China's capitalism isn't so foreign
Submitted by SHNS on Fri, 03/28/2008 - 15:54. By THOMAS P.M. BARNETT, Scripps Howard News Service editorials and opinion
Western powers today fear that China's stunning rise signals a real challenge to the notion that economic growth triggers democracy. While I understand such fears, let me tell you why they're unfounded: China's economy increasingly mirrors our own.

As business academics William Baumol, Robert Litan and Carl Schramm argue in their 2007 book, "Good Capitalism, Bad Capitalism," there are basically four types of capitalism operating today.

First, there's the family-style oligarchic capitalism found throughout much of Latin America, Africa, the Middle East, and Central Asia. In these low-trust social environments, blood ties trump contracts for getting business done.

Second, there is state-guided capitalism that features heavy government protection of national flagship companies that seek to dominate home markets while fueling export-driven growth. In decades past, this was the type of capitalism employed by Japan and South Korea during their rise. Today, we're talking ascending powers like China and Russia.

Third is the 'big firm" capitalism that marked America's corporate heyday of the mid-20th century and now characterizes Europe and Japan. These are mature markets where major players dominate most industries, giving the economy a lot of stability even as these larger entities don't adapt themselves quickly to new markets, while labor tends to be rigid.

Finally, there's the wide-open entrepreneurial capitalism that America always strives for, but which waxes and wanes through our history. For example, most big firms that dominated our economy in recent decades actually began as far smaller start-ups around the turn of the 20th century, when America's regional markets were being knitted together into a larger whole that rewarded economies of scale. An entrepreneurial economy features lots of small firms constantly generating new products and technologies.

Globally, the purest examples of highly entrepreneurial economies tend to be small "island" economies like Israel and Taiwan, nations for whom an almost non-stop "go global" strategy is the only way to achieve economies of scale in their high-technology products. Both are tumultuously democratic.

In their book, Baumol et al. argue that the current U.S. economy has located its happy historical medium: Leading industries dominated by big firms, but continuously invigorated by small, entrepreneurial start-ups that are regularly gobbled up by the big firms once their innovations mature. Good examples can be found in the information technology and pharmaceutical sectors, where a handful of giants represent the vast majority of go-to-market outcomes for start-up firms.

The authors single out this mixed model as any nation's best choice for sustained "smart" growth through continuous innovation, meaning America is basically there in terms of market evolution.

Is democracy required for this premium category? Entrepreneurs tend to be notoriously independent characters. If you don't give them the freedom they need, they tend to leave.

What does this tell us about China's "challenge?" Here's where I think we locate an underlying theory of market evolution lurking behind these categories, for China's rise has actually mirrored the American model more than we realize.

Because China started with a dominant state-run sector and refused to bite the bullet of "shock therapy," its leaders adopted a strategy of gradually cannibalizing the economy by encouraging the development of big firms, arising from either the growing private sector or state-owned entities, whose funding is obtained largely from government-controlled banks.

Here's the key part: these big firms are augmented by a growing constellation of private-sector entrepreneurial firms, who get their investment funds from foreign sources Provincial governments, municipal governments and individuals can launch these firms.

China's strategy seems clear enough: "Let the seedlings of new enterprise grow while tending to the forest of the existing (state entities), with the hope that the new ventures eventually will become more important to the economy than the (state outfits)."

As Baumol and his colleagues argue, "This is exactly what has happened, apparently with great success." The state-firm share of the national economy has dropped from virtually 100 percent in the early 1980s to approximately one-third of China's gross domestic product today.

Point being, China's model of development constitutes more of an endorsement of American-style capitalism than an improvement --much less rejection. This strategy of "incremental change, or entrepreneurial capitalism at the margin," allows China to gradually shift its economy toward the U.S. blend of big firms surrounded by entrepreneurial small firms.

What comes next? More and more freedom if China hopes to hold onto those entrepreneurs.

(Thomas P.M. Barnett is a distinguished strategist at the Oak Ridge Center for Advanced Studies and senior managing director of Enterra Solutions LLC. Contact him at tom(at)thomaspmbarnett.com.)

