Saturday, September 30, 2006

Iran Prez: West Would Exploit Nuclear Suspension

Iranian President Mahmoud Ahmadinejad has again rejected calls to suspend his nation's nuclear program, saying Western nations would exploit the move for propaganda purposes.

Ahmadinejad told students in Tehran Saturday that any suspension of nuclear enrichment would be portrayed by the West as a surrender. He vowed to continue, in his words, to protect Iran's right to a nuclear program.

Western nations say the program is intended to develop nuclear weapons. Iran says it is for peaceful purposes.

Earlier this week, European Union foreign policy chief Javier Solana met Iran's top nuclear negotiator, Ali Larijani, to discuss the dispute.

US Secretary of State Condoleezza Rice is scheduled to speak in coming days with her counterparts from other world powers to discuss that meeting. France, Britain, Russia, China and Germany will take part in the consultations.

Earlier Saturday, the US Congress passed a bill that would apply sanctions on companies or individuals providing materials for Iran's weapons programs. The bill (which is widely assumed to be directed at China and Russia) must be signed by President Bush to become law.

UPDATE: President Bush signed the bill late Saturday.


"The Goldman Sachs Effect"

American Economic Alert published a brilliant piece this week by William R. Hawkins, headlined, "The Goldman Sachs Effect Transfers the Strategic Advantage to China." Excerpts appear below, but we urge readers to click through to the entire essay. Hawkins is one of the smartest, best informed analysts of the US-China relationship. He's also a prolific writer; so be sure to bookmark the site.

Hawkins writes:

"A front page article in the September 25 issue of Defense News reported that China has tried to blind US satellites with high-powered lasers, which can disable electro-optical satellites like the giant Keyhole spacecraft or even interfere with radar satellites like the Lacrosse. Satellites have become critical to American military communications, surveillance, and targeting. Thus they are at the heart of the strategy to transform the US military through net-centric warfare systems.

"That China, a strategic rival of the United States in East Asia and increasingly in this hemisphere, would seek to disrupt American capabilities should not be surprising. There have been reports for many years that Beijing was working on a variety of anti-satellite weapons. What is truly alarming is the response from the Bush White House, or, rather, the lack thereof...."

Click here to continue reading.

Friday, September 29, 2006

Chrysler Cuts US Output to Make Chinese Cars

Another nail in Detroit's coffin.

German-US carmaker DaimlerChrysler AG says it is cutting production of vehicles made in the United States so it can focus on producing smaller, more fuel-efficient cars in China.

The company is reportedly in talks with potential Chinese partners to produce lower-cost automobiles for the US market.

DaimlerChrysler has joined the rush of foreign automakers for a share of the booming Chinese market.

This month, the German-based automaker formally opened its new plant in Beijing--complete with traditional pomp and fireworks. Chairman Dieter Zetsche said it's all part of the company's $1.9 billion investment in China.

"This, obviously as everybody knows, is one of the most dynamic if not the most dynamic countries and economies on the face of the earth,” said the chairman. “And DaimlerChrysler, we are very proud to play a role in contributing to China's economic growth and development."

China is the world's second-largest car market after the US, with seven million new vehicle sales a year. The company is said to be in talks with a state-owned company to sell Chinese-built subcompact cars in the US and Europe.

Chrysler Group Chairman Tom Lasorda said the company plans to introduce 10 new models this year. "Bottom line, we need to partner with someone who has low cost, high quality," Lasorda said. "We can't rule out China and we can not rule out European markets or other parts of Asia because there are a lot of key players in the "B" segment today and we are going to look at all of them."

Unlike other automakers that have produced specially designed cars targeted for a Chinese market, Dieter Zetsche said Mercedes and Chrysler models made in China will be identical to models sold abroad.

"The only difference ought to be the country of origin," he said. "As far as quality is concerned, there can only be one quality we are striving for with Mercedes or with Chrysler products around the globe."

The company plans to reduce dealer shipments in the US by 15 percent because of declining sales of pick-up trucks and sport utility vehicles.

Although DaimlerChrysler claims its international operations have been profitable, its US sales are down about 10 percent this year resulting in a projected loss of $1.5 billion in the third quarter.

Source: VOA

Eager to Appease, US Falters on Two Fronts

Major disappointment.

Bogged down in Iraq and eager to please, or appease, Rising Red China, the politically battered Bush administration is backing down on two important fronts: North Korea and Iran.

Israel will probably be next. The US and Europe will almost certainly allow Iran's Shiite proxy force, Hezbollah, to rearm and effectively take over the failed Lebanese state (which was long regarded as the "Paris of the Middle East" until its partial seizure by the Palestine Liberation Organization led to a horrible, protracted civil war with Christian militias).

On Friday, Iran's foreign minister, Manouchehr Mottaki, said his country has no reason to suspend its nuclear activities. Also on Friday, US President George W. Bush said he was prepared to let the clock continue ticking in an effort to bring the Islamist power back to the bargaining table pursuant to US demands for at least a temporary halt to Iranian uranium enrichment.

Iran has ignored an August 31 United Nations Security Council deadline to suspend uranium enrichment.

Meanwhile, the US and South Korea have reportedly agreed on a Chinese-approved plan for accommodating nuclear armed, missile mad North Korea. Washington is increasingly concerned that Beijing's Stalinist vassal--a declared nuclear power--is preparing its first-ever nuclear bomb test.

China Stages Sickening Olympics for Animals

How sick is Rising Red China?

Extremely sick.

The country that trades in harvested human organs--taken from political and other prisoners--is also known for its sickeningly cruel treatment of animals, including dogs.

Countless creatures are annually tortured and beaten to death, electrocuted, skinned and burned alive.

So it should come as no surprise that China is holding "Animal Olympic Games." That the awful events are being held in supposedly civilized and more Western oriented Shanghai is somewhat surprising, especially since China's Communist Party rulers are anxious about their international image ahead of the 2008 Beijing Summer Olympic Games.

More than 300 animals are being abused at the biannual spectacle at the Shanghai Wildlife Park. The cruelty Olympics have attracted thousands of visitors, including school children.

What goes on at the degrading games? An elephant is forced to engage in a tug of war with audience members. Bears and kangaroos are forced to box humans. Chimpanzees are forced to play basketball and lift huge weights. Monkeys are forced to race bicycles.

And so on and so forth.

All told, more than than 30 species of animals from 26 Chinese provinces and cities are reportedly taking part in the events.

And just think: the Chinese Century has barely begun!

Friday Fun Fiction: the Plot to Make the US Stronger

FACT: US Treasury Secretary Henry Paulson has argued that a strong China is in the US national interest. According to the fabulously rich ($700 million net worth) former chairman of Goldman Sachs, a strong China actually makes the US stronger.

FICTION: Toward the end of the American Century, in the fall of 1998, the inner, control group of the Council on Foreign Relations, America's most elite and influential foreign policy think tank and advisory group, covened an emergency session. It was a busy time for the Council; but the matter at hand--growing US weakness--had to be addressed, even if it meant taking time away from other high-priority items on the Council agenda, including diplomatic initiatives aimed at North Korean Dear Leader Kim Jong-il, PLO chairman Yasser Arafat, and a newly unearthed faction of moderate mullahs in Islamist Iran.

The problem of how to make the sole surviving superpower stronger was deemed to be even more pressing than, say, finalizing plans for a book-signing cocktail party to promote the publication of "The Crisis of Global Capitalism" by billionaire Council member George Soros, or finding someone to finally write that nutty novel about the theory of a sacred Jesus bloodline.

Details are hard to come by (minutes of inner circle Council meetings are still recorded by hand in invisible ink), but this much is known: after some heated debate and discussion, the members arrived at an ingenious solution to the perceived problem of US weakness--make China stronger. The stronger the better! The time had come for a Chinese century--to make the US stronger, of course.

The outline of the China plan, or plot, to strengthen the US, has been made available to this blog. It is a stunning scheme, completely in line with Secretary Paulson's brilliant theory of Rising Red China serving the US national interest. Key elements of the plot are set forth below.

1. In the name of global capitalism, help China to hollow out the US economy by speeding up the destruction of the remnant US manufacturing sector and the loss of millions of US jobs.

2. Encourage China to run up huge trade imbalances through the manipulation of its currency.

3. Stimulate the flow of tens of billions of dollars of direct foreign investment into China, while ignoring depressed regions of the US, including decaying urban areas and rural communities in desperate need of high-speed Internet access and reliable mobile phone service. These areas are to economically erased, eventually, in favor of any and all Third World nations.

4. Tolerate and tacitly encourage Chinese espionage and illicit influence peddling operations.

5. Look the other way while China modernizes and expands its military in ways that will permit it to eventually project power and challenge the US around the world--and out in space.

