Thursday, January 31, 2008

Afghanistan Could Become Failed State

Foreign Confidential....

US experts have warned that Afghanistan risks becoming a failed state if urgent steps are not taken to improve security and reconstruction in the country.

In a report issued Wednesday, former Ambassador Thomas Pickering and retired Marine Corps General James Jones called for NATO to increase troop levels, and for the US government to appoint a special envoy for Afghanistan.

The report warns that reconstruction efforts and civil reforms are seriously threatened by increased insurgent violence, weakening international support, and a lack of confidence among the Afghan people.

Bush and Harper

Also on Wednesday, President Bush spoke with Canadian Prime Minister Stephen Harper to discuss Afghanistan. A White House spokesman said the two leaders discussed the requirements to sustain the current mission and how to ensure its continued success.

Canadian officials say Harper told the president that Canada might remove its troops from Afghanistan next year unless NATO sends in more troops to fight Taliban insurgents.

On Monday, Harper said he accepts the broad recommendations of the independent Manley Panel, which said Canada should withdraw its 2,500 troops from violence-plagued Kandahar province unless NATO sends in extra soldiers and equipment.

The refusal of some European NATO allies to send troops to Afghanistan's dangerous east and south has created rifts with Britain, Canada and the Netherlands, which, along with the United States, have suffered the most casualties from Taliban violence.

Oxfam Calls for Change

In related news,the iInternational aid agency Oxfam has called for a major change of direction by Western countries in their efforts to reduce suffering in Afghanistan. Oxfam warned that poverty is driving ordinary Afghans into the arms of insurgents and drug gangs.

In a letter to British Prime Minister Gordon Brown and other world leaders, the agency said social and economic progress in Afghanistan has been slow and is being undermined by increasing insecurity.

Wednesday, January 30, 2008

OPEC Resisting US Pressure to Raise Oil Output

Carbon Confidential....

OPEC is set to disappoint the United States.

Concerned that worldwide oil demand and prices may fall sharply should there be a US recession, pressured by its most militant members--Iran and Venezuela--the oil cartel is unlikely to increase oil output in response to requests by US President George W. Bush. He recently urged OPEC to increase production to help control oil prices, which hit record highs above 100 dollars a barrel at the start of January.

New York crude closed above 92 dollars Wednesday, which is almost double the level of a year ago.

OPEC is scheduled to hold a production meeting in Vienna, Austria on Friday.

The 13-member cartel officially produces 29.67 million barrels of oil a day--40% of world output.

Australian Oil Companies Drawn to US

Carbon Confidential....

Australian oil and gas producers are making news--in the United States.

Strike Oil has made a number of gas discoveries in Texas.

And Samson Oil & Gas, which recently listed its American Depositary receipts on the American Stock Exchange, is actively pursuing projects in Oklahoma, Wyoming, and North Dakota--a state that is experiencing an actual oil boom.

The company, which is also listed on the Australian Stock Exchange, caught investors' attention last Tuesday by becoming the biggest riser in the US on the very day that stock markets were crashing all over the world.

On Bush's Passing Reference to China

The morning after US President Bush's final State of the Union speech, Gordon G. Chang contributed the following interesting comment to the contentions section of Commentary Magazine's online edition:

... President Bush mentioned China just once in his State of the Union address, a passing reference in a recommendation to “create a new international clean technology fund.” He wants the fund to help Beijing “make greater use of clean energy sources.”

Whether or not one thinks the Chinese will own this century—it is unlikely they will—and whether or not we think Beijing is benign—it is not—one cannot assess the state of the American union without mentioning China in a more comprehensive fashion.

Due in part to Washington’s generous and indulgent policies, the modern Chinese state has become increasingly assertive and now has attained the power to steer the world ahead or throw it into reverse. What Beijing and its proxies do in the months and years ahead will have a far larger impact on America than anything the President discussed last night.

Since the last State of the Union message, China has supported the nuclear weapons programs in Iran and North Korea, flooded our markets with toxic products and impure food, and injured our businesses by violating trade pledges. It threatened to dump its dollar holdings to devastate our economy and warned American forces to stay away from Asian waters. It has encouraged our adversaries and bullied our friends. Wasn’t any of this worth a mention last night?

Iran Preparing for War with Israel and US

Foreign Confidential....

Imagine an oil-rich, Shiite counterpart to Osama Binladen. Unlike the Sunni mass murderer, however, this terrorist operates out of a presidential palace instead of a cave, and commands an arsenal of ballistic missiles, an army of suicidal soldiers, and a fleet of fast boats and seemingly civilian cargo ships capable of firing Scud missiles from cleverly concealed, containerized launch pads.

Actually, you don't have to imagine the above-described individual, because he already exists. His name is Mahmoud Ahmadinejad; he is the president of nuclearizing, Islamist Iran; and he is actively preparing for the fight of his life--an armed conflict that could lead to the deaths of thousands of people, the destruction of whole cities, and the doubling of world oil prices.

Analysts fear that Ahmadinejad plans to attack Israel--directly or through proxies and allies--and American forces in the Middle East, including US ships in the Persian Gulf, if the United Nations Security Council imposes new sanctions on Tehran for refusing to halt uranium enrichment.

The threat is implicit in the Iranian president's provocative language. He ominously announced Wednesday that Israel had "reached its final stage"--"the end of the line"--while Iran was "moving towards the peak" of its nuclear program.

The Shiite Islamist leader, who has repeatedly vowed to annihilate Israel and referred to the Holocaust as a myth, called on the West to accept the "imminent collapse" of "the filthy Jewish state."

Speaking to a crowd on a visit to the southern port of Bushehr, where Iran's first light-water nuclear power plant is being built by Russia, Ahmadinejad urged Western governments to "stop supporting the Zionists, as [their] regime reached its final stage."

"Accept that the life of Zionists will sooner or later come to an end," Ahmadinejad said in a televised speech. "What we have right now is the last chapter [of Israeli atrocities] which the Palestinians and regional nations will confront and eventually turn in Palestine's favor."

The Iranian president added: "The ones who still support the criminal Zionists should know that the occupiers' days are numbered."

Turning to the nuclear issue, he said: "On the nuclear path we are moving towards the peak," he said without elaborating. "Next year at this time ... nuclear electricity should flow in Iran's electricity network."

The UN Security Council could approve new sanctions against Iran next month.

Chinese Cops Report Drop in Serious Crime

China's Public Security Bureau says there were fewer serious crimes committed in the country last year than in 2006, but the overall crime rate has remained high and economic crimes are on the rise. Daniel Schearf reports from Beijing.

The Public Security Bureau said Wednesday that the number of serious crimes, such as arson, explosions, murder, rape and kidnapping went down last year.

The PSB said there were more than 6,000 arson cases, down 11 percent, and 586 cases involving explosives, down 25 percent. No precise figures were given for murder, rape and kidnapping, but the PSB said murder decreased by 10 percent, while rape and kidnapping each dropped about two percent each.

Wu Heping, a spokesman for China's Public Security Bureau, said economic crimes rose more than four percent last year, to more than 84,000 cases.

Economic Crimes and Mass Disturbances

Economic crimes have reached a new peak, Wu said. In recent years with China's fast economic development, economic crimes have been climbing higher every day.

Wu refused to give figures for cases of what Chinese officials call "mass disturbances," such as rioting, demonstrating or protesting, even though such people are often treated as criminals.

He said the number of mass incidents went down last year and continue to decrease. But it is not the Public Security Bureau's duty or responsibility to give such statistics, Wu said.

In the past, Chinese officials have admitted that hundreds of such incidents occur every day in China's vast countryside, and have grown along with China's wealth gap.

Overall, the PSB says there were more than 4.5 million criminal cases last year, about the same as the year before. The vast majority of crimes involved theft, robbery, and burglary, which hardly dropped at all.

