RFE/RL NEWSLINE Vol. 11, No. 62, Part III, 3 April 2007

IRANIAN POLICE ARREST FEMALE ACTIVISTS. Iranian police arrested four
or five women's rights activists on April 2 when they tried to gather
signatures for a "million-signature campaign" targeting laws that
discriminate against women, Radio Farda and ILNA reported. Those
arrested were Sara Aminian, her unnamed husband, Nahid Keshavarz,
Mahbubeh Hosseinzadeh, and Soussan Tahmasebi, Radio Farda reported,
adding that they were taken to a Tehran detention center used for
vice-related or public-decency offenses. The broadcaster stated that
they were previously arrested in March, then released, for taking
part in women's rights demonstrations (see "RFE/RL Newsline," March
5, 15 and 20, 2007). ISNA separately reported on April 2 on the
reexamination in coming months of the unresolved case of Zahra
Kazemi, a photographer who died in 2003, apparently during
interrogation in Tehran's Evin prison (see "RFE/RL Iran Report," June
26 and October 30, 2006). Lawyer Mohammad Seifzadeh said lawyers for
the family will attend a session at a supreme-court branch in Tehran,
due to be held at an unspecified date in the Persian month to July
22, and explain why the last court verdict was flawed. VS

Europe tops US in stock market value
By Tony Tassell
Published: April 2 2007 21:48 | Last updated: April 2 2007 21:48
Europe has eclipsed the US in stock market value for the first time since the first world war in another sign of the slipping of the global dominance of American capital markets.

Europe’s 24 stockmarkets, including Russia and emerging Europe, saw their capitalisation rise to $15,720bn (€11,819bn) at the end of last week, according to Thomson Financial data. That exceeded the $15,640bn market value of the US.

The rise of the euro against the dollar, growth of east European markets such as Russia and stock market outperformance spurred by improving profitability have seen Europe close a long-held gap with the US. Ian Harnett at Absolute Strategy Research, who identified the move, said this marked a “seismic shift” in markets.

The last time Europe eclipsed the US in market capitalisation was likely to have been before the first world war, said Mike Staunton, stock-market historian at London Business School. The shift mirrors a trend in the debt world, where European activity has caught up, and in some cases overtaken the US.

European shares have outperformed the US, with their market capitalisation rising 160 per cent since the start of 2003 in dollar terms, said Thomson Financial. That compared with a 70.5 per cent rise for the US stock market. Over that time the euro has risen 26 per cent against the dollar.

Europe trails the US on the indices of market capitalisation compiled by FTSE and MSCI and which are used by fund managers as benchmarks.

However, these have a reduced or no weighting to shares that cannot be freely traded such as holdings of governments or controlling family shareholders. Europe has more companies with such stakes.

Copyright The Financial Times Limited 2007

April 4, 2007
Op-Ed Columnist
The African Connection

By THOMAS L. FRIEDMAN
NAIROBI, Kenya

Was anybody out there checking out jobs with the U.S. post office in 2005? Do you remember when you called that 800 number to get details? Sure you do. Do you remember how the voice on the other end of the line helping you had this soft British accent with a slight African lilt? Do you know why? Because you were routed to a call center in Kenya.

So maybe you weren’t looking for a job, but you had just bought a new computer. And when you turned it on, you clicked the icon for one of America’s biggest Internet service providers to get broadband access. But you needed someone to talk you through getting it connected — so you called that 800 number. The techie who helped you was also a Kenyan at that same Nairobi call center.

It’s called KenCall. It is located in an abandoned avocado processing plant, and it is the largest of Kenya’s blooming outsourcing call centers, with almost 300 employees and annual revenues that have grown to $3.5 million since it opened three years ago. If you’re surprised it’s here, so are most of its customers.

“I was actually talking to someone in America who had just given birth and she was ordering high-speed D.S.L. for her new residence — three or four hours after the birth,” said Nina Nyongesa, a 25-year-old KenCall supervisor and I.T. graduate of Nairobi University. “She said to me, ‘Where are you?’ I said, ‘Nairobi.’ And she said, ‘Are you sure?’ And she was really happy — so she bought one for herself, one for her mother and one for her mother-in-law. So instead of making one sale I made three.”