(Distributed by Scripps Howard News Service, http://www.scrippsnews.com)

March 30, 2008
Wed to Strangers, Vietnamese Wives Build Korean Lives

By NORIMITSU ONISHI
KWANGMYONG, South Korea — The two couples’ baby girls were born last month only two days apart, the younger one on the morning of the Lunar New Year. Each girl, everyone later agreed, had her Korean father’s forehead and her Vietnamese mother’s nose.

It was one year ago that the girls’ fathers had gone to Vietnam and, in the first two hours of a five-day marriage tour, plucked their mothers out of two dozen prospective brides at the Lucky Star karaoke bar in Hanoi.

Bound by fate and the rhythms of immigration bureaus, the brides, Bui Thi Thuy and To Thi Vien, had landed together in South Korea wondering what kind of place this would be and how their husbands would treat them.

“I feel we share a special bond because we were married on the same date and we both married Korean men,” Ms. Vien said. “We’re the same age and we became mothers almost at the same time.”

And so both new mothers now follow Korean custom by eating seaweed soup to recover their strength. Here in Kwangmyong, a city outside Seoul with a concentration of foreign workers and foreign women married to Korean men, Ms. Vien, 23, lives at the family home of her husband, Kim Wan-su, 40, a factory worker. Ms. Thuy, 23, settled with her husband, Kim Tae-goo, 56, in Yongju, a rural town southeast of Seoul where they grow apples.

The two couples, whose five-day courtship, wedding and honeymoon in Vietnam were described a year ago in an article in The New York Times, are part of a social phenomenon in South Korea. A combination of factors — including the rising social status of Korean women and a surplus of bachelors resulting from a traditional preference for sons — is forcing many Korean men to seek brides in Southeast and Central Asia and China.

In a country that defines itself as ethnically homogenous, marriages to foreigners accounted for one of eight marriages in 2006, more than triple the rate in 2000. In working-class areas southwest of Seoul, like Kwangmyong, community centers now offer services for foreign wives: Korean language classes, assistance with childbirth and for victims of domestic violence, advice on living in South Korea and with the in-laws.

But cultural gaps sometimes make it difficult to reach out to such wives.

“Chinese wives have their own outside network, so they tend to be assertive, and women from the Philippines speak English, so they are confident, but other women, like the Vietnamese, are shy about seeking advice and expressing their problems,” said Kim Myung-soon, a social worker at the Yeongdeungpo Social Welfare Center near here. “They tend to be submissive and smile at their in-laws even if there are problems. And one day they’re gone.”

Han Kuk-yeom, president of the Korea Women Migrants Human Rights Center, a private organization, said the government had not done enough to secure the rights of foreign wives or protect them from abuse.

Some men believe they are permitted to mistreat the women because they paid for the marriage tours and the weddings, and tend to look down on women from poorer countries, Ms. Han said. And the booming international marriage industry has drawn increasingly poor and vulnerable women here.

“Until about three years ago, more educated women tended to come to Korea, but as there are more international marriages, less educated and poorer women are coming to Korea,” Ms. Han said. “And they seem to have a harder time adapting to life in Korea, learning the language and so on.”

Divorce has risen among Korean men married to foreigners, according to government statistics. But it is too early to draw meaningful comparisons with the divorce rate of marriages between Koreans, which has also risen sharply in recent years.

Given the way they meet, both Korean husbands and their foreign wives have anxieties, as Kim Wan-su, removing ear plugs, explained during a lunch break from his job at a car key factory.

While foreign wives worry about how their husbands will treat them, Korean men harbor suspicions that the women married them merely to qualify for work here and to send money to their parents. When Ms. Vien’s parents in Vietnam heard that a Vietnamese bride in Korea had killed herself, they called in a panic. And Mr. Kim fretted after hearing that three brides who had come to South Korea through his wife’s agency had left their husbands shortly after arriving.

“I was worried that my wife would run away, too, but I’m not worried anymore,” Mr. Kim said. “We have a child, and we are a family. My wife didn’t come here to make money.”

While Mr. Kim was at work, Ms. Vien was taking care of their newborn at home. With the birth of their daughter, Dan-bi, Ms. Vien had stopped going twice a week to the local community center where she had befriended a woman from her home, Van Don Island, in Vietnam’s northeast. Ms. Vien had dropped out of college, where she had studied management, because her father, a farmer, could not afford the tuition.