Tuesday, January 29, 2008

Canadian Provinces Push Carbon Trading

Carbon World News....

Several Canadian provinces are pursuing a carbon-trading plan to fight global warming, though the current federal government is cool to the idea.

British Columbia, Ontario, Quebec and Manitoba have been discussing adopting carbon trading, or emissions credit trading, in conjunction with the Western Climate Initiative (WCI) in the United States, an idea championed by California Gov. Arnold Schwarzenegger.

Carbon-trading markets allow major polluters to pay others to cut greenhouse gas output on their behalf so they can meet emission caps. Supporters say that is the most cost effective way to reduce emissions and provide economic incentives to develop environmentally friendly technology.

An actual trading market couid be hosted at the Montreal Exchange.

The Conservative federal government has promised to set up a domestic emissions trading system. But the government has opposed placing binding caps on emitters, saying that could hurt the economy.

China Reports Bird Flu Outbreak in Tibet

Chinese agricultural authorities have reported an outbreak of bird flu among poultry in Tibet.

China's official Xinhua News Agency says the outbreak occurred in Tibet's Gongga county, which lies about 50 kilometers outside the capital, Lhasa.

Xinhua says the outbreak, of the deadly H5N1 strain of the virus, had been suspected since January 25, and was confirmed Tuesday.

The Ministry of Agriculture says efforts are underway to contain the outbreak.

One thousand birds have died from the virus. More than 1,300 others have been culled to prevent it from spreading. No human infections have been reported.

Bird flu remains difficult for humans to catch but scientists worry it could mutate into a form that passes easily between people.

The World Health Organization says the bird flu virus has killed more than 200 people worldwide since 2003, mostly in Asia.

Carbon World News Briefs


Reuters reported today that Russia's government has opened the door to applications from entrepreneurs and big polluters to profit from greenhouse gas emissions cuts by selling these to Western countries.

Russia has the potential to account for about a tenth of total emissions cuts under carbon trading through 2012, estimated at roughly the annual emissions of Australia.

The potential Russian carbon emissions market is estimated at $4.4 billion.


Meanwhile, Australia's leading environmentalist, Tim Flannery has developed a groundbreaking scheme that would allow Australians to buy stakes in the protection of endangered tropical forests

Flannery wants to set up an internet-based carbon market with a pilot program in Papua New Guinea. His scheme envisages that households and businesses would be able to secure the protection of forests and the replanting of trees through an auction scheme. Internet users would identify vulnerable forest lands online, using Google Earth and other technologies, and then make bids to secure the protection of the lands through an auction site such as e-Bay.

If the bid is accepted by the village, the funds would be held in trust by a non-government organisation until the agreed protection of biodiversity or carbon sequestration has been delivered.

Flannery says 20% of global carbon emissions come from the wholesale destruction of tropical forests.

Monday, January 28, 2008

US Diplomat Set to Visit North Korea

A senior American diplomat is scheduled to visit Pyongyang later this week to try to advance the stalled accord under which North Korea is to end its nuclear program in exchange for energy aid and other benefits. North Korea was to have accounted for all its nuclear holdings by the end of last year, but has yet to make that declaration. VOA's David Gollust reports from the US State Department.

Officials say US diplomat Sung Kim, a Korean-American, will visit Seoul, Beijing and Pyongyang this week for a round of consultations on the six-party process.

North Korea agreed nearly a year ago to give up its nuclear program in return for fuel oil shipments and diplomatic benefits from the other participants in the talks--the US, Japan, South Korea, Russia and host China.

North Korea has shut down, and is well along in the process of permanently disabling, the reactor complex at Yongbyon from which it derived the plutonium for its small arsenal of nuclear weapons.

Its declaration of nuclear assets would open the way for the next phase of the agreement, providing for the dismantling of its nuclear program and the normalization of relations with Japan and the US, which would remove North Korea from its list of state sponsors of terrorism.

At a joint news conference Monday with Australian Foreign Minister Stephen Smith, US Secretary of State Condoleezza Rice said the disablement of Yongbyon has gone "relatively well" but that North Korea needs to make an accurate and complete declaration so that there can be confidence going into the next phase.

"I am hopeful that the North is now ready to have serious discussions about that, and we will see," Rice said. "But the completion of the declaration and the completion of the disablement phase, of course, is necessary in order for further progress to be made on all of the obligations. And the United States stands ready to fully discharge its obligations in the second phase, should North Korea discharge its obligations."

US diplomat Kim, who has made several trips to the region in recent months, is due to arrive in Pyongyang Thursday and to return to Washington on Sunday.

In its declaration, North Korea is supposed to account for the uranium enrichment project US officials believe it conducted in addition to its plutonium-based weapons program, and to disclose what nuclear help it may have gotten from abroad, or given to other countries.

Administration officials have downplayed the delay in getting the declaration, noting that other parts of the complex deal have been completed behind schedule.

However conservative critics of the accord say it raises basic questions about whether Pyongyang intends to live up to its obligations.

Last week, Rice took the unusual step of disavowing the critical comments of the administration's part-time envoy for North Korean human rights, Jay Lefkowitz.

Lefkowitz said the delay suggests Pyonyang is not serious about disarming in a timely manner, and that it may maintain its current nuclear status for the rest of the President Bush's term.

Carbon Cutting Meeting Convening in Hawaii

The world's biggest greenhouse gas-polluting countries will send delegates to Hawaii this week for an American-sponsored meeting aimed at curbing climate change without stalling economic growth in Pacific countries.

The two-day gathering, which starts on Wednesday in Honolulu, is meant to spur UN negotiations for an international climate agreement by 2009, so a pact will be ready when the current carbon-capping Kyoto Protocol expires in 2012.

The United States has rejected the Kyoto Protocol, and instead favours voluntary measures to limit climate change.

US President Bush drew criticism at a meeting in September because of his opposition to the mandatory limits on carbon emissions specified by Kyoto.

That criticism continued at a recent global climate meeting in Bali, where US representatives were booed for opposing demands by poor nations for the rich to do more to help them fight climate change.

Fear Grips Asia's Export-Driven Economies

When all is said and done, exports are the engine driving Asia's economies. Hence, the fear....

Asian markets fell sharply Monday on fears a recession in the United States will weaken the demand for Asian exports.

China's Shanghai Composite Index tumbled more than 7 percent while the Nikkei in Tokyo and Sensex in Mumbai were both down almost 4 percent. Hong Kong's Hang Seng index dropped more than 5 percent.

The major European indexes in London, Paris and Frankfurt were also down in midday trading, but much less than Asia, dropping about 2 percent.

Analysts say investors are still nervous following last week's worldwide plunge, despite President's Bush's plan to revitalize the slowing US economy with tax rebates.

The US Federal Reserve meets this week to consider if another interest rate cut is needed to help stave off a recession.

Sunday, January 27, 2008

Carbon Trading News From Japan, India

Carbon World News...

Two Japanese companies recently launched carbon offset services under which individuals pay for projects designed to reduce greenhouse gas emissions to compensate for their own emissions.

gConscious, Inc. in Shibuya Ward, Tokyo, and Carbon Offset Japan in Minato Ward, Tokyo, started offering the service in December.

The two companies were established last year to help individuals reduce carbon dioxide emissions.

Under the scheme, individuals can contribute to achieving Japan's reduction target under the Kyoto Protocol, whose commitment period started this year.

Purchasing Emissions Quotas

The two companies purchase the emissions quotas from companies that have undertaken projects to cut CO2 emissions in developing countries with funds collected from their customers.

To offset one ton of CO2 emissions, gConscious charges its customers 5,000 yen, while Carbon Offset Japan bills them 4,200 yen.

Both companies donate the emissions quotas equivalent to the payment they have received from their customers to the Japanese government, which will include the amount as part of Japan's CO2 cuts.

The companies then inform their customers about the overseas project that made up for their CO2 emissions.

