August 2011
Vol 11, No. 8
ORGANIZED POLITICAL TERRORISM: THE NORWEGIAN MASSACRE By James Petras
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So let us fight together with Israel, with our Zionist brothers against all anti-Zionists, against all cultural Marxists/Multiculturalists”. -Anders Behring Breivik’s Manifesto
media’, the Norwegian police, Israel and rightwing terrorism.
“. . . two more cells exist in my organization”. . . -Ander Behring Breivik in police custody (Reuters 25/7/2011) INTRODUCTION
The July 22, 2011, bombing of the office of the Norwegian Prime Minister, Labor Party Jen Stoltenberg, which killed 8 civilians, and the subsequent political assassination of 68 unarmed activists of the Labor Party Youth on Utoeya Island, just 20 minutes from Oslo, by militant neo-fascist ChristianZionists, raises fundamental questions about the growing links between the legal Far-Right, the ‘mainstream
THE MASS MEDIA AND THE RISE OF RIGHTWING TERRORISM
The leading English language newspapers, The New York Times (NYT), the Washington Post (WP), the Wall Street Journal (WSJ) and the Financial Times (FT), as well as President Obama, blamed “Islamic extremists”, upon the first police
reports of the killings, publishing a series of incendiary (and false) headlines and reports, labeling the event as ‘Norway’s 9-11’,in terms, which echoed the ideological motivation and justifications cited by the Norwegian Christian-Zionist political assassin, Anders Behring Breivik himself. The July 23/24 front page of the Financial Times (of London), read “Islamist extremism fears: Worst Europe strike since 2005”. Obama immediately cited the terrorist attack in Norway to further justify his overseas wars against Muslim countries. The FT, NYT, WP and WSJ trotted out their self-styled “experts” who debated over which Arab/Islamic leaders or movements were responsible – despite Norwegian press reports of ‘the arrest of a Nordic man in police uniform’. Turn to next page
ARTICLES
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.MALAYSIA-VATICAN TIES....Malaysia now joins
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the majority of the world’s nation-states that have forged diplomatic relations with the Vatican...........P 4
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R EASONS W HY C HINA IS DIFFERENT..............................................P 7 .CAPITAL FLIGHT IN INDIA.............................P 8
.FLOTILLA 2 DESERVES OUR APPLAUSE ...It is a shame that the Greek authorities have gone all out to prevent Freedom Flotilla 2 from sailing from Greece to Gaza..............................................................P 4
. W HAT
A MERICAN P UBLIC SHOULDN ’ T KNOW.................................................... P 9 THE
.W ATER C HALLENGES
D EVELOPING WORLD................................................P 10 IN THE
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Clearly, the US mass media and political elite were eager to use the bombing and assassinations to justify ongoing overseas imperial wars, ignoring the burgeoning domestic extremist rightwing organizations and violent individuals who are the outgrowth of official Islamophobic hate propaganda. When Anders Breivik, a known neofascist extremist, handed his weapons over to Norwegian police without resistance and claimed credit for the bombing and massacre, the second phase of the official cover-up took place: He was immediately described as “a lone wolf assassin”, who “acted alone” (BBC July 24, 2011) or as mentally deranged, downplaying his political networks, his American, European and Israeli ideological mentors and commitments, which led to his acts of terrorism. Even more outrageous, the media and officials ignored the fact that this complex, multiphase terrorist attack was beyond the capacity of one ‘deranged’ person. Anders Behring Breivik had been a dues-paying member of a Far-Right political party, The Progress Party and a collaborator and contributor to an overtly neo-Nazi web site. He frequently focused his hatred on the ruling Labor Party for its relative tolerance of immigrants. He despised immigrants especially, Muslims, and was an ardent Christian-Zionist supporter of Israeli repression and terror against the Palestinian people. His criminal action was political in essence and embedded in a much wider political network. The political elite and media have scrambled to deny the overlapping links between ‘legal’ ideological Islamophobes, like the American Zionists Daniel Pipes, David Horowitz, Robert Spencer and Pamela Geller, the Dutch far-right Party of Freedom led by the hate-monger Geert Wilders and
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their counterparts in the Norwegian Progress Party who rail against the “Muslim threat”. The “direct action” terrorists take their cues from electoral parties, like the Progress Party, who recruit and indoctrinate activists, like Behring Breivik, who then leave the ‘electoral road’ to carry out their bloody carnage, allowing the ‘respectable’ hate-mongers to hypocritically condemn him… after the outrage. THE LONE ASSASSIN : A FASCIST
L E A D A R T I C L E (f) waiting patiently while armed to the teeth for a ferry boat (g) crossing with other passengers in his police uniform (h) rounding up the Labor youth activists and commencing the massacre of scores of unarmed youth and finally, (i) finishing off the wounded and hunting for those trying to hide or swim away - cannot accord with the activity of a lone zealot. Even the combination of Superman, Einstein and a world class marksman could not perform those tasks.
