Report # 97 BUSINESS AND POLITICS IN THE MUSLIM WORLD East Asia, Central Asia, GCC, FC, & Nadia Tasleem Weekly Report from 5 December 2009 to 11 December 2009 Presentation: 17 December 2009

This report is based on the review of news items focusing on political, economic, social and geo-strategic developments in various regions namely; East Asia, Central Asia, GCC, FC, China and Turkey from 5 December 2009 to 11 December 2009 as have been collected by interns.

EAST ASIA Political Front: Anti-corruption rally has been planed in INDONESIA. President declared it as a threat to oust him from power. Protestors however denied his allegation and asked him for support as their rally aims to target wide-spread corruption in the country. Meanwhile critics condemned President for being paranoid as he expressed such fear after terrorist attacks of July this year. Moving towards MALAYSIA, MCA (Malaysian Chinese Association) intends to hold party elections this year. For this purpose special session of MCA central committee was being called in which members have been asked to resign within two weeks in order to hold fresh polls. Though 13 members have already submitted their resignation but 7 more resignations are needed to dissolve central committee. Situation still seems to be vague as other members haven’t expressed their willingness t resign till now. Recent unrest in the province of Maguindanao has led President of PHILIPPINES to declare martial law in the region. Former President however condemned this act and said that peace could be restored even without declaration of martial law.

Geo-strategic Front: INDONESIA and CHINA have strongly emphasized on the need to enhance bilateral strategic ties. Meanwhile MALAYSIAN Prime Minister has recently paid his first visit to THAILAND in order to promote their annual consultation.

Social Front: Human Rights Chief in PHILIPPINES has accused Ampatuan clan for their involvement in last month’s political massacre in Maguindanao that left 57 civilian’s death. The two- day talks between the Philippines government and representatives of the Moro Islamic Liberation Front (MILF) ended with both sides optimistic over the continuation of the stalled peace parleys. Five thousand supporters of former THAI leader Thaksin Shinawatra rallied in Bangkok, seeking to put pressure on Prime Minister Abhisit Vejjajiva.

Economic Front:

1 Asian Development Bank has announced to grant US$200 million loan to INDONESIA for further reforms that support the government's ongoing efforts to spur sustainable growth and cut poverty. All the while government has started putt8ing efforts to convert its maritime resources into huge foreign exchange reserves. Despite visible fall in GDP THAI economy shows sign of recovery and seems to be an attractive market for investment. The failure of the government’s privatization program and the deterioration of revenue collection remain causes for concern as they would lead the PHILIPPINES to incur a budget gap equivalent to 4 percent of its economic output. MALAYSIA'S prime minister has announced some potent liberalization measures in order to persuade investors. Corruption however seems to be a major obstacle in the way of foreign investments. Japan still appears to be the largest foreign investor in Malaysia. The public sectors dealing in halal food in Malaysia and Pakistan have been working towards forging linkages to increase cooperation in the field of agriculture and veterinary services. Malaysia seems keen to sign regional and bilateral Free Trade Agreements (FTAs) with various countries for the promotion of trade. VIETNAM'S import from Indonesia stood at 1.18 billion U.S. dollars in the first ten months of this year, down 20 percent from the same period last year. In this period, paper was the item which Vietnam imported most from Indonesia with an expenditure of 140.47 million U.S. dollars. Meanwhile Vietnam has won a contract to export 400,000 tons of rice to the Philippines. IMF has asked CAMBODIA to take measures for the betterment of its banking system that has badly suffered due to global economic downturn.

CENTRAL ASIA Political Front: Council of Europe has selected members of the observation mission; being headed by Turkey, to monitor municipal elections in AZERBAIJAN. Opposition parties have expressed their intention to start unity talks in early 2010. Proposals for KAZAKH President Nursultan Nazarbaev to be named ''president for life'' have contributed to concerns about Kazakh democracy. Kyrgyz Emergency Situations Minister Kamchybek Tashiev has resigned as Prime Minister reprimanded him during the session for using reserve funds to build houses for ministry personnel in the southern city of Osh. A former senior Kyrgyz Security Council official has been hospitalized after a reported attack in the capital, Bishkek. UZBEK authorities have increased assaults on human rights activists ahead of upcoming parliamentary elections. Meanwhile 60 practicing Muslims have been detained in southern Uzbek prison on religious extremism charges.

Geo-strategic Front: In an effort to enhance ties with AZERBAIJAN, Iran has announced plan to unilaterally cancel its visa regime with her; allowing Azerbaijanis to visit and stay in Iran for a month without visa. Azerbaijani Foreign Minister Elmar Mammadyarov has insisted on restoring control over Nagorno-Karabakh despite accepting the right to self- determination as a core principle for resolving the Armenian-Azerbaijani dispute over the territory. The US has been putting efforts as a mediator to achieve final solution to Nagorno-Karabakh conflict and to bridge gap between Azerbaijan and Armenia. NATO has launched a new pilot project for social adaptation of reserve troops in KYRGYZSTAN. TAJIKISTAN has extended full support to the measures being taken by

2 the US in order to bring stability in Afghanistan. TURKMENISTAN and EU have started discussing prospects to enhance economic cooperation.

Social Front: The AZERBAIJANI parliament has voted to make it illegal to employ children under the age of 15 to work. This amended labor code will become law after being signed by the President. Several senior KAZAKH officials have been jailed in high-profile corruption cases over the last two years. A high school geography teacher in the southeastern Kazakh city of Taldy-Qorghan has turned to the Prosecutor's Office for permission to wear an Islamic head scarf as teachers are not allowed to wear Hijab in the class. In order to fight swine flu, Kazakh health officials have recently presented a vaccine in front of media. The Kyrgyz nongovernmental organization "Citizens against Corruption" has won the French Liberty, Equality, and Brotherhood Award for 2009. Kyrgyz authorities recently denied entry to prominent Tajik human rights activist Nigina Bakhrieva, in southern Kyrgyzstan. Human Rights Watch therefore urged the Kyrgyz government to immediately stop harassing human rights monitors doing research. A woman suffering from swine-flu-like symptoms has died in northern TAJIKISTAN in what could be the country's first reported death from the H1N1 virus. TURKMEN President has signed a decree granting amnesty to nearly 4,000 convicts in honor of a national holiday. UZBEK students who refused to work in cotton fields during the harvest season in have been expelled from high schools and universities. Human Rights Watch activists have strongly criticized repressive policies of Uzbek government.

Economic Front: AZERBAIJAN has started exporting Azeri Light oil to Turkey via Baku-Tbilisi-Ceyhan Pipeline. President has urged KAZAKH business entrepreneurs to actively participate in social projects. Mechanical problems at KYRGYZSTAN'S largest hydropower station caused two of its four major power generators to shut down. Kyrgyzstan has signed a deal with Kazakhstan on supply of 540 kWh to the republic in vegetative period. The Asian Development Bank (ADB) has approved a $500,000 technical assistance (TA) grant to develop a project design and feasibility study for a new regional power rehabilitation project in TAJIKISTAN. UZBEKISTAN has officially announced withdrawal from Regional Power Grid.

GCC Political Front: Kuwait's parliament started quizzing the prime minister of the oil-rich Gulf state in a secret session over allegations of corruption. After long hours of debate in the National Assembly, the Kuwaiti government won the battle of interpellations. Kuwait entered a new period of political turmoil as 10 opposition MPs filed a motion of “non-co- operation” against the premier over corruption charges after a marathon closed session. In response to that Speaker announced that the vote on the non-cooperation motion will take place on Dec 16. To pass, it requires a simple majority of elected members of the Assembly, which currently stands at 49. All the 16 Cabinet ministers have no right to vote on the motion.

3 Geo-strategic Front: General James Jones, national security adviser to President , claimed that US would appreciate contributions of additional manpower and personnel, both civilian and military, from the Gulf States as part of the new US strategy in Afghanistan and Pakistan. The GCC heads of parliaments and Shura councils ended their two-day meetings and issued their final communiqué. The communiqué reviewed the items discussed and approved which included the approval of the regulatory guidelines of the parliamentary and foreign relations coordination committee, review of a memo on 2009 activities by the GCC Secretariat, a report by Oman on its presidency over the previous session and activities during that period, and review of developments along the Saudi borders and support to the Kingdom's measures aiming to protect its sovereignty. SAUDI forces have repulsed Yemeni Shia rebels trying to seize a border village inside the kingdom, while fighting continued on both sides of the border. SAUDI ARABIA has denied Tehran's charge that an Iranian nuclear scientist was kidnapped on a pilgrimage to Mecca and hauled off to the United States. Saudi regime added that after having been informed of his disappearance by the Iranian delegation (in Mecca), Saudi authorities undertook an intensive search in Medina as well as in all the hospitals in the region of Mecca. Meanwhile Iran's President Mahmoud Ahmadinejad called on states of the Gulf region to expand cooperation and promote ties for welfare of the peoples of the region. Iran and the United Arab Emirates signed five documents for cooperation in various spheres namely law and commerce.

Social Front: A campaign has been launched for the voting age in Bahrain to be lowered to 19. Meanwhile Bahrain has been found at higher risk than most countries from threats such as rises in sea levels.

Economic Front: The GCC has one of the lowest total tax rates (TTR) and simplest taxation compliance requirements worldwide for business establishments. Stocks in Qatar, Kuwait and Bahrain all suffered steep falls after trading resumed on December 1 but have since stabilized. Dubai and Abu Dhabi stock markets recovered amid an apparent return of confidence, closing up more than one and almost four percent, respectively, after heavy losses over Dubai’s debt woes. Saudi Arabia's index has emerged as the best performing market in the Gulf region this year. Meanwhile Saudi Arabia's top monetary official sought to reassure investors and play down the impact of Dubai World’s debts. In a move to strengthen its international operations and capitalize on business opportunities in Pakistan, Dubai Islamic Bank’s fully-owned Pakistani subsidiary, has opened 10 new branches across the country.

TURKEY Political Front: Supporters of detained PKK leader Abdullah Ocalan have been asking government to provide better living conditions in jail, to their leader. Turkish Foreign Ministry however declared his prison to be of international standard. Recently emerged issue of government’s treatment of PKK's jailed leader; led (DTP) to

4 start anti-government rallies. Meanwhile DTP leaders have claimed that government's democratic initiative has ended. In the meantime other opposition parties have also mounted pressure upon the government to end peace initiative. Prime Minister Recep Tayyip Erdogan however reiterated his party's intention to continue plans for the settlement of the decades-old Kurdish question through a massive democratization package. Amidst ongoing crisis court started hearing a case filed by the Supreme Court of Appeals’ Prosecutor’s Office in 2007 against the pro-Kurdish Democratic Society Party (DTP) demanding its closure on charges of separatism. Seven soldiers were killed in the central province of Tokat after Kurdistan Workers’ Party (PKK) terrorists opened fire on soldiers patrolling a rural area in the district.

Geo-strategic Front: US President Obama pushed Turkey for more support in curbing Iran’s nuclear ambitions. Erdogan during his visit to the US, however asked Obama to give more time for talks with Iran, before seeking a fourth round of UN Security Council sanctions. While talking about Cyprus issue; Erdogan asked the US administration to exert greater effort to press for a solution on the island by March next year. Meanwhile he dismissed any chances of troop’s withdrawal from Cyprus unless Greece takes similar kind of measures. Meanwhile the EU has repeatedly asked Turkey to open its ports and airports to traffic from Greek Cyprus but Turkey hasn't complied with it so far. Turkish Cypriot leader has been asking Turkey not to open access to its ports and airports unilaterally rather to wait for lasting solution. In a statement issued in Brussels after a meeting of the EU General Affairs and External Relations Council, the 27 EU ministers expressed “deep regret” over the absence of improvement in Turkey’s relations with Greek Cyprus. Turkey has condemned Council for ignoring Greece and pressurizing Turkey who had already been taking practical measures to settle the issue. While answering a question related to Turkey’s intention to become leader of the Muslim world; PM out rightly said no rather expressed his country’s close association with the US and the West. Moving towards halted Turkish-Israeli ties, Turkey has accused Israel for innocent killings of Palestinians during their raids against Gaza. Meanwhile, responding to a question concerning rumors that Israel had entered Turkey's airspace for espionage purposes, Erdogan said that such a thing had never happened, but that the consequences would be dire if it did. All the while Turkish relations with Macedonia, Mexico, Albania, Germany, plus Turkish role in Afghanistan also grabbed attention.

Social Front: Pharmacies across Turkey, except for pharmacies listed to stay open, were closed to protest a decrease in the price of medicine.

Economic Front: United States Trade Representative and Turkish Deputy Prime Minister have unveiled a new forum aimed at boosting trade and investment ties between the two nations. The Turkish Statistics Institute (Turk Stat) revealed that Turkey's gross domestic product (GDP) shrank by 3.3 percent in the third quarter of 2009, compared to the same period last year.

5 CHINA Political Front: The electoral setback of Taiwan's ruling Kuomintang (KMT) and better performance of pro-independence opposition Democratic Progressive Party (DPP) in recently held local elections would spoil chances of collaboration between Taiwan and mainland China.

Geo-strategic Front: A delegation from Palestinian President Mahmoud Abbas' Fatah movement ended a one- week visit to China to boost cooperation. Meanwhile China pledged to work with Indonesia to push forward the bilateral strategic partnership. Likewise China and Philippines have also agreed to promote defence ties. Chinese President Hu Jintao also spoke highly of the strategic security talks with Russia that helped to promote bilateral ties. China has expressed hope to lift media cooperation with Arab countries to a new level. China strongly condemned a series of terrorist blasts in Pakistan that killed many people and left many others injured. Besides that Chinese growing tie with Central Asia Republics, Japan, Egypt, Peru and Canada also grabbed attention.

Social Front: 76 percent white-collars working in Chinese mainland cities suffer sub-health and nearly 60 percent are over fatigued; among high income group aged from 35 to 50. Meanwhile China has launched 45,000 governmental websites this year. China has invested more than 6.5 billion yuan (959 million U.S. dollars) to preserve grasslands in northern Autonomous Region. A pipeline leak has cut water supplies to thousands of families for more than 18 hours in the Northeast China.

Economic Front: Chinese economy has suffered from Dubai economic crunch yet business community retained their confidence. Peru's government has recently ratified a free trade agreement with China. Meanwhile the Chinese government pledged to push forward the transformation of its economic development pattern next year while maintaining stable and comparatively fast economic growth. China's exports have dropped considerably to the United States since the financial meltdown. On the whole, China's imports and exports rose 9.8 percent in November year on year, ending a 12-month decline, to stand at $208.2 billion. China's GDP is estimated to reach 8.3 percent growth this year with next year surpassing nine percent. In the meantime the China Investment Corporation (CIC), has nearly doubled its overseas investment this year compared with last year, putting most of the funds into foreign energy and mining companies. Lastly, China intends to boost consumer spending in line with a strategy to lift country's economy.

6 BUSINESS AND POLITICS IN THE MUSLIM WORLD TURKEY Weekly Report on Turkey’s Political, Geo-Strategic, Economic and Social Issues, Period: December 5 – 11, 2009. Submitted By: Aasia Khatoon Presentation: December 16, 2009 Report no.97

NEWS OUTLINE POLITICAL ISSUES KURDISH ISSUE ------P.no Kurdish initiative under threat from closure case, İmralı row ------3 Turkey says prison of PKK leader is of int'l standards------5 Erdoğan vows to go ahead with Kurdish move despite DTP ------5 Opposition bloc against democratic initiative------7 Turkey invites anti-torture group to visit Öcalan’s cell------8 Constitutional Court hears DTP case amidst escalating clashes------9 CHP’s Baykal calls on gov’t to give up Kurdish initiative------11 Firm stance against gangs key to democratization’ ------12 Closure of Turkey's Kurdish Party would be Major Setback for EU Accession – Ludford------13 Top Turkish court continues deliberations on pro-Kurdish DTP’s fate------13 Other POLITICAL ISSUES Terrorist attack kills 7 soldiers------14 Supreme Military Council convenes under shadow of devious army plots------15 European Court rejects Turkish opposition MP's application on immunity ------16 Turkish media: ideologically silent and half-blind------17 Turkey still struggles with human rights violations------18

7 YÖK president: Religious schools may become high schools in Turkey------20 GEO-STRATEGIC ISSUES ------21-62 Obama to press Turkish PM over Iran’s nuclear program We Do Not Want Nuclear Weapons In Our Region, Erdogan Turkey session in US Congress sees tension, controversy EU to note reform improvements, refrain from Cyprus sanctions Turkish Cypriot Side Has Plan B In Case Of Failure In Peace Talks, Says Talat Eroğlu vows to continue Cyprus talks if elected president Talat opposes Turkey opening its ports to Greek Cyprus Ankara lambastes EU for lack of vision in Cyprus decision EU center gets opened in Istanbul We made EU process a real reachable target Turkey Keeps Taking Necessary Steps In Eu Accession Process, Foreign Ministry Erdoğan tells EU to fix its foreign policy orientation PM nixes 'Muslim world leader' label Erdoğan urges EU to clarify position on Turkey Turkey rethinks military cooperation with Israel Israel says Syria, not Turkey, obstacle for peace talks Turk Fm: Israel Committed Crime In Gaza Erdogan: Israel Can't Use Turkey to Wage Aggression on 3rd Party Pm Erdogan Departs For U.S White House rendezvous to test solidness of Turkey-US relations Turkey’s independent foreign policy advantageous to US Erdoğan flies to US with packed agenda for Obama talks Turkey, Usa Draw Strategic Framework Of Economic Relations Turkey differs with US over Iran US President Obama reaffirms support for Turkey’s regional role Erdogan: Macedonia never far for Turkey Turkey & Macedonia sign contracts Turkey and Mexico May Take Joint Steps to Deal With Organized Crimes, Erdogan Foreign Minister Davutoglu To Travel To Bosnia-Herzegovina Albanian President Thanks Turkey for Supporting His Country Minaret ban will not happen in Germany, say experts Erdoğan cold toward sending combat troops to Afghanistan Former NATO envoy Çetin: Turkey can do more in Afghanistan More Turkish troops may join 2nd construction team in Afghanistan Top Turkish Commander Meets NATO Committee Head Turkey wants current status even in to maintain post-Kyoto period Eroglu Affirmative On Syria'S Willingness To Draw Water From Tigris US urges Turkey to drop Karabakh condition for ties with Armenia Armenian children forced to read in the dark i n Turkey ECONOMIC ISSUES------62-73 Minister: Fitch’s rating hike confirms economy’s resilience

8 Stop the old ‘bridge’ metaphor; Turkey has become a new regional ‘hub’ Turkish Finance Minister Leaves For France Turkey’s credit rating might be raised to investment grade in two years US, Turkey boost trade and investment relations through new framework US development agency names Turkey ‘Country of the Year’ GDP shrinks by 3.3 PCT, but showing strong signs of recovery Turkey's 2010 budget foresees no IMF funding Uncertainty affects the recovery, says TÜSİAD SOCIAL ISSUES------74-77 Pharmacies protest medicine price changes with one-day closure The tranquility of İstanbul’s outlying villages COMMENTARY------77-87 Erdogan’s Meeting with Obama: What Should We Expect? It's Time for the DTP to Pull Itself Together The New Middle East From the Bosphorus: Straight - Energizing a smart debate on energy PKK and Öcalan are on the safe side What did they discuss? Project to boost tourism in Turkey, Greece

POLITICAL ISSUES KURDISH ISSUE Kurdish initiative under threat from closure case, İmralı row Saturday, 05 December 2009 11:48 Today ZAMAN ------The Constitutional Court will on Tuesday be hearing the first session of a trial against the pro-Kurdish Democratic Society Party (DTP), filed two years ago by prosecutors of a high court demanding the party’s closure on charges of separatism, in a case w The court rapporteur’s statement on the case submitted to the court yesterday called for the party’s closure in line with the demand of the Chief Prosecutor’s Office of the Supreme Court of Appeals, that had initially filed a complaint against the DTP. The party

9 is being accused of “being a focal point for separatist activity” in the indictment. Co-chairwoman of the DTP Emine Ayna and Ahmet Türk made statements yesterday following a party meeting where they laid out a roadmap to handle the upcoming process. Türk said in his initial remarks there would be no meaning for DTP deputies to be in Parliament if the party was shut down. “We talked about the closure case today. Our friends believe that there is no meaning in remaining inside a Parliament with bans.” Türk said if the party was closed, all DTP deputies would resign from Parliament. DTP Co-Chairwoman Emine Ayna said the government’s approach to the needs of Kurdistan Workers’ Party (PKK) leader Abdullah Öcalan, who is serving life in prison on İmralı Island in the Marmara Sea off İstanbul, showed its approach to the Kurdish question. “The initiative is now over with the approach toward İmralı,” she said. She did not elaborate, but she was referring to recent allegations voiced by the DTP that Öcalan was being kept in poor conditions. Sezgin Tanrıkulu, who formerly headed the Diyarbakır Bar Association, stated that the closure case was not the only potential hang up in the process. He recalled that the Kurdish package was announced in late July, noting that the government has failed in the past five months to present a concrete roadmap with a schedule and deadlines laying out how to proceed with the initiative. “The government should immediately set up a schedule. It is impossible to expect the hope that came about when the initiative was first announced to continue forever.” He said in addition to the closure case, recent allegations voiced by the DTP about Öcalan’s jail conditions, were a problem that added to the ambiguity in the Kurdish initiative process. He said, however, this was easy to fix. “If it was possible for İmralı Prison, along with other prisons in the country, to open up to civilian inspection, this could be solved without any tension.” Tanrıkulu said the current legislation on prison inspections was not being enforced. Political parties’ law On the party closure case, Tanrıkulu said the political parties’ law should be changed to comply with EU standards for party closure known as the Venice Criteria. He said if in addition to closure, the court rules for political bans on some DTP members causing them to lose their parliamentary membership, the political cost would be too high. “Serious consequences that are unstoppable and irrevocable would ensue.” He said, instead, the government should work to rejuvenate the dwindling hope in the Kurdish initiative. Ümit Fırat, a Kurdish intellectual and writer, said the problem was part of a wider issue about democracy and party closures in Turkey. He said Turkey was making an effort to keep political parties out of politics, and described the country as a graveyard of political parties. He also said that the timing of the court trial was known and expected. “It is not right to associate this trial directly with the process. We knew about this two years ago when the Chief Prosecutor applied. The Constitutional Court can’t simply cover up this case forever.” He said under the current laws, it was nearly impossible for a political party to save itself from the hands of the Constitutional Court. “The decision not to shut down the Justice and Development Party (AK Party) was an exceptional case,” he said, noting that there was too much political pressure on the court both domestically and internationally. “The Constitutional Court can only take decisions in line with the regulations. It can’t say, ‘it would be bad for the initiative’.” Recalling that the government was planning to pass a draft making changes to the authority granted to the

10 Constitutional Court, Fırat also said political parties in Parliament were expected to make the necessary changes to the political parties’ law long ago, adding that this is the only remedy for the solution of both the Kurdish question and the larger questions about democracy in Turkey. Öcalan’s cell conditions In the past few days there has been controversy about the jail conditions of PKK leader Öcalan. Last week, Öcalan’s lawyers claimed that a new cell built for Öcalan is six-and- a-half square meters, compared to the old cell’s 12 square meters. The new cell’s window is reportedly high and cannot be looked through unassisted. Öcalan, in his latest meeting with his lawyers last week, warned that his new prison conditions are harming his health and he feels that he is at the bottom of a well. Since his statement to his lawyers there have been demonstrations across the country to protest his new living conditions. The Justice Ministry yesterday released a statement, asserting that the quality of Öcalan’s new cell was much higher than standards set for inmates by the EU and UN. The ministry also released pictures of the new cell. However, 98 members of the DTP released a joint statement, reacting to the ministry’s statement that Öcalan’s conditions are in line with international standards. Osman Baydemir, the mayor of Diyarbakır, read the statement: “If these conditions are good then Erdoğan, Bahçeli and Baykal should try spending 11 days, not even 11 years in there. Let’s see [if they’ll think] it is in line with standards, in line with humanity.” He also said that , the DTP and the PKK were ready to contribute to the solution of the Kurdish question. “If the state is ready, all the Kurds are ready,” he said. Meanwhile, Suat Kılıç, deputy chairman of the AK Party’s parliamentary group, said in a statement he made to the press that Öcalan’s conditions were completely in line with Turkey’s legislation as well as the legislation of the EU. He said, “We don’t think it is right, particularly for DTP members, to abuse this issue and take to the streets.” Protests against Öcalan’s alleged prison conditions continued in the early hours of Friday night. A group of PKK supporters in Şırnak attacked a teacher’s guesthouse in the İdil district. Two students were hurt by stones thrown from outside. The attackers could not get into the building, but teachers and students trapped inside had to endure two hours of terror until the police and gendarmerie forces intervened to disperse the protestors. Case against the DTP The Constitutional Court will on Tuesday start hearing the case of the Supreme Court of Appeals vs. the DTP. The prosecution demands the party’s closure on charges of separatism. In November 2007 the Constitutional Court announced it had accepted an indictment from Supreme Court of Appeals’ prosecutors to shut down the DTP. The prosecution claims that the DTP has ties to the terrorist Kurdistan Workers’ Party (PKK). The indictment also calls for 220 DTP members to be banned from politics, including deputies Ahmet Türk, Aysel Tuğluk, Sebahat Tuncel, Osman Özçelik, İbrahim Binici, Sevahir Bayındır and Fatma Kurtulan. The DTP has 20 members in the 550-seat Parliament. To shut down the DTP, the Constitution requires that at least seven of the 11 members of the Constitutional Court vote for its closure. ------Turkey says prison of PKK leader is of int'l standards

11 Saturday, 05 December 2009 11:22 TIME TURK ------Turkish Ministry of Foreign Affairs said that the high-security prison on Imrali Island was built in line with the international standards. Turkish Ministry of Foreign Affairs said that the high-security prison on Imrali Island was built in line with the international standards. In response to a question about imprisonment conditions of Abdullah Ocalan, head of the illegal PKK organization, Burak Ozugergin, spokesman for the Ministry of Foreign Affairs said, "we invited a delegation from the European Committee for the Prevention of Torture to come and see the existing conditions in the new prison building. A date will be set for the visit of the delegation in the coming days." Asked whether a draft submitted to the parliament paved the way for retrial of Ocalan, Ozugergin said, "neither the European Court of Human Rights nor the Council of Europe demanded retrial of Ocalan. Furthermore, there is not any decision made by the European Court of Human Rights that could lead to such a demand. The draft prepared by the Ministry of Justice to amend the Article 311 of the Law of Criminal Procedure has nothing to do with Ocalan. The draft concerns nearly 200 people. Earlier, the European Court of Human Rights ruled that their right to fair trial was violated. Ocalan can never benefit from this amendment." ------Erdoğan vows to go ahead with Kurdish move despite DTP Monday, 07 December 2009 12:40 Todays Zaman ------Prime Minister Recep Tayyip Erdoğan has reiterated his party's intention to continue plans for the settlement of the decades-old Kurdish question through a massive democratization package despite the efforts of the Democratic Society Party (DTP) to axe th “Everybody is laying their cards on the table for the national unity and brotherhood project. We are all witnessing this. This is a state project, and its interlocutor is the 72 million citizens of Turkey. What we are expecting is for everyone to lend their support to the project,” the prime minister stated on Sunday. Erdoğan's remarks came in the wake of statements by DTP officials last week, who said the government's plans for the solution of the Kurdish question were over for them due to the Turkish state's treatment of the jailed leader of the Kurdistan Workers' Party (PKK), Abdullah Öcalan. The pro-Kurdish party has long voiced allegations that Öcalan was being treated poorly in his prison cell. Öcalan is serving a life sentence on İmralı, located off the coast of İstanbul. He was the sole inmate until recently, but eight other convicts have now been transferred to the island, and he was placed in a different cell.

Throughout last week there was controversy about the prison conditions of the terrorist leader. Öcalan’s lawyers claimed that a new cell built for Öcalan is six-and-a-half square meters, compared to the old cell’s 12 square meters. The new cell’s window is reportedly

12 high and cannot be looked through unassisted. The Justice Ministry denied the claims in a statement last week. The ministry underlined that the quality of Öcalan’s new cell was much higher than standards set for inmates by the EU and the UN. The ministry also released pictures of the new cell. Also yesterday, Erdoğan stressed that his Justice and Development Party (AK Party) will continue to work on the Kurdish initiative. “We will hit the streets to tell our citizens about the initiative. We will struggle to tell all 72 million citizens about it,” he added. Over the weekend, DTP supporters continued their violent rallies in eastern and southeastern Turkey, protesting Öcalan’s new cell conditions. On Sunday, protestors clashed with security forces in Diyarbakır and İstanbul. Protestors attacked security forces with stones, and police responded with tear gas and pressure water. In Şanlıurfa, protestors attacked businesses in Atatürk Squre during their rally on Saturday. They also threw stones at the offices of the Democratic Left Party (DSP) and the Grand Unity Party (BBP), chanting slogans in favor of the terrorist leader. A rally in eastern resulted in the detention of seven protestors. Participants in the rally blocked several streets to the city’s main roads and attacked security forces with stones and Molotov cocktails. Four of the detainees were minors. Saturday’s rallies were a continuation of demonstrations across the country that erupted last week after DTP claims about a “smaller and low-standard” cell for Öcalan. In the Doğubayazıt district of eastern Van province, a group of around 200 DTP and PKK supporters clashed with police. Most of the protestors were children. The head of the Ağrı Police Department, Naci Kuru, expressed his sadness over the presence of minors. “We are extremely sorry to see that we have to clash with children who have been deceived [by the terrorist organization]. They are damaging their own children and businesses. It is impossible to understand,” Kuru stated. Many shops in the district were destroyed by protestors, and many shop owners were obliged to shut down their businesses. During the clashes, one police officer was wounded. Police had to disperse protestors with tear gas. Erdoğan dedicated a speech to the illegal and violent rallies organized by the DTP and PKK on Saturday, and warned citizens to be aware of acts of provocation. “There are people who want to insidiously and irresponsibly provoke this process. I want my dear citizens to be patient and act with common sense. If we are tempted with acts of provocation, then we will lose,” cautioned the prime minister. ------Opposition bloc against democratic initiative Monday, 07 December 2009 21:43 Todays Zaman ------DTP leaders said last week that the government’s ambitious reform initiative to resolve the Kurdish issue “is over” because of an alleged deterioration in Abdullah Öcalan’s prison conditions. The balance over political support for the democratic initiative has changed once again with the new position of the pro-Kurdish Democratic Society Party (DTP), which has taken a place beside the Nationalist Movement Party (MHP), which describes the initiative as a “project of destruction,” and the Republican People’s Party (CHP), which

13 agrees with much of the MHP stance. Based on General Staff statements, CHP and MHP spokespersons said the “initiative has come to an end” and that it had “resulted in a fiasco.” Over the weekend, DTP Deputy Chairwoman Emine Ayna said: “The initiative is over. It is finished.” The DTP leaders are actually quite confused. They want peace, on the one hand, but are worried that their reason for existence will be removed, on the other. Those executives of the party who are in favor of peace underline the danger of ethnic nationalism by explaining the mistake in Kurdish youth identifying solely with their ethnic identity. The leaders say: “You also have a sexual identity, a professional identity, you have a career and a social identity. You must also identify with these different identities. You cannot boast about your ethnic identity because it is not an identity that is earned by working for it. If it is going to be boasted about, then leave that to your mothers. You must show yourself with the identities you developed by putting in an effort for it.” As for the hawks, who are against this notion, they argue that putting ethnic identity in second place would not contribute to solving the Kurdish problem. The hawks, who have been asked to remain quiet in the aftermath of the exaggerated welcoming home of the Kurdistan Workers’ Party (PKK) members who entered Turkey at Habur, are now coming forward with complaints about the conditions of Abdullah Öcalan imprisonment. They want to add the DTP to the CHP-MHP bloc against the initiative. There is a serious contradiction in the bloc. The CHP and MHP are calling the initiative an “İmralı- government, AK Party-PKK project,” while the DTP hawks are saying “the initiative ended because Öcalan was not addressed.” AK Party not thinking about ending initiative As AK Party officials made a situation assessment at the end of a week with high street activity, they emphasized that they would not make concessions to the initiative process, which they describe as a “national unity and brotherhood project.” Asked about the DTP’s shift towards the CHP and MHP lines on grounds that the initiative was finished, party officials said: “We always said the nation would be addressed in this initiative. One party will support, another will oppose it. That is up to them. But no provocation will prevent the national unity and brotherhood project from moving forward.” Noting that the issue of fighting human rights violations, which is the initiative’s first package, has received wide support from all segments of society, the executives said they believe the DTP has come into conflict with its own constituents with its most recent shift in attitude. An AK Party deputy of Kurdish origin noted that the Kurdish people would not support fighting with police on the streets and said: “There is no sensible explanation for these rampages. It has become clear that Öcalan’s prison conditions were just an excuse. You cannot direct a society with lies. Kurdish people want the establishment of humane living conditions and the end of mistakes that have banned our language until now. While the processes to these ends are under way, if you come out saying the initiative has ended because of the debate over Öcalan’s involvement in the process, you will finish yourself off. You cannot convince anyone that way.”

