RUTHFULLY YOURS

LIBYA  ITEM 2: TIMES UK: Libyan rebels gain ground but warn of leadership divisions  http://www.thetimes.co.uk/tto/news/world/middleeast/article3086184.ece

EGYPT  ITEM 3: Raymond Ibrahim: Egypt: Desire for Money – Jizya – Prompts Attacks on Christians   http://www.meforum.org/2982/egypt-jizya-attacks-on-christians

GAZA FLOTILLA  ITEM 4: Christopher Hitchens: Boat People: Some questions for the “activists” aboard the Gaza flotilla.    http://www.slate.com/id/2298332/

IRAN  ITEM 5: REUTERS: Analysis – Iran’s nuclear steps deepen Western suspicions   http://af.reuters.com/article/worldNews/idAFTRE76517A20110706?sp=true
-Thanks to Ali X.-
ITEM 6: Michael Ledeen: Is the Iranian Government Teetering?   http://pajamasmedia.com/michaelledeen/2011/07/06/iran-approaching-fission-i%e2%80%99m-talking-politics-not-nukes%e2%80%a6/
-Thanks to Jules O.- 
SOUTH ASIA 
AL QAEDA  ITEM 7: LA TIMES: Al Qaeda looks at surgical implants to get a bomb past airport security   http://www.latimes.com/news/nationworld/nation/la-na-explosive-implants-20110707,0,3588476.story
ITEM 8: Muhammad Azam Khan: Al Qaeda and the task before the Pakistan military   http://tribune.com.pk/story/203710/al-qaeda-and-the-task-before-the-pakistan-military/
ITEM 9: Bill Roggio: Australian al Qaeda commander reported killed in Predator strike   http://www.longwarjournal.org/threat-matrix/archives/2011/07/australian_al_qaeda_commander.php

PAKISTAN  ITEM 10: WP: Pakistan’s nuclear-bomb maker says North Korea paid bribes for know-how   http://www.washingtonpost.com/world/national-security/pakistans-nuclear-bomb-maker-says-north-korea-paid-bribes-for-know-how/2010/11/12/gIQAZ1kH1H_story.html?hpid=z3

SOUTHEAST ASIA 
MALAYSIA  ITEM 11: AP/WSJ: Malaysian Activists Plan to Protest at Stadium   http://online.wsj.com/article/SB10001424052702303544604576431041690928106.html?mod=WSJ_World_LEFTSecondNews

EUROPE 
BRITAIN  ITEM 12: Soeren Kern: Britain Debates Forced Marriage   http://www.hudson-ny.org/2249/britain-forced-marriage
-Thanks to Jules O.-
ITEM 13: DAILY MAIL: Iran threatens ‘serious action’ over BBC plans to screen documentary series on Muslim prophet Muhammad   http://www.dailymail.co.uk/news/article-2012252/Iran-threatens-BBC-Muslim-prophet-Muhammad-documentary.html#ixzz1RQuoMR7v

LATIN AMERICA 
VENEZUELA  ITEM 14: Jaime Daremblum: Venezuela Needs De-Cubanization: The longer the Cubans stay, the greater the chance of serious friction in the military and other institutions.    http://pajamasmedia.com/blog/venezuela-needs-de-cubanization/

COLOMBIA  ITEM 15: WSJ: Colombia Tries to Heal Wounds of Long War: President Santos Moves to Build on Security Gains of His Predecessor to Address Root Cause of Conflict: Land Ownership   http://online.wsj.com/article/SB10001424052702304793504576430052585498810.html?mod=WSJ_World_LEFTSecondNews

EAST ASIA 
TAIWAN  ITEM 16: John Metzler: Global recession? Taiwan booming in the Chinese dragon’s shadow   http://www.worldtribune.com/worldtribune/WTARC/2011/mz0826_07_06.asp
-Thanks to Sol Sanders-

CHINA  ITEM 17: NYT: A Wave of Chinese Money Gives a Lift to Companies Struggling in Tough Times   http://www.nytimes.com/2011/07/07/business/smallbusiness/07sbiz.html

NORTH AMERICA 
UNITED STATES  ITEM 18: WSJ: U.S., Mexico in Truck Deal   http://online.wsj.com/article/SB10001424052702303365804576429911864563624.html?mod=WSJ_World_LEFTSecondNews
ITEM 19: VOA NEWS: IWF Changes Dress Code Rules, Lets Muslim Weightlifter Compete   http://www.voanews.com/english/news/usa/IWF-Changes-Dress-Code-Rules-Lets-Muslim-Weightlifter-Compete-125090654.html

ISSUES 
ENERGY  ITEM 20: BALTIC TIMES: Lithuanian parliament: Gazprom should lose its pipelines in Lithuania   http://www.baltictimes.com/news/articles/29001/
ITEM 21: Roman Olearchyk: Ukraine, wary of Russia, seeks energy independence with $1.5bn gas plant   http://blogs.ft.com/beyond-brics/2011/07/06/ukraine-a-black-sea-1-5bn-lng-plant/#axzz1RSIKRfqB

BANKING  ITEM 22: Jim Lacey: The Gnomes of Basel: The banking system needs reform. But the Bank for International Settlements hasn’t a clue how.  ITEM 23: WSJ: Signals to Expect From ECB’s Trichet    http://online.wsj.com/article/SB10001424052702303544604576429731982195632.html?mod=WSJ_World_LEFTSecondNews
ITEM 24: DOW JONES: Swiss Government Adopts OECD Standards On Bank Secrecy, Tax Offenses   http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201107060912dowjonesdjonline000259&title=swiss-government-adopts-oecd-standards-on-bank-secrecytax-offenses

SHARI’A BANKING/INVESTMENT  ITEM 25: BUSINESS DAY ONLINE (NIGERIA): Okonjo-Iweala pledges tighter fiscal policy, supports Islamic banking   http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/24228-okonjo-iweala-pledges-tighter-fiscal-policy-supports-islamic-banking

TERRORISM/TERRORISM FUNDING  ITEM 26: Kenan Malik: Assimilation’s Failure, Terrorism’s Rise   http://www.nytimes.com/2011/07/07/opinion/07malik.html?_r=1&ref=todayspaper
ITEM 27: AP/WP: Indictment unsealed in Detroit accuses man on FBI terror list of seeking to set bomb in Israel   http://www.washingtonpost.com/national/indictment-unsealed-in-detroit-accuses-man-on-fbi-terror-list-of-seeking-to-set-bomb-in-israel/2011/07/06/gIQA4XQ90H_story.html
ITEM 28: ALL HEADLINE NEWS: Hezbollah’s Latin American influence worries Congress   http://www.allheadlinenews.com/articles/90053547?Hezbollah%26%23146%3Bs%20Latin%20American%20influence%20worries%20Congress

MONEY LAUNDERING/CORRUPTION  ITEM 29: RIA NOVOSTI: Russian government daily Rossiiskaya Gazeta published the list of individuals and companies involved in money laundering and terrorism financing.   http://en.rian.ru/russia/20110706/165046783.html
ITEM 30: Georges Abi Saleh: Lebanon Actively Polices Its Banks   http://online.wsj.com/article/SB10001424052702304450604576417523565507418.html?mod=googlenews_wsj

COMMODITIES  ITEM 31: WSJ: Food Prices Near Record Highs   http://online.wsj.com/article/SB10001424052702303365804576431380189369202.html?mod=WSJ_World_LEFTSecondNews
ITEM 32: FINANCIAL TIMES: A tale of two inflation policies   http://www.ft.com/intl/cms/s/0/60dafe2c-a738-11e0-b6d4-00144feabdc0.html#axzz1RBhlVegV
ITEM 33: BLOOMBERG: African Barrick Shares Hit as Mining Boom Triggers Tax Grab   http://www.bloomberg.com/news/2011-07-06/african-move-to-cash-in-on-commodity-boom-weighs-on-mining-company-shares.html

CYBERWARFARE  ITEM 34: WSJ: Web’s Openness Is Tested in Tunisia: Post-Uprising Freedoms Are Under Pressure; Journey From Internet Activist to Official-and Back Again   http://online.wsj.com/article/SB10001424052702303544604576430041200613996.html?mod=WSJ_World_LeadStory
FULL TEXTS
MIDDLE EAST & NORTH AFRICA 
SAUDI ARABIA    ITEM 1a: FINANCIAL TIMES: Saudi clerics tap into social networks   http://www.ft.com/intl/cms/s/0/8b9834c8-a7ff-11e0-afc2-00144feabdc0.html#axzz1RBhlVegV

July 6, 2011 7:47 pm
Saudi clerics tap into social networks
By Abeer Allam in Riyadh

Within weeks of joining Twitter, Sheikh Abdullah bin Jebreen, a prominent Saudi scholar, had amassed nearly 6,000 followers.
“Retweet, God bless you!” he tweeted, after posting his recommended morning prayers.
Followers ask about underage driving (answer: dangerous because of youths’ propensity for drag racing and therefore un-Islamic), the qualities of a good Muslim (they should neither drink nor watch pornography), and whether bathing on Fridays is a religious obligation (it is).
Sheikh bin Jebreen himself is not known for tweeting, having died two years ago at the age of 76. But his students have revived his fatwas to reach a new generation.
Saudi clerics are embracing social media tools such as Twitter, Facebook and YouTube, attracting thousands of fans. Liberals, activists, and youths seeking to meet members of the opposite sex may have been the early adopters, but the clerics now compete for influence. Profile pictures of sexy western stars have given way to portraits of bearded men wearing the traditional white or red and white check head dresses, or ghutra, posing with a thoughtful gaze.
“It is a very smart move,” said Saud Kateb, a media professor. “We see a variety of opinions on Twitter now which reflect our conservative society. They are catching up and countering the views of the liberals, who were the pioneers.”
The trend may also be because the sheikhs have been frozen out of state media outlets after openly opposing King Abdullah’s social and economic reforms. In an effort to rein in fatwas by unofficial clerics the king last August decreed that only state-appointed scholars in the Supreme Council of Ulemas would be allowed to issue them.
A number of religious websites and call-in shows on satellite television have since been warned or closed. Some clerics, such as Sheikh Youssef al-Ahmed and Sheikh Abdul Rahman al-Barak, professors at Imam University but with no official religious position, are the most outspoken against new rules.
On YouTube and Twitter, Sheikh Ahmed directs his ire towards the head of the royal court and confidante of the king, Khalid al-Tuwaijri, as well as the king’s son-in-law and education minister, Prince Faisal bin Abdullah, accusing them of implementing a western agenda. He deemed a plan to employ women as cashiers at supermarkets as un-Islamic, condemned the co-educational King Abdullah University of Science and Technology, and was even critical of a financial centre under construction in
Riyadh.
Last week, Sheikh
Ahmed held a “town hall meeting” on Twitter, discussing the “evils of the liberal agenda” using the hashtag #libraliah. The discussion continued late into the night, with a follower noting that the sheikh was “tweeting the night away, instead of praying the night away’.’
Sheikh Ahmed’s 13,000 followers on Twitter and Facebook pale in comparison to those of Sheikh Salman Alodah, once regarded as a stalwart conservative, but now a reformist.
Sheikh Alodah tweeted his early support of the Arab spring, seeing protests as legitimate to “advise the ruler”. After signing a petition in support of a constitutional monarchy in February, his television show on the Saudi-owned MBC network was cancelled. He has a prominent base among the increasingly politicised youth in Saudi Arabia, which accounts for a hefty portion of his 113,000 Twitter followers and almost half a million Facebook fans. When he is not tweeting about political reform, he shares insights on the importance of family, friendship, and travel.
A close second in popularity is Sheikh Mohamed al-Arefee, a relatively young cleric who, with his piercing dark eyes and jet black hair and beard, has become a heart throb among his women followers. He live- streams his weekly sermons and asks his followers to suggest topics for his Friday sermons and television shows via Twitter.
“Like politicians, the clerics have discovered the wonders of directly reaching constituencies that used to be difficult to reach, like youth and women,” said Mr Kateb.
The sheikhs’ online followers easily outnumber those following prominent Saudi political bloggers, illustrating the clout they wield in Saudi society.

LIBYA    ITEM 2a: TIMES UK: Libyan rebels gain ground but warn of leadership divisions  http://www.thetimes.co.uk/tto/news/world/middleeast/article3086184.ece

Libyan rebels gain ground but warn of leadership divisions
Anthony Loyd Benghazi
July 7 2011 12:01AM

Rebel fighters broke through defence lines and advanced on twin fronts in Libya yesterday, seizing key positions and threatening Colonel Muammar Gaddafi’s principal escape route from Tripoli in the largest ground push for weeks.
The operation, which included fighters flown in from Benghazi to western Libya via Tunisia, began shortly after dawn. Rockets and mortars were fired from rebel positions towards the village of Al-Qawalish in the foothills of the western Nafusa mountain range.
Six hours later, after an assault from three sides that sent government units fleeing into the desert, hundreds of fighters on pick-up trucks yelled “Allahu Akbar” [God is greatest] as they poured into the village.
For weeks pro-Gaddafi forces have used Al-Qawalish as a position from which to shell rebels in the western mountains. Buoyed by French arms drops and Nato-led airstrikes, and providing the rebels can consolidate their hold, its capture will allow them a strong platform for more advances towards Tripoli.
Critically, the push also brings them closer to the town of Garyan, about 25 miles (40km) to the northeast, which controls the main road leading to the Libyan capital. “It will become a lot more interesting if the rebels get into Garyan,” a Western diplomat said. “Not only will that allow them to consolidate their hold in the mountains, it will also cut the most likely escape route for Gaddafi if he wishes to get out of Tripoli.”
Hundreds of rebel reinforcements have moved into the west of the country from Benghazi since May in preparation for the latest push, using a semi-clandestine air bridge that takes them to Tunisia from where they infiltrate the border to the Nafusa mountains. Many have been recruited from Tripoli and have formed a unit called the Tripoli Khattiba to liaise with rebel cells and eventually guide out-of-area forces into the city.
On the Mediterranean coast of Libya rebel commanders said that they had pushed 12 miles west from Misrata, taking them to within 80 miles of Tripoli, their biggest single advance since Colonel Gaddafi’s forces pulled out of the city in May.
However, an intense bombardment of Grad rockets and artillery checked their progress. Three rebels died and more than fifty were wounded. In Benghazi, the rebels’ political base, thousands of people gathered from across eastern Libya in a show of support for the revolution.
Rebel officials in the National Transitional Council (NTC) however, cautioned that overthrowing Colonel Gaddafi may take many more months. They cited divisions in the rebel leadership and failures in planning.
“The NTC has got no idea as to how to move forward from here,” one leading NTC figure said. “It has become bitterly divided. There are huge medical, fuel, finance and armament issues to sort out. The NTC are having enough problems trying to agree on how to supply themselves in Benghazi, let alone organise the takeover of Tripoli. The notion that they are ready for the move on the capital to coincide with an uprising in the city, or even plan it properly, is ridiculous as things stand.”
Foreign diplomats and rebel leaders have spoken privately of an August 1 deadline for Colonel Gaddafi’s overthrow. Commanders however are now warning that unless Colonel Gaddafi is removed by a coup or deal the conflict will drag on into the autumn.

EGYPT    ITEM 3a: Raymond Ibrahim: Egypt: Desire for Money – Jizya – Prompts Attacks on Christians   http://www.meforum.org/2982/egypt-jizya-attacks-on-christians

Egypt: Desire for Money – Jizya – Prompts Attacks on Christians
by Raymond Ibrahim
FrontPageMagazine.com
July 6, 2011

If growing numbers of Muslims in Egypt have an intrinsic hatred for all things Christian- demonstrated days ago by the torching of eight Christian homes on the rumor that a church was being built-let us not forget that this hate has instrumental, that is, economic benefits: the extortion of money from the non-believer-tribute from the conquered infidels to their Islamic overlords-otherwise known as jizya.

Consider: on June 24, hundreds of Muslims surrounded a Coptic church in Egypt, vowing to kill its priest-who was locked inside serving morning mass to several parishioners. The Muslims cried “We will kill the priest, we will kill him and no one will prevent us,” adding that they would “cut him to pieces.”

As usual, police and security forces gave the terrorists ample time to terrorize-appearing a full five hours after the incident began; and when they escorted the priest out, it “looked as if he was the criminal, leaving his church in a police car.”

What, exactly, did the rioting Muslims want this time? Why were they threatening to kill the priest?

The official story is that they were livid that the priest had earlier tried to make renovations to the 100-year old church (Islam forbids building new or repairing old churches). After forcing renovations to cease on threats that they would demolish the church, they also tried to banish the priest, giving him 50 days to quit the region. The priest’s time was up, yet he refused to abandon his flock. Hence, the wild attack.

However, Arabic news sources like El-Bashayer reveal a different, more practical, motivation: the desire to extort money from the Christians-echoed in an earlier report as a desire for a “donation” from the church:

Security forces succeeded in rescuing the life of the priest of St. George Church in Beni Ahmad, west of al-Minya, from being killed at the hands of the Salafists because of his refusal to pay them jizya money, according to sources…. [T]he church’s priest had declared that the Copts would not pay jizya, in any way, shape, or form. This is what caused the Salafists to want to banish him from the region, so they could collect jizya from the Copts.

This is not surprising; anyone following the growing Islamization of Egypt knows that increasing numbers of Muslims-called “Salafists,” that is, those who seek to emulate Muhammad and the early generations of Islam-have been eying their Christian neighbors as easy sources for quick cash.

For instance, who could forget Egyptian preacher Abu Ishaq al-Huwaini’s recent lament that Muslims could alleviate their economic woes if only they would return to the good old days of Islam-when abducting and selling or ransoming infidels was a great way of making a living. (Accordingly, weeks later, two teenage Christian girls in Egypt were reported as kidnapped, held ransom, and then “sold” to another group.)

Nor is this outlook limited to self-professed “Salafists”: Earlier, Dr. Amani Tawfiq, a female professor at Egypt’s Mansoura University, said “If Egypt wants to slowly but surely get out of its economic situation and address poverty in the country, the jizya has to be imposed on the Copts.” And days ago, Hazim Abu Isma’il, who is running for Egypt’s presidency, vowed he would impose the jizya on Egypt’s Christians.

Indeed, Al Azhar-Egypt’s, if not the Islamic world’s top authority, often accused of being too “moderate” by Salafists-recently made Islam’s official position clear when its grand leader, Imam Ahmad Tayeb, defying history and reality, proclaimed that “the Copts have been living in Egypt for over 14 centuries in safety, and there is no need for all this artificial concern over them,” adding that “true terrorism was created by the West.”

Raymond Ibrahim, a widely published author on Islam, is a Shillman Fellow at the David Horowitz Freedom Center and an Associate Fellow at the Middle East Forum.