KenCall is one small reason that Kenya’s economy grew 6 percent last year. Yes, Kenya still has all the ills of other African states — from AIDS to abject poverty. But Kenya also now has a democratically elected government that is learning to get out of the way of Kenya’s entrepreneurs and to get them the bandwidth they need to compete globally. It’s way too early to declare Kenya an economic “African Tiger,” but something is stirring here that bears watching — and KenCall is emblematic of it.

The company was started by the half-English, half-Kenyan Nicholas Nesbitt, his brother Eric and his brother-in-law Stephen Liggins. Nicholas Nesbitt and Liggins had made successful careers on Wall Street. But after Kenya’s democratic elections in 2002, they decided to come home and see if they could do good for their country and for themselves by taking advantage of Kenya’s large pool of educated, English-speaking talent to break into the outsourcing industry.

There was one big problem. Kenya, like the rest of East Africa, was not connected to any global undersea fiber-optic cable that would give it the cheap high-speed bandwidth of the scale needed by call centers. The Internet here all came via satellite, which is more expensive to begin with and was made even more so by the fact that the Kenyan state phone company had a monopoly.

In a rare move in Africa, the Kenyan government decided to give up that monopoly and open competition for satellite-provided bandwidth — even though it meant laying off 6,000 government workers. The competition made KenCall’s business possible. The Kenyan government is now working feverishly to get connected to the global fiber-optic network, via an undersea cable, which would make bandwidth here cheap and plentiful enough for all sorts of outsourcing.

KenCall opened in late 2004, taking orders for U.S. late-night TV commercials. Its Kenyan operators sold Yellow Page ads, security alarms and mortgages. But it has since grown its business to include data-entry for one of the premier Wall Street credit-rating firms and handling service calls for global banks and insurance companies. For an economy dependent on coffee, safaris and flowers, this is a real change of pace.

“The concept of connecting to the outside world and attracting investors from the outside — that has not been here before,” remarked Stephen Ogunde, another KenCall supervisor.

KenCall’s employees can make in a month what half of Kenya’s population makes in a year: around $350. They get health care and free transportation.

Don’t give up on Africa. KenCall is a reminder that with a little less government regulation, a little more democracy and a lot more bandwidth, African entrepreneurs can play this game too. “In the old days, ‘landlocked’ meant you didn’t have a harbor,” said Mr. Nesbitt. “In the new days, it means you don’t have fiber broadband to the rest of the world. This whole market here is just waiting for that.”

The British Detainees: Reading Diplomatic Signals
By George Friedman
Last week, Iranian forces captured 15 British sailors and marines in the Shatt al-Arab area, where the territorial distinction between Iraq and Iran is less than clear. The Iranians claimed the British personnel were in Iranian territory; the British denied it. The claims and counterclaims are less interesting than the fact that the Iranians clearly planned the capture: Whatever the British were doing in the area, the Iranians knew about it and had plans to do something in response. The questions are why, and why is this occurring now?
One explanation is that the British were on some sort of mission that the Iranians had to stop. A rumor circulating is that the British were involved in extracting an Iranian defector, and the Iranians were moving to block the defection. That's a possibility, but then the captured Britons hardly appeared to be operating as a covert team -- and if there was a defection under way, the secret had been blown a long time before, since the Iranians were able to amass the force used in the capture.
It seems to us that the capture of the British had less to do with any particular operation than with a more general desire on the part of the Iranians to capture the personnel and thereby create an international incident. The important issue, therefore, is why they wanted an incident, and why this particular sort.
By now, it is no secret that the Americans and Iranians are engaged in a complex negotiation that is focused on Iraq, but which also involves Iran's future nuclear capability. U.S. and Iranian officials met publicly in early March, and a further meeting is scheduled, but the most important discussions have taken place in private venues. It also is clear that there is a debate within Tehran, as well as within Washington, as to whether these talks should be going on, how the negotiations should be carried out and the role of force in the negotiations. We suspect that the capture of the British detainees had something to do with the U.S. negotiations and with internal Iranian politics.
At this point, both sides in the negotiations are trying to impress upon each other not only that they retain some options, but also that their moves cannot be easily predicted. Both want to be seen as retaining the option of surprise. The capture of the British personnel, then, should be read not so much as the trigger for an international crisis as a diplomatic signal. If either the Americans or the Iranians believed it were possible to achieve their own ideal outcomes in negotiations, either the capture or the U.S. military surge into Iraq would not have come about. The game for each now is an effort to secure an outcome that can be lived with -- not an outright victory.
U.S. Signals and Limitations
The U.S. approach to the negotiations with Iran has been multifaceted.

