ARTICLE: BORROWED IDEAS: Malaysia Transforms Rules For Finance Under Islam: In a Lesson to Arabs, Asian Bankers Mix Religion, Modernity, By YAROSLAV TROFIMOV, Wall Street Journal, April 4, 2007; Page A1
I wrote about this in BFA (or maybe it was PNM). Malaysia's pioneering Islamic finance in a very cool way.

Thanks to Ian Rhodes for sending this.

Posted by Thomas P.M. Barnett on April 4, 2007 11:04 AM

Argentina on Kirchner's Time
Print Mail

By Mark Falcoff
Posted: Tuesday, April 3, 2007

LATIN AMERICAN OUTLOOK
AEI Online
Publication Date: April 4, 2007

Click here to view this article as an Adobe Acrobat PDF.

No. 3, April 2007

Since its financial crisis six years ago, Argentina has faded somewhat from the headlines. This is no doubt due in large part to the disproportionate space our media outlets now devote to Iraq and Iran, but also to the fact that other Latin American news stories--particularly Fidel Castro's surgery and the antics of Venezuela's clownish president Hugo Chávez--have dominated coverage of the area. Argentina is not, however, a negligent regional actor.

Argentina represents the second or third largest economy in South America (depending on how one estimates such things), with strong cultural and family links to Latin Europe. Its capital, Buenos Aires, is a major educational, media, and publishing center for the Spanish language, as well as a destination for immigrants from Bolivia, Paraguay, and Peru. Argentina is also one of the pillars of Mercosur, an emerging trade bloc which (for all its problems) represents a significant force in Latin American diplomacy.

Perhaps the most underreported Latin American news story in recent years has been the long-term impact of the country's economic collapse in 2001. Although Argentina has experienced a number of crises and devaluations over the years, this one was without precedent in severity and human consequences. Someone who lived through it recently told me that it was the emotional equivalent of a neutron bomb: overnight the currency lost two-thirds of its value, and what is more, banks were closed so that ordinary Argentines could not access their funds. Supermarkets and neighborhood groceries were sacked. Several provinces with independent economic resources of their own seriously considered--for the first time in more than 150 years--leaving the Argentine federation altogether. Hospitals recorded a record number of fatalities due to heart attacks. Thousands of Argentines whose grandparents or great-grandparents had once emigrated from Spain or Italy formed long lines outside the consulates of those countries in an effort to return to their ancestral homes. President Fernando de la Rúa was forced to resign after hardly eighteen months in office, and--as if to symbolize popular discontent with the country's political institutions--parts of the majestic Congress building in downtown Buenos Aires were torched.

Economic Recovery

Over the last five years, Argentina has experienced a significant economic recovery, partly due to a drastic devaluation of the currency by two-thirds, but also to the government's decision to cease paying its foreign debt of some $140 billion, the biggest sovereign default in history. (It has since renegotiated most, but not all, of its foreign obligations.) The currency devaluation suddenly made Argentina's exports highly competitive in the world market and created an entirely new tourist industry. But by great good fortune it also coincided with a sudden upsurge in Chinese demand for soy, a product Argentina, with its fertile soil and favorable climate, is well situated to produce. At the same time, Venezuela's Chávez stepped forward to buy up $5 billion in Argentine debt paper, releasing the country from obligations to the International Monetary Fund (IMF). Unemployment has subsequently dropped from 25 to 9 percent, and the country now boasts $35 billion in reserves, the largest amount in its entire history.

Even so, recovery is not complete, and some indicators give reason for concern. Partly because of its refusal to settle with its remaining foreign creditors, the country now accounts for a mere 3 percent of new foreign investment in Latin America, compared to its normal 15 percent share. As it is, capital stocks are deteriorating; the country is basically surviving on resources put in place during the previous decade. Price controls have brought about a return of inflation, though exactly by how much no one can say for sure, since the director of Argentina's National Statistical Institute was forced out for producing figures not to the liking of the administration. The government may be purposely undervaluing the peso to promote exports and erect a wall against cheap imports, as well as to subsidize the flourishing tourist industry. Some estimates place as much as 40 percent of the labor force in the black economy. The general public mood is one of satisfaction with the present--certainly compared to the recent past--but also mild apprehension, as nobody is certain what the future will bring. Any change in world interest rates, grain prices, or the political situation in Venezuela, now Argentina's number one ally and financial supporter, could push the numbers in the wrong direction.