SUPERMAN TRAVELS FASTER THAN A SPEEDING BULLET VERSUS THE POLICE MOVING SLOWER THAN AN ARTHRITIC TURTLE
The case for the “lone wolf terrorist” defies credence. It is a tissue of lies used to cover up state complicity, intelligence malfeasance, and the sharp right-turn in the domestic and foreign policies of NATO countries. There is no basis to accept Breivik’s initial claim that he acted alone for several outstanding reasons: First, the car bomb, which devastated downtown Oslo, was a highly complex weapon requiring expertise and coordination – the kind available to state or intelligence services, like the Mossad, which specialize in devastating car bombs. Amateurs, like Breivik, with no training in explosives, usually blow themselves up or lack the skill required to connect the electronic timing devices or remote detonators (like the unsuccessful ‘shoe’, ‘underpants’ and ‘Times Square’ bombers have proved) . Secondly, the details of: (a) moving the bomb (b) obtaining (stealing) a vehicle (c) placing the device at the strategic site (d) successfully detonating it (e) then gowning up in an elaborate special police uniform with an arsenal of hundreds of rounds of ammunition and driving off in another vehicle to Utoeya Island
The media and NATO leaders must view the public as passive morons to expect them to believe that Anders Behring Breivik “acted alone”. He is willing to take a 20 year prison sentence if it means, as he maintains, that their collective action is the spark that ignites his comrades and advances the agenda of the violent and legal far rightwing parties. Facing a Norwegian judge on July 25, he publically declared the existence of “two more cells in my organization”. According to witness testimony on Utoeya Island shots from two distinct weapons were heard from different directions during the massacre. The police say they are… “investigating”. Needless to say the police have found nothing; instead they put on a “show” to cover their inaction by raiding two houses far from the massacre and quickly released the suspects. The most serious political implication of the terrorist action, however, is the conspicuous complicity of top police officials. The police took 90 minutes to arrive at Utoeya Island, located less than 20 kilometers from Oslo, 12 minutes by helicopter and 25 to 30 minutes by car and boat. The delay allowed the right wing assassins to use up the ammunition, maximizing the death toll of young, anti-fascist activists and devastating the Labor youth movement. continued next page
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The police chief, Sveinung Sponheim, made the feeblest excuse and coverup, claiming “problems with transport”. Sponheim argued that a helicopter “wasn’t on standby” and they “could not find a boat” (Associated Press, July 24, 2011). Yet a helicopter was available; it managed to fly to Utoeya and film the ongoing slaughter, and over half of Norwegians, a seafaring people for millennia, own or have access to a boat. A police force, faced with what the Prime Minister calls the ‘worst atrocity since the Nazi occupation’, moving at the pace of an arthritic turtle to rescue youth activists, raises the suspicion of some level of complicity. The obvious question arises as to the degree to which the ideology of right wing extremism – neo-fascism – has penetrated the police and security forces, especially the upper echelons? This level of “inactivity” raises more questions than it answers. What it suggests is that the Social Democrats only control part of the Government – the legislative, while the neo-fascists influence the state apparatus. The plain fact is that the police did not save a single life. When they finally arrived, Anders Behring Breivik had run out of ammunition and surrendered turning himself over to the police. The police literally did not fire a single shot; they did not even have to hunt or capture the assassin. An almost choreographed scenario: Hundreds wounded, 68 unarmed, peaceful activists killed and the Labor youth movement decimated. The police can claim “crime solved” while the mass media prattles about a “lone assassin”. The far right has a “martyr” to mask a further advance in their anti-Muslim, pro Israel crusade. (It is reminiscent of the celebrated
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Israeli-American fascist mass murderer, Dr. Baruch Goldstein, who slaughtered dozens of unarmed Palestinian men and boys at prayer in
1994). Only two days before the political murders, the head of the Labor Party Youth Movement, Eskil Pederson, gave an interview to the Dagbladet, Norway’s second largest tabloid, in which he announced a “unilateral economic embargo of Israel from the Norwegian side” (Gilad Atzmon, July 24, 2011). The fact of the matter is that the Norwegian military has no problem promptly dispatching 500 troops to Afghanistan, half way around the world and providing six Norwegian Air Force jets and pilots to bomb and terrorize Libya. And yet they can’t find a helicopter or a row boat to transport their police a couple hundred yards to stop a domestic right wing terrorist – whose murderous rampage was being described second by second by the terrorized young victims on their cell phones to their frantic parents? THE IMPERIAL ROOTS OF DOMESTIC FASCISM : CONCLUSION
Clearly, the decisions of Norway and other Scandinavian nations to participate in the US imperial crusades against Muslim and especially Arab people in the Middle East have aroused and energized the neo-fascist right. They now want to “bring the war home”; they want Norway to go further, to ‘cleanse the nation’ by expelling Muslims. They want to “send