GAZA FLOTILLA    ITEM 4a: Christopher Hitchens: Boat People: Some questions for the “activists” aboard the Gaza flotilla.    http://www.slate.com/id/2298332/

Boat People
Some questions for the “activists” aboard the Gaza flotilla.
By Christopher Hitchens
Posted Monday, July 4, 2011, at 11:03 AM ET

Palestinian boats and the Freedom Flotilla in the port of Gaza City
The tale of the Gaza “flotilla” seems set to become a regular summer feature, bobbing along happily on the inside pages with an occasional update. A nice sidebar for reporters covering the Greek debt crisis: a built-in mild tension of “will they, won’t they?”; a cast of not very colorful characters but one we almost begin to feel we know personally. Such cheery and breezy slogans-“the audacity of hope” and “free Gaza”-and such an easy storyline that it practically writes itself. Since Israel adopts a posture that almost guarantees a reaction of some sort in the not-too-distant future, and since there was such a frisson of violence the last time the little fleet set sail, there’s no reason for it not to become a regular seasonal favorite.
However, given the luxury of time, might it not be possible to ask the “activists” onboard just a few questions? (Activist is a good neutral word, isn’t it, with largely positive connotations? Even flotilla, with its reassuring diminuendo, has a “small is beautiful” sound to it.) Most of the speculation so far has been to do with methods and intentions, allowing for many avowals about peaceful tactics and so forth, but this is soft-centered coverage. I would like to know a little more about the political ambitions and implications of the enterprise.
It seems safe and fair to say that the flotilla and its leadership work in reasonably close harmony with Hamas, which constitutes the Palestinian wing of the Muslim Brotherhood. The political leadership of this organization is headquartered mainly in Gaza itself. But its military coordination is run out of Damascus, where the regime of Bashar Assad is currently at war with increasingly large sections of the long-oppressed Syrian population. Refugee camps, some with urgent humanitarian requirements, are making their appearance on the border between Syria and Turkey (the government of the latter being somewhat sympathetic to the purposes of the flotilla). In these circumstances, isn’t it legitimate to strike up a conversation with the “activists” and ask them where they come out on the uprising against hereditary Baathism in Syria?
Then again, Syria’s other proxy party in the region is Hezbollah, which operates a state-within-a-state and maintains a private army on the territory of Lebanon. Senior associates of this group have recently been named in a U.N. indictment concerning the broad-daylight murder of former Lebanese Prime Minister Rafik Hariri in February 2005. Hezbollah’s leadership and propaganda organs, while refusing all cooperation with the United Nations, are currently expressing undying solidarity with the Assad regime, which relies additionally on heavy support from the dictatorship in Iran. Again, the Hamas leadership seems compromised at best by its association with this local Tehran-Damascus axis. Surely there must be some spokesman for the blockade-runners who is able to give us his thinking on this question, too? At a time of widespread democratic and pluralist revolution in the region, Hamas imposes its own version of theocracy on Gaza and seems otherwise aligned with the forces that stand athwart the hope of continued and deeper change. Who wants to volunteer time to make this outfit look more presentable? Half the published articles on Gaza contain a standard reference to its resemblance to a vast open-air prison (and when I last saw it under Israeli occupation, it certainly did deserve this metaphor). The problem is that, given its ideology and its allies, Hamas qualifies rather too well in the capacity of guard.
Only a few weeks ago, the Hamas regime in Gaza became the only governing authority in the world-by my count-to express outrage and sympathy at the death of Osama Bin Laden. As the wavelets lap in the Greek harbors, and the sunshine beats down, doesn’t any journalist want to know whether the “activists” have discussed this element in their partners’ world outlook? Does Alice Walker seriously have no comment?
Hamas is listed by various governments and international organizations as a terrorist group. I don’t mind conceding that that particular word has been used in arbitrary ways in the past. But what concerns me much more is the official programmatic adoption, by Hamas, of The Protocols of the Elders of Zion. This disgusting fabrication is a key foundational document of 20th-century racism and totalitarianism, indelibly linked to the Hitler regime in theory and practice. It seems extraordinary to me that any “activist” claiming allegiance to human rights could cooperate at any level with the propagation of such evil material. But I have never seen any of them invited to comment on this matter, either.
The little boats cannot make much difference to the welfare of Gaza either way, since the materials being shipped are in such negligible quantity. The chief significance of the enterprise is therefore symbolic. And the symbolism, when examined even cursorily, doesn’t seem too adorable. The intended beneficiary of the stunt is a ruling group with close ties to two of the most retrograde dictatorships in the Middle East, each of which has recently been up to its elbows in the blood of its own civilians. The same group also manages to maintain warm relations with, or at the very least to make cordial remarks about, both Hezbollah and al-Qaida. Meanwhile, a document that was once accurately described as a “warrant for genocide” forms part of the declared political platform of the aforesaid group. There is something about this that fails to pass a smell test. I wonder whether any reporter on the scene will now take me up on this.

IRAN
ITEM 5a: REUTERS: Analysis – Iran’s nuclear steps deepen Western suspicions   http://af.reuters.com/article/worldNews/idAFTRE76517A20110706?sp=true

-Thanks to Ali X.- 
Analysis – Iran’s nuclear steps deepen Western suspicions
Wed Jul 6, 2011 9:28am GMT
By Fredrik Dahl

VIENNA (Reuters) – Expanding uranium enrichment, a new atomic energy chief said to have military expertise, missile tests — Western analysts see fresh signs that Iran may be seeking to develop the means to build nuclear warheads.

Iran’s determination to press ahead with a nuclear programme it says is for purely peaceful purposes suggests that tougher Western sanctions are so far failing to force the Islamic state to back down in the long-running dispute over its atomic aims.

“Although developments elsewhere in the Middle East have dominated media attention, Iran has been working hard in several ways to advance a nuclear weapons capability,” London-based proliferation expert Mark Fitzpatrick said.

“It needs fissile material, weaponisation expertise and a delivery vehicle. On each of these, it has been making progress,” Fitzpatrick, a director at the International Institute for Strategic Studies think-tank, said.

But even if Tehran decided to make such weapons it could still be years away from having nuclear-armed missiles, possibly giving diplomacy more opportunities to resolve a row which has the potential to spark a Middle East conflict.

World powers failed to make any progress in two rounds of talks with Iran half a year ago and no new meetings have been announced, leaving the diplomatic track apparently deadlocked.

“While difficult, Western capitals need to redouble their diplomatic effort to dissuade Iran from taking the nuclear weapons path,” Daryl Kimball, director of the Washington-based research and advocacy group Arms Control Association, said.

Kimball said Iran was closer to a capability to make atomic weapons but it “apparently has not yet made a strategic decision to do so and is still years, not months, away from building a deliverable nuclear arsenal.”

VIRTUAL NUCLEAR STATE?

Britain last week said Iran had carried out covert tests of a missile that could carry a nuclear warhead, an allegation which Tehran swiftly denied.

During a military exercise last week, Iran test-fired 14 missiles on one day alone, including some it says are capable of hitting its arch foe Israel and U.S. bases in the Middle East.

Defence analyst Paul Beaver said he thought Iran aimed to have a “nuclear-capable weapons delivery system and then to be able to use that in its diplomatic and political posturing.”

He added: “How close are they? They are within years, rather than within months, I believe.”

Tehran says its missiles cannot carry nuclear payloads and insists it is enriching uranium for electricity production and medical purposes. Making atomic bombs would be a “strategic mistake” and would also not be allowed under Islam, it adds.

But in a defiant move that further fuelled Western unease about its intentions, Iran announced last month it would shift its production of higher-grade uranium to an underground bunker and triple output capacity.

It says it needs 20 percent refined uranium to make fuel for a medical research reactor after talks on a swap — under which other countries would have supplied the material — broke down.

Nuclear experts argue the step would bring it significantly closer to the 90 percent purity needed for nuclear weapons, compared with a level of around 3-5 percent usually required to power atomic energy plants.

Olli Heinonen, a former chief U.N. nuclear inspector, said he saw Iran “moving in the direction” of becoming a state that has the ability to make atomic weapons.

“In spite of economical, technological and political difficulties faced, it appears that Iran is determined to, at the very least, achieve a ‘virtual nuclear weapon state’ capability,” he told a U.S. Congress foreign affairs committee.

But former U.N. nuclear watchdog head Mohamed ElBaradei, Heinonen’s old boss who stepped down in 2009, criticised what he called the “hype” about the threat posed by Iran.

“During my time at the agency we haven’t seen a shred of evidence that Iran has been weaponising, in terms of building nuclear-weapons facilities and using enriched materials,” he was quoted as saying in The New Yorker magazine last month.

NO BACKING DOWN

The decision to boost 20 percent uranium output was announced by Iran’s new atomic energy chief, who has been subjected to U.N. sanctions because of what Western officials said was his involvement in suspected atomic weapons research.

A nuclear scientist, Fereydoun Abbasi-Davani was named head of Iran’s Atomic Energy Organisation in February, after he was wounded in a 2010 bomb attack which Tehran blamed on Israel.

The Institute for Science and International Security (ISIS), a U.S.-based think tank, said Abbasi-Davani’s extensive scientific background was “more suited to researching nuclear weapons” than building nuclear power reactors.

“Abbasi-Davani has regularly been linked to Iran’s efforts to make the nuclear weapon itself,” ISIS said.

Iran’s mission to the U.N. International Atomic Energy Agency (IAEA) was not available for comment, but Abbasi-Davani pledged last month to work with the agency and invited its head to tour Iran’s nuclear facilities.

The IAEA, the Vienna-based U.N. nuclear watchdog, is also voicing growing concern about possible military links to Iran’s nuclear activities and Western diplomats expect it to firm up its suspicions in reports due later this year.

For several years, the IAEA has been investigating Western intelligence reports indicating Iran has coordinated efforts to process uranium, test explosives at high altitude and revamp a ballistic missile cone so it could take a nuclear warhead.

Iran says the allegations are forged and baseless.

But its refusal to halt enrichment has led to four rounds of U.N. sanctions on the major oil producer, as well as tighter U.S. and European Union restrictions.

“Iran has developed an ambitious nuclear programme that is diffused in the nature of its distribution of sites and coordinated in its approach to achieve the capacity to field a nuclear arsenal,” Heinonen said.

“Its actions bear witness to a regime that intends to stay on this path,” said Heinonen, who is now a senior fellow at Harvard’s Belfer Centre for Science and International Affairs.
ITEM 6a: Michael Ledeen: Is the Iranian Government Teetering?   http://pajamasmedia.com/michaelledeen/2011/07/06/iran-approaching-fission-i%e2%80%99m-talking-politics-not-nukes%e2%80%a6/

-Thanks to Jules O.- 
Is the Iranian Government Teetering? by Michael Ledeen
Posted By Michael Ledeen On July 6, 2011  Pajamas Media

The mullahs have stepped up their tempo of killing, both at home and abroad.  The main difference is that the Iranian citizens who are tortured and executed are slaughtered by fellow-Iranians.  Our guys and our friends and allies are gunned down, or, more often, blown up, by proxies.  As I have said before, the Iranians dread direct confrontation with other countries, both because they have no confidence in the loyalty of their armed forces (including the thoroughly corrupted Revolutionary Guards Corps), and because it’s not their way.  They prefer to kill stealthily, not openly.  You may have noticed that when the Saudis sent troops to help their neighbors in Bahrain put down an Iranian-inspired insurrection, the Tehran regime first thumped its chest  and promised to send the Guards to fight it out.  Then…nothing happened.  They just slinked away, back into their caves.
Call it the mullahs’ way of war.  Let someone else die for you, avoid exposure, and never ever risk your own skin.  And  they pay heavily for it.  As some Israeli analysts have written [1],

It can be assumed that the Sunni camp, headed by Saudi Arabia, is fully aware of the political and military significance of Iran’s weakness and its unwillingness to initiate face-to-face conflict. This will have ramifications on both the regional and the global levels.

The proxy killings [2] are on the front pages: Iraq and Afghanistan, with American forces on the way out, are prime targets for Iran’s clients, as our military commanders-including Robert Gates, now departed from the Pentagon-and yesterday, Ambassador Jeffries in Iraq, have been telling anyone who cares to listen.  If my information is right, we will see lots more of this, as well as similar havoc in Africa, where the Iranians have considerable appetite for terror bases, commercial agreements, and basing rights.

The direct slaughter at home is not so well covered in the popular press, but Iranians see it every day.  Over the weekend, more than fifty executions were publicly announced [3], and poor souls are rounded up for outrageous prison terms.  Crackdowns on “immoral” behavior (the wrong sort of haircut, the wrong sort of head scarf) are intensifying, and women are now forbidden to enter coffee and tea bars where hookahs are in use.

Have a look at this interview with one of the country’s leading human rights lawyers, who was sentenced to nine years’ imprisonment. He told the interviewer he felt fortunate to have escaped with his life.

For those who have chosen to believe that the Tehran regime is stable-and therefore that we should appease it-this is the good news.  It shows that Persia is ruled by mass murderers who are determined to kill anyone they fear.  You’ll recognize the recent application of these methods in Syria, which is because the Iranians are “guiding” Bashar Assad through his time of troubles.  The mullahs know that if Syria falls, Iran is suddenly without its favorite fighters, from Hezbollah to Hamas, from the Brothers to the Islamic Jihad.  As if they weren’t frenetic enough, they are also counseling Qadaffi (so sayeth [4]Le Monde [4] ).

On the other hand, it is hard to imagine any group wrecking a country, and its own ability to rule, more effectively than the tandem of Supreme Leader Ali Khamenei and President Mahmoud Ahmadinejad, now the political equivalents of colliding sub-atomic particles.  In recent weeks, several of Ahmadinejad’s appointees have been sacked, and some even arrested.  He was subjected to the startling indignity of being censored by the official state broadcasting network.  He tried to recover by announcing that every Iranian family would receive one thousand square meters of land (think sand, there’s quite a substantial desert in the east), only to have Khamenei himself diss the scheme.  Meanwhile, the Middle East’s evilest empire attracted the attention of the U.S. Department of State, for its generous toleration of human trafficking [5], mostly in women’s bodies.

No surprise, then, that Ahmadinejad lost it.  This regime has been a fascinating example of reciprocal payoffs and blackmail for years, but the facts have usually been hidden from public view.  No more.  Ahmadinejad made an amazing speech, accusing the Revolutionary Guards (hitherto almost universally believed to be the president’s most reliable base of support) of smuggling two billion dollars’ worth of cigarettes into the country via ports and piers outside the purview of Customs.  Such enormous sums, he said “invite all the smugglers of the world, not to mention our own “smuggler brethren.”  The last two words are code for the Guards.

The  RG Commander, Mohammad-Ali Jafari, denied it all, but then a news service still friendly to the president published a list of jetties where Customs did not function.  Whereupon a retired Guards officer said that if the Supreme Leader asked the Guards to bring him a hat, they would obey.  This (h/t Ali Alfoneh) is a reference to an old Persian saying, “If the King demands someone’s hat (the president’s in this case), his servants will bring it with the head still inside.”

I have long thought that Khamenei and Ahmadinejad were fused somewhere below the ribs, and would not be foolish enough to engage in public combat.  I may have to reconsider.  As we used to say in the old days, the objective situation is very revolutionary, and the people are openly contemptuous of the regime.  The economy is so bad that the Central Bank has been forbidden to release official data on inflation and other key indicators-a sure sign that the actual numbers are considerably worse than the official ones (knowledgeable sources tell me that real inflation is well over 50%).  And favoritism for the mullahs-and-commanders-of-industry is so blatant that workers are getting the back of the regime’s gnarled hand [6]:

In an interview with the Iranian Labor News Agency, Ali Akbar Eivazi, a board member at the Tehran Islamic Labor Councils Coordination Center, has reported new proposed changes to the Iranian Labor Law…he said: “In the modifications submitted by the Labor Ministry, 28 articles have been changed-in effect, all workers’ benefits have been axed in those 28 items.”

It’s not likely to help anyone.  Iran’s economic performance last year ranked in the bottom ten countries, and there is no sign that it’s getting better.  The owners can clearly oppress the workers all they want (the many strikes and protests over worsening conditions and chronic failure to pay salaries have little effect and are rarely reported outside the blogosphere), but the wreckage of Iran at the hands of the ruling mullahcracy will be hard to reverse.  The palpable inability of the regime to manage the country adds to the people’s contempt, and fuels the frequent nocturnal chants from the rooftops of the major cities, “Death to the Dictator.”

The misery of Iranian workers-in its most dramatic manifestation, the arrest and ongoing torture of Mansour Osanloo, the president of the Tehran Bus Drivers’ Organization-has come to  the attention of Western trade unionists, and the Teamsters recently made Osanloo an honorary member [7], and called for their counterparts around the world to support him and his followers.

If we had a government that took seriously the Iranian war against us, we would be echoing the Teamster’s call for freedom of association in Iran.  Indeed, we’d be busy supporting the people against the regime, both in Iran and in Syria.  But no.  Instead we appease Iranian allies like the Muslim Brotherhood [8], continue to meet with regime officials, and have just acquiesced in the official participation of the Islamic Republic in a NATO conference, which further demonstrates our utter failure to fight back against our known killers.

One might well marvel at the fecklessness of our so-called leaders, but the pattern of their cowardice and their headlong retreat from even minimal support for democratic revolution in enemy lands-while hailing it when it threatens friends, allies, and dubious characters (let’s say) like Qadaffi-is so well established (not even a peep on behalf of American hostages [9], lest we all forget) that most of us have long since stopped being shocked.

That does not mean we should lose our rage at the appeasers.  Military families like ours are certainly entitled to demand that our troops strike back at our enemies, and the so-called “peace movement,” if it understood what peace actually requires, would be campaigning in favor of the Iranian and Syrian revolutions.  They don’t, and we know why:  they want the Syrian and Iranian tyrants to prevail, dominate a new Middle East devoted to the destruction of the West, and create a radical Islamist and radical Leftist caliphate.

That’s a road to war, and the Obama Administration has found a unique way of sprinting along it:  empowering our enemies at home and abroad, encouraging them to believe that we will never fight back.

And our brave domestic opposition?  So far as I know, only Pawlenty-who does not seem to have generated much enthusiasm-has defined the defeat of the Tehran regime as the central goal of a sensible policy.  None of the others has even come close.  So color me unimpressed.

As of now, our best hope lies in the self-destructive activities of the Iranian leaders.  Watch that space.

Article printed from Faster, Please!: http://pajamasmedia.com/michaelledeen

URL to article: http://pajamasmedia.com/michaelledeen/2011/07/06/iran-approaching-fission-i%e2%80%99m-talking-politics-not-nukes%e2%80%a6/

URLs in this post:

[1] Israeli analysts have written: http://www.memri.org/report/en/0/0/0/0/0/0/5424.htm
[2] proxy killings: http://www.washingtonpost.com/world/war-zones/weapons-prove-iranian-role-in-iraq-us-says/2011/07/05/gHQAUnkmzH_story.html
[3] more than fifty executions were publicly announced: http://iranhr.net/spip.php?article2149 and http://radiozamaneh.com/english/content/secret-hangings-karaj-prison
[4] so sayeth : http://www.lemonde.fr/proche-orient/article/2011/07/05/le-jeu-de-l-iran-dans-les-crises-en-libye-et-en-syrie_1544919_3218
[5] human trafficking: http://www.state.gov/g/tip/rls/tiprpt/2011/164232.htm
[6] the back of the regime’s gnarled hand: http://iranlaborreport.com/?p=1546
[7] the Teamsters recently made Osanloo an honorary member: http://news.yahoo.com/teamsters-honor-iranian-labor-hero-28th-international-convention-020011947.html
[8] we appease Iranian allies like the Muslim Brotherhood: http://www.politico.com/news/stories/0611/58094.html
[9] American hostages: http://old.news.yahoo.com/s/afp/20110701/wl_mideast_afp/iranushikersun

SOUTH ASIA 
AL QAEDA    ITEM 7a: LA TIMES: Al Qaeda looks at surgical implants to get a bomb past airport security   http://www.latimes.com/news/nationworld/nation/la-na-explosive-implants-20110707,0,3588476.story

Al Qaeda looks at surgical implants to get a bomb past airport security
The Yemen branch of the terrorist network has discussed having a bomb hidden inside a suicide attacker as a way to blow up a U.S.-bound plane. The TSA steps up security.
By Brian Bennett, Washington Bureau
July 6, 2011, 5:49 p.m.

Reporting from Washington- Al Qaeda operatives in Yemen recently discussed surgically implanting an explosive device under the skin of a suicide bomber to get past airport detectors and blow up a U.S.-bound passenger plane, a U.S. official said Wednesday.

There is no indication of an immediate plot, but the government has warned airlines, stepped up security at U.S. airports and encouraged other countries to adjust security measures.

The focus is mostly on international flights, but domestic passengers are likely to see more bomb-sniffing dogs and an increased use of swabs that test for traces of explosive material on hands and luggage.

The potential for terrorists to surgically implant bombs has been examined by intelligence agencies in the past – Britain’s MI5 agency issued a report on the possibility last year. But new information suggests that the branch of Al Qaeda in the Arabian Peninsula has seriously considered the tactic, said the U.S. official, who spoke on condition of anonymity because of the sensitivity of the information.

As a precaution, the U.S. is adding an “unpredictable” regimen of security measures, said Nicholas Kimball, a Transportation Security Administration spokesman.

“Passengers should not expect to see the same activity at every international airport,” he said. “Measures may include interaction with passengers, in addition to the use of other screening methods such as pat-downs and the use of enhanced tools and technologies.”

Since the U.S. increased its use of body scanners last fall, terrorist groups have repeatedly indicated an interest in pursuing new ways to conceal explosives, said a U.S. security official, who also spoke on condition of anonymity because of the matter’s sensitivity.

Security experts said sewing a working bomb inside a passenger’s body would be possible though far-fetched. Such a device could be detonated wirelessly by a cellphone or radio-controlled trigger.

Rather than resorting to surgery, it would be easier to insert a bomb into a body cavity, as drug smugglers have done with their stashes for years, said Douglas Laird, a consultant and former head of security for Northwest Airlines.

