China, U.S., Europe battling over a shrinking global-trade pie

Chinese container ship bringing goods to Port of Long Beach
In polite, diplomatic language, China this week accused Eurozone leaders of piling up debts that threaten a global economic crisis, and the Europeans countered with complaints that Beijing manipulates its currency to unfairly skew trade in its favor.

GlobalFocusThe subtle verbal shots fired on the fringes of the Asia-Europe Summit in Vientiane, Laos, echo a theme raised during the U.S. presidential election, when Republican challenger Mitt Romney vowed to take up the gauntlet of a trade war he said had been thrown down by China.

 Both battles reflect the fear and uncertainty confronting the world's biggest economies in this fifth year of stalled growth and persistent recession, trade experts say. And with little hope on the horizon for revving the main economic engines any time soon, the rhetoric and posturing are likely to grow sooner than the rivals' bottom lines.

The European Union is China’s largest trading partner, and the sovereign debt crisis afflicting the 17 nations that use the euro common currency has been cutting into Europeans’ ability to buy Chinese goods. On Monday, Chinese Premier Wen Jiabao told the European delegates that they needed to come up with “a clear and reliable" plan for resolving the debt crisis that is stifling growth and trade.

French President Francois Hollande countered with a swipe at China’s artificially suppressed currency value, which makes Chinese products cheaper than they should be and contributes to the trade imbalance favoring Beijing.

"Europe has always trusted the market on condition that the rule of reciprocity is the same for everyone," Hollande said, alluding to the artificially set value of the Chinese yuan, also known as the renminbi. "We need to have equal exchange. We believe in an open market system."

Trade and economic analysts say China has moved some distance to correct currency distortion over the last few years, with the yuan exchange rate improving from more than 8 to the dollar to 6.29 on Tuesday. That’s close to a 25% appreciation, most of it in the last four years, noted Perry Wong, director of research for the Milken Institute and a frequent visitor to China.

Some economists set the actual value at closer to 5 yuan to the dollar, but full correction cannot be accomplished overnight, Wong said.

"Transformation in China will take time. In terms of structural change, for them to rely less on exports and import more goods from foreign countries, and to promote the quality of labor in China, will take years," Wong said. Most countries intervene to some degree to "more fully accommodate their own domestic economic agendas," he added, including the U.S. Federal Reserve Board policy of quantitative easing.

Wen Jiabao at Asia-Europe Summit in LaosChina’s alarm over the European debt crisis is justified, as it could portend a coming period of global economic upheaval, said Bruce Abramson, a partner with the Rimon Law Group and an expert in valuation, intellectual property, trade and competition.

"The Eurozone crisis is likely to spread into a global monetary crisis. It’s a testament to the Eurocrats that they have held it together as long as they have," said Abramson, predicting a five- to 10-year period of recession or feeble growth on the continent, in the United States and potentially in China. Growth this year in China's economy is pegged at 7.4%, down from 10% to 12% only a few years ago.

The persistent pressures presage more friction over trade rules and practices, Abramson said.

"Economic growth is a necessary prerequisite for peace, tolerance, acceptance -- all kinds of good things. But when the pie is shrinking, everybody, whether local, individual or national, worries about how to hold on to what they already have."

When you’ve got 10 people vying for control of only nine things of value, "you either learn how to make more things or how to have fewer people," he said. "More things is economic growth. Fewer people is war."

Jamie Metzl, a senior fellow at the Asia Society, said voices within China's centrally planned economy are gaining strength in their calls for structural reforms that would boost wages and social services for Chinese workers and find a better trade balance by allowing the currency to float to its actual exchange value.

"China is making preliminary steps toward making its economy less oriented toward exports, but the economy is still massively oriented toward exports," Metzl said, pegging the share of its output sold abroad at 70%.

That imbalance will persist as long as the yuan is undervalued and workers are underpaid, Metzl said.

"Certainly recession in Europe and sluggish growth in the United States are harming China’s ability to export. But unless China undertakes significant structural reforms, growth in China is very likely to continue to decelerate because of the inherent problems and imbalances," he said.

China’s communist government also plays "way too strong a role in the domestic economy," he added, which stifles innovation in the private sector that would make Chinese products more competitive and foster a healthier global trade environment.

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Photo: A China Shipping Container Lines Co. vessel enters the Port of Long Beach this week. The U.S. Census Bureau is scheduled to release trade balance data on Thursday. Credit: Tim Rue / Bloomberg

Insert: Chinese Premier Wen Jiabao arrives at the Asia-Europe Summit in Vientiane, Laos, on Tuesday. Credit: Barbara Walton / European Pressphoto Agency


Deadly Syrian stalemate spurs new diplomacy, little hope

Syrian rebel amid rubble of recent battle near Aleppo
Galvanized by a Syrian death toll that has doubled to 36,000 in little more than a month, U.S. Secretary of State Hillary Rodham Clinton has called for a new rebel hierarchy to direct the fighting against President Bashar Assad and steer Syria back to peaceful ethnic and religious coexistence.