In Kwangmyong, the couple lives with Mr. Kim’s mother and his older sister’s family — a total of nine people — on one floor of a three-story brick building on a narrow street. The older sister, Kim Ho-sook, had welcomed Ms. Vien and helped deflect the Kims’ 80-year-old mother, who was unhappy about the arrival of a foreign bride and said repeatedly that it would lead to the family’s downfall.

Last fall, the day before the couple held an elaborate wedding ceremony here after their quick wedding in Hanoi, the elderly mother — whose unhappiness was compounded by Alzheimer’s disease — ran away from home for 12 hours. The family tried to hide her disappearance from Ms. Vien and her parents, who had come to South Korea for the wedding. “But somehow Vien guessed what was happening and she started crying,” the sister-in-law said.

Last month, the day before Ms. Vien was scheduled to leave the hospital, her mother-in-law disappeared again, displeased that the baby was not a son.

“My mother still won’t even look at the baby,” the sister-in-law said. “She tells me not to like the child because it’s not a boy.”

Complicating matters, doctors recently diagnosed a hole in the baby’s heart and are not sure whether it will close on its own.

“I miss my mother a lot, especially these days,” Ms. Vien said. “I’m Vietnamese and everyone around me is Korean, so I feel a lot more ease talking to my mother. We can be on the phone for hours.”

On a recent Sunday afternoon, with the baby sleeping peacefully, Ms. Vien seemed in better spirits. She and her husband sat on the living room couch, often holding hands and showing the kind of affection they had displayed during the first week of their meeting.

Both said they were more committed than ever to building a life together, though they acknowledged gaps in culture and language. Their biggest arguments have occurred after he has gone drinking with co-workers and broken a promise to come home at a certain hour.

“I’m a working man, and she doesn’t understand that going out drinking with your co-workers is a necessity in Korean culture,” Mr. Kim said. “I feel that Vien thinks I didn’t keep my promise because she’s from a foreign country and I look down on her.”

Ms. Vien said that was not the case. “I’m your wife, and I don’t like it when you come home so late; nobody in the family likes that,” she said. “I get frustrated and worried. If I were Korean, I’d be less worried, because I’d understand exactly where you were. But I don’t.”

Ms. Thuy said, as she tucked in her daughter, Hyo-min, in the one-story red brick house that her husband, Kim Tae-goo, recently had built in Yongju, a two-hour drive from Seoul, “I’m going crazy because I can’t communicate with my husband.”

Ms. Thuy (pronounced TOO-ey), who finished high school in her hometown, Quang Yen, in northeastern Vietnam and soon after started seeking a husband, said she found learning Korean difficult. But Mr. Kim said she was not trying hard enough.

“She’ll repeat a word just a couple of times and then give up,” Mr. Kim said. “She should appreciate the fact that I’m trying to teach her. Our biggest arguments have been over this.”

“He doesn’t try to speak Vietnamese,” she said, adding that he knew only how to say “hello” and “how are you?”

They live with Mr. Kim’s mother and his 17-year-old daughter from his first marriage. (His first wife was Korean.) At home, though, Ms. Thuy seldom speaks with her in-laws.

“My daughter referred to her only once as ‘mother,’” Mr. Kim said. “But my mother and daughter don’t dislike Thuy.”

Ms. Thuy has yet to make friends outside. Although several other Vietnamese wives live in the area, Ms. Thuy, in a sign of the lingering regionalism seen among many Vietnamese wives, does not socialize with them because they are from Ho Chi Minh City, the former Saigon, in the south.

“They’re from Ho Chi Minh, so whenever I run into them, we greet each other,” she said, adding that she found it difficult to befriend them.

The birth of their daughter, coinciding with a lull in the apple farming season, has given the marriage fresh meaning, the couple said. Mr. Kim, who participated little in child-rearing during his first marriage, is now actively involved, scouring the Internet for information on everything from breast milk to hiccupping to diapers, while Ms. Thuy never lets the child out of her sight.

Sometimes they reminisce about their first meeting at the Lucky Star in Hanoi.

He picked her, she teased, only after his first three choices had turned him down. He had seemed rich, she said, and she liked that he was a farmer, like her father.

“I would have led a much more difficult life in Vietnam, because people are still poor there,” she said.