A surgically implanted device would be difficult but not impossible to detect. The current scanners used on some passengers can detect anomalies only on the surface of the body, but if the implanted explosive left an unusual lump on the skin, that could appear on the scan.

But unless the device was inserted in a perfectly sterile environment, small particles of explosive could be picked up by bomb-sniffing dogs and machines designed to detect such traces. A passenger who has a bomb implanted also might appear sick, which could be noticed by TSA screeners trained to watch for unusual behavior.

The best way to detect explosives inside a body would be through a full body X-ray, which is not used for airport screening because the dosage of radiation is too high, Laird said.

The Yemen-based branch of Al Qaeda has been linked to a number of bomb plots using malleable explosives that can be easily hidden and are difficult to detect.

In October, the group hid makeshift bombs in packages to be carried on cargo planes headed for the U.S. One of the packages, discovered in Dubai, flew on two passenger airliners before it was found after a tip by the Saudi intelligence service.

On Christmas Day 2009, a Nigerian bomber, Umar Farouk Abdulmutallab, passed through airport screening in Amsterdam and boarded a flight bound for Detroit with plastic explosives sewn into his underwear. His plot failed and he admitted to interrogators that he had been trained and outfitted with the bomb by the Yemeni group, known as Al Qaeda in the Arabian Peninsula.

Those devices used the explosive PETN, pentaerythritol tetranitrate, a powder about the consistency of salt that has been a staple of Al Qaeda bomb makers for nearly a decade.

PETN gives off relatively little vapor, making it more difficult to detect by dogs and the swabs used by the TSA. But the material requires a detonator, which typically uses materials that are easier to trace.

Informing airport security officials about terrorists’ possible use of implanted explosives can help keep airlines and screeners on alert for unusual signs, the U.S. security official said. “It helps to keep the possibility in the back of the mind.”
ITEM 8a: Muhammad Azam Khan: Al Qaeda and the task before the Pakistan military   http://tribune.com.pk/story/203710/al-qaeda-and-the-task-before-the-pakistan-military/

Al Qaeda and the task before the Pakistan military
By Muhammad Azam Khan
Published: July 6, 2011

The author is a retired naval officer and a research fellow at the Pakistan Navy War College, Lahore
After the attack on Nagasaki on August 9 1945, the US did not possess nuclear weapons any more since it expended the only two it had built. By 1949, when the Soviets conducted their first test detonation, the US had nearly 200 nukes. The race that thus began reached its zenith in 1969, when the US, at one point, had more than 32,000 nuclear warheads. The senselessness of this process can be gauged by the fact that there were less than 200 cities in the Soviet Union with populations in excess of a hundred thousand, so where were these nuclear warheads intended to be used? Although not all the nuclear weapons built since then have been the size of Hiroshima (12 kilotons), even a 0.1 kiloton warhead used as artillery shell today can produce TNT equivalent to 200,000 pounds; a blast hundred times as powerful as one caused by a large 2,000-pound conventional bomb.
According to a recent report released by the Stockholm International Peace Research Institute, some 5,000 nuclear weapons are deployed around the world, and both India and Pakistan continue to expand their capacity to produce fissile material for military purposes. “South Asia, where relations between India and Pakistan seem perpetually tense, is the only place in the world where you have a nuclear weapons race,” the director of the institute said recently. A Washington Post op-ed in January this year claimed that “Pakistan’s nuclear arsenal now totals more than 100 deployed weapons.” It further maintained that after years of apparent parity, Pakistan now has an edge over India.
While such developments may be reassuring for nuclear chest thumping, recent events inside the country illustrate some uncomfortable truths. There is no doubt that anti-Americanism has grown as rapidly as the number of ‘militant sympathisers’ who now soak the military’s rank and file. This is substantiated by a report on the interaction between Pakistan’s Ambassador to the US Husain Haqqani and the student officers at the National Defence University in Islamabad in May. When asked which among the three, internal, India or America is the principal national security threat to Pakistan, an overwhelming majority chose the third option. The arrest of Brigadier Ali Khan and admission by senior naval officials before the National Assembly Standing Committee on Defence that terrorists attacking the PNS Mehran base had support from inside are only the recent acknowledgement of these realities.
The armed forces, the country’s strongest institution, are now substituting India for the US as the principal threat. The central theme of al Qaeda’s ideology of takfeer is also founded on anti-Americanism; it denounces any strategic alliance of Muslim majority states with non-Muslim states, particularly the ‘big satan’. While the Arab spring has seen a firm rejection of this ideology in the Middle East, we in Pakistan seem to be inadvertently embracing it. An overwhelming anti-American mindset and personnel with ‘extremist’ proclivity filling the military ranks of a nuclear armed Pakistan is al Qaeda’s dream come true. Are we innocently playing into the hands of al Qaeda and what does this mean for Pakistan’s future?
The moot point is that if the pre-dominant threat to Pakistan is from the US, what is the strategy to fight the enemy who recently refused to vacate the Shamsi airbase? Also, with India now ostensibly relegated low on the threat perception index, why must we continue expanding our nuclear arsenal since enough of ‘minimum credible deterrence’ already exists?
In his magnum opus Inside al Qaeda and the Taliban, the slain journalist Saleem Shahzad, said: “Al Qaeda’s first objective was to win the war against the West in Afghanistan. Its next objective was to move on to have the fighting extended all the way from Central Asia to Bangladesh to exhaust the superpower’s resources before bringing it on to the field in the Middle East for the final battles to revive the Muslim political order under the Caliphate.” It may not be farfetched to state that al Qaeda’s philosophy aimed at ensnaring all Muslim liberation movements worldwide into its fold in pursuit of its global agenda is becoming more probable in this region. The blending of the Taliban, the Tehreek-i-Taliban Pakistan, the militant outfits of southern Punjab and several Kashmiri resistance movements, including Ilyas Kashmiri’s 313 Brigade, with al Qaeda points in this the direction.
Some of Pakistan’s major military and strategic facilities are located in dense urban centres and for good reason these cannot be relocated. With the rise in urban terrorism and al Qaeda’s strategy to overpower Pakistan, the sole de facto nuclear state in the Muslim world, the imperative challenge for the military is to purge its ranks of the adherents of this ideology.
At a crossroads, Pakistan has to address a fundamental question, an answer to which will define the nation’s destiny. Are our armed forces for the defence of Pakistan or are they for the greater glory and protection of Islam? The Pakistan Army has long given up Zia’s gifted emblem of imaan, taqwa, jihad and fisabilillah. More importantly, it has boldly fought and reclaimed areas from militants. The Indian foreign secretary’s recent acknowledgment that “the prism through which Pakistan sees the issue of terrorism has definitely been altered” is an apt conclusion. The trend set in motion during the 80s, one that allowed a professional fighting force to morph into an Islamic army, must be reversed in earnest. Failure to do so is an open invitation to the US and the West to perform what we have long theorised as conspiracy to ‘defang’ us.
Published in The Express Tribune, July 7th, 2011.
ITEM 9a: Bill Roggio: Australian al Qaeda commander reported killed in Predator strike   http://www.longwarjournal.org/threat-matrix/archives/2011/07/australian_al_qaeda_commander.php

Australian al Qaeda commander reported killed in Predator strike
By BILL ROGGIO July 6, 2011 3:23 PM

Pakistani news channels are reporting that an Australian named Saifullah who served as a key aide to Osama bin Laden was killed in yesterday’s Predator airstrike on a “guesthouse” in Mir Ali that killed four “militants.” From KUNA:

Citing unnamed official sources, local news channel Dawn reported that militant commander Saifullah, who was close to Osama Bin Laden, was among four militants killed in a US drone strike in Mir Ali district of North Waziristan agency.
More on Saifullah from Xinhua, which described him as “a key supporter of Osama bin Laden”:

Saif Ullah, a 50-year-old Australian national, is believed to be a key leader of militants supporting al-Qaida. He is the second most important militant leader killed in U.S. drone strike in Pakistan since this year.
US intelligence officials contacted by The Long War Journal would neither confirm nor deny that Saifullah was killed, but only said they were aware of the reports and were investigating.

PAKISTAN    ITEM 10a: WP: Pakistan’s nuclear-bomb maker says North Korea paid bribes for know-how   http://www.washingtonpost.com/world/national-security/pakistans-nuclear-bomb-maker-says-north-korea-paid-bribes-for-know-how/2010/11/12/gIQAZ1kH1H_story.html?hpid=z3

Pakistan’s nuclear-bomb maker says North Korea paid bribes for know-how
By R. Jeffrey Smith, Published: July 6

The founder of Pakistan’s nuclear bomb program asserts that the government of North Korea bribed top military officials in Islamabad to obtain access to sensitive nuclear technology in the late 1990s.

Abdul Qadeer Khan has made available documents that he says support his claim that he personally transferred more than $3 million in payments by North Korea to senior officers in the Pakistani military, which he says subsequently approved his sharing of technical know-how and equipment with North Korean scientists.

Khan also has released what he says is a copy of a North Korean official’s 1998 letter to him, written in English, that spells out details of the clandestine deal.

Some Western intelligence officials and other experts have said that they think the letter is authentic and that it offers confirmation of a transaction they have long suspected but could never prove. Pakistani officials, including those named as recipients of the cash, have called the letter a fake. Khan, whom some in his country have hailed as a national hero, is at odds with many Pakistani officials, who have said he acted alone in selling nuclear secrets.

Nevertheless, if the letter is genuine, it would reveal a remarkable instance of corruption related to nuclear weapons. U.S. officials have worried for decades about the potential involvement of elements of Pakistan’s military in illicit nuclear proliferation, partly because terrorist groups in the region and governments of other countries are eager to acquire an atomic bomb or the capacity to build one.

Because the transactions in this episode would be directly known only to the participants, the assertions by Khan and the details in the letter could not be independently verified by The Washington Post. A previously undisclosed U.S. investigation of the corruption at the heart of the allegations – conducted before the letter became available – ended inconclusively six years ago, in part because the Pakistani government has barred official Western contact with Khan, U.S. officials said.

By all accounts, Pakistan’s confirmed shipments of centrifuges and sophisticated drawings helped North Korea develop the capacity to undertake a uranium-based route to making the bomb, in addition to its existing plutonium weapons. Late last year, North Korea let a group of U.S. experts see a uranium-enrichment facility and said it was operational.

The letter Khan released, which U.S. officials said they had not seen previously, is dated July 15, 1998, and marked “Secret.” “The 3 millions dollars have already been paid” to one Pakistani military official and “half a million dollars” and some jewelry had been given to a second official, says the letter, which carries the apparent signature of North Korean Workers’ Party Secretary Jon Byong Ho. The text also says: “Please give the agreed documents, components, etc. to [a North Korean Embassy official in Pakistan] to be flown back when our plane returns after delivery of missile components.”

The North Korean government did not respond to requests for comment about the letter.

Jehangir Karamat, a former Pakistani military chief named as the recipient of the $3 million payment, said the letter is untrue. In an e-mail from Lahore, Karamat said that Khan, as part of his defense against allegations of personal responsibility for illicit nuclear proliferation, had tried “to shift blame on others.” Karamat said the letter’s allegations were “malicious with no truth in them whatsoever.”

The other official named in the letter, retired Lt. Gen. Zulfiqar Khan, called it “a fabrication.”

The Pakistani Embassy in Washington declined to comment officially. But a senior Pakistani official, who spoke on the condition of anonymity “to avoid offending” Khan’s supporters, said the letter “is clearly a fabrication. It is not on any official letterhead and bears no seal. The reference to alleged payment and gifts to senior Pakistani military officers is ludicrous.”

There is, however, a Pakistani-Western divide on the letter, which was provided to The Post by former British journalist Simon Henderson, who The Post verified had obtained it from Khan. A U.S. intelligence official who tracks nuclear proliferation issues said it contains accurate details of sensitive matters known only to a handful of people in Pakistan, North Korea and the United States.

A senior U.S. official said separately that government experts concluded after examining a copy of the letter that the signature appears authentic and that the substance is “consistent with our knowledge” now of the same events. Both officials spoke on the condition of anonymity because of the diplomatic sensitivity of the allegation.

Olli Heinonen, a 27-year vet eran of the International Atomic Energy Agency who led its investigation of Khan before moving to Harvard’s Kennedy School last year, said the letter is similar to other North Korean notes that he had seen or received. They typically lacked a letterhead, he said; moreover, he said he has previously heard similar accounts – originating from senior Pakistanis – of clandestine payments by North Korea to Pakistani military officials and government advisers.

The substance of the letter, Heinonen said, “makes a lot of sense,” given what is now known about the North Korean program.

Jon, now 84, the North Korean official whose signature appears on the letter, has long been a powerful member of North Korea’s national defense commission, in charge of military procurement. In August, the U.S. Treasury Department imposed financial sanctions on his department for its ballistic missile work.

According to Khan, in the 1990s, Jon met then-Pakistani President Farooq Leghari, toured the country’s nuclear laboratory and arranged for dozens of North Korean technicians to work there. Khan detailed the payments Jon allegedly arranged in written statements that Henderson, a senior fellow at the Washington Institute for Near East Policy, shared with The Post. Henderson said he acquired the letter and the statements from Khan in the years after his 2004 arrest by Pakistani authorities.

Henderson, who has written extensively about Khan, said he provided the letter to The Post because he lacked the resources to authenticate it himself.

He said the letter and the statements constitute new evidence that Khan’s proliferation involved more-senior Pakistani officials than Khan himself. Khan has been freed from home detention but remains under round-the-clock surveillance in a suburb of Islamabad, where the government has recently threatened him with new sanctions for illicit communications.

Some of Khan’s past statements have been called into question. Pakistani officials have publicly accused Khan – who is still highly regarded by many in his country – of exaggerating the extent of official approval he received for his nuclear-related exports to North Korea, Libya and Iran. In 2006, then-Pakistani President Pervez Musharraf accused Khan of profiting directly from nuclear-related commerce.

Although Khan “was not the only one who profited from the sale of Pakistan’s nuclear weapons technology and components by Pakistani standards, his standard of living was lavish,” and the disclosure of his private bank account in Dubai, the United Arab Emirates – with millions of dollars in it – was highly suspicious, said Mark Fitzpatrick, an acting deputy assistant secretary of state for nonproliferation during the George W. Bush administration.

Khan says the bank account was used by associates and a charity he founded, and the Pakistani government never asked him to return any money. He said that in 2007 – six years after his formal retirement and complaints of financial hardship – Musharraf arranged for a lump-sum payment equivalent to $50,000 and a monthly pension of roughly $2,500, which Khan says “belied all those accusations and claims.”

Although U.S. officials disagreed for years about North Korea’s uranium-enrichment capability, the dispute was settled in November when the Pyongyang government invited Siegfried Hecker – a metallurgist who formerly directed a U.S. nuclear weapons laboratory – to see a newly renovated building at Yongbyon that housed more than 1,000 enrichment centrifuges.

Hecker said in an interview that although the government did not disclose their origins, their size, shape and stated efficiency were close to a centrifuge model, known as the P2, that Khan obtained illicitly from Europe. Khan has said that he helped give North Korea four such devices.

“The combination of the Pakistani design, the Pakistani training and the major [Pakistani] procurement network they had access to” allowed North Korea to “put the pieces together to make it work,” Hecker said.

According to Khan’s written account, the swap of North Korean cash for sensitive Pakistani technology arose during a squabble in 1996 over delays in Pakistan’s payment to North Korea for some medium-range missiles. U.S. officials said they had heard of this dispute.

In the letter, Jon first thanks Khan for his assistance to North Korea’s then-representative to Islamabad, Gen. Kang Tae Yun, in the aftermath of a bizarre shooting incident in which an assailant supposedly gunning for Kang accidentally killed his wife. But the heart of the letter concerns two key transactions: the provision of a kickback to speed the overdue Pakistani missile-related payments and additional payments for the nuclear-related materials.

Khan, in his written statements – including an 11-page narrative he prepared for Pakistani investigators while under house arrest in 2004 that was obtained by The Post – said the idea for the kickback came from a Pakistani military officer.

Khan said Kang responded by delivering a half-million dollars in cash in a suitcase to a top Pakistani general, who declined it. Khan said Karamat, a more senior officer at the time, then said: “I should arrange with Gen. Kang to pay this money to him for some secret [Pakistani] army funds. He would then sanction the payment of their outstanding charges.”

“I talked to Gen. Kang, and he gave me the $0.5 million in cash, which I personally delivered” to Karamat, Khan wrote. He says this payment only whetted the army’s appetite, however: Karamat, who had just become chief of the army staff, “said to me that he needed more money for the same secret funds and that I should talk to Gen. Kang.”

Kang then started bargaining, saying that his superiors “were willing to provide another $2.5 million, provided we helped them with the enrichment technology,” Khan wrote.

Once the details of that assistance were worked out, Khan wrote, “I personally gave the remaining $2.5 million to Gen. Karamat in cash at the Army House to make up the whole amount.” Khan said he transferred all the funds on two occasions in a small canvas bag and three cartons, in one case at the chief of army staff’s official residence.

On the top of one carton was some fruit, and below it was $500,000 in cash, Khan wrote in a narrative for Henderson. Inside the bag was $500,000, and each of the other two cartons held $1 million, Khan wrote.

If the account is correct, the ultimate destination of the funds in any event remains unclear. Pakistani officials said in interviews that they found no trace of the money in Karamat’s accounts after an investigation. But the military is known to have used secret accounts for various purposes, including clandestine operations against neighboring India in the disputed Kashmir region.

Karamat said that such a delivery would have been impossible and that he “was not in the loop to delay, withhold or sanction payments” to North Korea. He called the letter “quite mind-boggling.”

The letter also states that Zulfiqar Khan, Karamat’s colleague, received “half a million dollars and 3 diamond and ruby sets” to pave the way for nuclear-weapons-related transfers. Zulfiqar Khan, who later became the head of Pakistan’s national water and power company, was among those who had witnessed the country’s nuclear weapons test six weeks before the letter was written.

Asked to respond, he said in an e-mail that he considered the entire episode “a fabrication and figment of imagination,” and he noted that he had not been accused of “any sort of dishonesty or irregularity” during 37 years as a military officer. He denied having any connection to North Korean contracts.

The senior Pakistani official said that Karamat and Zulfiqar Khan were “amongst the first to initiate accountability” for Abdul Qadeer Khan and his colleagues, and that implicating them in illegal proliferation “can only be deemed as the vengeful reaction of a discredited individual.”

In the letter, Jon requests that “the agreed documents, components” be placed aboard a North Korean plane. He goes on to congratulate Khan on Pakistan’s successful nuclear test that year and wish him “good health, long life and success in your important work.”

The Pakistani intelligence service interrogated Karamat in 2004 about Khan’s allegations, according to a Pakistani government official, but made no public statement about what it learned. Musharraf, who oversaw that probe, appointed Karamat as ambassador to Washington 10 months later, prompting further scrutiny by the U.S. intelligence community of reports that Karamat had arranged the sale of nuclear gear for cash.

Those inquiries, several U.S. officials said, ended inconclusively at the time because of Karamat’s denial and Washington’s inability to question Khan.

SOUTHEAST ASIA 
MALAYSIA    ITEM 11a: AP/WSJ: Malaysian Activists Plan to Protest at Stadium   http://online.wsj.com/article/SB10001424052702303544604576431041690928106.html?mod=WSJ_World_LEFTSecondNews

JULY 7, 2011, 3:39 A.M. ET
Malaysian Activists Plan to Protest at Stadium
Associated Press

KUALA LUMPUR, Malaysia-Malaysian opposition-backed activists have vowed to go ahead with a large rally for electoral reforms at a Kuala Lumpur stadium despite the government’s refusal to allow them to hold it there.

The dispute over the venue sparked new worries of a clash between protesters and police, who recently detained some 200 people linked to Saturday’s demonstration amid escalating political tensions.

On Tuesday, the activists agreed to a government offer for them to rally at a stadium instead of marching through the streets, after rare mediation by the king. They picked Merdeka Stadium in downtown Kuala Lumpur but the government told them to use stadiums in opposition-ruled states instead, citing safety issues.

The Bersih coalition organizing the rally accused the government of reneging on its offer. In a statement late Wednesday it vowed to stick to Merdeka Stadium, where it hopes to draw 100,000 people for the country’s largest political rally in four years to demand changes in election laws to curb fraud in national polls widely expected next year.