GlobalFocusThe latest proposal for halting Syria's 19-month-old civil war brings little new strategy to the crisis. Rather, it vents frustration with the international community’s own "divisions, dysfunctionality and powerlessness," as the International Crisis Group recently noted, that have prevented brokering an end to the bloodshed.

Like European leaders before her, Clinton acknowledged this week that the West’s reliance on out-of-touch exiles within the Paris-based Syrian National Council has done more harm than good in the effort to have opposition forces speak with one voice on their plans for a post-Assad future.

Clinton told reporters accompanying her on a trip to North Africa and the Balkans on Wednesday that the Obama administration will be suggesting names and organizations it believes should play prominent roles in a reconfigured rebel alliance that Western diplomats hope to see emerge from Arab League-sponsored talks next week in the Qatari capital, Doha.

But the U.S. push to get the opposition’s act together also exudes desperation. In the two months since a failed rebel campaign to take strategic ground around major cities, fighting has ground down to a bloody impasse, giving neither Assad nor his opponents hope of imminent victory on the battlefields.

The rebels’ summer offensive also exposed the widening role of Islamic extremists who have entered the fight, bringing arms and combat experience to the side of Assad’s fractured opponents. But the Islamic militants’ alignment with Syrians trying to topple Assad also gives weight to the regime’s claims to be fighting off terrorists, not domestic political foes.

Clinton reiterated the West’s insistence that Assad have no role in Syria’s future. That prompted immediate pushback by Russia and China, which have opposed what they call foreign interference in Syrian domestic affairs.

Russian Foreign Minister Sergei Lavrov was in Paris for talks with his French counterpart when Clinton announced the Obama administration’s latest initiative. A longtime ally and arms supplier to Syria, Russia has blocked three United Nations Security Council resolutions to censure Assad and, along with China, has rejected Western demands that the Syrian president resign and leave the country.

"If the position of our partners remains the departure of this leader who they do not like, the bloodbath will continue," Lavrov warned.

Chinese Foreign Minister Yang Jiechi registered Beijing’s objections by unveiling a "four-point plan" for bringing peace to Syria that reiterates the communist state’s position that the future of Syria be left for Syrians -- including Assad -- to decide.

Beijing has a solid history of blocking international intervention on human rights grounds, apparently fearing China could become a target of such actions because of its harsh treatment of dissent and political opponents.

For some Middle East experts, the solution to Syria’s crisis lies somewhere between the Russian-Chinese "hands-off" policy and the U.S.-led Western view that only regime change will bring about peace.

"This conflict is for Syrians and their neighbors to resolve, with European and Russian involvement. The U.S. should stay one removed," said Ed Husain, senior fellow in Middle East studies at the Council on Foreign Relations.

He described Clinton’s appeal for a new rebel leadership structure as "laudable, but a year too late."

"She’s driven by a desire to want to help now, but also to ensure a smooth transition in a post-Assad Syria. Sadly, reality on the ground dictates otherwise,” Husain said, alluding to entrenched battles that portend a long standoff.

Growing fears that extremists are gaining clout with the rebels also complicates diplomacy, as Syria’s Shiite, Christian, Kurdish and other minority sects are wary of how they would fare under a Sunni-dominated government allied with fundamentalist jihadis.

Clinton emphasized that extremist forces should be excluded from any new opposition forum that might emerge from Doha.

"It may seem ironic to call for a broad tent and then say 'except for those guys.' But I think the administration and other countries concerned about the future of Syria know that one of the challenges will be to have an analysis of who is who in the opposition,” said Charles Ries, a career U.S. diplomat now heading Rand Corp.’s Center for Middle East Public Policy.

Ries sees the need for "more movement on the ground in Syria" before Assad or the rebels are ready to submit to negotiations on the country’s future.

He is hesitant to declare the civil war a stalemate or the Russian-Chinese position unchangeable in the long run. But with rebels pinned down in the urban areas they hold and warding off attacks by Assad’s superior armed forces, he said, no one seems to think Assad is in the kind of imminent danger of being ousted that would be the catalyst for negotiation and compromise.

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Photo: A Syrian rebel fighter last month defends territory near Aleppo, one of many urban battlegrounds the opponents of President Bashar Assad are now struggling to hold. Credit: Zac Baillie / AFP/Getty Images


U.S., allies marshaling African proxies for fight against terrorism

Ansar Dine militants in Mali
"A quarrel in a far-away country between people of whom we know nothing."

