Important news from Erika

Oct 26 2011

Trusting the masses: US tiptoes into democracy in Pakistan


In his book “Where the Wild Frontiers Are: Pakistan and the American Imagination“, an edited collection of his Chapati Mystery blog, historian Manan Ahmed complained about the United States’ past support for former president Pervez Musharraf, and its refusal, at the time to trust Pakistan with democracy.  In an entry written in 2007, he described Pakistan as the “the not yet nation” - a country for which democracy might be a good thing in the long run, but  was in American eyes not yet ready. “We fear the multitudes on two fronts. One is that we conceive of them as masses without politics – forever hostage to gross religious and ideological provocations. Masses which do not constitute a body politic or act with an interest in self-preservation or self-growth. Faced with that absence of reason, we are forced to support native royals to do the job (from Egypt to Pakistan). We justify it by stressing that we may not like these dictators but we know that if we did not have them, the masses would instantly betray us to the very forces of extremism that we seek to destroy,” he wrote. “Second is that these masses are Muslim. This fear grounded in our history can, at best, be understood as the fear of the “Other” and, at worst, as the Lewis/Huntington model of civilizational clash. Either case, it is borne out of our inherent belief in ‘difference’. They are not like us. They do not possess reason, etc.” That U.S. attitude has been changing slowly over the past few years, underpinned by the Arab spring, and in the case of Pakistan, Washington’s increasingly difficult relationship with the Pakistan Army over its alleged support for, or tolerance of, Islamist militants based in Pakistan.  Democracy has become the new mantra, expressed most recently by former White House adviser Bruce Riedel in an op-ed in the New York Times. “America needs a new policy for dealing with Pakistan. First, we must recognize that the two countries’ strategic interests are in conflict, not harmony, and will remain that way as long as Pakistan’s army controls Pakistan’s strategic policies. We must contain the Pakistani Army’s ambitions until real civilian rule returns and Pakistanis set a new direction for their foreign policy,” he said. Somewhat more diplomatically, President Barack Obama made a point of saying that the United States’ argument was  not with the people of Pakistan but with the army’s Inter-Services Intelligence (ISI), agency. Asked if he would be willing to cut off aid to Pakistan, hit this summer by a second year of flooding, Obama hesitated, the New York Times reported.  The United States has a “great desire to help the Pakistani people strengthen their own society and their own government,” it quoted him as saying.  “And so, you know, I’d be hesitant to punish flood victims in Pakistan because of poor decisions by their intelligence services.” With Secretary of State Hillary Clinton flying into Pakistan to push for greater cooperation on Afghanistan, one of the more interesting, but less obvious, themes of her visit will be how she navigates her way around the country’s civilian-military imbalance.   The arguments, from a U.S. point of view, for supporting democracy and civilian rule are many.  In the short-run, the United States wants to weaken Islamist militants – including the Afghan Taliban as well as India-focused groups like the Lashkar-e-Taiba which it says still enjoy support from elements within Pakistan’s security services – an allegation the army denies. By weakening the grip of the army on the country’s security policy, it would — in theory – dislodge support for militants.  Tentative steps taken by the civilian government to change the way the country is governed – including through greater provincial autonomy – would provide a means for Pakistan’s different ethnic groups to try to negotiate their differences without taking up arms. But they would also undercut the centralising authority of the military, as would an ambitious but politically fraught proposal to split in two Pakistan’s dominant Punjab province, a major recruiting ground for the army. And civilian governments have always tended to be more in favour of peace with India than the army, which once nurtured Islamist militant proxies to offset what it saw an existential threat from Pakistan’s much bigger neighbour. Yet to consider how this might look on the other side of the table, read this column by retired army officer Ikram Sehgal who wrote in response to Riedel’s op-ed that the real aim of the United States was the “Balkanisation of Pakistan”.  By supporting civilian rule, he argued, the United States aimed merely to serve its own agenda given what he called ”atrocious (civilian) leadership that excels in nepotism and corruption of the worst kind”. “The majority in Pakistan sees the army and the ISI as Pakistan’s front line of defence and do not approve of the US thus tarring and feathering them,” he wrote.  “Propping up corrupt leaders in Pakistan allows the U.S.  to pursue its core national interest even if it is detrimental to ours, eg impose Indian hegemony on us and … the US sees the Pakistan Army and the ISI as roadblocks in pursuing their own core national interests.” In other words, an army which sees itself as the guarantor of Pakistan’s territorial integrity is unlikely to hand over power over foreign and security policy any time soon to the country’s civilian politicians.  As it is, the army barely disguises its impatience with the civilian government over what it sees as its failure to provide the governance necessary to underpin its own military campaigns against Islamist militants inside Pakistan. And the country’s politicians themselves have been unable to expand the space available to them to assert their influence over foreign and security policy.  Barring a few politicians who questioned Pakistan’s policies — among them former prime minister Nawaz Sharif – an All Parties Conference held last month largely rubber-stamped the army’s response to American pressure to “do more” against Islamist militants. While one of three parliamentary committees due to be briefed by the army week refused to go to army headquarters – saying the military should  come to parliament, two others did so.  And as columnist Ejaz Haider has argued, the civilian government has yet to draw up a national security strategy which might allow it to examine military strategy through a different prism – as happens elsewhere when military leaders are called to testify before parliamentary committees.   So the question is this: Does the United States have the patience to nurture civilian rule in Pakistan when it is looking for a way out of the 10-year-old Afghan war? Only the Pakistan Army can either help deliver parts of the Afghan Taliban and the Haqqani network into an Afghan political settlement, or raise pressure on them enough to weaken them significantly and allow the Kabul government to hold its own as U.S. troops begin to withdraw. The United States has always dealt with the army, even after Musharraf – who took power in a military coup in 1999 – was forced to quit in 2008. It was Musharraf’s successor as army chief, General Ashfaq Pervez Kayani,  who was feted in Washington rather than its president or prime minister. Even after the May 2 raid by U.S. forces who killed Osama bin Laden, Washington appears to have  given the details to the military first, thereby depriving the civilian government of the power of information and leaving it floundering in its response. In an article in Foreign Affairs,  C. Christine Fair at Georgetown University argues that the United States needs to change this approach, following the same rules that it applies for other countries when it deals with their militaries. “For one, the United States should follow its standard protocol for high-level exchanges. The Pakistani chief of army staff should meet and communicate with his American counterpart, not with the secretary of state or the president, as he does now. Rather than consult on political issues, the two countries’ military leadership should focus on security matters, such as the war in Afghanistan, continued joint training, and foreign military sales — preferably all geared toward supporting Pakistan’s counterterrorism and insurgency capabilities. It is worth remembering that the U.S. secretary of state meets with the military leadership of virtually no other country. Meanwhile, flagrant disregard for diplomatic protocol in almost every high-level exchange between Pakistan and the United States, is frustrating for even ordinary Pakistanis who are exhausted with U.S. pandering to their men on horseback, even if Americans are oblivious to it,” she writes. “Alongside diminished contact with the military, the United States should engage Pakistan’s civilian centers of power, including the parliament, the judiciary, educational institutions, and the economy.” And while she acknowledges that greater civilian engagement will not transform Pakistan ”over any useful time horizon — if ever”, this was not a reason for giving up, she says. ”Although democratization efforts may take a long time to bear fruit, if they ever do, one thing is clear: the most likely path toward a stable country involves empowering Pakistan’s civilians to exert control over security and foreign policy. U.S. assistance to help Pakistanis do so is a high-stakes gamble worth taking.” But that is long-term thinking from someone who has followed Pakistan closely for years. What about an administration facing a jittery political environment, the instant demands of 24/7 television news, and a desire at home for early results on Afghanistan? What about that nagging worry that Manan Ahmed captured in his book?  What if you support democracy and end up with a government you don’t like? The way Clinton and the U.S. administration finds its way through this particular minefield may end up telling us as much about the current state of ”the American imagination” as it does about Pakistan itself.

