There has been important progress on Darfur in the past two months. In July we agreed on the deployment of a robust UN/African Union (AU) force and the start of peace talks. But the situation remains completely unacceptable. In the coming weeks and months, we commit as leaders to redouble our efforts to make further progress.
At the end of July the UN agreed to our plan. UN Resolution 1769, passed –– for the first time –– unanimously, was the culmination of intense diplomatic activity over the crisis in Darfur. In the next few weeks, one of the largest UN troop deployments –– this time in partnership with the African Union –– will begin arriving in Darfur. Twenty thousand peacekeepers and nearly 4,000 police will contribute to ensuring the security of Darfur’s people –– as well enabling safe delivery of essential supplies of food.
Moreover, on the political front, most of the Darfuri rebel groups met in Tanzania early this month under UN and AU auspices to prepare for political negotiations. They reached agreement on their common demands and said that they would commit to a ceasefire if the Sudanese Government also made the same commitment.
But there is still a gap between the efforts pursued by the international community and the dramatic situation that remains on the ground.
More than two million people have already been displaced, and their numbers continue to grow. Four million people now rely on food aid and other humanitarian assistance. And the fighting continues with aerial bombardment, banditry and skirmishes between groups flourishing in a lawless and insecure environment. The pain of the people of Darfur demands quick and decisive action from the international community.
The important UN Resolution 1769 is not the end but just the starting point of the international efforts that we must mount to stop the killing and to bring peace to this troubled region. The troop deployment is only one stage in the process of bringing peace, and we cannot wait a moment longer for intense international action to secure a ceasefire. That is the reason why we are determined and fully committed to step up our actions over the crisis in Darfur and the region. We intend to mobilise all energies along five directions.
In the coming days, both Rama Yade, the French Secretary of State for Foreign Affairs and Human Rights, and Lord Malloch-Brown, the British Foreign Office Minister, will visit Sudan, including Darfur. We call on all sides to lay down their arms, to respect a ceasefire without delay and to bring the aerial bombings of civilians to an immediate end.
We will support all efforts to expedite preparations of the deployment of the AU-UN force (UNAMID), authorised by Resolution 1769, so that it will be operational by the end of this year.
But our plans go beyond the ceasefire, which cannot on its own resolve such a complex conflict. We need a political settlement that addresses the root causes of the violence and allows Darfur to participate in national elections in Sudan in 2009. The UN and AU will issue invitations for political talks to start in October. We urge the Government of Sudan and rebel leaders to engage fully and sincerely in this process. And we welcome the role of Sudan’s neighbours in support of UN/AU efforts.
If progress is not made on security, the ceasefire, political process and humanitarian access, we will work together for further sanctions against those who fail to fulfil their commitments, obstruct the political process or continue to violate the ceasefire.
We also believe there is a need to help with economic reconstruction –– to help people to return to their villages and rebuild their livelihoods. As soon as security allows, we will commit resources to grassroots development. When there is political progress, we will work with all parties to meet Sudan’s longer-term development needs.
And we must look beyond Darfur, to the issues affecting Sudan and the region. We want to see faster progress on the comprehensive peace agreement that brought peace between north and south Sudan.
In Chad, hundreds of thousands of people fleeing the conflict in Darfur are living in camps alongside people displaced by internal unrest. We are working intensively with the UN and the EU to ensure better security and greater humanitarian assistance. It is clear that the deployments of two missions to ensure security on both sides of the Chad-Sudan border are the two sides of the same coin.
The causes of conflict in Sudan are deep-rooted: economic, environmental and political. Neither Britain nor France, nor the people of Sudan, can achieve a successful outcome alone. We need cooperation from all parties and engagement from the international community. We welcome the visit to Sudan in the coming days by Ban Ki Moon, Secretary-General of the UN. There will be a AU/UN meeting in New York on September 21 to sustain international initiatives to address the crisis. And France will chair a Security Council meeting four days later at the level of heads of states and governments to rally world leaders to deliver on commitments to peace in Darfur and beyond.
It is the combination of a ceasefire, a peacekeeping force, economic reconstruction and the threat of sanctions that can bring a political solution to the region –– and we will spare no efforts in making this happen.
In a country that has long resisted globalization, President Nicolas Sarkozy bluntly told France on Thursday to stop kidding itself and face up to it - but in a French way.
Calling the free market an illusion, Sarkozy said France should not be shy about having the government defend French companies and interests from foreign marauders. But he also signaled that he was not the French "dirigiste" of the past.
Outlining his own brand of Gaullism, the president vowed to make conditions more business-friendly at home to allow French companies to compete better in the world. In return, he asked them to have French interests at heart when they set prices, negotiated wages and made investment decisions.
"We will not obtain growth if we don't play the game of globalization collectively," Sarkozy told about 4,000 business executives at the annual conference of the country's biggest employers' federation, Medef.
"But let's not be naïve," Sarkozy went on to say. "Let's look at the world and ask ourselves the question: Should we be naïve to the point of being the only ones not to defend our interests when all the others are defending theirs?"
Sarkozy's comments came as the debate about the winners and losers of globalization was gathering pace in several countries, where governments face rising demands for protection from voters. The recent turmoil in credit markets has only intensified those calls.
Sarkozy promised to equip French business to compete better in world markets and vowed to go further in cutting payroll taxes and relaxing the 35-hour workweek - a piece of legislation he called "an immense economic mistake."
He also vowed to press ahead with changes to the labor code, easing onerous hiring and firing rules, and paving the way to an American-style "Small Business Act" that would earmark a share of public tenders for small and medium-sized companies.
In a speech that was as much aimed at voters and labor unions as the business community before him, the president said that globalization had changed the goal posts of economic policy - stripping the state of power in some areas, like raising taxes on jobs that could end up being moved abroad, while obliging it to act more forcefully in others.
One such area is industrial policy.
"I'm not afraid of industrial policy," Sarkozy said. "I will not leave our industry at the mercy of all sorts of dumping and all the speculators."
As if to illustrate his determination to create "national champions" in strategic sectors, he used his speech to press Suez, a private utility, to sell its water and waste business and merge its energy division with the state-owned natural gas company Gaz de France to create "a large European electricity and gas group in which the state would be the main shareholder."
Under Sarkozy's predecessor, the government announced a merger of the two companies to thwart a takeover bid from the Italian electricity company, Enel. But after 18 months, the deal has so far failed to materialize.
Vowing to take his battle for economic realpolitik to Brussels, Sarkozy said that Europe would not preserve its place in the global economy if it went the idealistic way of an ever freer market with strict competition rules and a ban on state aid for industry. In comments that are certain to irk the European Central Bank again, he repeated his call for a lower euro to bolster European exports.
"We are condemned if competition rules are tougher here than elsewhere, if it's the only region in the world where it's impossible to conduct industrial policy, trade policy or exchange rate policy," he said.
Sarkozy broke with tradition when he chose the campus of a business school and the audience of the country's top business executives to outline his economic program. France's political class has traditionally preferred to be seen with philosophers and intellectuals. But under Sarkozy, money and big business are no longer taboo.
The son of a Hungarian immigrant and, unlike most of his predecessors, not a graduate of France's elite Ecole Nationale d'Administration, Sarkozy counts numerous big bosses among his closest friends and unapologetically spends his holidays in their luxury villas or on their yachts. "There is no shame in success or money," he said during his election campaign.
On Thursday, Sarkozy moved with visible ease among executives, as if, one chief executive of a large French company remarked, "he was one of us."
Labor unions and leftist politicians, who have criticized Sarkozy's decision to give a high-profile speech on economic policy before a business federation, appeared to concur. "He is the president of the CAC 40," grumbled Jean-Luc Melanchon, a Socialist senator.
Thursday's announcements follow a first round of economic measures, passed in an extraordinary parliamentary session in the summer. Legislators voted last month to cut the maximum tax burden to 50 percent of personal income and scrapped taxes on overtime pay.