That was how British Prime Minister Neville Chamberlain saw the Nazi threat against the Czech Sudetenland in 1938, a sentiment freshly evoked among war-weary citizens as the United States and its allies ponder moves to oust Islamic extremists from northern Mali, a country most Americans couldn't find on a map.

GlobalFocusU.S. Secretary of State Hillary Rodham Clinton and diplomatic counterparts from France have been shopping around a plan to train and equip West African troops to drive out the Al Qaeda-aligned militants who hold sway over a swath of northern Mali the size of Texas. Ultraorthodox Muslims this year hijacked a long-simmering rebellion by ethnic Tuaregs and began imposing an extreme version of Islamic law once in power. In July, they took axes to "idolatrous" cultural treasures in Timbuktu, provoking worldwide horror at the destruction.

Like Afghanistan before 9/11, when Taliban collusion with Al Qaeda made the country a training ground for terrorism, Mali left in the grip of militant Islamists runs the risk of becoming the next launch pad for attacks on the United States and its allies.

U.S. interest in rooting out Ansar Dine and Al Qaeda in the Islamic Maghreb from northern Mali has intensified in the seven weeks since a suspected terrorist attack on the U.S. mission in Benghazi, Libya, that killed Ambassador J. Christopher Stevens and three other Americans. The Al Qaeda affiliates in Mali are believed to have played at least a supportive role in the Benghazi attack.

"The Benghazi event, with the murder of Chris Stevens, has really precipitated American intervention. It's turned the tables in the region," said Ghislaine Lydon, a history professor at UCLA and expert on precolonial Northwest Africa.

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Israel, Palestinian militants exchange strikes in Gaza Strip flare-up

Israel-rockets
JERUSALEM -- Tensions along the Gaza Strip intensified Wednesday as a sustained barrage of rockets fired into Israel prompted an Israeli airstrike, marking an escalation in the latest round of fighting in the region.

In a morning barrage, Palestinian militants fired more than 50 rockets into Israel, officials said, with several making direct hits on farms and residences. Three immigrant Thai farm workers who were injured in the attacks were airlifted for medical treatment.

School was canceled throughout Israeli communities bordering on the Gaza Strip, and residents were instructed to remain near shelters and protected areas.

Israel retaliated with an airstrike on Gaza, the fourth in 24 hours.

"The [Israel Defense Forces] will not tolerate any attempt to harm Israeli civilians and will operate against anyone who uses terror against the state of Israel," said an army statement that held Hamas, which seized control of the seaside territory in 2007, "solely responsible for any terrorist activity emanating from the Gaza Strip."

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Cuban missile crisis myth constrains today's diplomatic standoffs

Kennedys and Khrushchevs
This post has been corrected.

Fifty years after the superpowers were poised to annihilate each other over nuclear missiles sent to Cuba, the myth prevails that President Kennedy forced Soviet Premier Nikita Khrushchev to back down by threatening to unleash nuclear war.

It took three decades after October 1962, when the world hovered on the brink of a cataclysm, before  documents were declassified that disclosed the back-channel diplomacy and compromise that led to peaceful resolution of the Cuban missile crisis. But even today, hard-liners cling to the narrative that taking a tough, inflexible stance with adversaries is the path to diplomatic triumph.

GlobalFocusThat misguided interpretation hampers diplomacy today, say veterans of the perilous Cold War standoff and the historians who study it. The notion that threatening military action can force an opponent's surrender has created dangerously unrealistic expectations, they say, in high-stakes conflicts like the U.S.-led challenge of Iran's purported quest to build nuclear weapons.

Kennedy didn't stare down Khrushchev with vows to bomb Cuban missile sites, although that was the tactic pushed by his military advisors, recently revealed history of the crisis shows. The president sent his brother, then-Atty. Gen. Robert F. Kennedy, to secretly negotiate with Soviet Ambassador Anatoly Dobrynin. In the strictest of confidence, RFK offered withdrawal of U.S. missiles from Turkey and a promise not to invade vulnerable Cuba in exchange for the Kremlin pulling out the nuclear arms it had deployed to Fidel Castro's island.

"The secrecy that accompanied the resolution of the most dangerous crisis in foreign policy history has distorted the whole process of conflict resolution and diplomacy," said Peter Kornbluh, Cuba analyst for the National Security Archive at George Washington University. "The takeaway from the crisis was that might makes right and that you can force your opponents to back down with a strong, forceful stance."

Documents released sporadically over the last 20 years show that the crisis was resolved through compromise, not coercion, said Kornbluh, who has spent decades pushing for declassification of U.S.-Cuba history documents related to the crisis. Some 2,700 pages from RFK's private papers were released by the National Archives and Kennedy Library just last week.

R. Nicholas Burns, a 27-year veteran of the U.S. Foreign Service now teaching diplomacy at Harvard's Kennedy School, sees applications for the Iran dispute from the real story of the missile crisis resolution.