Brazil Hydroelectric Project

Carbon Offset Japan plans to use 10,000-ton emissions quotas it obtained for the construction project of a small hydroelectric power plant in Brazil for the time being, meaning that those who used the firm's service contributed to reducing CO2 emissions in Brazil and helping the Japanese government meet its Kyoto Protocol target.

Under the Kyoto Protocol, Japan is obliged to cut greenhouse gas emissions by 6 percent from 1990 levels between 2008 and 2012. In 1990, Japan emitted about 1.26 billion tons of greenhouse gases.

Because it is deemed impossible to achieve this goal solely with domestic efforts, the government plans to purchase emissions quotas totaling about 100 million tons in five years with taxpayers' money.

Lighting Projects in India

In India, Climate Change Capital (CCC), which manages the world’s largest private sector carbon fund, is keen on funding the Clean Development Mechanism-based energy efficiency lighting projects being implemented across states such as Andhra Pradesh and Haryana.

The funding by the UK-based CCC is expected to be in lieu of receiving and encashing carbon credits generated from these ambitious projects, which seek to increase penetration of compact fluorescent lamps (CFLs) among households as an energy conservation measure.

The scheme aims at enabling private sector CFL manufacturers to collaborate with distribution utilities and sell the lamps at around Rs 10-15 per piece to households, while recovering the balance costs of CFL manufacture from CDM revenues.

CFLs are currently being sold in the market for around Rs 100 per lamp.

Largest Carbon Fund

While States would benefit on account of lowering of peak demand, as CFLs would reduce consumption, CFL manufacturers stand to gain from the intervention of PE players such as CCC in the scheme since the uncertainties involved in deferred CDM revenues and value of credits would be borne to a certain extent by the funding institutions.

CCC recently created the world’s largest private sector carbon fund, raising $830 million in three months last year, and expecting the total to top $1 billion. Investors include Dutch pension funds ABP and PGGM, two of the world’s top five pension funds, the UK-based international energy group Centrica, and a global emerging markets banking group.

The money raised is to be specifically invested in projects in developing countries that would lead to reductions in the amount of greenhouse gases (GHG), specifically carbon, being emitted into the atmosphere. The fund is specifically targeted at generating returns by acquiring a diversified portfolio of different types of carbon assets and derivatives.

North Korea Calls for Peace Treaty with US

North Korea on Saturday called for a peace treaty formally ending the Korean War to be signed as soon as possible, to ease military tensions with the United States.

The call was made in a commentary published by the Rodong daily, the newspaper of the North's ruling Workers' Party. It said now is the right time for a peace treaty to replace the armistice that has been in place since 1953.

The Korean peninsula is technically still at war since the fighting ended.

North and South Korean leaders held a summit in October that resulted in a call for a meeting of three or four parties to lay groundwork for a formal peace treaty and normalized US-North Korean relations.

But South Korean opponents to the idea argue that any treaty should wait until North Korea completes the full abandonment of its nuclear programs.

Last month, Pyongyang failed to meet a key end-of-the year deadline to declare its nuclear programs under the terms of a six-nation agreement.

Snow Strands 150,000 Rail Passengers

Heavy snow in southern China has left thousands of railway passengers stranded as they head home for the Lunar New Year holiday.

Chinese state media says more than 150,000 people were stuck Sunday at the key hub of Guangzhou railway station, which is the southern end of a key railway link to the capital Beijing.

Authorities say they expect the number of stranded to rise as high as 600,000 by Monday.

Railway officials say it is not immediately clear when service will be restored.

Chinese media say several major highways and airports have also been closed as a result of the heavy snows and freezing rains.

The Lunar New Year is one of the the most important holidays in China, with millions of people traveling annually for family gatherings. The holiday falls this year on February seventh.

Saturday, January 26, 2008

Did French Rogue Trader Trigger Market Crash?

What has Wall Street wrought?

Has globalization--the global spread of American-style, technology-driven, casino capitalism--created a menace beyond anyone's control and understanding?

The answer is: maybe, as shown by what happened last week.

Amid reports that 31-year-old "rogue trader" Jerome Kerviel is being held for questioning about fraud at Societe Generale, it is increasingly clear that the giant French bank exacerbated investors' panic by dumping huge futures positions.

In fact, Societe Generale-- France's second-largest lender by market value--may have caused the global market crash.

The French bank said Thursday it had lost more than $7 billion over three days by selling out of trading positions taken by a trader in the equity derivatives market--a niche in which Societe Generale is the world's top institution.

Market Pipeline asks: "Was the Fed duped into a clumsy and panicked move by the clean-up operation for Jerome Kerviel’s mammoth losses for the French bank?

"There are many prepared to believe that, without SocGen’s huge derivatives sales, the mood in the stock markets would not have been half as bleak."

Conclusion: the good news is that the United States may not be heading into a recession or depression, after all. The bad news is that the US has apparently helped create conditions that make it possible for a lone nut, or jerk ... or crook ... to destroy the global economy.

Say what? Even the railroad robber barons, moguls, and tycoons of the Gilded Age would be shocked by today's greed, stupidity, and arrogance, which has little, if anything, to do with traditional value-creation for shareholders, employees, and societies.

Friday, January 25, 2008

Espionage News Roundup

Foreign Confidential....

Spies continue to make news. A weekend roundup follows.

Bolivian Cops Spy on Press, Politicians

Bolivia's top police commander says his agency has spied on journalists and politicians without his knowledge.

The national police commander, General Miguel Vasquez, accused a subordinate of carrying out what he described as the "dirty work."

The announcement Thursday came after the release of photographs sent to news outlets that appear to show attempts to spy on individuals, including two congressmen, an opposition governor and a television news reporter.

Vasquez blamed the head of the national police intelligence service, Jose Luis Centellas, for the alleged espionage operation.

General Vasquez vowed to weed out corruption in his force.

A Curious Case in Japan

The case of the Japanese government employee accused of giving secret information to Russian intelligence has taken an unexpected turn.

While continuing to protest Russia's unwillingness to assist with the investigation, Japanese officials have practically admitted that there was no espionage: the official gave Russian diplomats translations from the foreign press and summaries of presentations at conferences.

Mikhail Galuzin, a counselor at the Russian Embassy in Tokyo, was summoned to the Japanese Foreign Ministry to hear the protest of Keiichi Katakami, deputy director of the ministry's department of European countries, in connection with the case of the 52-year-old employee of the Japanese cabinet's Information Research Office accused by the Japanese security police of passing confidential documents to the second secretary of the Russian embassy.

The case has caused a public outcry in Japan and was commented on by Japanese Prime Minister Yasuo Fukuda.

Spokesmen for the Russian embassy, in response to Japanese requests for cooperation in the case, expressed perplexity over it and stated that it was being used by those who wish to hinder the development of Japanese-Russian relations.

The Japanese were not satisfied.

Glazunov explained that the second secretary and the three other embassy employees the Japanese wanted to question had finished their assignments in Japan and left the country.

The Japanese suspect has been charged with violations of confidentiality and of corruption. He is thought to have received $37,000 from the Russian diplomat in the course of several months. He cannot be charged with espionage, because the documents he passed to the Russians were not secret. The secretariat of the Japanese cabinet has stated that there are not even confidentiality charges against the suspect now.

India Launches Israeli Spy Satellite

Israeli satellite Polaris was successfully launched by India's space agency ISRO from a launch center in southern Andhra Pradesh on Monday morning.

The Polaris is considered a spy satellite by many countries in the Gulf and Pakistan, who opposed the launch.

Originally scheduled to go up in September 2007, the Polaris launch was postponed until October, then rescheduled again for January 2008.

The satellite has a payload of 340 kg.

Upward Pressure on Coal

Carbon Confidential

"Coal Shares Stay Hot."

That's the subhead in the middle of an AP energy news roundup. Excerpts follow.