Other ideas--encouraging a Chinese alliance with terror-sponsoring, America-hating Radical Islam and allowing Chinese government-controlled listed companies to roam the planet and lock up energy supplies and fuel conflicts through arms sales to rogue states--were considered but shelved because they seemed too impractical and far-fetched at the time.

The concept of using China to bring about a multipolar world, however, in which the US would have to compete with China--and perhaps also Radical Islam and a resurgent Russia--was well received. Council leaders reportedly agreed with Soros that US supremacy threatened world peace--was perhaps the main menace of the new global era--and that the sole surviving superpower therefore had to be taken down several notches in prestige and influence ... in order, of course, to be made stronger.

Of course.

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Thursday, September 28, 2006

Iran Expert: Conflicting Messages Sow Confusion

Interesting insight from a dovish expert on Iran.

Abbas Milani, director of the Iranian Studies Program at Stanford University, told Voice of America that Tehran is quite accomplished in simultaneously sending "conflicting messages" to sow confusion. For example, Milani said in a radio interview, former Iranian President Mohammed Khatami, considered to be among the "reformers," sent a conciliatory message during his recent visit to the United States. The Stanford professior said the message was designed to strengthen the position of China, Russia, and France, who support more negotiations before imposing an embargo on Iran for refusing to halt uranium enrichment as mandated by the United Nations Security Council.

Milani told VOA that the Iranian regime is indeed “bent on having a nuclear bomb,” adding that the only long-term, effective deterrent to a nuclear-armed Iran is to "push for democracy" there.

Are Some US Firms Violating US Law in China?

Fact: It is an open secret on Wall Street and in some or many board rooms in Corporate America that powerful Communist Party officials in booming China are often illicit secret partners in and beneficiaries of many of the big deals made possible by foreign direct investment. The following questions therefore come to mind:

1. Are US bankers and investors and executives of US public companies who look the other way and fail to report their suspicions, or evidence of wrongdoing, in violation of US federal law--specifically, the Foreign Corrupt Practices Act and Sarbanes-Oxley?

2. Could the current, widening and intensifying crackdown on high-level official corruption in China implicate foreign investors--particularly in the real estate sector?

3. Is China's influence in Washington so great as to make the above two questions hopelessly academic and irrelevant?

Iran Update: Mullahs Buy Time to Build Bombs

This just in on the Iranian nuclear standoff:

1. No progress. The EU-Iran talks are producing ... talk ... without any real substance. EU sources say it is increasingly clear that Iran is playing for time. The murderous mullahocracy is still only thinking about ... maybe ... possibly ... perhaps temporarily ... suspending uranium enrichment.

2. Every day counts. Some analysts believe Iran may only be weeks away from having a nuclear bomb; so stalling tactics are the order of the day for skilled Iranian negotiators.

3. No sanctions. China and Russia remain committed to blocking meaningful sanctions against Tehran. Beijing will throw Washington an economic bone, in the form of yuan appreciation, to strengthen the position of the appeasement camp.

4. Helping hand. Like a so-called tag team in exhibition wrestling, North Korea and Iran are effectively working together to keep the US off balance and on the defensive. The Axis of Evil is no myth; on the contrary, China's Stalinist vassal and Islamist ally have a definite understanding regarding anti-American strategy and tactics. A North Korean nuclear bomb test will be timed to refocus attention away from Iranian intransigence.

Weekend Warnings: Taiwan, Iran, N. Korea

FLASHPOINT TAIWAN: As previously reported by China Confidential and confirmed today by remarks made by Taiwan President Chen Shui-bian, the self-ruled island democracy will continue to apply for United Nations membership. But from now on, Taiwan will apply as Taiwan and not as the Republic of China. Chen will also push for a constitutional name change, from ROC to Republic of Taiwan (despite the less than appealing initials ROT ). Analysts expect a sharp reaction from Beijing, which has vowed to attack Taiwan if it moves toward formalizing its de facto independence (recognized by 24 UN member states). China's Communist Party rulers can be counted on to exploit tensions across the Taiwan Strait in order (a) to whip up nationalist sentiment, and (b) to pressure Taiwan's ally, the United States, at a time when it desperately wants Chinese help in curbing Iran's nuclear development program and bringing missile mad North Korea back to the multiparty bargaining table for nuclear disarmament talks....

NORTH KOREAN NUKES: The US State Department is plainly worried about China's Stalinist vassal. North Korea's mass murdering Dear Leader Kim Jong-il, one of the world's truly psychotic heads of state, is reportedly bent on conducting an underground nuclear bomb test. His regime is a declared nuclear power, and a menace to the civilized world, but has yet to test a weapon. North Korea depends on China for most of its food and fuel; and the Chinese and North Korean armies are quite close. China will not support any truly tough or meaningful sanctions against its vassal (a country that boasts concentration camps and actual gas chambers, in which whole families have been murdered). Nor will China support tough sanctions against nuclear developing Iran, which has followed China's advice in attempting to buy time for its disputed uranium enrichment program by offering "serious negotiations" to a divided Western world. China's strengthening and deepening ties with Islamist Iran constitute the Communist regime's most important relationship in the Muslim world....

AMERICAN APPEASEMENT: As for the US, it will bend over backwards to avoid public criticism of China over the North Korean and Iranian issues. In fact, Washington will go to great lengths to avoid angering Beijing over any issue now that it seems to be rewarding US Treasury Secretary Henry Paulson with a mysterious upward creep in the relative value of China's manipulated currency, the yuan. The fabulously rich former investment banker--he made 70 trips to China as chairman of giant Goldman Sachs--is a fierce advocate of accommodating (appeasing) China's rise. He and Secretary of State Condoleezza Rice have sidelined the administration's China critics, Vice President Dick Cheney and Defense Secretary Donald Rumsfeld.

Wednesday, September 27, 2006

Reports: China Releases Catholic Priest

A bishop belonging to China's underground Roman Catholic church has reportedly been released from a Chinese prison after 10 months.

Reports by Catholic-affiliated news outlets (Asianews and the Union of Catholic Asian News) say bishop Julius Jia Zhiguo returned to his home this week in the northern city of Zhengding, in Hebei province. Authorities have also allowed the bishop to receive visits from priests from his diocese.

Jia is believed to be at least 70 years old. He has been arrested eight times over the past two years, apparently for refusing to join China's state-approved church, known as the Catholic Patriotic Association.

The bishop's latest detention began in November last year. Reports say that earlier this year, Jia was taken to a hospital for medical treatment, but remained in police custody.

Jia was ordained as a bishop of China's underground church in 1980. Beijing only allows Catholics to belong to government-controlled churches, but many Chinese Catholics remain loyal to the Vatican and worship in unofficial churches and private homes.


Bush Defies China by Honoring Dalai Lama

In a rare act of political will when it comes to dealing with Rising Red China these days, President George W. Bush on Wednesday defied the country's Communist Party rulers and signed into law a bill to present to the Dalai Lama a Congressional Gold Medal, the highest honor bestowed by the United States Congress.

The decision to honor the leader of Tibetan Buddhism caused outrage in Beijing when the US House of Representatives passed the measure two weeks ago. Chinese Foreign Ministry spokesman Qin Gang said the honor "seriously interferes with China's internal affairs and damages China-US relations."

The increasingly aggressive and assertive Chinese tyranny, which has conquered and occupied Tibet, considers the Dalai Lama a political enemy who works from his exile in India to push for his nation's independence. The universally revered religious and spiritual leader led large numbers of followers to refuge in northern India in 1959 following a failed uprising against Chinese Communist oppression.

The proposal to honor the Dalai Lama with a Congressional Gold Medal was co-sponsored by 73 of 100 US senators. The proposal said the Dalai Lama "has struggled for half a century to better the lives of the Tibetan people."

In 1989, the Dalai Lama was awarded a Nobel Peace Prize. China denounced the award.

Washington sources tell China Confidential that Beijing's biggest booster in the Bush administration, US Treasury Secretary Henry Paulson, opposed the decision to honor the Dalai Lama. (Ironically, Paulson is a follower of Christian Science, a faith that shares many metaphysical concepts with Buddhism.)

The Dalai Lama is enormously popular in the US. Last Thursday, for example, more than 2,000 people gathered in a field in the small Upstate New York town of Woodstock (the famous 1969 music festival was actually held in Bethel, NY) for a surprise appearance by the Tibetan leader. The gathering coincided with the International Day of Peace. It was publicized only by word of mouth, because of security concerns. Metal detectors and bomb-sniffing dogs were on hand for added safety.

Audience members, mostly local residents, told reporters they were pleased with the Tibetan Buddhist leader's unexpected visit and his message calling for peace, compassion and simple living. Many waited in the sun for hours before he appeared on the outdoor stage.