He indicated that he was glad about the outcome, too. “I don’t want to sound as if I’m looking down on Thuy,” he said. “But if I had married someone who was more educated or taller, I don’t think she would have been happy here with me. So I think we are a good match for each other.”

Su-hyun Lee contributed reporting from Seoul, South Korea.

Toronto Chinese Rally Turns Ugly
Participants heckle Tibetans: 'Leave Canada.' Mayor's China trip questioned

By Jason Loftus
Epoch Times Toronto Staff
Mar 29, 2008


This series of photos shows a man, identified as university student Yang Shao by other students, charging across Yonge Street with a Chinese flag. He was detained by police but later released. (The Epoch Times)

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TORONTO—A rally that was billed as promoting "anti-violence" turned hostile on Saturday as flag-waving Chinese denounced Tibetans who they blamed for the recent turmoil in Tibet in which 100 are said to have died.

Close to 1000 Chinese were in Toronto's Dundas Square for the afternoon event, many of them students.

"Dalai Lama die there!" some Chinese shouted at a group of Tibetans who had gathered across the street from the square to protest. "Leave Canada!" others urged.

Tibetans say the Chinese rally, which began orderly, was designed to incite hate against them.

The event was promoted in Chinese-language press as a rally to tell the "truth" about Tibet and "safeguard the reunification of the motherland."

Several major Chinese-language media outlets in Canada have parroted the Chinese communist regime's line on Tibet, blaming the turmoil on the Dalai Lama and his followers and fanning a nationalist animosity toward Tibetans. ( Read more )

The rally began with a parade of speeches repeating the Chinese regime's line on Tibet: that it has long been part of China, that the Chinese government spent millions trying to help the Tibetan people, and that Tibetan monks and youths led violent protests in Lhasa recently that caused death and suffering of Han Chinese, the majority ethnic group in China.


This series of photos shows a man, identified as university student Yang Shao by other students, charging across Yonge Street with a Chinese flag. He was detained by police but later released. (The Epoch Times)
The speeches were interspersed with patriotic Chinese songs. No mention was made of police violence used to quash the protests, nor of the Tibetan grievances that experts say sparked the initially peaceful protests in Lhasa.

"China and Chinese people have helped Tibetan people to improve human rights," said one organizer who spoke in English. "How can somebody who cannot even read or write understand anything about human rights? If they cannot read or write, how can they understand what they have lost in the past in Tibet? People were just blind faith to believe in their religion. They were controlled."

Another speaker added, "Tibetan culture not only has not been damaged, but has been greatly protected, spread and developed."

The rally became dramatic when a Tibetan refugee took to the stage waving a Tibetan flag. He was seized by a group of Chinese who dragged him away before police intervened to separate them.

After the incident, the man spoke with The Epoch Times. In tears, he described the suffering of Tibetans under communist rule, explaining that he left Tibet 10 years ago and came to Canada only recently. The man said Toronto Mayor David Miller should reconsider a planned trip to China next month amid the ongoing repression in Tibet by the communist regime.

Angry Chinese turned on the Tibetan protesters, hollering "Dalai Lama die there!" "Dalai Lama lies!" "Liars, liars!" and "Leave Canada!"


This series of photos shows a man, identified as university student Yang Shao by other students, charging across Yonge Street with a Chinese flag. He was detained by police but later released. (The Epoch Times)
They also sang communist party songs.

Police detained one man after he charged across a busy street to where the Tibetans were protesting, waving a large Chinese flag. He was identified as University of Toronto student Yang Shao by other students in the square.

Police at Toronto's 52 Division said the man had been released and no charges had been laid.

A spokesperson for the city office that oversees the Dundas Square said earlier this week that he didn't believe the group organizing Saturday's event would be spreading hate.

Patrick Carnegie, the square's manager of programming and events, said there were rules that governed how the square is to be used, including not belittling any identifiable group and conveying messages only in a positive way.

Any group can use the space "as long as they do so in a safe manner that is in accordance to the bylaws," Mr. Carnegie said.

According to Mr. Carnegie, the event had been approved as a "Love China Concert." When The Epoch Times pointed out that even English-language flyers for the event seemed to suggest an anti-Tibetan theme, he said the group was expected to follow the rules.

More to come. Anna Yang and Matthew Little contributed to this story.