First, by talking simultaneously with the Sunni insurgents, the Americans clearly have been letting the Iranians know that they have not been trapped into dealing only with the Iranians or Iraqi Shia when it comes to the future of Iraq.
Second, Washington has tried to keep the Iranian nuclear issue separate from the Iraq issue. Given that none of the world's great powers truly has an interest in seeing Iran get the bomb, Washington has international backing on some aspects of the Iran nuclear issue -- and does not want that confused with the question of Iraq, where support for its position is much weaker. Washington does not want to provide the Iranians with linkage between the issues; rather, it wants to maintain its ability to extract concessions over Iraq in exchange for concessions on the nuclear issue.
Third, and most important, the U.S. leadership consistently has emphasized that it has no fear of Iran and is not constrained politically or militarily. The entire objective of the U.S. surge strategy was to demonstrate that the administration retains military options in Iraq and is capable of using them. At the same time, the United States has carefully orchestrated a campaign to let the Iranians believe that it retains military options against Iran as well -- and is considering using them. The exercises by two U.S. carrier battle groups last week had been planned for quite a while and were designed to give the Iranians pause.
Finally, the United States has moved to arrest Iranian officials who had been operating quasi-diplomatic entities in Iraq. (The Iranians said they were diplomatic and the Americans said they weren't, so we will term them "quasi.")

Rumors of imminent U.S. military action against Iran have swept the region. Totally uninformed sources around the world have been speculating for weeks about the possibility of unspecified U.S. action. The rumors suited the Bush administration perfectly. The administration wanted the Iranians to feel endangered, so as to shape the Iranian negotiating process. This has certainly been the case amid congressional action to set a deadline for a withdrawal from Iraq. If the Americans are going to withdraw, then Iran has no motivation to negotiate; it need only wait. The administration played off the congressional proposals to hint that the possibility of a forced deadline increases the pressure for the president to act quickly, rather than to wait.
The problem for the United States, however, is the issue of what sort of action it actually can take. It is in no position to undertake a ground invasion of Iran. Iran is a big country, and occupying it is beyond the capability of any force the United States could field -- at least, not without a massive increase of ground forces that would take several years to achieve, and that certainly is not under way at the moment.
The other option is an air campaign. And it is not clear that an air campaign would work. The example of Israel's failure in Lebanon last summer weighs heavily. The Israelis chose the air campaign option and failed to achieve a satisfactory outcome. The U.S. Army historically has seen the air campaign as useful only if it is followed by an effective occupation. The most successful air campaign, Desert Storm, worked in a much smaller battle-box than Iran, and was followed up by a multidivisional ground force in order to defeat the defending Iraqi force and occupy the territory. In Iran, the quantity of air power needed for an outcome similar to that in Kuwait in 1991 is substantially greater than the United States has available, and as we have said, there is no follow-on ground force capable of occupying Iran.
The Iranian Signals
The Iranians, like the Americans, also have found it necessary to demonstrate a lack of intimidation. And for Iran, capturing 15 British sailors and marines was an excellent device. First, it raised the specter in the United States of another Iranian hostage crisis, reminding Bush of how the Iranians handled Jimmy Carter in 1979. Second, it showed that Iran is not concerned about possible retaliation by either the United States or the United Kingdom -- which has no options independent of the United States and is not driving negotiations over Iraq. Finally, the fact that action was directed against the British, rather than the Americans, slightly deflected the intensity of the crisis; because Americans were not taken captive, there was less pressure for the United States to do something about it.
But there is another dimension to this. The Iranians have shifted the spotlight away from Baghdad and to the southern region of Iraq -- to the area dominated by Shia and held by the British. The capture of the British personnel coincided with some fighting in the Basra area among Shiite militias.
In this way, the Iranians have sent two signals.
The first was that while the United States is concentrating its forces in Baghdad and Anbar province, Iran remains perfectly capable of whipping up a crisis in the relatively quiet south -- where U.S. troops are not present and where the British, who already have established a timeline for withdrawal, might not have sufficient force to contain a crisis. If the United States had to inject forces into the south at this point, they would have to come from other regions of Iraq or from the already strained reserve forces in the United States. The Iranians are indicating that they can create some serious political and military problems for the United States if Washington becomes aggressive.