For millenniums, China hardly touched the mighty Mekong, content to let its raging headwaters flow unimpeded from the Tibetan plateau down through Laos, Burma, Thailand, Cambodia and Vietnam. But over the past few years, the emergent superpower has begun turning the world's 12th-longest river into a highway for regional commerce and a source of hydroelectric power. For many Indochinese entrepreneurs, increased China trade and investment has allowed a backward region to participate in their upstream neighbor's remarkable economic expansion. Southeast Asian governments hope China will share the electricity it will harness after a series of massive dams on the upper Mekong are completed in the nation's western Yunnan province. Two have already been built. At least six more are planned.
But for tens of millions of residents downstream, China's efforts to manage the Mekong also threaten their way of life. An astounding 17% of all fish caught in inland waters worldwide come from this generous river, while 90% of the basin's residents are subsistence farmers who largely depend on the Mekong's nutrient-rich waters to feed their fields. Yet Chinese dams, along with engineering projects to make the river navigable by larger vessels, have begun to ravage the river's ecology by blocking sediment and producing unnatural water flows that dissuade fish migration and spawning. The nonprofit Southeast Asian Rivers Network estimates that fish stocks on the Thai-Laos border have already declined by half because of Chinese activity. Farmers, too, complain that the once-predictable floods needed to nourish their paddies have been disrupted by the two existing Chinese dams — and the cavalcade of future hydropower projects will only make things worse. "You can't talk about the Mekong today without talking about China," says Carl Middleton, a Bangkok-based consultant for environmental watchdog International Rivers Network. "So much that's happening on the river, whether it's economic, social or environmental, can be linked to China's rise."
Snaking its way from the icy reaches of Tibet to tropical rice paddies near the South China Sea, the Mekong serves as the lifeblood for 70 million people in six different countries. The river's wetlands alone cover an area the size of Ireland, while its fish diversity is rivaled only by the Amazon. But even as many of the world's other majestic rivers — the Nile, the Yangtze, the Mississippi — were efficiently exploited for trade or hydropower, the 3,000-mile (4,800-km) Mekong has until recently largely escaped the imprint of the modern world. During the colonial era, treacherous rapids stymied expeditions hoping to uncover its upstream secrets, leaving the waterway for local fishermen and farmers. By the mid-1900s, when the West was forced to withdraw from Indochina, the Mekong had become a byword for the failure of modern military might against dogged resistance forces nourished by the river's gifts.
The Mekong is not so unyielding these days. In 2001, Chinese crews, brought in by Southeast Asian governments eager to increase traffic and trade, began blasting and dredging a stretch of the river running from Burma and Laos to Thailand, clearing away islands, reefs and rapids that once blocked the passage of ships. Since then, sleepy Southeast Asian river ports have morphed into boomtowns, with boats from China disgorging cheap electronics, fruits, vegetables and every kind of plastic gadget imaginable. River traffic runs both ways: in December 2006, the first shipment of refined oil chugged up the Mekong bound for energy-hungry China, opening up a potential alternative shipping route to avoid the pirate-infested Straits of Malacca through which roughly half of its imported oil now passes. And with China needing somewhere to park its ballooning foreign-exchange reserves, the riverfront capitals of Phnom Penh and Vientiane now gleam with Chinese-built roads, buildings and other infrastructure. The torrent of investment will likely grow even greater next year when Chinese construction workers finish building a 1,100-mile (1,800-km) Yunnan-Bangkok highway that parallels a section of the Mekong. "Chinese are natural businessmen," says Liu Jingchun, a Chinese boat captain who transports goods between Yunnan and northern Thailand. "For so many years, we shut ourselves off from doing business. Now that we're allowed to trade again, it's like a giant floodgate has opened."
China has found microscopic worms in wooden packaging from the United States and uncovered substandard U.S. vitamin pills and fish oil for children, Chinese media said on Friday in the latest volley of cross-border accusations.
China has highlighted several quality concerns with U.S. products in apparent response to recent complaints in Washington about the safety of Chinese exports ranging from toys to toothpaste.
The pine wood worms, or nematodes, were found in 13 sets of packaging in the manufacturing hub of Shenzhen, the China Daily said.
Harmful organisms were found in another 10 of 70 batches of wooden packaging sampled between mid-July and mid-August.
This meant the rate of sub-standard packaging from the United States was higher than that for the European Union, Japan, Korea or Canada, the newspaper said.
The labels on some of the wooden packaging were unclear, the report said, adding that that this suggested some exporters might have used fake documents.
Officials have destroyed the goods and urged tighter supervision of wooden U.S. packaging, the paper said.
The vitamin and mineral pills and children's fish oil were discovered in the eastern coastal province of Zhejiang, the China News Service said.
"The two failed to reach the nutritious levels promised on their labels," it said, citing the Zhejiang industrial and commercial department.
China recently destroyed a cargo of sub-standard frozen potato slices also shipped from the United States, and the quarantine bureau earlier this month highlighted a cargo of contaminated soybeans that arrived in February.
China has sent a notice to the World Health Organization defending its own food safety standards and said it was willing to cooperate globally to tackle the problem.
China's quality watchdog on Friday introduced what Xinhua news agency called a landmark recall system for unsafe food products and toys to improve product safety.
The regulations, following the introduction of recall system for defective cars in 2005, went into effect on Friday, the General Administration of Quality Supervision, Inspection, and Quarantine announced.
Xinhua did not give details.
U.K. lenders responsible for 12 percent of the nation's mortgages are tightening standards for loans on house purchases, withdrawing offers and raising the cost for borrowers with less than perfect credit.Next, the Financial Times noted in an earlier article how London property prices--which have been extraordinarily robust--may finally be felled by subprime. As the City of London-based financial services industry encounters tighter credit conditions, fat salaries, fees, and commissions emanating from elevated levels of financial activity may be endangered. In this manner, high-end demand for very pricey London prime addresses may fall:
Merrill Lynch & Co.'s Mortgages Plc unit said yesterday that it raised its interest rates. Northern Rock Plc, the Newcastle upon Tyne building society that had 8.4 percent of the market last year, and Residential Capital Corp.'s GMAC-RFC unit, with a 3.5 percent share, said they stopped some offers and lifted costs for others. Deutsche Bank AG did the same, while two lenders backed by Investec Plc have stopped all subprime loans.
``There are some lenders who have pulled their current product range and not announced any new ones,'' said Ray Boulger, senior technical manager at Charcol Ltd., Britain's biggest online mortgage broker. ``Others have put up rates until they get little or no business.''
The changes add to evidence that homeowners are finding it more costly and difficult to borrow in Britain after a collapse in the U.S. mortgage market dried up credit around the world. That may hurt house prices, which tripled in the last decade to an average 198,915 pounds ($404,000) because banks were allowing homebuyers to take on loans of up to five times their income.
``The same person trying to get a mortgage will find the situation more difficult now than three months ago,'' said Fionnuala Earley, chief economist at Nationwide Building Society, the U.K.'s fifth-biggest home lender. ``Some lenders will reassess how much they want to lend. You're not going to stretch yourself for volume in a market you think is a little risky.''
U.K. consumers shoulder a record 1.35 trillion pounds in debt, the highest per capita among the Group of Seven nations. Mortgage lending hit a record in July, rising 13 percent over the year even as the Bank of England raised its benchmark interest rate to the highest in six years.
Nationwide Building Society said today that house price inflation eased to 9.6 percent from a year ago in August from 9.9 percent in July. Lenders approved 115,000 loans for house purchase last month, the same as in June, the central bank said in London today.
In the U.K., so-called subprime lending to homebuyers with a shaky credit history accounts for about 6 percent of the market, half the level of the U.S., according to the London-based Council of Mortgage Lenders.
``Subprime lending has been of a higher quality in the U.K.,'' said Kelvin Davidson, a property economist at Capital Economics Ltd., a London-based consultant. ``But the problems don't really emerge until the market starts to turn down.''