“Our determination to exercise our constitutional right to gather peacefully for a just and reasonable cause is unwavering,” said Bersih, a coalition of more than 60 civic groups.“We are coming, we will be peaceful and together, we will build a better Malaysia.”

Bersih is supported by opposition leader Anwar Ibrahim’s three-party alliance. The opposition has long accused the ruling coalition of manipulating election results to maintain its nearly 54-year rule, but the government says current election laws are fair. Authorities have accused Anwar of endorsing the protest to undermine the government.

The mandate of the current National Front-led government expires in mid-2013 but many analysts expect Prime Minister Najib Razak to hold elections next year amid signs that the opposition has lost momentum since the 2008 polls, when Mr. Anwar’s alliance seized more than one-third of the seats in Parliament in the government’s worst electoral setback.

EUROPE 
BRITAIN    ITEM 12a: Soeren Kern: Britain Debates Forced Marriage   http://www.hudson-ny.org/2249/britain-forced-marriage

-Thanks to Jules O.- 
Britain Debates Forced Marriage
by Soeren Kern
July 7, 2011 at 5:00 am

After years of kowtowing to multicultural sensitivities, Britain is now debating whether or not to make the act of forcing someone into a marriage a specific criminal offense.

Supporters of the anti-forced marriage legislation, which may be unveiled by the British government within the next few weeks, say it would be an important first step in combating a cycle of Islamic honor-related kidnappings, sexual assaults, beatings and murder that is spiralling out of control in Britain.

Recent studies show that honor-based violence (which differs from more common forms of domestic violence because it can also be carried out by a victim’s children, siblings, in-laws and extended family) is far more prevalent in Britain than originally thought.

According to the London-based Association of Chief Police Officers, up to 17,000 women in Britain are victims of honor-based violence — forced marriages, honor killings, kidnappings, sexual assaults, beatings, female genital mutilation and other forms of abuse — every year. This figure is 35 times higher than official figures suggest and British detectives say it is “merely the tip of the iceberg” of this phenomenon.

Research commissioned by Britain’s Department of Education shows that an estimated 8,000 young women in Britain are the victims of forced marriages each year. Some women’s groups say the actual number is far higher because many victims are afraid to come forward.

In 2010, 1,735 victims of forced marriages sought help from the Forced Marriage Unit, a special agency established by the British government. Some of those cases involved girls as young as 13, and there were 70 instances involving women with learning or physical disabilities. Around 85 percent of the cases involved females; 15 percent involved boys or men.

Another study titled “A Statistical Study to Estimate the Prevalence of Female Genital Mutilation in England and Wales” says that more than 65,000 women in Britain have undergone female genital mutilation, and at least 15,000 girls under the age of 15 are at high risk of the procedure. The report, which was funded by Britain’s Department of Health, says girls and adult women often are forced to undergo female genital mutilation as a condition of marriage. Although the practice is prohibited in the United Kingdom under the Female Genital Mutilation Act of 2003, to date not a single person has been prosecuted for the offense.

At least a dozen women are believed to victims of honor killings in Britain every year, but the exact number is not known — partly because there is no clear definition of what constitutes an honor-killing — and many believe the true figure could be higher. Often honor-killings cannot be resolved due to the unwillingness of family, relatives and communities to testify. For example, one in ten young British Asians believes honor-killings can be justified, according to a BBC poll.

The research literature shows that honor-based violence in Britain is most prevalent among Muslim immigrants from South Asia, the Middle East and North and West Africa. According to the Domestic Violence Intervention Project in West London, for example, up to 60 percent of Arab families suffer from honor-related violence. According to the Lantern Project in Birmingham, honor-based violence is equally common wealthy families as among unemployed or unskilled immigrants.

Honor-related violence in Britain is not limited to older, first-generation immigrants. According to a 174-page report titled “Crimes of the Community: Honor-Based Violence in the UK,” honor-based violence is “not a one-time problem of first-generation immigrants bringing practices from ‘back home’ to the UK. Instead honor violence is now, to all intents and purposes, an indigenous and self-perpetuating phenomenon which is carried out by third and fourth generation immigrants who have been raised and educated in the UK.”

British Prime Minister David Cameron has promised to “outlaw the practice of forced marriage.” In a campaign speech in Bradford in February 2008, Cameron said thousands of young Britons were being forced to marry someone against their will every year, with some cases involving assaults and kidnaps. “It seems utterly bizarre, and frankly unacceptable, that this goes on in Britain but it does,” Cameron said.

He also said existing legislation to tackle forced marriages needs to be strengthened to make the practice a specific criminal offense: “At the moment, the Forced Marriages Act, which we supported, only makes it possible to pursue civil prosecutions. The argument runs that it is unlikely that victims will come forward if it means pressing criminal charges against their parents. But we shouldn’t close this door and if the current legislation doesn’t work in ending forced marriages, the Conservative Party would consider making them a criminal offence.”

In April 2011, Cameron in a major speech on immigration, stated: “There are forced marriages taking place in our country, and overseas, as a means of gaining entry to the UK. This is the practice where some young British girls are bullied and threatened into marrying someone they don’t want to. I’ve got no time for those who say this is a culturally relative issue — frankly it is wrong, full stop, and we’ve got to stamp it out.”

In February, Cameron declared Britain’s long-standing policy of multiculturalism to be a failure. “Under the doctrine of state multiculturalism, we have encouraged different cultures to live separate lives, apart from each other and apart from the mainstream. We have even tolerated these segregated communities behaving in ways that run completely counter to our values.” Cameron cited “the horror of forced marriage” as one of the specific negative consequences of multiculturalism.

In May, the Home Affairs Select Committee, a cross-party group of British MPs, published a new report recommending that forced marriage be turned into a criminal offense to send a stronger message that it will not be tolerated. The committee, which took soundings from a variety of different groups working to counter forced marriage, said it was “not at all clear” that current legislation was protecting those at risk.

“We believe that it would send out a very clear and positive message to communities within the UK and internationally if it becomes a criminal act to force — or to participate in forcing — an individual to enter into marriage against their will. The lack of a criminal sanction also sends a message, and currently that is a weaker message than we believe is needed. We urge the Government to take an early opportunity to legislate on this matter,” the committee said.

In June, a new bill was introduced in the House of Lords that would force Islamic courts to acknowledge the primacy of English law. The Arbitration and Mediation Services (Equality) Bill would make it an offense punishable by five years in jail for anyone to falsely claim or imply that Sharia courts or councils have legal jurisdiction over family or criminal law.

The bill, proposed by Lady Caroline Cox-Johnson, and backed by women’s rights groups, was drawn up because of “deep concerns” that Muslim women are suffering discrimination within closed Sharia law councils. Cox said she had found “considerable evidence” of women, some of whom are brought to Britain speaking little English and kept ignorant of their legal rights, suffering domestic violence or unequal access to divorce, due to discriminatory decisions made. “We cannot continue to condone this situation. Many women say: ‘We came to this country to escape these practices only to find the situation is worse here.'”

Britain is not the only European country coming to grips with the problem of forced marriage. Belgium outlawed the practice in 2007, and those convicted of forcing someone into marriage by violence or coercion face a prison sentence of up to two years and a fine of up to €2,500 ($3,500). Norway amended its Penal Code in 2003. It is now a crime punishable by up to six years in prison to force a person into marriage; it is also a punishable offense to enter into marriage with a person under the age of 16.

Germany became the latest European country to outlaw forced marriages. In March 2011 the German government made the practice a crime punishable by up to five years in prison. French law forbids forced marriages and allows prosecution of anyone who mutilates the genitals of a girl with French citizenship or resident status, even if the operation is conducted in another country. But the practices continue to thrive in secret.
ITEM 13a: DAILY MAIL: Iran threatens ‘serious action’ over BBC plans to screen documentary series on Muslim prophet Muhammad   http://www.dailymail.co.uk/news/article-2012252/Iran-threatens-BBC-Muslim-prophet-Muhammad-documentary.html#ixzz1RQuoMR7v

Iran threatens ‘serious action’ over BBC plans to screen documentary series on Muslim prophet Muhammad
By DAILY MAIL REPORTER
Last updated at 8:57 PM on 7th July 2011

The Life of Muhammad will be presented by journalist Rageh Omaar
The BBC is courting controversy with its plans to broadcast a documentary series about Muslim prophet Muhammad.
Three-part series The Life of Muhammad has already been blasted by officials in Iran, who claim the country will take ‘serious action’ if it is screened.
The Iranian minister of cultural and Islamic guidance, Mohammad Hosseini, who has yet to watch any of the series, has branded the film an attempt by the ‘enemy’ to ‘ruin Muslims’ sanctity’.
‘The BBC’s decision to make a documentary on the life of [the] prophet Muhammad seems dubious and if our suspicions are proved to be correct, we will certainly take serious action,’ he told Iran’s Fars news agency.
The documentary, to be broadcast in mid-July, just ahead of the Muslim holy month of Ramadan in August, will see journalist and TV presenter Rageh Omaar travel to the place of Muhammad’s birth, Mecca, to re-trace the footsteps of the prophet.
However, the series will feature no visual images of Muhammad in a bid not to offend Muslims, whose religion forbids depiction of the prophet.
Instead, a spoken description of Muhammad will be given, making this the first biographical documentary not to feature visual images of the subject.

The documentary will include three episodes, an hour each, on BBC 2.
The film tells the ‘extraordinary story of a man who, in little more than 20 years, changed the world forever’, according to the blurb.
Part of the filming takes place in holy cities Mecca and Medina where non-Muslims are banned from entering.

Sacred: Part of the documentary is filmed in the holy cities of Mecca and Medina where non-Muslims are banned from entering
The first episode looks at the circumstances and society that Muhammad was born into, according to Riazat Butt from the Guardian.
She said that the film follows Muhammad’s childhood and early years when he is orphaned and looked after by his uncle.
THE CONTROVERSY SURROUNDING THE PROPHET MUHAMMAD
Danish newspaper Jyllands-Posten caused outraged among Muslims when it published cartoons of Muhammad in September 2005.
Muslim groups held protests against the printing of the prophet but the unrest spread when 50 publications around the world used the same images.
The devout religious followers believe in Muhammad’s sanctity as a messenger from god.
The Koran condemns pictorial forms of the prophet as idol worship.
The ‘201’ episode of South Park featured a group of angry residents demanding that Muhammad be produced.
The episode alludes to Comedy Central’s refusal to show pictures of Muhammad  following controversies about cartoons in newspapers.
Muslims complained about the show and the resulting broadcast was censored with all the Muslim images obscured and all references to Muhammad bleeped.
A third controversy began in 2007 when Swedish artist Lars Vilks depicted the Islamic prophet as a roundabout dog.
Galleries refused to show the art but one newspaper did publish the work.
‘The documentary does not shy away from contention but doesn’t immerse itself in the details either,’ said Ms Butt, who saw a screening attended by Muslim Mr Omaar in London today.
‘The programme also addresses the issue of the satanic verses, not just the apocalyptic fall-out from the Rushdie book but the incident where a supposedly divine revelation – acknowledging pagan gods – was later withdrawn because it was designed as a test.’
She said that as an opening episode it’s fairly heavy going if you’re new to the finer points of Islamic theology or Islam.
‘But it’s well filmed, has plenty of access to the relevant sites and has a diverse line-up of talking heads – [authors] Karen Armstrong, Tariq Ramadan, Robert Spencer, Michael Nazir-Ali and Tom Holland,’ she added.
The documentary-makers claims the film will raise questions about Islam’s role in the world today and explore ‘where Islam’s attitudes towards money, charity, women, social equality, religious tolerance, war and conflict originate’.
Mr Omaar, the Middle Eastern correspondent for Al Jazeera English, said: ‘I am extremely pleased to be presenting this exciting and groundbreaking series.
‘The details of Muhammad’s life really are little known, and I hope that my series will – for many – shine a light on the very beginning of Islam, taking viewers to the heart of this faith, illustrating just how Muhammad’s life and legacy is as important today as it was a over a thousand years ago.’
The show was commissioned by the BBC’s first Muslim head of Religion & Ethics, Aaqil Ahmed.
The BBC said: ‘In line with Islamic tradition, it does not depict any images of the face of Muhammad, or feature any dramatic reconstructions of Muhammad’s life.’

LATIN AMERICA 
VENEZUELA    ITEM 14a: Jaime Daremblum: Venezuela Needs De-Cubanization: The longer the Cubans stay, the greater the chance of serious friction in the military and other institutions.    http://pajamasmedia.com/blog/venezuela-needs-de-cubanization/

-Thanks to Jaime Daremblum- 
Venezuela Needs De-Cubanization
The longer the Cubans stay, the greater the chance of serious friction in the military and other institutions.
July 7, 2011 – 12:00 am – by Jaime Daremblum

For the past decade, Hugo Chávez has been supporting the Castro regime by sending millions of barrels of cheap oil to Cuba. These energy subsidies have helped the Communist government maintain power amid a terrible economic crisis. In return for its petroleum shipments, Venezuela has received an influx of Cuban doctors. And last month, as the entire world is now aware, Chávez himself received cancer treatments in Havana before returning to Caracas earlier this week.

But the strategic relationship between Cuba and Venezuela goes well beyond oil and health care. In addition to sending doctors, the Castros have also dispatched senior military personnel to help train and manage Venezuelan security forces. Back in February 2010, for example, General Ramiro Valdés (an architect of Cuba’s notorious G2 spy agency) came to Venezuela, supposedly to work as an “energy consultant,” but really to assist Chávez in the consolidation of a Cuban-style dictatorship. Indeed, Chávez has actively sought to “Cubanize” the Venezuelan military, police, and intelligence services.

A few weeks before Valdés arrived in Caracas, Venezuelan vice president Ramón Carrizales and his wife, Yubirí Ortega, the environmental minister, resigned from the government in protest at the Cubanization of the armed forces. Shortly thereafter, a group of prominent ex-Chávistas – including Gen. Raúl Baduel (defense minister from 2004 to 2007) and two other former military officers (Yoel Acosta and Jesús Urdaneta) who helped Chávez launch his failed 1992 coup attempt – published a letter urging the “autocratic” and “totalitarian” Venezuelan leader to resign from office. Among its many complaints, their letter said that Venezuelan institutions had been “distorted by the incursion of outside elements” (read: Cubans).

Cubans “are helping to run Venezuela’s ports, telecommunications, police training, the issuing of identity documents and the business registry,” the Economist reported around this same time (February 2010). “In some ministries, such as health and agriculture, Cuban advisers appear to wield more power than Venezuelan officials. The health ministry is often unable to provide statistics-on primary health-care or epidemiology for instance – because the information is sent back to Havana instead.” Meanwhile, “Trade unions, particularly in the oil and construction industries, have complained of ill-treatment by the Cubans.”

The tensions fostered by Cubanization will only get worse if Chávez dies or is sidelined for an extended period of time. Venezuelans of all stripes resent the presence of so many Cuban officials in their midst. The longer the Cubans stay, the greater the chance of serious friction in the military and other institutions. A rupture in the army could lead to violent instability.

Cuba isn’t the only source of conflict within the military. Senior members of the Venezuelan armed forces – including Gen. Henry Rangel Silva, the country’s “general in chief,” and Gen. Hugo Carvajal, director of military intelligence – are heavily involved in the global drug trade. In 2009, the U.S. Government Accountability Office reported that cocaine traffic through Venezuela had increased “significantly.” Between 2006 and 2008, Venezuela was the departure point for more than half of all maritime drug shipments from South America to Europe, according to the United Nations. The Wall Street Journal reports that imprisoned Venezuelan drug trafficker Walid Makled, who was captured in Colombia last August and extradited to Venezuela in May, has admitted to having “as many as 40 Venezuelan generals and top officials on his payroll to provide security and distribution, among other things.” One can only assume that these generals and officials will seek to protect their drug profits and resist sharing or giving up the spoils.

Besides fighting internally over narcotrafficking and Cuban influence, the military may also clash with the tens of thousands of pro-government paramilitaries that Chávez has cultivated as his personal security force. These militia fighters represent the Venezuelan equivalent of the Iranian Revolutionary Guards, the lethally effective organization that crushed massive pro-democracy demonstrations in June 2009. If Venezuelans rose up the way Iranians did two years ago, the armed forces might refuse to slaughter civilians in the street. But what about the militias, who report directly to Chávez? What if they conducted a bloody crackdown? Would the military intervene to stop them? Or would it allow a Tiananmen-style massacre to take place?

These questions bring us back to Cuba. Would Havana really allow the Chávez regime to collapse? After all, the Communist-ruled island is critically dependent on cheap Venezuelan oil. Without those energy subsidies, the Castro government might well implode. The Cuban military advisers and intelligence personnel sent to Venezuela have been tasked with fortifying Chávez and preserving Bolivarian socialism. If the Caracas regime were faced with large-scale street protests, à la Tehran in 2009 and Cairo in 2011, would the Cubans push for a crackdown? If so, would Venezuelan military officials be able to prevent it?

In so many ways, the Cubanization of Venezuela has contributed to greater instability and uncertainty, while increasing the likelihood of violence. Chávez has essentially allowed his country to be colonized by Communist apparatchiks, whose government has a major stake in keeping the Venezuelan regime afloat. This has created yet another obstacle to restoring Venezuelan democracy. Indeed, before it can escape the nightmare of Chavismo and return to liberal, constitutional government, the South American country must first de-Cubanize.

COLOMBIA    ITEM 15a: WSJ: Colombia Tries to Heal Wounds of Long War: President Santos Moves to Build on Security Gains of His Predecessor to Address Root Cause of Conflict: Land Ownership   http://online.wsj.com/article/SB10001424052702304793504576430052585498810.html?mod=WSJ_World_LEFTSecondNews

JULY 6, 2011, 8:14 P.M. ET
Colombia Tries to Heal Wounds of Long War
President Santos Moves to Build on Security Gains of His Predecessor to Address Root Cause of Conflict: Land Ownership
By DARCY CROWE

BOGOTÁ-President Juan Manuel Santos has surprised friends and foes alike during his first year in office by distancing himself from his onetime boss, former President Álvaro Uribe, and setting an ambitious agenda to try to repair the damages from a long-running civil war.

With approval ratings at over 75% and a solid majority in congress, Mr. Santos has secured a package of groundbreaking laws, including one to return nearly 16 million acres of land-equal to West Virginia-taken from peasants during the war.

In a wide-ranging interview in English, Mr. Santos said that the reform, linked to a plan to give up to about $20,000 in financial restitution to victims of the war, is the top challenge for his administration and a decisive step in dealing with issues surrounding land ownership, a root cause of Colombia’s violence.

Dismantling the country’s high levels of land concentration in few hands has been one of the most persistent demands by leftist guerrillas since they took up arms in the 1960s. Land that was stolen by paramilitary death squads and powerful regional bosses who threatened and sometimes massacred entire rural communities to force them off their farms over the past two decades only worsened matters.

“We have been a country in conflict for so many years, so many decades, centuries even, that it’s time for us to heal our wounds,” said Mr. Santos, the 59-year-old scion of one of the nation’s most influential families, which once had the power to make and unmake presidents through control of El Tiempo, the country’s leading newspaper. The family no longer owns the paper.

The focus on healing the country took many here by surprise coming from Mr. Santos, who was defense minister in the administration of Mr. Uribe. The former two-term president transformed the country through a no-holds barred offensive against the Revolutionary Armed Forces of Colombia, or the FARC, a decades’ old leftist insurgency turned drug trafficking group that has been pushed deep into the country’s jungles.

But Mr. Santos said his focus on healing Colombia is “building on top” of Mr. Uribe’s security achievements. “Once you start to regain control of the territory, you need to eliminate the objective factors of violence and this is one of them,” said the president, a former journalist who studied at the University of Kansas and Harvard Kennedy School.

The president has also kept up pressure on the FARC. In September, forces killed Victor Suárez, also known as Mono Jojoy, the FARC’s second-in-command. Since then, however, there have few high-profile strikes. Recent polls also suggest that Colombians sense that the country’s security situation is worsening, giving ammunition to Uribe loyalists who say that Mr. Santos is lowering his guard.

“In some areas it is true” that violence is up, Mr. Santos said. The president, however, maintains that renewed attacks by FARC are the result of the guerrillas being forced out of their traditional havens.

Mr. Santos has changed the tenor of foreign policy in addition to domestic policy. He has moved quickly to reset relations with Ecuador and Venezuela, with whom Mr. Uribe had a fraught relationship.