The fundamental breakthrough in the confrontation occurred "because Kennedy finally decided, against the wishes of most of his advisors, that rather than risk nuclear war he was going to make a compromise with Khrushchev," Burns said. He pointed to the confidential offer to remove U.S. Jupiter missiles from Europe, a turning point still "not well understood -- people think Khrushchev backed down."

In the real world, Burns said, "it is exceedingly rare that we get everything we want in an international discussion. To get something of value, you have to give up something."

Burns sees the outlines of a negotiated agreement with Iran that would prevent Tehran from developing a nuclear weapon, a plan he believes would be acceptable to Democrats and Republicans once the presidential election is over and the campaign rhetoric that rejects compromise dies down. In exchange for Iran's submitting its nuclear facilities to regular international inspections, Burns said, U.S. and other Western leaders could recognize Iran's right to enrich uranium to the levels needed in civilian arenas, such as energy production and medicine.

Lessons learned in the U.S.-led wars against insurgents in Iraq and Afghanistan also argue for exhausting every diplomatic option before engaging in armed conflict, Burns said.

"Sometimes it's necessary to use military force -- I'm not a pacifist," said the retired diplomat, who was an undersecretary of State for political affairs under President George W. Bush. "But more often than not, you have to put your faith in diplomacy. We have the time and space to negotiate with Iran."

Differentiating between national interests and those of allies is an even more important lesson gleaned from the missile crisis, said Robert Pastor, an American University professor of international relations and former National Security Council official in the Carter administration.

"Fidel Castro actually urged Khrushchev to attack the United States because he felt American imperialism would try to destroy both Cuba and the socialist world," said Pastor, who credits Khrushchev with wisely rejecting Castro's adventurism in favor of peace. Pastor sees a similar danger of Israel provoking war with Iran, confronting Washington with the need to decide between trying to restrain Israel or fighting a new Middle East war.

Sergei N. Khrushchev, the late premier's son who is now a U.S. citizen and international affairs analyst at Brown University, has been campaigning for a correction of the Cuban missile history at anniversary events this week.

"Khrushchev didn’t like Kennedy any more than President Obama likes [Iranian President Mahmoud] Ahmadinejad," he said in an interview. "But he realized you have to speak to them anyway if you want to resolve problems. We say we will never negotiate with our enemies, only with our friends. But that's not negotiating, that's having a party."

For the record, 8:35 a.m. Oct. 17: This post originally said the RFK papers made public this week were posted on the nongovernmental National Security Archive website. They were released by the National Archives and Kennedy Library.

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Photo: Caroline Kennedy, daughter of late President John F. Kennedy, shows her mother's original copy of the 1963 Nuclear Test Ban Treaty to Sergei Khrushchev, son of late Soviet Premier Nikita Khrushchev, next to a photograph of their fathers at the John F. Kennedy Library in Boston at a commemoration Sunday of the 50th anniversary of the Cuban missile crisis. Credit: Michael Dwyer / Associated Press

 


U.S., allies girding for worst-case scenario with Syria's WMD

Chemical weapons response training site in Jordan
During a week that witnessed deadly artillery exchanges between Syria and Turkey and a tense showdown over a plane purportedly ferrying munitions from Russia, the arrival of 150 U.S. troops in Jordan was likely to be viewed as token support for an ally coping with a refugee influx from Syria's civil war.

GlobalFocusThe deployment, though, may be a response to mounting concerns at the Pentagon and among European and Middle East allies that Syria's stockpile of chemical weapons could fall into the hands of hostile forces if the embattled regime of Syrian President Bashar Assad is eventually toppled.

U.S. Defense Secretary Leon Panetta disclosed little about the special-forces mission to Jordan when he confirmed it at a meeting of NATO defense ministers in Brussels on Wednesday. But he noted that the United States has been working closely with Jordan to keep track of Syria's weapons of mass destruction as the 19-month-old rebellion grinds on.

Unlike a decade ago, when bad intelligence on Iraq's alleged chemical and biological weapons spurred a clamor for U.S. military intervention, defense strategists appear to be approaching the suspected stockpiles of mustard and nerve gases in Syria with more collaboration and caution.

The resistance to preemptive action isn't just a consequence of lessons learned in Iraq. Syria is believed to have one of the world's largest chemical weapons arsenals, with commercial satellite surveillance and intelligence reports suggesting as many as 50 production and storage sites as well as missiles that could carry the deadly agents beyond its borders. Jane's Intelligence Review reported in 2009 that Damascus had embarked on a major upgrade of its chemical weapons facilities, transforming its Safir site near Aleppo, now the scene of intense fighting, into a credible deterrent to any threat from nuclear-armed Israel.

