected life rather than their full legal term, which would shorten the accounting hit. Companies also could use a valuation method that would reduce the impact of stock volatility, a factor that hits high-tech stocks hard. The high-tech industry led a battle against FASB's last attempt to expense options in the mid-1990s. Then, stock options were fueling the bull-market economy, and the high-tech community had powerful allies in Washington. Notably, Sen. Joseph Lieberman, D-Conn., threatened to put the FASB out of business by cutting off its funding. In 1995, the FASB backed down, ruling that companies need only report the cost of stock options in footnotes of financial statements. Now, however, stock options are blamed for scandals at Enron, WorldCom and other collapsed companies. FASB has funding to ensure its independence, and shareholder groups, investors and politicians have called for options expensing. Even business support has crumbled. DuPont, Coca-Cola and more than 100 other companies have announced they will expense options. In September, the Conference Board called U.S. and international accounting rule makers to "move expeditiously." And the New York Stock Exchange and Nasdaq have proposed rules that would crimp some option practices.

From SiliconValley.com, by Mark Schwanhausser, 7 November 2002

Brazil, Argentina defy Wall Street

Stock markets in Argentina and Brazil were able to defy Wall Street Monday and post slight gains as the governments in both economically struggling nations held talks with the International Monetary Fund. Argentina's Merval and Brazil's Bovespa both edged up 0.3 percent. In Argentina, investors were awaiting the outcome of aid talks between the IMF and government officials in Washington which are coming at a time when the World Bank debt repayments totaling $800 million come due later this week. In Brazil, the IMF is in town to review the $30 billion in aid it offered the country earlier this year to stave off debt default. Another market-booster was the success of a debt auction as the government rolled over around $260 million in dollar-linked debt -- a sign that investors are slowly coming around to the administration of president elect and leftist Luiz Inacio Lula Da Silva. Despite recent optimism that Lula won't rock the boat with market-unfriendly policies, some analysts fear that Brazil's $260 billion debt load will eventually be too much to handle. "Medium-term, many people would like to believe there is potential for a further rally from here. But we believe that in the medium-term, there will be a crisis and they will have to default on their debt," said Rudolph-Riad Younes, co-manager of the Julius Baer International Equity Fund (JIEIX: news, chart, profile). Elsewhere in the region, Chile's IPSA fell 0.3 percent and Mexico's IPC fell 1 percent.

From CBS Marketwatch, by Allen Wan, 11 November 2002

Accounting Oversight Board to Hold First Meeting

The new board to oversee the accounting industry, steeped in controversy over the selection of former FBI director William Webster as its chairman, plans to hold its first meeting behind closed doors Wednesday. The controversy already has brought the resignations of Harvey Pitt, chairman of the Securities and Exchange Commission, and the SEC's head accountant. The five-member accounting oversight board plans to privately discuss administrative matters, such as office space and staff, several people close to the matter said Monday. They spoke on condition of anonymity. That prompted an objection from Barbara Roper, director of investor protection at the Consumer Federation of America. "The whole point of creating this board was to restore investor confidence," she said in an interview. "They will further the impression that the public interest isn't being served." Unlike the SEC and other government regulatory agencies, the new oversight board isn't subject to so-called "sunshine" laws requiring that meetings be open to the public. Creation of the independent board was mandated by Congress last summer in legislation responding to the wave of accounting scandals at Enron, WorldCom and other big companies. A bitterly divided SEC voted on party lines about two weeks ago to appoint Webster and the other board members. The SEC inspector general is investigating the circumstances surrounding Webster's selection, including whether Pitt concealed from his fellow commissioners before they voted Webster's watchdog role at a company now facing fraud accusations. Pitt, a Bush appointee, resigned under fire last Tuesday and SEC Chief Accountant Robert Herdman - who also played a role in Webster's selection - offered his resignation to Pitt on Friday. Webster himself said last week he will step aside if he decides he can't be effective heading the board because of the controversy. President Bush would not indicate whether he wanted Webster to remain, saying he wanted to see the results of the internal SEC investigation.