Recently calling the now-ailing Venezuelan President Hugo Chávez “his new best friend,” Mr. Santos has gotten Mr. Chávez to pay back at least $600 million in money owed by Venezuela to Colombian businessmen, and arrest and extradite some members of the communist guerrillas who use Venezuela as a refuge.

Mr. Santos has also re-established relations with Ecuador, which broke off diplomatic relations with Bogotá after the Colombian military attacked a rebel camp in Ecuadorian territory killing one of the FARC’s top commanders.

The shift is part of a broader move to diversify Colombia from its dependence on the U.S. Mr. Santos has been courting Chinese investments more actively than his predecessor and is exploring the possibility of a joint Colombian-Chinese railroad connecting the country’s Pacific coast to the Caribbean as an alternative to the Panama Canal.

During the Uribe administration, Bogotá was widely seen as the U.S.’s most dependable ally in the region. But ties have been strained due to the inability of the White House to deliver on a long-promised free-trade deal. While Mr. Santos said he was confident the U.S. trade deal could be approved soon, he warned that if the bill didn’t pass this year “it would be a major setback” because political enthusiasm for it could wane in the U.S.

“It would be a lose-lose situation,” he said.

EAST ASIA 
TAIWAN 
ITEM 16a: John Metzler: Global recession? Taiwan booming in the Chinese dragon’s shadow   http://www.worldtribune.com/worldtribune/WTARC/2011/mz0826_07_06.asp

-Thanks to Sol Sanders- 
Wednesday, July 6, 2011
Global recession? Taiwan booming in the Chinese dragon’s shadow

TAIPEI – Taiwan’s dynamism and optimism is contagious. Walking around this prosperous and increasingly world class city one is reminded of the self-reliant and can-do attitude which turned Taiwan from a poor and languid backwater at the end of WWII, to one of East Asia’s most prosperous places. But leafy avenues and upscale shops aside, not to mention the iconic Taipei 101 skyscraper, the world’s second tallest building, the capital of the Republic of China remains a model of resourcefulness and resilience.

To be sure the numbers tell only part of the story; historically a high-growth export- oriented economy based largely on free enterprise, Taiwan’s GDP growth in 2010 reached 10 percent; despite the global recessionary gloom, growth will still hold at 5 percent this year, an impressive gain by global standards. Moreover, per capita income has grown to $19,500 from $2,300 in 1980.

Geography certainly hasn’t changed and Taiwan remains in the shadow, and some would say the creeping social sphere of influence, of its longtime rival the People’s Republic of China (PRC). When Mao Tse-tung’s communist forces seized the Mainland in 1949 following the Chinese civil war, the Nationalists went into exile on Taiwan. Thus China was divided de facto into two competing governments and two starkly different social visions.

Though political tensions have eased remarkably between both sides of the Taiwan Straits since the election of Nationalist President Ma Ying-jeou, the unnerving fact remains that the PRC regime has never renounced the use of force to reunify Taiwan.

According to Chang Chun-fu, The Deputy Director General of the Bureau of Foreign Trade, “Forty-one percent of our exports now go to Mainland China as compared to 11 percent to the USA.” Back in the 1980’s about 30 percent of Taiwan exports went to the U.S. He added that the “production costs are too high in Taiwan” so many private sector firms have invested in China. There’s at least $100 billion in Taiwanese investment in China, despite Taipei and Beijing being political rivals.

Director Chang stresses that Taiwan’s focus remains on a “service economy, green industry such as solar panels.” Currently Taiwan is the second largest producer of solar panels; most are exported to Europe. Moreover Taiwan’s research and development (R&D) sector remains impressive but with clear dependence on assembly and production in China especially in the computer industry.
The bigger story remains the island’s quality of life improvements. Having first been to Taiwan in the mid-1970’s and 1980’s, the island was defined by fast economic growth but often at the expense of the environment; air pollution, especially given the hot and humid climate, was a serious problem. This is far less so today as the island has widely embraced “green technology.”

Moreover the massive traffic jams have been alleviated by better roads and in Taipei, the capital, a very efficient and clean subway system which has alleviated downtown traffic. The island’s once extensive but slow rail network has been upgraded by bullet trains with frequency and speed connecting the island’s western coastal cities. Travel between Taipei and the southern port of Kaohsiung which once took at least five hours is now done swiftly in 90 minutes on a privately funded and run High Speed Rail network.

Taiwan’s socio/economic success story stands as a model for the developing world; a poor, war ravished ex-Japanese colony transformed itself into a laudable success story. Education, hard work, equitable land reform, and free enterprise remain the key ingredients. So too do ageless Chinese ethical and family values. Today Taiwan ranks in the top ten globally, between Switzerland and Canada, in the IMD World Competitiveness rankings.

The New Hampshire-sized island with 23 million people is separated from the Mainland by just 80 miles of water, but by a huge gulf in socio/political systems between the divided nation.

Perhaps one of Taiwan’s biggest accomplishments remains it’s thriving and tumultuous democracy. Contrary to the People’s Republic of China’s authoritarian political system where the monolithic Communist Party exerts a suffocating control on politics and still much of the economy through “state capitalism,” Taiwan’s two major parties, the ruling Nationalists (KMT) and the opposition Democratic Progressive Party (DPP) offer the population real political choices which are vigorously and freely debated.

Presidential and legislative elections are slated for January 2012; incumbent KMT President Ma Ying-jeou seeks re-election but is challenged by the DPP’s Tsai Ying-wen.

The Republic of China celebrates its 100th birthday this October. People tend to forget that Asia’s oldest Republic is quite alive and well despite its diplomatic isolation by Beijing and being shadowed militarily by the Mainland. This is still very much the David and Goliath saga.

John J. Metzler is a U.N. correspondent covering diplomatic and defense issues. He writes weekly for WorldTribune.com.

CHINA    ITEM 17a: NYT: A Wave of Chinese Money Gives a Lift to Companies Struggling in Tough Times
http://www.nytimes.com/2011/07/07/business/smallbusiness/07sbiz.html

A Wave of Chinese Money Gives a Lift to Companies Struggling in Tough Times
By JAMES FLANIGAN
Published: July 6, 2011

Chinese investment in American companies rose to $5 billion in 2010, but that may be only the beginning of a tidal wave of direct Chinese investment in American businesses, according to a recent report that envisions another $1 trillion to $2 trillion of Chinese overseas investment this decade.

The report, commissioned by the Asia Society and the Woodrow Wilson International Center for Scholars, outlines the change in China’s priorities from attracting foreign investment to becoming a global purveyor of capital. While China has been investing to develop natural resources in Australia, Africa and elsewhere for years, the coming wave is different. It reflects China’s intention to expand its already enormous but still growing domestic market. To do so, Chinese companies that have mastered manufacturing must develop their distribution, marketing and innovation skills, all areas where American businesses could help.

While there is some concern that political tensions could get in the way, the investment money is a huge opportunity for American businesses. The following four small businesses, already the beneficiaries of such investments, illustrate the aims of Chinese investors and the benefits that American companies can take from them – including rescue from a very tough economy.

Solar Power Inc., of Roseville, Calif., received a $33 million investment in March from LDK Solar, a large Chinese manufacturer of solar cells. The American company, now seven years old and with 60 employees, installs solar arrays on commercial buildings, including on the roofs of Staples Center and the 20th Century Fox movie studios in Los Angeles. Solar Power initially focused on the United States residential market but that market collapsed in the recession. In 2010 the company’s sales declined to about $24 million and its losses increased.

So Stephen C. Kircher, Solar Power’s founder and chief executive, turned to commercial projects and attracted LDK Solar’s investment in exchange for 70 percent ownership of Solar Power. Mr. Kircher had met LDK executives in China through two California financial institutions, Roth Capital Partners in Newport Beach and East West Bank in Pasadena.

“LDK Solar’s investment will allow us to compete for many projects across the United States, not just one job at a time,” Mr. Kircher said. Indeed, Solar Power recently won a three-year job to provide engineering on solar energy projects in New York and New Jersey.

Why did LDK, which has $3.6 billion in annual sales of solar energy components, buy into Solar Power? “Their aim is to employ Chinese people,” Mr. Kircher said. “They will integrate their manufacturing with marketing and distribution on our solar panel projects and then have the know-how to help them in the emerging domestic economy in China.”

MVP RV of Riverside, Calif., a maker of recreational vehicles, was able to reopen its doors this year thanks to a big order and significant investment from Winston Battery of Shenzhen, China. Brad B. Williams, Roger J. Humeston, and Pablo Carmona had purchased MVP, a motor home and travel trailer operation, in July 2008 from their employer, Thor Industries. At that time, MVP had 440 employees and close to $100 million in sales, Mr. Williams said.

Two months later, the recession began and demand for recreational vehicles collapsed. Gradually, employees were laid off, and the company closed its factory “to preserve capital,” Mr. Williams said.

“We went through more than 40 presentations trying to raise capital, with no luck,” Mr. Williams said. “But then we got a call from somebody asking us to visit Winston Battery in Shenzhen.” There the partners met Winston Chung, an entrepreneur whose company makes lithium ion batteries. “We hit it off immediately,” Mr. Williams said.

Mr. Chung gave MVP an order for a few motor homes that got the company working again. Then early this year, Winston Battery gave MVP a $5 billion order for 10,000 motor homes – which can cost from $100,000 apiece to more than $1 million – and 20,000 smaller vehicles over the next three years.

The Chinese company also began an investment “that will ultimately amount to $310 million, making Mr. Chung the majority owner of our company,” Mr. Williams said. As a result, he added, the original partners will have “a smaller piece of a bigger pie.”

The company is now back up to 250 employees and plans to take on about 1,000 more in the next few years. “We are building prototypes for the China market now,” Mr. Williams said. The recreational vehicles on order will be diesel-powered, he said, “but we will work with Winston Battery to develop electric-powered vehicles in the next few years.”

Synthesis Energy Systems, of Houston, recently got an $84 million investment from Zhongjixuan Investment Management, of Beijing, which will assist Synthesis in developing new ventures in China. Synthesis Energy was introduced to Zhongjixuan Investment, also known as ZJX, through a Chinese business associate who helped arrange a gas-from-coal energy project in China in 2006.

Synthesis holds a license for a coal gasification process that can upgrade the efficiency of burning low-quality coals while reducing toxic gas emissions. It was formed in 2004 to spread the use of a combustion process developed by the nonprofit Gas Technology Institute. Its revenue, from two projects in China, reached $4.5 million for the fiscal half year that ended last December, with a loss of $7.4 million, down from a $16 million loss in the comparable 2009 period.

“The real value lies in participation in the success of projects,” said Robert W. Rigdon, president of Synthesis, “but that demands a lot of capital.”

So he agreed in March to sell 43 percent of Synthesis Energy to ZJX. The hope is that a coal-burning technology developed partly in research at the United States Department of Energy can help China produce clean electricity from its vast reserves of low-quality coal. Mr. Rigdon said he was aware that considerable intellectual property – the coal-burning technology – could be at risk, given the history of Chinese companies’ use of foreign technology without regard to patents.

“That’s true,” Mr. Rigdon said, “but I think the intellectual capital is now safer because of our partnership with ZJX, which has extensive connections, both government and private, in China.”

Pansun’s Inc. is a maker and distributor of women’s and men’s sportswear and fashion apparel that was formed by Yu Ming Pan, president of Shanghai Tiqiao Textile and Yarn Dyeing, and Stacy Sun, a business consultant in Los Angeles who came from China a dozen years ago. They pooled $5 million in 2009 to start Pansun’s and to make equity investments in American design firms that had established their brands with retail chains.

“The designers’ merchandise was already in major retailers like Saks and Bloomingdale’s, Dillard’s and Nordstrom’s,” Ms. Sun said. “Our idea was that because of our financial strength from China, we could offer the chains assurances of a long-term supplier and good terms on inventory and returns.”

Along with reassuring the chains, Pansun’s would also help the designers. “We give each design house $1 million a year for marketing,” she said. One designer, Eric Niccoli, founder of Orthodox – a company that designs youthful fashions for men and women – has worked under a licensing agreement with Pansun’s for the last year and is negotiating the sale to it of a 50 percent stake in his company. “They are learning how to build a brand and they have a long-term vision,” Mr. Niccoli said.

That vision is to build a large clothing distribution and retail company with more than $100 million in revenue in the United States and Latin America. In so doing, Ms. Sun explained, the company’s principals will expand the market for Chinese manufacturing and acquire knowledge of branding and distribution, ultimately looking to create a large apparel company in their home country. “Our final destination is China,” Ms. Sun said.

NORTH AMERICA 
UNITED STATES    ITEM 18a: WSJ: U.S., Mexico in Truck Deal   http://online.wsj.com/article/SB10001424052702303365804576429911864563624.html?mod=WSJ_World_LEFTSecondNews

JULY 7, 2011
U.S., Mexico in Truck Deal
By ELIZABETH WILLIAMSON

The U.S. and Mexico agreed Wednesday to end a ban of nearly two decades on Mexican trucks entering the U.S.

The end of the dispute between the U.S. and its third-largest trading partner came about 2½ years after President Barack Obama killed a Bush administration program to ease the ban. In response, Mexico levied tariffs applied to about $2.4 billion of U.S. goods a year.

The ban, supported by Democrats in Congress and the International Brotherhood of Teamsters, was ruled a violation of the North American Free Trade Agreement.

Under Wednesday’s agreement, half of the tariffs on 99 U.S. products, from Christmas trees to pet supplies, will be suspended immediately. The levies ranged from 5% to 25% of the products’ value. The remaining tariffs will be lifted when the first Mexican hauler complies with a series of U.S. certification requirements, including English-language proficiency and drug and safety tests.

Mexican trucks will have to carry electronic recorders to ensure they do only cross-border, not domestic, runs and to track compliance with U.S. hours-of-service laws. The requirements are tougher than those established by Nafta and somewhat tougher than those now in force for American truckers. Mexican officials said the first truck could be certified as soon as August.

The Obama administration is looking to international trade to boost the still-sluggish economy. It has pursued a number of trade-rules enforcement cases, moved to settle longstanding disputes with major trading partners and is pushing for congressional passage of long-stalled trade agreements with South Korea, Colombia and Panama. Mr. Obama has said he wants to double the value of U.S. exports by the end of 2014.

“The agreements signed today are a win for roadway safety, and they are a win for trade,” Transportation Secretary Ray LaHood said in a statement.

The agreement “is a new path to the clear compliance of obligations of the United States under the North American Free Trade Agreement in the area of cross-border cargo transportation that will bring direct benefits to producers, exporters, consumers and operators of cargo transport,” a Mexican Economy Ministry statement read.

Teamsters General President Jim Hoffa condemned the agreement, saying it “lowers wages and robs jobs from hardworking American truck drivers and warehouse workers.” He questioned the U.S. Department of Transportation’s legal authority to end the ban.

The Owner-Operator Independent Drivers’ Association, which represents small truckers, also slammed the agreement. “People in Washington are constantly talking about two things these days-creating good jobs for Americans and cutting wasteful spending. This program does exactly the opposite for both,” said Todd Spencer, the organization’s executive vice president.

Business groups welcomed the pact, saying it was important to advancing U.S. trade policy more broadly.

“We need to press other countries hard to live up to their agreements, but we cannot expect them to comply if we don’t. Resolution of the trucking dispute and removal of retaliatory tariffs is a very positive development,” Doug Goudie, director of international trade policy at the National Association of Manufacturers, said in a statement.
ITEM 19a: VOA NEWS: IWF Changes Dress Code Rules, Lets Muslim Weightlifter Compete   http://www.voanews.com/english/news/usa/IWF-Changes-Dress-Code-Rules-Lets-Muslim-Weightlifter-Compete-125090654.html

July 06, 2011
IWF Changes Dress Code Rules, Lets Muslim Weightlifter Compete
Lolla Mohammed Nur

When Kulsoom Abdullah started weightlifting three years ago, she never thought she would be the first headscarf-donning Muslim American to compete in the USA National Weightlifting Championships – America’s most prestigious weightlifting competition.

What fueled Abdullah’s doubts and set her apart from fellow competitors was her dress code. As a devout Muslim, she chose to wear modest clothing – long-sleeved T-shirts and loose pants – garb that didn’t conform with official competition rules.

But the Atlanta, Georgia, native was given her chance in late June when the International Weightlifting Federation (IWF), in response to a challenge by Abdullah, modified its competing rules to allow tight-fitting, body-length unitards for the first time.

Game changer

Now, weightlifters who participate in competitions organized by any IWF member organizations worldwide – not just in the U.S. – can choose to participate in uniforms that cover their arms and legs.

As a result, Abdullah, on top of being probably the only PhD in electrical and computer engineering who can “deadlift” 111 kilos, today qualifies for national championships while wearing a headscarf and long sleeves.

Sarah Eveleth Watson
Kulsoom Abdullah preparing to compete”Weightlifting is an Olympic sport open for all athletes to participate without discrimination on the basis of race, color, religion, sex, age, or national origin in accordance with the principles of the Olympic Charter and values,” says IWF President Tamas Ajan. “This rule modification has been considered in the spirit of fairness, equality and inclusion.”

The IWF’s decision is a bold move considering its former rules stipulated that “costumes” had to be collarless and couldn’t cover elbows or knees; the rules even specified how high socks could go and how much skin bandages could cover.

Against other odds

The rule change did not come in a vacuum. A few weeks before the IWF’s decision passed, the International Federation of Association Football (FIFA) banned the Iranian women’s soccer team from competing in a pre-Olympic game against Jordan, and the Quebec Soccer Foundation fired a Canadian female teen referee. Both governing bodies pointed to headscarfs and untraditional clothing as violating competition rules.

“Those are preposterous outcomes … A woman should be able to participate in sport and abide by her faith; those two things are not mutually exclusive,” said Gadeir Abbas, the staff attorney with the Council on American Islamic Relations (CAIR) who had been working on the case of the Canadian referee. At the same time, he praised the IWF for taking the lead on this issue saying its decision reflects well on its leadership.

Rules as “works in progress”

John Duff, chief executive officer of USA Weightlifting, said modifying the competition rules for inclusivity was already on the IWF’s agenda. But he also stressed that rules are never set in place to discriminate.

“The [original] rules were not discriminatory in any shape or form. The rules are the rules, and every federation that is a member organization of the international federation complies and follows those rules,” he said. “They aren’t set for a particular country or a particular nationality or people or place…Every country and everybody who participates in the sport follows it.”

IWF officials have repeatedly emphasized that the headscarf by itself was never a concern. But, as Duff pointed out, rules are generally there to prevent athletes from gaining an unfair advantage by using extra material to hide a support mechanism on a joint, for instance. He explained that long clothing could make it difficult for judges to determine whether an athlete’s elbows or knees are locked.

Sarah Eveleth Watson
Kulsoom Abdullah sporting a medal she earned at a 2010 Open Championship in the US state of GeorgiaUSA Weightlifting – a member organization of the United States Olympic Committee governed by the IWF – had the same concern. The organization informed Abdullah she could not compete in the December 2010 national tournaments because covering her arms, elbows and knees violated IWF rules.

An appeal from Abdullah and CAIR prompted an IWF technical committee to debate the dress code rules in Malaysia during the last week of June, ahead of  July championships. The debate ended up paving the way toward a change in the rules.

Abdullah as trailblazer

While conceding that some clothing could be used to mask certain body parts and manipulate performance, Abdullah ended up putting together a 43-slide presentation to demonstrate to the IWF how, in her case, judges can see her joints even through a long-sleeved, tight-fitting unitard or looser singlet.
CAIR’s Abbas said that Abdullah essentially won this fight on her own.

“Kulsoom was her own best advocate, she’s an iconoclast: a PhD in electric engineering that can deadlift 150 pounds over her head…. She was a uniquely capable person to push for change,” said he.

Abdullah’s case was the “textbook example of how it should work,” said Abbas, adding that if the IWF had rejected her appeal, it would have amounted to discrimination.

“When… an organization is adhering to [an] old rule to exclude someone new that wants to participate, the failure to adjust is indicative of a discriminatory mindset,” he said.

Abdullah, who now looks forward to competing in the National Weightlifting Championships later this month, says unfortunately many Muslim women get caught in a vicious cycle of stereotypes.

“It’s a shame because the Muslim world is being criticized – they say you’re oppressing women or not empowering them… and then when a woman chooses to cover and participate, it’s also seen as a problem.”

Abdullah says she hopes her case will be an example for other female athletes who choose to dress modestly while competing in any sport, regardless of their faith. As for people adverse to change – she calls on them to try to keep their minds open about it.