L E A D A R T I C L E a message” to the Labor Party: Either it must accept a full neo-fascist proIsraeli agenda or expect more massacres, more elected fascists, more followers of Anders Behring Breivik. The “Progress Party” is now the second largest political party in Norway. If a “conservative” coalition defeats Labor, neo-fascists will probably sit in the Government. Who knows, after a few years of good behavior, they might find an excuse to commute their ex-comrades sentence or proclaim him mentally rehabilitated and freed. Clearly what is needed is the immediate withdrawal of all troops from imperial wars and a systematic, coherent and organized fight against domestic rightwing terrorists and their intellectual godparents, in America, Israel and Europe. Labor youth must go press on with their demand that the Labor Government, under Prime Minister Jen Stoltenberg, recognize the nation of Palestine and implement a total boycott of Israeli goods and services. A national and international political-educational campaign must be organized to expose the links between respectable electoral fascists and violent terrorists. The Labor Youth martyrs of Utoeya Island should be cherished and their ideals taught in all the schools. Their far-right enemies and supporters whether overt, covert or directly complicit, should be exposed and condemned. The best weapon against the renewed neofascist onslaught is a political and educational offensive, taking up the anti-fascist, anti-Quisling (Norway’s notorious Nazi collaborator) fighting traditions of their grandparents’ era. It’s not too late – if the Labor Party, the Norwegian trade unions and the antifascist youth act now before the flood of resurgent fascism. 31 July, 2011 Professor James Petras is the author of more than 62 books published in 29 languages, and over 600 articles in professional journals. Source: Countercurrents.org
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STATEMENTS MALAYSIA - VATICAN TIES The International Movement for a Just World (JUST) warmly welcomes the establishment of formal diplomatic ties between Malaysia and the Vatican. Malaysia now joins the majority of the world’s nation-states that have forged diplomatic relations with the Vatican. This includes a large number of Muslim majority states. Ties with the Vatican, it is hoped, will enhance relations between the Muslim majority and the Christian minority in Malaysia. Muslims and Christians share many common values ranging from a belief in God and respect for the individual person to a strong commitment to the well-being of the weak and disadvantaged and a deep attachment to just and honest governance. These shared values should be given greater emphasis within Muslim and Christian religious
circles, in the education system and in the media in Malaysia.
and legitimise any form of global injustice.
Diplomatic relations between Malaysia and the Vatican should also spur both Muslims and Christians in Malaysia to combat extremist attitudes within the two communities and to overcome religious prejudices and biases. Other hurdles pertaining to the misinterpretation and misapplication of certain laws should also be addressed with sincerity and honesty.
Dominance and control over global politics and the global economy has sometimes been rationalised through religion. Malaysian Muslims, Christians and people of other faiths expect the Vatican to adopt a principled position against any such perversion and prostitution of religion.
At the global level, Malaysia and the Vatican should not only fight violence and terrorism perpetrated in the name of religion but also cooperate with one another in trying to overcome the underlying causes of various global injustices which are mainly responsible for much of the current global turmoil. Religious elites should not distort and pervert religious teachings to justify
It is our prayer that with the establishment of diplomatic relations, Malaysia and the Vatican will renew their quest for a just and peaceful world.
Dr. Chandra Muzaffar, President, International Movement for a Just World (JUST). 20 July 2011
FLOTILLA 2 DESERVES OUR APPLAUSE It is a shame that the Greek authorities have gone all out to prevent Freedom Flotilla 2 from sailing from Greece to Gaza. In the latest incident, a French motor yacht, the Dignite al Karama that managed to slip out of Greek waters on 5 July, 2011 has been stopped by Greek coast guards. Earlier, the captain of a US boat, the Audacity of Hope, was detained after the boat was intercepted while attempting to break the Greek ban. The captain, John Klusmer, was released on 5 July. A Canadian ship, Tahrir, with activists from Canada, Belgium, Italy, Switzerland and Turkey, was also prevented from leaving for Gaza on 4 July, 2011. The Greek government, it is alleged,
has succumbed to tremendous pressure from not only the Israeli regime but also certain governments in Europe and the United States. It has sworn to “prevent breach of Israel’s naval blockade.” Greece’s current economic woes have made it even more vulnerable to external pressures. Turkey, it appears, has also yielded to pressure from the US and Israel. The Mavi Marmara, which was at the forefront of Flotilla 1 in May 2010,was supposed to join Flotilla 2. At the eleventh hour, it cancelled its participation. It is not just pressure upon governments that has hobbled Flotilla 2. Two of the ships berthed at Piraeus,
the port of Athens, were damaged, it is believed, by saboteurs. A law suit filed in a Manhattan Court in the US by a father and son claiming to be victims of a Palestinian terrorist attack in 2002 sought to delay the flotilla from sailing. A warning letter was also sent to maritime insurance companies that had provided insurance to the flotilla. Another warning letter was sent to the giant communications firm, Immarsat, not to provide communication services to the flotilla. The US Secretary of State, Hilary Clinton, accused the flotilla of provocation. United Nations SecretaryGeneral, Ban Ki-moon, tried to persuade governments to stop the delivery of humanitarian aid via the continued next page