The PKK, which began with the goal of an independent Kurdish state, later downsized its target and promoted the establishment of a federation. It later gave up on the federation

14 idea as well and demanded constitutional citizenship. The PKK is afraid of being eradicated from the minds of the Kurds if the Kurdish problem is solved without their demands being met. Some DTP supporters sincerely express this concern. While some AK Party deputies believe it would have been good to have the support of the opposition for the initiative, others say, “The DTP’s addition to the CHP-MHP bloc will be much better for the future of the initiative.” ------Turkey invites anti-torture group to visit Öcalan’s cell Monday, 07 December 2009 21:35 Todays ZAMAN ------Ankara has defended its treatment of Abdullah Öcalan, the jailed leader of the outlawed Kurdistan Workers’ Party (PKK), announcing that it has invited a European anti-torture group to visit his new prison cell. “The high-security prison newly built on İmralı Island is in compliance with international standards,” the Foreign Ministry said in a statement late on Friday. Earlier on Friday, the Justice Ministry released photos of the prison cell on İmralı Island in the Marmara Sea where Öcalan is being held, in a bid to show that his prison complies with international standards and to allay concerns that Öcalan is dealing with difficult conditions, following demonstrations across the country over Öcalan’s prison conditions. Öcalan was the sole inmate at the prison on İmralı Island until new prisoners arrived last month after the Council of Europe’s Committee for the Prevention of Torture (CPT) criticized Ankara for violating Öcalan’s human rights by keeping him in solitary confinement. “Following the transfer of new prisoners to the island prison of İmralı, a CPT delegation has been invited to our country to evaluate the current conditions on the ground,” the ministry statement, which came in the form of an answer by Foreign Ministry spokesperson Burak Özügergin to a journalist’s question, said, noting that the exact date of the visit by the CPT delegation would be set in the coming days. In a separate answer to another question, Özügergin ruled out suggestions that a bill in Parliament concerning Article 311 of the Code on Criminal Procedure (CMK) in regards to a retrial has paved the way for a new trial in Öcalan’s case. Özügergin recalled a February 2007 decision by the Committee of Ministers, the executive body of the Council of Europe, as the committee had rejected a demand from Öcalan for a new trial. The committee decided there was no reason to retry Öcalan. In May 2005, the European Court of Human Rights ruled that Turkey had violated Article 6 of the European Convention on Human Rights, the right to a fair trial, in Öcalan’s case. This decision opened the door for a new trial, though the Strasbourg judges ruled that a re-trial was not essential in Öcalan’s case. The Committee of Ministers followed the European court’s advice and rejected the demands of Öcalan’s lawyers. ------Constitutional Court hears DTP case amidst escalating clashes Tuesday, 08 December 2009 12:03

15 Todays Zaman ------The Constitutional Court today starts hearing a case filed by the Supreme Court of Appeals’ Prosecutor’s Office in 2007 against the pro-Kurdish Democratic Society Party (DTP) demanding its closure on charges of separatism. The hearing is taking place at a time of escalated tension on the streets across the country as clashes between Kurdish demonstrators and the police -- and in one instance an ultranationalist group -- have been frequent in the past few days. There were demonstrations over the weekend as well as yesterday in various parts of the country to protest the new conditions of imprisonment of Abdullah Öcalan, the leader of the terrorist Kurdistan Workers’ Party (PKK) who is serving a life sentence on the island of İmralı in the Sea of Marmara. Last week, his lawyers claimed that a new cell to which Öcalan was recently moved was much smaller than the previous one. The Ministry of Justice has denied a significant reduction in the cell’s square footage and published pictures of the cell. However, the lawyers’ statement was followed with demonstrations by Kurdish groups across the country, some of which have turned violent. On Sunday, a 23-year-old university student was allegedly shot to death by a police officer during a demonstration in Diyarbakır. This was followed on Monday by the death of Serap Eser, a 17-year-old student who was receiving treatment at a hospital due to serious injuries and severe burns caused by a Molotov cocktail thrown at a city bus by PKK supporters on Nov. 7. On Monday in İstanbul more than 100 people were detained in demonstrations. Store windows remained closed in several cities of the predominantly Kurdish Southeast, including Mardin, Nusaybin and Şemdinli. Meanwhile, PKK-affiliated prison inmates announced that they will start a hunger strike for an indefinite period to protest Öcalan’s jail conditions on Dec. 12. Interior Minister Beşir Atalay told a press conference yesterday that a fight for rights should remain within the limits of law and that violence will not be tolerated. The clashes and protests come at a time when the government is pushing forward with its Kurdish initiative package, which seeks to alleviate separatist terror by extending rights to Kurds. The initiative also risks losing ground if the Constitutional Court decides to shut the DTP down. Supreme Court of Appeals Chief Prosecutor Abdurrahman Yalçınkaya in 2007 filed charges against the DTP and demanded the permanent closure of the party. He claimed that the DTP members’ actions and statements run counter to the integrity of the state and nation and that the party has become a focal point of these acts. The indictment against the DTP calls for 221 members, including eight of its deputies -- Ahmet Türk, Aysel Tuğluk, Sebahat Tuncel, Osman Özçelik, İbrahim Binici, Sevahir Bayındır, Fatma Kurtulan and Emine Ayna -- to be banned from membership in a political party for five years. One of these 221 individuals mentioned later died, bringing to light that another person on the list was included by mistake. The Constitutional Court, if it decides to ban the party, will elaborate on the situation of the remaining 219 people one by one and reach a verdict on whether to ban them from politics. The indictment also demanded that the DTP be prevented from participating in elections until the case is finalized; that all DTP members, administrators, deputies and mayors are

16 banned from running in elections as independents or representing another party; and that new members are not permitted to join the DTP. However, the Constitutional Court refused to implement those measures in a decision in December 2007, and the DTP was able to run in the local elections in March 2009, in which it won 99 municipalities. The Constitutional Court in July 2008 was able to reach a verdict on the closure case against the ruling Justice and Development Party (AK Party), which was indicted six months before the DTP, but the AK Party did not request any additional time for its defense. The Constitution requires that at least seven of the 11 members of the Constitutional Court vote for closure before a party can be disbanded. Law on Political Parties The only thing that can really save the DTP from closure is a change to Turkey’s infamous Law on Political Parties, long criticized for its anti-democratic aspects. However, the government, blaming its inaction on a lack of support from the opposition, says it is impossible to change the law at this time. Speaking to Today’s Zaman, AK Party Deputy Chairman Salih Kapusuz acknowledged that “the DTP’s closure will put Turkey in a difficult position. We are aware of that. But there’s nothing we can do. The Constitutional Court waited for a long time for the Law on Political Parties to be amended. However, that is impossible after this point. We can only imagine the resistance [from the opposition] we’ll face in an attempt to make such a change at this time.” Pundits say it is highly unlikely for the Constitutional Court to not shut the DTP down given the stipulations of the current Law on Political Parties. The AK Party also believes that the DTP’s closure is almost a certainty. Jurists note that a ceremony organized by the DTP to welcome back a group of PKK militants who surrendered as part of the government’s Kurdish initiative is more than likely to be considered proof of the link between the DTP and the terrorist group -- what prosecutors base their closure demand on. Atalay told journalists that they are against party closures in democratic regimes. The closure of the DTP will inevitably undermine the government’s Kurdish initiative. AK Party parliamentary group Deputy Chairman Bekir Bozdağ told Today’s Zaman: “We have from the start objected to political party closures and made an effort to make the necessary changes to the Constitution and the Law on Political Parties. However, these could never be passed due to the uncompromising attitude of opposition parties. After this point, after the start of the Constitutional Court’s hearing of the case, it is impossible to talk about a change.” But what is the AK Party’s plan in the face of a potential crisis that could stonewall not only the Kurdish initiative but also Turkey’s EU harmonization process? The attitude the DTP openly displayed during the reception of PKK returnees in October and subsequent clashes have convinced the government that the DTP does not want to support the Kurdish initiative. The government will be continuing the process without seeking support from the DTP. Another plan the AK Party has laid out is to use the problematic situation to actually reverse the process. It is hoped, and highly expected, that the EU will show a strong reaction to the DTP’s closure. The AK Party believes the EU’s reaction can make it easier to carry out the Kurdish initiative at home as well as draft and adopt a new Constitution.

17 Meanwhile, the DTP last week announced that all of its deputies would resign from Parliament if the Constitutional Court decides to shut the party down. However, the government has not taken this seriously. Prime Minister Recep Tayyip Erdoğan, speaking shortly before his departure to the US on Sunday, said the resignation of a deputy in Parliament was not something for the elected official to decide, but a matter that can be taken up only by the electorate. For DTP deputies to quit, which would make an interim election necessary under Turkish legislation, the General Assembly of Parliament must vote on any resignations. The AK Party has no intention to allow the DTP to put up such a show. Atalay also said in yesterday’s press conference that the process of democratization has not been slowed down and that progress has already been seen. On Sunday, İstanbul’s Küçükçekmece district was scene to a group of 20 ultranationalists carrying axes and sticks who tried to break into a local DTP office. There were clashes between this group and DTP members. The ultranationalist attackers opened fire at random targets with blank cartridge guns and drew three crescents -- a nationalist symbol -- on the DTP office building’s wall. ------CHP’s Baykal calls on gov’t to give up Kurdish initiative Wednesday, 09 December 2009 10:5 Todays Zaman ------Main opposition Republican People’s Party (CHP) leader Deniz Baykal has called on the Justice and Development Party (AK Party) government to give up its efforts to draft a democratization package to settle the Kurdish question through peaceful methods. “Turkey is heading to a division. It is being dragged into a position to fear itself. What lies beneath is the mindset of the government, which has been sending Turkey in a dangerous direction for some time. … Continuing on this road [the Kurdish initiative] would be negligence,” he said on Tuesday during his party’s parliamentary group gathering. Baykal pointed to a series of demonstrations held by supporters of the pro-Kurdish Democratic Society Party (DTP) and the Kurdistan Workers’ Party (PKK) since last week, protesting a new prison cell on the island prison of İmralı for jailed PKK leader Abdullah Öcalan over claims that it is very “low-standard” and “threatens the health of the terrorist head.” “This initiative does not reflect the truth as told to the public. This initiative is imposed [upon the government by foreign powers]. Irresponsibility has started to reach all sides of Turkey. The streets have become lawless. The state, laws and the government are helpless,” he remarked. Clashes between Kurdish demonstrators and the police have been frequent in the past few days. One university student has been killed in the clashes thus far. “Danger has raised its face in attacks against business places and houses. They have started to arson buses and automobiles. Unfortunately one child has lost her life. Our child was the victim of a treacherous attack,” Baykal said, referring to the tragic death of 17-year-old Serap Eser, who was injured in early November by a Molotov cocktail attack on a municipal bus. The CHP leader also condemned the killing of seven soldiers in central Tokat on Monday in an armed attack by unidentified assailants. ------

18 ------Firm stance against gangs key to democratization’ Thursday, 10 December 2009 09:20 Todays Zaman ------Prime Minister Recep Tayyip Erdoğan has made clear that the government’s firm stance towards illegal organizations was an integral part of its efforts for the democratization of Turkey, while also indicating that various circles have tried to sabotage the Erdoğan’s remarks came on Tuesday, the second and last day of his official visit to Washington, where he had talks with US President Barack Obama on Monday. Turkey has been carrying out fundamental reforms in the fields of democratization and human rights simultaneously with its efforts for contributing to global peace, Erdoğan said in a speech delivered at a meeting held by the German Marshall Fund of the United States (GMF) at the Park Hyatt Hotel, while also refuting claims that the government has been misusing tax fines against media groups as a form of political pressure. “I underline the fact that we could never have reached the current level either in the economy and domestic and foreign policy or in democratization if we had postponed our struggle against gangs and illegal organizations. The provocations we have witnessed just during our term in office have very clearly shown what kind of a barrier these illegal organizations pose to transformation,” Erdoğan said, noting that certain circles were exploiting these illegal organizations for personal profit and that his government has been resisting threats by those circles, which he declined to name. “The illegal organization issue is now before the judiciary in Turkey,” Erdoğan added, in an apparent reference to the ongoing trial of Ergenekon -- a clandestine network accused of plotting to overthrow the government. “It would not be true to go into details, but indictments, claims, nasty relations, nasty scenarios and nasty plans which came into the spotlight [during the trial] have revealed that Turkey has faced a huge threat in the past,” Erdoğan said. The Ergenekon investigation started in June 2007 with the discovery of hand grenades at a house in İstanbul’s Ümraniye district. Dozens of suspects, including members of the military, businessmen and journalists have been arrested for suspected links to the terrorist organization. Most recently, as part of the investigation into Ergenekon, a plan known as the Cage Operation Action Plan has been revealed. According to the plan, a group in the Naval Forces Command aimed to intimidate the country’s non-Muslim population by assassinating some of their prominent figures and in this way undermine the power of the ruling party. Earlier this week, a defendant in the trial stated to the court hearing the case that some members of the military told him that a secret formation inside the General Staff and the Turkish Armed Forces (TSK) was trying to overthrow the government. In his speech at the GMF meeting, Erdoğan also touched upon speculation over the tax fine on Turkish media giant Doğan Yayın Holding, whose officials and columnists have argued abroad that the tax fine stemmed from its critical coverage of the government, suggesting that the case against the company is politically motivated. “Our term is the one during which bans [against freedom of expression] have been removed. We don’t believe that this is sufficient and we’ve been struggling to remove current obstacles, too,” Erdoğan said. “However, it is thought-provoking that a tax fine

19 issued to a holding which happens to have some newspapers and televisions is distorted and trying to be reflected as a blow to the freedom of press,” he added. The tax fine has nothing to do with governmental intentions of controlling media, he underlined, as he said that, as in the United States, nobody in Turkey has privilege or immunity when the issue is paying taxes. ------Closure of Turkey's Kurdish Party Would be Major Setback for EU Accession - Ludford Friday, 11 December 2009 USAK PUBLICATIONS ------For immediate release: Friday 11 December 2009 Contact: Sarah Ludford or Sonia Dunlop: Office +44 (0)20 7288 2526 or Mobile +44 (0)7970 795 278

The possible closure of the Kurdish interest party in Turkey, the Democratic Society Party (DTP), would be a major blow to Turkey's democratic credentials and therefore to its prospects of joining the EU. Hearings on the closure case began on December 9th in Turkey’s Constitutional Court. The DTP is threatened with closure – a ban of the party and all its elected representatives – due to allegations of ties with the Kurdistan Workers’ Party, the PKK, which is branded a terrorist group. Liberal Democrat European justice & human rights spokeswoman and London MEP Sarah Ludford said after meeting Akif Wan, UK representative of the Kurdish National Congress: “Turkish courts and other authorities need to be mindful of the danger that if they suppress a Kurdish political party, the arguments for a resort to war again in the South- East will grow, however unacceptable such a move. A full transition to democracy helps strengthen the protection against threats to the country. " "Those of us in the EU and Turkey who champion Turkey’s prospective EU membership will find it that much harder if a ban is decided. Last year the Court wisely decided not to ban the ruling AK party, so I hope wisdom will once again prevail.” “Reports claim that the prison conditions of jailed PKK leader Abdullah Ocalan have worsened and that he is deprived of space and light. If true, this could bring a reaction from the Council of Europe Committee on Torture, which would harm Turkey’s reputation. There is no justification for inhumane detention conditions.” Sarah Ludford MEP is a patron of the Peace in Kurdistan campaign and seeks a political solution for the Kurdish question. She was one of the guest speakers at the Fifth Annual Conference on EU, Turkey and the Kurds held by the EU Turkey Civic Commission in January 2009. ------Top Turkish court continues deliberations on pro-Kurdish DTP’s fate Friday, December 11, 2009 ANKARA - Hürriyet Daily News ------

20 Turkey's Constitutional Court was trying to wrap up deliberations Friday on whether to ban the pro-Kurdish party on charges of links to the outlawed Kurdistan Workers’ Party, or PKK. The court was still evaluating late Friday a demand by the country's chief prosecutor to close the Democratic Society Party, or DTP, for alleged ties to the PKK. The 11-member top court began hearing the closure case early Tuesday. After the first hearing, court chief Haşim Kılıç told reporters it would not be possible to issue a decision until at least Friday. He said the court needed time to assess the 141-item list of accusations submitted by Abdurrahman Yalçınkaya, chief prosecutor of the Supreme Court of Appeals. The court was considering the list and the DTP’s defense against the accusations. As part of the deliberations, the court was also examining speeches made by the party’s administrative team at rallies and in Parliament. The judges were further scheduled to investigate records of meetings between jailed PKK leader Abdullah Öcalan and his lawyers to determine whether the party called for violence, whether party members praised terror or whether the party had links to the PKK. Yalçınkaya filed a lawsuit at the court demanding the party’s closure on Nov. 16, 2007. In his submission, he alleged the DTP had become a focal point of separatist actions and that it maintained links to the PKK, a breach of the law on political parties. In the 121-page indictment, the chief prosecutor also demanded the top court ban 219 members of the DTP from politics, including co-leader Ahmet Türk, and deputies Aysel Tuğluk, Sebahat Tuncel, Osman Özçelik, İbrahim Binici, Sevahir Bayındır and Fatma Kurtulan. Under the Constitution, at least seven out of 11 members of the top court must approve the closure of the party for the decision to become legal. ------OTHER POLITICAL ISSUES Terrorist attack kills 7 soldiers Tuesday, 08 December 2009 09:45 TIME TURK ------Seven soldiers were killed on Monday in the Reşadiye district of the central province of Tokat after Kurdistan Workers’ Party (PKK) terrorists opened fire on soldiers patrolling a rural area in the district. At least three soldiers were wounded in the attack. One of the wounded was in critical condition and was taken to a hospital in Tokat, while two were hospitalized at Reşadiye State Hospital. Clashes between security forces and soldiers were reportedly ongoing by the time Today’s Zaman went to print. Reşadiye Mayor Rafet Erden told Turkish broadcasters that more security forces were sent to the area where the clash occurred. “We extend our condolences to the families of the slain soldiers. May they rest in peace,” he stated. The bloody attack came at a critical point as the Constitutional Court was preparing to hear a closure case against the pro-Kurdish Democratic Society Party (DTP). The party has refused to label the PKK a terrorist party despite encouragement from Turkish politicians.

21 PKK supporters have launched a series of demonstrations across the country since last week over DTP claims about a “smaller and low-standard” prison cell for the jailed leader of the PKK, Abdullah Öcalan. Öcalan is serving a life sentence on İmralı Island, located off the coast of İstanbul. He was the sole inmate until recently, but eight other convicts have now been transferred to the island, and he was placed in a different cell. Throughout last week there was controversy about the prison conditions of the terrorist leader. His lawyers claimed that a new cell built for Öcalan is six-and-a-half square meters, compared to the old cell’s 12 square meters. The new cell’s window is reportedly too high to look through unassisted. The Justice Ministry denied the claims in a statement last week. The ministry underlined that the quality of Öcalan’s new cell was much higher than standards set for inmates by the EU and the UN. ------Supreme Military Council convenes under shadow of devious army plots Saturday, 05 December 2009 :1153 Todays Zaman ------

The Supreme Military Council (YAŞ) convened on Friday to consider the promotions and dismissals of members of the military in a tense atmosphere amid ongoing debates over devious plots believed to have been prepared by Turkish Armed Forces (TSK) members t The council started its winter deliberations on the future of some members of the military under the chairmanship of Prime Minister Recep Tayyip Erdoğan. The council was expected to focus on two military plots, the Action Plan to Fight Reactionaryism and the Cage Operation Action Plan. No official statement had been released about the gathering by the time Today’s Zaman went to print. The first plot bears the signature of Col. Dursun Çiçek and details a plan to undermine the power of the ruling AK Party and the faith-based Gülen movement. The second plot aimed at assassinating prominent non-Muslim figures in Turkey and placing the blame for the killings on the AK Party. The killings were intended to increase internal and external pressure on the party, leading to diminishing public support for the AK Party. The YAŞ was expected to deliberate on the future of a number of colonels and generals whose names have been implicated in the plots. Media speculates about Cage testimony by admirals A Turkish daily yesterday reported that three admirals whose names were mentioned frequently in the Cage plan would testify to civilian prosecutors today as part of an ongoing investigation. Admirals Kadir Sağdıç and Fatih Ilgar and retired Adm. Feyyaz Öğütçü were expected to arrive at an İstanbul courthouse today to be interrogated about the plan, according to a Sabah report. Adm. Öğütçü’s name appears in Operation Cage documents as “the president.” Öğütçü was forced to retire at this August’s Supreme Military Council (YAŞ) meeting, reportedly due to his suspected ties to Ergenekon, a clandestine criminal organization accused of plotting to topple the AK Party government.

22 An official at the İstanbul Public Prosecutor’s Office, however, announced that the admirals would not testify. “There is no such [expectation for testimony by admirals.] They will not arrive at the courthouse tomorrow,” the official stated. Öğütçü was thought to be the most likely candidate to become the new naval forces commander. Observers believe the reason behind his retirement was his links to Ergenekon. According to a National Intelligence Organization (MİT) document, Öğütçü was one of the founders of the Karargah houses, which the Ergenekon investigation has revealed were meeting spots for generals plotting a coup d’état in addition to housing hit men and serving as storage places for munitions. Öğütçü was implicated in the placement of TNT and other explosives at the bottom of a submarine at the Rahmi M. Koç Museum. The explosives were found by police in May after a document was discovered on a computer owned by a suspect previously detained as part of the Ergenekon probe. The explosives were to be detonated while a group of students visited the museum. Several members of the military were arrested last month on the grounds that they had contributed to the preparation of the Cage plan. The Cage action plan was signed by Lt. Col. Ercan Kireçtepe and was to be put into operation by a team of 41 members of the Naval Forces Command. The plan was detailed on a CD seized from the office of retired Maj. Levent Bektaş, who was arrested in April for suspected links to a large cache of munitions unearthed during excavations on land owned by the İstek Foundation in İstanbul’s Poyrazköy district. That discovery came as part of the investigation into Ergenekon. Three generals set to testify over coup plans Ergenekon prosecutors are also expected to question three generals who are mentioned in a journal detailing plans to stage a coup d’état. On Tuesday former Land Forces Commander Gen. Aytaç Yalman, former Air Forces Commander Gen. İbrahim Fırtına and former Naval Forces Commander Adm. Özden Örnek, all of whom retired in 2004, were summoned by Ergenekon prosecutors. The three men are expected to testify on coup plans nicknamed Moonlight, Blonde Girl and the Glove, all mentioned in a journal detailing plans against the AK Party allegedly kept by Örnek, on Sunday at the latest. Sources say the prosecutors will not only question the generals on the alleged diary entries but also on similarly incriminating entries from a journal kept by Cumhuriyet daily Ankara Representative Mustafa Balbay, who is also a jailed defendant in the Ergenekon trial. ------European Court rejects Turkish opposition MP's application on immunity Saturday, 05 December 2009 13:31 TIME TURK ------European Court of Human Right rejected application of Turkish leftist opposition CHP deputy who asked for his parliamentary immunity to be lifted. European Court of Human Right Grand Chamber rejected application of Turkish opposition CHP (the People;s Republican Party) deputy who asked for his parliamentary immunity to be lifted.

23 The court held by thirteen votes to four that there had been no violation of the European Right Convention. Relying on article 6-1 of the Convention, Atilla Kart complained that he had been deprived of his right to a fair trial, with the resulting restrictions on the rights of the defence, in that he had been deprived of the opportunity to clear his name due to his parliamentary immunity. The application was lodged with the European Court of Human Rights on 8 February 2005. The application was declared partly admissible after a public hearing. On 8 July 2008, the court delivered a judgment finding by four votes to three that there had been a violation of article 6-1. On December 2008, a panel of the grand chamber acceded to the Turkish government's request to have the case referred to the grand chamber. On Thursday, the court pronounced the present judgment in a public hearing. Prior to his election, Kart practised as a lawyer and in the course of his professional activities two sets of criminal proceedings were brought against him, one for insulting a lawyer and the other for insulting a public official. As an MP, he enjoyed parliamentary immunity, and the criminal proceedings against him were suspended under Article 83 of the Turkish Constitution, which stipulates that an MP who is alleged to have committed an offence before or after election shall not be arrested, questioned, detained or tried unless the parliament decides to lift his immunity. Kart's who requests for his immunity to be lifted were transmitted via the prime minister's office to the competent parliamentary authorities, who decided to suspend the criminal proceedings for the duration of his term of parliamentary office. Kart challenged the decision, relying on his right to be judged in a fair trial. The files concerning his requests to have his immunity lifted remained on the parliament's agenda for over two years, until the next parliamentary elections, without ever being examined. Kart was re-elected in the 2007 general elections. In January 2008, the parliament speaker informed him that the files concerning the lifting of his immunity were still pending. This was the first time the Court had examined a case where it was the beneficiary of parliamentary immunity who complained that his immunity was preventing him from being tried. The Court noted that although the immunity enjoyed by Turkish MPs appeared to be broader than in other States, the scope of the protection afforded had limits and could not be deemed excessive per se. ------Turkish media: ideologically silent and half-blind Sunday, 06 December 2009 12:25 Todays Zaman ------Some newspapers’ failure last month to cover a report published by the Taraf daily on Nov. 19 about a military plot to damage the Justice and Development Party (AK Party) by assassinating prominent non-Muslim figures in Turkey and placing the blame for th The plan in question was detailed on a CD seized from the office of retired Maj. Levent Bektaş, who was arrested in April for suspected links to a large cache of munitions

24 unearthed during excavations on land owned by the İstek Foundation in İstanbul’s Poyrazköy district. That discovery came as part of the investigation into Ergenekon, a clandestine gang whose suspected members are currently standing trial on charges of having plotted to overthrow the government. According to the plan, the houses of non- Muslims were to be the targets of bombings, while the defenders of minority rights would be killed and all the blame would be put on religious people and the government. Despite the fact that the plan, called the Cage Operation Action Plan, included subversive plans to create chaos in the country with the ultimate goal of ousting the government, newspapers from the Doğan Media Group such as Hürriyet, Milliyet, Radikal and Vatan, as well as other newspapers such as Akşam, Haber Türk and Sabah, did not write a single word about Taraf’s report in the following days. Only when detentions and arrests were made regarding the plans in the following days and Prime Minister Recep Tayyip Erdoğan talked about the plan in a speech he delivered at his party’s parliamentary group meeting, did these newspapers carry the news, days after it was first revealed. Questioning Turkey’s performance regarding freedom of the press, the Sabah daily’s news ombudsman and a Today’s Zaman columnist, Yavuz Baydar, criticized Sabah for failing to cover the Cage Operation Action Plan in his column last week. “In spreading views, freedom of press is very strong in Turkey, but in giving news, there is a trend of going backward. There are many newspapers which turn a blind eye to a newsworthy item due to ideological polarization, an allergy to democracy and hidden militarism. Readers are negatively affected by this. It is certain that the media is undergoing a historic crisis in Turkey,” wrote Baydar. Indicating that the Turkish media is undergoing a crucial test, Baydar said as more striking facts are revealed and they are followed by allegations and judicial process, it is seen that some opinion leaders and editors in the media who have key roles stumble and give priority to their ideological and political leanings before their professional concerns. “News is hidden, it is ignored or distorted; instead of giving an account to readers about mistaken journalism, editors recklessly choose to challenge the readers, saying, ‘It is none of your business.’ This is the case during social transformation processes. In every profession, the fake and authentic are differentiated,” explained Baydar. According to Hüseyin Gülerce, a columnist for the Zaman and Today’s Zaman dailies, there is media polarization in Turkey, but it is not pro-government and anti-government as some claim, but rather pro-democracy and anti-democracy. He said the pro-status quo media circles which have been defending military tutelage since the establishment of the Turkish Republic, taking the side of the deep state because their interests overlap, are very disturbed by the emergence of alternative media sources in Turkey which stand up for democracy. “They neglect to disclose shady plans because when they cover these plans, the ground they depend on will be lost,” said Gülerce. Emphasizing the fact that the mission of the media is to inform the public correctly, he said the negligent attitude of some newspapers in the wake of horrendous military plans was contrary to press ethics and the rules of professional journalism. The same newspapers also neglected to fully cover the story in October when the original of another military action plan that aimed to destroy the government and the faith-based Gülen movement was uncovered, giving either limited or no coverage to the news.

25 Commenting on the failure of the newspapers in question to cover the shady military plans detailed in the Cage Operation Action Plan, Taraf daily columnist Alper Görmüş said: “The case of a newspaper which does not cover news that reveals such horrendous allegations is like the case of a police station which neglects a report of murder on the suspicion that it may not be real.” ------Turkey still struggles with human rights violations Friday, 11 December 2009 13:49 Todays Zaman ------Yesterday was Human Rights Day, which marks the anniversary of the UN General Assembly's adoption of the Universal Declaration of Human Rights in 1948. Leaders released various messages to mark the day; however, Turkey is still a land of serious human rig In 2008, according to statistics compiled by the Human Rights Association (İHD), 1,546 people in Turkey were reported to have been subject to violence by state officials, private security companies or teachers. Of these, 448 were subject to maltreatment or torture under detention, 264 by police forces outside detention or jail, while 333 were subject to such treatment in prison. More than 50 were threatened by members of the security forces, while 299 were injured as a result of police intervention in public demonstrations. One-hundred twenty-six students were subject to physical abuse in school. According to the İHD's report, 28 people died in explosions caused by land mines buried near villages in the Southeast. The total number of such incidents reported in 2007 was 678, meaning violations of Turkey's zero-tolerance-for-torture policy has more than doubled in one year. The organizations have not yet completed reports for the current year. The Association of Human Rights and Solidarity for Oppressed Peoples (MAZLUM-DER), another human rights group, reported 1,103 violations of the right to life in 2008. The group noted that a large number of these incidents occurred in the Kurdish- dominated areas of the East and Southeast. MAZLUM-DER also noted the number was 376 in 2007.

MAZLUM-DER also said that a large number of allegations of torture were reported, despite the government’s “zero tolerance” policy. The report blamed a change to the law regulating the powers of the police force for the increase in the number, saying, “The increase in the number of violations of the right to life that are occurring in direct correlation with the enhancement of police powers is bringing about the concern that we might be going back to the Turkey of the 1990s.” Traditions and ‘honor’ killings MAZLUM-DER’s report also recalled the death of Engin Çeber, a torture victim who died after being beaten by the police in 2008. The report said if the law regulating police authority had not been change, this death could have been avoided. The group also said the police used disproportionate force against May 1 demonstrators in Taksim, also relating this to the changes made to the law. MAZLUM-DER also accused the government of being lax about monitoring the police bureaucracy, which it said encourages right to life violations by the police.