The New Power Couple

Perhaps even more surprising than the country's modest recovery has been the return of politics more or less as usual. In 2001, the most frequently heard cry in the streets was "Out with all politicians!" Present and former officeholders were the object of harassment and even violence when they appeared on the streets or in restaurants. Today President Néstor Kirchner, who took office in 2003, has higher approval ratings than any chief executive in Latin America (and more than twice those of President George W. Bush), and is poised for a triumphant reelection later this year. More to the point, he is in the process of transforming the Peronist Party into an instrument of his own, aided and accompanied by his ambitious and politically powerful wife, Cristina.

The temptation to compare Kirchner and his wife to Bill and Hillary Clinton is irresistible--the Kirchners themselves do not disdain the comparison--and there are, in fact, some similarities. When interim president Eduardo Duhalde tapped Kirchner as his successor in 2002, Kirchner was a relatively unknown politician serving as governor of Santa Cruz, a remote province in windy Patagonia. Cristina, who previously represented Santa Cruz in the Senate, decided to switch constituencies to one more politically relevant. She now sits in the upper house of the Argentine Congress for the Province of Buenos Aires, the country's largest and most important, a kind of New York State and American Midwest all in one. Moreover, Señora Kirchner is known to harbor presidential aspirations of her own, and, like Hillary Clinton, she has her own fanatical following.

One wit has remarked that the Argentine president has accomplished the impossible: he has created a cult of personality with no personality at all.

There are, however, some crucial differences. Unlike Bill Clinton, Kirchner is not particularly charming or charismatic. One wit has remarked that the Argentine president has accomplished the impossible: he has created a cult of personality with no personality at all. His home province is also unlike Arkansas. Santa Cruz has a mere 120,000 residents, but is blessed with huge amounts of oil and gas, of which Kirchner made uninhibited use during his mandate there. In contrast to the U.S. Constitution, the Argentine charter of 1994 makes it possible for the Kirchners--if their popularity endures--to theoretically rule the country for the rest of their lives either by taking turns in four-year terms or by succeeding each other for eight years at a time.
The most important difference, however, is this: whereas the Clintons are firm and loyal Democrats, Kirchner--though formally a member of the Peronist Party--seems intent upon creating a movement in his own image and likeness. Very much in the same fashion as the late General Juan Perón himself in the 1940s, Kirchner has used government resources and the sense of inevitability to recruit supporters from across the political spectrum, pushing (again, as in the 1940s) all his opponents together in a heterogeneous alliance held together only by their opposition to him. Thus Roberto Lavagna, Kirchner's former finance minister and the man generally credited with pulling the country out of its 2001 crisis, will probably be the leading opponent on the ballot, supported by Radicals (the party of de la Rúa and former president Raúl Alfonsín), dissident Peronists (including Kirchner's one-time patron, former president Duhalde, and much of Duhalde's following), as well as a heterogeneous band of conservatives (who are called liberals in Argentina). Under the country's complicated system of ballotage, the victor requires only 40 percent of the vote (provided he maintains a spread of ten points above his next competitor), but at this point it seems inevitable that Kirchner will win hands-down in the first round.

Taking Cues from Venezuela

The crisis of 2001 has not merely brought to the forefront a formerly obscure politician from a backwater province, but it has also inaugurated a new national mood which might broadly be subsumed under the term "revisionist." Whereas for generations the country aspired to be accepted as European, or at any rate, at least an honorary member of the First World, it has suddenly discovered its Latin American identity. Pictures of Ché Guevara are for sale on every newsstand (although many young Argentines appear to be unsure who he is) and historic figures associated with the country's expansion beyond the borders of old Indian settlements are now represented as genocidal maniacs. (A beautiful statue in downtown Buenos Aires of General Julio Roca--a kind of Argentine combination of Andrew Jackson, General George Custer, and Theodore Roosevelt--has been horribly defaced.) There is an emerging animal-rights movement (this, in a country whose principal products include leather, furs, and wool). Polls reveals that Fidel Castro is the country's most admired foreign personality and Hugo Chávez the most admired Latin American president, followed by Kirchner. Although it forged a reflexive alignment with the United States in the 1990s--a momentary effort by President Carlos Menem to jump on the victor's bandwagon after the end of the Cold War--Argentina today is the most anti-American country in the region. This has not prevented cooperation with Washington on a narrow band of vital issues--notably terrorism and money-laundering, although in those respects it is no different from many countries in the region and beyond that maintain an otherwise tense relationship with Washington.

