Iraqi Navy on Way to Independence, Official Says
By Carmen L. Gleason
American Forces Press Service
WASHINGTON, March 19, 2007 – Twenty-one vessels will soon be added to the Iraqi navy fleet, putting it another step closer to being operationally independent, officials said during a Baghdad news conference yesterday.

With a contract on the verge of completion, the Iraqi navy is the first of the country's forces to use the Ministry of Defense's procurement process with Iraqi money in purchasing major capital programs from foreign governments and commercial ventures.
"The Iraqi navy has come a long way since the end of the hostilities," U.S. Navy Capt. Michael Zamesnik, U.S. Naval Forces Central Command liaison officer to Multinational Force Iraq, said "They were an organization that had been ravaged by the effects of the war, and they are making great strides to rebuild themselves."
Zamesnik said that the force is making positive steps and continuing to grow in the areas of equipment, training, manning and procurement. Iraqi naval installations are going under massive modernization efforts to build roads, utilities and barracks in addition to the reconstruction of piers to support the incoming vessels, he said. By 2010, 15 patrol boats, four patrol ships, and two off-shore support vessels will be added to the current fleet of fast attack boats and Predator-class ships.
"They have a 24-hour capability, are armed for self-defense, and I would say the Iraqi navy is considering these to be the jewel in the crown of their future fleet," British Navy Cmdr. Paul Marshall, Royal Navy advisor, said.
"Any navy in the world would be proud to have an acquisition program that increases capability by that amount within such a short time scale," Marshall said.
He said that the Iraqi government shows a lot of commitment and faith in the program by supporting it with resources and policies. The Iraqi waterways will continue to become safer with the increased number and skills of personnel, as well, he said.
Four battalions of Iraqi marines are being trained to provide all-point defense for the oil platforms, while navy diver platoons are being developed for maintenance on ships and platforms.
The Iraqi navy will take sole responsibility to ensure the security and protection of territorial waters and key infrastructure within its area of responsibility and to counter terrorism, smuggling and illegal activity at sea.
British Navy Capt. Tony Radakin, commander of the Naval Transition Team at Umm Qasr Naval Base, said that a recent coalition commander referred to the Iraqi patrol boats as one of his best assets. "That's simply because of their understanding of local waters, their ability to help shepherd any (Arab ships) that might be coming too close to the oil platforms, and to do that probably a lot more effectively than some of the coalition ships," he said.
The performance of the Iraqi navy and marines is "actually very good," Radakin said.
He attributed the recent decrease in piracy and oil smuggling in area waterways to current navy efforts. He also said that the heightened visibility of the navy has created safe waterways for the major commercial ports that have led to quadruple increases in port revenues.
"The Iraqi navy is a story of success," Zamesnik said. "They've done a very solid job of rebuilding. I know it will continue, along with coalition assistance."

Jihad versus McWorld? The fight has always remained within Arab Islam
MECCA JOURNAL: “The Price of Progress: Transforming Islam’s Holiest Site,” by Hassan M. Fattah, New York Times, 8 March 2007, p. A4.
This is not our culture versus theirs, but the desire for modernity and connectivity versus the desire for tradition and the status quo (ante, if you’re a radical Salafist).
Simply put, America is not in charge of this transformation world process called globalization.
No one from outside is telling the House of Saud to plop one of the world’s largest malls and condo developments looming over the Grand Mosque in Mecca. I mean, it’s a big country. Certainly they can plop it elsewhere.
But Saudi Arabia wants to both facilitate and take advantage of all the Muslims who visit this place, so the Disneyfication is self-inflicted for all the same reasons why we like Disney.
I mean, when you make your pilgrimage, why not hit the neighboring fast food joints, amusement park rides and lingerie shop?
Because don’t be under the impression that somehow this development crassly commercializes the uncommercial. No, the real crime here is the displacement of Mecca’s ancient and famed night market.
Mecca has long been a commercial as well as a religious center, but increasingly global brands dominate here.
Better get a move on, Osama. Time is rapidly running out.

March 13, 2007
The Classic British Sports Car From China

By CRAIG S. SMITH
LONGBRIDGE, England — MG, the legendary British brand that expired after a lengthy illness, will be revived this month as a Chinese sports car when the Nanjing Automobile Corporation begins to produce convertible sports cars under that name in China.