26 The report also stated that 25 people were killed in “honor” killings or blood feuds in the Southeast, despite efforts to prevent these by the media, the government and civil society organizations. It said such violations of the right to life have actually decreased in comparison with 2007, when 53 people were killed in violence arising from tradition. Another improvement, the report said, that no attacks on villages or setting villages afire occurred in 2008. However, it said there has been an increase in violations of the right to life in prisons, due to overcrowding and some problems with the legislation. It said 10 people died, while 101 incidents that risked inmates’ lives occurred in 2008, compared to five deaths and 80 incidents in 2007. The İHD reports that there were 29 murders whose assailants weren’t identified in 2008, compared to 42 in the previous year. The İHD’s report for 2008 also includes data on violations of freedom of expression, thought, religion and the freedom of assembly. In 2008, a total of 11 civil society organizations were shut down, compared to 13 in the previous year. However, the numbers the İHD provides for these types of closures was 169 in 1999 and 130 in 2000. That number has been consistently falling over the past nine years. Violations of freedom of speech According to the İHD’s report, 450 people were charged under anti-freedom of speech articles in the Turkish Penal Code (TCK), such as Article 301, which criminalizes an ambiguous type of behavior referred to as “insulting Turkishness.” In 2008, 215 other cases continued with 1,722 people standing trial as suspects in thought crimes. A total of 177 such trials were concluded, with 124 acquittals and 380 individuals being given a total of 432 years in jail and fined 321,847 lira. The total number of years defendants in thought crime cases were sentenced to was 556, according to MAZLUM-DER’s report in 2008. The group accused judges in most of those cases of ignoring or not being knowledgeable in international law. The section on human rights in the European Union’s 2008 Turkey progress report maintains that in addition to Article 301, “Other legal provisions that restrict freedom of expression remain a cause of concern.” The report noted: “For example, Articles 215, 216 and 217 of the Turkish Criminal Code, which criminalize offences against public order, and the Anti-Terror Law have been applied to prosecute and convict those expressing non-violent opinions on Kurdish issues. Turkish judges and prosecutors apply a wide interpretation of the provision on ‘incitement to violence’ or ‘public interest,’ in particular as concerns Kurdish-related issues. … Press articles on ongoing judicial proceedings have led to prosecutions and convictions under Article 288 [attempt to influence a fair trial] of the Turkish Criminal Code or under the Press Law. Similarly, public statements on the right to conscientious objection are prosecuted under Article 318 [discouraging the people from military service] of the Turkish Criminal Code.” Politicians on human rights day President Abdullah Gül on Wednesday, one day before Human Rights Day, received members of Parliament’s Human Rights Commission. In his message to mark the day, he said it hurt one’s pride when one’s country is associated with human rights violations. He said it was important for every individual to live in safety in a country. He said Turkey should increase controls and if necessary revise legislation for the full prevention of human rights violations and torture. State Minister and chief EU negotiator Egemen Bağış also released a message yesterday,

27 saying Turkey was a freer, more democratic country today than in 1999 when Turkey became an official EU candidate country. He said Turkey had undertaken deep-rooted reforms as part of the EU process which helped improve the country’s human rights record. He said thanks to changes in different laws, controls against torture had increased and freedom of expression and the press, cultural rights and the right to organize demonstrations have been extended and gender equality has been improved. Culture and Tourism Minister Ertuğrul Günay, in his message to mark the day, said everyone had a responsibility to fulfill in improving the state of human rights. He said Turkey was one of the first countries to ratify the Universal Declaration of Human Rights and has centuries of history of tolerance between different cultures. ------YÖK president: Religious schools may become high schools in Turkey Friday, December 11, 2009 ANKARA – Referans HURRIYAT ------Higher Education Board, or YÖK, President Yusuf Ziya Özcan said his group would draw up a plan for the coefficient system for university entrance exams during a meeting Dec. 17. He also floated a new proposal to convert religious vocational high schools into high schools in a move to solve problems on the issue. Özcan met with media representatives at a press conference Friday in Ankara. He said they were considering many alternative solutions for the coefficient system after the judiciary voted to continue weighting the scores of normal high school students and vocational high school students differently. Under the coefficient system, which gives weight to high school grades on university entrance exam scores, a lower coefficient point is applied to vocational and religious high school graduates if they want to study a program at university different from what they studied at high school. YÖK attempted to abolish the coefficient system to equalize standards for all high school students, but the Council of State declined YÖK’s application for a stay of execution over the court’s earlier decision to continue using the coefficient system for university entrance exams. Özcan said the new arrangements to be shared with the public on Dec. 17 would not cause a delay in university exam dates in 2010, adding that converting religious high schools into high schools could solve the issue. “I am revealing this thought not as YÖK president, I am just thinking aloud. The religious high schools can be converted into high schools and optional courses on religion can be included in the [high school] curricula,” he said. “Families send their children to religious high schools to make their children learn about their religion, not to make them an imam. The optional courses on religion can meet this need. Alevi students can learn about their religion and Christian students can likewise learn the basic principles of their own religion,” he said.

28 Özcan said the need for religious clerks in could be met via the establishment of high schools under the auspices of the Religious Affairs Directorate, emphasizing, however, that these were just his personal views. YÖK also planned to change the much-criticized election system of the university rectors, Özcan said, adding that they anticipated a system that would allow boards of trustees formed by the universities themselves to select their own rectors. “Such a system requires a constitutional amendment and would mean the president would abandon his power of appointing rectors. President Abdullah Gül has already said he wants to withdraw himself from this process,” Özcan said, adding that it was possible for the president to apply to Parliament to ask for a legal change on the issue. ------

GEO-STRATEGIC ISSUES Obama to press Turkish PM over Iran’s nuclear program Updated: Monday, December 07, 2009 11:00GMT—7:00AM/EST Sabah newspaper ------Washington, 7 December (WashingtonTV)—US President Barack Obama is expected to press Turkish Prime Minister Recep Tayyip Erdogan for more support in curbing Iran’s nuclear ambitions. Obama will probe Turkey’s willingness, as a member of the United Nations Security Council, to back new sanctions against Iran, during a White House meeting today, an administration official said, according to the Bloomberg news network. The Turkish daily, Sabah, reported that Erdogan will ask Obama to give more time for talks with Iran, before seeking a fourth round of UN Security Council sanctions. The Obama administration has said it will give Iran until the end of the year to reverse course on its nuclear program, or it will seek new sanctions against the country. Erdogan, whose country has in recent years improved ties with the Islamic Republic, has sought to help resolve the long-running nuclear standoff. In a visit to Iran in October, the Turkish leader accused Western powers of treating Tehran unfairly over its nuclear program, and downplayed Western fears that Iran wants to build a nuclear bomb. The Obama administration official, who spoke to Bloomberg on the condition of anonymity, said that the U.S. will seek to “clarify” the Turkish position on Iran after Erdogan’s comments. The official also said that Ankara could serve as a mediator only if it made clear to Tehran that its nuclear program can only be for peaceful purposes. Obama and Erdogan will also discuss Turkey’s troop commitment to Afghanistan, its role in northern Iraq and the establishment of relations with Armenia, the White House said last week. ------We Do Not Want Nuclear Weapons In Our Region, Erdogan Tuesday, 08 December 2009 21:51

29 TIME TURK ------Turkish Prime Minister Recep Tayyip Erdogan said Monday Turkey did not want nuclear weapons in its region. Speaking at a press conference following his meeting with U.S. President Barack Obama in Washington, D.C., Erdogan said that Turkey wanted those countries that had nuclear weapons to denuclearize themselves. At the same time, nuclear energy may be utilized for peaceful goals. No one has the right to negatively approach nuclear energy used for peaceful purposes, Erdogan said. Touching on Turkey's relations with Iran, Erdogan said that Turkey had good relations with this country. We look at Iran's relations with the world from a diplomatic perspective, Erdogan said. In regard to Turkey's mediatory role in the world, Erdogan said that Turkey could re- assume the role of a mediator between Israel and Palestine as well as Israel and Syria. On Cyprus, Erdogan said that his government asked for the support of the U.S. so that the talks in Cyprus were more fruitful until March. We have received a promise from the U.S. government to take a step towards strengthening Turkey within NATO, Erdogan noted. Touching on Turkey's multi-dimensional foreign policy, Erdogan said that Turkey should not lose the East while looking at the West and vice versa. Turkey should not lose the South while looking at the North and vice versa. Turkey has the strength to look at all directions in the world, Erdogan stressed. In regard to the terrorist attack on Turkish gendarmerie forces in Tokat province on Monday, Erdogan said that they did talk about certain provocations which might be staged in order to hurt the Turkish government's "democratic move". Such a terrorist incident in Tokat was an act of provocation, Erdogan also said. ------Turkey session in US Congress sees tension, controversy Saturday, 05 December 2009 11:58 Todays Zaman ------

A session on Turkey was held at the US House of Representatives on Thursday and was attended by guests from Turkey and other countries representing various backgrounds and political inclinations, which caused tension during some moments of the two-hour co The session discussed the topics of freedom of the press and a fine levied on the Doğan Media Group for tax evasion, illegal wiretapping of phone lines, the Ergenekon trial, women’s rights and torture. A Turkish journalist briefly walked out of the convention when some commentators spoke in favor of the Ergenekon trial, saying, “I can’t take this anymore.” A brief argument took place between Zaman and Today’s Zaman columnist İhsan Dağı and Hürriyet columnist Sedat Ergin. Pundits say the timing of the session, just four days ahead of a scheduled meeting between Prime Minister Recep Tayyip Erdoğan and US President Barak Obama, is also significant.

30 The Tom Lantos Human Rights Commission (TLHRC) that operated under the Committee on Foreign Affairs and which hosted a controversial panel discussion on Turkey about two weeks ago where the keynote speaker was British journalist Gareth Jenkins, known for his stance against the Justice and Development Party (AK Party) government and the Ergenekon trial, was the organizer of the session on Turkey. The convention was chaired by Donna Edwards, a TLHRC executive committee member, and started with presentations from speakers representing Amnesty International and Reporters without Borders. Following these speeches, guests from Turkey delivered their presentations. Zaman and Today’s Zaman columnist Dağı, Milliyet columnist Ergin, Sabah writer Hasan Bülent Kahraman, former European Court of Human Rights judge Rıza Türmen and women’s rights activist Selma Acuner. Congresswoman Edwards highlighted some important reforms in Turkey under the Erdoğan government, particularly with regards to the normalization of civilian-military relations; however, she added that most observers agreed that his term has also seen a deterioration in the field of human rights. Citing an editorial column that appeared in The Washington Post about the tax evasion fine levied upon the Doğan Media Group, Edwards pointed to problems in freedom of the press as well as some controversial wiretapping incidents in recent periods and problems about the functioning of the judiciary. Edwards claimed that some journalists did not join the session purportedly out of fear of the government and also mentioned charges pressed against a journalist who wrote a book investigating intelligence flaws in the murder case of journalist Hrant Dink. There was also a great deal of interest shown by viewers, and the room was packed with spectators from various backgrounds. US and Turkish diplomats, congressional aides, human rights observers, representatives from various think tanks and civil society groups, Turkish journalists and a large number of members of the Turkish and Jewish communities in the US were present during the session. Freedom of press Hürriyet daily’s columnist Ergin’s presentation concentrated on the tax fine levied on the Doğan group, which his newspaper is a part of. Stating that the $3 billion tax evasion fine exceeded the total value of the Doğan group, Ergin said such a thing could not possibly go unnoticed in the eyes of the free world. He also criticized Prime Minister Erdoğan for his recent statement that columnists “write too much.” Zaman and Today’s Zaman writer Dağı said he acknowledged the seriousness of the allegations regarding freedom of the press, but he also accused the Doğan group of monopolizing the media, which he said hindered complete freedom of speech. He also said the Doğan group had large investments in fields outside media and that it was common for media empires to be used for interests in other fields. Judge Türmen stated that if the Doğan group was eradicated, there wouldn’t be much opposition left in the media. Sabah columnist Kahraman confirmed information provided both by Ergin and Dağı and offered as a remedy a legal transformation of the media sector in Turkey to allow greater variety in the sector. Ergenekon trial Türmen stated his belief that the Ergenekon trial was increasingly creating the impression that the government was using prosecutors to suppress opposition and listed the problems he spotted in the judicial process. He also complained that the judiciary was not entirely

31 independent from the government. Dağı agreed there were “some deficiencies” in how the trial was being conducted but said it was of crucial importance to develop democracy and human rights in Turkey. Ergin agreed that when the investigation started in 2007, it was “good and right”; however, it turned into an instrument for the government to suppress the opposition. Human rights, secularism At the start of discussions on the state of human rights, Dağı objected to the organizers’ finding that human rights have been deteriorating in Turkey. Saying there hasn’t been a dramatic change in the number of applications to the European court, he said Turkey has never been as democratic as it has been during the past decade. Ergin and Türmen in their speeches regarding the AK Party’s human rights record both used the word “complicated.” Ergin acknowledged that there have been improvements in some fields but also said drastic changes in legislation were needed to reform other areas. Türmen praised reforms up until 2007 and the government’s steps regarding the Kurdish question but said “oppression by the elected” has been setting in since that year. Kahraman stated that he wasn’t entirely unhappy about the developments in human rights. Türmen said bans on alcohol or practices such as forcing people to join Friday prayers have been increasing in small Anatolian towns since the AK Party came to power. He also stated that only religious people were hired for government positions and complained that school textbooks were written with a Sunni outlook. Kaharaman said Turkey’s understanding of secularism was faulty, adding that the state was controlling the religious sphere. Doğu said the Kemalist secularist elite in the country was hostile to the market economy and democracy, and said: “We can’t damage our democracy to save a media group. And the US shouldn’t be a part of that.” These words were followed by a brief heated debate between Ergin and Dağı. ------EU to note reform improvements, refrain from Cyprus sanctions Saturday, 05 December 2009 12:01 Todays Zaman ------The European Union is expected to chide Turkey next week for refusing to open its ports and airports to traffic from Greek Cyprus but will refrain from imposing sanctions on the Muslim candidate country. The 27-nation bloc will also note that there has be The draft resolution, prepared by the Swedish Presidency of the EU, expresses “regret” that Turkey, “despite repeated calls, has not yet fulfilled its obligation of full non- discriminatory implementation of the Additional Protocol to the Association Agreement,” a document which the EU says commits Turkey to opening its ports and airports to vessels from EU member Greek Cyprus. In 2006, the EU suspended negotiations with Turkey on eight relevant chapters -- out of 35 in total -- because of Turkey’s non- compliance and vowed to review the issue once again in December 2009, suggesting that a suspension of the accession talks process could be an option. But the draft text prepared for next week’s ministerial meeting on Dec. 7-8 and leaders’ summit on Dec. 10-11 calls for no definite sanction, angering the Greek Cypriots, who have pressured the Swedish

32 presidency to toughen the text. “The Council will continue to closely follow and review progress made, in accordance with its conclusions of Dec. 11, 2006, and other related Council conclusions. Progress is now expected without further delay,” the draft resolution, a copy of which was obtained by Today’s Zaman, says. The document was being discussed at a meeting of COREPER, an EU body comprised of permanent representatives of the member states at the 27- nation bloc. The text is to be submitted to the EU foreign ministers for evaluation at their Dec. 7-8 meeting before being sent to the leaders for final approval. Amendments are possible in all meetings. The draft discussed at yesterday’s COREPER meeting also urges Turkey to “actively support” ongoing negotiations “aimed at a fair, comprehensive and viable settlement of the Cyprus problem within the UN framework, in accordance with the relevant UN Security Council resolutions and in line with the principles on which the Union is founded, including concrete steps to help bring about a climate favorable to such a comprehensive settlement.” Turkey says it will not open its ports and airports to traffic from Greek Cyprus, which it does not recognize, unless the EU takes a step towards fulfilling its own promises to lift severe economic sanctions on the internationally unrecognized Turkish Cyprus. Despite promising to allow direct trade with the isolated Turkish Cyprus in 2004, the EU has so far not taken any step to that effect, under pressure from Greek Cyprus, which joined the EU as the representative of the entire island shortly after the EU plan for direct trade with Turkish Cyprus was unveiled. The Greek Cypriots claim EU steps to allow trade with the Turkish Cypriots would deepen the island’s division. They rejected, however, a UN plan to reunite the island just before accession to the EU, while the Turkish Cypriots accepted it. Turkish leaders have warned in the past few days that any EU decision to impose sanctions on Turkey over the Cyprus ports dispute would have serious repercussions on Turkish-EU ties. “There are already too many sanctions on Turkey because of Cyprus,” Egemen Bağış, Turkey’s chief EU negotiator, said in a speech in Brussels on Thursday. “Any additional sanctions will kill the motivation of my leaders towards the EU.” Positive steps in problematic areas Leaving aside the Cyprus criticism, the document is expected to please the Turkish government as it acknowledges improvements in a number of problematic areas such as civilian-military relations. “Positive steps have been registered in the areas of the judiciary, civil-military relations and cultural rights,” it says. The EU says it is also “encouraged by the government’s democratic initiative including on the Kurdish issue.” The government is pushing for a massive democratization drive that, among other things, will expand rights for Turkey’s Kurds. The initiative, which has the backing of Western powers such as the EU and the US and Middle Eastern neighbors including Syria and Iraq, has been severely criticized at home by the nationalist opposition, which says it will undermine Turkey’s national unity. The draft resolution says the democratization initiative “should lead to concrete measures guaranteeing all Turkish citizens full rights and freedoms and should significantly improve the situation in the Southeast” and adds that the EU “welcomes the government’s efforts towards building a national consensus, which will also be beneficial

33 to the reform process, including the work on a constitutional reform.” But it also urges Ankara to step up the pace of reforms, particularly in the areas of freedom of expression, elimination of torture, freedom of the press, freedom of religion for all religious communities, trade union rights, civilian oversight of the military and gender equality. “The Council notes that the negotiations have reached a more demanding stage requiring Turkey to step up its efforts in meeting all conditions,” it says. It also includes a paragraph which appears to ease Turkey’s concerns that the accession process, which should proceed according to the Turkish progress in meeting technical standards, is being stalled due to political opposition to Turkish accession in some EU countries. “The Council points out that the negotiating chapters for which technical preparations have been concluded will be opened or closed provisionally, according to established procedures,” says the document. ‘Important player’ The document acknowledges Turkey’s growing clout in its region, saying it is an “important player” which has a key role in “energy supply and the promotion of dialogue between civilizations.” It welcomes “the significant diplomatic efforts made to normalize relations with Armenia, resulting in the historic signature of protocols for the normalization of relations in October 2009. It looks forward to the ratification and implementation of the protocols as soon as possible.” ------Turkish Cypriot Side Has Plan B In Case Of Failure In Peace Talks, Says Talat Monday, 07 December 2009 14:33 TIME TURK ------Turkish Cypriot President Mehmet Ali Talat said that the Turkish Republic of Northern Cyprus had a "plan b" in case peace talks to reunify the island with Greek Cypriots fail. Turkish Cypriot Side Has Plan B In Case Of Failure In Peace Talks, Says Talat Turkish Cypriot President Mehmet Ali Talat said that the Turkish Republic of Northern Cyprus had a "plan b" in case peace talks to reunify the island with Greek Cypriots fail. "We definitely have a 'plan b' but I can not disclose it right now," Talat told a meeting with Turkish Cypriots living in the United Kingdom on Sunday. Turkish Cypriot leader Talat and Greek Cypriot leader Demetris Christofias re-launched peace talks to reunify the island in September 2008. They have had over 50 meetings so far. Asked if there was an agreement with Greek Cypriot side on major topics, Talat said, "there are some issues we have agreed on and there are some more we could not agree on. We need a give-and-take process to reach final agreements." He said talks would be intensified and expressed hope for progress, adding that Turkish Cypriot arguments were in line with UN parameters which did not cause a problem for Turkish Cypriot side in the international arena. Recalling that he had a meeting with British Prime Minister Gordon Brown last week, Talat said Britain, a guarantor power in the island, should play an encouraging and more important role as it was the country that could make the best diplomatic formulation of the problem. "And I can say that I saw British officials are more interested when compared to past," he

34 said. ------Eroğlu vows to continue Cyprus talks if elected president Monday, 07 December 2009 12:36 Todays Zaman ------Peace negotiations between the Turkish Republic of Northern Cyprus (KKTC) and Greek Cyprus to find an enduring solution for the unification of the island would continue during KKTC Prime Minister Derviş Eroğlu’s presidency in the event that he is elected Reiterating that he is the strongest candidate so far for the 2010 elections, Eroğlu said solution to the conflict is still distant. Currently working with Mehmet Ali Talat, the incumbent president, Eroğlu said peace negotiations cannot last forever. “Negotiations will also continue after April. However, we do not have endless patience. We will also display our strong position,” Eroğlu said, implying that he will not be as patient as the current president at the negotiating table. Several peace packages have been offered in 41 years of peace talks, yet none have produced any tangible results due to Greek Cypriot’s firm position. The last such a peace solution was the Annan plan to unify the island proposed in 2004, to which Greek Cyprus said no while the KKTC approved it. “They are a member of the EU, they have trade relations with many countries, their level of welfare is very high and they are very comfortable in their position. That is why they do not want to negotiate,” Eroğlu noted.

Both sides of the island started peace negotiations in September of last year, and leaders will meet for the 57th time this week. “This is the last chance. If the talks fail, then we will look ahead,” Eroğlu stressed. Leaders of the two countries plan to put the solution package to a referendum before the general elections in the small country, which is heavily dependent upon hefty aid from Turkey. Eroğlu also said despite the KKTC president’s positive remarks on negotiation developments, no discussion topics have reached common terms with the exception of the judiciary chapter. Turkey earlier said that if Greek Cyprus says no to the peace solution, they will consider promoting the KKTC’s recognition as a state. Eroğlu also claimed that both sides are far from agreement and that the Turkish population is already very pessimistic with respect to a solution to the decades-long conflict. ------Talat opposes Turkey opening its ports to Greek Cyprus Wednesday, 09 December 2009 10:4 Todays Zaman ------Turkish Cypriot leader Mehmet Ali Talat has said he is opposed to Turkey unilaterally opening its ports and airports to Greek Cyprus because Greek Cypriots would think they could gain concessions without agreeing to a peace settlement in Cyprus. “This is very dangerous. [The] opening of ports and airports should be kept to either a solution or to lifting the isolation of Turkish Cypriots simultaneously,” Talat told Reuters in an interview in London on Monday.

35 The EU has repeatedly asked Turkey to open its ports and airports to traffic from Greek Cyprus. EU foreign ministers were meeting yesterday in Brussels to discuss, among other things, Turkey’s refusal to comply with the EU demand. The EU leaders will meet later in the week, on Thursday and Friday, to finalize a resolution -- which is expected to express “regret” over Turkey’s refusal to open its ports and airports. Greek Cyprus, on the other hand, is pressing the EU for sanctions to punish Turkey’s non-compliance. Talat, who had talks with British Premier Gordon Brown during his stay in London, also said he saw a good chance of reaching a peace deal with the Greek Cypriots and warned it would be a disaster for the ethnically split island if the negotiations broke down. “I believe that now we have a good chance because (Greek Cypriot leader Dimitris) Christofias wants a solution, I want a solution,” Talat said, calling for greater support for the process from the international community. The Turkish Cypriot leader said a collapse of the latest talks would be a “disaster [in] my opinion” and added: “First of all the island will be permanently divided, because ... such convenient conditions might not come again,” he told Reuters. No troop withdrawal now In remarks published earlier in the day, Talat said Turkish troops will withdraw from Turkish Cyprus when a lasting solution was found in the island. “It is clear that Turkish troops will withdraw together with a solution on the island. If the Annan Plan had been accepted, troop withdrawal would have taken place. But nothing has changed,” he told a meeting at the London School of Economics on Monday. In Washington, speaking after talks with US President Barack Obama, Prime Minister Recep Tayyip Erdoğan dismissed prospects for an immediate troop withdrawal from Cyprus. “Withdrawing troops from Cyprus is out of the question. It is inconceivable,” Erdoğan told a press conference after meeting Obama. Erdoğan said the Greek Cypriots have taken no step for compromise so far. “Thus, our soldiers are staying,” he concluded.

Erdoğan also said he had asked the US administration to exert greater effort to press for a solution on the island by March next year. The Turkish side says chances for a solution will decrease significantly following the presidential elections in Turkish Cyprus in April. Talat, who is pro-reunification, has said he would not run for re-election if there is no serious prospect of a settlement. ------Ankara lambastes EU for lack of vision in Cyprus decision Thursday, 10 December 2009 09:19 Todays Zaman ------The European Union has surrendered to the Greek Cypriot lack of vision in a decision which ignored Turkey’s active support of the ongoing reunification negotiations on the divided island of Cyprus, Ankara has stated. It has also accused certain EU members In a statement issued in Brussels on Tuesday after a meeting of the EU General Affairs and External Relations Council, the 27 EU ministers expressed “deep regret” over the absence of improvement in Turkey’s relations with Greek Cyprus. But they took no new action to restrict talks beyond the eight chapters frozen in 2006 due to Turkey’s refusal to

36 open its ports and airports to Greek Cypriot traffic and five which have been set aside at France’s insistence. In Ankara, a statement released by the Turkish Foreign Ministry late on Tuesday first of all noted that the council statement actually reaffirmed Turkey’s goal of full EU membership which is legally based on decisions made at European Council summits. “Nevertheless, despite intense and well-intentioned efforts by the term president Sweden in particular and other council members who are aware of the importance of Turkey’s EU membership, and while there are expectations for successful result from the ongoing negotiations between the two leaders on the island, we see that the lack of vision by one certain member country is reflected within the council’s conclusions in a way which doesn’t comply with international law,” the Foreign Ministry said. Given that a 2004 decision to ease the isolation of the Turkish Cypriots has not been fulfilled, pressuring Turkey to open its ports and airports to Greek Cypriot traffic is “clearly unfair,” the Turkish Foreign Ministry stated. The council said it expected Turkey “to actively support the ongoing negotiations” in Cyprus -- causing severe disappointment in the Turkish capital as it constantly speaks loudly in favor of the negotiations. “Substantially, it is unfortunate that the support lent to the negotiations by Turkey is not openly appreciated in the council conclusions and it is unfortunate that it has remained silent on chapters which were suspended because of some countries’ unfair justifications,” the ministry said, urging the EU to consider the bloc’s enlargement strategy and bilateral relations separately. In a move likely to further escalate tensions in Turkey-EU relations, following the meeting of the council, Greek Cypriot Foreign Minister Markos Kyprianou said they intended to set conditions for the opening of six future chapters to secure Turkey’s compliance with the 2005 agreement. “We are not blocking the chapters. But we will be introducing conditions for the opening of each chapter,” Kyprianou said. Saying the conditions would be related to Turkey’s broad EU obligations, he gave no details on how compliance would be measured. Foreign Ministry spokesman Burak Özügergin was swift to respond to Kyprianou, saying those remarks were “a unilateral statement,” while voicing Ankara’s determination to open the environment chapter during the Swedish term presidency, which will end in January. In Athens, meanwhile, Greek Alternate Foreign Minister Dimitris Droutsas termed the exclusion of a text proposed by the Swedish presidency, which stated, among others things, that bilateral differences between member-states and candidate-countries must not be an obstacle for EU enlargement, from the council’s conclusions a “considerable success.” ------EU center gets opened in Istanbul Sunday, 06 December 2009 15:04 Time Turk ------The European Union (EU) Center was opened in Istanbul on Saturday with a ceremony attended by Turkish Prime Minister Recep Tayyip Erdogan

37 Speaking at the inauguration of the Center, Erdogan said that the EU process was an important one for Turkey to go above the level of contemporary civilization. The EU is a project of civilization for Turkey and we will continue to make efforts in this direction, Erdogan stressed. The EU Center will be jointly used by the Turkish Secretariat General for the European Union and the Istanbul Metropolitan Municipality's EU Affairs Department. ------"We made EU process a real reachable target" Sunday, 06 December 2009 14:07 Time Turk ------Turkish State Minister & Chief Negotiator for EU talks Egemen Bagis said on Saturday that Turkish government's biggest target was EU membership "We have made the EU process, which has been continuing with ups and downs for half a century, a real and reachable target," added Bagis who spoke at the inauguration of EU Center's Istanbul office. We have made EU process a process of Turkish people because Turkey deserves the best, he said. Bagis said that Turkey had a big responsibility and importance for the EU and world peace, adding that nobody had the power to exclude Turkey from EU process. He said that Turkey's membership would make the EU not only a global actor but also a civilization project of the 21st century. Bagis noted that Turkey had a full determination and will in EU membership process. The determination of the government in reform process rapidly made Turkey a country in EU standards, he added. ------Turkey Keeps Taking Necessary Steps In Eu Accession Process, Foreign Ministry Wednesday, 09 December 2009 13:3 TIME TURK ------Turkey would keep taking required steps in its EU accession processn with great determination, Turkish foreign ministry said on Wednesday. Foreign Ministry Spokesman Burak Ozugergin said that Turkey has been continuing to work under the national program released by the government on December 31, 2008. "We continue to work for opening of environment chapter during the presidency of Sweden," he said. ------Erdoğan tells EU to fix its foreign policy orientation Wednesday, 09 December 2009 10:3 Todays Zaman ------

38 Prime Minister Recep Tayyip Erdoğan has once again dismissed speculation that Turkey is reorienting its foreign policy away from the West and said the European Union, by casting doubt on its membership promises to Turkey, is the one that should answer que Delivering speeches at Johns Hopkins University and the Washington branch of the Ankara-based Foundation for Political, Economic and Social Research (SETA) following his meeting with US President Barack Obama on Monday, Erdoğan ruled out arguments suggesting that Turkey’s foreign policy orientation has been shifting away from the West. “Turkey cannot lose the West while looking towards the East; cannot lose the East while looking towards the West; cannot lose the South while looking towards the North; cannot lose the North while looking towards the South,” Erdoğan said, underlining EU-candidate Turkey’s democratic and secular structure. Claims over a shift in Turkey’s foreign policy orientation are “deliberate” and “unfair,” he said, while noting that as a member of the Western alliance, Turkey’s capability of speaking with everyone should be seen as “an opportunity.” “Those who are jealous [of this capability] are not right,” Erdoğan said, urging those to embrace Turkey’s contacts as an opportunity. “There is no such movement as neo- Ottomanism within the Turkish Republic. It’s an epithet aimed at casting a shadow over the current government,” he said, adding that since regional issues around Turkey have global importance, Turkey’s efforts for resolving regional issues have actually been serving global peace. “There is nothing such as a shift of orientation, etc. It’s a normalization process. If there is something such as a shift in orientation that has to do with Europe, it should urgently be dealt with,” Erdoğan said, apparently criticizing EU member states such as France and Germany who offer Turkey options that fall short of full membership. The prime minister reiterated his sensitivity over the enduring humanitarian tragedy in Gaza. “Israel has to end domestic opinion differences so that problems between Israel and Turkey can also be overcome.” He said there were also conflicting messages from the coalition partners on Turkey’s possible mediation of talks between Israel and Syria, too. Speaking on Iran’s controversial nuclear program, he reiterated that Turkey wants all countries that possess nuclear weapons to get rid of them. “We do not want nuclear weapons in our region or in another place. We should get rid of nuclear weapons in our countries. When you have the right to produce nuclear weapons, does it work if you tell someone not to do so? Wouldn’t this double-standard put you into a bad position?” Touching upon the emigration of Anatolian Armenians during World War I, Erdoğan firmly denied allegations of genocide against the Anatolian Armenians during the Ottoman era. “My ancestors didn’t commit genocide; they wouldn’t,” he said, while noting that progress in ongoing normalization efforts between Armenia and Turkey were related to progress concerning the Nagorno-Karabakh dispute between Armenia and Azerbaijan. Ruling out pressure on the press in Turkey, Erdoğan said the press was “even free to insult the president, the prime minister and their families.” The US will continue intelligence sharing concerning northern Iraq where the outlawed Kurdistan Workers’ Party (PKK) has camps, he said, signaling that the US would not take any new step concerning the elimination of the PKK camps in the Kandil Mountains in northern Iraq.