Investors are flocking to coal as spot prices rise, international demand heats up and supply concerns grow. Widespread flooding has slowed, even halted, production in Australia and South Africa--major sources of coal for Asia and Europe. The Financial Times reported that BHP Billiton Mitsubishi Alliance, one of the world's biggest exporters of coal used to make steel, declared "force majeure" because of disruptions at its Australian operations....

Rio Tinto and Xstrata also reported coal production problems in Australia. Production losses are estimated in the hundreds of millions of dollars....

Weather is causing coal problems in China as well. The government suspended coal exports after the coldest, snowiest winter in decades left millions of Chinese without heat and running water.

Friction between coal producers and utilities has just made matters worse.

China's domestic prices of coal and crude oil rose 14.2 percent and 35 percent year-on-year, respectively, in December, according to the country's central bank.

But electricity prices rose only 2.1 percent. Utilities have chafed at caps on rates that prevent them from passing the higher costs for coal on to customers. And coal suppliers are pushing for higher prices.

China exported 53 million tons of coal last year, down 16 percent from 2006. Coal imports rose 34 percent to 51 million tons, much of it going to the country's expanding steel industry.

On China's Rise and the Decline of Davos Man

The annual Davos gathering of corporate wealth and political power is underway, with rock star activist Bono, billionaire philanthropist Bill Gates and UN chief Ban Ki-moon leading 30 heads of state or government, more than 110 cabinet ministers, and hundreds of leaders of industry in discussions on the global economy, poverty, and climate change.

But Tony Karon of Time Magazine says the people meeting in the Swiss resort are actually losing power and influence. The future does not belong to "Davos Man," he argues. An excerpt from Karon's essay, "Why Davos Doesn't Matter," follows.

The decline of Davos Man is not simply related to a credit crunch or a US election year. Even if America elects a new Administration dedicated to reversing the mistakes of the Bush team, it is unlikely to restore US and Western primacy such as it existed in the golden years of Davos. The policy failures of the Bush years may have accelerated the decline of US influence, but they are not its sole cause. In the years during which the US became distracted by the "global war on terror," China's economy has grown to twice the size it was when President Bush first took office. It is to China--guarantor, by virtue of the trillion dollars and growing line of credit it makes available to the American consumer, of the American way of life - that US investment banks turn for help when confronted by their losses in the sub-prime loan crisis. The very success of capitalism in developing and former socialist countries has inevitably weakened the grip of the West on the global political economy.

Today, market analysts contemplate whether the best hope for the global economy avoiding being dragged into the vortex of recession by the US slowdown may be the "decoupling" from the US economy that some believe could allow economies such as China and India to continue growing by virtue of momentum in their own economies. It's a theory, untested in crisis--and clearly the wobbles hitting India's stock market this week suggest its own investors are not convinced. Still, China has already become the key trading and investment partner in both Africa and in some key Latin American countries, offering a model of development quite different from the "Washington consensus" on issues of governance and economic management that might, as easily, have been dubbed the "Davos consensus." China is certainly not going to take direction from its debtors, and global energy prices have transformed Russia from obedient supplicant to swaggering challenger to the West.

Report: Climate Change Will Lead to Wars

Carbon Confidential....

Climate change will lead to the outbreak of wars over food and water supplies around the world and the displacement of hundreds of millions of people.

In all, a billion people could be made homeless by floods, famines, and armed conflicts and uprisings--with 200 million "environmental refugees" desperately seeking new places to live.

So says the Oxford Research Group in a report released yesterday. Titled "An Uncertain Future: Law Enforcement, National Security and Climate Change," the report explores these consequences and demonstrates that they will present new challenges to governments trying to maintain domestic stability.

The report, written by Chris Abbot, says that agencies tasked with protecting and sustaining national security will need to adapt to better cope with a changing global environment.

However, if governments simply respond with traditional attempts to maintain the status quo and control insecurity they will ultimately fail, according to Abbot. He argues that the risks of climate change demand a rethink of current approaches to security and the development of sustainable ways of achieving that security, with an emphasis on preventative rather than reactive strategies.

The report is based in part on a briefing that Abbot gave to the Australian Federal Police and other law enforcement and defence agencies in Canberra at the end of 2007.

Oxford Research Group is an independent non-governmental organisation and registered charity. The organization says it "works together with others to promote a more sustainable approach to security for the UK and the world."

Legal Mess Follows South Korean Oil Spill

The owners of a Hong Kong-registered oil tanker involved in South Korea's worst oil spill say the South Korean decision to indict the ship's officers for the incident is unjust. The owners say the crew should in fact be commended. Claudia Blume reports from Hong Kong.

The Hebei Spirit, a Hong Kong-registered tanker, was at anchor off the west coast of South Korea last December when it was struck by a drifting South Korean crane barge. The barge, which had broken free from the tugboat towing it, punched holes in the tanker's sides. More than 10,000 tons of crude oil poured from the tanker into the sea, coating a 45-kilometer stretch of the coast.

It was the largest oil spill in South Korean history.

This week, South Korean prosecutors indicted the director of Samsung Heavy Industries, which owns the barge and the tugboat, as well as three South Korean crew members.

The prosecutors also indicted the captain and the chief officer of the Hebei Spirit, accusing them of criminal negligence while on duty.

Robert Bishop, CEO of ship management company V. Ships, which manages the Hebei Spirit, said there was nothing the crew could have done to prevent the collision.

Far from the Truth

At a news conference in Hong Kong, Bishop said the captain's actions should be applauded instead of condemned.

"What he has been accused of is far from the truth, or far from the reality of what happened, shall we say," Bishop said. "So the consequence when all this comes to court should be that we are able to demonstrate that in actual fact, his performance was exemplary and the highest manner of good seamanship."

South Korean prosecutors claim the Hebei Spirit's chief officer was negligent in performing his lookout duty. They also allege the captain failed to take measures to prevent the collision, such as quickly hauling up the tanker's anchor.

The Hebei Spirit's managers maintain, however, that the officers did detect the erratic behavior of the crane barge early on and alerted marine traffic authorities. And lifting the anchor, the company claims, would not have helped as it takes at least 40 minutes to do so.

Human Rights Issue

Arthur Bowring , managing director of the Hong Kong ship owners' association, told this reporter that is organization objects to South Korea's indictment of the two officers.

"We are very disappointed with any maritime authorities who indict crew members who have been involved in an accident. It's not following basic human rights, it's not following the general course of legal issues," Bowring said.

The two indicted officers, both Indian nationals, are not in custody. But they must stay in South Korea to await their trial.

If convicted, they and the mainland Chinese owner of the Hebei Spirit, who was also indicted, face up to a year in prison and a fine of $150,000.

Thursday, January 24, 2008

UN Issues New Bird Flu Warning

The United Nations warned Thursday that bird flu outbreaks have spread to 15 countries, making the disease a global threat that requires close monitoring.

The UN Food and Agriculture Organization (FAO) released a statement calling for more monitoring and greater efforts to contain the virus.

The outbreaks have been reported since December and involve mostly domesticated poultry infected with the virulent H5N1 strain.

The FAO's chief veterinarian, Joseph Domenech, said that while there has been global progress in containing the bird flu, the crisis is far from over.

He said the outbreaks are especially worrisome in Indonesia, Bangladesh and Egypt, where the virus has spread despite major efforts to control it.

The other nations where bird flu outbreaks have been reported since last month are Benin, Burma, China, Germany, India, Iran, Israel, Poland, Russia, Ukraine, Turkey and Vietnam.

Rising China Keeps On Rising

Chinese authorities say the country's economy grew at 11.4 percent last year, the fifth year in a row growth has surpassed 10 percent despite ever greater efforts to slow it down. With inflation at an 11-year high in 2007, the government says controlling price increases will be one of its key priorities this year. VOA's Stephanie Ho reports from Beijing.