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Freedom Flotilla 2. Leading US media outlets criticised the flotilla for allegedly threatening Israel’s security. In spite of all this, we would regard Flotilla 2 as a relative success for a variety of reasons—even if it has not been able to deliver its much needed aid to the besieged people of Gaza. The flotilla drew 300 over activists from 22 countries which in itself is an achievement. The passengers on the US ship, the Audacity of Hope, included a notable holocaust survivor, Hedy Epstein, among other Jews. It is significant that on 4 July, 2011—US Independence Day—the American
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passengers on the boat called for the independence of the US from Israel. The flotilla also elicited the support of Nobel Peace laureates. Four of them, all women—Mairead Maguire, Rigoberta Menchu Tum, Jody Williams and Shirin Ebadi— in an open letter to the UN Secretary-General called upon him to “ support this non-violent, international humanitarian effort.” A number of NGOs from all over the world have expressed support for, and solidarity with, Flotilla 2. Even a segment of the mainstream media— not always sympathetic to the Palestinian cause—was appreciative of the flotilla’s attempt to help the
Palestinians. The men and women who were part of Flotilla 2 and all the others who made it possible deserve our applause for their commitment and their courage. Today, more than at any other time in the past, we have reason to be optimistic about their struggle and the valiant struggle of the Palestinian people and all those who champion their noble cause. What is important is to ensure that this struggle remains peaceful and nonviolent—and perseveres till it triumphs. Chandra Muzaffar. 8 July, 2011
ARTICLES MURDOCH EMPIRE SINKING BENEATH
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By George Galloway “Look on my works, ye mighty; and despair!” So said the base of the statue of Ozymandias of Egypt - Ramasses the Great, Pharaoh of the 19th Dynasty of Ancient Egypt - discovered deep under the desert sands in Shelley’s epic poem Ozymandias.
Like all good scandals follow the money is the maxim. And the question made famous by Watergate - “What did he know and when did he know it?” is the one on everybody’s lips. The “he” in question is, increasingly, the prime minister himself.
The poet’s point being of course that though undoubtedly great, in his day, ultimately Ozymandias and his empire went the way of all flesh, and all empires. So it seems is going the empire of Rupert Murdoch, once the greatest media conglomerate the world has ever known. Absolute carnage is currently being caused in British public life by the fallout from the illegal phone hacking carried out by Murdoch’s servants. In a story transfixing the country, there are often developments several times daily including arrests of powerful people and resignations from some of the best known public figures in the land.
Sunday. Since becoming prime minister just fifteen months ago, Cameron has had 26 meetings with Murdoch’s executives. Cameron’s wife was likely the only person to get more meetings with the PM than Murdoch’s executives. Cameron, against the advice of his deputy prime minister, employed former News of the World editor Andy Coulson as his communications director. Coulson, who has been at the centre of the hacking probe, was arrested on 8 July, while his deputy was detained last week.
David Cameron is slowly sinking into the Murdoch quicksands for several reasons. His relations with Murdoch’s top-brass, now under investigation, have turned out to be almost comically close. He was a “riding partner” of Rebekah Brooks, Murdoch’s British CEO, who was arrested by police on
This has snowballed, causing the resignation of Britain’s top two policemen and several other senior Murdoch executives. Two months after Coulson was finally continued next page
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continued from page 5 pushed out of his official position as communications director, and was under criminal investigation for phone hacking, Cameron invited him to spend the weekend at Chequers, the British prime minister’s country home.
He defended both men briskly, but in doing so drew attention to the fact that he is the second biggest shareholder in the Murdoch empire, and that the Murdochs were major shareholders in his own Rotana media empire in the Middle East.
Such is the turmoil in London that respected commentators - on Monday for example Professor Roy Greenslade, the pre-eminent media pundit - are calling on Cameron’s deputy Nick Clegg to table a motion of no confidence in the PM.
An unholy alliance, surely? Mr Murdoch is the co-owner, with Prince Walid, of Fox News - one of the most virulently anti-Muslim television stations in the world. The station gives a megaphone to the likes of Glenn Beck, Bill O’Reilly and Sarah Palin. In the US, Fox’s role was to throw gallons of petrol on the flames Islamophobia which were leading to the burning of
Last week, that would have been a joke. Today it doesn’t seem so funny, or unlikely. I declare an interest. I was one of the first people to be informed by Scotland Yard - London’s Metropolitan Police that my phone was being hacked by a private investigator working for Mr Murdoch. They visited me in my office in parliament and told me this, so I began a legal action which is set to come before the courts in December.
the Holy Quran by vigilantes. It didn’t surprise me all that much in the light of my role as a leader of Britain’s anti-war movement, a champion of the Palestinian cause for over 35 years, and a defender of Muslims both at home and abroad. Even Mr Murdoch wouldn’t dispute the fact that these are causes far from his own heart. This throws up a contradiction now coming more clearly into focus.