The rebirth of MG is the latest and most splashy example of how China’s growing economic might is reaching carefully into foreign markets, buying up troubled companies with established brands and using them to build bridgeheads for some of the hundreds of billions of dollars that the country has to invest overseas.

“Within a very small period of time you will see a lot of industries following the same strategy,” said the chairman of Nanjing Automobile in the United Kingdom, Wang Hongbiao, whose stature and demeanor bring to mind Humphrey Bogart.

It is a cautious, even stealthlike approach, and a stark contrast to Japan and Korea, which spent billions of dollars over decades to build recognized brands through exports before establishing a high-profile corporate presence overseas. That era reached its peak with the purchase of Rockefeller Center by Mitsubishi Estate in 1989. These days, China also wants to avoid a political backlash, like the kind that has already scuttled at least one deal.

Still, China is in a hurry, and as it increases outward investment, many of its companies hope to leapfrog the expansion process by acquiring technology and distribution networks together with well-known names on which to build larger businesses.

The investment agency that China is setting up to diversify its $1.1 trillion foreign exchange holdings could provide another boost, particularly as the government sees the entire world — including developing countries in Africa and Latin America — as its stage for acquisitions.

It began when the Chinese television and mobile telephone maker TCL bought the bankrupt Schneider Electronics of Germany in 2002. The computer maker Lenovo acquired I.B.M.’s troubled personal computer business in 2004.

Now, China Qianjiang Group, the largest motorcycle manufacturer in China, owns Benelli, the oldest motorcycle manufacturer in Italy. Shenyang Machine Tool Group has bought the 140-year-old German machine tool maker Schiess. Xinjiang Chalkis, a tomato producer, even owns a French tomato cannery and sells Chinese tomato sauce in Provence. All of those target companies were facing financial crises.

Many of China’s foreign purchases have been focused on energy resources, dominated by big state-owned enterprises like the national oil giants PetroChina and Cnooc, which have spent billions in recent years acquiring oil and natural gas fields. Those deals have helped swell the value of China’s foreign acquisitions to nearly $14 billion on more than 100 deals last year, from just $18.6 million in 1990, according to Thomson Financial, which tracks global investment trends.

But with the largest foreign exchange reserves in the world putting upward pressure on the yuan, China is now happy to have smaller companies invest some of that money overseas.

“Even five years ago, it would have been difficult to get approval for this kind of stuff,” said Jonathan Anderson, chief economist for Asia at UBS in Hong Kong. “But now the government is clearly giving companies a mandate to go out and make acquisitions.”

To encourage outbound investment, the commerce ministry now accepts applications online, and the State Administration of Foreign Exchange has abolished quotas on the purchase of foreign exchange for such deals.

That has led to a sharp increase in deals all over the world.

Wanxiang Group, the biggest maker of drive shafts, shock absorbers and other car components in China, bought the American auto parts companies Schiller, Universal Automotive Industries and Rockford Powertrain, to get into the United States market with established brands.

Samson Holdings, a Taiwanese-owned China-based furniture maker, has done the same by buying the North Carolina furniture makers Universal Furniture, Legacy Classic and Craftmaster Furniture.

In 2004, the Shanghai Automotive Industry Corporation took a controlling stake in Ssangyong Motor Company, the fourth-largest automaker in South Korea, in order to gain access to that market.

Still, the foreign investments are a trickle at this stage. Nanjing Auto, for instance, paid just over $100 million for the MG assets two years ago. “This is not Japan in the ’80s; this is Japan in the ’60s,” Mr. Anderson said.

Following the pattern of similar acquisitions, Nanjing has retained key managers while shifting much of the labor-intensive production back home where it is cheaper.

Even so, China’s overseas investments have already caused some alarm. In the United States, national security concerns over a takeover bid by Cnooc for Unocal in 2005 killed that deal. And a bid by Haier, a Chinese refrigerator maker, for Maytag was cut short the same year by a quick counteroffer from Whirlpool.

Emotions have already risen in Britain recently over Burberry’s plan to move production to China. Even Prince Charles has added his voice to protests that the quintessentially British brand would be made in China.