The Dalai Lama arrived in North America earlier this month, first stopping in Canada.

China Warns Taiwan Against Name Change

China is warning Taiwan not to reform the island's constitution. The warning from the Communist leadership on the mainland comes as legislators on democratically ruled Taiwan consider making changes, including re-naming the island.

Revamping the constitution has been one of Taiwan President Chen Shui-bian's main political objectives, and one that Beijing--which considers Taiwan a part of its territory--sees as a move toward independence.

Members of Chen's party are expected to introduce a bill on changing the island's name from the current "Republic of China," to "Republic of Taiwan."

China considers the change an assertion of Taiwan's separate identity and tantamount to a declaration of independence.

At a briefing in Beijing Wednesday, Li Weiyi, a spokesman of the Communist government's Taiwan Affairs Office, put Chen government on notice.

"We will never tolerate their seeking to legislate independence by amending the constitution," Li said. "We will closely watch their situation and be on high alert to new developments."

China last year enacted legislation authorizing an attack on Taiwan if Beijing determines that the island is moving toward declaring formal independence or if efforts to peacefully reunify fail.

Taiwan has been self-governed since 1949 when Chang Kai-shek's Nationalists fled there following their defeat by Mao Zedong's Communists in the Chinese civil war.

The United States has pledged to help Taiwan defend itself from an attack, but has said it does not support Taiwan independence. Washington has repeatedly urged both sides to avoid taking any unilateral steps to change the status quo. (The US does not consider the above-referenced "Anti-Secession Law" a change in the status quo.)

A senior State Department official this month voiced US concern over China's military build-up, including the hundreds of missiles that Beijing is pointing at Taiwan. The official called on China to demonstrate more transparency in its military, and cease its arms buildup opposite Taiwan.


Tuesday, September 26, 2006

Shinzo Abe Becomes Japan's Youngest PM

Shinzo Abe, 52, has become Japan's youngest prime minister since the Second World War. He told the nation that he wanted to improve relations with China and South Korea, and vowed to continue the structural reforms begun by his predecessor.

With the Liberal Democratic Party (LDP) firmly in control of Japan's parliament, there was no doubt Tuesday who would be selected as prime minister.

Lawmakers cheered the announcement of the lower house vote showing LDP President Shinzo Abe defeating his rivals by a large margin.

Within hours of his election, Abe spoke to the nation, saying he would not back away from the reform program implemented by his predecessor, Junichiro Koizumi. Abe instead vowed to accelerate administrative reform.

Abe also told reporters it is time to improve Japan's relationship with China and South Korea that deteriorated during the Koizumi administration.

Abe says improved Sino-Japanese relations are very important and he will make further efforts to this end.

The new prime minister reiterated his campaign pledge to make Tokyo a more equal partner in its security alliance with Washington.

Abe said the Liberal Democratic Party will study what constitutional changes might be needed to accomplish this.

The existing pacifist constitution was imposed on Japan by the United States following the Japan's defeat in World War II.

Earlier in the day, Abe announced his new cabinet. He kept Taro Aso in the post of foreign minister.

Aso told reporters that he believes the new administration will be able to achieve a Sino-Japanese summit, something that was not possible during Koizumi's five years in office.

China, along with South Korea, objected to Koizumi's repeated visits to a Tokyo shrine that honors Japan's war dead, including convicted war criminals. The two neighboring countries saw the visits as a sign of lingering militarism, and relations deteriorated during Koizumi's tenure.

Lawmaker Yasuhisa Shiozaki, a fluent English speaker, a rarity in the Japanese political world, is the new chief Cabinet secretary and top government spokesman. Shiozaki will also hold a new post dedicated to resolving the fate of Japanese nationals abducted by North Korean agents during the Cold War.

Opposition party leaders predictably criticized the new Cabinet lineup, saying it will not be up to the task of making needed reforms. Some criticism is also coming from Abe's party.

Outgoing finance minister Sadakazu Tanigaki, who challenged Abe for the party leadership, says the new prime minister selected loyalists and that the lack of diversity threatens party unity.


Pyongyang to Washington: Drop Dead!

Kim Jong-Hill has failed again.

Kim, also known as Christopher Hill, is America's point person for Asia and the chief American delegate to stalled six-party North Korean nuclear disarmament talks. The Assistant Secretary of State is also a notorious dove and diehard advocate of appeasing the secretive Stalinist state ruled by one of the world's leading lunatics, North Korean Dear Leader Kim Jong-il.

Which explains why many conservatives have nicknamed the American diplomat Kim Jong-Hill.

For Hill and his ilk, dialogue and discussion are sacrosanct; and diplomacy is apparently an end, not a means.

Some background: though the United States has officially opposed direct talks with China's Stalinist vassal, demanding instead that Pyongyang return to the six-party negotiations, we learned yesterday (scroll down) that Hill has had face-to-face meetings with his Communist counterparts, and would do so again under certain conditions. US ambassador to South Korea Alexander Vershbow said Tuesday that Washington is prepared to have high-level one-on-one talks with North Korea if it returns to the six-party talks. The US envoy offered to send Hill to Pyongyang for the meeting.

North Korea's reaction? Drop dead!

As reported by Voice of America (which is blocked in China), a top North Korean official has ruled out a return to six-party talks, and accused the US of trying to rule the world.

The verbal broadside came during North Korea's annual address to the United Nations General Assembly.

VOA said North Korean Deputy Foreign Minister Choe Su Hon blamed "vicious, hostile policies" of the US for "touch and go critical tension on the Korean peninsula." Referring to his country by its initials, DPRK, Choe said Washington is purposely stoking tensions in a strategy aimed at world domination.

"The United States aims to strengthen its armed forces in this region, and thus contain the ever-growing-strong DPRK and neighboring countries within its world supremacy strategy," the North Korean official said. "This is what the real intention of the United States is."

Choe accused the US of imposing unjustified financial sanctions on Pyongyang, and said that under such conditions, North Korea would not return to the multilateral negotiating table.

Said Choe: "It is quite preposterous that the DPRK, under the groundless US sanctions, takes part in the talks of discussing its own nuclear abandonment. This is the matter of principle which cannot tolerate even the slightest concession."

Washington imposed sanctions on Pyongyang a year ago because of North Korea's alleged involvement in counterfeiting US currency. North Korea responded by calling off the six-party talks, which also involved China, Japan, Russia and South Korea.

North Korea declared itself a nuclear weapons state in February of 2005, but has not conducted any nuclear tests. There is growing concern, however, that Pyongyang could test a bomb before the end of this year.

On July 4, North Korea defied US and Japanese warnings by carrying out ballistic missile tests that included launching a rocket capable of reaching the US.

The UN Security Council reacted with a resolution condemning the tests, and imposing weapons-related sanctions. But North Korea rejected the resolution, and vowed to continue its missile program.

China was responsible for preventing truly tough sanctions against its vassal, which depends on Beijing for most of its food and fuel supplies.

Bowing to China, US Wavers on North Korea, Iran

A season of appeasement is upon us.

Like changing autumn leaves in the northeastern regions of the United States, the country's positions on key issues are wavering--and falling.

But relations with Rising China are picking up, according to the US State Department.

Providing fresh, dramatic proof that Secretary of State Condoleezza Rice and Treasury Secretary Henry Paulson are now firmly in charge of China policy--and, in the case of Nobel Peace Prize-seeking Rice, foreign policy in general--the State Department's point person for Asia told reporters on Tuesday that the US and China are cooperating closely to resolve the North Korean and Iranian nuclear disputes. Assistant Secretary of State Christopher Hill said relations with China--he called the Communist tyranny a "kindred spirit"--are improving in many respects.

Regarding China's Stalinist, mass murdering vassal, Hill stopped short of predicting that Pyongyang would return to six-party nuclear talks.

The reason is simple: the US has softened its stance and agreed in principle to engage in direct negotiations with North Korea, which may be preparing its first underground test of a nuclear bomb. In fact, Rice, who continues to talk tough about a deadline for North Korea to return to multilateral negotiations, confirmed that Hill has met with his Communist counterpart on the sidelines of previous talks. The US has repeatedly rejected North Korean demands for formal face-to-face discussions.

The six-party talks involving the US, North Korea, China, Japan, South Korea and Russia, have been stalled since last November.

So much for nuclear-armed, missile mad North Korea. Turning to nuclear arming, missile mad Iran (which is close to having a bomb and may already possess nuclear warheads), Hill said China is "working very closely" with the US on that front.

Translation: Washington, as we have reported, has softened its stance toward the Islamist mullahocracy, which is backed by China. In a stab in the back to Iranian opposition groups, Rice, now acting for all intents and purposes as America's foreign policy president, is promoting the notion that there are authentic moderates among the Iranian clerical fascists.