Webster did not return a telephone call seeking comment Monday. Congress' auditing arm, the General Accounting Office, also is investigating Webster's appointment and the Senate Banking Committee plans hearings. Pitt, Herdman and an SEC commissioner initially approached Webster about taking the accounting oversight job. Webster has said he told Pitt that he headed the audit committee at U.S. Technologies, which has been sued by shareholders. Herdman's office then told Pitt that information did not create a problem for Webster's selection. Webster fired U.S. Technologies' outside auditors last year when he headed the board of directors' auditing committee. The auditing firm, BDO Seidman, recently alleged that Webster had made "false and misleading statements" about how much he knew about the company's financial problems. BDO Seidman released documents Thursday showing that in a July 13, 2001, conference call with the audit committee, its accountants warned the committee members of "material weaknesses in internal accounting control." Webster told Dow Jones Newswires on Friday that the auditors did voice concerns, but not in an urgent, "house on fire" way. He continued to insist that BDO Seidman was fired because the audit committee believed it was charging too much and taking too long to do its audits - not because of a warning about the company's financial controls. The oversight board, to be independent of the industry, will be armed with subpoena authority and disciplinary powers and financed by fees from publicly traded companies. In addition to Webster, the members of the board are Daniel Goelzer, a former SEC general counsel; Kayla Gillan, a former official of the California state pension fund; Willis Gradison Jr., a former Ohio congressman; and Charles Niemeier, chief accountant in the SEC's enforcement division.

From Nando Times-Business, 11 November 2002

Argentina Defaults on World Bank Loan

Argentina has defaulted on a debt repayment to the World Bank of more than $800m that was due on Thursday. "The World Bank today confirmed that it has received a partial payment of $79.2m from the government of Argentina against a scheduled payment of $805 million," the World Bank said in a statement. The Bank said the move meant it would not consider any more loans for the country, and access to current loans would be removed unless it was paid within the next 30 days. Argentina had been hoping to strike a deal with the International Monetary Fund - another international lender - before the debt payment fell due, and an Argentine delegation headed by Economy Minister Roberto Lavagna had been in talks with the Fund in Washington. IMF talks to continue - Earlier on Thursday, the Argentine government had said it would only be making a payment that covered the interest on the loan. "The country's level of reserves prevents it from paying the total (loan repayments) that expire today, because they would be left below the $9bn that the (International Monetary Fund) recommends," cabinet chief Alfredo Atanasof said in a statement. "By paying the interest of the payments (due), Argentina aims to continue negotiating for a definitive deal with the IMF (and) avoid default," he added.

Argentine President Eduardo Duhalde said the government would continue aid talks with the IMF. "Argentina continues to negotiate (with the IMF)... Argentina is committed to facing its obligations once a deal is sealed," he said. But he added that the government was set to reduce the sales tax - a policy that has not found favour with the IMF. Threat to aid - The IMF cut off its lending after Buenos Aires defaulted on $140bn of private international loans late last year. But 10 months of talks have so far failed to bridge the gap on economic priorities between Argentina, wary of inflaming its impoverished population, and the IMF. It is feared that defaulting on the World Bank loan could threaten future lending, and humanitarian aid, to Argentina. "If this is the beginning of a default with multilaterals, this is much more worrying in the long term," said Jose Luis Espert, an economist at Espert Y Asociados. But some analysts said things had got so bad in Argentina that a default would not make matters much worse. "Making this payment was probably not going to improve matters for the population," said Carl Ross at Bear Stearns. "I don't think this has a big impact on the real economy." Isolated impact? The possible spill-over effects for other South American economies are seen as being limited. "I think it's bad news for Argentina," said Michael Gavin, an economist at UBS Warburg. "For the rest of the region, I think Argentina's differentiated itself so completely that I doubt there will be important consequences."

From BBC, 14 November 2002

Republicans Mull Tax Cuts

Washington - The White House and Republicans in Congress are laying the groundwork for a wide range of tax cuts, including a short-term economic stimulus starting near $100 billion, congressional aides and lobbyists said Tuesday. But swift passage of new tax cuts was far from certain under arcane Senate rules, which could hold up deliberations for months, and divisions within the White House and Congress over the risk of exacerbating budget deficits. Emboldened by the November 5 election giving Republicans control of Congress, Bush directed his top economic advisers to come up with short-term stimulus options, hoping to give the lackluster economy a boost and avert a slide back into recession ahead of the 2004 presidential election. Bush is also pushing longer-term initiatives, top among them making big tax cuts enacted in 2001 permanent. Some White House officials led by National Economic Council Director Lawrence Lindsey are advocating broad-based tax cuts to shore up businesses and households. Treasury Secretary Paul O'Neill is more cautious, pushing for more limited, targeted tax relief less likely to send budget deficits soaring. White House spokeswoman Claire Buchan said Bush had not made up his mind. "The president is continuing to review options. Any plan must create jobs, spur economic growth, and be good for the short-term and the long-term," she said.