Given those problems, Nanjing Auto, China’s oldest automaker, is eager to keep a low profile and has been careful to preserve the British face of its famous brand — lest the reborn MG become nothing more than a Chinese competitor to the Mazda Miata. Earlier this year, Nanjing shipped eight vintage MGs to China as an introduction to the brand. The only twist: In China, Nanjing auto executives have told people that the MG stands for the more instructive “modern gentleman” instead of the original meaning, “Morris Garages,” where the cars were first made. MGs became classics of their time, beloved by generations. While the Italians built flashier sports cars for the rich, MGs developed a loyal following among aficionados who still refer to the distinctive logo as the “sacred octagon.”

“Emotion is the most important factor in purchasing cars,” Mr. Wang, 44, of Nanjing Auto, said. “That’s why we feel the brand is so important and is why we want to protect the British flavor of the brand.”

Rising labor costs and a series of missteps by British Leyland, the defunct company that manufactured MG during its 1960s heyday, led to the sale of MG to several different owners before bankruptcy finally ended production in April 2005.

Nanjing Auto bought all of the tangible assets from the MG plant, together with the rights to some of Britain’s most famous automotive brands, including MG, Morris, Austin and Austin-Healey.

It crated up most of the manufacturing equipment and shipped it to Nanjing, where it has been painstakingly reassembled.

On March 27, the 60th anniversary of Nanjing Auto, the Nanjing plant will start producing two MG models: the MG7, a five-seat, four-door sedan, and the MGTF, a two-seat, two-door convertible sports car. It hopes to eventually export the MG7 to Europe.

But the company has also signed a 33-year lease on a portion of the Longbridge factory site and later this year will begin producing the MGTF there for sale in Britain and eventually continental Europe.

Negotiations are under way to produce a hardtop version of the MGTF roadster through a joint venture in Oklahoma, and Mr. Wang said he hoped Americans would be able to purchase an MG in the near future, depending on the company’s ability to meet federal regulations.

Initially, the cars will be updated versions of two-year-old models; Mr. Wang said the company would design all new models — a process under way — in Britain.

“It’s just like cooking,” he said, sitting in his corner office with Chinese, American and British flags on the carved wooden mantelpiece above a gas fire. “You have to keep the original flavor.”

Mr. Wang took a visitor across the empty factory compound to an unused conference center that houses the office of Lord Austin, founder of the Austin Motor Company, later a part of British Leyland.

Inside the musty, wood-paneled office, filled with original furnishings, he pulled opened a drawer, releasing a hidden mechanism and allowing the top of Lord Austin’s heavy oak desk to slide back, revealing a secret compartment containing a guest book, its pages filled with the signatures of visitors to the legendary car company.

“Royalty signed here,” said Mr. Wang with evident enthusiasm at this bit of British heritage. The book contains the signatures of Prince Philip, Princess Margaret and Lord Snowdon.

A collection of gleaming cars is kept in the compound, including a lavish two-tone green 1938 MG sedan with graceful fenders and running boards, as well as an MGB sports car, the most popular British sports car ever made.

Not all Chinese companies are entering “through the backdoor,” as the Chinese like to say, by buying established brands. Changhong, one of the biggest television makers in China, has begun production of flat-screen TVs in the Czech Republic at a $100 million factory that it built from scratch.

Other TV makers in China have manufacturing operations in Europe to avoid paying the 14 percent duty on imports to the European Union.

But that has not been the strategy for China’s bigger companies like Nanjing Auto.

“The Chinese strategy to get into the market is to go for mature, established brands that might have had some trouble,” Mr. Wang said. Organic growth is too costly and too slow, he said.

“An example is Yuejin,” he said, referring to Nanjing Auto’s truck brand, a household name in China. “It has a history of 50 years, but for this brand to go into the European or American market would cost us a lot of money because it’s not known in either market. To build a brand-new automotive platform would also cost us a lot of time and investment.”

U.S. Sanctions With Teeth
By David Ignatius
Wednesday, February 28, 2007; Page A19

Everybody knows that economic sanctions don't work. Just look at the decades of fruitless pressure on Cuba. But guess what? In the recent cases of North Korea and Iran, a new variety of U.S. Treasury sanctions is having a potent effect, suggesting that the conventional wisdom may be wrong.

These new, targeted financial measures are to traditional sanctions what Super Glue is to Elmer's Glue-All. That is, they really stick. Deputy Treasury Secretary Robert Kimmitt doesn't even like to call them sanctions, preferring the term "law enforcement measures." Explains Stuart Levey, Treasury's undersecretary for terrorism and financial intelligence: "Sanctions are scoffed at. They have a bad history."