It's probably only a matter of time before the State Department identifies supposed moderates in the North Korean regime of Dear Leader Kim Jong-il. Until that awful day, we will have to settle for moderates in ... Hamas. Really. The new US view, as articulated by Rice, is that Hamas leaders in Gaza and the West Bank are moderate relative to Hamas leaders headquartered in Syria.

Next, we predict, the State Department will announce that it has found moderates in Iran's Lebanese Shiite proxy force, Hezbollah. Seriously. The line will be that the good Hezbollah leaders favor political and social action over military/terrorist activities.

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Sacking Signals Crushing of Shanghai Clique

The Shanghai Clique is going down--and no party boss or princeling will be spared. The lucky ones will be allowed to switch sides, however, and swear allegiance to the center.

And the whole episode will serve as yet another reminder that for all the talk of a new China, it remains a complex, mysterious dictatorship, where membership in a losing faction can lead to loss of freedom and even loss of life.

That's the real story behind the story making news: an intensifying, widening crackdown on alleged corruption in Shanghai, where well connected, corrupt officials loyal to China's former president, Jiang Zemin, and their privileged offspring--so-called Communist Party princelings--have long ruled. The scandal has already claimed the city's Communist Party chief, Chen Liangyu; not surprisingly, party rulers today announced that other officials could be targets. Several have already been named, along with a number of prominent businessmen.

"Any party member who violates party discipline, no matter how high or low his rank, will be thoroughly investigated and seriously dealt with," Gan Yisheng told a news conference. Gan is secretary-general of the party's anti-corruption Central Discipline Inspection Commission.

Translation: many arrests and convictions are certain; executions are possible.

Han Zheng, the acting party boss in Shanghai, warned local officials to fall in line behind President Hu Jintao.

State-owned Xinhua News Agency quoted Han as saying: "All Shanghai's party members and officials must unify their thinking and actions around the center."

Chen is accused of mismanaging 10 billion yuan (around $1.25 billion) by looting a social security fund for illicit loans and investments.

Analysts say he is probably guilty, but no more corrupt than other officials in booming China, including Hu's clique. The party's "socialism with Chinese characteristics" is essentially a mix of Stalinist-style socialism and state-supported capitalism--for the powerful, privileged elite.

Sources tell China Confidential that Hu made a final decision to crush the Shanghai Clique in early spring. The investigation of Chen and his cronies commenced in July; but the first big sign of things to come was in late August, when official media downplayed the publication of Jiang's collected works.

This is a crucial time for Hu to publicize his anti-corruption efforts. The party is preparing for a major party congress next year, during which Hu is expected to further consolidate his power by installing puppets and proteges in key party positions.

Monday, September 25, 2006

Hu Fires Shanghai Party Boss

China's Communist Party leadership on Monday announced Chen Liangyu had been dismissed from his post as Shanghai Communist Party secretary. Analysts say the move is a bold measure by President Hu Jintao, who is consolidating his power ahead of expected major changes in the party leadership next year.

By removing a party boss in Shanghai, a stronghold of former President Jiang Zemin, Hu is advertising that after three years in office, he is fully in control of state and party machinery.

Observers say it is important for Hu to demonstrate this ahead of the 17th party congress next year, when Hu is expected to install several of his proteges in key party leadership posts.

Chen is under investigation for allegedly mismanaging hundreds of millions of dollars in city pension funds, and other charges including nepotism. His dismissal is part of a probe, going on since July, of corruption in Shanghai.

Monday's announcement, carried by the Xinhua state news agency, said Chen's firing demonstrates the leadership's resolve to "build a clean party" and fight corruption.

Hu has made fighting graft a top priority. Political analysts say his administration has much to gain from publicizing the removal of corrupt officials.

Source: VOA

Sunday, September 24, 2006

China's Rulers Comforted by Paulson Trip

China's Communist Party rulers are interpreting last week's visit by US Treasury Secretary Henry Paulson (scroll down to read "Death by Dialogue") as a comforting signal that the Bush administration has no intention of getting tough with Beijing over its continuing support for Stalinist North Korea and Islamist Iran. Their meetings with the fawning former investment banker--who made 70 trips to China as chairman and chief executive of giant Goldman Sachs--persuaded China's leadership that the Bush administration will bend over backwards to avoid any confrontation with the Middle Kingdom with regard to economic or foreign policy issues.

The Chinese view is that following a steady decline in bilateral relations, culminating in President Hu Jintao's disappointing White House summit meeting in April with US President George W. Bush, the political picture is brightening because Defense Secretary Donald Rumsfeld and Vice President Dick Cheney--perceived as hardliners toward China--have been effectively eclipsed by Secretary of State Condoleezza Rice and Paulson.

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Friday, September 22, 2006

Foreign Media Companies Confused by New Rules

Foreign investors and media companies are awaiting word on how China plans to enforce a set of restrictions it announced earlier this month on the foreign media. The restrictions are widely viewed as an attempt by the government to keep control of the country's growing, lucrative media market. Analysts say the rules highlight the paradox of China's attempts to open its markets while at the same time seeking to retain control of them.

The set of vague rules announced by China's state-owned news service, Xinhua, on September 10 give the agency control over what foreign news wires may publish in the country. Xinhua has given itself the power to cut out politically sensitive news and other material deemed taboo.

As part of the restrictions, Xinhua also reserved the sole right to distribute the foreign agencies' products in China.

The financial news market in China is estimated to be worth $100 million--and growing. At the same time, officials at Xinhua have complained that foreign news services, including Reuters, Dow Jones and Bloomberg, dominate the Chinese market, providing business news directly to financial institutions.

Andy Browne, a reporter for the Wall Street Journal in Beijing, says the agency is trying to build its control over agencies such as Reuters and Bloomberg by playing on the fact that they are selling news the government regards as dangerous and subversive. He says that by controlling the delivery of the agencies' products, Xinhua puts itself in a position to poach their know-how.

"They'll get an up-close look at the product.," Browne says. "They'll get a look at the management processes, the marketing processes, the sales processes. And they've said, the president of Xinhua has said, that it's his goal to build a news organization that can compete with both Reuters and Bloomberg. So this fits right into the strategy that Xinhua has of turning itself into a global financial news organization."

A former senior writer at Xinhua, who asked that his name not be revealed, says Xinhua knows it cannot compete with foreign news agencies unless it starts behaving less like a propaganda mechanism for the Communist Party and more like a professional news organization.

"Xinhua would have to compete with international wire services like AP and Reuters. That means its reporters must write more professionally, more truthfully, more timely," he says.

Media advocates say for that to happen, China is going to have to allow greater press freedoms--a concession the Communist leadership does not appear ready to make.

Neither Xinhua nor the Chinese government has issued any directives on how the regulations will be enforced. Some media and business experts say the vagueness of Xinhua's notice this month and its failure to announce an implementation plan may mean the government has a chance to reexamine what could turn out to be a damaging decision.


Observer: Death by Dialogue

Henry M. Paulson, Jr. is a well known nature lover. He is also, according to media reports, a lover of snakes. Seriously. Whereas most Americans recoil at the sight of snakes, the fabulously rich, recently appointed Secretary of the Treasury of the United States reportedly likes the look and feel of an interesting snake. Pundits have pointed out that his affection for snakes should serve him well in Washington, DC, which, politically speaking, has often been compared to a snake pit.

Ahead of Paulson's first official trip to China (where people eat snakes and also use them for medicinal purposes), many American manufacturers, lawmakers, and labor leaders had hoped the Treasury chief would put his snake charming skill to good use for the American people--that is, for ordinary American workers and the relatively few American companies that still make things in the US. Their hopes died--quickly--with accounts of the high-level meetings between the representative of the world's greatest democracy--who made 70 trips to China as chairman and chief executive of giant Goldman Sachs--and the leaders of the world's greatest and fastest rising dictatorship.

Simply put, the so-called summit was a disaster--for America. Against a depressing backdrop of unfair Chinese trade practices--including illegal currency manipulation--which have helped to hollow out the US economy to the detriment of millions of workers, Beijing's Communist Party rulers have offered to engage the US in "strategic dialogue." Incredible! The "responsible stakeholder"--whose missiles, machine guns--and nuclear know-how and technologies--have a way of showing up in the hands of some of the planet's worst people, the "peacefully rising" regional power that protects the likes of Islamist Iran and Stalinist North Korea, the "status quo power" that threatens to erase self-ruled, democratic Taiwan and seeks to replace the US "hegemon" as the world's dominant economic and military power, has actually agreed to ... talk.

Amazing--not! Paulson's speech after arriving in China was an insult to the intelligence of every American worker; and his "heaven help" America warning, should it, heaven forbid, demand action instead of talk, was downright offensive, a remark that may play well in a despotic board room, or with the powers that be in Communist China, but not in the democratic marketplace of ideas.