The scope of the Syrian chemical weapons program and the international community's failure to craft a cohesive plan to stop the fighting confront Western military strategists with the need to plan for a worst-case scenario rather than act to prevent it, analysts say. That means preparing allies in the region to launch a massive rapid-deployment operation after the Assad regime collapsed but before Al Qaeda-aligned fighters or rogue elements of the Syrian rebels could get their hands on the WMD.

Military exercises in JordanThe U.S. special forces sent to Amman are probably training Jordanian troops in containment techniques and checking their equipment and chemical-biological hazard protection and practices, said Steven Bucci, a former Army Green Beret officer and senior Pentagon official who is now a research fellow in defense and domestic  security at the Heritage Foundation.

"They will probably be running them through training procedures for dealing with this stuff to secure it and get it under control or to respond to it if it gets used" in a calamitous last battle, said Bucci. "This is about the best use of our military we could have now, and hopefully we're also helping out the Turks."

Bucci testified to Congress in July that even a limited operation to secure Syria's chemical weapons would require more than 75,000 troops -- and many more if launched amid the civil war now raging.

It is "not a viable option" to commit masses of U.S. ground troops to such an operation, Bucci told the House Committee on Foreign Affairs Subcommittee on Terrorism, Nonproliferation and Trade. Any effective force, he said, would have to involve troops from allied Muslim countries also at risk of attack with Syria's chemical weapons.

That's why, he said in an interview Thursday, it is essential for the United States to coordinate with Syria's neighbors now to prepare a post-Assad operation that can prevent terrorist groups or smugglers from making off with the WMD.

Raymond Zilinskas, director of the chemical and biological weapons program at the James Martin Center for Nonproliferation Studies in Monterey, points out that assessments of Syria's chemical weapons program are largely unverified. But he, too, says the United States and its allies should be girding for the worst.

"From what I understand, these depots are pretty well guarded by the Syrian regime's forces, and they would probably be the last to give up their guarding duties," Zilinskas said. "But if there is a total collapse, there would of course be a threat of jihadists getting these weapons."

Talk of airstrikes to remove the threat is nonsensical, Zilinskas said. Syria has formidable antiaircraft defenses built with Russian assistance, and the international community lacks crucial information on the precise locations, quantities and containment of the gases to be able to bomb them without risking spreading the deadly substances.

"Sarin is pretty volatile. If all these other problems could be resolved, the sarin would probably be destroyed or would be so volatile that it would disappear quickly," Zilinskas said. "But that's not necessarily the case with mustard gas. It's much less deadly but much more persistent. And if the Syrians turn out to have VX, which is a persistent nerve gas, that could cause real problems. That is the worst-case scenario they have to prepare for."

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Photo, top: A military training facility in Russeifeh, Jordan, where U.S. forces and a handful of British allies began training Jordanian commandos this week to respond in case of an attack with chemical weapons from neighboring Syria. Credit: Mohammad Hannon / Associated Press

Insert: A scene from U.S.-Jordanian military exercises in the Qatrana desert in June. Credit: Jamal Nasrallah /AFP/Getty Images


Long-elusive Philippines peace accord reflects exhaustion

Moro Islamic Liberation Front rebels in southern Philippines
With 150,000 dead from decades of religious and ethnic fighting and no family in the southern Philippines free of fear they could be the next slain, Filipinos and their fractious leaders have run out of energy for rebellion.

A road map to peace unveiled this week by the Philippine government and the main rebel group, the Moro Islamic Liberation Front, has been hailed by Muslims and Catholics alike as a glimmer of hope that an end is in sight to bloody clashes that have racked the islands since the 1960s. The deal also eases Western concern that foreign Islamic militants could be drawn to remote Philippine jungle camps, already the scene of kidnappings and beheadings.

GlobalFocusUnder the accord to be signed Sunday in Manila, the rebels would eventually enjoy self-rule over a yet-to-be-defined territorial entity to be called  Bangsamoro, or Moro Nation. They would also have more control over the region's rich tropical forests and oil and gas reserves.

The agreement lays out a four-year transition to autonomy for the southern islands of Mindanao and the Sulu Archipelago. But huge hurdles remain to be cleared: How does the government integrate Islamic rebels into the mainly Catholic ranks of the national armed forces? Which areas of the ethnically diverse south will be included in the new state? Will sharia law be invoked in Bangsamoro, and can it realistically be applied only to the Muslim population, as proposed during the internationally mediated negotiations?

The most perplexing question may be how police and soldiers can disarm the legions of gun-toting rebels and resisters who constitute the only law in much of the south's remote mountains and jungles.

Having weathered dictatorship, corruption and conflict for much of the 66 years they have been independent, Filipinos are eager to answer those daunting questions, relief officials and analysts say.