Then there is the so-called “Ground Zero Mosque” controversy. The planned building was, of course, not at Ground Zero. It was not a mosque but an Islamic centre. The centre was partially funded by Prince Walid, the co-owner with Murdoch of Islamophobic media fire-raisers including Fox News and the New York Post.
A R T I C L E S images which would never see the light of day in Riyadh, the Saudi capital. As a whole it is safe to say that Murdoch’s nearly 200 newspapers-and his television stations in so far as he can compel the latter which are more tightly regulated-are bastions of fanatically pro-Israel, anti-Muslim bigotry. Yet they are co-owned by a member of the Saudi Royal family who not only approves of these practices, but regards the mogul Murdoch as his “good friend”. Murdoch’s plans to take 100 per cent ownership of British Sky Broadcasting now lie in ruins like Ozymandias’s broken statue. Aged 80, he may, at the pace we are moving, be ousted by his own shareholders before long. His dream of a Sky Arabia, however, remains a clear and present danger. Like the tobacco manufacturers, the more they are run out of towns in the west the more they concentrate on selling their addictive poison in the east. NewsCorp, with Prince Walid, may be sailing your way. Beware of pirates ye Arabs. 18 July, 2011
George Galloway is a British politician, author, journalist and broadcaster who was a Member of Parliament in the UK from 1987 to 2010.
Source:Al Jazeera
Prince Walid bin Talal bin Abdelaziz AlSaud, the second biggest shareholder in News Corporation after Murdoch, recently gave an interview, on his yacht, to the BBC flagship programme Newsnight. The Saudi prince declared himself “a good friend” of Rupert Murdoch and his son James Murdoch (probably the next executive to be charged by the police in the scandal).
Prince Walid it will be recalled was roundly insulted by the government of New York City when they returned the cheque he donated to the victims of the 9/11 attacks. A glutton for punishment no doubt. Murdoch’s newspapers in Britain are little better than their US-counterparts and include photographs and sexualised
The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.
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TEN REASONS WHY CHINA
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By Stephen S. Roach The China doubters are back in force.
WHEREWITHAL TO DELIVER
They seem to come in waves - every few years, or so. Yet, year in and year out, China has defied the naysayers and stayed the course, perpetuating the most spectacular development miracle of modern times. That seems likely to continue.
China’s commitment to stability has teeth. More than 30 years of reform have unlocked its economic dynamism. Enterprise and financial market reforms have been key, and many more reforms are coming. Moreover, China has shown itself to be a good learner from past crises, and shifts course when necessary.
Today’s feverish hand-wringing reflects a confluence of worries especially concerns about inflation, excess investment, soaring wages, and bad bank loans. Prominent academics warn that China could fall victim to the dreaded “middle-income trap”, which has derailed many a developing nation. There is a kernel of truth to many of the concerns cited above, especially with respect to the current inflation problem. But they stem largely from misplaced generalisations. Here are ten reasons why it doesn’t pay to diagnose the Chinese economy by drawing inferences from the experiences of others: STRATEGY
Since 1953, China has framed its macro bjectives in the context of fiveyear plans, with clearly defined targets and policy initiatives designed to hit those targets. The recently enacted 12th Five-Year Plan could well be a strategic turning point - ushering in a shift from the highly successful producer model of the past 30 years to a flourishing consumer society.
SAVING
A domestic saving rate in excess of 50 per cent has served China well. It funded the investment imperatives of economic development and boosted the cushion of foreign exchange reserves that has shielded China from external shocks. China now stands ready to absorb some of that surplus saving to promote a shift toward internal demand.
LOW-HANGING FRUITS: SERVICES
Services account for just 43 per cent of Chinese GDP - well below global norms. Services are an important piece of China’s pro-consumption strategy - especially large-scale transactionsbased industries such as distribution (wholesale and retail), domestic transportation, supply-chain logistics, and hospitality and leisure. Over the next five years, the services share of Chinese GDP could rise above the currently targeted four per cent point increase. This is a labour-intensive, resource-efficient, environmentally friendly growth recipe - precisely what China needs in the next phase of its development.
RURAL-URBAN MIGRATION
Over the past 30 years, the urban share of the Chinese population has risen from 20 per cent to 46 per cent. According to OECD estimates, another 316 million people should move from the countryside to China’s cities over the next 20 years. Such an unprecedented wave of urbanisation provides solid support for infrastructure investment and commercial and residential construction activity. Fears of excess investment and “ghost cities” fixate on the supply side, without giving due weight to burgeoning demand.
COMMITMENT
Seared by memories of turmoil, reinforced by the Cultural Revolution of the 1970s, China’s leadership places the highest priority on stability. Such a commitment served China extremely well in avoiding collateral damage from the crisis of 2008-2009. It stands to play an equally important role in driving the fight against inflation, asset bubbles, and deteriorating loan quality.
consumer purchasing power. That could lead to as much as a five per cent point increase in China’s consumption share by 2015.