The 11.4 percent growth in China's economy last year was the greatest in 13 years.

Xie Fuzhan, the commissioner of the National Bureau of Statistics, announced the annual economic figures in Beijing Thursday.

The second quarter last year saw the highest growth, of 11.9 percent, he said. That eased to 11.2 percent in the fourth quarter, indicating a modest slowdown.

The government has been trying for the past few years to moderate economic growth. But a number of measures, including several increases in interest rates last year, have failed to make much of an impact on the roaring economy.

Xie said one of the government's core economic goals this year will be to control widespread inflation, which reached 4.8 percent for the year.

One cause of rising prices is an "excessive" money supply, Xie said. China is also influenced, he said, by higher world prices.

Xie cited oil as an example. As China is an oil importer, there is an inevitable influence from higher prices for oil on the world market.

Total trade volume rose 23.5 percent, and the already huge trade surplus--which has prompted heated disputes with the United States and the European Union--rose by almost 50 percent to $262 billion.

Overall, the economy totaled $3.4 trillion in 2007. Asked whether China has yet surpassed Germany as the world's third largest economy, Xie said the German figures are not out yet, so he cannot compare the two.

He said whether China is the third or fourth largest economy, it is still a developing country. Because it has far and away the largest population, at 1.3 billion people, per capita GDP remains low.

Wednesday, January 23, 2008

Asian Stock Markets Rebound

Stock prices on major Asian exchanges rose sharply Wednesday morning as investors welcomed Tuesday's emergency interest rate cut by the US Federal Reserve.

Benchmark stock indexes in Australia, Japan, Hong Kong and South Korea were up by about three to seven percent in early trading.

The International Monetary Fund said the US rate cut was appropriate and helpful. But the IMF said a significant slowdown in world economic growth this year still appears inevitable.

The US central bank Tuesday cut a key interest rate by 0.75 percent, after worries over a slowing US economy caused world stock prices to plunge in recent days.

It was the biggest single reduction in the benchmark lending rate since 1990, when the Federal Reserve began using it as a policy tool.

Investors in Europe and the US responded with share prices rising in late day trading Tuesday.

The major US stock indexes still closed down, but most European indexes closed higher.

The Toronto stock market regained more than 500 points Tuesday as the Bank of Canada trimmed back its key interest rate a quarter-point to four percent.

President Bush and US lawmakers are negotiating a proposed $145 billion package of measures to stimulate the economy.

Meeting with key Congressional leaders Tuesday, Bush said that he is optimistic that the administration and Congress can "find common ground" and come to a quickly agreement.

Tuesday, January 22, 2008

US Subprime Troubles Hit Bank of China

Tip of the iceberg?

Illustrating the global reach of America's subprime troubles, trading in Bank of China was suspended Tuesday pending a major announcement. But the bank denied reports that it would post massive losses over assets linked to US mortgages.

The suspension came after Hong Kong media reported China's third-largest bank could announce a significant writedown in 2007 on its 7.95 billion US dollars of investments in subprime-related securities.

Senior banking regulators have warned Bank of China as well as Industrial and Commercial Bank of China and China Construction Bank would have to make provisions for all their subprime-linked assets.

Transparency is a key issue. China's rules do not require the country's banks to disclose total losses until April, when full results for 2007 will be announced. So analysts can only make educated guesses until then.

China Denies Covering Up Olympic Worker Deaths

China's head of work safety has said he will ask for an investigation of an alleged cover up of construction worker deaths at Beijing's main Olympic stadium. The official has also asked the media and public to help report work safety violations to prevent them from being swept under the table. Daniel Schearf reports from Beijing.

China's Minister responsible for work safety, Li Yizhong, said he did not know of any cover-ups of worker deaths at Olympic venues, but said he would ask for an investigation nonetheless.

The British newspaper the Sunday Times reported at least 10 construction workers had been killed during the building of Beijing's main Olympic stadium, known as the bird's nest.

Beijing's Olympic Organizing Committee denied the report.

Li said it was the first time he had heard of the incident.

Investigation Ordered

He said he will instruct the Beijing Work Safety Administration to investigate and if this situation occurred, they would of course handle it strictly according to law.

The Bird's Nest Stadium is the showpiece for the 2008 Olympic games, when Beijing hopes to impress the world with its level of development and modernity.

Li asked for the media and public to help reveal work safety incidents, including those at Olympic construction projects. He said tips from the public had helped catch officials who illegally invested in China's coal mines, the deadliest in the world.

Over 100,000 workers die in China each year from work accidents. Many of the deaths are from poor safety conditions that are often ignored or blatantly violated in the pursuit of profit.

Corrupt Chinese officials have also colluded with businessmen, allowing them to avoid safety rules and regulations in exchange for bribes.

China Seems Opposed to New Iran Sanctions

China has hinted it would not support a new round of sanctions against Iran despite Tehran's continued defiance of United Nations resolutions on its nuclear program. The five permanent members of the United Nations Security Council and Germany are meeting in Berlin to discuss further sanctions against Tehran. Daniel Schearf reports from Beijing.

China's Foreign Ministry Tuesday sought the middle ground on the Iranian nuclear dispute, calling for more efforts from all sides to resolve the issue diplomatically.

Ministry Spokeswoman Jiang Yu said the Iranian nuclear issue had reached a critical moment, but indicated China would not support a new round of sanctions.

Jiang said UN Security Council actions should be helpful for the comprehensive, lasting, and proper settlement of the issue.

More Diplomacy

She said that in the current circumstances China hopes the international community will intensify diplomatic efforts for an early resumption of negotiations so the issue is handled through negotiations and diplomatic means.

The comments came as the five permanent UN Security Council members--Britain, France, Russia, the United States, and China--joined Germany in Berlin for talks on further sanctions.

China has twice supported UN sanctions against Iran for refusing to fully cooperate and stop its uranium enrichment program. But China, along with Russia, has been reluctant to support a third, tougher round of sanctions being pushed by European nations and the US.

Importance of Oil

Oil could explain China's reluctance. Iran is energy-hungry China's third largest source of crude oil imports. China's top oil refiner plans to invest $2 billion in an Iranian oil field.

Last week Washington and Tehran both sent high-ranking diplomats to Beijing seeking China's support on the nuclear dispute.

Many western nations believe Tehran is secretly developing nuclear weapons, while oil-rich Iran says the nuclear program is only for peaceful energy production.

Monday, January 21, 2008

Is Carbon Trading the Next Big Thing?

Carbon Confidential....

With investors panicking and Asian and European stock markets crashing over fears of a US recession, carbon trading could be the next big bonanza.

The United States accounts for about 25% of global greenhouse gas (GHG) emissions and is home to the most liquid financial markets in the world--which not even a depression can kill. The markets will survive.

Not for nothing, as the Russians say, are Goldman Sachs and Morgan Stanley pouring money into carbon trading. The giant financial firms need new products to sell into the increasingly interdependent global economy. So selling hot air--trading carbon credits for a cooler planet--could be the Next Big Thing. In fact, carbon trading volumes could eventually dwarf those from the sale of stocks, bonds and all other financial instruments.

The big banking firms are even researching ways to trade biodiversity--meaning, the once ridiculed idea of paying Peru, say, not to develop energy resources in pristine areas may not be far-fetched, after all.

According to recent Financial Times article, should consensus be attained on a plan to fight global climate change between the largest emitting jurisdictions, expenditures could top $1 trillion within five years.

NYSE Euronext Launching Bluenext

Still in its infancy, the global carbon trade rose 80% last year to $60 billion, as China Confidential reported Saturday.

The US has not yet regulated its CO2 emissions. But 10 East Coast states plan to start trading next year; West and Midwest states plan to trade in regional markets; and US banks, hedge funds, exchanges and the New York Mercantile Exchange have become increasingly involved in voluntary trading.