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Oct 18 2011

InterContinental Hotels in 12 new China brand deals: China head


IHG also intends to expand the China branded hotel overseas in 2-3 years to cater to Chinese tourists abroad, said Keith Barr, IHG’s chief executive for the Greater China region.Most of the contracts signed will be in tier 2 and tier 3 cities as well as in Shanghai and Beijing, Barr told reporters in Shanghai.The move to expand the Chinese hotel brand overseas is aimed at attracting the large number of Chinese tourists who will travel worldwide as disposable income rises, he said.”(The brand) is rooted in deep consumer insights in China and as probably about 100 million outbound Chinese travel in the near future,” he said.”We will see this moving to key gateway cities across Asia and globally to meet their consumer needs.”Barr said the brand will cater to the taste of the Chinese consumer, from the type of social settings they enjoy to how VIPs and government officials like to be greeted.Earlier in the year, IHG signed a management deal with China’s Poly Real Estate Group Co Ltd (600048.SS) to cooperate on developing and managing hotels in China.IHG has said that one in four of the hotel rooms it opens over the next five years will be in China, highlighting the market’s importance to the company. The firm has 154 hotels in China with about 140 more in the pipeline.

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Oct 14 2011

Republicans ask deficit panel to rethink Dodd-Frank


* Also seeks changes to public housing, mortgage modsWASHINGTON, Oct 14 (Reuters) - Republicans on the House Financial Services Committee are calling on the deficit reduction panel to consider curbs to the Dodd-Frank financial overhaul in a bid to boost the sputtering economy.In a letter addressed to the congressional “super committee”, 20 Republicans joined Chairman Spencer Bachus in urging consideration of a raft of Republican legislation to repeal or limit last year’s Dodd-Frank oversight law.”Congressional proponents of (Dodd-Frank) promised that it would ‘increase investment and entrepreneurship, foster competitiveness, confidence in our financial sector, and robust growth in our economy,’” Bachus wrote in a letter on Friday.”Yet some 15 months after Dodd-Frank was enacted, many small businesses are starved for customers and credit; unemployment has soared to more than 9 percent; and for far too many American families, economic security seems further away than ever.”The Dodd-Frank financial oversight law was passed to limit the type of excessive Wall Street risk taking that many blame for the financial crisis of 2007-2009.It subjects big financial firms to stricter oversight, tries to bring transparency to the roughly $600 trillion global derivatives market, and puts restrictions on Wall Street pay, among other reforms.Republicans have blasted Dodd-Frank as a regulatory overreach that has hindered the U.S. economic recovery.The letter also recommends that the super committee — headed by Republican Congressman Jeb Hensarling and Democratic Senator Patty Murray — cut or rein in spending on a number of federal programs, from public housing to mortgage modification programs.It also advocates easing restrictions on capital raising by small businesses.Bachus is particularly tough on Dodd-Frank derivatives regulations, which he says will put U.S. markets at a competitive disadvantage and could impose trillions of dollars in compliance costs.He also slammed the billions of dollars of fees that he says will be imposed on the private sector as part of Dodd-Frank.”This is a dead weight loss to the economy,” Bachus writes. “None of these funds will be used to create jobs.”The letter attached 24 bills with a range of changes to Dodd-Frank and other laws, including exemptions for corporations that use derivatives, and a repeal of the entire Dodd-Frank act.The 12-member super committee is facing a deadline of Nov. 23 to come up with at least $1.2 trillion in deficit reductions over the next decade.

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Oct 13 2011

TEXT-Fitch rates Morgan Stanley India at ‘Fitch AAA(ind)’/stable


MSICPL’s ratings are driven by Fitch’s expectation of continued strong support from its ultimate parent - Morgan Stanley (MS, Long-Term Issuer Default Rating (IDR): ‘A’/Stable; Viability Rating: ‘a’; Short-Term IDR: ‘F1’). The former’s systems and operations are well integrated within MS’s, and MS has invested over INR1.5bn in MSICPL in FY10 through Morgan Stanley India Company Private Limited. The ratings may be downgraded if the linkages of and support from MS are deemed by Fitch to have deteriorated or if MS’s ratings are downgraded to India sovereign rating of ‘BBB-‘Funding profile is well-matched due to shorter tenor of assets compared with liabilities. It also has back-up liquidity in the form of fixed deposits, bank lines and mutual funds. Leverage is currently below 2x.Return on average assets (using an average of assets at end-financial year) dipped in FY11 to 1.38% from 2.43% in FY10 due to rising interest costs, although supported by improved operational efficiency. Fitch notes that profitability may be volatile in near-term as the current global economic slowdown impacts business volumes.MSICPL is engaged in financing MS’s private wealth management clients in India against liquid securities (primarily shares) as well as in trading fixed income securities.Fitch has taken the following additional rating actions on MSICPL’s instruments:Proposed INR7.93bn long-term fully principal protected market-linked debentures: assigned a final rating of ‘Fitch AAAemr(ind)’INR2.07bn fully principal protected market-linked notes (issued and outstanding): affirmed at ‘Fitch AAAemr(ind)’INR20bn short-term debt: affirmed at ‘Fitch A1+(ind)’INR10bn long-term debt affirmed at ‘Fitch AAA(ind)’The suffix ‘emr’ denotes the exclusion of the embedded market risk from the rating. Ratings of the equity-linked debentures is an ordinal assessment of the underlying credit risk of the instrument and does not factor in the market risk that investors in such instruments will assume. This market risk stems from the fact that coupon payment on these instruments will be based on the performance of a reference index or equity share.