FOREIGN DIRECT INVESTMENT
Modern China has long been a magnet for global multinational corporations seeking both efficiency and a toehold in the world’s most populous market. Such investments provide China with access to modern technologies and management systems - a catalyst to economic development. China’s upcoming pro-consumption rebalancing implies a potential shift in foreign direct investment - away from manufacturing toward services - that could propel growth further. EDUCATION
LOW-HANGING FRUITS: CONSUMPTION
Private consumption accounts for only about 37 per cent of China’s GDP the smallest share of any major economy. By focusing on job creation, wage increases, and the social safety net, the 12th Five-Year Plan could spark a major increase in discretionary
China has taken enormous strides in building human capital. The adult literacy rate is now almost 95 per cent, and secondary school enrolment rates are up to 80 per cent. Shanghai’s 15year-old students were recently ranked first globally in mathematics and reading as per the standardised PISA metric. Chinese universities now continued next page
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graduate more than 1.5 million engineers and scientists annually. The country is well on its way to a knowledge-based economy. INNOVATION
In 2009, about 280,000 domestic patent applications were filed in China, placing it third globally, behind Japan and the United States. China is fourth and rising in terms of international patent applications. At the same time, China is targeting a research-anddevelopment share of GDP of 2.2 per cent by 2015 - double the ratio in 2002. This fits with the 12th Five-Year Plan’s new focus on innovation-based “strategic emerging industries” - energy conservation, new-generation information technology, biotechnology,
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high-end equipment manufacturing, renewable energy, alternative materials, and autos running on alternative fuels. Currently, these seven industries account for three per cent of Chinese GDP; the government is targeting a 15 per cent share by 2020, a significant move up the value chain. Yale historian Jonathan Spence has long cautioned that the West tends to view China through the same lens as it sees itself. Today’s cottage industry of China doubters is a case in point. Yes, by our standards, China’s imbalances are unstable and unsustainable. Chinese Premier Wen Jiabao has, in fact, gone public with a similar critique.
concept of strategy has become an oxymoron, China has embraced a transitional framework aimed at resolving its sustainability constraints. Moreover, unlike the West, which is trapped in a dysfunctional political quagmire, China has both the commitment and the wherewithal to deliver on that strategy. This is not a time to bet against China. 31 May, 2011
Stephen S Roach, a member of the faculty at Yale University, is Non-Executive Chairman of Morgan Stanley Asia and author of The Next Asia. Source: Project Syndicate
But that’s why China is so different. It actually takes these concerns seriously. Unlike the West, where the very
CAPITAL FLIGHT
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A version of this article first appeared on Project Syndicate.
INDIA
By AFP Rich Indians and companies hold about $2.5 billion in Swiss accounts, according to a report quoting the Swiss central bank, amid anger in India about the stashing of illicit funds abroad.
Opposition parties have been quick to pick up on public anger over the socalled “black money” issue, accusing the Congress-led government of seeking to cover up the scale of the problem.
Walter Meier, spokesman for the Swiss National Bank, said Indian deposits stood at 1.95 billion Swiss francs ($2.5 billion) at the end of 2010, according to the Press Trust of India news agency in a Sunday dispatch from Geneva. The sum included $2.1 billion in savings and deposits by individuals, financial institutions and companies. The remaining $400 million represented deposits in Swiss accounts held by wealth managers on behalf of Indian clients. India’s Supreme Court earlier this month ordered a probe into undeclared money in foreign bank accounts, while accusing the government of “serious lapses” in handling the issue.
reveal the reasons behind the flight of money, Indian regulatory officials believe Indians may be moving funds to harder-to-trace accounts in places such as Singapore and Dubai. Meier was quoted as saying the vast majority of deposits from India were held in two of Switzerland’s biggest banks, UBS and Credit Suisse. The US-based think-tank Global Financial Integrity last November estimated that from 2004 to 2008, India lost $19 billion per year in illicit financial flows out of the country.
The issue of so-called “black money” —funds not reported to the government for tax purposes or parked abroad to avoid tax — is one of the latest problems to engulf Prime Minister Manmohan Singh’s administration. Indians had moved out some $500 million from Swiss banks since 2008, according to the Swiss central bank’s figures, While the Swiss bank did not
Last year, India said a tax pact signed with Switzerland should help the government track illicit Indian funds in Swiss bank accounts but Finance Minister Pranab Mukherjee said the measure would not be retroactive. 25 July, 2011 AFP (Agency France Presse) is France’s biggest news agency. Source: AFP
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AMERICAN PUBLIC SHOULDN’T KNOW By Kourush Ziabari
Many people around the world might have credulously or perhaps naively fallen in the trap of believing the tempting claims of the U.S. statesmen and politicians who say that their country is a “beacon of freedom” and a “pioneer of democracy.” It’s a bitter reality that many of us have been defeated and overwhelmed by the propaganda of the U.S. mainstream media who incessantly attempt to make their audiences believe that democracy and freedom are originally American values and cannot be found anywhere else in the world, that all of the world nations need the United States to achieve these values and that the United States must resort to every instrument to export these home-made values to the rest of the world, including frequent military expeditions.