What is truly amazing is this: never before in its history has the US been so influenced by a foreign dictatorship as it is today in the case of China. China's reach and influence in American economic, political, and academic life is without precedent. From Wall Street to Washington, from Corporate America to the classrooms of the country's leading universities, one can easily ruin his or her career by speaking out against Chinese tyranny and treachery.

For Americans who see China as a menacing adversary, the phenomenon is increasingly worrisome. Imagine if the Soviet Union had been America's biggest creditor. Consider what it might have been like if US consumers had been funding Soviet imperialism by buying cheap Soviet-made goods, kept artificially low in price by a manipulated currency regime. Think about a behemoth like Wal-Mart, which is essentially China's US retail partner, or arm, stuffed with Soviet toys,TVs, clothing. (By the way, one wonders if the launching of Wal-Mart's generic drug price war was timed to coincide with the Paulson visit.)

Now, substitute the words Nazi Germany and German, or Nazi, for Soviet Union and Soviet in the above paragraph. Scary, right? But not to Paulson, apparently. And perhaps that's the real significance of the Paulson trip: proof of a new awareness in Washington--secret knowledge, in a way--that the game is largely over and the US has already lost. Maybe Paulson knows--in his heart--that the Chinese propagandists who describe the US as a "dying hegemon" that does not yet know it is dying--and is therefore still dangerous--are only half-right. The American people are in the dark; but America's leaders--and bankers--know the score. China is trading, manipulating--and talking--the US to death.

Death by dialogue. It's the new Chinese way, from North Korea to Iran to the Sudan....

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Wednesday, September 20, 2006

Comment: Conflicting US and Israeli Messages

Regarding the Iran nuclear standoff, two explanations come to mind for the conflicting messages emanating from Jerusalem and Washington this week:

(1) the United States and Israel dramatically disagree in their respective assessments of Iran's intentions and capabilities, or

(2) the two allies are disinforming the public--perhaps with the help of certain seemingly soft European allies--while secretly planning a military attack against the nuclear arming Islamist rogue that has repeatedly threatened to destroy Israel and defeat, if not also destroy, the US.

The first explanation obviously makes more sense.

Consider this: on the same day, Wednesday, that Israeli Foreign Minister Tzipi Livni warned the United Nations that Iranian leaders pose the greatest threat to civilized values, a senior official in the US government told reporters that Washington no longer sees the Iranian regime as monolithic. Since August, the official said, the US has changed its position on the nuclear issue in response to perceived internal divisions in Iran.

The hoary notion that there are moderates within Iran's clerical fascist ruling elite--an idea dating to the Carter administration's attempts to appease the bloodthirsty Khomeini regime---is anathema to US and Israeli hawks, who have compared the concept to pre-war talk of Nazi moderates in Hitler-ruled Germany.

Report: Human Rights in China Deteriorating

The United States Congressional-Executive Commission on China has concluded human rights in China deteriorated this past year, following some limited improvements. This was among the findings in the group's annual report issued in Washington Wednesday.

The US Congress created the Congressional-Executive Commission on China six years ago to monitor human rights and the development of the rule of law in China.

At a Capitol Hill hearing where the report was released, commission chairman Senator Chuck Hagel praised Chinese government efforts to establish the rule of law and raise hundreds of millions of citizens out of extreme poverty. But he said that while China is advancing economic freedoms, it is limiting political rights.

"The gap between forward-looking economic freedoms and a backward-looking political system remains significant," Hagel said.

Some of the experts consulted by the commission were at the hearing. New York University law professor Jerome Cohen criticized China's failure to pass a law covering criminal procedure. He said China had been expected to enact the law to pave the way for ratification of the United Nations Convention on Civil and Political Rights.

Cohen also expressed concern that China's legislature, the National People's Congress, has yet to abolish the punishment known as "reeducation through labor," which allows police to imprison people for up to four years without judicial review.

"That has been one of the most effective and feared police sanctions for almost the entire career of the People's Republic of China," said Cohen. "There's been a bill before the National People's Congress for over two years that would abolish or at least substantially reform that sanction. And that too seems dead in the water."

Another speaker, John Kamm, is head of the Dui Hua Foundation, an American organization that works to advance human rights in China through dialogue with the Chinese government. For years, Dui Hua has raised cases of Chinese political prisoners by presenting lists of their names to the Chinese ministry of justice. Kamm said about one year ago, though, this communication stopped.

"The Chinese government has now decided to close this channel," he noted. "The ministry of justice has said it will not meet me anymore, unless I agree to stop raising names and submitting lists. This I cannot agree to do."

Meanwhile, some experts say China's rapid economic growth may actually be providing disincentives for the government to allow greater political freedom. This argument is made by the Carnegie Endowment for International Peace's Minxin Pei, who says the country's strong economy takes pressure off the government, to either pursue democratic reforms or allow the existence of opposition political parties.

"Because under one party rule, China's political elites can easily convert their political power into economic wealth, they have even less incentive to permit greater political competition," he explained. "It is obvious that democratic reforms will threaten not only their political monopoly, but also their newly acquired economic wealth."

Pei warns China is heading into a period of more intensified government control. He said the country is determined to maintain social and political order as it prepares to host the 2008 Olympics. In Beijing's mindset, he says, control equals stability.


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US Manufacturers Criticize Paulson 'Gimmickry'

The US Business and Industry Council (USBIC) dismissed as "bureaucratic gimmickry" an announcement by United States Treasury Secretary Henry Paulson that a new US-China dialogue has been set up to "promote economic cooperation and the growth of China-US relations." USBIC, which represents many domestic manufacturers, called for rapid progress to help the "American victims of Chinese protectionism and mercantilism."

Alan Tonelson, a research fellow at USBIC, said: "Secretary Paulson's announcement of this new institution reveals a determination to substitute bureaucratic gimmickry for meaningful progress in eliminating China's predatory trade practices. America's domestic manufacturers and working families don't need another talk shop tasked with discussing China's trade barriers, its currency manipulation, and its other illegal subsidies. By the administration's own count, three other such high-level mechanisms already deal directly with US-China economic issues, and several more address them indirectly. The American victims of Chinese protectionism and mercantilism need action from their government now, not endless dithering."

Founded in 1933, the USBIC is a national business organization comprised of roughly 1,500 small and medium-sized manufacturing companies. In a recent national conference on the problems of the US trade deficit, USBIC called for an Article XII, WTO-compliant solution to the trade deficit that would impose an emergency import surcharge on many manufactured goods.

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Early Warning: The French Were Right

We now know why Paris was buzzing ahead of the visit to Washington by former Iranian President Mohammed Khatami, as China Confidential reported on September 10. Turns out, the French rumors were accurate.

After months of tough talk about deadlines and sanctions--and hints of possible military force should the need arise--the United States has indeed softened its stance toward Iran. Sensing a shift in Tehran's position on the nuclear development dispute, the United States is ready to participate in a new round of negotiations with the Islamist nation, provided it halts its uranium enrichment activities in a verifiable way.

And US Secretary of State Condoleezza Rice is ready to join the talks, which would actually aim for a broad improvement in US-Iran relations. (Rice reportedly has her eyes set on a Nobel Peace Prize.)

One concession on the part of Washington: a willingness to allow Tehran to pursue peaceful nuclear development, possibly by allowing Russia and China to enrich uranium for their Islamist ally.

Sources say the US policy shift--which could still be reversed should Iran refuse to freeze uranium enrichment--reflects a change in US thinking about Iran's increasingly important role in the Middle East. Following its proxy war with Israel in Lebanon, during which America's ally failed to defeat Iranian-backed Hezbollah guerrillas, the Islamist non-Arab nation has become a regional superpower. Its influence is clearly felt in Iraq, where Shiite militias and death squads are making a mockery of US efforts to transform the Middle East by establishing a democracy. Thus, Washington may actually by looking to Iran to play a moderating role.

If that turns out to be the new direction of US policy, we can comfortably make a few predictions as follows:

1. Israel will be extremely concerned and disappointed. Jerusalem is convinced that Iran's Holocaust-denying president, Mahmoud Ahmadinejad, is an implacable enemy bent on destroying the Jewish State. The Israeli government believes Iran is quite close to developing a nuclear bomb; some Israelis suspect Tehran may already possess atomic warheads to match its missiles.

2. America's influential neoconservatives and many, if not most, of the country's conservatives will also feel let down; they will interpret US diplomacy as appeasement, a "peace for our time" disaster reminiscent of the runup to World War II.

3. China's international influence and prestige will be greatly enhanced. Beijing's most important relationship in the (loosely defined) Middle East and Muslim world is with oil-rich Iran. China will persuade Russia to let Iran join the Shanghai Cooperation Organization, a tool of Chinese "energy diplomacy" that seeks to counter US influence in Central Asia.