March 30, 2008
POLITICAL MEMO
Iraqi Offensive Revives Debate for Campaigns

By MICHAEL COOPER and LARRY ROHTER
The heavy fighting that broke out last week as Iraqi security forces tried to oust Shiite militias from Basra is reverberating on the presidential campaign trail and posing new challenges and opportunities to the candidates, particularly Senator John McCain.

The fierce fighting — and the threat that it could undo a long-term truce that has greatly helped to reduce the level of violence in Iraq — thrust the war back into the headlines and the public consciousness just as it had been receding behind a tide of economic concerns. And it raised anew a host of politically charged questions about whether the current strategy is succeeding, how capable the Iraqis are of defending themselves and what the potential impact would be of any American troop withdrawals.

Mr. McCain, the presumptive Republican nominee, has made the Iraq war a centerpiece of his campaign; he rode to success in the primary season partly on his early advocacy of the troop buildup. The battle in Basra broke out as he returned from a trip to Iraq this month, proclaiming that violence there was down and that the troop escalation was working.

Mr. McCain, of Arizona, said he was encouraged that Prime Minister Nuri Kamal al-Maliki’s government had sent its troops to reclaim Basra from the Shiite militias. “I think it’s a sign of the strength of his government,” Mr. McCain said Friday at a stop in Las Vegas. “I think it’s going to be a tough fight. We know that these militias are well entrenched there. I hope they will succeed and succeed quickly.”

The Democrats, who are calling for phased troop withdrawals, are beginning to point to the fighting in Basra as evidence that the American troop buildup has failed to provide stability and political reconciliation — particularly if the fighting leads one militia, the Mahdi Army, to pull out of its cease-fire; that could lead to a new spate of sectarian violence across the country. Some are saying the fighting strengthens their case for troop withdrawals.

But the McCain campaign is hoping to turn that argument on its head, asserting that the battle in Basra shows just how dangerous the situation on the ground in Iraq is. It says this bolsters Mr. McCain’s argument that a premature withdrawal of American troops would lead to more widespread violence, instability and perhaps even genocide.

“I think that what this demonstrates is that there are very powerful forces that still remain that do not want to see the success of the central government and that would relish the prospect of the American withdrawal so that they could try to fight or shoot their way into power,” said Randy Scheunemann, the McCain campaign’s senior foreign policy adviser. “Would you rather have the Maliki government in control, or the Iranian-backed special groups in control, or Al Qaeda in control?”

But at a news conference on Saturday in Johnstown, Pa., Senator Barack Obama of Illinois suggested the news from Basra highlighted his contention that American military involvement could not solve the deep-seated problems facing Iraq.

“I don’t want to suggest I’ve absorbed all of the facts,” about the situation in Basra, Mr. Obama said. But, he continued, what he had heard “appears consistent with my general analysis. The presence of our troops and their excellence has resulted in some reduction in violence. It has not resolved the underlying tensions that exist in Iraq.”

Dennis B. Ross, a Middle East peace negotiator in the administrations of the first President Bush and President Bill Clinton, said the violence posed risks for candidates in both parties.

“Senator McCain is more vulnerable than the Democrats, because this is a reminder of how messy the situation remains in Iraq,” Mr. Ross said. “This is an interesting reminder of how much remains to be done. With the main focus having been on the military side, the surge has not created enough of a self-sustaining political fabric.”

Campaign officials in both parties cautioned that the situation in Iraq appeared fluid and that preliminary reports of what was going on there were incomplete. And much depends on the eventual outcome in Basra. It could end up showing that the Iraqi government is capable of taking control back from the militias. Or it could show the Iraqis are incapable of defending themselves, shattering a fragile cease-fire in the process.

Either way, officials in both parties agreed that the fighting in Basra — coming two weeks before Gen. David H. Petraeus, the senior American commander in Iraq, is scheduled to appear on Capitol Hill — was likely to intensify the debate over the war again.

Mr. Obama’s opponent for the Democratic nomination, Senator Hillary Rodham Clinton of New York, did not directly address the Basra situation on Saturday and instead kept the focus on economic issues. But aides to both candidates said the fighting there raised troubling questions about whether the troop buildup was making the country more stable. And given the trouble that the Iraqi security forces have had in ousting the militias, and their need for American air support, they said it also called into question the fighting capabilities of the Iraqi military.