The Financial Services Authority, Britain's securities regulator, last month said it had studied 485 subprime loans and found that more than half were awarded to customers who were not required to provide evidence of their income. And with almost half the loans, the brokers involved failed to adequately assess the ability of borrowers to pay.
John McFall, a member of Parliament for the ruling Labour Party, said he has been pressing Bank of England Governor Mervyn King to study the risk subprime borrowing has on the economy. On Aug. 8, King said ``I don't think there's much evidence of major damage to loan performance in other markets'' outside the U.S.
``We're walking blind,'' McFall said in an interview. ``I don't think there's any systemic risk, but there will be pain.''
DB Mortgages, a unit of Frankfurt-based Deutsche Bank, said on Aug. 22 that had it raised interest rates by around 1 percentage point. The firm also said it wouldn't be offering loans to first-time buyers.
``We're reacting to market conditions,'' Peter Beaumont, deputy chief executive of Mortgages Plc, said in an interview on Aug. 29. The company demanded bigger deposits from borrowers and raised its interest rates.
Infinity Mortgages, funded by Investec Plc, and Unity Homeloans, which Investec set up in 2006, said they would not take on new business. Unity blamed ``adverse movements in the capital markets'' in an Aug. 10 statement. Infinity cited the cost of borrowing and the difficulty of selling on debt securities.
``We're the victims of the global situation,'' said Simon Biddle, head of marketing for Infinity. ``The spreads that are emerging in securities are absolutely huge.''
Northern Rock said on Aug. 23 that it raised some rates and withdrew some of its subprime offers. Ron Stout, a spokesman for the company, said the changes weren't unusual.
Edinburgh-based HBOS Plc, the nation's biggest mortgage lender, hasn't changed its offers lately, said spokesman Mark Hemingway.
The lenders are concerned about increasing default rates in the U.K. A record 30,075 people in England and Wales declared themselves bankrupt in the first quarter, up 24 percent from a year ago, according to government figures.
So far, the lending squeeze hasn't slowed the broader market. In June, 102,000 loans were made for home purchase, the most since November, according to the CML. The lobby group doesn't identify how many were subprime loans.
Even so, higher costs to some borrowers will further inch up the cost of servicing a mortgage, which already is at its highest since 1992, according to Citigroup Inc.
``The longer the situation persists, the more likely it is that we do see the credit crunch feeding through to new borrowers,'' said George Buckley, chief U.K. economist at Deutsche Bank in London.
Fears are growing that the fallout from the US subprime mortgage meltdown will hit house prices in central London, one of the world's hottest high-end property markets.
Prices for "prime" homes in the most expensive streets of the capital have risen about 50 per cent in the past two years as a financial services boom has enriched bankers and other professionals in the City of London.
But the global market turmoil unleashed by the US subprime collapse is threatening activity levels at banks in the City, and London property agents are warning that high-end residential prices could suffer as result.
"If there is a downturn in City profits and employment levels, you couldn't be surprised if central London prices fall," said Liam Bailey, head of research at Knight Frank, the property consultancy.
The importance of the City to the economy was underlined as official figures showed business services contributed over half the economic growth in the second quarter of the year.
Mr Bailey said there had long been a correlation between the health of the City and London residential prices. The prime London market suffered badly in 2002 and 2003 after prices of technology and telecommunications shares crashed.
John Young of Humberts, a London estate agent, said the recent "uneasiness" in the City had prompted several deals to fall through. Tracy Kellett, founder of BDI Home Finders in London, a buying agent, said some sellers were dropping prices.
David Forbes, a director of agents Savills in its posh Knightsbridge office, said it was too early to call the market.
Charles Ellingworth of Property Vision, an adviser to home buyers, said City "tremors" had a "huge impact" on buyers' confidence. "We are not seeing panic yet but the closest comparison we have is that this feels remarkably like August 1998."
But in a word of well-deserved caution, given the strength of the rebound after the 1998 financial crisis, he added: "For three months, we didn't do a deal then suddenly in November it all came back to life and we had the two busiest months ever."
And here is more of a backgrounder to the story. A issue being raised here is why the US is acting now when it was common knowledge that such activities were commonplace before:
The US justice department and other authorities have stepped up investigations into several large European banks for violating US sanctions against Iran, Libya, Cuba and Sudan.
One person familiar with the probes said some banks had started to discuss settlements with the authorities and could agree to financial penalties by the end of the year.
A number of the banks, whose names have not been disclosed, came under investigation by authorities, including the Treasury, when they alerted the government to potential violations after a landmark money laundering settlement by ABN Amro in 2005, according to people familiar with the matter.
The Dutch bank was fined $80m by the Treasury’s Office of Foreign Assets Control, state regulators and the Federal Reserve after it emerged that its US offices had processed wire transfers that originated from Bank Melli Iran and engaged in transfers involving Libya.
The payments breached anti-money laundering compliance rules and requirements that banks report suspicious activity.
Some payments were transferred through the US after ABN obscured identifying references. After its $80m civil fine, ABN Amro said in April it was putting aside €365m to resolve a separate criminal investigation by the justice department into its dollar-clearing activities.
The Clearing House and the Wolfsberg Group, two international banking associations whose members include HSBC, UBS and Credit Suisse, have endorsed changes that would provide banks and their counterparts with more information about those conducting wire transfers.
US officials, including under-secretary Stuart Levey at the Treasury, applauded the banks’ initiative but it is thought unlikely to deter authorities from addressing previous violations.
When regulators in 2005 slapped ABN Amro with an $80m (€59m, £40m) penalty for violations of US sanctions against Libya and Iran, it sent seismic waves through the international banking system.
The reverberations are still being felt today.
People close to several European banks say that US regulators and criminal investigators have broadened the scope of a probe that began with the Dutch bank.
They are now examining whether a handful of banks similarly violated laws by processing US dollar payments through US counterparts for clients in Iran, Cuba, Libya and Sudan, countries that – with the exception of Libya after 2004 – are still subject to US sanctions programmes.
Some legal experts say the case against ABN Amro, which promised in April to set aside hundreds of millions of euros to resolve a criminal investigation by the US justice department into its US dollar clearing practices, clarified for the first time the Bush administration’s position and interpretation of sanctions rules and their application to the financial services industry.
Namely, that US banks and individuals are not allowed to facilitate banking activity abroad in which they could not engage directly.
“The ABN Amro case is a very high-profile indication of the intention of the Office of Foreign Assets Control [at the US Treasury] and other agencies to enforce that position.
“As a result, it is a wake-up call for the financial community with respect to the handling of wire transfers by foreign banks that ultimately touch on US-embargoed states,” says Wynn Segall, a partner at law firm Akin Gump in Washington.
Another Washington attorney said it remained to be seen whether the investigations that were under way would result in penalties as large as the one facing ABN Amro, or whether they were part of a broader strategy by regulators to put pressure on European banks to cut ties with Iran.
The US Treasury has warned more than 40 banks across the world that it would follow a strict interpretation of US and United Nations restrictions on doing business with Tehran as part of its campaign to persuade financial institutions to break ties with Iran.
Some people familiar with the investigations, who asked not to be named, say that the looming possibility of financial penalties raises questions about the authority of US regulators to penalise banks for conduct that went unchecked for years.
“This is an issue where the legal lines are not clear. It is the kind of thing that banks around the world engaged in.
“The bottom line is, name a major bank in Europe that didn’t do dollar payments for Iran or Sudan. A large number of them did it for Cuba – and right there is the issue,” said one person familiar with the matter.
But if the ABN Amro case represents a model for the kinds of cases that US authorities may be bringing against other banks in the future, as some legal experts believe, then the US government would have a strong case to argue that the violations under scrutiny were not just routine technical blunders.
In the case of the Dutch bank, regulators found that one of ABN Amro’s foreign branches was able to develop and implement “special procedures” for certain fund transfers and other operations “designed and used” to circumvent compliance systems established to comply with US laws.