ISSUES 
ENERGY    ITEM 20a: BALTIC TIMES: Lithuanian parliament: Gazprom should lose its pipelines in Lithuania   http://www.baltictimes.com/news/articles/29001/

Lithuanian parliament: Gazprom should lose its pipelines in Lithuania
Jul 06, 2011
By Rokas M. Tracevskis

VILNIUS – On June 30, the Lithuanian Parliament, despite public protests by Russian PM Vladimir Putin, adopted amendments to the Law on Natural Gas, which means splitting of the gas supply company Lietuvos Dujos into three entities and the taking of Lietuvos Dujos-owned gas transportation pipelines into the ownership of the Lithuanian state after mid-2013 (this term can be prolonged in case of some difficulty in negotiations with the current owners over compensation). Now German E.ON Ruhrgas owns 38.9 percent of Lietuvos Dujos shares, Russian Gazprom – 37.1 percent, the Lithuanian state – 17.7 percent, and minor shareholders – 6.3 percent. Gazprom is the only supplier of gas to Lithuania at the moment.

According to the Lithuanian government’s plans, the construction of the Lithuanian state-owned LNG terminal in the Lithuanian seaport of Klaipeda will be completed in 2014 and the EU co-sponsored pan-Baltic LNG terminal in Riga is expected to start functioning at a similar time – the latter terminal causes some fears in Vilnius due to possible participation of Gazprom-related companies in that project. The parliament’s decision was made, implementing the European Union’s Third Energy Package of 2009, aiming to liberalize the EU’s energy markets by splitting big utility groups, which have the status of monopolies, and allowing for all gas suppliers unhindered access to EU infrastructure.

The victory of the Lithuanian PM Andius Kubilius-backed move was clear: 81 MPs voted in favor of amendments while 23 MPs voted against and seven abstained. Some MPs of the oppositional Order and Justice Party’s parliamentary group spoke against the amendments, but the most vocal opponents to the Kubilius initiative during the parliamentary debates were the opposition Social Democrats.

Interestingly, the opposition Labor Party supported the ruling center-right coalition on the issue of these amendments. “We have some doubts, but we will support this project,” Vytautas Gapsys, head of the Labor Party’s parliamentary faction, said during the debates in the parliament.

“We are running from Ivan, but he will take our last trousers!” shouted Petras Grazulis, MP of the Order and Justice Party, pointing to prices of Gazprom’s gas supplies, which are 15 percent higher for Lithuania than for Finland, Estonia and Latvia, which postponed implementation of the Third Energy Package, avoiding in this way the gas price repercussions from Gazprom.
“The EU expertise showed that it will be finally beneficial for our country,” Kubilius said. “The EU expertise forced Finland, Estonia and Latvia to choose another way,” Social Democrat MP Vytenis Andriukaitis disagreed. The Social Democrats are stating that such reorganization of the gas sector is foolish while Lithuania has no alternative for Gazprom’s gas supplies.

The Social Democrats were always more friendly towards Gazprom than their center-right opponents. For example, Social Democrat MP Birute Vesaite is known in the parliament mostly only for two reasons: a constantly and loudly expressed love for Swedish feminism and Gazprom. After the parliament passed the amendments, Algirdas Butkevicius, leader of the Social Democrat Party, stated that “there is too much politics in this decision.” The Social Democrats warned that this reorganization of the gas sector can cost the Lithuanian state some 1.5 billion litas (400 million euros) due to compensation for the pipelines’ current owners. It was the former Social Democrat-led government of PM Algirdas Brazauskas which privatized Lietuvos Dujos in two stages, with E.ON Ruhrgas (in 2002), and its traditional Russian partner, Gazprom (in 2004), taking more than a third of the gas company’s shares each.

“It was a big mistake to sell the transportation pipelines eight years ago,” Kubilius said after the vote on the amendments.
The amendments provoked nervous reaction from the current owners of Lietuvos Dujos. “Once again we underline: if any undertaking has procured gas volumes at the Lithuanian border or seashore and has concluded a contract with any gas consumer in Lithuania, gas transmission to the respective gas user is guaranteed by the existing laws and legal acts.

Therefore, the new draft LoNG [Law on Natural Gas] is not related at all with ‘de-monopolization’ or ‘liberalization,’ but very much with nationalization. The splitting of the company into three undertakings (as it is envisaged) would only result in an increase in operating costs and consumer transportation tariffs,” reads Lietuvos Dujos’ statement of June 9.

Bronislovas Lubys, the biggest shareholder of the Achema Group (leading manufacturer of nitrogen fertilizers and chemical products in Lithuania) and president of the Lithuanian Confederation of Industrialists, expressed his skepticism about such an anti-Gazprom move, pointing out that the price of 1,000 cubic meters of Gazprom gas for Lithuania was 426 U.S. dollars in June, and the price will be 486 U.S. dollars in the coming December, while the price of Gazprom’s gas for Latvia is the following: 349 U.S. dollars in June and 425 U.S. dollars in December (according to a forecast by German banks and the Latvian gas company Latvijas Gaze). Lubys expressed his doubts that the reorganization of Lietuvos Dujos will cause a reduction of gas prices in Lithuania in the short term.

“The reorganization of Lietuvos Dujos will go on by arranging agreements with the Lietuvos Dujos’ shareholders on the terms of this process. The European Commission will participate in this dialogue because we are implementing the laws of the European Union,” Lithuanian Energy Minister Arvydas Sekmokas said in his press conference on June 30. He refused to speculate on the exact price which the Lithuanian government will pay to compensate shareholders of Lietuvos Dujos, stating that it is “a matter of negotiations.” Sekmokas said that the Lithuanian consumers will win due to the parliament’s amendments.

“I did consult with operators of the gas transporting system of the Netherlands and representatives of the Dutch government institutions regarding the implementation of the Third Energy Package. They confirmed that such reorganization needs certain efforts and investments in the short term, but the separation of ownership gives the best benefits to consumers in the long term,” Sekmokas said, emphasizing that the implementation of the Third Energy Package is a top priority for the European Commission.
ITEM 21a: Roman Olearchyk: Ukraine, wary of Russia, seeks energy independence with $1.5bn gas plant   http://blogs.ft.com/beyond-brics/2011/07/06/ukraine-a-black-sea-1-5bn-lng-plant/#axzz1RSIKRfqB

Ukraine, wary of Russia, seeks energy independence with $1.5bn gas plant
July 6, 2011 5:38 pm by Roman Olearchyk

Ukraine on Wednesday made a serious move towards cutting its energy dependence on Russia by formally inviting potential investors to prepare studies on building the country’s first LNG (liquefied natural gas) plant.
Located on the Black Sea, it would be a gateway for gas from the Black Sea region and beyond. But, as with many projects in Ukraine, the path from announcement to completion may be long and complicated.
Vladyslav Kaskiv, head of Ukraine’s state agency for investment and national projects, said an investor would be chosen by the year-end. He estimated the cost of the LNG plant to be at least $1.5bn.
One influential business obligarch rumoured to have an interest in the LNG plant being built is Ukrainian billionaire Dmytro Firtash. He is leading the race to privatise the Odessa Portside plant, a gas guzzling chemical plant which stands near the site where the LNG plant could be built.
But the Odessa chemicals group’s privatisation has been repeatedly delayed amid political arguments. If it were again held up, it’s easy to see how the LNG plant plan might also run into the Black Sea sands.
However, there’s no doubting Kiev’s new-found determination to finally implement long-discussed proposals for energy diversification – even at the cost of dropping longstanding and informal barriers that have long kept out multinational oil majors.
Ukraine has decided that it needs western capital and technology to develop its potentially large shale gas reserves. Royal Dutch Shell, Chevron, ExxonMobil and TNK-BP are among companies said to be eyeing exploration and production licenses.
Late last month, Vadim Chuprun, deputy energy minister, said “ExxonMobil, Halliburton, ConocoPhillips, Shell and other companies” have “responded to our proposals.”
Parliament late last month adopted legislation on production sharing agreements set by potential investors as a precondition.
“According to US Geological Survey studies, we have at least 1.5-2.5 trillion cubic meters of shale gas. This number is approximate and will obviously grow,” Mr Chuprun added.
The reserves are believed to be located in two major pockets: one close Ukraine’s border with Poland; another in the east.
They, along with offshore prospects on Ukraine’s Black Sea coast, could significantly diversify Ukraine’s supplies, cutting into the sales export sales of Russia’s Gazprom. Importing 40bn-50 billion cubic meters of gas in recent years, Ukraine is currently Gazprom’s largest customer.
Russia has long covered the majority of Ukraine’s gas needs, but Ukraine is seeking new supplies after its northern neighbour has quadrupled prices since 2004.
Referring to the LNG project and the potential of shale schemes, Kaskiv said: “These projects could help Europe at large diversify energy supplies and get energy at more competitive prices.”
The world’s largest energy companies have long fancied opportunities in Ukraine, but local officials have largely kept them out, preserving control over the domestic energy sector in the hands of oligarchs and Russian groups.
But Jorge Zukoski, President of the American Chamber of Commerce in Ukraine says Ukraine is now expressing a “clear intention to open up the energy sector to reputable international companies.”
“We are talking about multibillion investments,”  Zukoski says. Late last month, TNK-BP said it alone planned to invest $1.8bn in Ukraine shale gas exploration. “We hope to see the first tender announcement by the end of this year,” Zukoski said.
As well as the clear commercial advantages of energy diversification, Ukraine could boost its public revenues (by taxing the new enterprises) and broaden its international political ties by working more closely with companies from the US and the European Union.
But to do that, these schemes must come to fruition. And for that to happen Kiev needs to deliver a consistent energy policy and to implement it – something it has struggle to do in the past.

BANKING    ITEM 22a: Jim Lacey: The Gnomes of Basel: The banking system needs reform. But the Bank for International Settlements hasn’t a clue how.  http://www.nationalreview.com/articles/271134/gnomes-basel-jim-lacey

JIM LACEY
JULY 6, 2011 4:00 A.M.
The Gnomes of Basel
The banking system needs reform. But the Bank for International Settlements hasn’t a clue how.

Forget Zurich. When it comes to real power in the banking world all eyes focus on the small Swiss city of Basel, home of the Bank for International Settlements (BIS). The BIS was originally established in 1930 to help manage reparations payments imposed on Germany by the Treaty of Versailles following the First World War. That original purpose ended with the rise of the Nazis and their abrogation of the Versailles Treaty. But, like any good bureaucracy – whose top imperative is always survival – the BIS remade itself, first as the international manager for the Bretton Woods system, and later as an international banking regulator.

It is in this later incarnation that it has done the most damage. In its so-called Basel Capital Accords (Basel I), the BIS directed that banks keep capital reserves of approximately 8 percent, but then it risk-weighted those requirements. In doing so, the BIS noted that nations rarely disappear, and they are therefore usually available to pay their debts. In its infinite wisdom, the BIS declared that banks did not have to put any reserves aside to cover loans to sovereign nations. As far as the BIS was concerned, a serial defaulter such as Argentina was a better credit risk than IBM. Banks, which proved more than ready to put their reserves to work, piled into Latin America and other regions that, prior to the BIS ruling, they had treated with a great deal of circumspection.
When things eventually went bad, as they were sure to do, American banks, which had put aside only puny sums to meet such an eventuality, saw their capital erased almost overnight. Only through massive government intervention was the banking system brought back from the brink. Chastened, the BIS admitted it just was not very good at analyzing risks and setting capital requirements for large sophisticated banks. As the BIS saw it, the big banks would be much better at doing this for themselves. Basel II removed the BIS and national regulators from any role in determining capital requirements, on the assumption that banks, with their ability to do sophisticated risk modeling, would analyze their own portfolios and figure out how much capital they needed to put aside. The BIS was in the process of instituting these rules, with the full support of the U.S. Federal Reserve, when the 2008 banking crisis erupted.

Risk-modeling computers were supposed to create a nirvana in which clever bankers could monitor and adjust their risks and set reserves on a moment-to-moment basis. What everyone neglected is the historical record showing that models exist only so that one day they can be proven spectacularly wrong. Some bank models, for instance, placed the chances of the type of financial crisis that occurred in 2008 at 30 billion to 1. That is approximately twice as unlikely as a meteor smashing into your home, or 500 times as unlikely as your winning the Mega Millions lottery.

The fact that Basel II was such a spectacular failure even before it was fully implemented has not deterred Basel’s gnomes from working furiously on Basel III – third time’s the charm? The BIS is, in fact, almost ready to release the Basel III rules, which will probably set a minimum capital requirement of 7 percent for all banks, and add 2.5 to 3 percentage points on top of that for the 30 or so global banks judged to be “systematically important.”

How did they come up with these numbers? Well, the first thing you have to remember is that it has nothing to do with how much capital a bank may need to survive a crisis without government intervention. Rather, it is all the capital the BIS believes large European banks can raise right now, and even that is iffy for some banks. The real problem is that a 9 or 10 percent capital reserve is not going to be enough to see Europe’s largest banks through a default of one or more of the PIGS (Portugal, Ireland, Greece, Spain). One wonders if even 50 percent capital reserves would be enough to do the trick. Moreover, our own Federal Reserve believes that Basel III has not gone far enough. Federal Reserve governor Daniel K. Tarullo has stated that for systemically important financial institutions he would be more comfortable with a 14 percent capital reserve – about what Bankers Trust had on hand just prior to its being wiped out and acquired by Deutsche Bank in 1998.

The facts of life are that, if Greece defaults tomorrow, first the European banking system and then our own will start sprinting for the edge of the cliff. Bank capital reserves will vanish in a twinkling, and within weeks, days, or hours the global financial system will once again teeter on a precipice. Anyone putting his faith in Basel III is truly placing hope over experience.
So, what is the answer? Large American banks claim that adding to their capital requirements means less money will be available for lending. This is not a particularly good thing for an economy still trying to recover from a recession. There is little doubt that the banks are right about this, although some academics believe the problem can be alleviated by changing the capital structure of banks so that they give up their addiction to debt. As this would require major changes to the U.S. tax code, it is a debate for another day. In the meantime, we must recognize that without a reignition of credit formation there is little hope of a strong recovery.
Therefore, in the here and now, pragmatism must rule the day. Banks that are so systemically important that their failure can bring down the financial system need to maintain a high level of reserves – but not today. The banking system remains fragile, and until the United States has made a full recovery from the last recession it is not wise to do anything further to impede credit creation within the economy. Over time, and as the financial system repairs itself, there will be opportunities to reexamine bank reserves to ensure they are commensurate with the risks banks are taking, as well as the risk each bank presents to the financial system as a whole.
I am not sure, however, that the required decisions can be left to an international committee that typically creates a one-size-fits-all answer to any problem. I, for one, would prefer that banks with huge exposure to Greece be required to hold more reserves than banks that have avoided commitments to sovereign nations at risk of default. Moreover, we live in an era when banks can change their risk profiles in minutes. So whatever reserve rules we apply must be dynamic. A way must be found to measure the true risks represented by each bank’s loans, trades, and investments, and then change that bank’s reserve requirement as rapidly as it changes its risk profile. Finally, it is worth noting that no amount of capital is going to be enough to meet a global liquidity crisis of the sort that the meltdown of one or more Euro countries will present. There is no sense in disguising the fact that in a crisis an extra bit of capital cushion is just going to give us a bit more time for the government to ride to the rescue. Many banks really are too big to fail, and that is not going to change any time soon.

For at least the next few years, therefore, a 7 percent reserve requirement seems about right for American banks. That will give them the capital cushion required to get through most rough patches, while allowing them to expand credit creation. In the meantime, the Fed must continue to stand ready for a major financial catastrophe, the risks of which are closer to 1 in 3 than 30 billion to 1. The global financial system and the American economy are far from being out of the woods, and anything that makes life harder on the financial system must be approached with caution. Extra bank reserves are a good thing, but let’s advance toward that goal slowly.

– Jim Lacey is professor of strategic studies at the Marine Corps War College. He is the author of the recently released The First Clash and Keep from All Thoughtful Men. The opinions in this article are entirely his own and do not represent those of the Department of Defense or any of its members.
ITEM 23a: WSJ: Signals to Expect From ECB’s Trichet    http://online.wsj.com/article/SB10001424052702303544604576429731982195632.html?mod=WSJ_World_LEFTSecondNews

JULY 7, 2011
Signals to Expect From ECB’s Trichet
By BRIAN BLACKSTONE

European Central Bank chief Jean-Claude Trichet’s monthly news conference on Thursday could be among the most significant in recent memory: Greece is edging closer to default; Moody’s has pushed Portugal into junk status with Greece; euro-zone inflation is near two-year highs; and the economy is slowing.

Oh, and the ECB is almost certain to raise interest rates for the second time in three months, further distancing itself from the U.S. Federal Reserve and Bank of England, which have rates closer to zero and are expected to hold them there for many more months.

Here’s a road map for Thursday:

Greece: The ECB initially took a strong stance against debt restructuring or any sort of arrangement with the private sector that leads to default by rating agencies. It forced Germany to back down from its earlier insistence for a maturity extension (which would have almost certainly been ruled a default).

But ECB officials ceded control of the debate when they started speaking favorably about voluntary private-sector participation. The problem is that, ultimately, what constitutes voluntary participation is a judgment call. Governments and banks have touted recent Greek rollover plans as strictly voluntary. Rating agencies are skeptical. Mr. Trichet’s remarks will be eyed for whether he thinks private-sector participation is still useful to even be discussing, or whether the very debate is doing more harm than good.

Collateral rules: The ECB suspended its collateral requirements for Greece one year ago, meaning its bonds can be used at the ECB’s lending window despite being rated deep into junk status. A default rating changes things, because the ECB rules also require “adequate” collateral be posted.

One question that needs clarity is whether the ECB will look for loopholes to keep Greek banks afloat. For instance, it could insist that all three rating agencies declare a default before cutting Greece off, or make distinctions between individual bond issues and the rating of Greece itself, or make it clear that emergency loans from the Greek central bank would still be available to Greek banks. That would provide some calm to markets and governments, but at the expense of the ECB’s credibility.

If Mr. Trichet takes a hard line, suggesting he would side with the first default ruling and cut Greece off, the onus would shift back to governments and banks to either come up with rollover plans that pass muster with the rating agencies, or abandon the idea altogether.

Rating agencies: Moody’s on Tuesday cut Portugal’s rating to junk status, the first agency to do so. If S&P and Fitch follow suit in coming weeks, Portuguese bonds risk losing their eligibility at the ECB (though economists think the ECB would suspend the rules for Portugal as it already has for Greece and Ireland). Still, the move raises two issues for the ECB. First, given its vast exposure to Greece, Ireland and Portugal via bond purchases and collateral, how secure is the ECB’s balance sheet? And second, why are rating agencies still given such a central role in the ECB’s crisis response? Expect Mr. Trichet to be quizzed on both.

The economy/inflation: The ECB has been largely upbeat on the economic outlook and worried about inflation. But growth appears to have weakened in the second quarter, raising the question as to whether this is a temporary soft patch or start of a more pronounced slowdown. Inflation, meanwhile, was 2.7% in June. That’s above the ECB’s 2% target but below its recent peak of 2.8% in April. Mr. Trichet’s comments may provide clues to whether the ECB thinks the worst of inflation is over, or whether the risk remains for a renewed upturn.

Interest rates: Lost in the Greek drama is the fact that the ECB will almost surely raise its main policy rate to 1.5% from 1.25%, the second increase in three months. The Fed and Bank of England appear nowhere near raising rates, meaning further ECB rate increases may put upward pressure on the euro. Look for any hints from Mr. Trichet on whether more increases are in the pipeline later this year (by, for instance, continuing to warn about inflation risks) or if he is ready to hit the pause button.
ITEM 24a: DOW JONES: Swiss Government Adopts OECD Standards On Bank Secrecy, Tax Offenses   http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201107060912dowjonesdjonline000259&title=swiss-government-adopts-oecd-standards-on-bank-secrecytax-offenses

Swiss Government Adopts OECD Standards On Bank Secrecy, Tax Offenses

ZURICH -(Dow Jones)- The Swiss government Wednesday adopted standards on banking secrecy laid out by the Organization for Economic Cooperation and Development, or OECD, which will allow foreign authorities to pursue citizens suspected of using hidden Swiss accounts for tax evasion, and no longer only for outright tax fraud.