4. US diplomacy will fuel Saudi/Sunnni fears of Shiite encirclement. Iraq will mainly be considered part of the Iranian sphere.

5. There will be no more talk on the part of US officials of a war with "Islamic fascism," or Islamism, or Radical Islam. A rapprochement with Islamist Iran rules that out. Washington will revert to the "War on Terror" term--that is, until and unless the Democrats come to power, at which point, the rhetoric is likely to be further tuned down to a demilitarized, defensive, law enforcement-style "struggle" against terrorism.

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Big US Trade Group Unlikely to Back Bill Aimed at Punishing China for Currency Manipulation

The largest industrial trade association in the United States is not likely to support bipartisan legislation that would allow domestic manufacturers to take China to court for predatory trade practices that have devastated the US economy.

China Confidential has learned that John Engler, president of the National Association of Manufacturers (NAM), has written to NAM directors to inform them that in the opinion of the group's legal counsel, the bill--one of several proposed punitive measures making its way through the US Congress--is fundamentally flawed. Engler's two-page letter, which is dated September 15, says the group's lawyers have concluded that the bill would not be "actionable" (liable to a lawsuit) under the rules of the World Trade Organization.

The legislation, which is sponsored by two US Congressmen, Republican Duncan Hunter of California and Democrat Tim Ryan of Ohio, has been crafted to make alleged Chinese currency manipulation actionable under US law and to work within International Monetary Fund and World Bank guidelines in order to avoid possible retaliatory sanctions by the WTO.

Called the Hunter-Ryan Chinese Currency Act of 2005, the bill is in the first stage of the complex US legislative process. A bill introduced to the House of Representatives first goes to House committees that consider whether the bill should be presented to the House as a whole. The majority of bills never make it out of committee.

Hunter-Ryan reportedly has the support of over 100 House members. The lawmakers blame unfair Chinese trade practices for the loss of millions of US manufacturing and outsourcing jobs over the course of the last five years.

In June, some NAM members apparently agreed--surprisingly, in view of the organization's pro-free trade orientation. Reflecting growing frustration with both China and the US government's failure to take tough action on the trade issue, the NAM international economic policy committee voted to endorse Hunter-Ryan. A final decision will be made by the NAM executive committee and international economic affairs policy group, which is scheduled to meet on Sept. 28. But Engler's letter is a good indication of how the vote is likely to go--against Hunter-Ryan.

The bill's backers will be disappointed. The legislation is unique in that it seeks to define currency manipulation as an illegal “trade subsidy,” which would make it actionable under US law. A countervailing duty could be applied to Chinese imports should China be found guilty of keeping the value of its currency artificially low.

US manufacturers could file currency complaints against China with the US International Trade Commission and seek sanctions on Chinese products until the illegal practice is ended.

Many US lawmakers and some economists argue that the managed--or manipulated--yuan is undervalued by as much as 40 percent against the dollar. The low yuan is believed to have helped raise China's soaring trade deficit with the US, which is running well above last year's record $202 billion.

In his letter, Engler writes that "even if China's currency manipulation met the definition of a subsidy, it is neither a prohibited nor an actionable subsidy as defined by the WTO and would not be countervailable."

About the bill's status: Hunter-Ryan is currently in both the House Armed Services Committee and the House Ways and Means Committee. Because it is a trade bill, it must first clear the House Ways and Means Committee before it can go to the full floor for a vote.

The security angle? Addressing concerns that China is effectively arming itself--against US interests--with US dollars, the bill requires that the US defense secretary notify the International Trade Commission when imported goods manufactured in China are similar enough to US made products used in its national defense. This requirement would guard against so-called market disruption--i.e. the US manufacturer being driven out of business by low-priced Chinese goods.

Meanwhile ... US Treasury Secretary Henry Paulson has begun a four-day visit to China that is expected to include an appeal to the country's Communist Party leaders to accelerate economic reform.

But before his arrival, Paulson warned China's legion of critics in Washington not to expect a "quick fix" and vowed to resist protectionism.

Paulson, whose net worth has been estimated at $700 million, is regarded as one of Beijing's best friends in Washington. As chairman and CEO of Goldman Sachs, he made 70 trips to China to expand the investment banking firm's business there.

In a move widely interpreted as a gesture to the Treasury chief, China allowed its currency to rise to its highest value relative to the US dollar since a small revaluation in July last year. The Chinese central bank set the central parity rate at 7.9342, up from 7.9431 on Monday.

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US Jewish Leader: Iranian President Lied to UN

One of America's most influential and respected human rights advocacy organizations has condemned the Iranian president's speech at the United Nations.

David A. Harris, executive director of the century-old American Jewish Committee, issued the following statement Tuesday night following the appearance at UN world headquarters by Mahmoud Ahmadinejad.

"Iranian President Mahmoud Ahmadinejad has once again revealed why he poses such a danger to the international community. If there were any who doubted the megalomania, messianic zealotry or hatred in this Iranian leader, his performance at the United Nations should clarify matters.

"In his speech to the UN General Assembly, strikingly empty for the occasion, he tried to wrap himself in universal ethical values, but in truth reminded the world why he cannot be trusted.

"He blatantly lied about Iran’s nuclear intentions, claiming only that his nation sought nuclear energy for peaceful purposes, when the UN Security Council and International Atomic Energy Agency have both found compelling evidence to the contrary.

"He spoke about human rights and human dignity, when his own country violates both on a daily basis. Iran’s treatment of political reformers, protesting students, members of the Baha’i community, independent journalists and countless other groups belies his sanctimonious claims.

"He wrapped himself in a mantle of brotherhood and piety, while Iran supports and funds terrorist groups targeting innocent civilians far from its borders.

"He invoked the quest for peace, while Iran develops missiles with an ever longer range and precision and flaunts its newest weapons systems for the entire world to see.

"He claimed that all nations and states are entitled to peace and security, but then refused to call Israel by name and denounced it as an illegitimate entity.

"He repeatedly attacked the United States and United Kingdom, two nations that have a lot to teach Iran about the true meaning of human liberty, the rule of law and mutual respect, turning the truth on its head again and again.

"This man is dangerous. He should not be underestimated. He believes he has a direct line to the Almighty, and, even more ominous, he believes the Almighty has a direct line to him. He has put the world on notice. We can only hope that the world draws the necessary conclusions before it is too late."

Tuesday, September 19, 2006

Iranian-Supplied Chinese Rockets Found in Iraq

The commander of US forces in the Middle East told defense reporters in Washington, DC this morning that apparently new, longer-range Chinese rockets have been found in Iraq.

General John Abizaid said that he believed the Chinese rockets came from Iran, although they may have been removed from arsenals of the defeated Saddam regime.

Military experts tell China Confidential that Iran supplied the rockets and that they are in fact brand new, Chinese-made weapons.

Energy-starved China and oil-rich, Islamist Iran have deepening economic, political, and military ties. Beijing, as we have reported for months, is firmly committed to blocking meaningful sanctions against America's arch-enemy. And Chinese arms have been instrumental in Iran's military modernization (scroll down to read Ilan Berman's prepared statement before the US-China Economic and Security Review Commission).

Abizaid also said that a new, armor-piercing rocket-propelled grenade has turned up in Iraq. The weapon, which was first used in Lebanon by Iran's Shiite proxy, Hezbollah, in its month-long war with Israel, has a dual warhead and has proved effective against most types of armored vehicles.

Citing links between Hezbollah and Shiite militias in Iraq, the US commander said the RPG could be "a hint of things to come."

Quote to Consider: Ahmadinejad on Atomic Standoff

“You [IAEA] can pass as many resolutions as you like and be happy about it, but you cannot stop the progress of the Iranian people.... We thank God that our enemies are idiots.... This [decision of the IAEA to refer Iran to the UN Security Council] is the funniest decision Iʹve seen.”

-Iranian President Mahmoud Ahmadinejad, “laughing off” the International Atomic Energy Agency resolution referring the Iranian nuclear issue to the UN Security Council, AFP, February 5, 2006.

Monday, September 18, 2006

Understanding Sino-Iranian Cooperation

EDITOR'S NOTE: On September 14, the US-China Economic and Security Review Commission, commonly called "the China Commission," conducted hearings on "China's Proliferation to North Korea and Iran." Ilan Berman, vice president for policy of the American Foreign Policy Council, a Washington, DC-based nonprofit organization, testified. His prepared statement, excerpted below, summarizes and analyzes China's relationship with Iran relative to its nuclear standoff with the West. The information is up-to-date--and terribly alarming.

Iran’s nuclear ambitions have emerged as a cardinal challenge for the United States and its allies. Over the past four years, the Islamic Republic’s concerted quest for a nuclear capability has catalyzed a widening international crisis.