But what’s the reality on the ground? Who really knows about what’s taking place behind the scenes? How much difference is there between the United States which is trimmed and made neat to be put before the eyes of the international community and the United States which mercilessly and inexcusably deprives its own people of getting informed about the latest developments in the world? Isn’t it ironic that the same United States whose leaders always boast of democracy, freedom and equal opportunities set off media outlets to direct black propaganda against countries such as Iran while preventing
its people from having access to the content of such media? If you’re familiar with the conventional double standards and hypocrisy of the American type, you might have heard about the US Information and Educational Exchange Act of 1948, popularly known as the Smith-Mundt Act. This discriminatory and indefensible act which was first signed into law by President Harry S. Truman on January 27, 1948 after getting approval by the 80th Congress is, in a nutshell, a regulation which allows the United States to establish and initiate media outlets which are aimed at nonAmerican audiences in order to further the diplomatic and political objectives and interests of the U.S. overseas; however, these media outlets, including radio and TV stations, are unavailable to the U.S. citizens, and to put it more succinctly, it’s forbidden for them to have access to these media channels. The legislation which was introduced in the House of Representatives Committee on Foreign Affairs at the request of State Department, authorizes the U.S. State Department to communicate to audiences outside of the borders of the United States through broadcasting, face to face contacts, exchanges, online activities, the publishing of books, magazines, and other media of communication and engagement. Funding for these activities comes from other legislation passed by the U.S. Congress called appropriations. According to this law, the materials which are produced to be broadcast through certain American media outlets cannot and should not be disseminated and publicized domestically and can only be available to the members of
Congress and academicians. With the concerted efforts of several U.S. Congressmen, the Act was amended to read: “no program material prepared by the United States Information Agency shall be distributed within the United States.” However, it’s interesting to note that at the time of working on the compilation of the Smith-Mundt Act, fierce controversies had arisen among the congressmen, including a quarrel over how to “remove the stigma of propaganda” from this law, because even the U.S. lawmakers had come to the conclusion that it was an all-out replica of the propaganda machinery of the former Soviet Union and Nazi regime. Seven radio and TV stations are covered by the Act, two of which are exclusively dedicated to Iran: Radio Farda and Voice of America. It means that the American citizens cannot watch the TV programs which VOA airs and listen to what the Radio Farda broadcasts. This clearly shows that the U.S. statesmen and politicians have predetermined and programmed plans for the nationals of Iran and it’s on their agenda to sow the seeds of discord between different groups of Iranian nation by airing programs in which nothing can be traced but is mere propaganda, falsification and fabrication. A quick look at the performance of media outlets such as VOA and Radio Farda helps us comprehend that making the Iranian nation worried about the current situation of the country, spreading falsehoods and untruths about the course of events and developments in the country and advertising the large-scale policies of the White House and the Israeli regime continued next page
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with regards to Iran are the main objectives of these state-run media which are sumptuously funded and excessively supported by the U.S. government. According to the statistics released by Washington Post, the U.S. Congress has allocated an annual budget of $7 million to Radio Farda and by using this profuse amount of money, this soft war machine unremittingly produces
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and disseminates falsehood and mendacious propaganda against the nation of Iran. Maybe, it might be necessary for the people of the United States to know where their taxes go and how their government spends on its unrelenting wars with the countries which don’t want to fall under the umbrella of U.S. hegemony.
A R T I C L E S listening to the propaganda of Radio Farda and VOA; however, it is vital for them to know that their government does not really represent a “beacon of freedom” nor does it have the features of a “pioneer of democracy” but is more of a propaganda machine programmed to wage wars and win profits. 11 June, 2011 Kourosh Ziabari is an Iranian journalist
The American people are deprived of
WATER - CHALLENGES
IN THE
Source: Countercurrents.org
DEVELOPING WORLD
By Chin Yoong Kheong Water is a gift from heaven— indeed if you can harvest the rain. The bulk of the rain runs off on the surface to the streams and rivers and eventually to the sea. Some evaporate back to nature. The rest dissipates to the ground. The treated water that you get when you turn on the tap goes beyond the gift of nature. It comes with cost of treatment, research and distribution. Some have argued that water is a human right. Accessibility to clean water is the right of human dignity. Someone has to bear the cost. The right to consume clean water comes with responsibility for the environment and for cost. In most parts of the developing world, that cost is left to be borne by the coffers of the government, which is funded by the minority – the taxpayers. With limited funds and low water tariff, the water utility sector in the developing world has remained underdeveloped and in dire straits. The low quality of service in turn leads to unwillingness of consumers to pay for water tariff increase. The lack of funds stifle the development of the water infrastructure system, leading to leakages, clogged pipes, low pressure and poor quality service resulting in a downward spiraling vicious cycle of the water services sector. Based on the projected population
growth trend worldwide, the water services industry in the developing world will face major challenges in keeping with the demand of the already challenging times that the water industry is currently facing in developing countries. Not surprisingly, the population growth is particularly significant in Asia.