James Freis, director of the Financial Crimes Enforcement Network (FinCen), a division of the Treasury that investigates money laundering, said last month that “myths” about big penalties for minor lapses in banking requirements should be dispelled and that federal financial regulators were making “great efforts” to eliminate uncertainty about what they expect in a “solid, risk-based”, anti-money laundering programme.
Banks seeking to come to grips with the potential regulatory issues they face for previous activity are, in the meantime, moving ahead with voluntary changes to international wire transfer practices.
Two international banking associations in April said they anticipated that an “enhanced system” of message formats would be developed that would “protect the integrity” and “enhance the transparency” of international wire transfers.
While I'm glad to know that Singapore is getting ready for the nearly inevitable rise in sea levels, I'm also saddened that there are so many other countries that do not have the foresight of a Lee Kuan Yew, the educational research facilities of Singapore, or its deep pockets in dealing with the matter. Make no mistake: there are a lot of vulnerable countries that have not given this matter much thought and are even less prepared to meet its challenges [sigh]. Let's go about things in order. We begin with this snippet which shows the absolutely astounding amount of knowledge Lee has about global warming and other, ah, burning issues. Petro BushTM he ain't:
And without further ado, the article on how Singapore is planning for sea level rises:
Lee Kuan Yew: ...You in America could ignore large parts of the world. Why do you worry about what's happening to the Aborigines of Australia, or natives in the Congo or the Amerindians in South America. They do not concern you.
But this interconnected world is not going to become disconnected. Technology has brought this about. I do not see that technology disappearing. I think the problems will become more acute the other way, overpopulation, earth warming and displacement of millions, maybe billions of people, that is the greater danger.
IHT: What about the risks to Singapore, what are the risks to Singapore in those scenarios?
Lee Kuan Yew: Oh! We are already in consultations with Delft in Holland to learn how we can build dikes!
IHT: Is that right?
Lee Kuan Yew: Oh, yes! Let's start thinking about it now.
IHT: Are you serious?
Lee Kuan Yew: We are. We are in consultations with them.
It scares me because many world leaders have not woken up to the peril that their populations are in. This melting ice cap. I expected great consternation! What would happen to this earth? But, no. Has it triggered off emergency meetings to do something about this?
Earth warming, the glaciers melting away? Never mind the Swiss Alps and skiing resorts having to manufacture snow. When the glaciers in the Himalayas and Tibet melt away, the Ganges, the Yangtze, the Irrawaddy, the Mekong, may dry up, except for rainy seasons. What will happen to the hundreds of millions? Where do they go? Where can they go? This will be a very serious problem.
Surrounded by sea and almost pancake flat, Singapore is without doubt vulnerable to the rising sea levels many scientists predict global warming will cause.
While topographical maps are considered a military secret here, anyone flying into Singapore can easily see that the island is elevation-challenged. Its highest point is a jungle-clad hill rising 165 meters, or 540 feet, above sea level. Most of the business-end of Singapore - its airport, its business district and, of course, its busy container ports, lie less than two meters above sea level.
Faced with the prospect of a long, slow submersion into the very waters that serve as the lifeblood of this maritime trading hub, Singapore has reached out to the world's greatest experts on the subject of battling back the sea - the Dutch.
"We are already in consultations with Delft in Holland to learn how we can build dikes," said Lee Kuan Yew, the former prime minister, in an interview last Friday.
Delft Hydraulics, a research institute and consulting firm specializing in water management issues in the canalled Dutch city of Delft, is already helping Singapore convert its biggest river and marina into a huge downtown reservoir. Now it is also helping the city-state look into just what it can do to defend its roughly 200-kilometer, or 125-mile, coastline.
"We feel we have strong reasons to be concerned, but no reasons for panic," said Vladan Babovic, director of the Singapore Delft Water Alliance, a $43 million research center opened in February between Delft, the National University of Singapore and the country's water management agency, PUB Singapore. "We will be able to resolve these challenges," he said.
Singapore got a preview of just what havoc rising sea levels could cause back in 1974 when a rare astronomical event caused the tides to rise 3.9 meters, more than double the usual level.
"It eroded the coast very badly," said Wong Poh Poh, an associate professor specializing in beach geography at the National University of Singapore, who studied the event. Areas along the Singapore River were inundated, as were parts of the airport and a coastal public park built on reclaimed land.
Wong later discovered that during such periods of elevated sea levels, the variations between high and low tide are accentuated, putting the country's reservoirs, many of which lie adjacent to the coast, at risk. Singapore officials later used one of Wong's reports to draw the attention of the United Nations to the problems associated with global warming.
Still, no one is certain just how much of Singapore is vulnerable to the problem. The Singapore Delft Water Alliance and researchers at the national university's Tropical Marine Science Institute began a study into the potential effects of climate change on Singapore in March. But the leader of that study, Liong Shie-Yui, said that the group had yet to produce any noteworthy findings.
Assessing the risk is complicated by the fact that no one knows for sure just how much the sea may rise or how fast. Estimates vary from as little as 60 centimeters, or about 24 inches, to as much as 6 meters. And sea levels are not consistent from place to place: atmospheric pressure, wind and currents can cause variations.
Ultimately, Singapore is unlikely to build dikes per se, but rather concrete seawalls, Babovic said. Dikes are technically made of earth. After digging up and quarrying much of its own interior to reclaim new land that has increased Singapore's area by between 15 percent and 20 percent, Singapore now relies on imported landfill and sand for its reclamation efforts and to produce cement for new buildings.
Many scientists believe that dikes are no longer the most environmentally sensitive solution. Wong recommended docks and seawalls back in the early 1990s but now said that more natural structures might work better.
Babovic said that scientists were studying ways to incorporate mangroves and sea grasses into the design of dikes and seawalls to improve their environmental impact and make them look better, too.
"You need more imaginative solutions," said Wong. "What we don't want is to put something there that will constrain future use."
According to today's Wall Street Journal, however, the dam is falling short of these goals. On top of that, it is adding all sorts of additional problems that are mostly of the environmental variety. I always was critical of the cultural and social damage that the dam would cause, but it turns out there are environmental issues which may render those concerns as secondary, hard as it is to believe. Siltation, landslides, water pollution...you name a damming (pun intended) issue, and the Three Gorges has it:
China's vaunted engineering marvel, the Three Gorges Dam, drew fierce criticism during its construction for uprooting more than a million people and manhandling the Yangtze River basin. Now, a year after completion, the project has new problems -- including landslides, water pollution and suggestions that the dam could contribute to the very flooding it was built to prevent.
Geologists say the massive weight of water behind the Three Gorges Dam has begun to erode the Yangtze's steep shores at several spots. That, along with frequent fluctuations in water levels, has triggered a series of landslides and weakened the ground under places like Miaohe, a village about 10 miles up the reservoir from the dam. Local officials worry that a whole mountainside here could collapse into the water, killing residents and threatening a vital shipping lane.
There are additional dangers. Chinese scientists say that as the dam blocks silt heading downstream, the Yangtze River estuary region, which includes Shanghai, is shrinking and sea water is coming further inland. A report this spring by the World Wildlife Federation [sic] said water flowing through the dam is now moving faster, damaging downriver dikes. The urbanization that accompanied the dam's construction led to more raw sewage and fertilizer runoff, which collects in the reservoir rather than flushing downstream.
The emerging issues at Three Gorges illustrate this rapidly industrializing country's efforts to control its environment, and how the attempts to overcome them can worsen the problem. In other areas of the world, dam building has resulted in landslides or earthquakes set off by the weight of water in reservoirs. Here at the world's largest hydroelectric project, a center of China's population and economy, the consequences could be magnified...
China's media is starting to cover problems at Three Gorges Dam and its 400-miles-long reservoir. The government hasn't spoken publicly about issues here, but it has quietly rolled out a warning system for landslides and is supporting research to map out at-risk regions. Officials are pouring money into water-treatment plants and reinforcing about 1,400 miles of riverbanks.