The agreement reached this week is less the product of strategic give-and-take during years of negotiations than a white flag of surrender to exhaustion sent up by both the government and the rebels. That is the view of Albert Santoli, president of the Asia America Initiative that for more than a decade has provided relief to the tens of thousands of Filipinos who have fled the fighting.

"People are tired of killing each other. They're tired of never knowing if they're going to have to flee their homes," Santoli said. He pointed to the relative harmony in refugee camps that shelter internally displaced Muslims and Christians together as grounds for confidence that Filipinos are eager to work for peace.

Although he views a 2016 target for creating Bangsamoro as unrealistic, Santoli said the deadline may motivate young Filipinos to take advantage of the apparent sincerity of President Benigno Aquino III to broker an end to the fighting.

"The hope is that if everyone is committed to the process that things will get better, that they'll be able to create an attitude of cooperation among youth," Santoli said. "But in practical terms, it will take a generation."

Michael Buehler, Philippines expert for the Asia Society and a political science professor at Northern Illinois University, sees the potential for success in this latest peace effort of the post-World War II era.

"Mindanao is one of the most resource-rich parts of the country," which is its blessing and its curse, Buehler said. The decades of fighting have prevented the south from tapping its valuable tropical woods, minerals and fuels. They have also provided cover for backdoor deals between business interests in the north and southern provincial kingpins who often have sway over the rebels in their fiefdoms.

"Very often Manila has had a divide-and-rule approach to problems in the south," Buehler said. If autonomy looks to be getting in the way of deals cut on the sidelines of the conflict, "that could provide incentive for them to undermine the peace plan," Buehler said of the de facto rural power brokers unlikely to be eager to step aside for Islamic rebel leaders. 

Still, the new plan is seen as a serious effort to integrate Muslims who have long felt like outsiders in the Catholic-dominated state, said Gerard Finin, a senior fellow at Honolulu's East West Center who has traveled and worked in the Philippines since the 1970s.

He sees two major challenges ahead, though. The mediators -- which include the United States, Europe, Malaysia and other Muslim nations -- must strive to keep the rebels unified behind the Moro Islamic Liberation Front leaders during the difficult negotiations ahead. And all must remain vigilant, Finin said, in protecting any new Bangsamoro government from being undermined by the multitude of political, economic and tribal conflicts of interest fueling the violence.

"There are still many big questions to be answered," Finin said. "But things are looking better today than they have for some time."

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Photo: Moro Islamic Liberation Front rebels patrol inside their base at Camp Darapan on the island of Mindanao in 2011. The rebels and other unauthorized gunmen would be disarmed under a peace plan to be signed Sunday in Manila. Credit: Ted Aljibe / AFP/Getty Images

 


Sanctions, currency chaos igniting unrest in outcast Iran

An Iranian shopper pays a fruit seller with 50,000-rial banknotes
Soaring prices at Tehran's cavernous Grand Bazaar have ignited violence this week as money traders and vendors clashed with riot police over the plummeting value of the Iranian currency, which is being gutted by international sanctions and mismanagement by the Islamic regime.

GlobalFocusWhat for most Iranians has been an abstract political dispute between their leaders and Western countries concerned about Tehran's nuclear ambitions has suddenly hit them in their wallets and pushed them to lash out. The rial has lost 80% of its value against the U.S. dollar in the last year, a decline accelerated by tightened U.S. and European Union sanctions now depriving the regime of half the hard currency it was earning from oil exports.

Iranian President Mahmoud Ahmadinejad blamed the deepening economic chaos on foreign enemies, contending there is "no economic justification" for the public scramble to dump rials in favor of dollars, euros and gold. Supreme leader Ayatollah Ali Khamenei also struck a defiant pose, reasserting Tehran's right to enrich uranium and vowing that Iranians "will never surrender to pressure."

But Iranian exiles and scholars see the angry outbursts in the marketplace as a sign that ordinary Iranians are finally fed up with a regime that has brought them isolation, insecurity and eroding living standards. They see a population, resentful of a crackdown on dissent three years ago, now edging toward rebellion.

The unrest also demonstrates that the U.S. policy of letting sanctions and diplomacy undermine popular support for the regime is having the desired effect, confronting Tehran with its gravest challenge since Islamic clerics came to power in a  1979 revolution, the experts say.

The street value of the rial has dropped by half in the last two months and plunged 18% on Monday alone. The unofficial exchange rate for the dollar -- more than 35,000 before back-alley trading halted -- is almost three times the official rate of 12,260. But that subsidized exchange rate is available only from state banks to a limited and shrinking number of key importers.

Money traders stopped selling dollars Tuesday, confused over how to price the swiftly deteriorating rial. Some vendors closed their shops in protest of the government's failure to intervene and prop up the currency; others boosted prices beyond what many shoppers can or will pay.  