Tax package make-up - Officials said a final decision on the size and make-up of Bush's tax package would likely depend on how well the economy holds up in the fourth quarter and the pace of consumer spending during the critical holiday shopping season. "The first question is whether the measures are needed. If you cross that threshold, the question is how bold are you going to be. You have some (administration officials) who are more willing to take the risk of red ink than others," a senior Republican congressional aide said. Based on preliminary discussions, the components of a short-term stimulus would likely start at nearly $100 billion, which may be spread over two years. It could end up being far more depending on the state of the economy, Republican congressional aides said. They said a stimulus of less than $50 billion to $100 billion would have little economic impact. "Anything less than that would be window dressing," a senior Republican aide said. Bush's advisers are considering several options, including accelerating tax breaks for families that are not scheduled to kick in until later and allowing businesses to write off their capital investments faster. Even though Republicans hold a thin majority, Bush will need at least some Democratic support to get the 60 votes he needs under Senate rules to overcome a filibuster. Bush could get around the 60-vote rule by getting his tax cuts included in the budget Congress approves, but that process could delay Senate action on taxes until the middle of 2003. Citing these obstacles, business groups are concerned that any short-term stimulus will come too late. "Earlier is certainly better than later," said Bruce Josten, executive vice president of the Chamber of Commerce. "But I think it's going to be hard to have an early legislative result."

Permanent tax cuts - In addition to providing a short-term stimulus, Bush will ask Congress to make last year's $1.35 trillion tax cuts permanent. They are set to expire at the end of the decade. Bush may also resurrect several ideas that were put on hold before the election because moderate Republicans in Congress - and some of Bush's own economic advisers - were concerned about how they would be received by voters. Those include raising the age at which senior citizens must begin withdrawals from retirement accounts; raising limits on how much pretax income can be put into 401(k) retirement accounts and doubling the amount of capital losses investors can deduct from ordinary income. O'Neill is expected to make a push to simplify the tax code. Lawmakers also plan to overhaul tax breaks that benefit U.S. exporters to bring them in line with global trade rules. Some Republicans are pushing for more sweeping and costly changes, including reductions in capital gains taxes. But administration officials - and some business leaders - have sought to scale back expectations. "There's a lot on the table, but all of those discussions have to compete against a growing deficit in an atmosphere of declining tax receipts," Josten said After four years of surpluses, the federal government sunk back into deficits in fiscal 2002. Additional tax cuts, coupled with Bush's threatened war with Iraq, could send the government deeper into the red for the foreseeable future, Democrats say.

From CNN, 20 November 2002

A Shameful Chapter in the Recent History of Wall Street

The mud that has been cascading down on Wall Street has taken on a more lurid hue following the publication in the US of a shocking book that details years of abuse and intimidation of female brokers by their groping and sex-obsessed male colleagues. Although the book - Tales of the Boom Boom Room - expands mostly on a legal case filed by former employees of Smith Barney that was settled four years ago, it includes details never before revealed. Many of the pages, describing everything from foul language to lap-dancing in the workplace, are not family reading. The book's author, Susan Antilla, a reporter with Bloomberg News, worked on the case when it was heading for the courts. In her no-holds-barred tome, she also explores the misery of women who worked during the boom of the 1990s at other small brokerages and at Merrill Lynch, which was similarly sued. At the centre of the action is a branch of Smith Barney, now a unit of Citigroup, in Garden City, a Long Island suburb of New York City. The main protagonist is its former manager, Nicholas Cuneo, depicted as a boor who encouraged a locker-room atmosphere while gleefully denigrating women in the office. One of them, Pam Martens, finally snapped and gathered evidence to sue the firm for discrimination. Ms Martens emerges as a kind of Erin Brockovich, whose triumph over a California energy company that poisoned a city's water supply inspired the film starring Julia Roberts. The book's title refers to a basement room opened by Mr. Cuneo at the Garden City office as a place for his male staff to "unwind".