"We thought of all the possible issues," says environmental scientist Weng Lida, the former head of the Yangtze River Water Resources Protection Commission, a government agency tasked with protecting the river basin's water and environment. He is now secretary general of the Yangtze River Forum, a coalition of the Chinese government and nongovernmental organizations that share research on the region's environment. "But the problems are all more serious than we expected..."
The changes can be seen here in Miaohe, where villagers have grown oranges from gnarled trees and farmed the area's steeply terraced rice paddies for generations. Miaohe's 100 or so residents narrowly avoided the mass relocations that accompanied the dam's construction, when some 1.3 million people moved from their homes to make way for the reservoir.
This spring, villagers noticed a crack some 600 feet long and barely a half-inch thick zigzagging across their paddies. Not long afterward, dam officials lowered reservoir levels to prepare for the summer flooding season.
After early May rains raised reservoir levels again, there were four landslides in five days not far from Miaohe village. Villagers say they heard timbers in their houses begin to split. The government told them to evacuate.
Officials in Zigui City, the county seat, are facing a new wave of relocations. Some 100,000 people in the county moved to make way for the reservoir. Now officials are concerned they'll have to relocate more. "The changes have come faster than our plans," said Cui Shaofeng, an official from the Zigui County resettlement office.
The 4,000-mile long Yangtze is the world's third-longest river, racing down from Tibetan glaciers, slicing massive valleys through the middle of China and passing fertile plains before its brown waters meet the sea. On the way, the river passes the Three Gorges, a series of canyons that for centuries plagued sailors with swift currents and hidden rocks. Floods were a constant threat, claiming 300,000 victims, by some estimates, in the last century alone.
China's leaders long dreamed of damming the Yangtze in part to harness its power, but primarily to prevent catastrophic flooding. Modern China's founding father, Sun Yat-sen, proposed a dam in 1919. Mao Zedong, who believed nature could be shaped to man's purpose, wrote a poem about turning the treacherous Three Gorges into a navigable lake...
Construction officially began in 1994. Controversy continued. Responding to pressure from human-rights groups, the U.S. government and the World Bank pulled support from the project. In an open letter in 2000, leading engineers in China, including some who had worked on the feasibility study, protested a decision to fill the reservoir faster than originally planned.
The first trouble came in June 2003, two weeks after the Yangtze River was impounded and the reservoir began to fill. While water levels rose, passing 300 feet and approaching 450 feet, the valley's slopes started eroding under the pressure of the water.
On July 14, a mountain on a tributary of the Three Gorges gave way, shearing a tongue of land about two-thirds of a mile wide and long and more than 60 feet thick. Thirteen farmers were swept to their deaths in the mud and debris. The wedge hit the water, sending a two-story-tall wave crashing over 20 boats, drowning 11 fishermen. Officials blamed the landslide on heavy rainfall. Geologists say a sudden change in water levels loosened rocks along the riverbanks.
With a final cost of at least $22 billion, the 600-foot-tall dam was finished in May 2006. Once it is fully operational later this year, it will contain five trillion gallons of water, equivalent to one-fifth of the fresh water consumed each year in the U.S. It will produce more than 18,000 megawatts of electricity, nearly 10 times the capacity of Hoover Dam.
Mr. Weng, the environmental scientist, believes the dam was necessary to stop floods. His biggest concern now is the worsening quality of the reservoir's water. Phosphorus and nitrogen levels from industrial and fertilizer runoff have risen 10 times above levels a decade ago, according to the WWF report, which he co-edited.
The reservoir is filling with sewage as well. Waste-water discharge has soared in the Yangtze basin, more than doubling from 2000 to 2005, the WWF report says. The basin is home to some 160 million people, including 30 million in the municipality of Chongqing, 400 miles upstream from the dam. In the 10 years ending in 2005, the Yangtze basin economy grew 12.6% a year on average -- a percentage point faster than the rest of the nation -- as it has switched from agriculture to industry.
Scientists and government officials say many sewage plants were built to process waste before it hits the reservoir, but that some aren't connected to city drains. Zhou Wei, vice director of the department of reservoir management at the government's Three Gorges Project Construction Committee, acknowledges that sewage levels in the reservoir appear to be increasing. He says the government has given additional funds to make sure plants are running full-time.
From the beginning, engineers were also concerned about sedimentation. The Yangtze carries some 500 million metric tons of silt into the gorges each year. Without a way to release most of this mud, the reservoir would silt up and the dam could breach or collapse. Government engineers created 23 sluice gates at the bottom of the dam to release turbid water during flood season, and they estimate the system will keep the reservoir at roughly 90% or more of its capacity for nearly a century. Some critics believe sedimentation is growing at a faster rate, which could eventually make the dam unable to contain a flood crest...
There are also concerns about whether the dam will control floods. Weeks of downpours in July created the biggest surges on the upper Yangtze since 1998, when flooding on the undammed river killed thousands downstream. Officials announced on Aug. 1 that the July crest passed through the dam without incident.
Critics say that while the dam can handle surges, it may contribute to downstream flooding for an unforeseen reason. Past the narrow gorges where it enters central China's broad plains, the river traditionally slowed, and in some places centuries of sedimentation raised the riverbed above the surrounding countryside and is held back by dikes, as in New Orleans. Water released by Three Gorges runs faster, the WWF says, because the dam traps most of the silt. Lightened of its muddy load, the water courses out with more force and threatens to gouge out these dikes.
Geologists, meanwhile, are focusing on landslides. The Three Gorges have a base of limestone but are layered in places with sandstone, shale and mudstone -- softer materials that are more likely to collapse. Some areas were reinforced before the reservoir was filled. But as dam officials raise and lower water levels in anticipation of floods, the soaking and huge pressure changes leave banks weakened.
A team of scientists at the Imperial College London said earlier this year that slope instability is the gorges' "most widespread natural hazard." Writing in the Quarterly Journal of Engineering Geology and Hydrogeology, published by the Geological Society of London, they warned the problem is likely to get worse.
One of the authors looked at satellite readings of Zigui, Wushan and Badong counties, with a combined population of more than a million people. Geologist Ioannis Fourniadis of Imperial College London estimated that 3% of the counties' slopes are actively falling and 7% are unstable for activities such as road building. Another 15% were mostly stable. The rest were solid limestone, which he says pose extremely low risk.
A spokesman for China's Ministry of Land Resources blames this year's high incidence of landslides on heavy rainfalls since spring. He says the early-warning system has detected some major slides and that the government is training local people to recognize landslide warning signs.
Less than a mile from Miaohe, where a gravel road that provides sole access to the village passes through a muddy tunnel, the villagers have set up temporary housing. Inside the tunnel, they camp in plastic lean-tos. Nearby, the local government is clearing an area for the refugees to build new homes.
The government is providing money for homes, but the villagers say it isn't enough. The farmers will be able to grow rice, oranges and tea here, but they complain that the land isn't good. The local government is providing families a dowry for their daughters, to encourage them to marry out.
"This all started happening right after they began damming the river," says Han Qingxi, 52 years old, pausing from rebuilding his simple stone home. Nearby, backhoes level the mountainside. "They say it's safer here," he says.
- If even the Americans themselves can't figure out how widespread and extensive the fallout will be in the States, what more the rest of the world?
- Who believes rating agencies anymore, anyway? Aren't these the same folks who give debtlodocus americanus a triple-A rating for its sovereign debt?
- Don't we already have a Bank of International Settlements (BIS) doing some oversight?
- Haven't the Americans already signed up to Basel II regulations on banking supervision? Why weren't provisions concerning all these newfangled financial instruments given more consideration? We can't go back to the drawing board again...
Politicians, regulators and financial specialists outside the United States are seeking a role in oversight of American markets, banks and rating agencies in the wake of recent problems related to subprime mortgages.
Their argument is simple: The United States is exporting financial products, but losses to investors in other countries suggest that American regulators are not properly monitoring the products or alerting investors to the risks.