Congress's Oversight Offensive
» David S. Broder | Ten weeks into the new Congress, it is clear that revelation, not legislation, is going to be its real product.
George F. Will: A Shot in the Arm for the GOP
Jim Hoagland: Democracy's Welcome 'Clamor'
Tom Malinowski: Terrorists, Not 'Warriors'

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Authority for the new sanctions, as with so many other policy weapons, comes from the USA Patriot Act, which in Section 311 authorizes Treasury to designate foreign financial institutions that are of "primary money laundering concern." Once a foreign bank is so designated, it is effectively cut off from the U.S. financial system. It can't clear dollars; it can't have transactions with U.S. financial institutions; it can't have correspondent relationships with American banks.

The new measures work thanks to the hidden power of globalization: Because all the circuits of the global financial system are inter-wired, the U.S. quarantine effectively extends to all major banks around the world. As Levey observed in a recent speech, the impact of this little-noticed provision of the Patriot Act "has been more powerful than many thought possible."

Treasury applied the new tools to North Korea in September 2005, when it put a bank in Macao called Banco Delta Asia on the blacklist. There was no legal proceeding -- just a notice in the Federal Register summarizing the evidence: Banco Delta Asia had been providing illicit financial services to North Korean government agencies and front companies for more than 20 years, according to the Treasury notice. The little Macao bank had helped the North Koreans feed counterfeit $100 bills into circulation, had laundered money from drug deals and had financed cigarette smuggling. North Korea "pays a fee to Banco Delta Asia for financial access to the banking system with little oversight or control," Treasury alleged.

Wham! The international payments window shut almost instantly on Pyongyang's pet bank. Transactions with U.S. entities stopped, but the Treasury announcement also put other countries on notice to beware of Banco Delta Asia. The Macao banking authorities, realizing that they needed the oxygen of the international financial system to survive, took regulatory action on their own and froze the bank's roughly $24 million in North Korean assets. And around Asia, banks began looking for possible links to North Korean front companies -- and shutting them down.

A similar financial squeeze is being applied to Iran. Here again, the impact has come from the way private financial institutions have reacted to public pressure from Treasury. "As banks do their risk-reward analysis, they must now take into account the very serious risk of doing business in Iran, and what the risks would be if they were found to be part of a terrorist or proliferation transaction," says Kimmitt.

Treasury began squeezing Iran last September, when it accused Bank Saderat, one of the largest government-owned banks, of financing terrorism by funneling $50 million to Hezbollah and Hamas since 2001. The Treasury order cut the bank off from any access to the U.S financial system, direct or indirect. A similar ban was imposed in January on Bank Sepah, which Treasury alleged was a key intermediary for Iran's Aerospace Industries Organization, the agency that oversees the country's ballistic missile program.

Meanwhile, top Treasury officials began visiting with bankers and finance ministers around the world, warning them to be careful about their dealings with Iranian companies that might covertly be supporting terrorism or weapons proliferation. This whispering campaign was enough to convince most big foreign banks in Europe and Japan to back away from Iran.

The new sanctions are toxic because they effectively limit a country's access to the global ATM. In that sense, they impose -- at last -- a real price on countries such as North Korea and Iran that have blithely defied U.N. resolutions on proliferation. "What's the goal?" asks Levey. "To create an internal debate about whether these policies [of defiance] make sense. And that's happening in Iran. People with business sense realize that this conduct makes it hard to continue normal business relationships."

The writer co-hosts, with Newsweek's Fareed Zakaria, PostGlobal, an online discussion of international issues athttp://blog.washingtonpost.com/postglobal. His e-mail address isdavidignatius@washpost.com.

Assessing a promised Iraqi-American crackdown in the capital

Reuters

IT IS very early days, but American officials in Baghdad say that the first signs of a joint American-Iraqi effort to stem the sectarian mayhem in the Iraqi capital are hopeful. Only one of five planned extra American brigades has yet been deployed. It will be several months before the full reinforcement needed for President Bush's vaunted “surge” is complete. But the Americans claim to see an improvement on the streets already.