A lavatory bowl was hung from the ceiling, and a "Happy Hour", with cocktails and beer, was sometimes declared at 10am. Lap-dancers were invited, and male brokers showed off guns and exposed themselves. While there are scattered claims of attempted rape and of women leaving their jobs in despair or considering suicide, most of what emerges is a pattern of verbal abuse and daily humiliation. Women were regularly paid less than their male counterparts, and excluded from lunches. They entered the Boom Boom Room at their peril. A stripper once performed in the main trading room. Under Mr. Cuneo's regime, female workers were called "tits and slits". One woman came to work to find herself praised on a message board for her alleged skill at giving sexual favours. Another overheard a colleague say: "As soon as a woman squeezes out a kid, you stamp 'a million dollars' on the kid's forehead and 'stretched goods' on the woman's." The book is published at a time when Citigroup and Merrill Lynch are under federal investigation for conflict of interest violations, mostly focused on researchers boosting companies of dubious worth to build business. For the public to be reminded of their history of sexual discrimination is far from welcome. A spokeswoman for Smith Barney, which settled with the women plaintiffs and dedicated $15m (£9.5m) to revamp its equal opportunity policies, said it was all in the past. The firm, she asserted, was "proud of the significant strides made over the past several years to become an employer of choice, committed to giving every employee the opportunity to achieve his or her full potential".

From UK-The Independent-Americas, 17 November 2002

Accounting Board Undercut by U.S. Budget Impasse, Members Say

Washington - The new U.S. accounting oversight board may have trouble renting offices and hiring staff as it prepares to police the nation's auditors, after Congress failed to pass a federal budget, board members said. The Public Company Accounting Oversight Board, which is required to begin regulating the auditing industry by April 26, is supposed to borrow money from the Securities and Exchange Commission to get started. The board is already missing a chairman since William Webster quit following disclosures that he headed an audit committee of a company sued for fraud. The group was created through a corporate-governance law enacted in July after bankruptcies at Enron Corp. and WorldCom Inc. Without sufficient money to pay administrative costs, including salaries of the remaining four board members, it may not be able to get started in January as planned. "Financing is a challenge," said board member Bill Gradison, a former Republican congressman from Ohio. "Let's say we find office space, I think a potential landlord would ask, `How much do you have in the bank?' " Congress didn't include extra money for the board when legislators failed to complete work on appropriations bills for fiscal 2003, which started Oct. 1. The lawmakers kept SEC spending at an annual rate of $438 million in the continuing resolution that runs until Jan. 11. The SEC itself is strapped for cash, taking on a record number of investigations while waiting for more money. Funding Problem - "If questions about our funding aren't straightened out pretty quickly, it will be a problem," said board member Daniel Goelzer.

The accounting board is key to rebuilding investors' confidence in company financial statements, and it's important to get it up and running soon, experts said. "We don't want the markets to have to deal with this type of uncertainty," said Paul R. Brown, a professor of accounting at New York University's Stern School of Business. "We should clear the way for this board." Webster, a former director of the Federal Bureau of Investigation and of the Central Intelligence Agency, resigned 18 days after he was elected chairman of the group in a contentious 3- 2 vote by the SEC commissioners. SEC chairman Harvey Pitt, who has announced his resignation but hasn't been replaced yet, supported Webster, the former head of the audit committee at U.S. Technologies Inc., for the oversight job. The auditing profession is now mainly self-regulated through the American Institute of Certified Public Accountants, the industry's lobbying group and a peer-review system. The oversight board is intended to take over that aspect of the AICPA's duties. Once it's up and running, the board is supposed to fund itself by exacting payments from public companies. Assurances Received - SEC spokesman Brian Gross said the SEC has received assurances from both the Treasury Department and the White House's Office of Management and Budget that "they will work with us to see that the board gets the funding it needs." Charles Niemeier, a board member who is the SEC's chief accountant in the enforcement division, said he is acting on the assumption the board will get the money it needs. "This is sort of like digging a ditch, you can talk about it all you like, but eventually you have to dig the ditch," Niemeier said. "The only thing we could do right now that would be a mistake is to get caught up in technicalities, instead of moving ahead." Niemeier said he plans to resign from the SEC at the end of next week and begin working full time for the oversight board, unpaid until members decide on their salaries and the group is incorporated as a non-profit organization. Board members, who met for the first time last week, said they were confident they could meet the law's April 26 deadline if they are not hindered by considerations such as a stalled budget.