MAIN FACTS:

– The Federal Council adopted the dispatch on the new Federal Act on International Administrative Assistance in Tax Matters. It governs the execution of administrative assistance in double taxation agreements and other agreements on the exchange of information, in particular the exchange of information agreed on in accordance with the OECD standard.

– In spring 2009, the Federal Council took the decision to adopt in future the international standards set out in Article 26 of the OECD Model Convention with respect to administrative assistance in tax matters. According to this, international administrative assistance should be possible not only in the case of tax fraud but also in the case of tax evasion and for tax assessment. The implementation of this decision requires appropriate wording in the double taxation agreements, or DTAs, with other countries. Up to now, over thirty DTAs have been adapted or renegotiated. Execution of administrative assistance must ensue under national law. To this end, the Tax Administrative Assistance Act is to be introduced.

– The Act contains the principle that administrative assistance will only be provided upon request in individual cases. No administrative assistance will be provided by Switzerland if a request is based on information which was acquired by acts which are punishable under Swiss law. Information transmitted abroad is only allowed to be used to enforce Swiss tax law, in so far as it could have been obtained in accordance with Swiss law.

– Unlike the ordinance, which covers only administrative assistance in accordance with double taxation agreements, the Act also governs administrative assistance based on other agreements which make provision for the exchange of information relating to tax matters, e.g. the agreement on the taxation of savings income with the EU. The appeal procedure is to be streamlined and the deadlines shortened.

-Zurich Bureau, Dow Jones Newswires, +41 43 443 80 47; zurichdjnews@ dowjones.com

SHARI’A BANKING/INVESTMENT    ITEM 25a: BUSINESS DAY ONLINE (NIGERIA): Okonjo-Iweala pledges tighter fiscal policy, supports Islamic banking   http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/24228-okonjo-iweala-pledges-tighter-fiscal-policy-supports-islamic-banking

Okonjo-Iweala pledges tighter fiscal policy, supports Islamic banking
THURSDAY, 07 JULY 2011 00:00     TUNJI OLAWUNI WITH AGENCY REPORT

·Senate approves World Bank MD, Aganga, Nnaji 7 others as ministers

Ngozi Okonjo-Iweala, World Bank managing director, laid out her vision for the Nigerian economy on Wednesday, pledging she would create jobs and ensure the country lives within its means if approved as a cabinet minister.

President Goodluck Jonathan had asked Okonjo-Iweala, a respected former finance minister who helped negotiate debt relief in 2005, to return to her old position with broad powers over economic management, government sources said.

She appeared before the Senate on Wednesday to be grilled by lawmakers over what she would do as a minister; part of the process of approving Jonathan’s cabinet nominees.

“I am really worried about the issue of making sure our budget is not eaten up by recurrent expenditure. The budget recurrent is now 74 percent and not much is left for capital expenditure. How can we invest in capital if we’re spending all our money on recurrent expenditure?” Okonjo-Iweala asked.

“Can we run a budget that is not negative? Absolutely. We can do it. We have been able to in the past.” She explained that in previous administrations she served, the goal had been “to put in place a sensible fiscal policy that would enable us to have a reasonable fiscal deficit”.

The high cost of government has been a major concern for economists and investors in the country’s economy. Recurrent expenditure accounts for well over half of government spending despite poor public services.

Okonjo-Iweala explained further that for the country to get over her economic problems, certain issues must be addressed and these, according to her, are: creation of jobs for the teeming unemployed youths; improvement of decayed infrastructure; disciplined financial controls, and support for key areas of the economy including agriculture, services, construction and real estate.

Okonjo-Iweala also said she was concerned that Africa’s biggest oil and gas producer was seeing its foreign reserves fall despite high oil prices, although she said that was partly due to a policy of supporting the naira – the country’s currency; a stance she would not seek to reverse in the immediate term.

“If we want to re-value the naira, this may not be the time to think about it,” she said.

“I think we should wait until things are more stable. We are growing the economy. We are creating jobs. Young people are working and the sectors we have are giving what they should.”

On Islamic banking, she said the issue of introduction of non-interest banking in Nigeria should be viewed devoid of sentiments; noting that “we need to look at non-interest banking without emotions. It is another form of banking. We just need to unpack the elements of this system of banking in order to understand it”.

On the viability of  non-interesting banking model in Nigeria, the World  Bank boss said: “From the evidence, it seems to be functioning relatively well in various parts of the world”, and  with proper implementation, it should also work in Nigeria.

The inclusion of Okonjo-Iweala in the cabinet could lend more weight to the  president’s reform ambitions.

She was praised as finance minister for fighting corruption and negotiating the cancellation of nearly two-thirds of Nigeria’s $30 billion Paris Club debt. She was suddenly reassigned by then President Olusegun Obasanjo as foreign minister in 2006; a move that was never properly explained.

She was appointed to the World Bank, where she had previously worked for more than two decades, in October 2007.

Challenged about why she had left Nigeria to work for the World Bank, she defended her decision, saying she had given more than three years of dedicated service before circumstances changed.

Okonjo-Iweala’s nomination by President Goodluck Jonathan was approved by a unanimous Senate vote.

Former special adviser on Energy, Barth Nnaji, who also appeared before the Senate for screening, said Nigeria would require $10 billion annually in the next ten years to guarantee steady supply of power. He said by 2014, 15, 000 megawatts of power would be generated.

Asked if government has the money to fund power project, Nnaji responded “no, the federal government does not have the money. We are talking of about $3.5 billion for generation on the average per year. The distinguished Senate will know how difficult it is to give that to a single sector for a year.

“When you now add transmission which has a serious infrastructure crisis and then distribution and then we talk about gas; then you will be talking about almost $10 billion dollars per year on the average over the next ten years to reach where we are going. And that is impossibility”.

While responding to questions on power generation, Nnaji said:  “We are planning to have four sources of power. One, the existing power generation of the federal government which has capacity of over 5000 megawatts but which is generating under 2,400 megawatts for now. The second area comprises the existing IPPs; that is Shell, Agip and Rivers State power. We have to maintain their capacities. The third is the bulk trader we talked about. They can buy from private companies, in the next two to three years, about 6000 megawatts of power and if you add this quantum of power, it will raise.

“The fourth are the hydros and they are the Mambilla, Zungeru and even the coal power plants. If you calculate the power which will come from all the fours sources within the next two years, you would have 10,000 megawatts. By 2014 we should be reaching about 15,000 megawatts”.

On the new tariff introduced by government on electricity, Nnaji said investors would not invest if the tariff did not reflect the cost. It must meet international standards of recovery of cost.

In his appearance before the Senate, Olusegun Aganga – immediate past minister of Finance – explained the deficit in the budget and said in 2010 it was N1.1 trillion but was reduced to N850 billion.

He explained that as part of effort to reduce recurrent expenditure, government started the biometric system in 36 MDAs and from the system, 3,600 staff were found not to be on the payroll of the agencies.

Bello Mohammed – acting national chairman of the ruling People’s Democratic Party (PDP); Abba Moro, director general of David Mark campaign organization, and Samuel Ortom, PDP national treasurer – all ministerial nominees – were asked to take their bow without being asked questions by the Senate.

TERRORISM/TERRORISM FUNDING    ITEM 26a: Kenan Malik: Assimilation’s Failure, Terrorism’s Rise   http://www.nytimes.com/2011/07/07/opinion/07malik.html?_r=1&ref=todayspaper

Assimilation’s Failure, Terrorism’s Rise
By KENAN MALIK
Published: July 6, 2011

SIX years ago today, on July 7, 2005, Islamist suicide bombers attacked London’s transit system. They blew up three subway trains and a bus, killing 52 people and leaving a nation groping for answers.

In one sense the meaning of 7/7 is as clear to Britons as that of 9/11 is to Americans. It was a savage, brutal attack intended to sow mayhem and terror. Yet whereas 9/11 was the work of a foreign terrorist group, 7/7 was the work of British citizens. The question that haunts London, but that Washington has so far barely had to face, is why four men born and brought up in Britain were gripped by such fanatic zeal for a murderous, medieval dogma.

British authorities have expended much effort in seeking to understand how the 7/7 terrorists acquired their perverted ideas and became “radicalized.” In the immediate wake of the attacks, much ink was spilled over the role of extremist preachers and radical mosques. More recently, the focus has shifted to universities as recruitment centers for terrorists.

But this obsession with radicalization misses the point. The real question is not how people like Mohammad Sidique Khan, the leader of the 7/7 bombers, came to be radicalized, but why so many young men, who by all accounts are intelligent, articulate and integrated, come to find this violent, reactionary ideology so attractive. To answer it, we need to look not at extremist preachers or university lecturers but also at public policy, and in particular the failed policy of multiculturalism.

Multiculturalism has become a fraught issue throughout Europe in recent years. A rancorous chorus of populist politicians, like Geert Wilders in the Netherlands and Jimmie Akesson in Sweden, have made major electoral gains by stoking fears about multiculturalism. Mainstream politicians have joined in, too. Prime Minister David Cameron of Britain and Chancellor Angela Merkel of Germany have recently made deeply critical speeches, and the Dutch government decided last month to dump a decades-old policy of multiculturalism.

The real target of much of this criticism, however, is not multiculturalism but immigration and immigrants – especially Muslims. Mr. Wilders, leader of the Freedom Party, the third largest in the Dutch Parliament, has campaigned for an end to all non-Western immigration, a ban on mosque building and the outlawing of the Koran. Mr. Akesson, whose far-right Sweden Democrats shocked the nation by winning 20 seats in last year’s parliamentary elections, denounces immigration as the biggest threat facing Sweden since World War II. Centrists have responded not by challenging such prejudice but by appropriating the right’s arguments in an effort to hold on to votes.

Part of the difficulty in thinking about multiculturalism is that it has come to have two meanings that are rarely distinguished. On one hand, it refers to a society made diverse by mass immigration, and on the other to the policies governments employ to manage such diversity. The failure to distinguish between these meanings has made it easier to use attacks on multiculturalism as a means of blaming minorities for the failure of government policy.

Mass immigration has been a boon to Western Europe. It has brought great economic benefits and helped create societies that are less insular, more vibrant and more cosmopolitan. But the policies designed to manage immigration have been largely a disaster. To see why, one needs only to look at the experience of Britain and Germany. Both have adopted multicultural policies, though they have taken different paths. The consequences, however, have been similar.

Thirty years ago, Britain was a very different place than it is now. Racism was vicious, visceral and often fatal. “Paki bashing,” the pastime of hunting down and beating up Britons with brown skin, became a national sport in certain circles. I remember organizing patrols on the streets of East London during the 1980s to protect South Asian families from rampaging racist thugs. Workplace discrimination was endemic and police brutality frighteningly common. Anger at such treatment came to an explosive climax in the riots that rocked London, Liverpool, Birmingham, Bristol and other cities during the late 1970s and early 1980s. It was in response to this rage that Britain’s multicultural policies emerged.

The British government developed a new political framework for engaging with minority groups. Britain was now in effect divided into a number of ethnic boxes – Muslim, Sikh, Hindu, African, Caribbean and so on. The claims of minorities upon society were defined less by the social and political needs of individuals than by the box to which they belonged. Political power and financial resources were distributed by ethnicity.

The new policy did not empower individuals; instead, it enhanced the authority of so-called community leaders, often the most conservative voices, who owed their positions and influence largely to their relationship with the state. In 1997, the Islamist groups that had led the campaign against Salman Rushdie’s “Satanic Verses” during the 1980s helped set up the Muslim Council of Britain. Its first general secretary, Iqbal Sacranie, had once declared death “too easy” for Mr. Rushdie. Polls showed that fewer than 10 percent of British Muslims believed that the council represented their views, yet for more than a decade the British government treated it as their official representative.

Politicians effectively abandoned their responsibility to engage directly with minorities, subcontracting it out to often reactionary “leaders.”

If the prime minister wanted to get a message to the “Muslim community,” he called in the council or visited a mosque. Rather than appealing to Muslims as British citizens, politicians preferred to see them as people whose primary loyalty was to their faith and who could be politically engaged only by other Muslims. As a result religious – and Islamist – figures gained new legitimacy in their own neighborhoods and came to be seen by the wider society as the authentic voice of British Muslims.

More progressive movements became sidelined. Today “radical” in an Islamic context means someone who is a religious fundamentalist. Thirty years ago it meant the opposite: a secularist who challenged both racism in the streets and the power of the mosques. Secularism was once strong within Muslim communities, but it has been squeezed out by the new relationship between the state and religious leaders.

Many second-generation British Muslims now find themselves detached from both the religious traditions of their parents, which they often reject, and the wider secular society that insists on viewing them simply as Muslims. A few are drawn inevitably to extremist Islamist groups where they discover a sense of identity and of belonging. It is this that has made them open to radicalization.

A similar process has taken place in Germany. Postwar immigrants, primarily from Turkey, came not as potential citizens, but as “gastarbeiter,” or guest workers, who were expected to eventually return to their native countries. Over time, immigrants became transformed from a temporary necessity to a permanent presence, partly because Germany continued relying on their labor, and partly because they – and especially their children – came to see Germany as home.

The German state, however, continued to view them as outsiders and to refuse them citizenship. Unlike the practices in Britain, France or the United States, German citizenship is based on blood, not soil: it is granted automatically only to children born of German parents. Germany has nearly four million people of Turkish origin today, many of them born there, but fewer than 25 percent have managed to become citizens. Instead, multiculturalism became the German answer to the “Turkish problem.”

In place of citizenship and a genuine status in society, the state “allowed” immigrants to keep their own culture, language and lifestyles. One consequence was the creation of parallel communities. Without any incentive to participate in the national community, many Turks became dangerously inward-looking. Today, almost a third of Turkish adults in Germany regularly attend mosque, a higher rate than elsewhere in Western Europe and higher than in many parts of Turkey. The increasing isolation of second-generation German Turks has made some more open to radical Islamism. The uncovering last year of German jihadis fighting in Afghanistan should therefore have come as no surprise.

In Britain, the promotion of multicultural policies led to the de facto treatment of individuals from minority groups not as citizens but simply as members of particular ethnic units. In Germany, the formal denial of citizenship to immigrants led to the policy of multiculturalism. In both cases this has resulted in the creation of fragmented societies, the scapegoating of immigrants and the rise of both populist and Islamist rhetoric.

IN neither Britain nor Germany did multiculturalism create militant Islam, but in both it helped clear a space for it among Muslims. The challenge facing Europe today, therefore, is how to reject multiculturalism as a political policy while embracing the diversity that immigration brings. No country has yet succeeded in doing so.

In principle, the French assimilationist resolve to treat everyone as a citizen, not simply as an inhabitant of a particular ethnic box, is welcome. Yet as evidenced by police brutality against North African youth and the state ban on burqas, France continues to tolerate, and even encourage, policies that polarize society in the name of colorblindness. And although the relationship between Muslims and the state is healthier in America than in most European countries, the furor over a proposal to build an Islamic center and mosque near ground zero in New York reveals that the same fears and problems that haunt Europe exist in the United States.

There is no off-the-shelf solution. But the anniversary of 7/7 should remind us of how much is at stake in finding one.

Kenan Malik, a British writer and broadcaster, is the author of “From Fatwa to Jihad: The Rushdie Affair and Its Legacy.”
ITEM 27a: AP/WP: Indictment unsealed in Detroit accuses man on FBI terror list of seeking to set bomb in Israel   http://www.washingtonpost.com/national/indictment-unsealed-in-detroit-accuses-man-on-fbi-terror-list-of-seeking-to-set-bomb-in-israel/2011/07/06/gIQA4XQ90H_story.html

Indictment unsealed in Detroit accuses man on FBI terror list of seeking to set bomb in Israel
By Associated Press, Published: July 6

DETROIT – A Michigan man on the FBI’s most wanted list of terror suspects is accused of using a fake passport in an attempt to get into Israel and conduct a bombing on behalf of the Islamic militant group Hezbollah, according to an indictment unsealed in federal court in Detroit.

Faouzi Ayoub, 44, faces one count of passport fraud, according to the August 2009 indictment that was only unsealed in U.S. District Court in Detroit within the past week.

(FBI/Associated Press) – This undated image provided by the FBI shows Faouzi Mohamad Ayoub. An indictment has been unsealed in federal court in Detroit charging the Lebanese-born man with passport fraud in an attempt to gain entry into Israel and conduct a bombing on behalf of the Islamic militant group Hezbollah. Ayoub was indicted in August 2009 and charged with using a passport under the name of Frank Mariano Boschi to enter Israel in October 2000. Authorities say Ayoub should be considered armed and dangerous.

Federal prosecutors accuse the Lebanese-born Ayoub, whose last known U.S. residence was in southeast Michigan, of using a passport under the name of Frank Mariano Boschi to enter Israel in October 2000. The indictment does not indicate whether authorities believe Ayoub participated in any bombing.

The FBI’s office in Detroit could not discuss the case Wednesday, say where Ayoub was believed to be now or explain why the indictment was unsealed, spokeswoman Sandra Berchtold said. But she noted that he should be considered armed and dangerous and that anyone with information about him should contact their local FBI office, or nearest U.S. embassy or consulate.

“Future indictments may be handed down as various investigations proceed in connection to other terrorist incidents,” according to a posting about Ayoub and others on the FBI’s website.

The U.S. government classifies Hezbollah, which dominates the Lebanese government coalition, as a terrorist group. Hezbollah fought a devastating, 34-day war with Israel in 2006 that that left 1,200 Lebanese and 160 Israelis dead. Lebanon and Israel technically remain at war.

It was not clear how long Ayoub’s name had been on the FBI’s Most Wanted Terrorists, at the top of which is Egyptian Islamic Jihad founder Ayman Al-Zawahiri, indicted for his alleged role in the 1998 embassy bombings in Tanzania and Kenya. The attacks killed 224 people.

Al-Zawahiri’s group later merged with al Qaeda.
ITEM 28a: ALL HEADLINE NEWS: Hezbollah’s Latin American influence worries Congress   http://www.allheadlinenews.com/articles/90053547?Hezbollah%26%23146%3Bs%20Latin%20American%20influence%20worries%20Congress

Hezbollah’s Latin American influence worries Congress
Tom Ramstack
July 6, 2011 05:31 pm EDT

Congress is reviewing its defense options amid growing evidence the radical Islamic group Hezbollah is expanding its presence in Latin America.

On Thursday, witnesses from public policy groups plan to testify on Hezbollah’s Latin American connections before the House Homeland Security subcommittee on counterterrorism and intelligence.
The State Department classifies Hezbollah as a terrorist organization.
Witnesses for the hearing include Roger F. Noriega, a senior fellow of the American Enterprise Institute, and Douglas Farah, a senior fellow of the International Assessment and Strategy Center.
Their testimony is expected to closely follow recent statements to a Senate committee from Air Force General Douglas Fraser, commanding officer of the U.S. Southern Command.
He said Iran and its close allies in Hezbollah are taking advantage of friendly relations with Venezuelan President Hugo Chavez, a critic of U.S. foreign policy.
Iran is increasing the number of its Latin American embassies and teaching Islam to impoverished residents of the area, Fraser said.
“There are flights between Iran and Venezuela on a weekly basis and visas are not required for entrance into Venezuela or Bolivia or Nicaragua,” Fraser said. “So we don’t have a lot of visibility in who’s visiting and who isn’t, and that’s really where I see the concerns.”
Fraser, who heads U.S. military operations throughout Latin America, described Iran’s growing influence as a “potential risk” to the region.
“It is a concern, and it is an issue we will continue to monitor for any increasing activity,” he said.
Other concerns in Congress spring from Mexico’s war with its drug cartels.
Some lawmakers say the war is weakening the Mexican government and opening opportunities for Hezbollah to join with the cartels.
Rep. Sue Myrick (R-N.C.) wrote a letter to the Homeland Security Department last year suggesting closer cooperation with the Mexican police and military to halt Hezbollah’s support of the drug cartels.
Last year, Mexican police arrested Jameel Nasr, the reputed head of Hezbollah’s operations in Mexico. He was living in Tijuana, across the border from San Diego, when he was arrested.
Evidence against him included frequent trips to Lebanon, allegedly to set up a network of Hezbollah operatives that would target Israel and Western nations. Nasr also made trips to Venezuela and other parts of Latin America, Mexican police reported.
Another part of the Islamic influence comes from Middle Eastern refugees.
About 25,000 Muslims whose families emigrated from Lebanon after the 1948 Arab-Israeli war and the 1985 Lebanese civil war live in Latin American countries.
They are believed to have helped Hezbollah with the bombing of a Jewish cultural center in Buenos Aires, Argentina in 1994. Eighty-five people died in the attack.
More recently, intelligence reports show Hezbollah has been financing training camps and propaganda operations in South America, according to U.S. officials.
Their biggest boost came from an agreement signed in 2007 between Venezuelan President Chavez and Iranian President Mahmoud Ahmadinejad.
The two leaders agreed to use part of a joint $2 billion investment fund to thwart what they referred to as U.S. domination in developing countries.
The fund originally was designed to fund oil production and to build infrastructure. They did not explain details of how the money might be used against U.S. influences.