"We need an international approach, and the United States needs to be part of it," said Peter Bofinger, a member of the German government's economics advisory board and a professor at the University of Würzburg.
While regulators in the United States have not been receptive to the idea in the past, analysts said that Europe and Asia have more leverage this time around. Washington might have to yield if it wants to succeed in imposing bilateral regulations on state-owned investment funds from emerging economies.
"America depends on the rest of the world to finance its debt," Bofinger said. "If our institutions stopped buying their financial products, it would hurt."
Banks and investment funds from China to France were recently hit with heavy losses after buying mortgage-related securities and complex financial products originating from the United States. In many cases, investors were caught by surprise because American rating agencies gave the products top ratings, leading buyers to believe there was little risk. International investors are also asking why American banks were allowed to give mortgages to home buyers who could not repay them.
"In a globalized economy with hedge funds, leveraged buyouts and all these investment funds, we have to ask the question about more transparency," said Claude Bébéar, the chairman of the supervisory board of AXA, one of the world's largest insurers.
Half a dozen U.S. banking and financial regulators - including the Securities and Exchange Commission and the Federal Reserve Board - would not comment. Several mentioned, however, that they were not the sole regulators of the subprime market.
In Europe, the credit crisis appears to have emboldened those who have pushed for stricter international rules for some time.
The German government was rebuffed by Washington and London earlier when it pushed for an international code of conduct for hedge funds. Now some economic advisers to the German government are going further, suggesting that rating agencies should be nationalized, that large-scale loans be registered publicly and that minimum standards be developed for complex debt securities.
The head of the French Council of Economic Analysis, which advises the prime minister, said hedge funds should be subject to stricter disclosure rules about their risk exposure.
Christian de Boissieu, president of the group and a member of the Committee for Credit and Investment Institutions, which helps regulate the French banking sector, is also calling for a global register of all hedge funds. In addition, he said, complex securities should be scrutinized before being authorized for banking portfolios.
President Nicolas Sarkozy of France, who has vowed to "moralize financial capitalism" has asked his finance minister, Christine Lagarde, to prepare a proposal for stricter disclosure rules on market participants before a meeting of the Group of 7 countries' finance ministers in October.
On Monday, in a foreign policy speech, Sarkozy called again for an enhanced global rule book to avoid financial crises.
Such crises could recur, "if the leaders of major countries fail to take resolute concerted action to foster transparency and regulation of international markets," Sarkozy said.
The Chinese central bank said Tuesday that it was moving to standardize information disclosure of all asset-backed securities as it expands its own market for these financial instruments. Information about loans, terms and borrowers will need to be included in any new securities that are introduced in China, it said.
The United States and Britain are the genesis of the bulk of the world's sophisticated financial products, like the ones that broke down recently, in part because Wall Street banks have a big presence in both countries.
"At the heart of the issue is that the largest financial institutions continue to innovate and create ever more sophisticated products," said Chris Rexworthy, director of enhanced regulatory services at IMS Consulting, a London compliance consulting firm, and a former regulator with the British Financial Services Authority.
Regulators around the world talk about the importance of stress-testing, Rexworthy said, but the recent developments create concerns that "institutions are either not investing enough effort in this, getting it wrong, or just producing things too complex for their risk-assessment models to cope with," he said. "Greater cooperation on the international stage between regulators is undoubtedly one of the things we need to see more of."
U.S. regulators are aware of the problem. American banking and financial services regulators conducted a series of surveys and reviews dating back to 2005 that found that credit standards had loosened for home loans, and that borrowers in some cases did not understand or qualify for the loans they were given.
Some financial institutions are managing the risk from nontraditional mortgage loans by following more prudent underwriting, the U.S. Federal Deposit Insurance Corporation said in September 2006, while some are "spreading the risk of these products to investors."
Some American regulators have been pushing for more international cooperation in general. The Securities and Exchange Commission has been discussing greater hedge fund oversight in recent months, and it signed several cooperation agreements with regulators from China to Germany in the past 18 months.
The commission is a "very active member" of the International Organization of Securities Commissions, the global body that brings together all securities regulators, said Andrew Larcos, the international group's public affairs officer. "They do understand the need for closer international cooperation." Still, he added, because the subprime mortgage loans that kicked off this current crisis were primarily from the United States, the situation "obviously raises questions about how that market is regulated."
In the United States, much of the blame is being focused on rating agencies, which are paid by banks for rating products, and who sometimes attached investment-grade ratings to securities that turned out to be less so.
Joseph Mason, a finance professor at Drexel University in Philadelphia, and Josh Rosner, the managing director of the research firm Graham Fisher, have pushed for more oversight of rating agencies.
"It's not just the U.S. regulators that failed, though they did fail," Rosner said. International banking regulators have "thrown the keys to the rating agencies," which have been left in charge of the safety and soundness of bank capital, insurance and pension money.
In Australia, where investors have embraced financial products like derivatives and swaps, several hedge funds were hard hit by exposure to subprime loans, and analysts said they expected it would be months before the extent of the problem is seen.
As geographical boundaries are broken down, "a problem in one location is a problem everywhere," said Dick Bryan, a professor of economics at the University of Sydney. In the aftermath of a credit crunch, "there is the need to challenge the sovereignty of national regulators - why should the rules of lending in the U.S. be left to U.S. regulators when the consequences go everywhere?"
Asian nations were pushing for some regional cooperation even before the credit crisis, as cross-border investing and their equity markets have boomed. The South Korean market regulator, the Financial Supervisory Committee, has been particularly vocal on the issue.
"Regulators and policy makers in the region are quietly looking at the unfolding developments and asking many questions to themselves about what's happening and what should be done," said Douglas Kim, a spokesman for the South Korea regulator. "Few would doubt that more policy cooperation and coordination are in the region's interest even in times of market calm," he said.
In general, Washington's reaction has been that it wants "no form of oversight," said Kenneth Rogoff, an economics professor at Harvard and a former chief economist of the International Monetary Fund. "We're talking about America's most dynamic export industry."
Police in China's capital said Tuesday they will start patrolling the Web using animated beat officers that pop up on a user's browser and walk, bike or drive across the screen warning them to stay away from illegal Internet content.
Starting Sept. 1, the cartoon alerts will appear every half hour on 13 of China's top portals, including Sohu and Sina, and by the end of the year will appear on all Web sites registered with Beijing servers, the Beijing Public Security Ministry said in a statement.
China stringently polices the Internet for material and content that the ruling Communist Party finds politically or morally threatening. Despite the controls, nudity, profanity, illegal gambling and pirated music, books and film have proliferated on Chinese Internet servers.
The animated police appeared designed to startle Web surfers and remind them that authorities closely monitor Web activity. However, the statement did not say whether there were plans to boost monitoring further.
The male and female cartoon officers, designed for the ministry by Sohu, will offer a text warning to surfers to abide by the law and tips on Internet security as they move across the screen in a virtual car, motorcycle or on foot, it said.
If Internet users need police help they can click on the cartoon images and will be redirected to the authority's Web site, it said.
"We will continue to promote new images of the virtual police and update our Internet security tips in an effort to make the image of the virtual police more user friendly and more in tune with how web surfers use the Internet," it said.
China has the world's second-largest population of Internet users, with 137 million people online, and is on track to surpass the United States as the largest online population in two years.
The government routinely blocks surfers from accessing overseas sites and closes down domestic Web sites deemed obscene or subversive.
In time, though, I definitely see Chinese automakers coming out with more, er, distinctive models to appeal to the home market. As China already is the third largest maker of automobiles in the world, the twin pressures of legal challenges and the marketplace will probably ensure that these sorts of automotive fakeries become less common (or one would hope). From the FT:
German chancellor Angela Merkel weighed in on the issue on Tuesday, describing plagiarism and copyright infringement in China as “a big problem” in a speech in Beijing.
DaimlerChrysler said it would consider unspecified legal action if Chinese carmaker Shuanghuan Automobile showed the Noble, which it says closely resembles its Smart Fortwo minicar, at next month’s Frankfurt motor show.