They plan to meet informally on Dec. 2 to discuss governance structures and budget issues. Vacant Chairmanship - Without a chairman, the four board members have divided up responsibilities for organizing the new oversight body. Board member Kayla Gillan is drawing up models of governance for the board that she plans to present at the board's next meeting. The leadership void may lead to a less powerful role for the accounting board chairman than the SEC chairman has traditionally exercised over the agenda of the commission, board members said. One option is to give the chairman power over some administrative functions without control over the agenda and the staff. Niemeier said the board may have little choice in granting the chairman diminished powers if Webster's seat remains vacant by the time the board opens for business in January. "If we gave all the powers to the chairman, then what did we just do?" Neimeier said. "It's really not a practical way to approach it and it's just not going to happen." Neimeier said he has not made up his mind how much power the chairman should have. Gillan declined comment on the board's organizational plans. SEC Disarray - While SEC officials have said they plan to act quickly in appointing a new accounting board chairman, they face disarray themselves following the resignations of SEC Chairman Harvey Pitt and Chief Accountant Robert Herdman, who both agreed to step down after the controversy over Webster's selection. Beyond disciplining auditors and setting accounting standards, the board will face a number of policy questions. This week, at an SEC meeting on auditor independence, commissioners asked the board to look into a range of accounting issues, including whether to make audit firms write down dissenting opinions about a company's accounting. "We're throwing out a lot of suggestions here, a lot of jewels, hopefully, not rocks," Commissioner Roel Campos said.

From Bloomberg-Politics, by Robert Schmidt, 22 November 2002

China to Admit Entrepreneurs to Its Communist Party

China's Communist Party said it will allow entrepreneurs to join, departing from its 81-year- old policy to admit only peasants, intellectuals and workers. "The party wants outside people from all sectors of society," spokesman Ji Bingxuan spokesman said at a prelude to the party's 16th Congress. "This will further improve the impact and efficiency of the Communist Party throughout Chinese society." The change in policy comes as a time when several of China's most prominent entrepreneurs are under arrest or in hiding amid a government crackdown on corruption. Yang Bin, former chairman of orchid-grower Euro-Asia Agricultural Holdings Ltd., is under house arrest after police questioned him about unpaid taxes. His personal fortune, once worth $900 million, made him the country's second-richest man last year, according to Forbes. Yang Rong, founder of the first Chinese company to list on the New York Stock Exchange and Forbes' third-richest Chinese entrepreneur in 2001, is in hiding and wanted by Chinese police for unspecified economic crimes. "The standards for fighting corruption still fall short of the standards demanded by the public," Ji told reporters at Beijing's Great Hall of the People. "It is still an uphill battle." Chinese President Jiang Zemin first announced a proposal to admit entrepreneurs during last year's ceremonies marking the party's 80th birthday. It will be put into the party's constitution during the party Congress, which begins tomorrow. China's Communist Party has 66 million members, about 5 percent of the country's population.

From Bloomberg, by Eugene Tang and Michael Forsythe, 7 November 2002

Bill Gates: Microsoft to Invest $400 Million in India Over Next Three Years

New Delhi - Microsoft Chairman Bill Gates announced Tuesday that his company would invest $400 million to improve computer literacy and expand his company's activities in India. The announcement came a day after he pledged $100 million to fight AIDS in India. In a statement released Tuesday before he was scheduled to address a news conference in the Indian capital, Gates said the $400 million investment would be spread over three years and would include expanding the company's software development center and improving computer literacy. Gates made the announcement on the second of his four-day visit to India, where Microsoft would also set up 10 Microsoft Information Technology Academy Centers in partnership with Indian states. The staff at its center in the southern Indian city of Hyderabad - the only software development center Microsoft has outside the United States - was expected to increase to 500 by 2005, he said. In collaboration with Indian companies, Microsoft intends to promote the use of its Wesoft also unveiled a plan to launch Windows XP and Office in Hindi, the language spoken by a majority of India's 1 billion-plus people, within the next year. Gates said Microsoft would work with Indian partner companies to extend Windows XP language support to include Bengali and Malayalam as well.