The arrival of a new American commander in Baghdad, General David Petraeus, is said to have “re-energised” the Americans' headquarters almost overnight. The appointment of a little-known but energetic Iraqi general, Aboud Qanbar, to oversee the operation in Baghdad, a compromise candidate between the first choices of the Iraqi government and the Americans, has been a pleasant surprise, according to those who have met him. More important, Iraq's government has kept its promise to send in ten extra police and army brigades.

American forces have moved out of their well-defended bases into local outposts run jointly with the Iraqi army and police. The second-ranking American general in Iraq, Ray Odierno, says that in the past three weeks the number of corpses discovered has dropped dramatically. Based on police reports, the Associated Press counted 164 bodies found in the capital in the 13 days after the campaign's official start on February 14th, compared with 390 in the same period the month before.

Anbar province, the Sunni insurgents' heartland, may also be changing a tad for the better, as some Iraqi factions and tribal groups are said to be turning against al-Qaeda-linked insurgent cells and seeking to accommodate the Iraqi government.

To predict success would be extremely rash, however. The bloodshed still continues apace. A suicide bomber, presumably a Sunni, killed at least 40 people at Baghdad's Mustansiriya University, a stronghold of Shia factions, on February 25th. Iraqis say that insurgent snipers are still active, often firing from mosques before disappearing into back alleys. The newly beefed-up troop presence may reduce some forms of violence, such as multi-car Shia raids on Sunni districts, but is less likely to deter Sunni suicide bombers.

The fiery Shia cleric, Muqtada al-Sadr, who had previously backed the crackdown and had told his followers to avoid confronting the Americans, has since denounced any security plan enforced by an “occupier”. And one of Iraq's two vice-presidents, Tariq al-Hashemi, a Sunni, says the crackdown focuses too hard on Sunni areas. He also criticised the government for advertising the plan, thus giving gunmen and bombers a chance to escape. Many Shia militia leaders are said to have left Baghdad, but they are expected back once the crackdown is over.

American officers say they get a lot of support and tip-offs from Sunnis in districts that lie alongside Shia ones. But they get much less co-operation in Shia zones where local armed groups are on the offensive, or in areas where Sunni fighters are more secure and want to be left in peace.

Perhaps the biggest snag is that many Baghdadis, on both sides of the sectarian divide, have come to think that their own group is the main victim of the violence and that armed militias are their salvation. It will be hard to persuade them to put their faith instead in Iraqi government forces, let alone American ones.

Jack Keane, the retired American general who helped persuade President Bush to try the surge, says it must be sustained for 18 months to two years to change the minds of ordinary Iraqis and allow the government to find a more solid political settlement. But with American presidential elections coming up next year, there is growing pressure to start bringing troops home this summer. Even if the surge works militarily, it may be too late politically—in Washington, if not in Baghdad.

Much will depend on the attitude of Iraq's neighbours. Iraqis are fond of saying they are not blessed by them. Iran gives its backing to Shia militias and Syria to the Sunni insurgency. The Sunni Arab states look askance at the new power of Iraq's Shia majority. Turkey, as self-proclaimed protector of the country's Turkoman minority, has talked of intervening in the north, especially when Iraq's Kurds sound bent on independence. Iraq's new leaders and their American mentors have often considered getting the regional governments to sit round a table to discuss ways of bringing peace.

Now it may actually happen (see article). This week's news of a possible regional peace conference has raised hopes that a new political mood could reinforce the tentative improvement in security. Iraq's foreign minister hopes that all Iraq's neighbours—Iran, Jordan, Kuwait, Saudi Arabia, Syria and Turkey, plus others in the 22-country Arab League and the UN Security Council's five permanent members—will send representatives to what he calls an “ice-breaking” session before gathering grander figures at a bigger conference, perhaps next month. Condoleezza Rice, America's secretary of state, has told Congress that America intends to take part too, despite the presence of Iran and Syria.

In any event, Iraqis sense a possible change of tactics, if not of heart, in Washington. Last year the Iraq Study Group, co-chaired by Lee Hamilton, a former congressman, and James Baker, a former secretary of state, suggested that America should talk to Iran and Syria over Iraq, yet in the past few months such an idea had seemed even less plausible. Mr Bush blamed them ever more loudly for Iraq's troubles. It is just possible that his change of tack, plus a successful surge, will start to tug Iraq in a better direction.