The NYSE Euronext, parent company of the New York Stock Exchange, is launching Bluenext, a European carbon emissions market, with North America and Asia as prime targets for international expansion.

Bluenext is 60% owned by NYSE Euronext and 40% by French state bank Caisse des Depots. It will initially operate a spot market in carbon dioxide emissions allowances, to be followed by a market in emission credits.

Another sign of things to come: the Multi Commodity Exchange of India (MCX), the country's largest commodities exchange, began live trading of carbon credit futures Monday. MCX will be the first carbon credit futures contract to be listed in India and other Asian countries.

Sunday, January 20, 2008

EU to Unveil Carbon Cutting, Trading Plan

Carbon Confidential....

The European Union's executive body, known as the European Commission, will unveil its drive to fight global warming Wednesday, with plans to slash industrial pollution, tighten emissions trading and impose renewable energy targets.

The measures are aimed at translating into concrete action the EU's goal of cutting emissions of the gases that cause climate change by 20 percent by 2020, compared to 1990 levels.

To help achieve its aims, the EU wants to increase the use of renewable energies like wind and solar power to 20 percent of all energy forms by then.

According to draft documents and officials, the Commission will toughen up the EU's emissions trading scheme, which allows energy intensive industries to buy and sell permits to pump out carbon dioxide.

At the moment the nearly 12,000 plants concerned get the quotas free from their local EU government, but under the new legislation they will have to pay, which has caused a stir among European businesses.

Industrial emissions are to be capped at 21 percent below levels in 2005--when the latest data on carbon dioxide emissions is available--and will soon include new sectors like aviation, petrochemicals, ammonia and aluminium.

Road transport and shipping, as well as the agriculture and forestry sectors, will not be included.

The EU's executive body will also decide how to share the burden for cutting greenhouse gases among the 27 member nations, one of the more controverial parts of the package.

The targets are still being debated in Brussels, but were expected to be calculated based on a country's gross domestic product (GDP) which richer nations fear will penalise them.

France wants the calculation to be based on the level of pollution currently produced per inhabitant.

Nordic countries also fear they will be penalized, rather than rewarded, for their efforts.

Similar targets will be set for the use of renewable energy forms in each country's energy mix, to achieve the 20 percent average cut, and legislation on this will set out criteria to ensure that biofuels are produced in a sustainable way.

Revisions will also be made to existing European legislation governing the way that state aid is granted for environmental purposes.

The Commission hopes to have its plans approved by EU member nations and the European Parliament by the end of the year.

Taiwan Warns of Rising Bird Flu Risk

The politics of disease prevention....

Taiwan has warned the international community that it could be at heightened risk from diseases such as avian influenza because Taiwan is prevented from attending meetings on important health issues because of pressure from China.

Taiwan says it will try to alert the international community of this potential threat during the World Health Organization 's Executive Committee meeting, which begins Monday in Geneva.

Lisa Schlein reports.

The Chinese Ministry of Health and the World Health Organization signed a Memorandum of Understanding in 2005.

Taiwanese officials say under that agreement, all health-related issues concerning Taiwan must be communicated to China, which then informs Taiwan. They say this cumbersome bureaucratic process can take up to a month.

By then, Taiwan's chief medical officer says, it may be too late. The president of the Foundation of Medical Professionals Alliance in Taiwan, Wu Shu-Min is in Geneva to alert the international community of the threats posed by keeping Taiwan sidelined from global health issues. He says this is a health rights and security issue, not a political issue.

Dr. Wu: "We know if we continue to go through this kind of channel, something is going to happen, especially now with avian flu, it is really quite imminent to happen. So, that this reporting system has to be very, very clear and open. As a result of this MOU [memorandum of understanding], there are a lot of technical meetings related to avian flu we were not able to attend," he said.

Dr. Wu says China's insistence that WHO should not directly contact Taipei can have serious consequences. As an example, he says that in September Taiwan imported baby corn from Thailand that might have had a bacterial infection that causes gastro-intestinal disease. But China did not tell Taiwan of this until 10 days after it had been informed by WHO, according to Wu.

He says Taiwan had a lucky escape because the imported corn was not infected.

He says if Taiwan is not informed of a disease threat in a timely manner, it will not be able to take action that could prevent the disease from spreading to other countries.

China Imposes Price Controls on Essential Foods

China has introduced price controls to slow a rapid rise in politically sensitive food prices. VOA's Claudia Blume reports on Beijing's latest attempt to battle the country's surging inflation.

Price controls were imposed on a range of essential goods, such as flour, meat products, milk, cooking oil and liquefied petroleum gas.

These are not price freezes per se. Under new rules announced by Beijing this week, large producers or processors of these products must obtain government permission if they want to raise prices.

Wholesalers and retailers do not need permission to change prices, but they have to notify the authorities within 24 hours of any price increase of more than four percent.

China's rulers are worried about rising inflation, which reached an 11-year high of six-point-nine percent in November. The rise was mainly limited to food prices, and was blamed on shortages of grain and pork.

Fear of Social Unrest

Inflation has been a spark for social unrest in the past, and Beijing is seen as worried. But some economists have warned that the control of food prices could lead to shortages and the development of a black market.

Stephen Green, a senior economist with Standard Chartered Bank in Shanghai, disagrees.

"Everyone in the central government is aware that food price controls, if they are implemented too severely, do create shortages, but what has happened so far is, they have asked producers to report price increases," he says. "We haven't seen the government actually coming and saying: 'Pork must be sold at this price, gas must be sold at this price.' It's a question of managing price increases, not telling companies what prices to sell their food--at the moment at least."

Green says price controls are just one of several measures used by the government to battle inflation.

"There is a strategy for bringing down inflation, which uses things like interest rates and loan controls and the exchange rate. But in the short term, there are concerns that food prices will continue to rise, and so what they are trying to do is introduce a framework where they manage their inflation."

Beijing says the price controls are temporary.

China Business and Economic News: Dependence on US Consumption, Death of Domestic Property Boom

Candid comments on Sunday from an important Chinese official about the country's dependence on US consumption.

Zhang Tao, deputy head of the international department of the People's Bank of China (the central bank), dismissed the idea that the country's export-driven economy can decouple from the US. He told a financial forum that China's exports will be badly hit if US consumption weakens.

Figures due this week are expected to show that China's gross domestic product grew more than 11 percent in the fourth quarter of 2007 from a year earlier, despite a worsening US credit crunch.

But Zhang said he saw increasing risks to a US slowdown.

"If US consumption really comes down, that's bad news for us," he said. "That will have a pretty severe impact on our exports."


In other economic news, Reuters published an in-depth report Sunday on the death of the Chinese property boom. Excerpts follow.

China's steps to cool a frenzied residential market are finally biting and look likely to usher in an industry shake-out that could see thousands of small-time developers forced out of business, leaving large listed operators sitting pretty.

Beijing wants to stave off the kind of price bubble and crash that fed the US subprime crisis, flung Southeast Asia into economic meltdown in 1997 and depressed Japan in the early 1990s....

But bankruptcies could flood banks with bad loans and end up sparking the social unrest that Communist party chiefs dread....

Led by multi-millionaire developers often in their thirties, China's private property industry is barely a decade old, with mortgages only made widely available in 1997.

In the last five years, a surging economy fuelled a huge construction boom as farmers bought one-way bus tickets to cities, and the urban middle class left crumbling houses for sparkling new flats.

Foreign investors have funded much of the activity.

Chinese developers such as Guangzhou R&F and Agile Property have launched hugely popular Hong Kong initial public offerings and bond issues, and more are on their way.

Funds run by the likes of Dutch financial group ING, Morgan Stanley and Deutsche Bank, have also funnelled Western pension money into Chinese home building.

With average home prices doubling since 2002 and high-end apartment prices rising much further, Beijing has tried, but mostly failed, to cool markets with curbs on supply and demand.