Tehran’s intransigence in this stand-off has been made possible in part by its strategic partnership with Beijing. Since the start of international negotiations with Iran over its nuclear program some three years ago, China has worked actively to dilute the effectiveness of any global response. It has done so initially through its vociferous opposition to Iran’s referral to the United Nations Security Council, and more recently by its resistance to the imposition of multilateral sanctions against Tehran.


China’s obstructionism on the Iranian nuclear issue has been driven by two primary considerations.

The first is energy. China’s runaway economic growth has brought with it a voracious appetite for energy....

All of this has made Tehran an indispensable energy partner for the PRC....

Iran has become China’s single largest oil supplier, and as long ago as 2002 already accounted for more than 15 percent of the PRC’s annual oil imports. This degree of economic dependence, moreover, is poised to deepen considerably as energy projects now underway between the two countries begin to come online over the next several years.

While energy represents the primary driver of contemporary cooperation, mutual opposition to America’s primacy in world affairs serves as an important secondary force. In the post-Cold War era, officials in Beijing have expressed their commitment to a multi-polar world in which American influence is diluted, and have pursued partnerships with nations antagonistic to the United States as part of this effort. As numerous observers have noted, China today has embraced a “balancing” strategy designed to frustrate US policy through robust international diplomacy. While it is doing so most directly in Asia, the Chinese government has increasingly sought Middle Eastern partners for this venture as well. Cooperation with Iran, the emerging geopolitical center of gravity in the post-Saddam Hussein Middle East, has consequently emerged as a major point of political focus.

These sentiments have been echoed in Tehran.... As one conservative Iranian paper put it following then-president Mohammad Khatami’s landmark visit to the PRC in the year 2000, “the strengthening of the Tehran-Beijing axis is of great importance” in the context of “confronting the unipolar world being considered by America.”

These trends have found their expression in an increasingly robust proliferation partnership, and in the integration of Iran into Chinese-dominated security structures.


As a practical matter, China’s record of proliferation to Iran is poor—and getting worse....

Over the past decade-and-a-half, the Islamic Republic of Iran has been engaged in a sustained, multi-spectrum modernization of its military, and China has played a big part in these plans.... The goods provided by the PRC have included anti-ship cruise missiles, surface-to-air missiles, combat aircraft, and fast-attack patrol vessels, as well as advanced technology designed to expand the versatility of Iran’s burgeoning cruise missile arsenal. These supplies have contributed significantly to what has become the central element of Iran’s military rearmament—a revitalization of its naval forces. As a direct result, US intelligence agencies now estimate that Iran has the ability to shut off the flow of oil from the Persian Gulf for brief periods of time, even with a Western military presence in the region.

Despite its commitment to abide by the guidelines of the Missile Technology Control Regime, China remains an active missile partner of the Islamic Republic. The US intelligence community believes that Chinese entities continue to provide substantial assistance to the Islamic Republic’s ballistic missile program, and have assisted the Iranian regime in erecting an indigenous production capability for its strategic arsenal. In particular, American officials have expressed concerns that Chinese firms have aided in the development—and subsequently the enhancement—of the centerpiece of Iran’s ballistic missile arsenal, the 2,000-kilometer range Shahab-3.

China has also provided Iran with sophisticated cruise missile technology. Beginning during the Iran-Iraq War (1980-88), large quantities of Chinese-origin “Silkworm,” C-801 “Eagle Strike,” and C-802 cruise missiles found their way to the Islamic Republic. Iran, in turn, has wasted no time in transferring this technology to its terrorist proxies. A recent example took place in July, during the month-long war between Israel and Hezbollah in Lebanon, when an Israeli warship, the INS Hanit, was hit and disabled by an Iranian variant of the C-802 “Silkworm”—a missile that Israeli officials previously did not know the Shi’ite militia possessed.

Iran’s efforts to acquire chemical weapons (CW), like its ballistic missile program, began during the Iran-Iraq War, when the Iranian leadership launched a national effort to develop a response to Iraqi chemical weapons attacks on Iranian troops. During the mid-1990s, this effort received a substantial boost from foreign suppliers, including China, who provided the Iranian regime with critical precursor chemicals and key weapons know-how. The results have been dramatic; since the mid-1990s, the US government has termed Iran’s CW program to be the “most active” in the developing world—encompassing nerve, blister, choking and blood agents, as well as “a stockpile of at least several hundred metric tons of weaponized and bulk agent.” And, despite its status as an original signatory of the 1993 Chemical Weapons Convention, Chinese firms still appear to be actively engaged in the transfer of “dual-use CW-related production equipment and technology” that could assist in this effort.

China’s most active WMD assistance to Iran, however, has been in the nuclear sphere. Preliminary nuclear contacts between the PRC and the Islamic Republic began in the mid- to late-1980s. The two countries are known to have signed nuclear accords in 1989, and again in 1991, paving the way for what would become a vibrant and multifaceted atomic partnership. By 1996, in a manifestation of the strength of this collaboration, the Pentagon had officially designated China as a “principal supplier of nuclear technology to Iran.”

A decade on, this aspect of the Sino-Iranian strategic partnership is still going strong, despite the threat of US sanctions. China has reportedly been a major focus of Iranian procurement activities, with Iranian front companies successfully acquiring nuclear-related materials from the PRC in recent years. Iranian opposition elements have also charged that Chinese experts are employed at multiple nuclear facilities inside Iran, including the Saghand uranium mine and a uranium centrifuge facility outside Isfahan. Beijing’s most important support, however is moral; through its resistance to US and European efforts to hold Iran accountable, Beijing has bought Tehran valuable time to forge ahead with its nuclear program.

Iran is likewise expanding its links with the premier security bloc in the “post-Soviet space,” the China-dominated Shanghai Cooperation Organization (SCO).

Established in June of 2001, the SCO is an expansion of the “Shanghai Five,” a regional grouping begun in 1996 with the purpose of strengthening the common security of its member states: Russia, China, Kazakhstan, Kyrgyzstan and Tajikistan. By contrast, both the membership and the mission of the SCO are substantially broader. Ostensibly, the purpose of the new bloc, which now also encompasses Uzbekistan as a full member and Mongolia, Pakistan, India and Iran as observers, is to expand regional economic, cultural and counterterrorism cooperation. Iran’s involvement, however, increasingly underscores the bloc’s unstated purpose: the diminution of American influence in the “post-Soviet space.” As Iranian observers have made clear, “[t]he national interests of Iran and China are in clear contradiction to the presence of the American military forces in [C]entral Asia, and the support of China for Iran's membership… should be seen within that framework.”

Indeed, Beijing appears to be receptive to Iranian efforts to expand its role in this grouping. Iran’s radical president, Mahmoud Ahmadinejad, was a guest of honor at the SCO’s most recent summit in June 2006, delivering a public address that called upon the group to play a greater role against “the threats of domineering powers”—a thinly-veiled reference to the United States. Beijing has also sent positive signals to Iran regarding its quest for full blown membership in the six-country bloc (though so far stopping short of directly lobbying for the Islamic Republic’s full inclusion in the forum).

Such a union, however, would have major benefits for both sides. Iran, facing a looming confrontation with the United States over its nuclear program, is eager to obtain a measure of collective security. China, meanwhile, has a vested interest in securing its most important energy partner against external threats. And while Iran’s immediate membership is not likely as a result of both institutional and political constraints, the potential of such an expanded bloc, if and when it does materialize, will be immense. As David Wall of Cambridge University has explained, an SCO incorporating Iran “would essentially be an OPEC with bombs”: an energy-rich geopolitical alliance stretching from the Taiwan Strait to the Strait of Hormuz.

With the expiration of the United Nations-imposed August 31st deadline to cease uranium enrichment, the international crisis over Iran’s nuclear program has entered a new and dangerous phase. World attention is now focused on available punitive measures against the Islamic Republic, sanctions chief among them.

China has a decisive vote in this process. By virtue of its permanent seat on the UN Security Council, China has the ability to stymie the UN’s implementation of multilateral measures against Iran. And, despite repeated US entreaties, Chinese officials have done just that, steadfastly refusing to back sanctions against Iran on the grounds that they would be “counterproductive.”

Beijing’s resistance is logical. Sanctions against Iran threaten to undermine an increasingly important element of the PRC’s economic construct. China requires steady supplies of oil in order to maintain its current economic momentum, and can ill afford a supply interruption—particularly from an energy source as important as Iran. By way of comparison, the impact for China of Iran going “offline” as a result of sanctions would be roughly equivalent to the effect a sudden cessation of oil supplies from Saudi Arabia would have on the US economy. It has likewise not been lost on Chinese officials that a likely result of sanctions could be an escalation to military action against Iran, and the possible loss of a major Chinese ally to US-supported regime change.