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U.S. jobless claims dip 1,000 last week


Economists polled by Reuters had forecast claims rising to 405,000 from the previously reported 401,000.Nonfarm employment increased 103,000 in September after gaining 57,000 the prior month, the department reported last week. While payrolls last month were lifted by the return of 45,000 Verizon Communications workers, key measures of labor market health showed some improvement.Initial claims stayed close to the 400,000 mark usually associated with some improvement in the jobs market for a third straight week.More signs of improvement in the labor market could further diminish the chances of a new recession, but much of the economy’s fortunes now depend on how Europe handles its debt crisis.A Labor Department official said there was nothing unusual in the state-level data, but noted that claims tended to show large increases at the start of a quarter.The model used by the department to smooth out seasonal variations had expected a large increase in claims last week and since the figure came in close to expectations, there was little change in the seasonally adjusted level.Since Monday was a federal holiday, four states including California and Virginia, gave estimates. But the Labor Department official said these tended to be accurate and he did not anticipate major revisions to the data next week.The four-week moving average of claims, considered a better measure of labor market trends, fell 7,000 to 408,000.The number of people still receiving benefits under regular state programs after an initial week of aid dropped 55,000 to 3.67 million in the week ended October 1.Economists forecast so-called continuing claims unchanged at 3.70 million.The number of Americans on emergency unemployment benefits fell 11,412 to 3.02 million in the week ended September 24, the latest week for which data is available.A total of 6.82 million people were claiming unemployment benefits during that period under all programs, down 39,203 from the prior week.

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Oct 12 2011

UPDATE 2-Wall St. office cleaners join march for better jobs


By Michelle Nichols and Paula RogoNEW YORK, Oct 12 (Reuters) - Hundreds of office cleaners and guards marched near Wall Street on Wednesday demanding good jobs and protesting economic inequality, while a smaller group of demonstrators rallied at JPMorgan Chase’s skyscraper.The marches were part of a growing Occupy Wall Street movement, the month-long protests that have inspired solidarity rallies planned for Thursday at some 90 U.S. college campuses. Demonstrations have occurred in more than 1,400 cities around the world.The movement began on Sept. 17, when protesters set up camp in a park near Wall Street in Lower Manhattan, upset that the billions of dollars in bank bailouts doled out during the recession allowed banks to resume earning huge profits while average Americans have had no relief from high unemployment and job insecurity.Participants also complain the richest 1 percent of Americans do not pay their fair share of taxes.More than 750 cleaners, security guards and other building service workers converged on the financial district to march for better-paying jobs, while at a nearby rally outside a JPMorgan Chase skyscraper police said about 100 people walked around the building and then returned to their camp in the park.Police said they arrested four people at the bank building.Barricades had been placed outside the JPMorgan Chase building in preparation for the protest, and many police officers stood on duty.The building service workers union, the Service Employees International Union, which organized the march, said contracts for tens of thousands of workers were about to expire.”We’re out here because there’s no jobs and we’re about to lose our jobs. We’re tired and we’re fed up and we need these people in here to hear us,” said Carla Thomas, 47, a building security guard, gesturing toward Wall Street.People who live near Zuccotti Park where the protesters are based have been complaining that loud music at night, including bongo playing, is keeping their children awake.New York Mayor Michael Bloomberg has said the protests can continue as long as laws are obeyed.Deputy Mayor Cas Holloway said the mayor told the protesters the park would be cleaned on Friday due to unsanitary conditions created over the past three weeks.”The cleaning will be done in stages and the protesters will be able to return to the areas that have been cleaned provided they abide by the rules” established for the park, Holloway said in a statement.At a rally in San Francisco, 11 protesters were arrested on Wednesday when up to 200 people demonstrated at the Wells Fargo corporate headquarters, blocking entrances and sticking posters on the building, one that read: “My bank went to bail-out land and all I got was a lousy recession.”TRUST BROKENProtesters appeared to be directing frustration at JP Morgan Chase’s high-profile chief executive, Jamie Dimon.About 500 protesters on Tuesday met on Manhattan’s upscale Upper East Side, marching past the homes of Dimon, hedge fund manager John Paulson, media mogul Rupert Murdoch and David Koch, co-founder of energy firm Koch Industries.Several of those being criticized by the protesters have shown understanding, sympathy or support for the Occupy Wall Street movement, including a U.S. Federal Reserve official, President Barack Obama and some corporate executives.Citigroup Chief Executive Vikram Pandit said on Wednesday the sentiments of the protesters were “completely understandable” and that he would be happy to speak with them.”Trust has been broken between financial institutions and the citizens of the U.S., and that is Wall Street’s job, to reach out to Main Street and rebuild that trust,” he told a business breakfast hosted by Fortune magazine.Bill Gross, manager of PIMCO, the world’s biggest bond fund, posted on Twitter late on Tuesday: “Class warfare by the 99%? Of course, they’re fighting back after 30 years of being shot at.”A found on Wednesday that 82 percent of Americans had heard of the Occupy Wall Street protest movement, and 38 percent felt favorably toward it. Thirty-five percent were undecided, and about one-quarter unfavorable.Hundreds of people were arrested in previous rallies in New York, and police have used pepper spray on protesters.Demonstrators were arrested in Washington, Boston and Chicago on Tuesday at protests inspired by the Occupy Wall Street movement.