The challenges facing the water services industry in the developing world are manifold and chief of which is the systemic issue of transparency and accountability arising from the procurement processes and their performance. The lack of transparency and accountability have often led to bloated capital expenditure and operating expenditure that the consumers and taxpayers are left paying. Typically, the water supply and sewerage services are under the control and management of the local councils, municipalities, provincial or
state government and often self regulating. Under the circumstances, political decisions are often made with little regard to the sustainability of the water services industry in the long term. Rising cost with limited tariff adjustment and poor services will eventually lead to high indebtedness that future generations may be left to pay. The cost of consuming water is not confined to the treatment and distribution of water. Every drop of water that we consume produces a drop of wastewater that we need to treat before discharging back to the environment. The cost of treating wastewater is inevitably higher than the cost of treating raw water for consumption. If we do not treat wastewater well, we pollute the rivers that carry the wastewater discharges, killing the source of our future generation. With the rising population and growing affluence of the people, the quick fix to meet the rising demand for treated water is privatization and more recently, public private partnership (PPP). The water services value chain is typically dichotomized to privatize out water treatment (and in some cases with water distribution) or ceded out in the form of PPP. In a number of cases, the water services industry is continued next page
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then split into water treatment, water distribution and sewerage services; with each service rendered by different entities with different economic interest. Given the fast rising demand for water services and the risk associated with the challenges faced by the industry as a whole, private sector participation has often come in with some form of assurance of returns. With the great need to meet the fast rising demands of the population, the government cedes to the private sector’s term of returns assurance. The assurance may be in the form of guaranteed internal rate of return (IRR) or guaranteed tariff increase or both. The associated risk essentially pushes up the funding cost of infrastructure development. Privatization or PPP seems the natural mode of funding infrastructure given that the breath and depth of the capital markets in the developing countries are fairly undeveloped. PPP, if not well regulated, can do more harm than good for developing countries in the long run. There is no uniformity in privatized arrangements made across different states/province in a country. This leads to different levels of performance between private operators and uneven management of water services across a country. Given a self regulating structure, the inherent industry structure does not provide a proper mechanism for proper feedback to National, and State/Provincial government on their level of satisfaction on service delivery. The lack of an effective structure gradually increases inefficiency of water distribution, leading to flawed cost structures for water operators and poorly determined tariff rates for consumers. There is a great need to reform the water services industry in the developing countries. The fundamental
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keys to the reforms lie in addressing both efficiency and effectiveness on one hand and funding on the other. A self regulatory structure does not work in the water services industry which is deeply entrenched in a myriad of local councils, provinces or states. There is a need to establish a strong and largely independent national regulator that can promote and drive efficiency to the industry operators whilst recognizing the interest of various stakeholders. Given the developing status of these economies, the national regulator needs to define clearly the socio-economic objectives. The industry reform must derive a sustainable business model in the long term that adequately addresses the long term funding issue. With the industry operating at below full cost recovery, it is imperative that the funding solution must address the needs of the industry to fund infrastructure development in the long term. The capital markets in the developing world cannot match such needs. The tenure of funding is relatively short and given the risk of below full cost recovery, the funding cost is high. Often a privatized water services operator would borrow short to finance long resulting in an unstable funding regime. The key lies in developing a PPP model that leverages the strengths of both the private sector as well as the public sector for the industry as a whole. The model needs to address the different risk profile of each country to carve out an appropriate model specific to that country. Malaysia has taken a bold move in the water services industry reform. It has changed the Federal Constitution to take the power of regulating the industry to the Federal level, a politically mammoth task that was successfully done with substantial buy-ins. An economic model was then designed to achieve full cost recovery taking into
A R T I C L E S account the need to settle existing debts, driving efficiency and effectiveness, raising long term cheap financing whilst balancing the social objectives and raising the customer service levels. In 2004, the then Ministry of Energy, Water and Communication led by the Minister with the backing of the Cabinet managed to table and pass two important pieces of legislation, the Water Services Industry Act that sets out the reforms and power of regulation and the National Water Services Commission Act that establishes the national socio-economic regulator. The reforms set out to establish the following initiatives: 1. Bridge the funding gap 2. Widen breadth and depth of the capital market 3. Comparative regulatory structure 4. Consumer focus with transparency and accountability In embarking on the reforms, Malaysia studied the various regulatory models in various developed countries and recognized that the challenges of these developed countries are significantly different. Recognizing the differences, Malaysia has managed to carve out a model that is more suited to the challenges of the developing world. It has mapped out the direction forward for a holistic water services industry that encompasses water abstraction, treatment, distribution and wastewater treatment in the long term. Confucius once said, the journey of a thousand miles starts with the first step. Malaysia has taken a giant leap and has begun the journey up the mountain of long term sustainability. 18 July, 2011
Dr. Chin Yoong Kheong is a chartered accountant and partner of KPMG. He is also an Executive Committee member of the International Movement for a Just World (JUST)
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