39 ------PM nixes 'Muslim world leader' label Friday, December 11, 2009 - Anatolia News Agency HURRIYAT ------Asked whether he was poised to become a leader of the Muslim world as a result of Turkey’s multilateral foreign policy, Turkish Prime minister Recep Tayyip Erdoğan says he is not attempting to do so. He says Turkey is alongside the United States, especially in terms of the military and that the two countries cooperate also within many different international organizations and commissions Asked whether he was poised to become a leader of the Muslim world as a result of Turkey’s multilateral foreign policy, the country’s prime minister said Friday that he is not attempting to do so. “I did not put any effort into becoming [a leader of the Islamic world]. Things like this do not happen just because someone wants to occupy this or that post,” Prime Minister Recep Tayyip Erdoğan said in a televised interview on the English-broadcasting news channel Russia Today. “We believe in serving our people in the best way possible,” Erdoğan said. “Of course, here in Turkey, we want to establish equal relationships with other countries because there is a problem of inequality in our world.” Responding to a question about Turkish-U.S. relations, the prime minister said the two countries were working together on many issues. “Turkey is alongside the United States, especially in terms of [the] military,” he said. “As for politics, there are also areas where we cooperate within many different international organizations and commissions.” Looking at economic cooperation, Turkey’s primary partner is Russia, with $38 billion in turnover as of the end of 2008, Erdoğan said. “We definitely need to further our economic cooperation with the United States. I am not saying that there is competition between the U.S. and Russia in this respect,” the prime minister added. “What I am saying is that we are open to cooperation, and we want to expand it. Actually, we need each other.” Turkey lifts EU’s burdens Commenting on his country’s efforts to join the European Union, Erdoğan said Turkey would not become an additional burden for the EU. On the contrary, he said, its membership would lift some of the existing burdens the bloc faces, and it would be a mistake for the European Union to reject Turkey as a member. “What we are saying is, regardless of whether you accept Turkey or not, we are already in the European Union. There are 5 million Turks in EU countries already. You will only lose by leaving us behind,” Erdoğan told Russia Today. The Turkish prime minister said there are countries already in the bloc that cannot compete with Turkey in terms of their freedoms and economies. “Why do they not accept Turkey?” he said. “When you take a closer look at this, you see political reasons.” According to Erdoğan, Turkey and the European Union are about to enter a new stage and his country can take different steps during this new period. “If the European Union makes a permanent decision not to accept us, then Turkey will make its decision based on

40 that,” he said. “But since we are holding talks with the new EU chairman, we are about to enter a new stage. We can make progress on many aspects, I believe.” Filling a gap In answer to a question about the Nabucco and South Stream gas pipelines, Erdoğan said Turkey was not a partner in the South Stream project. “We are partners in Nabucco, though, and are involved in it. I see them as complimentary projects,” he said. “Europe cannot be satisfied with either Nabucco or South Stream, but both projects can meet the demand of Europe and fill a very big gap.” Erdoğan said his country has been working hard to launch Nabucco as soon as possible. “We are a transit country, but there are supplying and consumer countries as well. Turkey is also a consumer country,” he said. “So, we need to implement the Nabucco project as fast as we can. I, personally, and the relevant ministers and authorities continue to work on this as we want to launch Nabucco as soon as possible.” Responding to a question on relations with Armenia, Erdoğan said he sent a letter in 2005 to former Armenian President Robert Kocharian, proposing that historians investigate the 1915 killings of Armenians during the last days of the Ottoman Empire. Armenia insists the killings should be declared “genocide,” but Turkey rejects this notion, saying they took place in the context of wartime clashes. “There has been no reply. This is the job of historians, not politicians,” Erdoğan said. “Besides, the Turkish nation, our grandparents, did not commit genocide. They just would not have done it... The Ottoman Empire would not have fallen for such a mistake.” The Turkish prime minister criticized Armenia for its stance over the proposal for a historian committee and said Turkey will never accept blame as long as the former Soviet country refuses to cooperate on the issue. “What we say now is that Armenia should give access to its archives and let investigators do their research so that we can reach a solution. It’s as simple as that,” Erdoğan said. “Armenia is not doing this, and since this is the case, they do not have the grounds to accuse Turkey. We will never accept blame for such a thing.” ------Erdoğan urges EU to clarify position on Turkey Thursday, 10 December 2009 09:20 Todays Zaman ------A half-century has passed since the European Union first engaged Turkey on the prospect of entry, Prime Minister Recep Tayyip Erdoğan has complained, calling on the 27-nation bloc to be straightforward if they have any second thoughts on Turkey’s accessio Erdoğan’s message to EU leaders came in Washington as he spoke Tuesday on the “Charlie Rose Show” on PBS hours before a scheduled meeting of EU heads of state and government today in Brussels during their customary December summit. Ruling out assumptions that candidate Turkey has been moving away from the EU recently, shifting toward the East, Erdoğan said the EU’s approach toward Turkey has not been appropriate. “They have been keeping us waiting for 50 years,” Erdoğan said. The progress made by some countries which have become members in the meantime is less than what Turkey has achieved so far, he said: “Turkey is not going there for being a burden, but for

41 sharing the burden. For sure, if the EU has different thoughts on Turkey’s accession, then they should be honest.” ------Turkey rethinks military cooperation with Israel Sunday, 06 December 2009 12:27 Todays Zaman ------Turkey and Israel are currently going through one of the rockiest moments in their history. The precariousness of the relationship between the two countries, decided mainly by the Palestinian problem, is now manifest in the field of military cooperation. Traditionally, military contracts between Turkey and Israel have always kept bilateral relations from collapsing, but cooperation in the recent period in security and intelligence has nearly halted completely. Civil society organizations in Turkey want all existing agreements between the two countries to be annulled. The first strain in relations occurred when Prime Minister Recep Tayyip Erdoğan requested “one minute” from a moderator in Davos during a World Economic Forum (WEF) summit in January to finish his speech, followed by a dramatic walkout in protest of Israel’s Gaza policies. In October, Turkey excluded Israel from a multinational air defense exercise at the last minute. Although the primary factor in the deterioration of the relations is the situation in Gaza, Israel’s constant failure to fulfill the conditions it guaranteed to carry out in military contracts has also contributed to a loss of confidence, particularly regarding the modernization contracts for Heron and F-4 warplanes and M-60 tanks. Israel has defended itself, saying that Turkey’s demands concerning these contracts are simply not realistic. If the two countries fail to overcome the gap in confidence, it might be impossible for Israel or Israeli companies in the future to win military contracts in Turkey. The most striking example of the recent development was the cancellation of the $38 million Lorop Project, bought from the Israeli Elop Electro-Optic Company by the Air Forces Command. In addition to this, a $40 million tender for the Harpy II system was canceled by the order of Air Forces Commander Gen. Faruk Cömert. Yet another factor that has damaged the relationship of the two countries is the relationship between Israel and northern Iraq. Interior Minister Beşir Atalay has stated that he was deeply offended when the Israeli army trained troops in northern Iraq. A history of relations Turkey was the first Muslim country to recognize Israel. Traditionally the contents of military contracts with Israel have been kept highly confidential, as well as the method of their signing. The first agreement between the two countries was signed on July 4, 1950. It was a trade agreement. Later, an air transportation contract was signed between the two countries in February 1951. However, Turkey started seeing Israel as the biggest threat in the Middle East at the time of meetings for the Baghdad Pact, straining relations between the two countries. In 1956, Turkey recalled its ambassador in Israel when England, France and Israel attacked Egypt over this country’s nationalization of the Suez Canal. After this point, the two countries chose to conduct their relationship in a more low-

42 profile manner. In 1958, Israeli Prime Minister David Ben Gurion and Foreign Minister Golda Meir came to Turkey, where they held secret talks with then-Prime Minister Adnan Menderes. The two countries signed a top-secret agreement against the Soviet threat, known as the Environment Alliance. Only the top 10 politicians and generals knew about the agreement. In fact, this agreement has been kept from the public eye until very recently. Today, Turkey officially rejects the existence of such an agreement, but Israeli archives suggest otherwise. Most surprisingly, Iran, Israel’s archenemy, appears as a third signatory to this agreement. In 1966, Turkey failed to secure Israel’s support for the vote on Cyprus in the United Nations, further straining relations between the two countries. In 1966, Turkey notified the Israeli military attaché that military cooperation between the two countries was officially over. In 1967, at the time of the Arab-Israeli war, Turkey refused to give clearance to US planes bringing logistical supplies to Israel, while it let USSR planes helping Arab countries through its airspace. Relations normalized after US interference Israeli-Turkish relations deteriorated further until the military coup in 1980 in Turkey. Upon the escalation of tensions, 61 US senators sent a letter to the US ambassador in 1981, asking him to make special efforts toward the improvement of Turkish-Israeli relations. Following this letter, Turkey, with an order from then-President and coup leader Kenan Evren, abstained from a vote on the UN resolution which condemned the Israeli occupation of the Golan Heights. In return for this, Israel provided intelligence to Turkey about the Armenian terror organization ASALA. A new era began in Turkish-Israeli relations when intelligence units from both countries carried out a joint operation in Zahle, east of Beirut, dealing a heavy blow to ’s ASALA faction and JCGA militants. This warm rapprochement between the two countries gained a new dimension with then- Prime Minister Turgut Özal’s visit to the United States in 1985, when he met secretly with the Jewish lobby. From that date on, it became a tradition for Turkish prime ministers to visit with the Jewish lobby during their visits to the US. Being the first Muslim country that recognized Israel in 1948, Turkey was also among the first countries to recognize the establishment of the state of Palestine, on Nov. 15, 1988. Since 1950, Turkey had tried to keep its relations with Israel secret; however, after a deal between Israel and Palestine in 1993, Turkey made its relations with Israel public. From this date on, full cooperation began between Israel and Turkey. In 1992, a tourism cooperation agreement between Turkey and Israel became the first of a series of agreements to be signed. A visit paid by Israeli President Ezer Weizman on Jan. 25, 1994, was meaningful in that it was the first Israeli presidential visit to Turkey. Çiller’s term A visit from Israeli Foreign Minister Shimon Peres to Turkey in April 1994 was the start of a new era. Turkish Prime Minister Tansu Çiller made a proposal to cooperate in intelligence sharing and anti-terrorism, a watershed event in the history of the two countries’ relations. Çiller also signed a treaty with Israel on March 31, 1994, assuring full confidentiality on all agreements signed with Israel. Between 1994 and 1997, Turkey signed 19 agreements with Israel, 12 of these ironically signed by the anti-Israeli government of Necmettin Erbakan’s Welfare Party (RP).

43 Constitution and agreements with Israel For the 12 agreements signed under the Erbakan government, some have speculated that they are unconstitutional as the signature under these was that of then-Chief of Staff Gen. İsmail Hakkı Karadayı and not the Turkish defense minister, as should be per the law. None of the agreements were ratified by Parliament, another violation of the Turkish Constitution. Nurettin Aktaş, a former deputy from the Justice and Development Party (AK Party), submitted a question to Parliament in 2002 querying the number of military treaties with Israel and their content. Then-Defense Minister Sabahattin Çakmakoğlu said there were 13 defense agreements with Israel, the content of which had not been ratified by Parliament due to confidentiality clauses. Speaking to Sunday’s Zaman, Aktaş said: “All treaties with Israel are against the Constitution. If the government wants to, it can annul all of these.” A similar question motion was submitted by Republican People’s Party’s (CHP) Kemal Anadol. The response, from Foreign Minister Ahmet Davutoğlu, also confirmed confidentiality. Of these secret agreements, Prime Minister Erdoğan had spoken of several during a party congress in Kütahya. Problems in treaties In the long term, most of these agreements have worked to damage relations between the two countries. Israeli companies won $500 million in tenders to modernize 54 F-4 warplanes and 48 Phantom planes. Another project was the joint manufacturing of Leopard tanks, which were developed, incidentally, by a team of engineers including former Prime Minister Erbakan. Some observers have also stated that the Feb. 28 unarmed military intervention of 1997, which took place exactly three days after then-Chief of General Staff Gen. Karadayı’s visit to Israel, is also meaningful, claiming that the military’s close rapport with Israel played a role in the intervention. After Erbakan’s RP was ousted by the 1997 intervention, a Motherland Party (ANAVATAN)-Democratic Left Party (DSP) coalition government came to power. In this period, the two countries’ relations truly blossomed. Turkey and Israel started participating in military drills together. There still was slight tension in this period due to Israel’s attack on Aksa, Palestine, that year. However, the coalition government led by Bülent Ecevit never fully severed ties with Israel. To the contrary, the most important military projects began to be awarded to Israel. In 2002, Turkey awarded a contract for the modernization of 170 American-made M-60 A1 tanks to Israel. Those who were against this were accused of anti-Semitism by Chief of General Staff Gen. Hüseyin Kıvrıkıoğlu. In the face of controversy around this $1.035 billion tender, the Israeli IMI company reduced the tender price. However, the modernization project did not succeed in the way Turkey wanted. Nationalist Movement Party (MHP) deputy Erdal Sipahi said his party and many others in Parliament at the time objected to this tender being awarded to Israel, but “an order from above” handed it to Israel. Sipahi says: “According to the contract, these tanks were supposed to be modernized by the end of 2003. Later, they reset the date and moved this to 2007. We are now in 2009, and the project has not yet been completed. The cost of a single tank for Turkey has reached $4.5 million. Leopard-2 tanks that we buy from Germany on the other hand cost

44 $1 million per tank. I don’t think those tanks would be of any use after all this time even if Israel completed the delivery.” A major controversy about this tender was the technical capability of Turkish military defense company ASELSAN, which was able to complete the modernization of 162 Leopard tanks for just over $160 million. Projects under way Currently, the cost of military tenders awarded to Israel and Israeli companies stands at $1.8 billion. The annual trade volume between the two countries is $2.6 million. When the AK Party came to power in 2002, Israel sought to maintain warm relations with the government. However, the first crisis broke with Israel in January during the bombings of the Gaza Strip. In May 2007, Erdoğan visited Israel, which was returned with a visit by Israeli President Shimon Peres in November that year. After the two visits, Turkey awarded $700 million in projects involving tank modernization and the modernization of 48 warplanes and 300 helicopters. In the latest agreement with Israel, Turkey bought 10 unmanned Heron air vehicles; however, there has been a major delay in Israel’s delivery of the Herons, only adding to the problems of the M-60 tender. The Herons, which were initially promised for May 2008, were finally delivered last month. The Air Forces are currently testing these aircraft, but it is hard to say that Israel’s next job will be as easy in the next military tender. ------Israel says Syria, not Turkey, obstacle for peace talks Tuesday, 08 December 2009 13:03 Todays Zaman ------Israel is ready to return to peace talks with Syria, but Syrian intransigence is blocking the resumption of the negotiations, which collapsed in January, an Israeli politician has said. Daniel Ayalon, the Israeli deputy foreign minister, told a group of Turkish journalists in Tel Aviv over the weekend that the talks, mediated by Turkey, collapsed not because of a deadly operation in Gaza but because of Syrian reluctance to compromise. “In principle, we are not opposed to Turkey’s mediation. Conditions are ripe for this now. The problem is that we don’t have a partner to talk to,” he said. The Turkish-mediated talks between Syria and Israel were terminated in January in the midst of the Gaza operation, which killed about 1,400 people. Since then, Turkey has strongly criticized the Israeli government, sparking a Turkish-Israeli diplomatic crisis. Contrary to its relations with Israel, Turkey’s ties with Syria have grown significantly, with the two countries abolishing visa requirements and signing strategic cooperation agreements. Israel said Turkey has lost its credibility as an impartial mediator, calling for direct talks with Syria instead. Syria, on the other hand, says it would return to peace negotiations only if they are mediated by Turkey. But a weekend report in the Egyptian Al-Ahram newspaper said the Turkish-mediated talks could resume in the first half of 2010. Israel’s Industry, Trade and Labor Minister Binyamin Ben-Eliezer also said relations with Turkey were back on track and that the Turkish-mediated talks were to resume. Speaking to reporters on his way to Washington for talks with United States President Barack Obama, Prime Minister Recep Tayyip

45 Erdoğan said Turkey was ready to resume mediation if the conditions were right. When asked to comment on Israeli statements that Turkey cannot be a fair mediator, Ayalon said: “This is behind us now. Mutual interests and the nature of relations have prevailed [over tension].” He reiterated, however, that Israel wants direct negotiations rather than mediated talks. When asked about prospect of France mediating the talks instead of Turkey, he said this is not likely under current circumstances. Sources told Today’s Zaman that the US is working behind the scenes to improve Turkish-Israeli ties at a time when it is already bogged down in a number of foreign policy headaches, such as Iran’s nuclear program and Afghanistan. Ayalon also cautioned against a further deepening of Turkish-Syrian cooperation. “Turkey should not let Syria become a determining factor in its ties with Israel. Syria should not be in a position to veto our relations,” he said. In a sign that an improvement in ties with Turkey may not be imminent, Ayalon reiterated that Israel will not allow Turkish officials to visit Hamas-controlled Gaza should they decide to visit Israel. Foreign Minister Ahmet Davutoğlu previously cancelled plans to visit Israel when he was told that he would not be allowed to visit Gaza. Israeli officials have said they were looking forward to a visit by President Abdullah Gül but Gül said Davutoğlu would travel to Israel first and that he would decide whether to go to Israel on the basis of the results of Davutoğlu’s visit. Ayalon said Turkey should not allow Hamas to have “veto power” over Turkish-Israeli ties. He also appeared to dismiss comments that Israel is critical about the government while favoring the military. “We see Turkey as a whole. The idea of having ties only with one part of it is absurd,” Ayalon said. ------Turk Fm: Israel Committed Crime In Gaza Wednesday, 09 December 2009 10:1 TIME TURK ------Turkish Foreign Minister Ahmet Davutoglu said that Israel had made a big mistake during Gaza offensive early this year. "More than that, Israel committed crime as it used phosphorus bombs," he said. Davutoglu spoke on Turkey's active role in the Middle East at a conference on Turkey's foreign policy held in Washington D.C. on Tuesday. Davutoglu said that the Middle East peace process had three pillars as relation between Israel and Syria, Israel and Palestine, Israel and Lebanon. He said, "what Turkey wants to do is to contribute to these pillars in a way that they could support each other." Turkey has created a new balance among these three pillars, Davutoglu said, however, Israel had disturbed the balance with its offensive in Gaza late December of 2008 and early January in 2009. "Yes we criticize Israel. We believe Israel had made a big mistake with the offensive. More than that, Israel had not only made a big mistake, but also committed crime as it used phosphorus bombs," Davutoglu said. "We will no more tolerate massacres in our region. We will not tolerate any terrorist attacks in Iraq as well, neither a Sunni one nor a Shiite." Davutoglu also said that Turkey and United States were in cooperation to achieve peace

46 in the Middle East and he praised U.S. President Barack Obama's approach to the issue. Asked about nuclear problem in the region, Davutoglu said Turkey was against nuclear weapons in its region. "But Israel, Iran or any other country, including Turkey, has the right to get nuclear technology because monopoly in technology is not acceptable," he said. "We do not want a nuclear Iran, we do not want a nuclear Israel, either," he stated. ------Erdogan: Israel Can't Use Turkey to Wage Aggression on 3rd Party Thursday, 10 December 2009 USAK PUBLICATIONS ------If Israel were to violate Turkish airspace in order to conduct reconnaissance operations on Iran, Ankara's reaction would resemble an "earthquake," Turkish Prime Minister Recep Tayyip Erdogan said in an interview with Egyptian journalist Fahmi Huwaidi published Thursday morning. Responding to a question concerning rumors that Israel had entered Turkey's airspace for espionage purposes, Erdogan said that such a thing had never happened, but that the consequences would be dire if it did. "[Israel] will receive a response equal to that of an earthquake," he cautioned, urging Israel's leaders to refrain from "using the relationship they have with [Turkey] as a card to wage aggression on a third party." Ankara would not be a neutral party and stand aside with its arms folded, he said. Erdogan also alluded during the interview to last winter's IDF Operation Cast Lead, saying that Israel could not reasonably have expected to participate in a joint military drill with Turkey after "sweeping" the people of Gaza. He stressed that the Turkish government's policy on Israel was both derived from and backed by the country's voting public. "We cannot challenge the feelings of the Turkish people, who were greatly affected by what happened during the aggression on Gaza," he said. ------Pm Erdogan Departs For U.S Sunday, 06 December 2009 20:36 TIME TURK ------Turkish Prime Minister Recep Tayyip Erdogan has departed from Istanbul on Sunday and is on his way to the United States upon an invitation by President Barack Obama. Mrs. Emine Erdogan, State Minister & Deputy Prime Minister Ali Babacan, State Minister & Chief Negotiator for EU talks Egemen Bagis, Foreign Minister Ahmet Davutoglu, Minister of Public Works & Housing Mustafa Demir, Deputy Chairman of the Justice & Development (AK) Party Kursad Tuzmen, and several reporters are accompanying Prime Minister Erdogan. ------

47 White House rendezvous to test solidness of Turkey-US relations Sunday, 06 December 2009 12:21 Todays Zaman ------More than two years after a key White House meeting with former US President George W. Bush, Turkey’s Prime Minister Recep Tayyip Erdoğan is now preparing to be hosted by the new resident of the White House, US President Barack Obama, who took office in J As usual for any meeting between Turkish and US leaders, Erdoğan and Obama are set to discuss a packed agenda on how the two NATO allies will cooperate on a number of hot issues. Among the most pressing issues of global politics, the apparently diverging approaches of the two allies toward Iran’s nuclear program and Turkey’s unwillingness to change the parameters of its mission in Afghanistan despite an official US request for the contribution of further troops and more flexibility on the Afghanistan mission are likely to be the largest topics dealt with. These two issues will probably be a litmus test for the declared “model partnership” between Ankara and Washington -- which some say is a notion still at an amorphous state. During a landmark visit to Turkey in April, Obama refrained from employing the frequently used “strategic partnership” term to define relations between Turkey and the US, but rather suggested building a “model partnership” between Turkey and the United States with a unity based on ideals and values. While in Turkey, Obama said: “I think where there’s the most promise is in the idea that Turkey and the United States can build a model partnership, one in which a majority Christian and a majority Muslim nation, a Western nation and a nation that straddles two continents can come together; we can create a modern international community that is respectful, secure and prosperous. This is extremely important.” A bilateral relationship between NATO allies Turkey and the United States is one of the relationships that is the most institutionalized, Foreign Minister Ahmet Davutoğlu said in June, calling for a focus on the future of this relationship instead of constantly recalling their mutual solidarity during the Korean War. In a speech delivered in Washington, Davutoğlu listed the foreign policy issues on agenda of both Ankara and Washington at the time: Iraq, Afghanistan, Pakistan, the Palestine-Israel dispute, Lebanon, Caucasus, Armenia and Cyprus. He added: “A model partnership is not an issue of preference, but it is a necessity. The US president wanted to stress the uniqueness of this relationship. This is not an ordinary relationship; it’s a prototype and a unique relationship.” No dull moment with these ‘unique’ ties Erdoğan’s meeting with Obama comes days after the latter unveiled his new strategy on Afghanistan in a long-awaited speech delivered on Tuesday and also at a time when global alarm is growing over Turkey’s neighbor Iran’s failure to dispel fears it harbors plans to build nuclear weapons. At West Point Obama announced he would deepen the US involvement in Afghanistan, sending 30,000 more troops to fight the Taliban. He also called for additional commitments from US allies and pledged to strengthen ties with Pakistan, where al- Qaeda and Taliban fighters have been based. Hours after Obama’s speech, US Ambassador to Turkey James Jeffrey announced to

48 Turkish media that Ankara and Washington have been holding discussions over a US request for more troops for Afghanistan from Turkey, stating that the US has asked for a “specific number” of troops, although he declined to name that number. Turkish officials were quick to refuse to send combat troops to Afghanistan but refrained from responding to the request for more troops. On the Iran front, just a week ago, in a major expansion of its nuclear program and in retaliation for a recent resolution by the UN, Tehran said on Sunday it would build 10 more uranium enrichment sites like its Natanz International Atomic Energy Agency (IAEA)-monitored underground one. The IAEA resolution, which passed on Nov. 27, censured Iran for covertly constructing a second enrichment plant near the holy city of Qom, demanding that construction halt. Turkey, along with Afghanistan, Brazil, Egypt, Pakistan and South Africa, abstained. Potential problems, one or two? According to Ian Lesser, a senior transatlantic fellow at the German Marshall Fund of the United States, the controversy surrounding Iran’s nuclear program will definitely be at the top of the agenda during Monday’s talks between Erdoğan and Obama. “It is an issue on which both Turkey and the United States share a basic interest. Neither of the two want to see an Iran with nuclear weapons,” Lesser told Sunday’s Zaman in a brief telephone interview. “There is clearly a gap in the approaches of Turkey and the Obama administration, but there is also a very serious strategic dialogue going on between the two parties,” Lesser said, in apparent reference to Erdoğan’s accusations of the West treating Iran “unfairly,” while expressing his conviction that Iran’s motives regarding nuclear power were “peaceful.” “The US will look to Turkey to use its close relations with Iran to change its stance at a time when the possibility of UN Security Council sanctions is growing each day. The Obama administration will probably ask Erdoğan to convey their tough messages to Tehran,” Lesser said, underlining that not only Western countries, but also Turkey’s eastern friends, such as the Gulf countries, are concerned over Iran’s nuclear program. When asked whether he expected any harmful effect on bilateral relations in the case of an absence of a full agreement on the issue, Lesser said, “A serious gap between Turkish and US perceptions has the potential to cause a serious problem, but not a collapse.” He also said he believed that questions on the souring ties between Turkey and Israel might be posed at lower-level meetings, but not necessarily during the White House meeting. Lesser, who focuses on the US-Turkey-EU triangle in his studies, meanwhile, warned that the recent course of affairs regarding the rapprochement between Turkey and Armenia will be high on the agenda of the meeting. The US side will urge Turkey for further progress on normalization efforts with Armenia, probably via the swift ratification of the two protocols signed by the governments on restoring diplomatic ties and reopening the common border between the two neighboring countries, he said. Unlike some Turkish commentators, Lesser believes that the Afghanistan issue will not turn into a major problem in bilateral relations. Modalities of a model partnership Both Turkish and US officials have been trying hard to dispel long-held clichés regarding

49 the nature of the relationship between the two countries, -- clichés which were nourished during the Bush administration, since the approach at the time implied “Don’t get into a knock-down, drag-out fight, or we’ll harm you,” or “We have made a decision, this is the decision, come if you want to join us on this decision.” “If you permit me, that question is typical Cold War logic. It assumes that there is one power, the United States, who always wants something from us. But being an ally means sharing, being inclusive,” Davutoğlu said in a recent interview with Newsweek when bluntly asked “what the US wants from Turkey.” Listing again the foreign policy issues that are on agenda of both Ankara and Washington, he added, “We share the problems, and we are therefore trying to solve these problems together.” In Ankara, during the same meeting with Turkish media when he disclosed his country’s request for Afghanistan Wednesday, US Ambassador Jeffrey was asked about the possible US response if Turkey doesn’t agree to send more troops to Afghanistan. “This is a discussion among people who are in a model partnership,” Jeffrey firstly noted in response. “And if Turkey can’t provide more troops or more money or more civilians, then we would say, ‘OK, is the reason that you don’t believe in the mission and you think that we should do something different, or that you don’t have the resources.’ Then, you know, we go back and forth, and we do this with 43 countries; Turkey is no different, and people do that with us, believe me, on a half-dozen issues. Turkey asks us to do this, and we explain we can’t do this, we can do only one-third of what you want, and Turkey asks us why can’t you do two-thirds?” he elaborated. “And I constantly try to emphasize, all of this is normal, it’s not a plot against Turkey, it is not a source of conflict. This is what countries do, like individuals do. Ups and downs are like in private relations, that’s what normal countries do, but many people read into that some sort of either America is pressuring Turkey or Turkey is refusing to support America or Turkey is moving away from the West. Depending upon your political position; people will either take this position or that position. None of this has any relation to the reality, as I know it, in my over 25 years working with Turkey,” he concluded.

------Turkey’s independent foreign policy advantageous to US’ Sunday, 06 December 2009 12:32 Todays Zaman ------The Justice and Development Party (AK Party) Deputy Chairman Kürşat Tüzmen has said the independent foreign policy strategy Turkey is pursuing with neighboring and regional countries benefits the US and added: “The peaceful growth of Turkey in the region is to the advantage of the US, one of the leading countries that is interested in the region. It is to the benefit of our allies for Turkey to be consulted as a trusted country as the policy regarding neighboring and regional countries is being prepared.”

50 Speaking to Sunday’s Zaman about Prime Minister Recep Tayyip Erdoğan’s visit to the US upon the invitation of President Barack Obama, Tüzmen, who is the deputy chairman for the AK Party’s foreign affairs, noted that in addition to trade and economic relations, regional issues would also be discussed during the visit. “It is going to be a very important meeting for both Turkey and the US as well as for countries in the region. A wide range of topics will come up during the meeting. Regional issues, the evaluation of sector-related topics from the perspective of foreign trade, Turkey’s current predicament and relations with neighboring and regional countries may all be included in the meeting,” Tüzmen said. He talked about the radical changes that had taken place in foreign trade with the recent strategy that Turkey had implemented, named the neighboring and regional countries strategy, and said: “Our trade with neighboring and regional countries was around 7 percent [of total trade]. In a very short period this figure increased to 49 percent with the new strategy. The sevenfold increase in our trade [with neighboring and regional countries], which was around 7 percent just seven years ago, is very important for the US as well. That is because Turkey has become a trade partner with countries that are also important for the US. The inclusion of countries such as Iran, Iraq, Syria and Russia carries a separate meaning for the US. Turkey’s extraordinary success in the recent period and the improvement of its credit rating increases the weight of economic aspects in bilateral relations.” Regional integration Turkey conducts close to half of its total foreign trade with countries in the region, the AK Party deputy chairman said and contributes to the increase in regional wealth. “Our endeavor includes regional integration, in other words it includes the product-sharing model. It is integrative work ranging from what product and service is best suited to what country to how other countries supplement that product. What underlies the exportation of finished products from Turkey to foreign markets is that Turkey is shifting its emerging sectors to countries that need them. This way not only do they benefit from cheap labor there, but it also contributes to the country’s workforce. When we add other tools such as free trade agreements, integrated economic commissions, delegations and fairs, the result is a regional integration that yields positive result for everyone.” Tüzmen underlined that each relationship with neighboring countries is important in different ways and said it was very likely these relations would be discussed during Erdoğan’s visit to the US. Turkey has made clear that it does not want a nuclear threat in the region and is pursuing a balanced policy over the issue. Trade with Iran has increased tenfold in the last seven years, reaching $10 billion. He pointed out that Turkey’s trade with Syria and Iraq, which was less than half a billion dollars, has increased to around $5 billion and that Turkey has become an important trade partner with Iran as well as with Russia, with which it has a trade volume of $50 billion. Tüzmen said this transformation, which had attracted much attention in the world, had not been easy and that there have been recent attempts to make the same unfair criticisms that were directed against the government when the neighboring and regional countries strategy was initially implemented. He highlighted that Turkey’s historic, cultural and geographical ties with neighboring and regional countries were crucial advantages. “We made clear that we could use the common links with neglected neighboring and regional countries for the development of Turkey and the region. We were subjected to unfair

51 criticism, but we did not pay attention to it and within seven years we made sure this epic was written. This offers important advantages not only for Turkey and the region but for world peace.” Tüzmen explained that a discussion over regional problems during the Obama-Erdoğan meeting would not affect Turkey’s regional enhancement strategy. “Turkey will continue the endeavors it started in the region for friendship, peace and enhancement. It will adhere to mutual agreements. If there is a task Turkey is carrying out it will pursue it to the very end. This goes for all countries. However, while we improve our trade with neighbors we will not change our stance on the nuclear threat that poses a danger to humanity. We are saying very clearly that we do not want a nuclear threat in our region. We are saying this to all countries. We will repeat this while continuing to trade because this is very important for us as well. Because the more trade you do the more you can contribute to peace. We need to continue to step up foreign trade in order to be powerful and provide a substantial contribution to friendship and peace.” He said a request of that nature would be unpleasant considering that millions of people have been victimized in Azerbaijan, and went on to say: “We will reach a decision on that issue in line with our own assessments. We prepared and presented this initiative with sincerity. Relations with Armenia developed a little differently than relations with neighboring and surrounding countries. While generally a bottom-up strategy starting with trade and then diplomacy was followed, with Armenia a top-down strategy was followed. It was an endeavor that began with steps taken by our president and prime minister. The common point in both strategies is solving current problems and looking ahead.” ------Erdoğan flies to US with packed agenda for Obama talks Monday, 07 December 2009 11:49 Todays Zaman ------Iraq, Afghanistan, Pakistan, the Middle East, the eastern Mediterranean, the Balkans and the Caucasus were only some of the talking points listed on Sunday by Prime Minister Recep Tayyip Erdoğan as issues to be discussed today during a White House meeting Erdoğan, speaking at a press conference in İstanbul ahead of his departure for the US capital, said he and Obama would exchange views on the future of bilateral relations, which were defined as a model partnership” by Obama during his visit to Turkey in April. “Primarily, we will talk on issues which are common on our agenda and on which we have been cooperating; developments in a wide region which includes Iraq, Afghanistan, Pakistan, the Middle East, the eastern Mediterranean, the Balkans and the Caucasus. We will also discuss various issues such as the struggle against terrorism, prevention of the spread of weapons of mass destruction, global financial crisis, climate change and the security of the energy supply,” Erdoğan said, underlining that the April visit by Obama, which took place shortly after he took office in January, has brought a “significant momentum” to the bilateral relations between the two NATO allies. “I believe that my visit will be useful and timely for maintaining this momentum, for further strengthening and diversifying Turkey-US cooperation and for carrying out

52 concrete steps regarding our economical and commercial relations in order to make them as good as our cooperation in the political and military fields,” he added. Erdoğan is being accompanied by a large delegation during his visit to the United States. In addition to his spouse, Emine Erdoğan, State Minister and Deputy Prime Minister Ali Babacan, Foreign Minister Ahmet Davutoğlu, State Minister and chief EU negotiator Egemen Bağış, Public Works and Settlement Minister Mustafa Demir and ruling Justice and Development Party (AK Party) Deputy Chairman Kürşad Tüzmen are in the delegation. The Turkish Armed Forces (TSK) are being represented by Deputy Chief of General Staff Gen. Aslan Güner during the visit. While in the US, Erdoğan will deliver speeches at the German Marshall Fund of the United States, The Johns Hopkins University and the Washington branch of the Ankara- based Foundation for Political, Economic and Social Research (SETA). In his speeches he will focus on Turkey’s foreign policy, Erdoğan said. Besides the ongoing Turkish-Armenian rapprochement process and the Cyprus issue, the global dispute surrounding Iran’s controversial nuclear program and Obama’s new strategy on Afghanistan are likely to take more time than other topics during the Erdoğan-Obama meeting. On Friday, Erdoğan met with Iran’s nuclear negotiator, Saeed Jalili, in Ankara. The meeting was held behind closed doors and no statement was made after the meeting. Iran and the West are deadlocked over a UN proposal for Iran to send much of its uranium abroad for enrichment. The plan is aimed at reducing Iran’s enriched uranium stockpile in hopes of thwarting the country’s ability to make a nuclear weapon. Speaking in İstanbul, Erdoğan was asked whether he would have talks with US officials on Turkey’s contribution to Afghanistan. The level of Turkish troops in Afghanistan has increased from 750 to around 1,800 in step with Turkey’s one-year term leading the Kabul Regional Command for the NATO- led International Security Assistance Force (ISAF), which began on Oct. 31, Erdoğan noted. “At the moment, we have done what we could,” Erdoğan said, adding that Turkey could train the Afghan army and police if needed, while signaling Turkey’s unwillingness to respond positively to an official US request for the contribution of further troops and more flexibility on the Afghanistan mission. After wrapping up his talks in Washington on Tuesday, Erdoğan will proceed to Mexico for an official visit at the invitation of President Felipe Calderón. The visit will mark the first prime ministerial level visit from Turkey to Mexico in almost a decade. Erdoğan will depart from Mexico on Thursday. In line with its multidimensional foreign policy, Turkey pursued a more active policy towards Latin American and Caribbean countries in the early 1990s. An “Action Plan for Latin America and the Caribbean” was put into effect in 1998, and has been reviewed regularly since then. In 2006 Turkey took another significant step, declaring 2006 the Year of Latin America and the Caribbean, giving a further boost to the action plan. Joint economic plan Today, on the occasion of Erdoğan’s visit, the two allies will outline a US-Turkey plan for economic and commercial cooperation at a joint press conference with US Secretary of Commerce Gary Locke, US Trade Representative Ron Kirk and Turkey’s Babacan. Turkey, which has been holding accession negotiations to become a member of the European Union, has been interested in a free trade pact with the US. Turkey is the