Before harsher sanctions kicked in three months ago, Iran's government had been using a sizable share of its $100-billion annual oil earnings to subsidize dollar-denominated food and consumer goods, to keep prices stable and placate the population, said Abbas Milani, a Tehran-born academic who directs Iranian studies at Stanford University.

Milani said he suspects the government was initially using the economic downturn brought on by the sanctions to put an end to the costly dollar subsidies. But he now concludes that the regime has been forced to let the rial tumble because it has run out of the hard currency needed to stop the slide.

Riot police block Tehran's Grand Bazaar"We're not talking about a billion dollars or 2 billion to stabilize a currency that has gone down so far. The government would have to find enormous sums of money to pour in, and if they had it they would have done it by now," Milani said.

"I don't think the regime can survive this one," he said, unless Khamenei does the unthinkable and meets Western demands that Iran cease enriching uranium beyond levels needed for civilian nuclear programs.

Tehran officials recently told the International Monetary Fund that they had $50 billion on hand, enough to see Iran through the sanctions bite for at least four or five months, Milani said. He calculates that the regime should have saved about $300 billion in a rainy-day fund over the last eight years. That no intervention in the currency crisis has been forthcoming tells him that much of the oil windfall has been squandered or siphoned off into private accounts of the Revolutionary Guards and government leaders.

"Social and political cohesion in Iran will be deeply disturbed by this economic crisis," predicted Alireza Nader, senior policy analyst on Iran for Rand Corp. "And it's not just the economic crisis -- you saw Iranians take to the streets in 2009 for a number of reasons, and those tensions have been simmering below the surface. We see them coming up now."

Nader pointed out that protesters at the bazaar this week have shouted denunciation of the regime's politics as well as soaring inflation. Shouts of "Leave Syria alone and think about us!" could be heard in clandestinely shot video footage of the angry crowds, he said.

 The Iranian government has been the sole regional supporter of Syrian President Bashar Assad and his brutal suppression of a rebellion now in its 19th month.

"Eventually this is going to put enormous pressure on the Iranian government to concede on a number of issues, not just the nuclear programs but domestic political issues as well," Nader said. "It's already gotten to the point where people's livelihoods are at stake and they're not going to tolerate that situation. We can definitely expect to see more unrest in the coming months."

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Follow Carol J. Williams at www.twitter.com/cjwilliamslat

Photo: An Iranian shopper on Wednesday pays a fruit seller at the Grand Bazaar in Tehran with 50,000-rial banknotes. The sanctions-battered Iranian currency has lost 80% of its value in the last year, spurring inflation and social unrest. Credit: Abedin Taherkenareh / European Pressphoto Agency

Insert: Riot police block an approach to the Grand Bazaar on Wednesday after arresting money traders and dousing fires lighted in protest of the falling rial currency. Credit: European Pressphoto Agency


As 'Chavismo' sputters, a charismatic challenger woos Venezuelans

Henrique Capriles has united and mobilized opposition forces
Venezuelan President Hugo Chavez has loomed larger than life over his oil-rich country for nearly 14 years, doling out healthcare and houses and university admissions to supporters of his “Bolivarian Revolution” aimed at creating history’s first affluent socialist state.

A barrel-chested former paratrooper who has tapped Venezuela's oil revenues to court a loyal following among the country’s poor, Chavez has handily outpolled disorganized opponents in past elections and harnessed people power to defeat a 2001 coup d’etat and win a recall vote three years later.

GlobalFocusBut much of the revolutionary fire that stirred the masses into a political phenomenon known as Chavismo has gone out of the cancer-stricken president. For the first time since his 1998 election victory, he faces a viable competitor with a message of unity and a track record of efficient management as governor of the state that surrounds Caracas.

Few neutral observers are yet convinced that Chavez will fall to Miranda state governor Henrique Capriles in Sunday’s presidential election. They are as dubious of polls showing the 40-year-old challenger with a slight edge as they are of the Chavez-commissioned surveys depicting the incumbent at least 10 percentage points ahead. 

Still, there is a solidifying impression among political analysts that Chavez's "missions" to eradicate illiteracy, improve healthcare, provide government jobs and build housing for the homeless have benefited too few for the vast sums squandered on the programs. A Reuters news agency report this week on its investigation into the opaque ledgers of a massive slush fund under Chavez's control identified more than $100 billion in off-budget spending over the last seven years.

While the social programs are popular and have made dents in poverty and illiteracy, Venezuelans are tiring of unfulfilled promises after 14 years, said Michael Shifter, president of the Inter-American Dialogue think tank in Washington. He believes that Chavez "has run his course."

Violent crime has skyrocketed -- including at least two fatal shootings of Capriles supporters at campaign events this week. Infrastructure is crumbling, as seen in deadly refinery explosions this summer. Power shortages afflict much of the country, and "there is a sense that Chavez's rhetoric has lost its magic," Shifter said.