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Oct 11 2011

Steve Jobs: Agent of change


By Aaron Pressman The opinions expressed are his own. It’s probably fitting that on the day Steve Jobs died the company he co-founded was vying for the crown of most valuable with Exxon Mobil, the legacy of an earlier titan of commerce, John D. Rockefeller. In the early 20th century it was Rockefeller who had the vision to remake entire industries and help modernize the U.S. economy while creating vast fortunes in the process. Jobs’ legacy may become equally great. Starting at the dawn of the personal computer age, Jobs’ visionary moves at Apple rippled across the technology industry and helped ready the economy for the information age. On the Internet today, you can get an intimate sense of the man and the many lives he influenced from those who knew him well, just met him once or were admiring him from afar. With Walter Isaacson’s authorized biography coming out next month, the study of Jobs and the roots of his success is just getting started. The amazing commencement address he gave at Stanford in 2005 is a good starting point. Many knew that Jobs had dropped out of Reed College after less than a year but Jobs explains in his speech that it wasn’t the classroom he despised but the control. He actually hung around Reed for another 18 months and sat in the classes, including a calligraphy one, that most interested him. There are many, many videos of Jobs on the web worth watching. Jobs was kicked out of Apple in 1985 only to return a decade later when the company was on the brink of failure. He quickly honed Apple’s product lines and killed projects across the company. That didn’t make him popular, as you can see in this clip from Apple’s 1997 developer conference when a programmer lambasts Jobs for killing off a particular document format. One line in the video from Steve jumped out as particularly Jobsian: “Some mistakes will be made along the way. That’s good because at least some decisions are being made along the way. And we’ll find the mistakes and we’ll fix them.” Some Apple fans make the mistake of believing that Apple is a perfect company, that no product is released before it has been perfected by Jobs and his team. Even a cursory scan of Apple’s major unveilings puts lie to that myth, from the over-priced G4 Cube to the expensive and underpowered MobileMe service. Jobs made many mistakes in his illustrious career but he learned from the errors and did his best to fix them along the way. Beautiful design was one of Jobs’ highest values though it sometimes led him astray. At NeXT Computer, the company he started after leaving Apple, Jobs’ perfectionism led to a product that was absolutely gorgeous and filled with cutting-edge technologies but priced well beyond the means of its target market of university students, artists and graphic designers. The G4 Cube, too, had great looks but a high price tag and murky marketing. By 2005, Jobs had learned his lesson. The gorgeous and self-contained Mac mini was not burdened with the latest and greatest gee-whiz features. It carried a low, low price and a brilliant marketing message for a clear target audience. Switch from a cheap Windows computer to the mini and bring your old monitor, mouse and keyboard along for the ride. Jobs also matured in his dealings with other business leaders. After saving the music business from itself with the iTunes store, Jobs quickly found himself at war with the major record labels. Resenting Apple’s domination of digital downloads, most of the major record labels turned to Jobs’ competitors when they were ready to offer higher-quality and unlocked music files. It was a rare setback for Jobs when he relented to the labels’ demand for higher music prices in return for DRM-free downloads. But when it came time to add electronic books to the iTunes ecosystem, it was Jobs who played the competition for fools. Swooping in with a new pricing model that would give book publishers unprecedented control over retail pricing of ebooks, Jobs had realized that content makers could be his most powerful allies. At the end of his Stanford address, Jobs offered an optimist’s view of death. “Death is very likely the single best invention of life. It is life’s change agent. It clears out the old to make way for the new.” The world is poorer today lacking Steve Jobs’ powerful influence as an agent of change. But the way is cleared for the new to turn their visions to reality.

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