53 United States’ fourth-largest trading partner in the Muslim world and 27th overall. Its top exports to the US include steel, clothing and jewelry. Its top imports from the US are agricultural goods, military equipment parts and aircraft. Two-way trade totaled about $11.1 billion in 2008, but that is expected to fall this year because of the global financial crisis, which has crimped consumer demand. ------Turkey, Usa Draw Strategic Framework Of Economic Relations Tuesday, 08 December 2009 15:30 TIME TURK ------Turkey and the United States designated strategic framework of economic and commercial relations. Turkish State Minister and Deputy Prime Minister Ali Babacan, the United States Trade Representative Ron Kirk and U.S. Secretary of Commerce Gary Locke held a press conference on new framework mechanism between the two countries in Washington, D.C.. Babacan said commercial and investment relations were advancing well between Turkey and the United States and there was a potential to boost them. Regular meetings would take place in Washington, D.C. and Ankara or Istanbul within the scope of framework mechanism, he said. U.S. Trade Representative Kirk said the first meeting would be held in Washington, D.C. next spring and the following one would take place in Turkey the same year. Locke said the new mechanism would help to create brand new job fields for both peoples. Trade volume between Turkey and the United States reached 15 billion U.S. dollars in 2008 and the two countries could improve this figure, Locke said. ------Turkey differs with US over Iran Tuesday, 08 December 2009 14:37 Al Jazeera ------The month of December is turning out to be crunch time for Barack Obama, the US president, as four of the key issues which have marked his presidency - Afghanistan, Iran, healthcare reform, and climate change - will have reached a critical stage in the we Last week, Obama laid out a new strategy for Afghanistan, hosted a jobs summit, and made a pitch to Democratic Senators to pass his healthcare reform legislation. Next, he will give a major speech on the economy, and zip over to Oslo, Norway to pick up his Nobel Peace Prize (the irony of receiving the prize a week after ordering 30,000 new troops to fight the Taliban has been lost on no one in Washington). Then he will travel to Copenhagen, Denmark for the global climate change summit. The Senate is trying to pass healthcare reform before Obama takes off for holiday vacation in Hawaii. The Turkish equation

54 But first, time for Turkey. Recep Tayyip Erdogan, the Turkish prime minister, visited the White House for a one-on-one sit-down with Obama on Monday. On the agenda: Afghanistan, Iran, and Iraq. Obama has made relations with Turkey a priority. He visited Ankara and Istanbul on his first trip abroad as preesident, and made a speech signalling his new outreach to the Muslim word - a theme he later expanded upon in Cairo. Turkey's stratgic significance as a country that borders the European Union, Syria, Iraq, the Caucasus, and Iran cannot be overstated. US-Turkish relations plummeted to dismal lows while George Bush was in the White House, but Obama is intent on repairing ties. The White House also believes that the US will benefit by demonstrating a healthy relationship with a Muslim country ruled by Erdogan's mildly Islamist government. "I am pleased that America can call Turkey a friend, and I'm pleased that I'm able to call Prime Minister Erdogan personally a friend," Obama said after the meeting. Erdogan said the US and Turkey have a "model partnership". Strategic disagreements Nevertheless, there are significant strategic disagreements. Obama would like the Turks, who have Nato's second-largest army, to send more troops to Afghanistan. But Erdogan has consistently refused to send combat forces, instead keeping the 1750 Turkish troops already there confined to a non-combat role. Obama appears not to have pressed the issue with an outright demand for more troops. In his public remarks after the meeting he referred only to Turkey's " outstanding contributions to stabilising Afghanistan." On Iran, "Turkey and the United States have not been on the same wavelength," says analyst Bulent Aliriza of the Centre for Strategic and International Studies. Obama has hardened his stance in the face of Iranian intransigence over the nuclear issue and is likely to seek harsher UN sanctions soon. Erdogan has been building closer economic ties and diplomatic relations with Tehran. Turkey is one of Iran's major economic partners, with $10 billion in bilateral trade annually. If Obama succeeds in tightening the economic stranglehold around Iran, it will hurt Turkey economically. Turkey is also a non-permanent member of the UN Security Council, which would have to approve new sanctions. The leaders appear to have kicked the Iranian can down the road; in their public remarks, Erdogan did not even mention Iran, while Obama merely said Turkey will be an "important player" in trying to nudge Iran away from what the West believes is a drive to acquire nuclear weapons. But some time in the next few weeks, Turkey may have to choose between its Nato ally and its major trading partner - a decision which may strain relations and complicate Obama's December even more. ------US President Obama reaffirms support for Turkey’s regional role Wednesday, 09 December 2009 10:2 Todays Zaman ------

55 Amid growing speculation that NATO member Turkey is turning away from the West, the US administration has clearly voiced its appreciation of the role played by Turkey in contributing to the maintenance of global peace.

Prime Minister Recep Tayyip Erdoğan and US President Barack Obama reaffirmed during a meeting on Monday at the White House that defending each other has been an obligation for the two NATO allies. Ahead of the key meeting, the apparently diverging approaches of the two allies toward Iran’s nuclear program and Turkey’s unwillingness to change the parameters of its mission in Afghanistan despite an official US request for the contribution of further troops and more flexibility on the Afghanistan mission seemed to be the subject of concerns over whether a harmonious message could come out of the meeting. Yet, despite subtle differences on the Iran issue, messages delivered by both Erdoğan and Obama following the meeting reflected a mutual determination to flesh out the declared “model partnership” between Ankara and Washington. During a landmark visit to Turkey in April, Obama refrained from employing the frequently used “strategic partnership” term to define relations between Turkey and the US, but rather suggested building a “model partnership” between Turkey and the United States with a unity based on ideals and values. “Turkey is a NATO ally, which means that we are pledged to defend each other. … And given Turkey’s history as a secular democratic state that respects the rule of law, but is also a majority Muslim nation, it plays a critical role I think in helping to shape mutual understanding and stability and peace not only in its neighborhood but around the world,” Obama said at a joint press conference following the talks. As Obama pressed him for more support to curb Iran’s nuclear program, Erdoğan said he is willing to serve as a diplomatic channel to the Iranian leadership. Obama said he told Erdoğan during a White House meeting “how important it is to resolve the issue of Iran’s nuclear capacity in a way that allows Iran to pursue peaceful nuclear energy but provides assurances that it will abide by international rules and norms.” “I believe that Turkey can be an important player in trying to move Iran in that direction,” Obama said. Obama, who has sought to engage Iran in a dialogue on its nuclear program since taking office, however, warned that time is running out for Tehran to respond to US overtures and indicated new sanctions could be in the works if there is no response by the end of the year. “Turkey can play the role of a negotiator or a mediator,” Erdoğan said, adding he had made that suggestion to Obama and the two were in agreement on Iran’s nuclear program. “As long as Iran is willing to increase its nuclear capability for civilian purposes or peaceful purposes, we will never have a negative approach towards this demand,” he said. But he said if Iran’s nuclear program was aimed at building a weapon of mass destruction, “those problems can only be solved through diplomatic means.” “We do not want to see a country in our region possessing nuclear weapons and we want the countries in our region who have nuclear weapons to be rid of them,” Erdoğan said. On the Afghanistan struggle, Obama, who is seeking more help, praised Turkey for its “outstanding” contributions there, saying that Turkey’s commitments have helped bring

56 stability to Afghanistan. Turkey took over the rotating command of the NATO peacekeeping operation in Kabul last month and doubled its number of troops to around 1,750. However, it has resisted repeated US requests to send its troops on combat operations. Another key talking point at the press conference was the recent course of affairs regarding the rapprochement between Turkey and Armenia, with Obama “encouraging Erdoğan to continue to move forward along this path.” This was an apparent reflection of the US expectation of further progress on normalization efforts with Armenia, probably through the swift ratification of the two protocols signed by the governments on restoring diplomatic ties and reopening the common border between the two neighboring countries. Friends in business Erdoğan’s visit was used as an opportunity for diversifying the strong political and military cooperation between the two allies with the launch of an initiative aimed at boosting trade and investment ties. “We can ... build on what is a good trade and commercial relationship and make it a much more robust one,” US Trade Representative Ron Kirk said at a press conference with Turkish Deputy Prime Minister Ali Babacan. The initiative creates a new Cabinet-level forum to discuss ways to expand the flow of bilateral trade and investment and to try to resolve disputes when they arise, similar to the agreement the United States has with China. “Overall, just to summarize, I am incredibly optimistic about the prospect of stronger and stronger ties between the United States and Turkey that will be based not only on our NATO relationship, our military-to-military relationship, our strategic relationship, but also increasing economic ties. And one of the concrete outcomes of this trip is to follow through on discussions that I had with both Prime Minister Erdoğan and President [Abdullah] Gül in Turkey to stand up a strategic working group around economic issues and improving commercial ties,” Obama said of the initiative. The launch of the initiative has been widely considered as another concrete sign of the mutual desire to make the model partnership more substantial. Commentaries in Tuesday’s Turkish newspapers widely described the White House meeting as a meeting which strengthened Erdoğan’s political position inside Turkey due to Obama’s clear remarks in support of the Erdoğan government’s democratization initiative and of Turkey’s fight against terrorism. “Turkey is a great country. It is growing in influence around the world. And I am pleased that America can call Turkey a friend, and I’m pleased that I’m able to call Prime Minister Erdoğan personally a friend. I’m grateful for his trip here and look forward to many years of collaboration with him to observe both the prosperity of the American people and the Turkish people,” Obama said. ------Erdogan: Macedonia never far for Turkey Sunday, 06 December 2009 12:18 TIME TURK ------Turkish PM Erdogan said Saturday Macedonia has never been far for those living in Turkey.

57 Turkish Prime Minister Recep Tayyip Erdogan said Saturday Macedonia has never been far for those living in Turkey. Speaking at the Turkish-Macedonian Business Forum in Istanbul on Saturday, Erdogan said that the Turks never saw the friends and brothers in Macedonia as people far away. I believe that our solidarity and discussions at the highest level will carry Turkish- Macedonian relations further, Erdogan noted. Nowadays, we are taking steps in the Middle East and Russia and removing visa requirements. We want to see Turkish-Macedonian businesspeople working hand in hand in such regions, Erdogan stressed. We have always encouraged trade with Macedonia and will continue to do so, Erdogan said. Turkey's trade volume with Macedonia is around 350 million USD. This figure is not adequate, Erdogan said. Prime Minister of Macedonia, Nikola Gruevski, in his part said that the Macedonian government leases land up to 99 years. "The Republic of Macedonia can offer land to Turkish companies," Gruevski said. Our common goals with Turkey are to reach EU standards, establish dynamic economies and have more strength in competition, Gruevski also said. ------Turkey & Macedonia sign contracts Sunday, 06 December 2009 15:58 TIME TURK ------Turkey and Macedonia signed on Saturday contracts on cooperation and cement purchase. The contracts were signed during Turkish-Macedonian Business Forum in Istanbul. Turkish State Minister Zafer Caglayan attended the signing ceremony. Turkish Turkerler and Donertas construction companies signed a contract with Macedonian Granit company to make joint businesses in Balkans and the Near East. The other contract was signed by Donertas, Damatronics and Deger companies about a cement purchase worth of 10 million Euro. ------Turkey and Mexico May Take Joint Steps to Deal With Organized Crimes, Erdogan Thursday, 10 December 2009 USAK PUBLICATIONS ------Turkish Prime Minister Recep Tayyip Erdogan said on Wednesday that there might be steps Turkey and Mexico could jointly take to deal with organized crimes. "In 1990s, Mexico succeeded in destruction of the terrorist organization," Erdogan told a joint news conference with Mexican President Felipe Calderon. Erdogan said diplomatic relations between Turkey and Mexico had started 81 years ago, "however, only three high level visits took place in 81 years. Then prime minister, Mesut Yilmaz, visited Mexico 10 years ago. Last year, the Turkish foreign minister paid a visit. I believe that our visit would be a new milestone."

58 Erdogan expressed Turkey's willingness to boost relations with Latin America and the Caribbeans. "Starting as of 2006, the Turkish government speeded up Strategy Plan towards Latin America and the Caribbeans which started to be implemented in 1998. This visit aims at boosting this momentum and fostering actual relations. I would like to particularly underline that political, economic, commercial and cultural relations should be improved," Erdogan said. Erdogan said Mexico was one of the most important building stones of Turkey's policy of launching initiatives in Latin America, "political importance of Mexico, the 13th biggest economy of the world, gradually rises in Latin America and in the world. Turkey and Mexico work in close cooperation under important institutions like G-20, UN Security Council and OECD." "We have agreed on turning relations between Turkey and Mexico into a closer and fruitful cooperation. We have also assessed developments closely concerning the two countries and threatening international peace and stability. We also agreed that continuation of cooperation under G-20 would be useful in dealing with problems like global economic crisis," he said. Referring to fight against illicit drug trafficking, Erdogan said, "Turkey is almost at the position of a transit country of drug trafficking activities stemming from Afghanistan. Turkish security forces have been carrying out very successful operations. Mexico experiences similar problems. We agreed to launch joint efforts." Commenting on bilateral economic relations, Erdogan said the trade volume between Turkey and Mexico was actually 450 million USD. "This figure is of course very low for the 13th and 17th biggest economies of the world. We agreed to overcome this problem." "Businessmen of the two countries should be encouraged to launch investments," Erdogan said and invited Calderon to Turkey. Mexican President Calderon said the two countries were consolidating their bilateral relations, indicating that important topics of the common agenda were discussed during the formal visit of Erdogan. Calderon said the two countries reached a consensus of opinion on working together to encourage mutual investments and resolve global problems in various international platforms. Referring to geostrategical importance of Mexico and Turkey with respect to their population, economy and leadership, Calderon said Mexico also had problems stemming from its geopolitical location. Calderon said Turkey and Mexico would strengthen cooperation in the UN Security Council to allay and prevent disagreements on security in 2009 and 2010. Calderon said Mexico supported "Alliance of Civilizations", a joint initiative of Turkey and Spain, and supported works to boost dialogue between the Islamic and Western cultures. "We also aim at boosting scientific and cultural cooperation. Mexico will assume roles in activities like exchange of students, artistic activities and promotion of institutes. We should accelerate commercial relations and reciprocal visits," he said. The Mexican president also invited Erdogan to his country in 2010 to attend celebrations to mark 200th anniversary of the Mexican revolution.

59 ------Foreign Minister Davutoglu To Travel To Bosnia-Herzegovina Friday, 11 December 2009 14:06 TIME TURK ------Turkish Foreign Minister Ahmet Davutoglu will pay a visit to Bosnia-Herzegovina to attend the Alliance of Civilizations' South European Regional Conference to be held in Sarajevo on December 13-14, 2009. Turkish Ministry of Foreign Affairs released a statement Friday and said the representatives from 14 countries and various international institutions would participate in the meeting which marked the culmination of the endeavors to draw up regional strategies in line with the decision endorsed at the Alliance of Civilizations Second Forum convened in Istanbul on 6-7 April 2009. The statement said Alliance of Civilizations, jointly initiated by Turkey and Spain in 2005, had become the leading international initiative with respect to intercultural dialogue. "The Regional Strategy on Intercultural Dialogue and Cooperation for South East European Countries" and "the Sarajevo Declaration" will be adopted at the meeting. The Alliance of Civilizations launched by Turkey and Spain in 2005 has become the most prominent initiative in the field of intercultural dialogue. Through regional strategies that will be diversified in the near future, the Alliance aims at giving a boost to its efforts towards implementing concrete projects. The statement said, "as a country of the region and one of the co-sponsors of the Alliance, Turkey has made significant contributions to the development of the South East European Strategy. We will sustain our efforts at the implementation phase of the Regional Strategy, too. We attribute special importance to this Strategy which is in line of our vision of cooperation, mutual respect and peaceful co-habitation in the Balkans." The Regional Strategy seeks to establish a shared framework for countries to promote cross-border collaboration, intercultural understanding, peace and security in the region. The strategy will employ an array of policy tools to target common challenges in the four areas of action of the Alliance – youth, education, media and migration - with the goal of enhancing cooperation of regional actors for sustainable human development. Along with endorsing the Regional Strategy on Intercultural Dialogue and Cooperation in South East Europe, the Ministers will issue a declaration pledging political support and commitment towards the initiatives outlined in the strategy. Furthermore, a plan of action with step-by-step implementation of policies for the period of 2010-2012 will be discussed by various partners, stakeholders and civil society representatives. ------Albanian President Thanks Turkey for Supporting His Country Friday, 11 December 2009 USAK PUBLICATIONS ------President Bamir Topi of Albania thanked Turkey for extending support to his country in every area.

60 President Topi and President Abdullah Gul held a joint news conference after their tete-a- tete meeting. Albanian president said that their talks focused on the bilateral relations. Referring to economic and commercial relations between the two countries, President Topi invited Turkish businessmen to make more investments in his country. President Topi said that Turkish and Albanian troops were contributing to peace and stability in different countries, adding that Albania would increase number of its troops in Afghanistan. ------Minaret ban will not happen in Germany, say experts Sunday, 06 December 2009 12:28 Todays Zaman ------After the widely debated Swiss referendum banning the construction of minarets in the country passed with 57 percent of the vote, concerns have been raised that other European countries that have large Muslim populations may take similar steps to curb the However, in Germany, where there are 7 million people who define themselves as Muslims, experts and politicians do not foresee a similar ban on minarets because of the tolerance of the predominately Christian German society and the German legal system, which prevents referendums like the one in Switzerland. “There is no possibility of a referendum in Germany on a federal level. In addition, the building of mosques is protected by the constitutional right of religious freedom. This includes minarets,” said Johannes Gabriel Goltz from Germany’s Interior Ministry, dismissing claims that Germany, like its neighbor, will take steps to hinder religious freedom. Goltz also stated that in Germany, fundamental rights can’t be changed or “narrowed” by a referendum, adding that “the Constitution protects people’s fundamental rights against the state and the power of the majority.” There are 206 mosques with minarets in Germany, and 120 more are planned in addition to numerous mosques without minarets. The minaret discussion also occurred in Germany after demands favoring a ban on the construction of minarets; however, a Bavarian administrative court ruled in 1996 that minarets are complimentary and important parts of mosques. The German Islam Conference published a report in March 2008 stating that the construction of mosques in Germany is an important step regarding the integration of Muslims into German society, but expressed concerns, saying: “It is not unusual to face conflicts in the construction of mosques in neighborhoods and crowded cities. Sometimes there are concerns that the construction will create traffic in the area.” The report went on to state that as a result of mosques, Islam becomes more visible in cities, causing prejudices to emerge and fears to manifest. The document also underlines that “after construction has been completed and daily life of the city normalizes, conflicts start to gradually disappear.” The religious freedom guaranteed by the German Constitution includes the construction of mosques with minarets. Regarding zoning laws, the construction of mosques is subject to the same procedures as synagogues and churches. The German Federal Administration leaves the authority to local administrations to grant permission for the construction of

61 places of worship. Nükhet Kivran from the Munich Education Platform underlined that she does not expect the Swiss referendum to be a model for Germany, saying: “The freedoms of German citizens including religious ones are determined and protected in the German Constitution. Religious freedoms include the right [to observe] religious practices in place of worship.” Kirvan also noted that the minarets are architecturally harmonizing parts of mosques rather than a symbol of political Islam, as was widely argued in Switzerland ahead of the referendum. Living in Germany for 30 years, Kirvan discussed the dual faces of Europe, one of which reflects respecting human and cultural rights and well rooted democracy. “In contrast,” she added, “Europe has a second face that is racist and against Islam.” She expressed concern that with the deliberate policies formulated by right-wing politicians, hatred against Islam and Muslims may increase in the coming years and considered the Swiss ban a sign of further restraints that will hinder the religious freedom of Muslim across Europe. Isabella Zacharias, a member of the Bavarian State Parliament from the Social Democratic Party (SPD), told Sunday’s Zaman that the Swiss minaret ban has accelerated efforts of racist groups in Germany against Muslims, urging the German government to defeat these groups and stop their racist goals. Reiterating that the German Constitution does not allow any referendum that puts freedoms to a vote by citizens, Zacharias noted that “just like bells are indispensable parts of churches, minarets are the same for mosques, and they symbolize that Islam has become a social reality in Europe.” The German politician used İstanbul as an example of a city where there are places of worship for the three Semitic religions, adding that “this is what we wish for Germany.” ------Erdoğan cold toward sending combat troops to Afghanistan Monday, 07 December 2009 21:53 Todays Zaman ------

Prime Minister Recep Tayyip Erdoğan has expressed unwillingness to sending combat troops to Afghanistan in the wake of US President Barack Obama’s call on NATO allies to beef up troop numbers. The prime minister was, however, warm to training the Afghan army. “We can open a center for training Afghan soldiers in Afghanistan. We can train one Afghan battalion in Turkey and another in Afghanistan. If Afghanistan calls for training its police officers, our police departments are ready,” Erdoğan stated. His remarks came during a question and answer session with Turkish journalists on Sunday during his flight to the US. US President Obama announced on Dec. 1 a decision to send 30,000 more troops to Afghanistan, marking an attempt to turn the tide in the eight-year war and regain the initiative from the Taliban, which has gained strength over the past year. NATO member Turkey is a supporter of the US-led campaign in Afghanistan but Turkish leaders said Ankara would not be sending soldiers for combat purposes, fearing that

62 participation in combat operations could alienate Muslims in Afghanistan and in the broader Muslim world. “We do not have an objective to participate as combat troops in Afghanistan. Our ties with the Afghan people are aimed at eliminating deficiencies in terms of logistics in Afghanistan. There is a good dialogue between the Turkish and Afghan peoples. We have made serious investments in regional development there,” Erdoğan remarked. On Nov. 1, Turkey took over the Kabul regional command of the International Security Assistance Force (ISAF) for one year, increasing the number of its soldiers from around 900 to 1,750. But unlike other European members of ISAF, Turkey’s mission is limited to patrols and its troops do not take part in combat operations. The prime minister underlined that Turkey was ready to send $50 million to Afghanistan. “They voiced a need for $40 million. We will send $50 million. We will send this sum for the establishment of education centers and similar facilities.” President Abdullah Gül and Defense Minister Vecdi Gönül also expressed their reluctance to send combat troops to Afghanistan last week. “We do not want to be in a state of waging war. Our level of activity will rise, but we will decide how we will do it,” Gül stated. Parliament approved a government motion requesting authorization to send troops to Afghanistan in 2001 under a coalition government of the Democratic Left Party (DSP), the Nationalist Movement Party (MHP) and the Motherland Party (ANAP). The Justice and Development Party (AK Party), which came to power in 2002, sent additional troops to serve in NATO’s ISAF in the following years on the basis of the same parliamentary decision. ------Former NATO envoy Çetin: Turkey can do more in Afghanistan Friday, 11 December 2009 13:05 Todays Zaman ------Hikmet Çetin, the former NATO senior civilian representative in Afghanistan, said US President Barack Obama's new strategy can be successful only if the Western powers are able to win the hearts of the Afghan people. Çetin, who served in Afghanistan between 2004 and 2006, assessed the situation in Afghanistan, the possible challenges and opportunities in the region and also the role of Turkey in an exclusive interview with Today's Zaman after his visit to Afghanistan two weeks ago when he met with many officials, including the re-elected president, Hamid Karzai. He said the West made some mistakes in Afghanistan and still continues to do so and to be able to withdraw from there within 18 months, as Obama’s new strategy envisages, is not realistic. However, if the West cooperates with Pakistan on the issue; succeeds in training the Afghan security forces and upgrades their equipment; increases economic assistance in coordination with the Afghan government; and, most importantly, wins the hearts of the Afghan people, the world can be hopeful about the future of the region. This new strategy also has to be supported by the new Afghan central government. He recalled that every NATO member has been implementing its own caveats about where their troops can be deployed and their range of tasks, but for the success of

63 NATO’s mission “five hundred soldiers with less caveats will be preferable to 5,000 soldiers with strict restrictions,” according to Çetin. He added that Turkey is also imposing caveats and that it has its own reasons for doing so, but there are many other ways for Turkey to contribute the peace and stability in Afghanistan. “The Obama administration is trying to carry out the mission in Afghanistan as a NATO mission and this is why they are asking for more troops from their alliances. They decided to send 30,000 more troops and they have the capacity to send even more, but they want to underline the international dimension of the operation and in my opinion it is a requirement. But I believe that what the Obama administration has been seeking exactly is certain number of soldiers with more flexibility rather than huge numbers of soldiers. The commander of the mission should be able to send a soldier in Kabul, for example, to the south when it is necessary. When I was there, sometimes it was a very big problem too. Those restrictions should come to an end,” he said. Turkey can contribute with a whole package Çetin underlined that Turkey has some restrictions as well, and he believes that it has reasons for these but thinks the contribution of Turkey can be increased by many ways. “These are my personal opinions, but Turkey can contribute more to the training of the Afghan police and soldiers. The Afghan people want it too. For the time being, Turkey is training those soldiers in Turkey and sending them back, it supports the military academy in Kabul as well. But it can carry this mission further and train certain military units in Afghanistan; it can start with a battalion. Then it can enlarge this mission and can take full responsibility for training them. I think Turkey is the best country to do that,” he said. Çetin recalled that NATO is working in five different regions in Afghanistan: the center, east, west, north and south. Every contributor country is assigned to a certain region. The commandership of the center is now the responsibility of Turkey for one year, but according to Çetin, Turkey can extend the time period of this command and can conduct the commandership of the center as long as the NATO mission continues. He also emphasized that there are many other fields Turkey can make a contribution in, for example, it can increase its economic and social assistance to Afghanistan, it can send public administration experts to assist with the state formation. “For example, there is a legal reform process going on in Afghanistan now and the Italians are conducting it. But I think Turkey is the best country to combine modern law and Shariah for Afghanistan and nobody will object to that,” he said. According to him, if Turkey gives assistance in these areas as a package, its contribution to Afghanistan and the NATO mission will be even more valuable. He also stresses that Obama’s strategy is also based on the training of the Afghan security forces and when the Afghans are ready to take control of the country the US will withdraw. It is hoping to do this within 18 months. According to Çetin to setting a withdrawal date is a necessity but 18 months might not be realistic.

“When I was there, almost 60,000 Afghan police had been trained but 60 percent of them were illiterate. To do training alone is not enough either, their equipment is also very important. In Afghanistan, it is impossible to reach certain regions by land transportation and helicopters are needed,” he said. Çetin underlines that in order to increase the number of the soldiers and their flexibility,

64 training Afghan security forces alone definitely is not good enough. “If you don’t start rapid economic and social development it does not matter how much you increase the number of the soldiers, you cannot solve the problem. You should supply essential services, such as education and health, so you can destroy the sources and the bases of terrorism, if the locals do not support terrorism, it cannot survive,” Çetin stressed. Unless there is social and economic development, nothing will change He has a warning, however, about the social and economic development projects, saying that in order to ensure the sustainability of these development projects, the Afghan people should be involved in them. “Let’s say a country decides to implement a development plan [in Afghanistan]. It gives the tender to firms from its own country or does the job via its own NGOs. All this assistance is categorized as aid to Afghanistan, but most of the money goes back to the original countries as high salaries or high costs. But if this aid comes from Afghanistan it will be cheaper and more effective. Another problem is that they are carrying out this assistance without getting the opinion of the locals and when al-Qaeda destroys them [the new infrastructure], for example a school, the locals do not defend it,” he said. He underlined that for the success of the new strategy, the formation of the new Afghan government is very important. “Karzai should pick names which are effective and not involved in corruption,” he said. But all these things are not enough, in order to win in Afghanistan, cooperating with Pakistan is also a must, according to Çetin. “If you don’t cooperate with Pakistan, whatever you do, the Taliban will continue to be strong in Afghanistan. Pakistan should be assisted in controlling its borders and the madrasas in the north,” he stressed. Çetin added that the Taliban are a part of the Afghan nation and you cannot get anywhere by excluding them. Their leaders might be in cooperation with al-Qaeda, but if you cooperate with the people, in time it will bring about the separation of the Taliban and al- Qaeda. “The Afghan people are unhappy about the existence of the al-Qaeda and to the extent that the hearts of the Afghan people are won by international community, it will be possible to clear al-Qaeda from the region. Afghan youngsters, Afghan women want peace and to be able to look into the future with hope,” he said. ------More Turkish troops may join 2nd construction team in Afghanistan Friday, December 11, 2009DÖNDÜ SARIIŞIK ANKARA - Hürriyet Daily News ------Turkey may dispatch more non-combat troops to Afghanistan alongside a second provincial construction team, which is set to start work in the war-torn country soon. 'They will not join combat operations but will be involved in reconstruction and training missions,' says Musa Kulaklıkaya, head of Turkish International Cooperation and Development Agency, or TİKA. Turkey may dispatch more non-combat troops to Afghanistan in 2010 when the second provincial construction team begins its work in the war-torn country, according to Musa

65 Kulaklıkaya, the head of Turkish International Cooperation and Development Agency, or TİKA. Turkey may send extra non-combat soldiers to Afghanistan, as NATO is to increase its presence in the frontline, Kulaklıkaya said in an interview with the Hürriyet Daily News & Economic Review. “There is no final decision yet. But in case of dispatch, they will not join combat operations but be involved in reconstruction and training missions,” said Kulaklıkaya. Twenty-five NATO allies have promised to send approximately 7,000 more combat troops in the next few months. The decision came Dec. 4 as a result of a day of meetings, but no further commitment is expected before an international conference on Afghanistan is held Jan. 28 in London. The provincial reconstruction team, or PRT, aims to provide development support to the people, assist in the development of infrastructure, increase activity and improve administration and security in the region. Turkey established its first PRT in Wardak, 35 kilometers from Kabul, after the U.N. Security Commission decided that NATO would work to reconstruct Afghanistan. The second PRT will be established in the Jowzjan province where a Swedish-led PRT is currently operational, but is due for departure. “Rather than combat troops, we prefer a structure to serve the development projects in Afghanistan. That’s why we have applied to establish a new PRT in Jowzjan,” Kulaklıkaya said. A Turkish-led PRT has a structure including both civilian and military officials. The soldiers are basically responsible for safety, while long- or short-term civilian experts are assigned to head development projects in the fields of education, health and agriculture. Turkey has contributed to 27 out of 34 Afghan provinces through small- and medium- seized projects although only the one Turkish-led PRT is operational. When it comes to a PRT operation, the assigned country is responsible for all the development activities from construction to training of civil servants in a special province. As to new operations in Afghanistan, no date has yet been fixed. However, Kulaklıkaya hinted at the closeness of the date when he said: “The consultations are underway between the Turkish Foreign Ministry, the General Staff, NATO and Afghan authorities.” “I think the project will be realized before the summer of 2010. An official announcement will probably be made by the end of December,” he said. TİKA and the Turkish Armed Forces often carry out joint projects such as sanitary inspections and the reconstruction of school buildings. “Some 80 soldiers are serving at the PRT in Wardak. I assume a similar amount of soldiers will be assigned to the PRT in Jowzjan,” Kulaklıkaya said. Jowzjan is in northern Afghanistan and borders Turkmenistan, the Balkh Province to the east, Sar-e Pol Province to the south and Faryab Province to the west. TİKA plans to launch the new PRT with support from its office in operation in Mezar-ı Sherif, which is in the same region. TİKA is familiar with Jowzjan due to its ongoing projects of education, drinkable water and agriculture, but has yet to set new goals for the province.