“We take intellectual property protection very seriously,” a DaimlerChrysler spokesman said. “We decided to reserve the right to pursue legal action.”
BMW said it was considering legal action against the importer of another Shuanghuan vehicle – the CEO – which it claims closely resembles a previous version of its X5 sports utility vehicle which was discontinued in 2006.
Shuanghuan and China Automobile Deutschland, the importer, could not be reached for comment on Tuesday.
“If suddenly a car turns up that looks like a Smart but isn’t one, but rather a copy produced by not entirely legal means, then that’s not good,” Ms Merkel said.
DaimlerChrysler, which following its sale of Chrysler is due to change its name to Daimler in October, has not elaborated on its legal plans, but the company is understood to have contacted Shuanghuan about the issue.
The German company last year succeeded in stopping another Chinese producer, CMEC from bringing to market another vehicle that closely resembled the Smart.
Global carmakers, including Germany’s, are seeking to entrench their positions in China – now the world’s second-largest vehicle market after the US – while seeking to protect and enforce their property rights.
Now, it turns out that the insurance industry is also not too happy about the obstacles being placed by China in the way of those who want to provide property and casualty insurance there. Despite the plethora of China trade cases already out there, I believe that financial services may yet become another area of contestation between the US and China. From the Financial Times:
When China was negotiating to join the World Trade Organisation in 2001, a crucial sticking point was whether it would open the country's insurance sector to foreign companies.
Beijing agreed to allow foreign property and casualty insurers to operate wholly owned domestic units. Foreign life insurers would be allowed to hold up to 49 per cent of Chinese joint ventures by the end of 2004.
Many predicted that the major international insurers, with decades of experience and myriad sophisticated products, would rapidlycapture market share from the lumbering state-owned underwriters.
But three years after the market's opening, the fearsome foreigners have gained little ground even though large international insurers have dedicated enormous energy and resources to this tantalising market.
In the first half of the year, foreign-owned P&C insurers' market share was just 1.15 per cent, down from1.24 per cent in the same period a year earlier and even from the 1.17 per cent share notched up in 2005.
Foreign life assurers fared slightly better. Their market share reached 5.79 per cent in the first half, up from4.82 per cent in the same period of 2006. "This could reflect the fact that life insurance is more attractive to insurance companies than property and casualty, so the foreigners are putting less resources into that sector," says Dorris Chen, BNP Paribas analyst.
Foreign life assurers, however, captured 12.77 per cent of the market in the first half of 2005. That was thanks to a single Rmb20bn ($2.6bn) policy sold by Generali China Life Insurance, a joint venture between Italy'sAssicurazioni Generali and the China National Petroleum Corp.
That policy - an annuity, retirement and pension that covered CNPC's 390,000 employees - made up the bulk of the Rmb32.4bn in total premium income earned by foreign insurers in China in 2005. No such mega-policies have been issued by foreign insurers since.
The only foreign insurer to make a consistent strong showing is American International Group. Its wholly owned American International Assurance unit got its business licence back in 1992 through practised lobbying and captured 1.6 per cent of the overall life assurance market on its own in the first half of this year.
Though foreign groups are not gaining ground, China's insurance market is growing at an annual rate of about20 per cent and will probably continue its rapid expansion thanks to the dismantling of the country's social infrastructure and the lack of a replacement safety net.
Foreign insurers put their slow progress down in part to continuing regulatorybarriers. Although the national market was formally opened, insurers have found that they must apply separately in every local market in which they want to operate. This process is time-consuming, opaque and fraught with red tape.
No international insurer wants to be the one to accuse the government of not meeting its WTO commitments although many complain in private that Beijing has not acted in the spirit of the WTO's mantra of equal treatment for all market participants.
In the country's biggest cities, where international players have had more success at getting approval for branches, analysts say the they have carved out a relatively significant market share, though figures arenot available.
Still the foreigners have been constrained by a limited supply of agents and other industry professionals. Many prefer to work for domestic companies because of perceived better career opportunities. Consumers have also shown limited enthusiasm for foreign groups' policies, which, though aggressively priced, are often more expensive than those issued by local companies.
Global insurers, such as HSBC and Axa Winterthur, that have chosen to invest directly in existing Chinese insurers have been more successful than those striking out on their own or through newly formed joint ventures. Like their counterparts in the banking sector, they have found it more profitable to tie their fortunes to state-owned partners than to fight them.
Draft industry regulations released last week restated the limit on foreign ownership in local insurers as20 per cent for each individual investor and 25 per cent for all foreign shareholders combined, the same limits that apply in the banking sector.
Investors can still exceed those limits, but in practice are likely to continue to find expansion difficult because they will not be considered local.
The regulations, most of which are aimed at excluding short-term foreign investors, will also introduce a $2bn minimum asset requirement and make offshore investors hold their stakes for at least three years. Investors will also have to have top ratings from an international credit rating agency, a barrier that may screen out some institutional investors.
On the other hand, the draft regulations would allow banks to invest in domestic insurance companies, a long-expected move that fits with Beijing'splan to foster home-grown full-service financial institutions.
But companies such as China Life, which took in Rmb121bn, or 47 per cent, of total life assurance premiums in the first half of this year, are not going to besatisfied with domination of the domestic market. They are already investing large sums in offshore securitiesmarkets.
With Beijing's wholehearted support, these behemoths may turn the tables on the foreign insurers through takeovers that will give them access to foreign markets as well as inter-national expertise. International groups may find that being acquired by a Chinese insurer is the best way to improve their chances in the murky Chinese market.
The Danish city of
Odense, on a waterlogged island about 80 miles west of , is not exactly a global media capital. Yet in a villa in a quiet residential neighborhood, a new breed of Internet-based marketer is challenging the traditional advertising business model. Copenhagen
Come&Stay, with sales last year of $30 million and a market cap of $78 million on NYSE Euronext, does so-called permission-based e-mail advertising for blue-chip customers including BMW, Ikea, GE Capital, and Apple.
In effect, it's the opposite of a spammer, since it sends pitches only to people who have actively indicated a willingness to receive advertising. The company boasts a list of some 270 million such e-mail recipients, as well as a database of demographic information about them.
The names have been collected over many years, mostly from Come&Stay's roster of corporate clients, who use the marketing firm to manage big campaigns aimed at customers who've signed up for e-promotions.
For advertisers, who also include Dell Computer, Hyundai, and Chrysler's Dodge unit, Come&Stay offers a cheap and low-risk way to reach a target group. Clients pay only for responses, which can be defined in different ways -- anything from a simple click to more concrete actions such as signing up for a test drive, completing a loan application, or making an actual purchase. "We can track everything," says Chief Executive Officer Torben F. Rasmussen, whose goal is to boost sales tenfold within five years. Given that sales have been doubling every year, that could happen.
The business model is simple -- and powerful. That's one reason Come&Stay, which is active in the
U.S.and has a quarter of its 160 employees in , is a lurking threat to traditional broadcast and print media. By using e-mail to hit consumers directly, Come&Stay bypasses traditional outlets (although its clients include CNN). Ft. Lauderdale, Fla.
Now, the company is moving into mobile advertising, with a list of 27 million cell-phone numbers from people who have indicated willingness to get pitches via text or multimedia messaging, sometimes in exchange for free or reduced-price mobile service. "Your mobile phone is closer to your heart than e-mail," Rasmussen says. That's a market set to take off.
The company is the product of the merger last year of Paris-based Come&Stay and rival Danish firm Retail Internet, based in an
building that once served as executive offices for a cigar box factory. The combined company kept the name of the French unit but moved its headquarters to Odense and handed management to Rasmussen, who had been CEO of the Danish outfit. Denmark
While Come&Stay is a major player in northern Europe, globally it's still a dwarf compared with
Mountain View( )-based DoubleClick, the digital advertising company acquired by Google in April for $3.1 billion. Unlike DoubleClick, Come&Stay, with operations already in 14 countries, is focused solely on e-mail advertising. Calif.