Iran is well aware of China’s calculus. As one Iranian analyst recently put it: “The dimensions of the historical, religious, economic and commercial cooperation between Iran and China are numerous, and it seems that China has always considered very seriously the dilemma of choosing either Iran or the United States, and it is hoped that in the end, it is going to choose that option which will safeguard the long term interests of China.”

None of this is to say that Chinese officials are not cognizant of the dangers of Iran’s atomic drive. In recent months, China has joined with the other permanent members of the UN Security Council in pressuring Iran to abandon its uranium enrichment activities. But, in keeping with its internal economic imperatives, the PRC has insisted on “diplomacy” as the sole means of resolving the Iranian nuclear impasse.

China’s stance has far-reaching implications. So far, the Bush administration has focused on international diplomacy as the primary means by which to curb Iran’s nuclear ambitions. However, it is becoming increasingly clear that China’s political and economic priorities militate strongly against a constructive role for Beijing in the peaceful resolution of this crisis.

Intelligence Roundup: From Tehran to Taipei

China will continue to disappoint the United States and support its arch-enemy, Islamist Iran, in its nuclear standoff with the West. The Chinese-Iranian strategy of stalling for time by offering "serious negotiations" is working brilliantly. The two countries have effectively derailed the US drive for meaningful sanctions against Tehran by driving a wedge between Washington and its European allies. Western opinion is more divided than ever, even in the US, regarding Iran's intentions and capabilities, with appeasement advocates, led by former US President Jimmy Carter, challenging assertions that Iran is close to developing a nuclear bomb. Carter, who was fundamentally complicit in the 1979 Islamic fundamantalist overthrow of the pro-American Shah, is telling anyone who will listen that Iran is not really pursuing nuclear weapons and is instead simply seeking to use the issue to strengthen its legitimacy and prestige in the eyes of the international community. Across the Atlantic, French President Jacques Chirac is doing his part. Chirac told the BBC Monday that he is opposed to sanctions and supports dialogue to defuse the issue, referring to Iran as "a great country" ....

One country that has little doubt about Iran's intentions is Israel, which Iranian President Mahmoud Ahmadinejad has repeatedly threatened to destroy. Many Israeli analysts are also increasingly concerned about China's alliance with Iran, which, in the wake of Israel's failure to defeat Iran's Lebanese Shiite proxy, Hezbollah, and America's failure to crush Iranian-backed Shiite militias and death squads in Iraq, is fast emerging as the most dominant--and dangerous--power in the Middle East. Israeli hardliners see a replay of the Cold War period in which Egypt, supported by the Soviet Union, posed an existential threat to the Jewish State. The difference, Israelis note, is that whereas Egypt was an economically weak Soviet client state, Iran is an oil-rich Chinese ally....

To keep the US off balance, China's Communist Party rulers are likely to increase tensions with self-ruled, democratic Taiwan. The pretext will probably be Taiwan's continuing campaign to join the United Nations. Taiwan's president, Chen Shui-bian, has reiterated his intention to keep applying for UN membership following the island's 14th consecutive rejection by the world body, bowing to pressure from Beijing. Chen told a video news conference last week that Taiwan would apply as Taiwan, not Republic of China. Beijing is certain to cite such a move as a provocation; China's recently adopted "Anti-Secession Law" authorizes use of force against Taiwan, a de facto sovereign state actually recognized by 24 UN member-nations, if it moves to formally declare independence or if peaceful reunification efforts fail. For image reasons, China will try to muzzle its more outspoken generals, some of whom have in the past publicly threatened the US with nuclear war should it intervene in a cross-Strait conflict. One general talked about "nuclear dust clouds" over Los Angeles....

Saturday, September 16, 2006

Iran and North Korea Conspire in Cuba

Reporting on the Non-Aligned Movement summit meeting in Communist Cuba, the official news agency of Islamist Iran has published an article that reads like a news release from Axis of Evil central command. Excerpts are set forth below.

But first, consider this: the fact that the meeting--a kind of Woodstock festival for Third World tyrants, terrorists, and crooks--took place just 90 miles off the coast of the United States is itself a tragic commentary on America's misguided, decades-old tolerance of the Castro dictatorship. Apparently, the so-called imperialist "hegemon," to use China's preferred term for the US, is not so scary, after all.

Imagine a global anti-China conference--with the US in attendance as an "observer"--convening in, say, Taiwan. You can't--because China would not allow it. And the US would not dare to participate in a hate China fest. But Beijing, sources say, was quite comfortable in Havana. Instead of exercising a moderating influence on the gathering, as Washington had hoped, Rising Chinese diplomats conducted a series of bilateral meetings--with Iran's Hitlerian monster-in-chief, Mahmoud Ahmadinejad, Venezuela's wannabe tropical Mussolini, Hugo Chavez, and the spies and stooges constituting the delegation representing China's rogue Stalinist vassal, North Korea, and Congo head crook Denis Sassou N'Guesso, who also holds the do-nothing African Union in his hands, among other luminaries--all of which will no doubt be explained away to fawning Western observers and appeasers as "just business."

The US State Department wants--begs--China to become a "responsible stakeholder" in the international system. China's response? To pay lip service to the stakeholder nonsense while preserving the traditional Chinese "lips and teeth" relationship with nuclear armed North Korea ... and bolstering and investing in nuclear arming (or already armed) Iran.

Another thought: it is indeed ironic that Iran and North Korea met in Cuba, which is still in the grip of a regime that used Soviet-supplied nuclear-tipped missiles--and atomic brinkmanship--to ensure its survival.

Now for that Axis of Evil dispatch....

HAVANA (IRNA) --- In a meeting with the Chairman of Supreme People's Assembly of Democratic People's Republic of Korea (DPRK) Kim Yong Nam, (Iranian president Mahmoud) Ahmadinejad stressed the importance of bolstering all-out ties with North Korea. Pointing to the similarity of stances between Tehran and Pyongyang on international developments, particularly the fight against imperialism, the president reiterated that "the era of imperialism and bullying powers has ended."

(He said:) "Independent states should reinforce their unity and bolster ties by increasing their nations' economic, industrial and political cooperation."

He said Iran fully supports North Korea's right to conduct peaceful nuclear activities. "The brave and strong North Korean government and nation will emerge victorious in the battle to assert their right."

Kim, for his part, said the Islamic Revolution is bearing more fruit with the passing of each day through strategic moves being taken by the Iranian president which attract the attention of the world.

Imperialism is at its final days, he said, adding that strategic ties between Tehran and Pyongyang are based on a joint struggle against it.

He noted that policies of the North Korean government and nation favor promotion of friendship, convergence and solidarity with Iran and adding that the two governments compliment each other in their very strong stances against the United States.

He also said that North Korea fully supports the Iranian government, particularly its principled stance on access to peaceful nuclear energy.

Friday, September 15, 2006

Once Again, Rising China Disappoints the US

Again, China disappoints--denouncing accusations by senior US officials that it has sold weapons to Iran and North Korea, and reiterating its opposition to sanctions and use of force against Iran.

The official Xinhua News Agency said Friday that Foreign Ministry spokesman Qin Gang called Washington's weapons proliferation charges "groundless and irresponsible."

And Iran's news agency reported that Chinese Prime Minister Wen Jiabao, whose photo appears here, told Iran's Vice President Ali Saeedlu in Tajikistan's capital on Friday that Beijing is opposed to imposing sanctions against Tehran.

China's proliferation record is "dangerously shortsighted," according to Peter Rodman, US Assistant Secretary of Defense for International Security.

Addressing the US-China Economic and Security Review Commission, an advisory panel created by the US Congress, Rodman on Thursday urged China to re-evaluate its relationships with (Islamist) Iran and (Stalinist) North Korea, two countries with which the US is engaged in nuclear standoffs.

Rodman cited North Korea's July 4 test-firing of several missiles (in the direction of Japan and the US) and the use by Iran's Shiite Lebanese proxy, Hezbollah, of Chinese-designed cruise missiles in strikes against Israeli naval vessels 11 days later as evidence of Chinese behavior.

Paula DeSutter, US Assistant Secretary of State for Verification, Compliance and Implementation, told the "China Commission," as the panel is known to Washington insiders, that despite repeated assurances from the Chinese government that it opposes the proliferation of materials and technology used in the production and delivery of weapons of mass destruction (WMD), the US government remains concerned about lapses in enforcement.

DeSutter said: "China's nonproliferation efforts have shown some improvement over the past several years. Unfortunately, Chinese entities' record of transferring WMD and missile technologies and materials--and the record of the Chinese government's enforcement of its own laws and regulations to stem these transfers--remains unsatisfactory."

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