66 “We may consider continuing similar projects, but it will be tailored to local demands when we start working there. Vocational training, agriculture, health and education are among our priorities,” Kulaklıkaya said. Ankara has recently hosted 60 Afghan bureaucrats as part of vocational training. TİKA plans to train a group of Afghan women in Ankara in the health care professions of nursing staff and midwifery. A Turkish-Afghanistan Friendship Hospital was built in Jowzjan province, which is located in northern Afghanistan. The medical staff received training in Turkey. In order to boost the economy, Turkish officials also distributed wool and dye to 500 families who own carpet looms. The population of the province is approximately 426,987. The major ethnic groups are Uzbeks and Turkmens followed by Tajiks and Pashtuns. ------Top Turkish Commander Meets NATO Committee Head Friday, 11 December 2009 USAK PUBLICATIONS ------Turkish General Staff Chief Gen. Ilker Basbug met with Admiral Grampoalo Di Paola, chairman of NATO's Military Committee, in Ankara on Friday. Basbug welcomed Di Paola with full military honors at the General Staff Headquarters in Ankara. The meeting went behind closed doors. ------Turkey wants current status even in to maintain post-Kyoto period Monday, 07 December 2009 11:22 Todays Zaman ------As the UN Climate Change Conference begins today (Monday) in Copenhagen, Turkish officials are gearing up for tough negotiations to present the country’s climate strategy after the Kyoto Protocol expires in 2012. Officials from the Ministry of Environment and Forestry said Turkey will express in Copenhagen its intention to maintain its current status of exclusion from Annex B, freeing it from emission reduction commitments. Turkey, as an Organization for Economic Cooperation and Development (OECD) country, was included in Annex I of the United Nations Framework Convention on Climate Change (UNFCCC) in 1992, and even in Annex II, which is the list of relatively advanced industrialized countries that have committed themselves to financial and technical transfers to developing countries. After Turkey’s objections, it was eventually removed from Annex II but as a non-signatory to the original 1997 protocol, it was also not included in Annex B. So Turkey has been free from emission reduction commitments, even though it ratified the Kyoto Protocol on Aug. 26 of this year, and Turkish officials want to keep it that way unless financial support and technology transfer are offered. Turkish officials noted that per capita annual emissions in Turkey are 4.5 tons compared

67 to 23.5 tons in the United States and 11 tons in Denmark, where the climate summit will be held on Dec. 7-18, drawing up strategies for the post-Kyoto policies and commitments. But Turkey’s emissions have risen quickly, from 170 million tons in 1990 to 372 million tons in 2007 as its annual per capita income rose from $3,000 in 1990 to $10,000 in 2007. And Turkish officials say the country will continue to grow. On the other hand, Turkey is in a region that is quite vulnerable to climate change, and the country is indeed committed to the implementation of policies and measures to reduce greenhouse gas emissions blamed for global warming. Giving examples from all sectors regarding quantitative reduction efforts, Environment and Forestry Minister Veysel Eroğlu said recently that as a result of the Energy Efficiency Law, 75 million tons of carbon dioxide emissions will be cut by 2020. Turkish officials, who will go to Copenhagen to negotiate on behalf of Turkey, said that they will tell the conference about Turkey’s unique situation, shared only by two other countries, to keep it free from reduction commitments. Turkey, South Korea and Mexico are members of the OECD, widely considered to be a group of industrialized nations, but do not have emission reduction commitments under the current Kyoto regime until 2012. Meanwhile, the latest round of international talks on climate change ended on Nov. 6 without resolving major disputes over a new global climate pact and how to pay for it. UN scientists say rich countries must cut carbon emissions by 25 to 40 percent from 1990 levels by 2020 to prevent the Earth’s temperatures from rising by 2 degrees Celsius (3.6 degrees Fahrenheit) above its average temperature before the industrial era began 150 years ago. Developing countries should also limit their emissions and must adapt to the effects of climate change, including floods and drought. But they need money. However, industrialized countries have yet to unveil specific amounts to help poor countries fight global warming. About 29 percent of the greenhouse emissions in world come out of the United States. The share of EU countries is 26.5 percent, while Russia emits about 8 percent and China about 7.6 percent. ------Turkey uses more renewable sources of energy * Law No. 5346, dealing with electricity production from renewable sources and enacted in 2005, is still in effect. This law guarantees electricity producers who produce from renewable sources that the government will buy the electricity generated at 5.5 euro cents per kilowatt-hour. * Established wind farms reached 743 MW production capacity in 2009 compared to 17.2 MW in 2005. * Turkey uses hydropower for its 35.8 billion kWh energy use out of 200 billion kWh of its total use. * Turkey increased its use of renewable energy resources more than twofold in 1990- 2009, bringing it up to 15,280 MW from 6,782 MW. * As a result of the Energy Efficiency Law, 75 million tons of carbon dioxide emissions will be avoided by 2020. * Turkey increased energy efficiency in cement, iron and steel plants by using and promoting the best available techniques, supporting the transition to clean production. * Turkey prepared a National Solid Waste Management Action Plan (2008-2012).

68 According to the plan, 114 landfill sites will be constructed and will serve 76 percent of the population by 2012. * Turkey started an ambitious forestation campaign with a target of 2.3 million hectares of land in a five-year period from 2008 to 2013. As a result of the campaign 181.4 million tons of carbon dioxide emissions will be sequestered. * There are initiatives in the transportation sector including the enhancement of the quality of fuels consumed in vehicles, utilization of bio-fuels, use of vehicles with new engines and technologies, removal of old vehicles from the road, expansion of metro and light rail networks in big cities. The Marmaray sub-sea tunnel project in İstanbul -- which will connect the Asian and European sides of the city -- will reduce 130.335 tons of greenhouse gas emissions yearly. * Turkey is promoting the use of biomass instead of fossil fuels, and best available agricultural and irrigation techniques to reduce emissions and conserve natural resources. The Law on Soil Conservation and the Law on Grassland and Pasture Conservation contribute to the sequestration of emissions. Turkey also adopted an action plan in 2008 to combat drought. ------Eroglu Affirmative On Syria'S Willingness To Draw Water From Tigris Tuesday, 08 December 2009 21:28 TIME TURK ------Turkish Environment & Forestry Minister Veysel Eroglu said on Tuesday that Syria was willing to draw 1.2 billion cubic meters water from Tigris annually. "Why should not we give if there is water. Studies will take place however we will try to do our best to release this volume," Eroglu said speaking at a joint news conference with Syrian Irrigation Minister Nadir al-Buni in Ankara. Eroglu and al-Buni had a five hour meeting to review last-minute preparations for a number of cooperation protocols on water and irrigation as a part of a strategic cooperation deal signed earlier this year. The protocols are scheduled to be inked in a meeting on December 22-25 in the Syrian capital, Damascus. Eroglu said Turkey was eager to boost cooperation with Syria. Turkish minister said the two countries continued works on high ranking strategic cooperation council, "various meetings had earlier taken place in Aleppo and Gaziantep to this end. Following the meeting in Aleppo, barriers in the border were removed and visa procedures lifted." "Citizens of both countries are pleased over the developments. Cabinets of Turkey and Syria will have a joint meeting at the end of this month. Our cooperation is not only related to irrigation, we also have deals on extinguishing forest fire," he said. Syrian Irrigation Minister al-Buni said they prepared the memorandum of understandings that would be signed during Turkish Prime Minister Recep Tayyip Erdogan's visit to Syria in December. He said the memorandum of understandings were ready in principle, noting that they would be signed in Damascus. Referring to Asi Friendship Dam, to be built on the Asi River on the border between

69 Syria and Turkey, Eroglu said the dam did not only aimed at energy. "It is a dam targeting irrigation and preventing flood. It is known that agriculture lands and some cities had to face floods because of overflow in Asi River. Technical works are underway." The Asi River originates in Syria and flows through Turkey's Hatay province before spilling into the Mediterranean Sea. ------US urges Turkey to drop Karabakh condition for ties with Armenia Friday, 11 December 2009 11:33 Todays Zaman ------Within days of Prime Minister Recep Tayyip Erdoğan clearly linking the issues of normalization of relations between Ankara and Yerevan to resolution of the Nagorno- Karabakh dispute between Baku and Yerevan, a senior US State Department official urged Turk

Following a White House meeting with US President Barack Obama on Monday, Erdoğan said progress in ongoing efforts at normalization between Armenia and Turkey was related to progress concerning the Nagorno-Karabakh dispute between Armenia and Azerbaijan. Obama had already “encouraged him [Erdoğan] to continue to move forward along this path,” in regards to the rapprochement between Turkey and Armenia. Obama’s remarks are considered an apparent reflection of the US expectation of further progress on the normalization efforts with Armenia, probably through the swift ratification of the two protocols signed by the governments on restoring diplomatic ties and reopening the common border between the two neighboring countries. Philip H. Gordon, the assistant secretary of state for European and Eurasian affairs at the US State Department, who participated in White House talks between US and Turkish officials, touched upon the issue on Wednesday during a meeting at the Council on Foreign Relations (CFR). Reiterating US support for the process of normalization between Armenia and Turkey, Gordon added: “We would like to see the protocols ratified. We think this would benefit Turkey and Armenia and help peace and stability throughout the region.” On Monday Erdoğan said: “We have also discussed relations between Azerbaijan and Armenia, which are of great importance. This is important in the context of Turkish- Armenian relations. We have discussed the Minsk Group and what the Minsk Group -- the United States, Russia and France -- can do to add more impetus to that process. I can say that to have more impetus in the Minsk process is going to have a very positive impact on the overall process, because the normalization process between Turkey and Armenia is very much related to these issues. As the administration in Turkey, we are determined to move forward in this area.” The Minsk Group of the Organization for Security and Cooperation in Europe (OSCE) has striven to solve the Nagorno-Karabakh conflict, a territorial dispute between Baku and Yerevan, for 17 years. In response to a question regarding Erdoğan’s call for more impetus within the Minsk

70 process, Gordon continued: “We are actively engaged in the Nagorno-Karabakh issue. Not because we see it linked to the Turkey-Armenia relationship, but because we think it could be also contributing to peace and stability in the region that both Armenia and Azerbaijan would benefit from. [A] Minsk group co-chair is in the region right now because we think this is hugely important. But it has long been hugely important, and it’s hugely important independently of any other issue. It’s something we care [about], and we would like it to succeed. If both of these processes were to succeed, it would really be a historic development for the region.” Underlining US expectations of seeing a “move forward as quickly as possible,” Gordon said the US has been asking both the Armenian and Turkish governments for the ratification of the protocols “as soon as possible, without preconditions and independently of any other issue.” Gordon, meanwhile, called what appeared to be the diverging approaches of the two NATO allies toward Iran’s nuclear program “a tactical difference.” Yet, he also noted that the US told Turkey about their “disappointment” over the fact that Turkey had abstained in a vote on a resolution in the International Atomic Energy Agency (IAEA), passed on Nov. 27, which censured Iran for covertly constructing a second enrichment plant near the city of Qom, demanding a halt to construction. There “could be problems” if measures such as sanctions are taken against Iran without seeking a diplomatic solution, Erdoğan said on PBS’s “Charlie Rose” show following his meeting with Obama. Voicing gratitude for Turkey’s support in Afghanistan, Gordon underlined that Richard Holbrooke, Obama’s special envoy for Afghanistan and Pakistan, “cares deeply about the special cooperative relationship” between the US and Turkey in Afghanistan. Ruling out arguments that Turkey has been drifting away from the West, Gordon said what he has observed is a Turkey that is aspiring to become a full European Union member, a goal supported by the US administration. When reminded of Washington’s silence on the influence of the military in Turkish politics, Gordon said: “I think we have always made clear that first of all we respect Turkey’s democracy and the need for appropriate civilian-military relations in Turkey. And when the prime minister comes here, we believe he is speaking for Turkey and the Turkish government. And we are satisfied with that relationship.” ------Armenian children forced to read in the dark i n Turkey Friday, December 11, 2009Vercihan Ziflioğlu ISTANBUL - Hürriyet Daily News ------Children from Armenia are attending classes and reading smuggled textbooks at an illegal school in the basement of a building in Istanbul. Forbidden to attend Armenian minority schools under the Lausanne Treaty and the Special Education Law, these children could not go to school even if the Turkish-Armenian border is opened, unless the law is changed Tzsonivar is 8 years old and she misses her father and siblings who live in another country. Six-year-old Serge hopes to be president of that country some day. But for now,

71 they are stuck in a legal twilight zone, unable to attend Turkish schools, studying in illegal elementary classes with smuggled textbooks and volunteer teachers. Serge and Tzsonivar are Armenian. Unlike Turkish Armenians who can attend community schools established under the 1923 Treaty of Lausanne, these children are citizens of Armenia. Unlike expatriates, who often send their children to private foreign schools, Serge and Tzsonivar are poor. The tuition for a non-state school would be more than their undocumented parents can afford. Most parents would prefer their children to be educated in the Armenian language, even if they could afford to send them to private foreign schools in Turkey. Even if all the problems between Turkey and Armenia are resolved, Armenian-born children currently studying in an Istanbul basement would still not be able to attend the country’s Armenian minority schools. A change in Special Education Law would be required for those children to reclaim their right to an education. Only children with Turkish citizenship who are from the country’s Greek or Armenian minority are allowed to attend the minority schools in Istanbul, under the terms of the Lausanne Treaty. Every knock on the door is cause for worry The Hürriyet Daily News & Economic Review visited an illegal school several times over two weeks with the promise of keeping the students’ names and the neighborhood a secret. There were almost 20 children ranging in age from 5 to 14 at the school. Their greatest fear is that their location will be exposed and every knock on the door makes them afraid that the authorities are raiding the school. There are other illegal schools like this in Istanbul. The children here are not only deprived of their right to an education, but they miss their families, too. Lusine, a teacher at the school said: “Our aim is to teach the children at least how to read and write and provide a social environment. For many, their family is in Armenia or other countries. They do not have the chance to see their mothers during the daytime either, which affects the children negatively.” Reproach for Armenia’s rich The 1989 earthquake in Gyumri, Armenia’s second-biggest city, and the Nagorno- Karabakh war with Azerbaijan have pushed the country into economic distress. The Turkish border being shut down due to the war has made the situation even worse. Many citizens of Armenia went abroad to find jobs due to the financial difficulties, and Turkey was the top choice. Today, economic problems continue and, even though their children have not had a proper education since, their parents do not wish to go back to Armenia. According to Turkish authorities, there are 60,000 illegal Armenian workers in the country, while data from Armenia’s Foreign Ministry puts the number at 20,000. Although most of the illegal Armenian workers in Turkey are college graduates, many of them do basic jobs such as housecleaning or working at bazaars. Those with better economic positions engage in the suitcase trade, the practice of buying products at low cost in Istanbul’s bazaars and selling them for a higher price in their home country. Most adults can cope with this struggle one way or another, but school-aged children often experience great difficulties. “The politicians are after their own gains; it is us, the ordinary people, who suffer,” said Aghavni, a graduate of the Yerevan University faculty of economics who earns a living in Istanbul by cleaning houses. Criticizing the rich people of Armenia, Aghavni said:

72 “They are your children, too. You know how to show off in the streets of Yerevan in luxury jeeps, but you do not even think of claiming those children, your future. We had to leave our country because of financial difficulties. We did not even have bread to eat.” The psychologist of the illegal school Armineh, another teacher at the school, came to Turkey 10 years ago from Gyumri, where her family still lives. “I came here unwillingly, to earn a living and send money to my family. I have been a housecleaner and I have worked at bazaars. Now I clean houses two days a week and have a stand at the bazaar,” she said. Like her other friends, Armineh has devoted herself to the children at the illegal school. She studied psychology in Armenia and is very concerned about the future of the children. “They suffer great damage both psychologically and in a social sense; most of them are withdrawn,” she said. “It bears thought and is very sad that children are deprived of their educational rights in this century.” The Armenian president is the idol of little Serge The children’s textbooks are brought from Armenia. The biggest wish of 12-year-old Garoush is to go back to his school in Yerevan. “I miss my school and friends very much. We came to Turkey five years ago,” said Garoush. “I want to go back, but my mother says it is not possible now.” Tzovinar is 8 years old and her father and siblings live in the village of Gavar, near Sevan Lake in Armenia. Her eyes were full of tears. “I miss my father and siblings so much. I cannot see my mother either because she has to work a lot to earn money.” Serge is 6 years old and his favorite person is Armenian President Serge Sarkisian, for whom he was named. “I want to be president, too, like Serge Sarkisian, when I grow up,” he said. “The child at the house my mother cleans wears very nice clothes. He has a very nice school bag, but I do not. I will let everybody go to school when I become president.” Lawyer Davuthan: ‘The law must change’ The Daily News asked for the opinion of Archbishop Aram Ateşyan, the spiritual leader of the Patriarchate of Armenians of Turkey, but received no comment. The Patriarchate Secretariat said it was due to Ateşyan’s busy schedule. The archbishop met with Prime Minister Recep Tayyip Erdoğan recently and mentioned the subject. The Turkish branch of UNICEF also preferred to remain silent on the matter. “This is a very political subject. It would not be our place to voice an opinion,” said Şebnem Balkan, a UNICEF spokeswoman, and said she was just assigned to the job. Setrak Davuthan, a lawyer for the foundations of the Armenian community of Istanbul, explained the matter as follows: “There is a law banning children from Armenia from attending the schools of the Armenian minority foundations. The law on private education institutions states that only citizens of the Republic of Turkey can study at minority schools. If that clause does not change, the problem will not go away even if the borders between Turkey and Armenia open.” According to Davuthan, the roots of the problem date back to the Lausanne Treaty. He said such difficulties were because the articles of the Lausanne Treaty on minorities are interpreted as the government sees fit. “In the time of the Ottomans, not only Armenians, but also Turks studied in the minority schools because the level of education was good,” he said. There are currently 18 Armenian minority schools in Istanbul.

73 ------ECONOMIC ISSUES Minister: Fitch’s rating hike confirms economy’s resilience Saturday, 05 December 2009 12:06 Todays Zaman ------State Minister for Foreign Trade Zafer Çağlayan has argued that international credit rating agency Fitch’s decision on Thursday to upgrade Turkey’s sovereign rating by two notches to BB+ confirmed that the global economic crisis has indeed left the Turkis

Other rating agencies will also issue similar upgrade decisions in the days ahead, he claimed. Commenting on recent economic developments during his speech at a ceremony to celebrate the start of Temsa’s export of its Avenue bus to Azerbaijan, Germany and Britain on Thursday in İstanbul, he recalled Prime Minister Recep Tayyip Erdoğan’s remarks last year -- at the dawn of the crisis -- that the crisis will pass Turkey by without seriously rocking it. Unfortunately, there have been some circles who failed to understand this claim or who opted to misinterpret it. Some people, those who wanted the Turkish economy to collapse, its banking and finance sectors to melt away and millions of people to lose their jobs, failed to pay enough attention to Erdoğan’s remarks.” When reminded of his previous remarks about Fitch, in which he claimed the rating company had lost its credibility, the minister said, “We will say they are correct when they do it the right way, and we will criticize them when they get it wrong.” Fitch Ratings increased Turkey’s long-term foreign currency Issuer Default Rating (IDR) to BB+ from BB-; the long-term local currency IDR to BB+ from BB; and its country ceiling to BBB- from BB. Edward Parker, the head of emerging Europe in Fitch’s Sovereigns team, said the “upgrade reflects Turkey’s relative resilience to the severe stress test of the global financial crisis and some easing in prior acute constraints related to inflation, external finances and political risk.” Çağlayan said the automotive sector has always been of utmost importance for Turkey, especially given its extraordinary performance in exports. Turkey has rapidly become a global center of interest for auto investments as many multinational companies rushed to invest in the country’s high auto market potential. Turkey will soon become one of the most important bases in auto manufacturing, he asserted, adding that this would have already happened had the crisis not erupted last year. In the past 11 months, the sector earned $11 billion from sales abroad, Çağlayan noted. In this context, the minister argued, Temsa has risen as a distinctive success story selling 75 percent of its total production to export markets. Following the minister, Sabancı Holding Chairwoman Güler Sabancı addressed the audience to offer gratitude to the government for its incentives in research and development. She also thanked Temsa’s engineers and designers for their efforts in developing new products. Temsa’s Avenue mass transport vehicle has an environment-friendly engine, a high roof, a wide interior and is fitted with a powerful air-conditioning system. It is nearly 800

74 kilograms lighter than the competing models of its rivals. It is manufactured in four types depending on engine: Euro4, Euro5 Diesel, CNG and Hybrid. ------Stop the old ‘bridge’ metaphor; Turkey has become a new regional ‘hub’ Sunday, 06 December 2009 12:36 Todays Zaman ------During Prime Minister Erdoğan’s upcoming visit to Washington, his host at the White House is likely to offer him diplomatic niceties on Turkey’s role as a “bridge” between East and West. Our argument is that this metaphor, however flattering it may have been in the past, no longer fits the reality of contemporary Turkey. Today, Turkey is less of a bridge and more of a dynamic regional hub in a rapidly changing world where a fundamental power shift is taking place towards Asia and away from the West. Turkey has re-emerged as a powerful actor in its own right, deriving its strength from a $750-billion-strong economy, large military, huge cultural and historic hinterland, and an increasingly effective and trusted broker role for protracted problems in the region. Turks also have redefined their strategic interests and are not happy at all to be treated in a patron-client relationship. Our suggestion is that Western officials should accept this new reality not as a challenge but as a positive development. If they stop treating Turkey as a biddable client providing useful transit services (as implied by the bridge metaphor) and instead recognize Turkey’s autonomous status and far-reaching national interests, a far healthier basis for future relations between Turkey and its Western allies will emerge. One way or another, a resurgent Turkey is rewriting the rules of the power game in the Middle East, Eurasia and Southeast Europe. It is doing so in a positive and non- confrontational manner that, when seen through this new “hub” lens, accords well with Western interests in the troubled regional geography in which Turkey lies at the center. In effect, what we are witnessing today is the emergence of a Turkish version of the German Ostpolitik of the 1960s -- with just the same potential for positive outreach into a troubled region. The current Turkish behavior is shaped by the shifts in the country’s international identity and the changes in Turkey’s vision of its new geopolitical role. These, in turn, are the result of powerful processes that are reshaping the socio-political life of the country. These processes are the economic development in the Anatolian hinterland, the broadening of the elite through the emergence of the new ambitious provincial social actors, who are economically dynamic and culturally conservative, and the increasing role of elected officials and thus a stronger government. None of these dynamics need be seen as detrimental to Western interests. In revisiting the “Turkey dossier,” the first step for Western policy makers will therefore be to back away from the past, where Turkey was seen as the “sick man of Europe” or a “loyal ally” of the West on the outer margins of the EU, NATO or Asia. A more constructive image is to view Turkey as being located in the very heart of Eurasia and now working free from the post-Ottoman cliché of “modernization.” Policy shift to rise as a regional powerhouse

75 The signature policy of Turkey’s new self-confidence is the policy of “zero problems with neighbors.” This marks a revolutionary change from the “siege mentality” that promoted the paranoiac view that Turkey was surrounded by enemy countries. One after another initiative has been launched to pave the ground for the settlement of most historically deep-seated and complex problems. In this context, Turkey and Armenia, two historic enemies, broke new ground in October by signing protocols providing for the restoration of diplomatic relations and the opening of the long-closed border between them. If borders are not reopened by April 2010, it seems certain that the Turkish-American partnership could possibly be dealt another blow due to the long-standing proposed “Armenian genocide” bill. Iran remains the single most important item on Turkey’s plate. Erdoğan’s recent visit to Tehran resulted in new projects to increase the existing $11 billion trade volume to $30 billion over the next few years. There was talk of Turkey brokering a deal with Iran on nuclear matters including storage of enriched uranium on Turkish soil. Joint exploration and production of natural gas, trade in local currencies, the establishment of an industrial border area and a joint airline are also among the points agreed upon to boost economic cooperation between the two neighbors. Two other visits this past October may serve to more vividly illustrate Turkey’s activist foreign policy. Prime Minister Erdoğan, accompanied by nine ministers and an Airbus full of businessmen, visited Baghdad, where he held a joint session with the Iraq government and signed no fewer than 48 memoranda in the fields of commerce, energy, water, security, forestry, the environment and so forth. At almost the same time, Foreign Minister Davutoğlu was in Aleppo, where he signed another 40 agreements with Syrian Foreign Minister Walid al-Muallim, of which perhaps the most important was the removal of visas, allowing for a free flow of people across their common border. These developments have been balanced by some loosening in Ankara’s traditionally close ties to Tel Aviv. Turkey has closed its airspace to Israeli military training (while holding joint military exercises and opening borders with Syria). However, the Nov. 24 visit to Ankara by Israeli Minister of Industry, Trade and Labor Binyamin “Fuad” Ben Eliezer demonstrated that both sides are open-minded to repairing their mutual relations. In the wake of Turkey’s accelerating regional engagement, the EU accession process enjoys less priority, partly due to the particularly unwelcoming approach under the Sarkozy presidency and the Cyprus problem still staying as a stumbling block. In fact, Turkey’s accession story is like an unfinished symphony, started almost half a century ago and yet to be finalized. Turks tend to see EU policy as evasive and full of double standards, with many promises going unfulfilled. This has cost Brussels a serious loss of credibility in the eyes of most Turks, even those who are fervently pro-European. Turkey has certainly not lost its European vocation, but this will have to be adjusted to fit the new circumstances. On Cyprus, for example, Ankara made it clear that if a choice has to be made at the end of this year between Cyprus and EU membership it would be undoubtedly Cyprus. In order for its “zero problem with neighbors” strategy to be credible, Turkey has to deal with its own domestic problems first on the basis of widely shared consensus with internal stakeholders. Turkey has always been a conservative country and the vast majority of Turks have traditionally voted for center-right parties. The rise of the Justice and Development Party (AK Party) represents a struggle between the military and the

76 civilian bureaucratic elites, and challenges the secular, modernist forces in the country. There are signs that the AK Party finds it difficult to divorce the country’s foreign policy goals from its own cultural and religious sensitivities. In a historic turnaround, the current government has opened Pandora’s box on the Kurdish issue, albeit not in a well- engineered and orchestrated manner. Turkey is now using a softer approach. A peaceful settlement of this decades-long problem will enhance Turkey’s desire to implement a more activist regional strategy. Turks eager to get promoted in energy politics Energy has a pivotal role in shaping Turkey’s regional role as the country, a major consumer of energy in its own, is also key to linking oil and gas producers in Russia, Caspian, Central Asia and the Middle East with energy-hungry markets in Europe. Yet, Turks are not content to be a simple “bridge” over which energy flows only; they aspire to become a regional “hub” extracting greater value for the crisscrossing oil, gas pipelines and power interconnections. Unlike the West, Russia seems to have adjusted much earlier to this new geopolitical game. Seizing the opportunity created by Ankara’s growing frustration with the EU and the US, Russian Prime Minister Putin traveled to Turkey on Aug. 6 with his basket of tempting strategic and economic proposals immediately after a similar Nabucco agreement mission in July 2009 by his EU opponents. The crystal-clear message from Russia to Turkey during Putin’s visit was, “We will make it worth your while to do business with Russia.” Hence, the visit has generated a series of unprecedented commercial and energy contracts worth $40 billion that will support Turkey’s drive to become a regional hub for fuel transshipments while helping Moscow maintain its preferred partner status on natural gas shipments from Asia to Europe. There are heightened fears in several capitals about Turkey becoming too cozy with Moscow at the expense of overriding some Western energy and strategic interests, with possible security ramifications in the long run. Some of the same misgivings were felt at the time of Germany’s Ostpolitik outreach to then-Soviet-occupied Europe. Just as those fears proved misplaced, so a smart engagement strategy to keep Turkey plugged into the West’s preferred energy strategy will require a more nuanced understanding of this country’s interests. We believe that this is entirely possible; but, so far, that is not what we have seen. These developments have unsettled Western assumptions about Turkey. In particular, it has undermined the article of faith that the West enjoyed the whip hand over Turkey because of the latter’s aspiration to join the EU. This was the theme of President Obama’s speech to the Turkish Parliament in April. This assumption needs to be reviewed. It does not help when Western think tanks hold conferences about Turkey, they talk about Turkey’s “dangerous drift” in Turkey’s progress toward adopting the “acquis communautaire.” This is living in the past. President Obama has a lot in store to discuss with Prime Minister Erdoğan, including Russia, Iran, Iraq, Afghanistan, Armenia, Syria and Israel, when he comes to the White House on Dec. 7. There is an important lesson here for the Obama administration. With its strategic commitments in Afghanistan and Pakistan and economic challenges at home, the US is less able to dictate strategic outcomes to countries like Turkey. Luckily, the more astute of America’s diplomats already know this. They recognize that,

77 increasingly, if Washington wants to promote and protect US interests in this critical region, it will have to do so through serious diplomacy -- by respecting evolving balances of power and accommodating the legitimate interests of others so that US interests will be respected. Turkey’s current policy provides a valuable model of what that kind of diplomacy could be like. Let’s not jump to an easy conclusion that what Turkey has been doing systemically since 2002 in this most difficult part of the world is a simple drifting away from the West and embracing “rogue” and “anti-Western” nations at the expense of its historical western vocation. It is also too early to judge Turkey’s multi-vectored drives as successful. Indeed, far from looking for a life without them, Turkey is looking for an upgraded relationship with the US and the EU. Turkey can hardly expand its influence without first having a firm footage in the West. A more promising approach lies in better understanding Turkey’s drivers, needs and priorities and seeking western alignment for a durable, “win-win” relationship with Ankara as well as using Turks’ leverage in the broader Middle East, Eurasia and Southeast Europe to find solutions to protracted problems that the West has thus far failed to address. Turkey is the only country in the world which can simultaneously talk in a spirit of trust and partnership to Tehran, Baghdad, Damascus, Riyadh, Tel Aviv, Moscow, Baku and Yerevan, as well as enjoying dialogue with most radical groups in Lebanon, Palestine, Iraq and Afghanistan. Hence, Ankara stands at a historic juncture and possesses the ability to shape politics beyond its borders if it pays attention to the two following parameters: maintain its newfound global role only by building international constituencies and prove that its heart beats for Muslims and non-Muslims, and Turks and non-Turks, with the same strength. Turkey’s respected and non-confrontational rise in that volatile, troubled region that is increasingly peaceful, with countries cooperating with one another, is good for the West and the world. This is an exceptional and unique role Turkey could play as a regional “hub,” rather than a “bridge.” This is what Washington and Brussels should be supporting wholeheartedly, rather than getting worried about. ------* Mehmet Öğütçü, a former Turkish diplomat, OECD international staff member and an honorary fellow with University of Dundee, is currently with a major multinational corporation based in London. Jonathan Clarke, a former UK diplomat, is a senior fellow at the Carnegie Council for Ethics in International Affairs in New York. ------Turkish Finance Minister Leaves For France Monday, 07 December 2009 09:51 TIME TURK ------Turkish Finance Minister Mehmet Simsek left for France to attend an investment meeting. Simsek is set to attend a conference on "France-Turkey Existing and Potential Investments" and deliver speeches on "France-Turkey Joint Business and Investment Opportunities under European Dynamics" and "Ways to Develop France-Turkey Joint

78 Business and Investment Opportunities". He is expected to return to Turkey on December 8 after holding a series of bilateral talks with French officials. ------Turkey’s credit rating might be raised to investment grade in two years Tuesday, 08 December 2009 08:38 Todays Zaman ------Turkey, who was among just 13 countries whose credit ratings were raised by international credit rating agencies this year, is among 10 countries expected to see their rating rise to “BBB,” thus branding them a “safe” country for investments, in the next While Turkey’s credit rating was once among the first to be reduced in a global or regional crisis, it was among the few countries with a “positive” outlook during the recent global financial crisis, analysts the Anatolia news agency spoke with noted. According to a study by ING Bank, Turkey’s economic potential and its strength in the face of the financial crisis were underestimated and its credit default swap spreads (CDS) overvalued. The study predicts international rating agency Standard & Poor’s (S&P) will raise its outlook on Turkey to positive from stable in the next few weeks. ING also stresses that Moody’s might upgrade Turkey’s rating in the first half of next year as well. Following the start of a high economic growth phase in the banking sector, Turkey’s credit rating is predicted to be increased by one grade to BBB in the next one to two years, qualifying the country as a safe place to make investments in. The rise in credit rating to BBB will provide the Treasury and private sector with an opportunity to borrow from international markets at lower costs and for longer terms. BBB is the lowest investment-grade rating given by both S&P and Fitch; Moody’s uses the rating Baa, which is similar. Turkey’s current ratings are at the higher end of the speculative or junk grade, which indicates that the international ratings agencies feel there is a higher risk of default. Recently international credit rating agency Fitch upgraded Turkey’s long-term foreign currency Issuer Default Rating (IDR) by two notches, to BB+ from BB-; the long-term local currency IDR to BB+ from BB; and its country ceiling to BBB- from BB. It also reaffirmed Turkey’s short-term foreign currency IDR at B. Credit rating is seen as an indication of the likelihood and ability of a borrower to pay a debt and its interest back at a specified time. Credit ratings are calculated from financial history dating back 15 to 20 years. When calculating the credit ratings of countries, economic and political risk factors taken into account. Foreign currency cash flow, debt ratio, expansion of exports, balance of payments, the current account balance, the ratio of short-term capital flow to reserves, growth rate, total savings, public debt, investments and inflation are among the economic risk factors considered. As political risk factors, the electoral system and election dates, developments in foreign policy, the workings of democracy, political parties, relations between the government and opposition parties, risks in the political field and the degree of independence of the country’s central bank are taken into account. Credit ratings range from C or D to AAA, the highest credit quality denoting the lowest