A cult of personality enveloped Chavez through most of his presidency, with his visage ubiquitous on posters and billboards. Broadcast media have been obliged to carry every one of his 2,300 speeches. If aired end to end 24/7, they would run for 72 days, according to the calculations of two prominent Latin American statesmen in a report for the Woodrow Wilson International Center for Scholars.

The report, by career Chilean diplomat Genaro Arriagada and former Mexican Federal Electoral Institute chief Jose Woldenberg, also noted that Venezuela’s high-tech balloting machines that identify voters by fingerprint are suspected by a third of the population -– and a majority of Chavez supporters -- of creating a record of how they voted, despite official demonstrations to the contrary.

Voters in line for new housing or other government perqs fear they'll be bumped from the waiting lists if they are found to have voted for the opposition, said Charles Shapiro, a former U.S. ambassador to Venezuela and now president of the Institute of the Americas in La Jolla.

Hugo Chavez campaigning Tuesday"What is true is not as important as what people think is true," Shapiro said of voters' enduring  suspicions that their votes won't be secret.

Opinion polls in Venezuela are a poor gauge of voter intentions, said Shapiro, who wouldn't hazard a guess as to whether an end to the Chavez era might be on the horizon.

"What I do know is that Capriles has run a terrific campaign. Chavez has been president for 14 years, and in any country a certain weariness sets in," Shapiro said. "While Chavez is a very good campaigner, he clearly is not as vigorous as in past campaigns."

Chavez, 58, has had three cancer operations in Cuba in 15 months and often has been absent, uncharacteristically, from the public spotlight.

The 40-year-old Capriles, by contrast, has projected a dynamic image, plunging headlong into Chavista territory to assure the poor that as president he would maintain popular social programs but run them better.

"Capriles has been extremely smart in his campaign, in a way that would suggest there's not going to be a period of vengeance against Chavez supporters in the government," Shifter said. "The mistake the opposition has made in the past is saying that everything Chavez has done is bad."

It remains to be seen whether the young governor's message is strong enough to overcome the considerable powers of incumbency, with Chavez in control of the airwaves and the oil treasure chest, Shifter said. There are also concerns about whether a Capriles victory would be respected by Chavez loyalists on the electoral council, in the courts and among the armed forces.

"Capriles is the new generation," whether he wins this time or not, Shifter said. "People are obviously responding to his message and giving him a serious look."

ALSO:

Georgia President Saakashvili concedes election defeat

Assailants kill at least 25 students in northeastern Nigeria

Hong Kong police arrest 7 in harbor collision that killed 38 people

Follow Carol J. Williams at www.twitter.com/cjwilliamslat

Photo: Venezuelan presidential candidate Henrique Capriles, at a campaign rally on Monday, has united the country's scattered opposition forces to confront President Hugo Chavez with the first serious challenge of his 14-year tenure in Miraflores Palace. Credit: Leo Ramirez / AFP/GettyImages

Insert: President Hugo Chavez, at a campaign rally in Yaracui state on Tuesday, still draws enthusiastic crowds but has been less in the public spotlight this election year because of long absences for cancer treatment in Cuba. Credit: Juan Barreto / AFP/GettyImages


'Bibi's Bomb': Netanyahu uses a picture to make his point

Netanyahubomb

For weeks, Israeli Prime Minister Benjamin Netanyahu has urged the United States to draw a clear “red line” to stop Iran from getting a nuclear weapon. Today, Netanyahu showed them how.

Literally.

Warning the United Nations General Assembly that the world must act quickly to halt Iran, Netanyahu brandished a red marker and drew his own clear red line atop a drawing of a bomb.

By the middle of next year, Netanyahu argued, Iran could have enough enriched uranium to make a weapon within “a few months, possibly a few weeks.” His red line landed just below the “final stage” on the diagram.

The gambit grabbed as much attention as his dire message: The image of Netanyahu drawing that “red line” was irresistible to the media after photo after dull photo of suited diplomats at the U.N. If cartoonish, it was unforgettable. If simplistic, it was easily grasped. Some saw it as a brilliant stroke of political stagecraft.

“Bibi's use of that chart was one of the most effective, gripping uses of a chart I've ever seen. Is the world listening??” former Bush White House press secretary Ari Fleischer tweeted.

In a rarity for the sober world of international diplomacy, “Bibi’s bomb” went viral, as Internet users competed to get in the best quips.

But illustrating the tense and serious issue with a cartoon fell flat with others watching the speech. Some said that the act made Netanyahu himself look cartoonish, an image that didn’t spell out the threat so much as conjure up animated villains.

“It is precisely because Iran's nuclear program is such a threat to Israel that turning to cartoon bombs to explain the issue is a lousy idea,” tweeted Jeffrey Goldberg, a correspondent with the Atlantic.

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