The second is a statement about the negotiations over Iraq. While they are interested in reaching a comprehensive settlement over Iraq, the Iranians are prepared to contemplate another outcome, in which Iraq fragments into regional entities and the Iranians dominate the Shiite south. In some ways, this is more than an acceptable alternative. For one thing, in holding the south, the Iranians would be in a position to impede or cut U.S. lines of supply running from Kuwait to central Iraq. Second, their forces would be in a position to bring pressure to bear on Saudi Arabia, unless the United States were to redeploy troops.
In other words, the shift of attention to the south poses a worrisome military challenge to the Americans. If the Iranians or Shia were to get aggressive in the south, the United States could be forced to spread its troops even thinner, leaving operations in the north severely weakened. The maneuver could help to collapse the Americans' position in Iraq by overloading them with responsibilities.
Call, Raise -- Draw?
The Iranians have called the American hand and raised the stakes. Where the United States has been trying to generate a sense of danger on the part of Iran with rumors of airstrikes, the Iranians have signaled that they aren't worried about the airstrikes -- and then raised the American bet by forcing the United States to consider what its options might be if all hell broke loose in southern Iraq. Tehran is saying that it has more credible options than Washington does.
There is obviously a political debate going on inside Iran. As we have argued, there is deep consensus among Iranian leaders as to what outcome they want, but there is a faction led by older leaders, like Ali Akbar Hashemi Rafsanjani, that does not underestimate the resources of the United States. And there is a faction that argues that the United States, at its weakest, must be pressured until it capitulates. The capture of the British personnel could have been designed to enhance the power of the more aggressive faction. But because Iranian politics are opaque, it could be argued just as logically that the capture was designed to enhance Rafsanjani's position by setting up a game of "good cop, bad cop." In other words, Rafsanjani now can ask for concessions from the Americans to keep the other faction from going too far.
Whatever the inner workings of the Iranian elite, the move strengthens Iran's negotiating position in a number of ways.
By holding the British captives, the Iranians are also trying to show the limits of Anglo-American power to their own public. One of the motives behind the capture was to demonstrate to Iranians that the Americans are incapable of taking action against Iran. (The British were less important in this context because they never were viewed by Tehran as being capable of or interested in decisive action against Iran.) The capture of the detainees, then, solidifies Supreme Leader Ayatollah Ali Khamenei's position by revealing American weakness. If the United States and the United Kingdom don't rescue the prisoners and don't take other military action, holding the detainees increases the credibility of the Iranian leadership -- not only in relation to the Americans, but also with the Iranian public.
The logic here would call for a rescue attempt. However, in order for the captives to be rescued, the following elements are required:
1. Intelligence on the captives' location must be perfect, to the point of providing information on their precise housing.
2. The hostages cannot be housed in multiple locations; otherwise, the operation becomes both more complicated and more likely to fail, unless timing is perfect.
3. There must be time to rehearse the extraction, during which the prisoners must not be moved.
4. There must be a light covering force protecting the direct guards. The involvement of heavily armed, trained and dispersed troops at the battalion level and above, equipped with anti-aircraft systems, makes a successful extraction very unlikely.
The Iranians are old hands at this game. We can assume that they have:
1. Obfuscated the location of the British by communications deception and other means, while moving the detainees around.
2. Separated the detainees into at least three groups, one very small and remote from the other two.
3. Obscured the sites where the British are being held, in order to make model construction and rehearsals impossible.
4. Covered the detainees with an interior group of guards embedded in a multi-brigade matrix, with heavy anti-aircraft artillery and surface-to-air missile concentrations. Preparatory airstrikes by American or British forces would give away the extraction and force an abort.
That leaves the United States with the option of either accepting the status quo or initiating air operations against Iran. Now, the Iranian countermove -- creating chaos in southern Iraq -- seems daunting, but the Iranians might not have the influence in the region they would like others to believe: The Iraqi Shia are highly fragmented. But on the other hand, the Iranians do not have to impose a stable regime in southern Iraq right now. All they have to do is create instability there in order to weaken the Americans.
It comes down to the question of how lucky the U.S. leadership is feeling at the moment. Given past performance, we'd say George W. Bush is not a lucky man. If it can go wrong, it does go wrong for him. Symbolic airstrikes against Iran are conceivable, but an extended air campaign designed to smash Iran's infrastructure simply does not appear to us as a viable military option. Given Iran's size, the number of sorties designed to make a dent would be enormous. The Americans would be banking on frightening the Iranians into negotiation. Air power did that in Kosovo, against a country fighting for a peripheral interest. In Vietnam, it failed. Iran seems more like Vietnam than Serbia.
Therefore, we expect the United States to signal military action against Iran but not take it. We also expect the private talks between Iran and the United States to proceed with some sobriety. The Iranians know they have a weaker hand than it appears. Taking 15 captives is, in the end, not all that impressive by itself, and the rest hasn't played out yet. Thus, the saber-rattling will continue. That's what negotiations look like in the Middle East.