79 expectation of credit risk. BBB indicates a low expectation of credit risk. Turkey’s credit rating is Ba3 in Moody’s, BB- in S&P and BB+ in Fitch’s ratings. ------US, Turkey boost trade and investment relations through new framework Wednesday, 09 December 2009 13:0 Todays Zaman ------United States Trade Representative Ron Kirk and Deputy Prime Minister Ali Babacan have unveiled a new forum aimed at boosting trade and investment ties between the two nations. On the heels of Prime Minister Recep Tayyip Erdoğan’s visit to the White House, Babacan and Kirk held a joint press conference at the White House yesterday revealing a new trade and commercial policy structure, titled the “Framework for Strategic Economic and Commercial Cooperation.” The framework creates a new Cabinet-level forum to discuss ways to expand bilateral trade and investment flows and to try to resolve disputes when they arise. Kirk spoke about the new initiative, highlighting Turkey’s economic strength in the region and its already strong ties with the US, saying: “US economic ties with Turkey are strong. However, they have room for significant growth, given Turkey’s development as a market in its own right and its emerging role as a regional business hub.” He continued, saying, “We can ... build on what is a good trade and commercial relationship and make it a much more robust one.” Secretary of Commerce Gary Locke, who will co-chair US participation in the framework process, also attended the press conference, highlighting that “this framework ... will be an important vehicle for expanding trade and investment and creating new jobs for the workers and the people” of both countries. Locke noted that trade with Turkey had reached a record level of $15 billion in 2008 but had taken a hit during the global economic crisis, and stated that there is every reason to expect that the two countries can surpass that “when the world economy gets back on its feet.” Babacan, who will co-chair Turkish participation in the forum with Minister for Foreign Trade Zafer Çağlayan, said figures for trade between the two nations were improving steadily and had the potential to grow further with this framework. Babacan added that the private sector was crucial for bettering economic relations and taking advantage of the new framework. Babacan said the two countries would seek suggestions from business on how to increase trade in areas ranging from energy to agriculture to military equipment. Locke, on this same note, stressed that “the strong involvement of the private sector is critical to our efforts to increase US-Turkish trade and investment. We hope to obtain private sector input in a formalized way to guide government-to-government discussions.” Seeking ‘easier’ trade with US Answering a question from the press, Babacan noted that the core of the framework is furthering trade and business relations and that ever since coming to power, this government has always pushed forward a liberal economic policy. “We’re one of the only countries that did not put up protectionist walls during the global financial crisis and also a country that did not have problems with our banking or financial sectors. We’re the

80 only country in the OECD [Organization for Economic Cooperation and Development] that didn’t have to bail out banks with public funds. We are on the side of more and easier trade.” Babacan, stressing that his government will work towards realizing the interests of both nations, noted that “this framework is a long-term initiative. We shouldn’t see it as an initiative that will only be concerned with a few topics; we should see it as a concept that can grow to encompass a much broader spectrum of issues.” Babacan downplayed the chances of Ankara using the forum to press Washington to reduce high US tariffs that Turkey faces on textiles and some other exports. On the same note, Kirk noted that the initiative was not intended to be a stepping stone to talks with Turkey on a free trade agreement, highlighting that there were no immediate plans to pursue a free trade agreement between the two countries. ------US development agency names Turkey ‘Country of the Year’ Wednesday 9 December 2009 09:4 Todays Zaman ------The US Trade and Development Agency (USTDA) has announced the Republic of Turkey as the recipient of its 2009 Country of the Year award. USTDA Acting Director Leocadia I. Zak presented the award to Turkish Deputy Prime Minister Ali Babacan yesterday at the Office of the United States Trade Representative (USTR). “USTDA is delighted to add Turkey to the distinguished list of high-performing partners who have earned the agency’s Country of the Year award,” said Zak. “This important award reflects the strong economic relationship between Turkey and the United States, and I am very proud that USTDA has been able to contribute to this relationship.” A statement by the agency explained the importance of this award, noting that “this award is a reflection on the success of the agency’s program in Turkey supporting their development priorities.” It continued: “Turkey has a long history of engaging USTDA in the early project planning stages for many of its infrastructure development needs. This has allowed the agency to play a vital role in advancing these priority projects. As a result of this cooperation, the agency has been able to open the door for US industry to play a significant role in Turkey’s continued economic development, which has resulted in the export of more than $630 million in US-manufactured goods and services,” noting specific examples such as the geothermal power plant in Germincik, which began operations in May, and the US-Turkey Clean Energy Partnership, launched in April. ------GDP shrinks by 3.3 PCT, but showing strong signs of recovery Friday, 11 December 2009 11:35 Todays Zaman ------

The Turkish Statistics Institute (TurkStat) revealed yesterday that Turkey's gross domestic product (GDP) shrank by 3.3 percent in the third quarter of 2009, compared to the same period last year, though it is showing that the growth situation bettered af

81 According to the data release, which calculates the GDP both based on the current prices method and by basing it on 1998 prices, Turkey continued to shrink in the third quarter of 2009 compared to the same period last year, making it the fourth quarter in a row that its GDP growth has dipped below zero. The GDP shrunk by 3.3 percent calculated with 1998 prices as a base year, and 0.1 percent when using current prices. In the third quarter of 2008, the GDP grew by 1 percent compared to the year before. In the first nine months of this year, the GDP shrank by 8.4 percent to end at TL 7.96 billion calculated using current prices. The data also considered GDP growth on a sectoral basis, with the construction sector taking the biggest hit during the third quarter, shrinking 18.1 percent. The construction sector shrunk almost half that amount in the third quarter of 2008, 9.8 percent. The sector shrank by 19.5 percent in the first nine months of the year. The wholesale and retail trade sector, which shrank by 1.5 percent in the third quarter of 2008, continued to contract by 7.2 percent in third quarter of 2009. The share of taxes and subsidies in the GDP also shrank by 8.4 percent. Although many sectors experienced significant slowdowns during the third quarter, other sectors enjoyed great growth. The financial intermediation services sector grew by 9.5 percent compared to the same period of last year. Government spending during the first three periods of the year increased, according to the release. Government spending was TL 20.9 billion in the first quarter, TL 23.3 billion in the second and TL 27.1 billion in the third quarter of 2009. The share of government consumption spending in total government spending increased from 9 percent to 9.7 percent in the third quarter. Minister of Finance Mehmet Şimşek, speaking to journalists at the Gaziantep Journalists’ Association (GGC), noted that Turkey would start recovering much faster in the first quarter of 2010. Speaking about the current economic crisis, Şimşek stated that the crisis had significantly affected Turkey’s real sector, especially sectors focused on exports. While noting that because of the crisis many investments were delayed, Şimşek said: “The economy hit the trough in March, during the first quarter. After the first quarter, however, there was a relative improvement in conditions. There are great signs that the last quarter of the year will be great. I’m not saying that ‘everything is just as it should be; we are on the path to sustained growth’ by just looking at one or two months of data, but there will be a noticeable improvement in conditions in the fourth quarter. Exports and energy consumption are increasing. It will take time to return to the performance of 2007, however.” Speaking on the performance of the banking sector, Şimşek noted that the macroeconomic foundation of Turkey is strong compared to the rest of the world. “The banking sector has a higher capital adequacy ratio than the West, and they will support us even more in the following months.” Şimşek also pointed to the decreasing and now single digit interest rates, saying this was a “big accomplishment for Turkey. …Turkey will exit the crisis much quicker from the first quarter of 2010 onward.” He also noted that the Organization for Economic Cooperation and Development (OECD) expects Turkey to grow by 6.7 percent annually from 2011 to 2017. Şimşek noted this growth rate is strong, coming close to China’s. Independent Industrialists and Businessmen’s Association (MÜSİAD) President Ömer Cihad Vardan, speaking to journalists in Ankara, noted that the performance of Turkey’s

82 GDP growth meant that Turkey was quickly exiting the economic crisis. Noting that the shrinking of the economy had slowed down from 14.7 percent to 3.3 percent in two quarters, Vardan said: “This shows that we are quickly overcoming a sharp dive in the growth rate. Our exit speed is great, and if it continues like this then in the last quarter we should see a growth rate of zero or even 1 percent.” Speaking on whether this meant an increase in employment in Turkey in 2010, Vardan noted that these figures were “rays of hope” in the betterment of employment in Turkey. ------Turkey's 2010 budget foresees no IMF funding Friday, December 11, 2009 ISTANBUL – Daily News with wires HURRIYAT ------Turkey's budget drafted for next year does not foresee any financing from the International Monetary Fund, Turkish Treasury officials said Friday. Treasury plans to borrow 195.3 billion Turkish Liras in 2010. Some 8.4 billion liras ($5.6 billion) of that will be from international markets. Domestic borrowing will total 181.6 billion liras, and the Treasury will refinance 99.5 percent of total debt coming due, the Ankara-based institution said Thursday in a statement on its Web site. The refinancing rate is less than the 103.4 percent posted for this year as the global crisis ate into tax revenue and forced the government to increase spending on measures to stimulate the economy and preserve jobs. In 2009 Turkey borrowed $3.75 billion on international markets through three sales of dollar-denominated bonds. The Treasury will make payment of debts worth 200.3 billion liras next year. Some 149.6 billion of that will be for the principal amount, while some 50.7 billion of that will be for interest. Domestic debts would total at 182.6 billion liras, while external debt will add up to 7.7 billion liras. Turkey’s Central Bank plans to buy back as much as 8 billion liras ($5.3 billion) of domestic debt over the next 12 months, effectively rolling over all the maturing debt it holds, Central Bank Gov. Durmuş Yılmaz said. About 5 billion of the debt will be bought at twice weekly auctions of 100 million liras in the secondary market starting on Dec. 23 and ending in June, Yılmaz told reporters in the capital Ankara Thursday. Subsequent purchases will take place whenever necessary through the rest of the year, he said. The Bank holds 5 billion liras in papers that mature on May 10, and three packets of 1 billion liras that mature on July 10, Sept. 10 and Nov. 10, Yılmaz said. The rollover of that debt will account for about 5 percent of the Treasury’s planned borrowing for the year. The debt is part of the legacy of the country’s 2001 banking crisis. “This should be market neutral because it’s the exact amount of maturing debt and because they’re aiming to do this over time to minimize market distortions,” said İnan Demir, economist for Finansbank in Istanbul. “If they’d planned to buy more, it would have been another story.” By purchasing some of the debt before it matures, the Central Bank will maintain a “limited” portfolio of government bonds because it adds to its range of policy instruments, Yılmaz said. The bank and the Treasury remain “distanced” and there’s no

83 return to practices of earlier years when the bank would support Treasury borrowing, he said. The purchases will be of lira-denominated debt of between one-year and five-year maturity and care will be taken that “the debt is liquid on the secondary market,” Yılmaz said. The Treasury is expected to obtain 8.7 billion liras from privatizations, Unemployment Insurance Fund, and the Savings Deposit Insurance Fund in 2010. The money the Treasury expects to lure in from conditional and guaranteed debt returns add up to 600 million liras, reported Anatolia news agency. The Treasury targets to increase bond issuance from international capital markets slightly to 8.4 billion liras, which while higher than the 2009 out-turn is actually more on par with the annual eurobond financing run for the period 2005-2008, said Timothy Ash, the head of European, Middle Eastern, and African economics at the Royal Bank of Scotland. The Treasury also foresees to obtain 5.3 billion liras from the World Fund, European Investment Bank, and other international funding establishments in the shape of project and program loans. The Treasury expects to see a “gradual global economic recovery” in 2010, the statement said. It forecast 8.7 billion liras in income from state asset sales, “prudentially lower” than the estimate in the 2010 budget estimate of about 10.5 billion liras. Any over-performance from asset sales will be used to strengthen cash reserves or lower the refinancing rate, it said. The country’s borrowing requirements will also change “if additional sources are to be provided from international institutions,” the statement said. Turkey has been in talks with the International Monetary Fund on a new lending accord since May 2008. ------Uncertainty affects the recovery, says TÜSİAD Friday, December 11, 2009 ISTANBUL - Hürriyet Daily News ------Turkey should prepare itself for the future, particularly through a proper judicial structure and education, says Arzuhan Doğan Yalçındağ, chairwoman of the Turkish Industrialists' and Businessmen's Association, or TÜSİAD. 'It will take a long time [to create] sustainable economic growth and decrease the unemployment rates,' she adds While struggling with topical problems amid economic uncertainty, Turkey should also prepare itself for the future, the head of the country’s top business organization has said. “Turkey should build its own economic program beyond the limits of the medium-term fiscal program,” said Arzuhan Doğan Yalçındağ, chairwoman of the Turkish Industrialists’ and Businessmen’s Association, or TÜSİAD. Speaking to TÜSİAD’s High Advisory Council on the global situation and recovery, Yalçındağ added, “It will take a long time [to create] sustainable economic growth and decrease the unemployment rates.” Turkey should create its own strategies, Yalçındağ said, adding that the country “can grasp the opportunity of its demographic characteristic.”

84 "As TÜSİAD, we have done demographic research. If Turkey can use its demographic situation well, the country can also take part in technological innovations and growth,” she said. “Our main aim is to become a country that is suitable to invest in.” “However, in order to do that, we should have a suitable judicial structure,” Yalçındağ added. “As Turkey takes a proper place in world business, we have to change our education system and our educational philosophy.” The post-crisis period still holds the risk of protectionism due to a possible increase in the current budget deficit in some countries, according to the TÜSİAD chairwoman. Noting the importance of the Asian continent during the crisis, Yalçındağ said that economic growth has shifted eastward: “The Asian continent is expected to be the locomotive region of the world economy.” Unemployment issue The perceptions concerning this year may not help much to face problems in 2010, TÜSİAD High Advisory Council Chairman Mustafa Koç said at the meeting. Koç noted that the council is not expecting a quick recovery in 2010. “The most important thing for us is to solve the unemployment problem in Turkey,” he said. “Unless we can solve this problem, the recovery process will be longer.” Noting that TÜSİAD foresees 3.5 percent growth for 2010 and 4 percent growth for 2011, Koç said, “In this environment, which is full of unemployment and problems, we do not understand how we do not accept the [International Monetary Fund, or] IMF deal and $30 billion or $40 billion.” Turkey is faced with really important problems in terms of the budget, according to Koç, who said the public debt balance has gained a negative trend. “The strength of the public debt balance directly affects the confidence in a country’s economy policies,” he added. State Minister Hayati Yazıcı also commented on the “uncertainty” statements. “I think statements arguing that there is a crisis in politics are actually exaggerated comments. Of course, Turkey has been affected by the crisis, like other countries,” he said, urging more dialogue to solve the problems. “[But] there is political confidence and stability in Turkey,” Yazıcı added. “The problems mentioned in this meeting are already on the agenda of the government. Our economy is a strong one.” ------Project to boost tourism in Turkey, Greece Tuesday, December 8, 2009 MİLAS - Anatolia News Agency HURRIYAT ------A collaborative project between Greece and Turkey aims at boosting tourism activities between the two countries, said Panagiotis Koutsikos, chairman of the Turkish-Greek Chamber of Trade. Koutsikos and an accompanying delegation paid a courtesy visit Saturday to Enver Tuna, chairman of the Milas Chamber of Trade and Industry. Speaking to reporters during the visit, Koutsikos said they wanted to promote cooperation between Turkish and Greek tour operators.

85 “We have developed a project to promote tourism in Turkey and Greece. If tourists stay a week in Turkey and a week in Greece under the same program, this could boost tourism in both countries,” he said. “We began implementing this project four years ago. Last year, one million tourists made use of the project. The province of Muğla has excellent beaches. Towns like Marmaris, Bodrum and Fethiye are important centers for tourists. The whole coast offers beauty to foreign tourists,” Koutsikos said. Many hotels in Greece also buy products from Turkey, he said. “We will bring together importers and exporters from the two countries and help them grow their businesses. We have chosen the province of Muğla in order to develop [this] project.” ------SOCIAL ISSUES Pharmacies protest medicine price changes with one-day closure Saturday, 05 December 2009 11:55 Todays Zaman ------Pharmacies across Turkey, except for pharmacies listed to stay open, were closed on Friday to protest a decrease in the price of medicine. As part of the protests, organized by the Turkish Pharmacists Union (TEB), TEB head Erdoğan Çolak and a group of pharmacists closed the shutters of the Natura pharmacy in Ankara’s Çukurambar district, starting off the one-day closure. “We call it a one-day closure protest for the solution of our problems. A TEB congress will gather on Dec. 11, 12 and 13. This congress will make radical decisions if the government does not move toward a solution,” Çolak said. While stressing that about 7,000 pharmacies have closed as a result of the decision on medicine prices, he said they cannot afford the closure of such a large number of pharmacies as a pharmacists’ organization. Çolak said the state has not yet supported them in meeting their losses but rather had supported pharmaceutical companies. The decision to decrease the prices of 2,750 medicines went into effect on Dec. 4, which leaves many pharmacies strapped for cash as medicines that have already been bought at higher prices from pharmaceutical companies will need to be sold for the new lower price -- sometimes less than half the previous price. Çolak further said that they had not victimized patients as they had put additional pharmacies on duty to be open on the day of the protest. In a number of pharmacies across Turkey, various placards were displayed reading “We would close one by one eventually, now we are closed altogether,” “We are closed today, we do not know about tomorrow” and “As pharmacists, we will not let our labor, our employees livelihoods, the future of our children and the health of our patients be played with.” Although the number of pharmacies listed to stay open was increased on the day of protest, patients with prescriptions in their hands did not seem happy with the protest. Long queues in front of pharmacies were observed, especially in big cities. İstanbul Chamber of Pharmacists official Şehnaz Efeoğlu noted that about 300 pharmacies were open in İstanbul on Friday.

86 In addition, a number of pharmacists chose not to participate in the protest, opening their pharmacies on Friday. “I understand the problems of my colleagues but this protest is wrong,” pharmacist Muharrem Selamoğlu, who is also the Niğde deputy for the ruling Justice and Development Party (AK Party). Opening his pharmacy in Ankara on Friday, Selamoğlu said it is not fair to prevent patients from accessing medicine at a time when pandemic diseases are widely seen. “We, as a government, try to present the best service to the citizens. It is wrong to carry out a boycott against the state. The state bargained with the medicine companies, which promised to compensate the financial losses of the pharmacies. If they do not compensate for our losses, we have to conduct a boycott against them. I am against a boycott which punishes citizens and the government,” he explained, adding his colleagues are likely to react against him for opening the pharmacy. A pharmacist from İzmir, Bülent Delican, said he thinks the solution must be found in discussions instead of in a protest and he opened his pharmacy in order not to victimize patients. “I did not participate in the protest. Everybody is free to decide. I used my democratic right. I don’t think it is right to close pharmacies,” Delican said, stressing that medicine companies must shoulder the biggest responsibility about the decision to lower medicine prices, not pharmacies. ‘The protest is against human rights’ Stating that he did not find the protest to be right, Consumers Union Vice President Mustafa Dinç claimed that the protest is against both consumers’ and human rights. Arguing that the protest will bring pharmacists face-to-face with patients, Dinç said the protest violates the right of protecting one’s health. While recalling Labor and Social Security Minister Ömer Dinçer’s statement on Thursday that according to an agreement the ministry signed with representatives of medicine companies, these companies must compensate for the pharmacies’ financial losses -- which are estimated to be TL 800 million, Dinçer alleged that pharmacists organized the protest because they will lose profits and added that the decrease in prices will benefit the entire country. ------The tranquility of İstanbul’s outlying villages Sunday, 06 December 2009 12:30 Todays Zaman ------Everyone living in İstanbul longs for a more natural and peaceful life. Retirees’ dreams often center around the idea of a quiet little home in a seaside town. Going fishing in the calm of the evening as well as growing vegetables in one’s own backyard are some other common city-dweller dreams. Often though, the retirement period that was imagined doesn’t wind up going as planned. Some have a hard time separating from their children, while others feel the need to work for financial gain. Then again, there are some lucky folks who are able to live the serene village life they had dreamed of while still managing to be near the city where their kids live. These are people who live in tiny villages which are really as close to İstanbul city centers like Taksim and Kadıköy as an hour or so away.

87 We were curious about who these people might be, and so we set out to find out. In doing so, we toured around many of İstanbul’s local villages, from Üvezli to Seymen, from Pirinççi to Paşamandıra. We traveled roads bearing signs such as “Watch out for cows,” and drank our tea in little coffeehouses near tiny village centers. We strolled through gardens and paths. And we saw that these local city villages are not really much different to those which dot Anatolia. With their wooden homes, their bright green forests, their rivers that flow through the seasons, their little lakes and their historical touches, they all carry a part of Anatolia within them. One of these village residents is “Uncle Ali” from the village of Kömürlük. We come upon him as he works in his garden. This winter he hasn’t really planted anything in his garden, but he’s already thinking about summer vegetables. Ali sells the tomatoes and peppers he grows to customers that come from the city. The growing interest in organic crops has motivated many of the people, like Ali, who live around here. Most villagers now make sure that customers from the city can buy their garden fresh vegetables and fruits. Another village dweller we come upon, “Aunt Fatma,” is gathering wood in her village of Kurna, and bringing it back to her home to burn in her special wood burning stove. Later, she goes to fill up water containers at the village fountain. Unlike Ali and some other village dwellers, Fatma does not grow vegetables to sell, but just enough for herself. Her neighbor Kenan does the same. Kenan moved to Kurna after retiring. His wife and children still live in İstanbul, and he is here alone now. As he puts it, he is “relaxing his mind here.” The most noticeable aspect of İstanbul’s villages is the aging population that inhabits them. With youth heading to the city to find work, village squares are left to the elderly. Some of these elderly people spend much time fishing, others hunting in the nearby forest. But they all share one habit, and that is spending time in the coffeehouses in the village centers. Not many games get played at these coffeehouses, but instead people get caught up in deep conversations over their teas. They allow themselves the pleasure of a serene, slow-paced life practically in the shadows of the skyscrapers that continue to rise up every day in nearby İstanbul. Of the people living in these villages, there are those who actually gave up every- thing they had had in the city to move here, before retirement age. Seventy-eight-year-old Hikmet Yılmaz is one of these people. Forty years ago, he sold the three taxis he had owned in Üsküdar and moved to the village of Yeşilvadi near Şile. Uncle Hikmet was once even the village’s “muhtarı.” He says the motivating factor for his departure from Üsküdar was the changing city around him. He recalls the years of his youth fondly, and that period that İstanbul was going through then, too. But he also emphasizes that for him, leaving the city was the right thing to do. He recalls, “İstanbul was fast becoming a place where you could no longer live.” Their only complaint is the price of milk While everything is natural and healthy in these villages, life is not without complaints from the villagers. In Çatalca the greatest complaint is about the price per liter of milk. The same milk we buy in grocery stores for TL 2-3, they have a hard time selling for even 75 kuruş per liter. The same situation is found in some of the villages to the east of Şile, and added to this complaint is the going rate for hazelnuts, too. Every year, people here worry about what price the government will set for hazelnuts. Another widespread

88 complaint? That thieves are constantly stealing cows belonging to villagers from the “river villages” of Şile. Some villagers say that “it has come to the point that we’ll be forced to give up animal husbandry.” All the villages need is their forest to thrive Ormanlı village/Çatalca Ormanlı is a sweet little forest village, inhabited by many Turks who came from Greece and Bulgaria. There are also lots of ruins of Greek buildings here, since it used to be a Greek village. The crops grown in this village include wheat, barley and sunflowers, and in the summer, you can see lots of storks sitting atop the electricity posts here. Ormanlı is only 2 kilometers from Terkos Lake, which is partially fed by the Istıranca River near Ormanlı. You can catch fish in the lake and the river here. If you want to head to Çatalca from here (it’s 32 kilometers), you have to hop on the Yenibosna-Yalıköy bus line. Kurna village /Pendik: This village is only 15 kilometers from Pendik, and lies just next to the Ömerli Dam. The most noticeable aspect of this village is the long lines that form in front of its fountains. After all, the water that flows from these fountains is fresh and sweet tasting, a combination of rainwater and crystal clear melted snow. As a result, it’s not just Kurna denizens you’ll find waiting to fill up their water holders, but also people from nearby villages and even larger towns. The 500-year-old in Kurna is mostly in ruins due to lack of care. You can reach this village from the Pendik turn-off on the İstanbul-İzmit road. Pirinççi village/Eyüp: This is really one of İstanbul’s oldest villages; Pirinççi is a small settlement squeezed between mountains, trees and gardens. The Pirinççi River that runs through the region helps water the fields of those working in agriculture here. And when there is heavy snowfall, the village’s road connection to Sultangazı is cut off. There are no mass transit vehicles that head into Pirinççi, so if want to go there, you have to drive from either the Kemerburgaz or the Habibler road. Don’t be surprised by the sea as it rises up in front of the road to Şile Üvezli and other river villages of Şile/Şile: The first thing you note on entering the village of Üvezli is traces of eastern Black Sea villages; wooden homes and vibrant green natural surroundings. The Ahıska Turks, who emigrated between the years of 1877-1878 from Georgia and Artvin, started to move to this cluster of villages known by many as the “river villages,” namely: Üvezli, Kömürlük, Kervansaray, Bıçkıdere, Oruçoğlu, Ulupelit and Darlık. The residents of these village have strong ties to one another. Tradition reigns strong here. Until about a decade ago, many of the homes here didn’t even have televisions. The villagers living here depend on forestry, agriculture and animal husbandry for their livings. In the summer months, people can purchase organic vegetables grown in gardens here. The river villages lie around 60 kilometers from Üsküdar. You can reach them by bus on the Şile-Üvezli line. Paşamandıra/Beykoz: Paşamandıra is surrounded by wide, bright green meadows. It is a small village located by the side of the Riva River. Agriculture is very important in this region largely inhabited by emigrants from Kastamonu and Trabzon. In Paşamandıra you can find wheat and corn, and hazelnut, apple, pear, quince and fig trees and there are many horse farms. “Grill and eat” restaurants line the road here. This village is only 23 kilo-

89 meters from Kavacık, and can be reached by bus from Beykoz. Seymen/Silivri: A large portion of the tulips that line the boulevards and squares of İstanbul are actually grown in this village. Grown in 14 different colors, these tulips help support a full 23 families. Interestingly, the tulips grown here began to be grown during the Ottoman era. Most of the residents of this village are either from Thrace or the Black Sea region, and although these two regions are quite different from one another, over time, the village residents have grown fond of each other’s foods and traditions. Uskumruköy/Sarıyer: This village is surrounded on both sides by the Bahçeköy and Belgrad forests. And some of the animals that make these forests their habitat can be seen in and around the village. There is a lookout tower called “Ovid- ius” built by the Genoese here. Uskumruköy, with its garden restaurants and tea gardens, is only 9 kilometers from Sarıyer. ------COMMENTARY Erdogan’s Meeting with Obama: What Should We Expect? Monday, 7 December 2009 usak publications www.hurriyat.com Kaitlin Mackenzie ------Turkish Prime Minister Recep Tayyip Erdogan is set to visit the White House today, December 7, to meet with US President Barack Obama. This meeting comes at a key time for both countries: Washington is seeking to continue its “strategic partnership” with Ankara and Turkey has recently faced a barrage of accusations that it is turning away from the West. As such, a face-to-face meeting between the countries’ leaders raises questions as to what items will be on the agenda and what, if any, progress will be made. Turkey and the US have both welcomed new voices in their governments this past year, with the inauguration of Barack Obama and appointment of Ahmet Davutoglu as Turkish Foreign Minister being the most noteworthy of these changes. The new US president had hoped to usher in a new era in Turkish-US relations, which had soured during the course of the Bush years, and had hoped that his auspicious speeches given in Ankara and Cairo would aid in renewing the countries’ partnership. Only a few months after Obama’s inauguration, Ankara named a new Foreign Minister: Ahmet Davutoglu, an international relations professor and former foreign policy advisor to the prime minister, whom many credit as the architect of Turkey’s new foreign policy. Both men have received praise, as well as criticism, for their approaches, though for markedly different reasons. Turkey’s foreign policy has, over recent years, become more open to its eastern neighbors, and Turkey’s political and economic ties to neighboring countries have soared. Past administrations had focused nearly exclusively on Turkey’s relations with the West, while the current administration has gained notoriety for the attention it has paid not only to its neighbors, but also to fellow Muslim majority states. Such a shift has engendered much discussion, both in Turkey and abroad, of what many

90 observers claim to be a reorientation in Turkish foreign policy. Charges that Turkey is turning its back on the West and embracing the East have widely circulated, though Erdogan and Davutoglu have been quick to defend their policies and reiterate the importance and immutability of Turkey’s relationship with the West. Meeting amid such frenzied speculation regarding Turkey’s foreign policy, Erdogan and Obama will surely touch upon the issue of Turkey’s trajectory, for its implications are wide ranging. Over the past few months, a string of decisions made by Ankara have drawn Washington’s attention and not necessarily in a good way. Philip Gordon, assistant secretary of state for Europe and Eurasian affairs, recently stated that there are currently" more points of disagreement than of agreement" between Washington and Ankara. Gordon is most likely referencing Turkey’s relations with Israel and Iran, as well as domestic Turkish issues of which Washington is wary. There are also rumors of the Erdogan administration’s alleged “secret Islamist ideology”, which detractors have claimed is the true motivation behind the Turkish government’s increased relations with its neighboring states. However this may be, Washington has given Turkey credit for its steps to mend diplomatic fences with Armenia and has long praised Ankara’s increased economic and diplomatic ties with countries with which the US has much less stable (if any) links, such as Syria, Iran, and Iraq. This position has allowed Turkey to play the role of “honest broker” between Washington and Damascus, or, as recently witnessed, between Washington and Tehran, though the Ankara-Tehran relationship is not entirely viewed in a positive light. Furthermore, Mr. Davutoglu has repeatedly explained his government’s reasoning behind its actions, referred to as the “zero-problems-with-neighbors policy”. Due to Turkey’s geographical location, with several problematic countries sharing its borders, Ankara argues that its position in this “troubled neighborhood” warrants increased diplomacy and economic integration. Such ties aim to decrease violence and improve the domestic conditions of Turkey and its neighbors, which aids regional stability. Ankara argues that it has pursued these policies to serve Turkey’s national interests and that ameliorating its regional situation is not mutually exclusive from its Western friendships and alliances. Although Turkey-US relations have had their ups and downs, Ankara and Washington face many of the same foreign policy issues today. This especially true considering Obama’s recent decision to send at least 30,000 more troops to Afghanistan. As a NATO member and a country trusted by the Afghani people, Turkey is a key partner for the US in Afghanistan, and Obama is surely aware of this fact. Indeed, US Ambassador to Ankara James Jeffrey has confirmed that President Obama has requested more Turkish troops be sent to aid the NATO alliance in Afghanistan. It is speculated that Washington will ask that Ankara be flexible both in terms of the number of troops sent as well as their allocation. Turkey has already deployed roughly 1,750 peacekeeping troops to Afghanistan, but the US had hoped that Turkey would agree to play a larger role in the conflict. But, speaking before his trip to Washington, D.C. on Sunday, Erdogan stated that Turkey has already sent the “necessary number” of troops. He continued to say that “For the moment, we have done what we had to do [in Afghanistan]; our contingent of soldiers is at a useful number.”[i] Some observers expect Obama to touch upon Turkey’s relations that run contrary to US interests, such as Turkey’s relations with Israel in light of the cancelled military exercise

91 and criticism of the Gaza situation, or perhaps bring up Turkey’s invitation to Sudanese President al-Bashir, which received an outpouring of criticism. Also to be considered is Washington’s growing unease with the familiarity and support shown by Erdogan towards Iran. In the domestic arena, the US has been carefully watching the Ergenekon trial and the government’s handling of the media. Regarding media freedoms, US officials have closely followed the situation of the Dogan media group, against which the government levied a $2.5 billion fine; the media conglomerate is known for its opposition to the AKP government and claims the fine is politically motivated. But, despite these possible issues of contention, it seems more likely that President Obama would avoid matters of disagreement and would instead focus upon matters of agreement. With Turkey playing a key role in the region, especially in Afghanistan, the US is hesitant to chastise such an important ally. Turkey’s influence has grown substantially over the past seven years, and is not going to be receptive to what it views as a bossy or demanding attitude from Washington, as was witnessed when Turkey refused to allow the US to use Incirlik air base to open up a northern front in the Iraq war. Whether Washington attempts to use its support of Turkey’s EU membership or the Armenian issue as leverage against Turkey remains to be seen, but Obama is respectfully aware of Turkey’s importance and independence, and seems unlikely to risk straining Turkish-American relations. Though Ankara maintains that its NATO membership is its “strongest alliance”, its rebuttal of anti-Western dealings has been more nonchalant than frantic, and strong anti- American sentiments are still a force to be reckoned with inside Turkey. The following days should prove to be an interesting indication of the road that lies ahead. ------It's Time for the DTP to Pull Itself Together Friday, 11 December 2009 Prof. Dr. Ihsan Bal Director of USAK Center for Security Studies Translated by Gamze Coskun Edited by Kaitlin MacKenzie ------Turkey has been witnessing severe clashes in the streets since last week. In various cities, that DTP has directed groups of people, mostly children, to set fire to banks, stores and busses and attack everyone and everything. Why do they use such a method? Why is this method – contrary to the explanations of DTP – totally different from the situation encountered in Izmir? The street demonstrations reflect the desire to create both an anarchic and chaotic atmosphere. While some do not care about hurting people in the street that are unrelated to the incident, these actions are still being rationalized as a way of seeking justice, as well. Above all, Turkey’s illness of resorting to the use of violence in order to seek justice has to be left behind. What happened to the sayings about founding the future Turkey by integrating grievances with hope? Where are the people chasing after the unidentified murders while damning the Diyarbakır Prison? Isn’t it necessary to have a principled stance rejecting the use of violence as a means? The understanding of “if the person who

92 uses violence in Turkey belongs to my group then it is a justified action, but if he is not then it is unjustified” is not only an unprincipled move but also it palls. If there are ones saying “No, we reject all these” in such an environment sincerely providing easy access to different social and political channels varying from parliament to media, and arts for seeking justice, then it can be called an imposition of bullying and violence to the society. The method of pushing for the improvement of the conditions of Ocalan’s prison cannot turn the streets into hell. The method of eliminating the barriers against Kurdish language is not threatening, blackmailing and terror, either. Citizens ought to act in line with democracy like demanding the Higher Education Council (YOK) open departments on Kurdish as Mardin University did or providing Kurdish plays in theatres as Van Theatre did with the allowance of the Ministry of Culture. It has to be known that Turkey is running out of patience against the people who try to mix the bad with the good and to create trouble by taking advantage of every opportunity. In short, we have to know that we cannot impose our secret agendas on society by testing their patience. If the politicians really think that they lack the power to stop the street unrest, then the state should use its authority within the framework of laws. Yet, some of the DTP members declare that all these actions are democratic reactions. If throwing stones at a DTP convoy is seen as a “fascist attack”, how can the violent actions of the organization- directed youth in other parts of the country be interpreted as a “democratic reaction”? The real point to be agreed on is that the road going to a powerful democracy and a strong rule of law based on human rights mainly passes through bettering the system in sync. Sharing the grievances of the past does not mean transferring the habits of yesterday to today. There cannot be any excuse or reason for using violence in Turkey anymore. No one should be under the illusion that the problems can be solved or concessions can be made by resorting to violence. In today’s Turkey, no “secret” agendas can be kept secret, and it can be observed that the ones who hide behind the violence or do not share the grievances of the Kurds panic more and more every passing day. Lately, some of the attitudes of defending the provocations as “democratic reactions” are noticed by Turks and Kurds. The period of letting some people, who forget that they live in a more transparent country, take advantage of the situation is left behind. ------The New Middle East Wednesday, 9 December 2009 usak publications Sedat Leciner ------A period ends in the Middle East, and with Turkey, a new term starts in the region. It is unknown how aware Turkey is of this but the Turks destroyed the old order in the Middle East, or rather disorder, established after the World War I, and a new period based on communication, more interrelation, and cooperation emerged in its place. When the distrust in the region towards Turkey is eliminated the improved relations with Turkey also contribute to the elimination of distrust between the other countries in the region.