Denis McDonough, a senior foreign policy adviser to Mr. Obama, said the situation in Basra “does raise a handful of concerns as it relates to the surge and, more importantly, about the prospect of political reconciliation.”

Lee Feinstein, the national security director for the Clinton campaign, said: “The sectarian fighting is continuing and apparently now intensifying with some 150,000 U.S. troops on the ground. The Bush-Cheney-McCain policy is to say we can’t bring our troops home when violence appears to be down, and that we can’t remove our troops when violence is increasing as we have seen this week.

“The only way to get the Iraqis to accept responsibility for their future is by no longer extending them an indefinite blank check, intensifying diplomacy and withdrawing our troops swiftly, responsibly and safely.”

Mrs. Clinton has recently been arguing that the troop buildup had failed to achieve its goals, as she did at a campaign event Tuesday in Pennsylvania. “President Bush seems to want to keep as many people as possible in Iraq,” she said. “It’s a clear admission that the surge has failed to accomplish its goals.”

Mr. Ross, who wrote “Statecraft and How to Restore America’s Standing in the World,” said the Basra fighting posed hard questions not only for Mr. McCain but also for the Democrats. “It is a little sobering to say you can withdraw on a fixed timetable,” he said.

Aaron Miller, a former State Department official who was an adviser to six secretaries of state on Arab-Israeli peace negotiations and the author of “The Much Too Promised Land: America’s Elusive Search for Arab-Israeli Peace,” said the political ramifications of the latest fighting would depend on the success of the effort by the Iraqi Army in Basra to root out insurgents.

“If this comes out well and represents a really consequential development, it will play to McCain’s strength, his argument that the surge is working and that training is a long-term effort,” he said. “If it comes out in a gray area, and things start to unravel elsewhere, then it is going to validate the Democratic argument that we don’t know the half of what is going on. It’s very much a question of what the ending is and whether it is clear cut.”

Steve Friess and Michael Powell contributed reporting.

Shiite leader al-Sadr defies Iraq gov't
By ROBERT H. REID, Associated Press Writer
1 hour, 51 minutes ago
Anti-American Shiite militia leader Muqtada al-Sadr ordered his followers Saturday to defy government orders to surrender their weapons, as U.S. jets struck Shiite extremists near Basra to bolster a faltering Iraqi offensive against gunmen in the city.

Prime Minister Nouri al-Maliki acknowledged he may have miscalculated by failing to foresee the strong backlash that his offensive, which began Tuesday, provoked in areas of Baghdad and other cities where Shiite militias wield power.

Government television said the round-the-clock curfew imposed two days ago on the capital and due to expire Sunday would be extended indefinitely. Gunfire and explosions were heard late Saturday in Sadr City, the Baghdad stronghold of al-Sadr's Mahdi Army militia.

The U.S. Embassy tightened its security measures, ordering all staff to use armored vehicles for all travel in the Green Zone and to sleep in reinforced buildings until further notice after six days of rocket and mortar attacks that left two Americans dead.

Despite the mounting crisis, al-Maliki, himself a Shiite, vowed to remain in Basra until government forces wrest control from militias, including the Mahdi Army. He called the fight for control of Basra "a decisive and final battle."

British ground troops, who controlled the city until handing it over to the Iraqis last December, also joined the battle for Basra, firing artillery Saturday for the first time in support of Iraqi forces.

Iraqi authorities have given Basra extremists until April 8 to surrender heavy and medium weapons after an initial 72-hour ultimatum to hand them over was widely ignored.

But a defiant al-Sadr called on his followers Saturday to ignore the order, saying that his Mahdi Army would turn in its weapons only to a government that can "get the occupier out of Iraq," referring to the Americans.

The order was made public by Haidar al-Jabiri, a member of the influential political commission of the Sadrist movement.

Al-Sadr, in an interview aired Saturday by Al-Jazeera television, said his Mahdi Army was capable of "liberating Iraq" and maintained al-Maliki's government was as "distant" from the people as Saddam Hussein's.

Residents of Basra contacted by telephone said Mahdi militiamen were manning checkpoints Saturday in their neighborhood strongholds. The sound of intermittent mortar and machine gun fire rang out across the city, as the military headquarters at a downtown hotel came under repeated fire.