It has raised interest rates regularly, imposed taxes on capital gains and land appreciation, stopped non-residents buying apartments, told banks to curb loans to developers and employed a "use it or lose it" policy to deter land speculation.

But because of its immature market economy, the government often prefers edicts to market tools, often with clumsy results.

A construction industry slowdown would also hurt consumption in the world's fourth biggest economy, which some economists hope will take up the slack from any US recession....

However, unlike in the US, securitisation of mortgages and other loans is almost non-existent in China, so the impact of loan defaults would be limited, and property-related lending typically makes up less than 15 percent of bank business.

Saturday, January 19, 2008

Iranian Proxies Attack, Threaten Israel

Early warning.

Iran is apparently trying to trigger a two-front proxy war with Israel that could easily escalate into a wider conflagration.

A major missile war is possible.

The Islamist nation is encouraging its Gaza-based, Sunni Palestinian ally, Hamas, to attack Israel in the South, while Iran's Shiite Lebanese proxy, Hezbollah, threatens and taunts Israel in the North.

If not for Iran, Hamas would most likely have ceased the daily rocket barrages--15 missiles were fired yesterday--which have terrorized southern Israel, emboldened Islamist terrorists, and embarrassed and weakened the deeply unpopular governing coalition of Israeli Prime Minister Ehud Olmert.

More ominously, perhaps, Iran engineered the sudden surfacing in Beirut Friday of Hassan Nasrallah. It was his first live televised appearance in more than a year.

The Hezbollah leader boasted that his group was holding body parts of Israeli soldiers, including heads and a "nearly intact cadaver."

Nasrallah went on to threaten UN peacekeepers and warn Israel that another war--a follow-up to the 2006 Lebanon conflict--would change the face of the Middle East.

On Politics and PCs

Highly recommended weekend reading.

PC Magazine yesterday published an original, thought-provoking analysis of the Taiwan issue. Excerpts from Glenn Smith's article, "China-Taiwan Showdown Involves Politics, PCs," follow.

... If things fall apart and a Tom Clancy scenario unfolds in the Taiwan Strait you can forget about upgrading your PC or laptop for a while. The hundred miles of shallow seas separating Taiwan and China happen to be the most important yet most precarious link in the global ICT supply chain.

So much is at stake for information technology companies--not to mention the global economy --that one of the founders of the island's semiconductor industry, Robert Tsao, former head of United Microelectronics Corporation, the second largest IC foundry in the world, began placing full-page advertisements in major newspapers asking the DPP to abandon political behavior that could be viewed as antagonistic toward China.

This is a rare move for one of Taiwan's normally apolitical technological and industrial elite....

Taiwan's next presidential election is on March 22, and President Chen has attached a public referendum on UN entry to the ballot.

To Beijing, this is tantamount to sedition. In fact, on March 14, 2005, sensing that pro-independence President Chen might embark on such an adventure while China is straddled with the onerous task of playing nice during the build up to the 2008 Summer Olympics, Beijing passed an Anti-Secession Law.

This ... battle of wits has been going on since 1949 when Chiang Kai-shek fled China with his troops and established a provisional government in Taiwan. China, oddly enough, believes the island is its territory as promised by Roosevelt, Churchill and Stalin – and Generalissmo Chiang for the Republic of China [ROC] -- in the 1943 Cairo Declaration.

Yet if ever there is a last chance that the Taiwan-China dysfunctional duet could miss a beat, then this is it.

Even a minor slip could send the NASDAQ plummeting. "What you have is not just a China-Taiwan bilateral trade relationship that surpassed $100 billion last year," said Hammond-Chambers. "China's export machine is driven by the complex intertwined relationships with Taiwan's suppliers on Taiwan and Taiwan manufacturers based in China clustered around major Taiwan ODM/OEMs who are exporting from China to the global market--the US, Europe and increasingly the Middle East."

Hundreds of billions of dollars in world trade depend on this Taiwan-China relationship.

Global Carbon Market Nearly Doubled in '07

Carbon Confidential....

Carbon analysis consulting group Point Carbon says the cash value of the global carbon trading market in 2007 was $60 billion, up about 80 percent from 2006’s carbon market cash value of $33 billion.

That translates to 2.7 billion tons of carbon dioxide emissions (CO2e) traded, up from 1.6 billion CO2e tons traded the previous year.

The Oslo-based firm says total traded volume in the global market reached 2.7 billion tonnes of greenhouse emissions reductions in 2007, a 64 per cent jump in the same period.

Britain's Brown Sees Greener Pastures in China

Britain and China are entering a new era of environmental cooperation and will lead the world in creating a sustainable future.

So said Britain's Prime Minister Gordon Brown Saturday as he ended a two-day visit to China that was mainly focused on boosting trade ties with the world's fastest growing economy.

But Brown changed the subject by touring leading-edge projects in Beijing and Shanghai that aim to radically reduce China's greenhouse gas emissions.

The most interesting project: building the world's first "eco-city" at Dongtan, on Chongming island off Shanghai, which will supposedly provide virtually carbon-neutral living for up to 10,000 people from 2010.

The project is a joint venture between the Shanghai authorities, HSBC and the British design and engineering firm Arup, which is also involved in the Beijing Olympic stadium project for this year's summer Games.

Brown has also promised China £50 million in aid for "green" technology, including energy efficiency, so-called clean coal, and carbon capture and storage.

Rio Tinto Bullish on China, Commodities

MIning giant Rio Tinto was upbeat yesterday about the outlook for economic growth in China--its key market--asserting the company is poised for rapid growth in 2008.

Chief executive Tom Albanese said that even if the US falls into recession it would do little to slow the Chinese economic juggernaut driving the commodities boom.

The Chinese economy is still strong and becoming less dependent on the slowing US economy, Albanese told reporters participating in a tour of the company's operations in Western Australia state.

Albanese spoke as the deadline for a formal takeover offer from its rival BHP Billiton Ltd looms.

His message was clear: the global commodities boom is far from over.

BHP is offering three of its shares for every Rio Tinto share -- an offer currently worth about US$105 billion.

In related news, Goldman Sachs said China's economy is sufficiently decoupled from the US to keep metal demand growth buoyant in the medium to longer term. The investment banking firm is leaving its commodity forecasts unchanged despite forecasting a recession in the US.

Taiwan Cabinet Members Offer to Resign

Two senior Taiwanese Cabinet ministers have offered to resign following the ruling Democratic Progressive Party's defeat in legislative elections held last week.

Government Information Office chief Shieh Jhy-wey told reporters Friday that he wanted to quit ahead of the Cabinet's planned mass resignation on January 28.

Education Minister Tu Cheng-sheng has also offered to step down.

In last week's elections, the opposition Nationalists won 81 of the 113 seats in Taiwan's legislature.

The Nationalists campaigned on a theme of improving ties with China and strengthening Taiwan's stagnant economy, which they blamed on President Chen Shu-bian's pro-independence stance.

China and Taiwan split in 1949 during the Chinese civil war, and Beijing regards the self-ruled island as part of its territory. China has threatened to use force if Taiwan takes steps towards formal independence.

Friday, January 18, 2008

World News: Gin is the New Vodka

Churchill would be pleased....

In the totally nonpolitical news department, China Confidential is pleased to report that gin is the new vodka.

That's the word from the best bars around the world--from Miami to Prague to Vietnam.

Vodka fatigue
is real.

Ultra-expensive, ultra-smooth vodka brands are losing out to gin, the sophisticated spirit that was synonymous with the words martini and tonic (and mill) until the remarkable ascent of vodka-- considered an "ethnic" beverage only 50 years ago.

Younger, hipper drinkers are discovering the joys of gin, a spirit flavored with juniper berries.

The hippest gin of all, arguably, is exceptionally exotic--"explosive," as one reviewer put it--Bulldog London Dry Gin.

China Confidential has learned that Bulldog will soon be available in Beijing.