Argentina today is the most anti-American country in Latin America. This has not prevented cooperation with Washington on a narrow band of vital issues--notably terrorism and money-laundering

To be sure, much of the new "Latin American" alignment has been promoted by a curious relationship with Venezuela's Chávez. One of the most interesting subjects of debate in Argentina today is who is using whom. Without a doubt, Kirchner has found in Chávez a helpful ally who asks few questions and spreads money around with a disarming insouciance. This has allowed the Argentine president to thumb his nose at the hated IMF and resist pressures to reach a final settlement with his outstanding creditors. At the same time, Chávez is a useful foil: his outrageous public statements and grandiose threats against the United States amount to a gratifying exercise in political theater, and they pay political dividends at home at a low cost (among other things, they also help keep most of Argentina's small but active left-wing community inside the Kirchner electoral tent.) For example, during President Bush's trip to neighboring Brazil and Uruguay last month, Chávez appeared at a huge protest rally in Buenos Aires--which he also financed--and was introduced to an ecstatic crowd by Hebe de Bonafini, the vituperative president-founder of the Mothers of the Plaza de Mayo, a self-styled human- rights organization which has gone on to tackle other issues. Kirchner did not attend and would have us believe he had nothing whatsoever to do with the event itself. As for Chávez himself, presumably just the chance to bask once again in the adoration of foreign crowds was sufficient recompense.

It would be wrong to characterize Argentina, however, as falling within some sort of Venezuelan sphere of influence. Argentina is not--and never will be--Bolivia, much less Ecuador or Nicaragua. There is no doubt the Argentine president is running his own show--and running it well, according to his own lights. His style is authoritarian and opaque: he has never held a cabinet meeting, refuses to receive ambassadors, has purged the Supreme Court, makes uninhibited use of government money, taps telephones, and characterizes all forms of dissent or disagreement as illegitimate. Of the country's two great dailies, one is clearly an official organ of the government. Some journalists working for what remains of the independent media have received threats. Businessmen who contemplate contributing to the campaign funds of opponents find their taxes suddenly subject to an audit. Congress has ceased to play much of an active role in government, even though Kirchner's party has a majority in both houses. The president has access to huge amounts of off-budget money which he is using to build his own political machine. Some of this is not new, of course, but it is disturbing nonetheless in a country where democratic institutions have tended to be fragile and where corruption, cronyism, and patronage have been the principal tools of government. The issue here is not whether or not Kirchner remains president, but rather what kind of a country he will bequeath when he finally quits the scene.

Nothing All That New

Argentina's history tends to be cyclical. For the past seventy years or so, the country has bobbed back and forth between crises and recovery, each time convinced that it has finally found a formula for sustained prosperity. Elected governments and military dictatorships, Peronists and anti-Peronists, protectionists and free marketers have each taken their turn at the wheel, each enjoyed a moment of euphoria and mass support, each ultimately suffered discredit and collapse--with some recent presidents forced to depart the government palace by helicopter. Sooner or later the country will have to return to the capital markets and settle accounts with its remaining creditors if it wishes to sustain and improve its present recovery. In the meanwhile, Kirchner rides the high curve of a cycle. He can only hope that his own landing will be softer than that of all his predecessors.

Mark Falcoff is a resident scholar emeritus at AEI. Editorial associate Nicole Passan worked with the author to edit and produce this Latin American Outlook.

Feinstein's Office Denies Conflict of Interest Charges
By Fred Lucas
CNSNews.com Staff Writer
April 04, 2007

(CNSNews.com) - Breaking nearly a week of silence, Sen. Dianne Feinstein's office Tuesday called allegations of a conflict of interest "nonsense" and said the California Democrat played no role in awarding military contracts that benefited companies owned by her husband.

It was reported last week that Feinstein no longer serves on a Senate subcommittee that oversaw military construction.