An Iraqi army battalion commander and two of his bodyguards were killed Saturday night by a roadside bomb in central Basra, military spokesman Col. Karim al-Zaidi said.

The fight for Basra is crucial for al-Maliki, who flew to Basra earlier this week and is staking his credibility on gaining control of Iraq's second-largest city, which has essentially been held by armed groups for nearly three years.

In a speech Saturday to tribal leaders in Basra, al-Maliki promised to "stand up to these gangs" not only in the south but throughout Iraq.

Iraqi officials and their American partners have long insisted that the crackdown was not directed at al-Sadr's movement but against criminals and renegade factions — some of whom are allegedly tied to Iran.

Al-Maliki told tribal leaders that the offensive in Basra "was only to deal with these gangs" — some of which he said "are worse than al-Qaida."

Without mentioning the Sadrists by name, al-Maliki said he was "surprised to see that party emerge with all the weapons available to it and strike at everything — institutions, people, departments, police stations and the army."

Al-Sadr's followers have accused rival Shiite parties in the national government of trying to crush their movement before provincial elections this fall. The young cleric's lieutenants had warned repeatedly that any move to dislodge them from Basra would provoke bloodshed.

But al-Maliki's comments appeared to reinforce suspicions that his government failed to foresee the backlash, including a sharp upsurge in violence throughout the Shiite south and shelling of the U.S.-controlled Green Zone, the nerve center of the Iraqi leadership and the U.S. mission.

Two American soldiers were killed Saturday when their vehicle was struck by a roadside bomb in mostly Shiite east Baghdad, the U.S. military said.

The growing turmoil threatens to undermine White House efforts to convince a skeptical Congress and the American public that the Iraqis are making progress toward managing their own security without the presence of U.S. troops.

With the Shiite militiamen defiant, a group of police in Sadr City abandoned their posts and handed over their weapons to al-Sadr's local office. Police forces in Baghdad are believed to be heavily influenced or infiltrated by Mahdi militiamen.

"We can't fight our brothers in the Mahdi Army, so we came here to submit our weapons," one policeman said on condition of anonymity for security reasons.

He said about 40 policemen had defected to the Mahdi Army. The figure could not be confirmed, but AP Television News footage showed about a dozen uniformed police, their faces covered with masks to shield their identity, being met by Sheik Salman al-Feraiji, al-Sadr's chief representative in Sadr City.

Al-Feraiji greeted each policeman and gave them a copy of the Quran and an olive branch as they handed over their guns and ammunition.

On Saturday, Iraqi officials said they had received a phone call from Tahseen Sheikhly, the high-profile civilian spokesman for the Baghdad security operation, who was seized by gunmen two days earlier from at his home in a Shiite area of the capital.

An Iraqi-owned satellite television station, Sharqiya, broadcast what it said was a tape of the conversation, in which a man identifying himself as Sheikhly said he was being held "with a group of officers" at an unknown location.

"Our release depends on the withdrawal of al-Maliki from Basra and the easing of the military operations against the Sadrists in all provinces," he said. "We appeal to the prime minister and the Iraqi government to work with the Sadrist movement, which represents the popular base of society."

Bombings, exchanges of fire and other violent incidents have been reported in Karbala, Hillah, Diwaniyah, Nasiriyah, Kut and other cities throughout the Shiite south.

In Basra, U.S. jets dropped two precision-guided bombs at midday Saturday on a suspected militia stronghold at Qarmat Ali north of the city, British military spokesman Maj. Tom Holloway said.

"My understanding was that this was a building that had people who were shooting back at Iraqi ground forces," Holloway said.

Iraqi police said that earlier in the day a U.S. warplane strafed a house and killed eight civilians, including two women and one child. They spoke on condition of anonymity as they were not authorized to release the information.

The U.S. military had no immediate comment on the report and it was not possible to independently verify it.

Iraq's Health Ministry, which is close to the Sadrist movement, on Saturday reported at least 75 civilians have been killed and at least 500 others injured in a week of clashes and airstrikes in Sadr City and other eastern Baghdad neighborhoods.

The U.S. military sharply disputes the claims, having said that most of those killed were militia members.