That focus may be the key to Come&Stay's growth. "There's a big market and a growing market and there's space for smaller players," says Rebecca Jennings, a senior analyst for Forrester Research, which estimates the e-mail marketing sector could be worth $2.8 billion in Europe alone by the end of the decade, up from $2.1 billion this year...
Come&Stay also incorporates some of the management ideas of Lars Kolind, whose "spaghetti organization" became famous in the 1990s. Kolind, a well-known figure in
Denmarkwho teaches occasionally at the Wharton business school in , was one of the original financial backers of Retail Internet, and Rasmussen considers him a mentor. Philadelphia
Kolind introduced the spaghetti organization at Danish hearing aid manufacturer Oticon in the early 1990s, attracting worldwide media attention. Immortalized by management guru Tom Peters in his 1992 book Liberation Management, the spaghetti organization eliminated traditional management and let employees choose their projects and teams.
While Come&Stay doesn't go quite that far, employees are given broad freedom to launch small-scale projects or make changes in ad campaigns without management approval. One example: An employee rearranged the content of a daily e-mail containing a weather forecast and advertising.
By moving the forecast to the middle of the page and the ads to the top, the employee boosted revenue from the mailing by 30%, Rasmussen says. "If an employee has an idea, he'll just do it. We'll know tomorrow if it works." So far, it seems to work just fine.
We can leave your friends behind
'Cause your friends don't dance and if they don't dance
Well they're no friends of mine
I say, we can go where we want to
A place where they will never find
And we can act like we come from out of this world
Leave the real one far behind
And we can dance
Saving face is a very important concept in Asian cultures. It involves not embarrassing your counterparty too much even if he/she/it has let you down to some extent. In this context, the response of the Chinese to the current brou-ha-ha over the safety of products emanating from the Middle Kingdom is perfectly understandable. In part, it is a cultural misunderstanding. Western media has mercilessly pounced on Chinese products found to be defective as "Poison Me Elmo" or "SpongeBob PoisonPants." Western firms have also been quick to dump their Chinese partners when product safety questions arise.
The Chinese would undoubtedly prefer a less confrontational approach to handling the product safety issue than it being thrown into the court of public opinion, which is already quite resentful of China's rising dominance in manufacturing. (There are, of course, underlying trade tensions.) What we have here is another not-so-snappy retort from China aimed at face saving that's the equivalent of "Oh yeah? Well, your mother wears army boots." It goes, "Yes, we could improve our product safety standards, but your product designs were dangerous to begin with." It's all rather silly if you think about it, this product safety dance, so I've decided to include a clip above of the equally silly 80s video entitled "Safety Dance" by Men Without Hats. Unlike today's mostly tuneless, humorless, and crass mu-sick, 80s music is fun. Anyway, on to the Reuters story:
China on Monday hit back at Mattel, after a massive toy recall, saying designers and importers should also take responsibility for product safety, but promised to punish its own manufacturers who flout standards.
The world's largest toymaker, Mattel, recalled more than 18 million Chinese-made toys in mid-August because of hazards from small magnets that can cause injury if swallowed, just two weeks after it recalled 1.5 million toys due to fears over lead paint.
"I myself looked at some of the samples of these problematic toys, and I found that there is a serious problem with the design. The design is seriously defective," Li Changjiang, head of China's General Administration for Quality Supervision, Inspection and Quarantine, told a news conference.
"In my view, no matter where those toys were sold there would be a recall, because it is highly likely they are dangerous for children.
"While we recognize that Chinese producers should be blamed for those problematic toys, what kind of responsibility should the U.S. designers and the U.S. importers take in this respect?" Li asked.
China is facing growing global pressure to clean up its manufacturing sector and ensure the quality of its exports after a series of scandals involving products ranging from poisonous pet food ingredients to sub-standard toys and tainted toothpaste.
Li has described the storm surrounding Chinese-made goods as politically motivated and unfair, but he has also called for tougher regulation of manufacturers and warned that failure to improve quality was undermining China's trade strength.
On Monday, he blamed differing national standards, misleading statistics and lack of communication for some of the product safety scares that have alarmed foreign consumers.
"For some products, the two countries enforce different standards," Li said of China and the United States, also citing "inaccurate statistics".
But he said the latest Chinese campaign to improve product safety would focus on creating a chain of supervision across the entire production process for both industrial products and food.
Monitoring and inspection of drug manufacturers would also be strengthened, and celebrities banned from endorsing drugs in advertisements, Li said.
He also acknowledged the vast challenge China faces in overseeing its hundreds of thousands of tiny, often family-run producers, a task compounded by lack of communication between myriad government agencies overseeing production and safety standards, and between central and local authorities.
But Li defended the "made-in-China" label and said Chinese-made toys in particular were enjoyed the world over.
"In China, about 3 million workers are working in the toy industry, providing toys to children all across the world," he said.
"It is because of their hard work that children in other parts of the world are having fun in their daily life."
BHP Billiton Ltd., the world's biggest mining company, said growth in sales to India is outpacing gains in China as the southern Asian nation requires more coal and nickel to meet rising demand.
BHP is raking in higher sales from India than it did six years ago from China, which now accounts for a fifth of revenue, incoming Chief Executive Officer Marius Kloppers said at a conference with reporters in Melbourne. BHP is still looking to invest in bauxite and iron ore projects in India, he said.
India's government plans to spend as much as $450 billion by 2012 to build new roads, ports and power stations and accelerate growth to 10 percent from an average 8.6 percent in the past four years. BHP said Aug. 22 it has as much as $50 billion of projects it could develop to feed rising demand.
``Everybody in the industry missed the Chinese growth story, and what BHP is doing now is to set themselves up for the next stage when India could go on the same growth path,'' said Mark Pervan, a commodity strategist at Australia & New Zealand Banking Group Ltd., in Melbourne. ``They've built the business for Chinese demand, and what they want to do with the $50 billion of projects is to prepare for the new emerging economies like India...''
[BHP] gained 6.5 percent yesterday after posting its eighth consecutive record half-yearly profit on Aug. 22.
BHP's sales to China jumped 47 percent in the six months ended June to $5.29 billion from a year ago, according to a slides presentation on Aug. 22. Its sales to India surged 56 percent in the same period from a year ago to $1.14 billion, according to calculations by Bloomberg from figures provided by BHP today.
China accounted for 20.4 percent of BHP's sales in the second half, whereas India only contributed to 4.4 percent of sales, BHP spokeswoman Samantha Evans said in an e-mail.
BHP's total sales have jumped to $47.5 billion this year, from $17.8 billion in 2002, and the $19.1 billion it had in 2001 when it was created from the merger of BHP Ltd. and Billiton Plc.
China, the world's largest consumer of metals and the fastest growing major economy, will continue to want more metals and iron ore, Kloppers said. India, the world's second-fastest growing major economy, will need energy commodities such as coal, as well as metals, he said.
``This is a larger portion of the globe industrializing than before,'' said Kloppers. ``It's not one economy, but two economies. We're pushing into India extremely aggressively in selling products there.''
The company pulled out of a partnership with South Korea's Posco, Asia's third-largest steelmaker, to invest in a $12 billion steel and iron ore venture in the Indian state of Orissa in 2005. BHP was to develop the iron ore mine for Posco's planned plant.
BHP is ``very glad'' it dropped out as the Indian government's refusal to allocate resources to the project has hampered development, said Chief Executive Officer Charles `Chip' Goodyear, at the same conference.
``The amount of resources they will allocate doesn't allow for the efficient operation of that mine,'' said Goodyear. ``We determined it won't be profitable for us to create a resource that's not competitive in a global market. Posco since has been trying very hard to get access to land and resources.''
BHP will announce details of its plan to increase iron ore production in Western Australia state to 300 million tons a year in the next two months, said Kloppers. The company is targeting production of 155 million tons from its mines from 2010.
``We've put in a date of 2015,'' for the new production, said Kloppers.