Earlier this year, Metro Newspapers accused Feinstein of a conflict of interest because the subcommittee had oversight of military contracts that often went to defense contractors owned by her husband, Richard Blum.

Feinstein's departure from the Senate subcommittee on military construction appropriation, also called MILCON, had nothing to do with reports in the Silicon Valley weeklies, said Feinstein spokesman Scott Gerber. In fact, she had already left the panel before the reports were published in late January.

"It is nonsense to suggest Sen. Feinstein resigned from the military construction subcommittee," Gerber told Cybercast News Service Tuesday. "At the beginning of Congress, following the historic shift in power, Sen. Feinstein had the opportunity to be the chair of the interior appropriations subcommittee."

This Senate panel offered her more ways to help the state of California, Gerber said, adding, "She is still on the full defense appropriations subcommittee."

Feinstein's service on the committee never presented a conflict of interest, Gerber said, because she didn't have the power to direct contracts to her husband's business or any other company.

"Sen. Feinstein never sought to award military contracts," Gerber said. "That procedure is done by the defense department. Congress plays no role in that process."

That's only technically true, said Kenneth Boehm, chairman of the National Legal and Policy Center, a conservative government watchdog group. He said Tuesday it was disingenuous for Feinstein's office to claim she had no role in awarding contracts.

"The Pentagon does award contracts, but when the Pentagon wants money it goes to the appropriation subcommittees in the House and Senate for money," Boehm noted. "It's hard to imagine a more textbook example of a major financial conflict of interest."

When the Pentagon or any federal agency submits its wish list to Congress, Boehm explained, the appropriations committee members select which programs and projects are funded and often have knowledge of what companies might be suited for the project based on geography, specialization and other factors.

This is well known on Capitol Hill, he said.

"To say she didn't actually do the contract is fall-down-laughing material," Boehm said.

Metro Newspapers first reported in late January several instances in which Feinstein seemed directly involved in issues that could benefit Perini Corp. and URS Corp. Her husband has ownership in both, according to the newspapers.

The examples include a subcommittee hearing where Feinstein asked Pentagon officials about increasing anti-terrorism protection for army bases.

The next year, in March 2003, Feinstein asked why the funds for anti-terror protection had not been spent. Just over a moth later, URS announced a $600 million contract to provide services for U.S. Army bases that include anti-terrorism force protection.

In another instance, Feinstein asked another military official when money would be spent on a maintenance facility for the C-17 Hickam Air Base in Hawaii. URS later announced a $42 million contract to build it.

Also, Feinstein's subcommittee in mid-2005 approved funds to reinforce roofs at military stations in Iraq, and in October of that year, Perini got a $185 million federal contract for that purpose, the papers reported.

Feinstein at the very least had knowledge about what the military wanted and when, said Chris Farrell, research director for Judicial Watch.

The conservative group is working on a complaint to the Senate Ethics Committee and a freedom of information request to the U.S. Department of Defense.

"She had a preview of what was coming down the pipeline," Farrell told Cybercast News Service. "It's a sneak preview for him [Blum]. It's like ordering off a menu."

Feinstein chairs the Senate Rules Committee, which sets both procedural rules and ethical guidelines for members.

N Korea envoys 'keeping children'
North Korean diplomats stationed overseas are reportedly refusing an order to send their children home, according to South Korean media.
The order was issued earlier this year in an apparent attempt to stop defections from the hardline regime.

It said diplomats should send all but one of their children back to North Korea by the end of March.

But South Korea's Yonhap news agency said diplomats were resisting the order, in an "unprecedented" move.

Yonhap quoted an unnamed source as saying the incident could trigger a "major political scandal", given how unusual it is for North Korea's ruling Communist Party to be disobeyed.

Old regulation

Diplomatic postings are highly sought-after jobs in North Korea, and are only given to the most loyal supporters of the regime.

But analysts say that once overseas, diplomats' exposure to foreign thinking brings them under official suspicion in secretive North Korea.

Earlier this year the regime revived an old regulation which said that diplomats posted overseas could only take one child with them, Yonhap reported.

The regulation was suspended in 2002, allowing diplomats to take out many more children.

North Korea now wants the children sent home, and there are reports that hundreds of children could be affected.

Yonhap's source said opposition to the move was particularly strong among North Koreans living in China, the North's closest ally.