From MSNBC, 12 November 2002

Gates Visits India's Software Hub, Insists Philanthropy Not Intended to Boost Microsoft Image

Hyderabad, India - Microsoft Chairman Bill Gates, visiting India's software hub to talk business and immunize children, insisted Thursday that his philanthropy was not intended to burnish his company's image following a punishing antitrust trial. Gates has pledged $500 million in investments and charitable grants during his four-day visit to India, home of a Microsoft software development center. He was to depart India on Thursday. Some have accused Gates of wooing big business by giving away millions of dollars from his personal fortune in a country becoming increasingly dependent on Microsoft. Software business owners say big companies like Microsoft try to get poor governments and companies ''addicted'' to their expensive products. ''Proprietary software companies hand out free copies for the same reason that cigarette companies give sample packs to college kids - to encourage addiction,'' said Richard Stallman, the founder of the Boston-based Free Software Foundation during a recent visit to Bangalore, India's technology hub. While reviewing a child immunization program he is funding, Gates told reporters his philanthropy had nothing to do with improving Microsoft's image or reeling in more Indian customers. ''The foundation is something for which myself and my wife personally provided resources. It is completely independent,'' Gates said. The Bill & Melinda Gates Foundation has contributed some $3 billion to projects worldwide including AIDS prevention, health care and computer literacy. Gates is the world's richest man, with a fortune estimated at $43 billion. ''Microsoft has enabled us to do this, but there is no connection between the activities of the foundation and the software activity,'' Gates said. His visit comes only weeks after a U.S. federal judge accepted a settlement between Microsoft and the U.S. Justice Department in a case that often portrayed the world's largest software company as a corporate bully. Microsoft was found guilty of violating antitrust laws by making it difficult for its rivals to compete. The settlement includes requirements meant to blunt its monopoly in desktop computing. On Thursday, Gates visited a rural health clinic south of Hyderabad, where he launched the second phase of a $12.5 million program that seeks to vaccinate more than 1 million Indian children each year. Hyderabad, a leader in India's computer software boom, is home to Microsoft's only software development center outside the United States.

From MSNBC, 14 November 2002

Corporate Tax Avoidance Chronicled

Washington - Study Shows Corporations Manipulate Export-Import Prices to Avoid Taxes - Buying lawnmower blades from Australia for $2,326 each or selling ATM machines to France for $97 apiece might seem overly generous to America's trading partners. But a study released Friday found corporations using such implausible pricing last year to avoid paying $53 billion in U.S. taxes. Under the practice known as transfer pricing, corporations move income out of the United States and into the hands of foreign affiliates, effectively putting profits out of reach of the Internal Revenue Service. In addition to being a means to evade taxes, such pricing schemes are common to criminal money laundering operations. Tax losses from price manipulation rose from nearly $45 billion in 2000 and $35.7 billion in 1998, said finance professors Simon J. Pak of Pennsylvania State University Great Valley and John S. Zdanowicz of Florida International University, who have been studying the issue for more than a decade. The two professors said in the study that their tax loss estimates were probably conservative because they only analyzed commodities that could be identified by measures such as kilograms, tons or units. If non-quantifiable goods were included, "our estimated tax loss would be significantly higher," they said. "This is a very aggressive area of tax abuse," said Sen. Byron Dorgan, D-N.D., chairman of the Appropriations Committee subcommittee that oversees the Treasury Department. Dorgan secured a $2 million grant in this year's budget for the researchers, saying he hoped to "convince the Treasury Department and the IRS to get serious" about the issue. Treasury Department spokeswoman Michele Davis said, "We're looking at all the complexities in the tax code that provide incentives for people to conduct transactions that minimize their tax burden."

