Other countries eagerly await U.S. immigration reform

They design our electronics, harvest our food, staff our research labs and care for our children. Immigrants -- legal and illegal, skilled and unskilled -- by all accounts are vital cogs in the wheel of the U.S. economy, and the money they send back to their families improves the quality of life throughout their homelands.

So why, when both sending and receiving countries benefit, is the quest for comprehensive immigration reform in the United States so politically divisive and often pushed to the legislative back burner?

Immigration policy experts say the caustic partisan debate over who can stay and who must go has been ratcheted up by the lingering joblessness inflicted by the Great Recession and the searing spotlight of Campaign 2012 that illuminated only candidates' points of contention rather than those of convergence.

Now that the election is over and President Obama purportedly is beholden to the 71% of Latino voters who helped propel him to a second term, the more sober analysts of immigration dynamics are predicting that lawmakers of all political stripes will make a priority of devising more fair, efficient and mutually advantageous practices for integrating foreign labor.

"Immigrants operate on supply and demand, like everyone else. If there is a huge supply of jobs, they will come to the United States and look for them. If, as the case has been recently, there is not a huge supply of jobs or work opportunities are declining, then they either don’t come here or they go back," said S. Lynne Walker, vice president of the Institute of the Americas and an immigration policy analyst for more than 20 years. She pointed to a Pew Hispanic Center report in April that tracked the steady decline of undocumented workers, who have been kept at bay by the recession.

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

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.

The 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.

China’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

Sanctions, currency chaos igniting unrest in outcast Iran

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.

What 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.

"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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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

U.S. will seek to lift ban on Myanmar imports, Clinton announces

NEW YORK -- The Obama administration will seek to lift the U.S. ban on imported products from Myanmar, Secretary of State Hillary Rodham Clinton announced Wednesday at the beginning of a meeting with Myanmar President Thein Sein.

The step would wipe out the biggest remaining economic restrictions the U.S. maintains on the changing country, the latest in a series of incremental moves the U.S. has taken to reward Myanmar.

"In recognition of the continued progress toward reform and in response to requests from both the government and the opposition, the United States is taking the next step in normalizing our commercial relationship,” Clinton said.

There were no immediate details about how or when the restrictions would be lifted. Although Congress renewed the import ban in August, it also allowed for President Obama to waive the restrictions.

A senior administration official told reporters that the White House would consult Congress on how to lift the ban, including whether to end restrictions for all products at once or lift bans on categories one by one. Trade between the U.S. and Myanmar was not especially high in dollar value, the official said, and included hardwoods, gems and textiles.

The announced move would be an economic boon for Myanmar, also known as Burma, and gives its president “a major boost,” said Suzanne DiMaggio, vice president of global policy programs at the Asia Society. The U.S. action "will go a long way toward muffling critics and hard-liners at home.” 

As Myanmar has taken steps toward reform, freeing hundreds of political prisoners and allowing opposition candidates such as democracy icon Aung San Suu Kyi to stand for election, the U.S. has loosened its restrictions on the long-isolated nation, easing most economic sanctions and opening up investment.

The long-standing ban on products made in Myanmar, first put in place nine years ago, dealt a major blow to the Myanmar garment industry, which once sent nearly half of its products to the U.S. More than 100 garment factories were shuttered and at least 50,000 jobs lost, the State Department reported in 2004.

Suu Kyi had urged the U.S. to drop the ban, one in a host of sanctions she had once supported, saying her country should no longer depend on such pressure to maintain its momentum toward democracy. Experts said her supportive statements, made before Thein Sein visited this week, paved the way for the sensitive move.

“It’s a little weird to support sanctions when the people you were supposedly supporting,” Suu Kyi and others in the democracy movement, “don’t support them anymore,” said Joshua Kurlantzick, a Southeast Asia fellow at the Council on Foreign Relations.

But other activists and ethnic minorities at odds with the government and have been loath to lose the leverage over Myanmar, which still faces serious obstacles on its road to reform.