The reports said that diplomats in China had yet to send a single child back to North Korea, prompting the despatch of a senior official from Pyongyang to Beijing to investigate.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/asia-pacific/6521143.stm

Published: 2007/04/03 09:47:46 GMT

==============================
US helps fight against Abu Sayyaf
By Nick Meo
in Jolo, the Philippines

Except for Humvees on the beach and armed guards, the US Navy Seals base in Jolo island in the southern Philippines looks more like a hang-out for surf bums than a military base for an elite anti-terrorist task force.
A few yards from the detachment's temporary home in a mansion surrounded by blast barriers and coconut palms, the surf pounds on a powder-sand shore with jungle-covered mountains behind.

A nicer backwater of the war on terror could not be imagined.

Just a few miles away are the dwindling but still dangerous remnants of one of Asia's most ruthless Muslim militant groups, Abu Sayyaf.

With leaders trained in Afghanistan and pledged to ignite jihad in South East Asia, the group has been blamed by the Manila government for killing hundreds of Philippines citizens in bomb attacks and other violence.

In 2001 the group kidnapped three Americans, beheading one. A US missionary died in a botched rescue attempt the next year. In 2004 the group was blamed for a ferry bombing in which 100 passengers died.

The Philippines military says international terrorists are still hiding with Abu Sayyaf, including two men suspected of involvement in the 2002 Bali bombings.

At that time, Abu Sayyaf were making millions of dollars from kidnapping and virtually ran the Sulu archipelago, which for decades has been a lawless, impoverished region notorious for pirates and Muslim rebels.

Now the revitalised Philippines security forces estimate there are only about 200 Abu Sayyaf fighters left in the jungles of Jolo.

Hearts and minds

The US Special Forces teams, Seals and soldiers who have been based on Jolo since 2002 are strictly forbidden from engaging in combat with Abu Sayyaf, under terms agreed with the Philippines government.

Around 100 US troops are instead equipped with the latest unmanned spy planes and electronic eavesdropping equipment to gather intelligence on their allies' targets.

Meanwhile, since 1997, USAid has spent $4m a year building schools, clinics and roads to win hearts and minds on the island, one of the poorest places in the Philippines.

The posting is an unusual one for military veterans of Iraq and Afghanistan.

Infantryman Tommy Bairefoot, 26, transferred from convoy security in Iraq.

"It is a bit like being in paradise, and you don't have to worry about roadside bombs here," he said.

With combat strictly banned, much of the Americans' time is spent on hearts and minds programmes.

Troops set up clinics where villagers who rarely see the inside of a hospital are treated.

At one clinic, Special Forces Captain Ryan Mienecke said that he had not been near any fighting during five months on the island but had seen plenty of Abu Sayyaf militants.

Gesturing at the villagers who had arrived to see an army doctor he said: "Take a look around you. I'm sure some of them are here at this camp."

Human rights concerns

The US troops are full of praise for their Philippine allies, who have fought Muslim rebels for years in Jolo and surrounding islands, but only managed to win over much local support in recent years, partly thanks to US money.

Special Forces Captain Ian Berg said: "The islanders don't really support Abu Sayyaf they just want stability, and that's what's being established here."

The US Government has also spent millions of dollars on rewards for information leading to the arrest or killing of named militants.

The two most wanted are accused Bali bombers Umar Patak and Dulmatin, who has a $5m price on his head.

A major success came at the end of 2006 when Abu Sayyaf's leader Khadaffy Janjalani was killed in a fire fight.

Islanders are wary about the military but most agree that crime rates are down and an edgy normality has returned after years of chaos and bloodshed.

Some human rights campaigners are critical of the Philippines military, however, claiming that civilians are killed in the fighting as well as militants.

Merlie Mendoza, of human rights group Tabang Mindanao, said: "Villagers see armed men, whether guerrillas or the military, they run away into the trees, and in the confusion they are shot. There are not investigations into what happens and nobody knows how often it happens."

General Juancho Sabban, the ebullient public face of the fight against Abu Sayyaf, is confident that the tactics are working and that Abu Sayyaf will eventually be wiped out.

"If you win the people, you win the war," he said.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/asia-pacific/6499589.stm

Published: 2007/04/02 11:51:19 GMT

© BBC MMVII