Biometric cash machines bring joy
By Amarnath Tewary
Vaishali, Bihar

These days Mahendra Sahni, a daily wage worker in India's most backward state of Bihar, struts up to a gleaming new cash machine in his village to withdraw his hard earned money.
The middle-aged, illiterate fish farmer from Vaishali district makes about 2,000 rupees a month ($44).

For years he used to waste nearly a day getting to the bank and queuing up to get his wages.

Now, when he inserts a cash card into the machine, he is greeted with an voice instruction in Hindi: "Please put your thumb on the specified space."

When he does that, crisp currency notes roll out of the machine with the voice saying, "Your cash is ready. Please accept it."

Sahni and 14 other poor daily wage workers from Vaishaligarh and neighbouring areas are among the first villagers in Bihar to have access to biometric cash machines to withdraw their money.

"This shows how science has made progress and can be used for poor village people like us," says Sahni.

The biometric cash machines are custom-made for people who cannot read or write and use features like fingerprint verification and voice guided animated screens and easy navigation.

The federal government has now announced that everybody in Vaishali employed under its ambitious new National Rural Employment Guarantee Scheme will get their wages through these new cash machines.

The scheme promises some 60 million households in India a level of financial protection through guaranteed work or unemployment benefit.

Banking made easy

For the moment, the cash machine run by the state-run Central Bank of India, is targeting some 210 daily wage workers in the area.

"It is basically for poor workers like Sahni who cannot read or write their names. Banking for them will become easy with these cash machines," says the bank's local manager Pranay Kumar.

The biometric cash machines work through a series of processes.
First, the fingerprint of an account holder is captured through a scanner at the time of the opening of the account.

A template is created for each fingerprint and stored in the cash card given to the customer.

When Sahni goes to the cash machine and inserts the cash card, his fingerprint is captured using an inbuilt scanner and it is matched with the impression stored in the cash card.

Central Bank's executive director K Subramanyam says biometric devices will go a long way in offering banking services in India's villages where 70% of its people live.

Payment through cash machines will also protect the workers from local contractors who routinely extract a cut from their wages in return of getting them on the list of government employment schemes.

For the moment, Sahni and his neighbours are happy to have discovered a hassle-free way of withdrawing their meagre savings.

The entire procedure of cycling to the branch and going through the paperwork with help from others and waiting in the queue for the money took up valuable work time.

The other day, he picked up 1,000 rupees in five minutes flat from the cash machine and cycled back home to begin work again.

"Withdrawing money couldn't be a better experience," he says.