Under the scheme, a U.S. company buys a product at an inflated price from an overseas subsidiary, keeping the money within the corporation while vastly reducing its taxable profit in the United States. Similarly, a manufacturer can write off losses from selling a product overseas at an undervalued price, while the profits are retained by the overseas partner. Among overvalued imports were cotton dish towels from Pakistan at $153 each, tweezers from Japan at $4,896 a unit and plastic buckets from the Czech Republic at $973 each. Undervalued exports included missile launchers sold to Israel for $52 a unit, clinical thermometers sold to Germany for 6 cents each, and bus and truck radial tires sold to Britain for $11.74 each. Japan led other trading partners, accounting for $12.2 billion in lost U.S. taxes due to transfer pricing in 2001, followed by Canada with almost $5 billion and Germany with $4.6 billion. U.S. Customs Service spokesman Dean Boyd said his agency has for more than a decade been tracking transfer pricing used not only to avoid taxes but also to launder money. "This type of overvaluation and undervaluation is certainly something we have to be concerned about," he said. Boyd said that since Sept. 11 the Customs Service's Numerically Integrated Profiling System has also been used to investigate terrorism financing. He said importing gold into the country at vastly inflated prices is "an easy way to export funds from the United States," but that many other commodities, including licorice roots, have been used to launder money.

From ABC News-Politics, 1 November 2002

Court Clears Financing for Bankrupt US Airways

Arlington, Va. - Bankrupt US Airways has received final court approval to obtain $500 million in financing from the Alabama public employees pension fund. U.S. Bankruptcy Court Judge Stephen S. Mitchell agreed Thursday to allow the Retirement Systems of Alabama to provide US Airways with the debtor-in-possession financing. The court had previously given interim approval while creditors and other interested parties reviewed the proposal. Arlington-based US Airways, which filed for Chapter 11 bankruptcy protection in August, has drawn $300 million of the $500 million. Now the remaining $200 million can be used, subject to conditions that include having US Airways meet requirements for a federal loan guarantee. The Air Transportation Stabilization Board gave conditional approval of a $900 million federal guarantee of a $1 billion loan last summer. The airline must meet certain financial conditions and emerge from Chapter 11 before it can access the funds. US Airways is in the midst of a restructuring plan designed to cut costs by $1.4 billion to $1.6 billion a year. Employees have agreed to hundreds of millions of dollars in wage concessions, and furloughs and layoffs continue at the airline. A pre-Sept. 11 work force of 46,000 has been cut by roughly one-third. Last week, the company posted losses of $335 million in the third quarter, better than the year-ago quarter when it lost $766 million. Separately, the RSA has offered to invest $240 million in equity for a 37.5 percent ownership of the restructured airline. Other potential investors have a Nov. 15 deadline to offer competing investment offers. The company hopes to emerge from bankruptcy by March.

From Nando Times-Business, 8 November 2002

U.S. Bankruptcy Filings Hit Another Record

Washington- Americans filed for bankruptcy protection in record numbers during the 12-month period ended Sept. 30 as the economy tried to claw its way out of the doldrums, statistics released Monday showed. There were nearly 1.55 million bankruptcy filings in the 12 months ended Sept. 30, a record, up 7.7% from the 1.44 million filings made in the same period a year ago, according to figures released by the Administrative Office of the U.S. Courts. Broken down, there were almost 1.51 million personal bankruptcies in the latest 12-month period, up 1.5%, and 39,091 business filings, up 1.6% during that time, according to the courts. The rise in filings comes as the economy slowly recovers from last year's recession, albeit without new jobs. Retail sales have come in above expectations while consumer confidence has been recovering and there have been initial signs that business spending on equipment is starting to pick up. The labor market has largely been in a rut with a 5.7% unemployment rate in October and a net loss of 5,000 jobs. However, the Labor Department reported on Thursday that new applications for jobless benefits fell 25,000 to their lowest level since July. In the three months ending in September, the courts reported an 11.6% rise in bankruptcy filings from the same period a year ago, to 401,306. "It's more of the hangover of the debt binge of the 1990s and possibly could help spark renewed interest to do something in the area of bankruptcy reform when Congress gets back," said Sam Gerdano, executive director of the American Bankruptcy Institute. Congress attempted earlier this month to pass a compromise proposal to overhaul U.S. bankruptcy laws, a measure that would have made it harder for debtors to walk away from their bills which credit card companies, banks and retailers wanted. The measure died after conservative Republicans objected to a provision that would have prevented anti-abortion protesters from avoiding court-ordered fines by declaring bankruptcy.

From USA Today-Money, 25 November 2002