This reporter can't wait.

Israeli Missile Test a Message to Iran

Foreign Confidential....

Israel's successful test launch this week of a long-range, ballistic missile capable of carrying a nuclear warhead was intended as a show of strength to Islamist Iran, which has vowed to wipe the Jewish State off the map.

The Jericho-3 missile has a range of 2,500 miles, meaning it can strike anywhere in Iran.

The missile was launched from a secret Israeli air base south of Tel Aviv.

In other news from Israel, security forces thwarted a plot by Iranian-backed Islamic Jihad to bomb the Tel-Aviv-Jerusalem railway.

Islamic Jihad--which has been designated as a terrorist group by the United States, the European Union, the UK, Japan, Canada, Australia, and Israel--is openly committed to the destruction of Israel and its replacement with a Palestinian Islamist state. The group's armed wing, the Al-Quds Brigades, has claimed responsibility for numerous terrorist attacks in Israel, including suicide bombings and other "martyrdom operations."

Islamic Jihad is also responsible for the near-daily rocket barrages at Israeli towns that have killed and injured civilians, and cause widespread hardship in communities in Israel's southern region. The rockets are primarily launched from Hamas-controlled Gaza, with the support and approval of Hamas, which is also backed by Iran.

Thursday, January 17, 2008

China Overtakes S. Africa as Top Gold Producer

China became the world’s largest gold producer last year, eclipsing South Africa, as total world gold production dropped 1% to 2,444 tonnes.

Chinese gold production rose from 247 tonnes in 2006 to an estimated 276 tonnes last year, according to the second update of the Gold Survey 2007 report by UK precious metals consultancy GFMS in a report released Thursday.

Over the same period South African gold production fell from 296 tonnes in 2006 to 272 tonnes in 2007.

China's output was up 12% from the previous year and represented just over one-tenth of the world's supply.

South Africa's Fall

South Africa's fall to second place was the first such setback for the country since 1905, GFMS said. South Africa's late 19th century gold rush led to the founding of mining giant Anglo American.

One metric ton equals about 1.1 short tons, which is the common volume measure in the United States, or 35,274 ounces.

The ranking is part of a broader report on gold supply and demand released by GFMS, which said gold is likely to hit $1,000 an ounce this year but may first correct lower.

Untapped Fields

The title of top gold producer adds to a list of raw materials China can claim to produce more than any other country, including aluminum and steel. Mining experts say China is unlikely to loose that lead anytime soon as more foreign producers make inroads in China's untapped mining fields.

Driving China's output higher last year was increased high-grade output by the hundreds of smaller small-scale miles responsible for much of the country's output. Their size gives them the flexibility to go after higher grade ores when prices jump, as they did last year.

In a related development, foreign gold producers have been flocking to China. Their operations are almost certain to result in an expansion of Chinese gold output.

Jinshan Gold Mines

Vancouver-based Jinshan Gold Mines is one such company. It started production in July at its Chang Shan Hao gold mine in China's northern province of Inner Mongolia, reaching 19,000 ounces of gold by December 18. The mine is designed to produce about 120,000 ounces of gold per year, making it one of the country's largest producers.

Most of China's gold output stays in the country where it's transformed into jewelry and manufactured items, though the country's export role is increasing.

South Africa, which was producing as much as 1,000 tons of gold in 1970, has seen its mining production decline for five straight years, owing partly to a crackdown on unsafe mines.

US Envoy: North Korea Won't Abandon Nukes

North Korea beat Bush. But in a refreshing show of candor, the Administration admits its failure....

The US President's special envoy for human rights in North Korea, Jay Lefkowitz, said Thursday that the secretive Stalinist/Kimist regime is not likely to give up its nuclear weapons before Bush leaves office next January.

Lefkowitz also accused China and South Korea of not putting enough pressure on Pyongyang during the talks that first began in 2003 to end its nuclear weapons drive.

"It is increasingly clear that North Korea will remain in its present nuclear status when the administration leaves office in one year," Lefkowitz said in Washington.

Weasel Words

His harsh language contrasted sharply with the weasel words of Assistant Secretary of State for East Asian and Pacific Affairs Christopher ("Kim Jong") Hill, whose dovish devotion to diplomacy as an end instead of a means has allowed one of the planet's most deranged and dangerous governments to make a fool out of Washington.

For one thing, Lefkowitz avoided referring to North Korea by its formal name, the DPRK--which Hill delights in using, as if to show off his sophistication (to his boss, academician-turned-Secretary of State Condoleezza RIce).

Lefkowits said North Korea "has not kept its word," was "not serious about disarming in a timely manner" and "its conduct does not appear to be that of a government that is willing to come in from the cold."

Proliferation and Extortion

Lefkowitz accused North Korea of being a "serial proliferator" and using its nuclear arms to "extort" foreign aid, saying there was no guarantee that US military and nuclear strength could prevent it from passing on nuclear arms or technology to Islamists or their backers.

His remarks came after Pyongyang missed a key December 31 deadline to disable its main nuclear facilities and give a full declaration of its atomic programs in return for economic aid under a deal agreed in February 2007.

North Korea never intended to comply with the six-nation nuclear accord. As China Confidential has predicted, Pyongyang will refuse to provide information on a secretive uranium enrichment program alongside its plutonium powered nuclear plant.

New Approach

Lefkowitz called for a "new approach" in disarmament talks--"perhaps even bilaterally"--with North Korea that would permanently link human rights as part of the engagement policy and a critical condition for any normalization of diplomatic relations.

"The six-party talks have not involved human rights. However, there is a valid question of whether this continues to make sense," he said.

He said his proposed new concept of dialogue with North Korea could evolve to resemble the Organization for Security and Cooperation in Europe, which emerged with the Helsinki Final Act as a significant step toward reducing Cold War tensions.

Hamas Claims Fatah Support Against Israel

Foreign Confidential

The security situation in southern Israel is intolerable with towns and villages subjected to near daily rocket fire from Hamas-controlled Gaza. In response, Israel has locked down Gaza, and Israeli Prime Minister Ehud Olmert has vowed to keep up raids on gunmen in the territory.

Late Thursday night, Israeli Defence Minister Ehud Barak ordered the closure of all border crossings between Israel and Gaza. In announcing the measure, a ministry official said it would remain in effect for several days and would affect both commercial traffic and individual travelers. He added that crossings would be authorised to respond to "exceptional humanitarian needs."

But the Islamist regime ruling Gaza and its rival Fatah-led administration in the West Bank are actually drawing closer in response to Israeli air strikes and ground incursions in Gaza.

The Israeli reprisals are being condemned by Palestinian President Mahmoud Abbas and other leading members of his Fatah-led administration in the West Bank, who say if the Israeli actions continue it will be difficult to continue peace negotiations with Israel.

Condolences from Abbas

On Thursday, Abbas, went so far as to call his bitter enemy, Hamas leader, Mahmoud Zahar, and offer condolences for the death of his son who was killed fighting Israeli troops earlier this week.

Ahmed Yousef, a senior Hamas leader, told VOA that the Israeli attacks are helping to bring Hamas and Fatah closer together. He said Abbas' telephone call is a sign that Palestinians will soon be united and facing Israel together.

Bitter Enemies

Hamas and Fatah have long been bitter enemies. Since the Islamist movement ousted Fatah forces from Gaza last year, the Palestinian territories have been divided, with Fatah running the West Bank, and Hamas in control of Gaza.

As if to prove the assertions of Israeli hawks who question Palestinian intentions, Palestinian Islamists have fired about 4,000 homemade Qassam rockets at southern Israel since Israeli troops and settlers disengaged from Gaza in 2005.

While the rockets have not resulted in large numbers of casualties, concerns are growing because the range of the rockets is growing--with some now reaching the city of Ashkelon, home to more than 100,000 Israelis about 15 kilometers from the Gaza border.