MONEY LAUNDERING/CORRUPTION    ITEM 29a: RIA NOVOSTI: Russian government daily Rossiiskaya Gazeta published the list of individuals and companies involved in money laundering and terrorism financing.   http://en.rian.ru/russia/20110706/165046783.html

Russia publishes its money laundering and terrorism financing list
Russian government daily Rossiiskaya Gazeta published the list of individuals and companies involved in money laundering and terrorism financing.
06:29 06/07/2011
MOSCOW, July 6 (RIA Novosti)

Russian government daily Rossiiskaya Gazeta on Wednesday published the list of individuals and companies involved in money laundering and terrorism financing.
The first of the document part, compiled by the Foreign Ministry on the basis of similar UN documents, lists some 600 foreign companies and individuals.
The second one, compiled by Russia’s Justice Ministry, focuses on those whose activities are directly related to Russia. A total of 48 organizations and over 1,500 individuals are mentioned in the second part of the list.
Only organizations and individuals, whose illegal activities were established in court or whose activities on the Russian territory were officially ended, were listed.
“Specialists say, however, that there is a classified part of the list, where terrorism and extremism suspects are mentioned,” the newspaper wrote.
ITEM 30a: Georges Abi Saleh: Lebanon Actively Polices Its Banks   http://online.wsj.com/article/SB10001424052702304450604576417523565507418.html?mod=googlenews_wsj

LETTERSJULY 7, 2011
Lebanon Actively Polices Its Banks
Georges Abi Saleh

Regarding Bret Stephens labeling Lebanon as “a money-laundering haven for the region’s bad guys,” the Association of Banks in Lebanon (ABL) highlights the following: First, Lebanon is one of the major financial centers of the region. Lebanese banks are directly present in 31 countries and deal with a network of correspondent banks in 111 cities across the globe, including major banks in the U.S. (“Don’t Bank on Beirut,” Global View, June 14). Lebanese banks are known for compliance with international norms, namely the Basel Committee on Banking Supervision and the Financial Action Task Force.

Second, money laundering accusations cannot be generalized to all 66 Lebanese banks because of two isolated cases in a decade, which were vigilantly tackled by the authorities.

We stress that the case of the Lebanese Canadian Bank (LCB), accused by the U.S. Treasury as a primary money laundering concern, is an isolated one in our banking sector. The reaction of the Lebanese authorities was quick: LCB was soon taken over by Société Generale de Banque, LCB shareholders and senior management were put out of the market, and the case remains under investigation. This fact is confirmed by the March 23 press release issued by U.S. Ambassador Maura Connelly, in which she “assured the ABL that action taken [against LCB] by the U.S. Treasury was not targeted against the Lebanese banking sector, but was instead part of the U.S. Treasury’s global effort to protect the U.S. financial sector from illicit activities.”

As for the second alleged case of Al Madina bank in 2003, regulatory reaction was also firm: The bank was liquidated, accused senior managers incarcerated and all other criminals legally prosecuted.

ABL considers the opinion article to be unjust, and it constitutes a reputational risk, unfairly targeting the Lebanese banking sector.

COMMODITIES    ITEM 31a: WSJ: Food Prices Near Record Highs   http://online.wsj.com/article/SB10001424052702303365804576431380189369202.html?mod=WSJ_World_LEFTSecondNews

JULY 7, 2011, 7:11 A.M. ET
Food Prices Near Record Highs
By CAROLINE HENSHAW

LONDON-World food prices edged up in June to near their record highs as a sharp increase in sugar prices outweighed a slump in the grains complex, the United Nation’s food body said Thursday.

The Food and Agriculture Organization’s food price index, which covers prices of a basket of commodities, rose 1% to 234 points last month, up 39% compared with the same time last year and just below the record 238 points hit in February.

The main driver of the increase was a rise in the FAO’s sugar index, which increased by 14% on month to 359 points. Prices have surged from their May lows due to concerns that aging cane and poor weather may cut production in top producer Brazil below last year’s level.

U.K. sugar merchant Czarnikow this week reduced its estimate for Brazil’s harvest to 535 million metric tons of cane, down 40 million tons from its initial forecast and less than the 575 million tons harvested in the 2010-11 crop year, joining a raft of other analysts who have lowered their expectations for this year’s crop.

Cereal prices, however, pulled back slightly as improving weather eased fears over the size of the harvest in Europe and the U.S. and the resumption of exports from Russia. The FAO Cereal Price Index averaged 259 points in June, down 1% from May but still 71% higher than in the same month in 2010.

Grain prices plummeted at the end of June when the U.S. Department of Agriculture released surprising figures upgrading its estimate for domestic corn supplies. Abdolreza Abbassian, secretary of the FAO’s Intergovernmental Group on Grains, said the slump in prices may be felt more in the coming months.

“To see prices coming down in July would not surprise me given the trends of the previous weeks,” he said. “The figures we now have for cereals are very close to our previous forecast” in May.

The FAO raised its estimate for world 2011-12 cereal production by 11 million tons to 2.31 billion tons in response, up 3.3% compared with last season. World cereal stocks at the close of the crop season in 2012 are now expected to stand six million tons above their opening levels.

Sugar prices too are expected to fall in the coming months. Forecasters still expect a large surplus this year, even with a fall in Brazil’s harvest, and the advent of the Northern Hemisphere harvest in the coming months should help world supplies.

Still, Mr. Abbassian warned that any pullback in world food is likely to be only slight and prices look set to stay at historically-high-and volatile-levels well into 2012. Grain markets are also likely to remain nervous until more is known about corn yields in August, he added.

“For the foreseeable future we will be still vulnerable to weather shocks affecting prices more than we’re used to because we’ve got no buffer,” he said.

The FAO Dairy price Index averaged 232 points in June, virtually unchanged from 231 points in May. The FAO Meat Price Index averaged 180, marginally up from May as poultry meat prices rose 3% to a new record, while pig meat prices declined.
ITEM 32a: FINANCIAL TIMES: A tale of two inflation policies   http://www.ft.com/intl/cms/s/0/60dafe2c-a738-11e0-b6d4-00144feabdc0.html#axzz1RBhlVegV

Last updated: July 6, 2011 10:07 am
A tale of two inflation policies
By James Mackintosh

In monetary policy, as in life, you get what you pay for.
The Brazilian real this week hit its highest, in nominal terms, against the dollar since 1999. Last week the Turkish lira set a new low against the euro. The real’s strength and the lira’s weakness are direct results of their central banks’ attempts to cope with the dilemma created by having a strong economy and a floating currency in a low-rate world.

The central bank has to choose between two ugly alternatives. If it raises rates to slow the economy – the option Brazil picked – it attracts hot money flows, as currency traders chase the yield. That pushes up the currency, while the capital flows leak into the money supply, offsetting the effects of the tightening.
The alternative is radical: faced with a booming economy, Turkey started cutting rates in December. That succeeded in weakening the lira, but meant easier loans, offsetting any slowdown in capital inflows.
Both Brazil and Turkey are trying unconventional policies to tackle the unwanted side-effects. Brazil is taxing capital flows, to deter foreign money. Turkey is restricting bank lending. Neither policy seems to be having the desired effect, with domestic credit growing rapidly in both countries.
Turkey’s central bank claimed on Tuesday that its unconventional approach was working. Economic growth would slow from the red-hot 11 per cent annualised level of the first quarter, credit growth would cool, and inflation fall. Investors should be sceptical, given the number of times the bank has changed its inflation target in recent years.
The Brazilian approach is not obviously working either, as money continues to pour in from abroad. But Turkey looks worse off, running a near-9 per cent current account deficit.
Investors should watch closely; one of the experiments might unexpectedly start to work. They should also prepare for both to end messily. Bad debts and capital flight often follow a credit splurge.
ITEM 33a: BLOOMBERG: African Barrick Shares Hit as Mining Boom Triggers Tax Grab   http://www.bloomberg.com/news/2011-07-06/african-move-to-cash-in-on-commodity-boom-weighs-on-mining-company-shares.html

African Barrick Shares Hit as Mining Boom Triggers Tax Grab
By Chris Kay – Jul 7, 2011 12:45 PM ET

A gold agent uses water to check for traces of gold in waste rock near the North Mara mine in the district of Nyangoto, Tanzania. Photographer: Trevor Snapp/Bloomberg
African countries are moving to grab a bigger slice of their commodity wealth as rivalry for the world’s remaining reserves of iron ore, uranium and gold sap the bargaining power of companies such as Anglo American Plc. (AAL)
Tanzania’s proposal to study a so-called super tax on mines sent African Barrick Gold Plc, the East African nation’s biggest producer of the metal, to a record low in June. Ghana, Namibia, Guinea, Uganda, Mozambique and Gabon also are acting to increase their share of profits from mining.
The balance of power is swinging in favor of African governments as commodity prices soar and Brazil’s Vale SA (VALE5) and China’s Minmetals Resources Ltd. join Western companies bidding for contracts. At the same time, policy makers are looking to finance investment in roads, rail links and power supplies that they say is essential to maintain growth that has averaged 5.7 percent across the continent over the past decade.
“The fact that Chinese, Brazilian and Indian companies are becoming much more involved in the African mining space means that Western mining companies are feeling squeezed,” Chris Melville, a London-based African mining consultant at Menas Associates, said in a June 14 telephone interview. “When you have more suitors, you can afford to be a little bit more selective and a little bit more demanding.”
Mineral Wealth
Companies may have little choice but to pay more. The copper belt running through Zambia and the Democratic Republic of Congo holds 10 percent of world copper reserves, while Congo alone has two-thirds of cobalt deposits. Botswana says it has 200 billion metric tons of coal reserves and Guinea is the world’s biggest exporter of bauxite, the ore used to make the main raw material in aluminum production. The continent also has some of the world’s richest seams of uranium, platinum and gold.
Shares in mining companies are suffering as governments begin to flex their new-found muscle, even as the S&P GSCI Index of 24 commodities jumped 40 percent in the past 12 months.
Kenmare Resources Plc (KMR), a Dublin-based producer of titanium minerals in Mozambique, dropped 8.1 percent yesterday after the government said it plans to revise the country’s mining law and will seek to give the state a share of projects in “strategic sectors” such as coal.
New Licenses
Kenmare’s managing director, Michael Carvill, said by phone today that the plans won’t affect its existing operation in the southern African nation. Changes to Mozambique’s mining laws will only apply to new licenses, Mario Marques, adviser to Mineral Resources Minister Esperanca Bias, said today in an e- mailed response to questions.
London-based African Barrick Gold slumped 7.8 percent on June 8 to the lowest price since the stock started trading in March 2010, after Tanzania’s planning commission recommended the government consider a super tax. The company said in a statement on June 9 that its tax obligations were fixed by existing contracts and could not be changed.
Australia’s Extract Resources Ltd. (EXT), which is proposing a $1.7 billion uranium venture in Namibia, fell 20 percent April 28-29 on concern the African nation’s government planned to give mining rights to a state-owned company. Extract said June 7 that it was in talks to sell a stake in its Husab uranium project to state-owned Epangelo Mining Co. “on a commercial basis.”
Shares in Aquarius Platinum Ltd. (AQP), Impala Platinum Holdings Ltd. (IMP) and Anglo American Platinum Ltd., majority owned by Anglo American, slid in March after Zimbabwe’s government said it will ensure foreign companies are “junior partners” in the country.
Definite Trend
“This is definitely a trend which we are seeing now and some of it has to do with commodities, but I see a lot of it has to do with the perception from governments that they’re not getting a fair share,” Mouhamadou Niang, the manager in charge of mining sector investments at the African Development Bank, said in a June 16 phone interview from Cairo. “There are demands from both sides” and there “needs to be a sense of continuity and stability of fiscal and legal regimes.”
The drive for a greater share of mineral wealth may move to the continent’s biggest economy, South Africa.
South Africa’s ruling African National Congress party agreed in September to study industry nationalization to meet demands from Julius Malema, head of its youth arm.
‘Cold Feet’
“Investors, the traditional suppliers of risk capital to this industry, are getting cold feet,” Impala Platinum’s Chief Executive Officer David Brown, said June 28 in Johannesburg. “The risk associated with future investment in South African mining has increased considerably as seen from the outside world.”
The nationalization debate risks cutting the mine output that contributes 8.8 percent of South Africa’s gross domestic product, he said. Across the continent, talk of higher taxes may damp investment.
“Governments tempted to move in this direction convince themselves that necessary mining investments in their countries will continue unabated,” Anglo American Chief Executive Officer Cynthia Carroll, said June 30 at the Melbourne Mining Club in London. “They are wrong. International businesses have choices to make between investment opportunities in different jurisdictions.”
Options
With so many of the world’s remaining mineral deposits in Africa, those options may be narrowing, just as Africa’s choices are widening. Governments are being courted by more miners, particularly from China, Liberia’s President Ellen Johnson Sirleaf told an audience in London on June 13.
The Chinese are “so aggressive and hungry for raw materials that they are penetrating in a way, and their processes and procedures are not as complicated,” she said. “We have also reached a place of maturity in how we negotiate.”
China Union Investment Ltd. is developing a $2.6 billion iron-ore deposit in Liberia, while Cnooc Ltd. (883) is helping to exploit oil deposits in Uganda. China also has a $6 billion deal with Democratic Republic of Congo to build infrastructure in exchange for minerals.
Countries outside Africa are also raising taxes. Australia estimates that its plan to impose a 30 percent levy on iron-ore and coal profits will earn A$7.7 billion ($8.2 billion) in its first two years, the country’s Treasury Department said last month. The tax, which will help pay for road and rail projects, is scheduled to start in July 2012 after the laws are passed by parliament.
Brazil is studying an additional tax on its most profitable mining projects, the newspaper Folha de S.Paulo reported on June 21, without saying where it got the information.
“There’s definitely more competition and the mining companies that want to be here in Africa in the long run have to revisit to some extent their strategy in terms of how they negotiate concession contracts,” Melville said.

CYBERWARFARE    ITEM 34a: WSJ: Web’s Openness Is Tested in Tunisia: Post-Uprising Freedoms Are Under Pressure; Journey From Internet Activist to Official-and Back Again   http://online.wsj.com/article/SB10001424052702303544604576430041200613996.html?mod=WSJ_World_LeadStory

JULY 7, 2011
Web’s Openness Is Tested in Tunisia
Post-Uprising Freedoms Are Under Pressure; Journey From Internet Activist to Official-and Back Again
By STEVE STECKLOW

TUNIS, Tunisia – Slim Amamou’s struggle to end Internet censorship in Tunisia has come full circle.

In January, the 33-year-old online activist and software developer was jailed after the government accused him, among other things, of attacking President Zine El Abidine Ben Ali’s website. Mr. Ben Ali soon fell from power. Mr. Amamou was swept into the interim government, embodying how the youth who had run a revolution from the Internet had now gained a toehold in power.

Now he is back on the outside, worrying about what he sees as a new threat of Web censorship.

Mr. Amamou’s experience tracks his country’s halting embrace of information freedom. Before this year’s Tunisian uprising, the country ranked behind only Iran, Myanmar, Cuba and China in terms of online restrictiveness, according to Freedom House, a Washington-based, pro-democracy nonprofit. Tunisia granted wide-open Internet access earlier this year, and now faces its first tests of its intentions to maintain that openness.

Tunisia’s military recently ordered a block on Facebook pages that called for violence. The government’s Internet agency is fighting a Tunisian court order to block pornographic websites, setting up a battle that could help define the breadth of censorship in the country.

How Tunisia proceeds could provide an early sign of whether uprisings across the region will lead to lasting freedom of information, democracy and other protester demands-or whether these windows are in danger of closing.

Mr. Amamou, a soft-spoken man from a medical family in the capital, Tunis-where his father is a professor of medicine and his mother, a gynecologist-studied computer science. After college, he and some friends launched a website-design company. When he began blogging, he wrote about project-management software.

In 2008 and 2009, Tunisia increasingly censored political blogs and sites critical of its human-rights record. Mr. Amamou, who says he never considered himself political, grew defiant. He created a website that gave Tunisians access to blocked sites.

Last year, he also discovered that Tunisian users of Google Inc.’s Gmail email service were being redirected to a fake login page that stole their passwords. He wrote about it online. The government, he said, censored his article. While Mr. Amamou hadn’t implicated the then-government, one official says it used such methods to monitor activists’ accounts.

In May 2010, Mr. Amamou planned a street demonstration in Tunis to protest Internet censorship. He said Tunisia’s constitution included the right to protest, but as far as he knew no one had sought legal permission. He and a friend decided to try.

They attempted to deliver the necessary documents to the Interior Ministry. The agency, he said, refused to accept them. They mailed the papers and requested proof of delivery. The proof never came. The pair documented their efforts online.

The day before the planned demonstration, police arrested the pair. Mr. Amamou says they were interrogated all day and threatened with torture. Police made him record and post online a video from the station calling off the protest. “Please, don’t bother coming,” he says in the video.

The pair instead organized “flash mobs” in public places. Tunisians gathered not only in their country but also in France, Canada, New York and Ghana, wearing white T-shirts to protest Internet censorship. The activists posted footage of the mobs in what became a popular online video. He vows in the video: “I swear on my mother, we’ll be back.”

In December, a Tunisian street vendor set himself on fire after government authorities confiscated his fruit and beat him. The country revolted.

Mr. Amamou helped to spread online videos of various protests and broadcast one live. “The censorship could not keep up,” he said.

Expecting to be arrested, he said he activated a program called Google Latitude on his mobile phone to let friends track his location. On Jan. 6, police arrested him. They took his phone but left it on. Word quickly spread online that he was at the Interior Ministry.

The police accused him of participating in cyberattacks on government websites by the hacker group Anonymous. Mr. Amamou says he publicized the attacks but wasn’t behind them.

The interrogation lasted five days, he said. “They were constantly slapping me in the face,” he said. He was brought before a prosecutor, who sent him to jail.

On Jan. 13, amid growing demonstrations, Mr. Ben Ali announced reforms, including an end to Internet censorship. Government officials turned off the Web-blocking equipment.

The protests continued. The next day, Tunisia’s longtime ruler fled the country.

Mr. Amamou was freed. Four days later, the new interim government offered him the post of secretary of state for youth and sports. He accepted.

He was criticized by some online activists, including Sami Ben Gharbia, who has lived in exile in the Netherlands. He saw Mr. Amamou as aligning himself with officials from the old regime. “Seeing him next to them all at the same table was very shocking and disappointing for many of us,” he said.

Meanwhile, one government official said Mr. Amamou was too inexperienced to be effective.

The activist defends his decision. “I had this opportunity to see for myself if they were really serious about making free elections,” he said.

He had his first clash with his new colleagues when he showed up at a ministerial meeting without a tie. One minister offered to give him one. Mr. Amamou put one on for the meeting. “It was a small compromise,” he says.

Officials also asked him to stop sending Twitter messages during internal government meetings to his 25,000 followers. He complied. “I tweeted everything after the meetings,” he said.

As a government official, Mr. Amamou convinced some ministers to set up Facebook pages to make their agencies more accessible. He pushed to release unpublished government data on youth unemployment. He introduced “citizen journalism clubs” at youth centers.

Meanwhile, one of his friends, Moez Chakchouk, was shaking up the Tunisian Internet Agency, where he had been named chief executive in February. A critic of countrywide censorship, he wants to end the license for a Western product used to block websites.

But more widespread blocking may be in store. A judge is now reviewing the military’s May order for the agency to block five Facebook pages. The agency is also appealing a Tunisian court’s order that it reinstitute countrywide blocking of pornographic sites.

“Tunisia is a conservative, Muslim society where people should not be confronted to shocking pornographic material against their will,” says Monhom Tourki, an attorney who filed a suit on behalf of two plaintiffs.

A judgment in the pornography matter is expected this summer. Mr. Chakchouck says Tunisian law doesn’t define pornography and worries that broad definitions of offensive materials could result in more censorship.