93 The first step of the change was taken with Syria. Syria is one of the main actors in Lebanon and Palestine issues, it is at the heart of . Because of the regime rivalry and long border with Iraq, Syria is also influential on Iraq. Its alliance with Iran is also a cornerstone of balance in the Middle East. The Iran-Syria alliance draws reactions from the Sunni “bloc” of Jordan, Egypt, and Saudi Arabia. As a result of these formations of sectarian blocs, the tendency to invest on the tensions and tension-related conflicts increase. Syria is important not only for Iraq, Lebanon, Palestine, Israel, Iran, Egypt, and Saudi Arabia but also for the other Arab countries because Syria has become the most important country in the shift in the anti-Turkey perceptions of Arab countries. Syria had made an effort to create anti-Turkish sentiments in Arab countries, and to take the water conflicts to the agendas of other countries in order to give Turkey a bad name for years. In short, Turkey made the right decision by choosing Syria first as a step towards resolution of the problems in the region. As the relations with Syria improve, and even reach a strategic level, the relationship serves as a model for the other Arab countries. In every Arab country that Turkish officials visit, they are met by the same question: “What does Syria have that we do not?” The 1-3 December 2009 Jordan trip of President Abdullah Gul is one of the obvious examples of this influence. The effect of the Syria example on Jordanians had a positive impact and led to the important changes in how they see Turkey, and with this confidence it has become possible to enter into vital agreements. In the same way, thanks to Turkey’s improving relations with Syria, Turkey has been mentioned positively at the international formations like the . The Arab League countries for example, which were always busy with contending with Israel and Turkey in the past, supports Turkey in nearly any platform now. This support even appears as backing Turkish candidates rather than Arab candidates in some international platforms. In this context, we also see the rapid change in the negative image of Turkey in the Arab media. For instance, the Arab caricaturists who used to draw Turkey in a negative way have started to draw Turks and Turkey with a positive image. Thanks to the improving relations with Syria, Turkey can also influence Lebanon, and thanks to its gaining credit in the eyes of the Lebanese, it can influence Syria in return. With the help of prestige it gained, Turkey can moderate between countries like Syria and Saudi Arabia that have an on again off again relationship, and in the same way it can moderate between Iraq and Syria when necessary. Nearly all the Arab countries want to improve their relations with Syria, yet, its connection to Iran and unnecessary arrogances hinder it. Here, the role of Turkey comes into the play. Syria is an easily accessible country for Turkey. Bashar al-Assad counts on the sincerity of Turkey and does not reject its requests. This strengthens Turkey’s hand in terms of the countries having something to do with Syria, and establishes the road for new relations. Actually, a Turkey with close relations with Syria provides important benefits even for a ‘wise Israel’. In the same way, a Syria shifting from a radical line to a moderate line may even work for the benefit of the U.S. The same applies for Abdullah Gul’s last Jordan trip. Jordan strongly wants to improve its relations with Syria, but Turkey’s assistance is inevitable in a way because of the serious distrust and lack of communication between Jordan and Syria. Jordan wants Turkey to be a facilitator between these two countries, and it also demands the formation of a permanent business council between the three countries.

94 *** Another reflection of the improved relations with Syria is seen in textbooks of the Arab countries. The Arab world, starting with Syria, has eliminated the anti-Turk statements in the textbooks. The Arab children who grew up nearly as enemies of Turks just a short time period ago face less slander and fewer aspersions, and eliminations still continue. For instance, Jordan newly started this. This process started with Syria and spread to other Arab countries. One more thing is that the current experience which shows the Arab people and Arab leaders that the things learned about Turkey were so wrong. Turkey’s hard warnings to Israel in its wars with Lebanon and Gaza, defending the rights of the Palestinians more than any Arab countries, the Davos Incident, the 1 March Resolution and many other moves proved to Arabs that the Turks were different from the image that they had in their minds, and it showed that Turks were not different from themselves. By seeing honored and powerful Turkey have the ability to say “no”, they saw the possibility of also being able to do that. Turkey’s ability to be both a country that seeks for cooperation, permanently using the jargon of peace and that gets tough when necessary, openly criticizing the wrong things both surprises and pleases the Middle East. Thanks to these developments, Turkey attracts a great deal more attention in the Middle East than it ever has. When you say that you are Turk, the doors open more and more. The interest in Turkish increases day by day. Arab youths try to learn Turkish. Turkish cultural products, such as Turkish serials, are in demand. It can be said that the Turks are now on the list of new heroes for Arabs: Not only Muhannet (Kivanc Tatlitug) of the serial Nur (‘Gumus’ in Turkish), but Prime Minister Recep Tayyip Erdogan is also one of the heroes of the new Arab youth. It is impossible to see the increasing friendly atmosphere in the street. But the most pleasing thing is that Turkey excites the administrators as well. Syrian Head of State Assad and his family do not leave the championship in this to anyone. Turkey is the second to be addressed according to Assad and his family. Assad family’s relations with the families of President Gul and Prime Minister Erdogan are beyond the conventional family friendship relations between leaders that we see from the West. Yet, the interest of leaders towards Turkey is not limited to Yet, the interest of leaders towards Turkey is not limited to Assad only. Even the Egyptian administration’s frosty stance towards Turkey coming from the past is changing slowly. The Egyptian head of state and prime minister make speeches which praise Turkey to the skies. The leaders of Lebanon, Saudi Arabia, Libya and other regional countries praise Turkey in the media, which is something extraordinary. The Turkish Flag is Everywhere The most significant thing that occurs during the Turkish leaders’ trips to nearby regions is that the Turkish flag is flawn everywhere throughout the streets. We witnessed it in President Gul’s Serbia trip in October 2009. The Serbian officials, who refrained from displaying the U.S. flag, flew the Turkish flag in nearly every part of capital Belgrade. The Turkish delegation was hosted with a first class protocol and the relations improved with a speed beyond anyone’s expectations. As it is said, only the Russians are treated like this. The President of Serbia indicated that they would like to see Turkey as a strategic partner. This attitude towards Turkey is worth paying attention to Turkey is seen as a historical enemy and has recognized Kosovo.

95 In the same way, during Gul’s last visit to Saudi Arabia, Riyadh was decorated with thousands of Turkish flags – perhaps the first time the capital has so prominently displayed another country’s flag. Not only in passageways but also nearly all the main streets of the entire city, there were thousands of Turkish flags. There were so many flags that some of them remained in place for a while even after the trip. The same happened during the trips to Syria. During Foreign Affairs Minister Ahmet Davutoglu’s trip to Syria concerning the lifting of visa requirements, there were lots of flags not only in Halep city but also in all places till the Turkey border. During his Jordan trip, I myself saw people who took the flags as a keepsake. In short, no one is scared of the Turkish flag anymore, and no one refrains from decorating his/her capital or home with it. When a man in the street or intellectuals see a Turkish flag, it reminds them of a country that pursues honored foreign policies with the West, and people who try to establish friendly and constructive relations. In other words, the Turkish flag, with Turkish people, returns to the countries which it left. We should not underrate the flag. It symbolizes the recognition of one country by another and the trust, love and respect towards that country. One of the wise leaders of the Central Asia who realized this truth said to one of the high level Turkish officials “For the first time after the Ottoman Empire, the Turkish flag has started to stream in all over the Islamic world.” It is a just statement. In the Ottoman geography, the prejudices towards the Turkish flag are being eliminated and trust supersedes the prejudices in Muslim countries, in close or neighboring countries, and even in distant countries in Africa. This is a significant development for the foreign affairs of a country. Being capable of achieving such an active foreign policy without making huge mistakes and arousing respect in every countries in the same way is something to be appreciated. It can be said “it is good to have friendly communication and love but what benefit will we gain from it?” There are lots of benefits to be gained from it. Turkish companies have fine prospects before them in economic terms. We are at the beginning of a long road concerning investments, tourism and trade. The improving warm environment has significant contributions even to political affairs except from the contributions to the economic and social relations. For example, there seems a U-turn in the attitude of Egypt, which accepted Greece and Greek Cypriots as the main parties in the Eastern Mediterranean till a short time ago. Now, they discuss the Eastern Mediterranean not with the Greeks but with Turkey. There had been intensive discussions on topics such as sharing oil explorations in the sea with the Greek Cypriot Administration. Significant progress has been made in the negotiations between high level Turkish and Egyptian military officials. There are lots of political gains as such. Shortly, the progressing relations do not remain at the level of friendly communication but they also provide economic, social and political gains. Cooperation instead of Competition In this sense, an atmosphere of cooperation is superseding the competition of the past. The competition of the past between Turkey and Egypt, Turkey and Iran or between other countries is rapidly being dissolved. The countries which experience that Turkey does not have a secret agenda witness that Turkey does not aim at competition surprisingly and happily. Certainly, Turkey and Syria's becoming closer has played a significant role in this process.

96 Turkey showed the Middle Eastern countries the meaningless of competition and the waste of resources used against each other. Countries that enter into relations with Turkey easily understand that without coordination and self-made efforts, such competition only works for the benefit of outsider countries. Briefly, the Middle East is changing, and the old understanding, the accordingly old (dis)order are being abolished. The language of communication is not the language of conflict, but is becoming the language of reconciliation. As a consequence, a culture of conflict is being transformed into a culture of cooperation. Probably, after a long time period, Turkey will determine its own fate. ------From the Bosphorus: Straight - Energizing a smart debate on energy Thursday, December 10, 2009 USAK PUBLICATIONS ------While the details remain dim and unfocused, we see a special and unique role emerging for Turkey in the global debate unfolding in Copenhagen on climate change. A glance through yesterday’s Hürriyet Daily News & Economic Review reveals a few observations: Global energy use, which will be down a bit when all the accounts for the crisis year of 2009 are in, will quickly resume its consumption-based march upward. Demand will increase by at least 40 percent by 2030, according to the International Energy Agency. In Turkey, the percentage increase will be dramatically greater. There is just one challenge: The needed increase in oil production over that period will be equivalent to four times the current production of Russia. Turkey, if it can lose the mind-bending shackles of entrenched bureaucratic thinking and acting, has a significant hand to play in this energy game. Obviously, the country will be a critical transit hub in just about any scenario one can contrive; some accounts estimate 8 percent of the world’s carbon-based energy will be transiting through Turkey in less than a decade. But the emerging scramble for alternatives, driven by the dire concerns of climate change, is an area where Turkey wields a serious hand of cards as well. As negotiators in Copenhagen yesterday were hearing visions of electric cars and smart grids, it is instructive that an international conference on wind energy was wrapping up in Istanbul. Windy Turkey could well become a major world center of wind-energy production within five years, predicted Alexis DeBeaumont, vice-president of the energy firm Alstrom. We would note that Turkey has a similar potential in geothermal and hydroelectric resources, even nuclear. This, of course, assumes that we can summon the discipline to execute projects in this realm intelligently and selectively, without the environmental destruction that has been Turkey’s track record to date. In short, Turkey will be a laboratory for the planet’s new and complex energy vision; or, alternatively, it might well serve as a template for short-sighted destruction. Even more important than this physical resource base, we think that Turkey has an intellectual and moral resource base that should be part of climate-change salvation.

97 No country has the credibility of Turkey to bring together the poles of opinion between developed and developing countries. Just who should pay was yesterday’s debate in Copenhagen. Soon, other little-considered questions will arise: Who is responsible for the carbon footprint of a T-shirt manufactured in Sri Lanka? The factory in Colombo that produces it or the consumer in Paris who will be wearing it? This is an area of the carbon-trading debate that has yet to be discussed. Turkey has deep interests and experience in both camps. This resource should not be neglected in any discussion of Turkey’s energy future. ------PKK and Öcalan are on the safe side Thursday, December 10, 2009 MEHMET ALİ BİRAND HURRIYAT ------When I was in Washington I talked to U.S. authorities specialized in terror and to authorities of the northern Iraqi administration in the U.S. capital about recent PKK initiatives. Their judgments based on intelligence from Turkey and northern Iraq were very interesting. What I heard is in accordance with some of our own interpretations. According to specialists, what’s happening is nothing but a struggle of the PKK and Öcalan to be on the safe side. “Demonstrations and the recent attack are very typical. Steps taken by the government or the fact that Öcalan’s cell has been reduced by a few square centimeters is not the real reason. The chaos stirs from within the organization and its leader,” says the expert, adding to his words that this situation will continue. They draw attention to differences in opinion within the PKK and believe that the democratic initiative has done harm to the organization that came to a point of losing its control. Just the same is true when people put forth that Öcalan provokes demonstration because he faces danger of being excluded from all. Sources in the northern Iraqi regional administration draw attention to tension within the PKK. A source known for its closeness to Barzani stated that the only way the organization could erect itself again is by increasing attacks and demonstrations, which he says will continue in the period ahead. American sources even say that conflict within the PKK has entered a dangerous period and if the pace continues, then Kurdish-Turkish fights will be widespread. They say, “The PKK and Öcalan don’t exactly know what to do. There is a serious lack of dialogue. And there is also a difference in opinion between Kandil and Europe,” and add that this does not seem to end any time soon. General evaluation is in the lines of PKK trying to postpone the democratic initiative project at least for a while and solve internal problems in the meantime. American sources believe that the PKK has been affected by this initiative but they also say Erdoğan should not stop this process. [HH The closing of DTP will relief the PKK very much One other development followed carefully from Washington is the decision of the Constitutional Court expected today regarding the DTP.

98 Almost all observers agree that in case the party will be closed the PKK will be the one to be pleased much. It will then turn to its own public and say that Turkey does not even want Kurdish-origin people in Parliament and thus it will have a reason to accelerate organizing demonstrations. If we were to pay attention, President Obama after his meeting with Erdoğan during his statement in the Oval office said that he opposes a closure of parties. And the prime minister also during his statement to the press said: “We don’t want parties but people to be punished. Closing parties won’t lead us anywhere.” This approach you’ll find in surroundings that follow Turkey closely in Washington. And that is why the decision of the Constitutional Court is expected with much curiosity. In case of closure all accounts need to be recalculated and a new deck of cards played. One of those awaiting the decision with much curiosity is the PKK. According to those watching the organization closely, the PKK is fed up with difference in opinion within the DTP and is looking for a new party and members that will strictly obey. The only complain the PKK has regarding the DTP and the only mutual point between those who say the PKK can’t control the party as much as it wants to and those who oppose this view by saying the organization fully controls the DTP is that it has entered a period of reorganization. Authorities of the northern Iraqi Kurdish administration in Washington put forth that the PKK will come to an intersection where they might split internally but this will shape up only after the decision regarding the DTP has been made and after steps have been taken by the AKP. ------What did they discuss? Thursday, December 10, 2009 BARAK BEKDIL HURRIYAT ------President Barack Obama: “Welcome, Mr. Prime Minister. It’s great to see you. But I must say I don’t quite understand why you insist everyone else should leave the room.” Prime Minister Recep Tayyip Erdoğan: “Shhhhh, Mr. President … That man …” President: “Which man?” Prime minister: “The one who is disguised as my ambassador. … I don’t trust him. We suspect that he could be a terrorist.” President: “A terrorist!? Your ambassador?” Prime minister: “Yes. Our security services spotted him having exchanged greetings at a dinner party with a general now prosecuted for plotting a coup. That general is a wicked man, and so cunning. He waited for his retirement to stage the coup. His gang even had hand grenades!” President: “I know your country is amazing, but I don’t quite get its complexities. Grenades for a coup? Why not tanks while on active duty? But anyway, we are alone now.” Prime minister: “Thank you, Mr. President. We’ll soon appoint a new ambassador. He is familiar with your country. Actually, he resides in your country. You’ll love him! Open up any credible dictionary, find the entry ‘interfaith tolerance,’ there you’ll see his cute

99 picture smiling at you. But I am here to discuss things of more importance. Did you know that you and President [Mahmoud] Ahmadinejad are in fact personal friends?” President: “Personal friends? Ahmadinejad?” Prime minister: “Yes. It’s simple. I am your personal friend. And he is mine. So, he is a personal friend of your personal friend. You see? He is your personal friend, too. Smile, Mr. President! Ahmadinejad sends his best regards to you. He even sent you a fabulous nuclear carpet. … Errr, a silk carpet …” President: “But his nuclear program is of international concern.” Prime minister: “President, have no concern. Muslims don’t build nuclear weapons. And they don’t commit genocide. Which brings me to another subject. … I loved your creativity when you said, ‘Meds Yeghern’ in April. That was smart. But be reasonable. You have Muslim relatives. Did they commit any genocide? No. You see, Muslims don’t commit genocide.” President: “Prime minister, you don’t understand. This is not a matter of faith. I am convinced that …” Prime minister: “One minute, president! It’s the Jews who know well how to kill people. Muslims don’t kill.” President: “Prime minister, please stop categorizations based on faith.” Prime minister: “The Swiss are learning how to kill, too. They have banned our bayonets. … Err, our minarets. That’s worse than killing. What times we are living in. No tolerance for other faiths. …” President: “Why don’t you set a good precedent and open the Orthodox seminary at Halki?” Prime minister: “Oh, but you said it. That seminary is not Muslim, so it doesn’t count.” President: “Oh, prime minister! Let’s change the subject. Afghanistan …” Prime minister: “Ah, that’s another Muslim country!” President: “I know, prime minister. We were wondering if your military could …” Prime minister: “But our military is Muslim too. Forget combat troops. Muslims don’t combat Muslims. But I have better news for you. Our Muslim brothers have asked me to convey a message to you. If you bomb Israel they might consider forgiving your country’s past sins.” President: “Bomb Israel!?” Prime Minister: “Just a few sorties. … Besides, we need your assistance to fight the PKK [Kurdistan Workers’ Party]. We want U.S. combat troops to be stationed in Diyarbakır, Tokat, Mersin, Adana, İzmir, Istanbul, Antalya, Ankara and a few other cities. Why are you looking at me like that?” President: “Look, prime minister, all this is nonsense and none of this should fall into the public domain.” Prime minister: “I cannot promise that. We have a free press. And I understand your country is well behind our democratic standards. For instance, would it be possible in your country if a businessman wants to buy the country’s second-biggest media company but does not have the money to buy it, and, hey presto, suddenly two government banks rush to his aide and give him the money. You see how much we care about press freedoms in our country? All you have to do is hire my son as your CEO.” President: “But the multiple-billion dollar tax fine on some media companies that you declared hostile …”

100 Prime minister: We have a perfectly liberal system. Journalists have every liberty to criticize my government. It just comes with a small price tag. … But you see, it’s in the spirit of capitalism. There is no free lunch. …” President: “ … ” Prime minister: “Now we should go out and have our press conference. Remember to smile. … Hey, what are we having for lunch?” ------BUSINESS AND POLITICS IN THE MUSLIM WORLD GULF COOPERATION COUNCIL NEWS MONITORING REPORT MADIHA KAUKAB 5th Dec to 11th Dec 2009 PRESENTATION DATE: 16th Dec 2009

Following news monitoring report is based on the important political, social, economic and Geo-strategic events occurred in Gulf Cooperation Council States along with a short summary of the report. Following report also contains a brief economic overview of GCC . OUTLINE

Summary (P # 4)

GCC (P#6)

o US seeks additional manpower from GCC in new Afghan strategy o One million Somali refugees living in Yemen - official o Unified policy needed for cheaper drugs in GCC o GCC parliamentary action meets with cooperation goals: Kharafi o GCC heads of parliaments issue final communique o Palestine, Iraq top priorities for GCC summit in Kuwait o Arab countries flop on human rights: Report o Iranian president calls for promoting ties among Gulf states o GCC nuclear cooperation reflects Gulf cohesion - study o GCC women conf. an opportunity to discuss major issues: Kuwaiti MPs

Economic Front

o Unified GCC currency could become reality in Kuwait: Ahmad Al-Sabah o GCC has among the lowest total tax rates: PwC o Gulf petrochemical industry hit by India, China: Sabic o GCC plans $ 60bn railway project o Most Gulf stocks hit milestone lows; Dubai tumbles

101

SAUDI ARABIA (P#13)

International Front

o Clinton and Saud al-Faisal discuss Mideast peace, Yemen o Saudi 'deplores' Iran charge of kidnapped scientist o Navy destroys 2 boats smuggling arms Saudi-Yemen borders o Saudi forces stop Yemen rebel offensive on border

Social Front

o Jeddah flood toll reaches 113 o Saudi Arabia 'will have 20% more rain this year' o Saudi Shoura Council wants flood plans prepared o Death toll in Jeddah floods higher than declared o Trust in climate science shaken, says Saudi Arabia

Economic Front

o Saudi market to reopen amid Gulf uncertainty o Saudi Arabia's GDP set to rise by 3% in 2010

UAE (P#16)

International Front

o Abdullah bin Zayed receives Egyptian FM o UAE and Armenia sign MoU for combating human trafficking o Iran, UAE sign 5 documents for cooperation o UAE, US discusses cooperation

Social Front

o Dubai to set up human rights centre in 2010

Science and Technology

o Abu Dhabi forum could boost plans for pan-Arab Space Agency

Economic Front

o Dubai remains financial and tourism hub: Analysts o Saudi banks' exposure to Dubai World 'very limited' o UAE stocks recover after Dubai debt crisis losses o Dubai Islamic Bank expands presence in Pakistan

102 o Dubai Financial Market achieves biggest gain since debt crisis

KUWAIT (P#19)

International Front

o Kuwait gives $ 1M to ILO for the benefit of Palestinians o Iran not invited to GCC summit

Political Front

o Kuwaiti MPs refuse to hold closed door grilling o Kuwaiti govt ready for grilling debates o Kuwait parliament grills PM over alleged corruption o Kuwait MPs file motion that could oust premier o Kuwait political turmoil worsens o MPs hail victory of Kuwait democracy o Supporters rejoice victory of Premier in Parliament: Kuwait

BAHRAIN (P#23)

Social Front

Drive to lower the voting age launched in Bahrain Bahrain 'facing climate threats' o New plan to fight climate change: Bahrain

Economic Front

o Bahrain's economic strategy review urged o Bahrain in major push to promote key events o Bahrain ready to back a GCC unified currency

QATAR (P#25)

International Front

o Qatar, France to sign pact on judicial ties o Qatar, Georgia hold talks

Social Front

o Qatar Labour Dept puts online tabs on law violations o Degree fraud worries Qatar health panel

Economic Front

103

o Qatar's $ 23b rail project to be completed in 2026 o Qatar inflation seen low, rates on hold o Trade between Qatar, Japan rises o Qatar tops world managerial spending index

OMAN (P#27)

International Front

o Oman-Egypt joint panel meets today o Oman, China to hold talks o Oman, Iran discuss ways of developing bilateral relations

Social Front

o New expat recruitment rules soon in Oman

SUMMARY

GCC The United States would appreciate contributions of additional manpower and personnel, both civilian and military, from the Gulf States as part of the new US strategy in Afghanistan and Pakistan, General James Jones, national security adviser to President Barack Obama.

As GCC health ministers begin their conclave in Riyadh today, pharmacists here expect their focus would be on simplifying registration procedures for drug firms and encouraging group purchases of medicines by private healthcare providers as well to bring down the prices of medicines.

The GCC heads of parliaments and shura councils wrapped up their two-day meetings here on Monday and issued their final communique. The communique reviewed the items discussed and approved which included the approval of the regulatory guidelines of the parliamentary and foreign relations coordination committee, review of a memo on 2009 activities by the GCC Secretariat, a report by Oman on its presidency over the previous session and activities during that period, and review of developments along the Saudi borders and support to the Kingdom's measures aiming to protect its sovereignty. The heads of delegations expressed hope the 30th GCC summit, due in Kuwait in mid December, would prove fruitful, and also expressed gratitude to Amir of the State of Kuwait Sheikh Sabah Al-Ahmad Al-Sabah for the invitations to attend the summit.

104 According to a report state of human rights in the 12 countries — Algeria, Bahrain, Egypt, Iraq, Lebanon, Morocco, Palestine, Saudi Arabia, Sudan, Syria, Tunisia and Yemen — “has worsened compared to 2008”.

Iran's President Mahmoud Ahmadinejad called on states of the Gulf region on Tuesday to expand cooperation and promote ties for welfare of the peoples of the region. The president, speaking during a meeting with the visiting United Arab Emirates Foreign Minister, Sheikh Abdullah Bin Zayed Al Nahyan, at the president's office in the capital, said Iran "sees no obstacle in the face of the approach to promote the cooperation with states of the region including the UAE." Expanding the cooperation among the states of the region "constitutes a factor for prosperity and progress," he said. The UAE official for his part affirmed Abu Dhabi's keenness on promoting the ties with Tehran.

The GCC members' peaceful nuclear cooperation unpalatably bespeaks Gulf cohesion and eagerness to beef up Gulf unity and prop up the regional economic development process, according to a recent study. It has become ineluctable for the GCC member states to go ahead with a peaceful nuclear program with the purpose of revamping development domains, primarily industry and agriculture, the study - compiled by Kuwait Institute for Scientific Research Information Section Chief Nader Al-Awadhi - indicated.

On economic front, the GCC has one of the lowest total tax rates (TTR) and simplest taxation compliance requirements worldwide for business establishments, said a new report by PricewaterhouseCoopers (PwC).

Saudi Arabia's top monetary official on Friday sought to reassure investors and play down the impact of Dubai World’s debts ahead of the first day of stock market trading in the kindgom since the news broke. "The group's (of Saudi banks) exposure to Dubai World is very limited," Muhammad al-Jasser, governor of the Saudi Arabian Monetary Agency, told Saudi-owned Al-Arabiya television. Markets in Dubai and Abu Dhabi extended losses on December 1, shedding 5.6 per cent and 3.6 per cent respectively. Stocks in Qatar, Kuwait and Bahrain all suffered steep falls after trading resumed on December 1 but have since stabilised. "There is no danger for the banking sector in the kingdom," Jasser said, adding it would be up to the banks to decide on provisions they may need in the future. Saudi Arabia's index is the best performing market in the Gulf region this year.

Dubai and Abu Dhabi stock markets recovered Sunday amid an apparent return of confidence, closing up more than one and almost four percent, respectively, after heavy losses over Dubai’s debt woes. Dubai's stock market closed 7 per cent higher yesterday, its biggest gain since the debt crisis exploded, and led by Emaar Properties after it called off a merger with state-owned entities. On the other side In a move to strengthen its international operations and capitalize on business opportunities in Pakistan, Dubai Islamic Bank’s fully-owned Pakistani subsidiary, has opened 10 new branches across the country.

105 On international front, Saudi Arabia said it "deplored" Tehran's charge that an Iranian nuclear scientist was kidnapped on a pilgrimage to Mecca and hauled off to the United States, a Saudi newspaper reported Wednesday. Foreign Ministry spokesman Osama Nugali told Asharq Alawsat that he was “stunned by the declarations and allegations” from Tehran, which he “deplored.” Nugali said that nuclear scientist Shahram Amiri’s disappearance had sparked an extensive investigation by the Saudi government. “After having been informed of his disappearance by the Iranian delegation (in Mecca), Saudi authorities undertook an intensive search in Medina as well as in all the hospitals in the region of Mecca,” Nugali told the newspaper. In the meantime, the Saudi Royal Navy has destroyed two boats smuggling arms in the joint waters of the Kingdom and Yemen on Monday. On the other side Saudi media declared that Saudi forces have repulsed Yemeni Shia rebels trying to seize a border village inside the kingdom, while fighting continued on both sides of the border.

Iran and the United Arab Emirates signed on Tuesday five documents for cooperation in various spheres namely law and commerce, Mehr news agency reported. Mehr said Iranian Foreign Minister Manouchehr Mottaki and the visiting UAE Foreign Minister, Sheikh Abdullah Bin Zayed Al Nahyan, signed the accords that stipulated cooperation in criminals' extradition, judicial cooperation in commercial issues, in addition to a memorandum of understanding for specifications and standards of traded commodities and products, as well as the minutes of the first meeting of the joint economic committee. Meanwhile, Undersecretary of the Interior Ministry, Lt. General Saif Al-Sha'afar and Deputy Secretary of Energy Daniel B. Poneman discussed matters of common interest and venues of cooperation between the UAE and the U.S Poneman is leading a delegation from the Department of Energy on a current visit to the UAE.

On social front, in Bahrain, a campaign has been launched for the voting age in Bahrain to be lowered to 19. The Hewar Society is spearheading the drive and aims to push through the law before next year's parliamentary and municipal council elections. Being held under the slogan 19@2010, it aims to encourage more young people to take an interest in politics and help shape the future direction of the country. Bahrain is at higher risk than most countries from threats such as rises in sea levels, Foreign Ministry director of bilateral relations Ambassador Dr Dhafer Alumran told delegates at Banyan Tree Desert Spa and Resort, Al Areen.

DETAILED REPORT

GCC

US seeks additional manpower from GCC in new Afghan strategy The United States would appreciate contributions of additional manpower and personnel, both civilian and military, from the Gulf States as part of the new US strategy in Afghanistan and Pakistan, General James Jones, national security adviser to President Barack Obama, told KUNA on Friday.

106 "I think one of the things that we will continue to be trying to change as much as we can is the degree to which we have a civilian surge, if you will, in terms of capacity," Jones said when asked by KUNA what the United States would most want from Gulf States as part of its approach to Afghanistan, Pakistan and the region. "So civilian contributions, experts on irrigation projects, experts on agriculture, economic experts that can help bring into reality a legitimate economy that is growing at a satisfactory rate, education experts to make sure that we try to reverse the severe deficit in education that Afghans have been subjected to as a result of the previous rule of the Taliban, both for men and women," Jones said during a briefing at the Foreign Press Center. "Those kinds of things are extraordinarily important". Jones said the United States also needs "in-kind contributions, financial contributions" to the Afghan national army trust fund and the legal trust fund, both of which are up and operating. The decision by Obama to set a timetable for US withdrawal from Afghanistan while simultaneously ordering 30,000 more troops to the county "did not mean that we will leave in 2011," Jones said. "It just means that that will be a transition point where we will be able to pull some of our forces back and turn over some of the responsibilities to the Afghans themselves".

One million Somali refugees living in Yemen - official Yemeni Human Rights Minister Huda Al-Ban said Friday that there are around one million refugees from Somalia living in Yemen which affects Yemeni economic and social status.

Al-Ban said in a press release that she will highlight such dilemma during her participation in the fourth International Conference on Human Rights, scheduled to start in Cairo next Sunday. The Yemeni minister called upon the international community to bare responsibility for such problem and ends the suffering of African refugees who arrive on a daily basis in Yemen through the sea.

Unified policy needed for cheaper drugs in GCC As GCC health ministers begin their conclave in Riyadh today, pharmacists here expect their focus would be on simplifying registration procedures for drug firms and encouraging group purchases of medicines by private healthcare providers as well to bring down the prices of medicines.

GCC states have for years been following group purchase policy for medicines for government healthcare facilities, but private medical centres do not enjoy this privilege, sources point out. Medicines are expensive in Qatar and the UAE, particularly since imports are not in as much bulk as in Saudi Arabia, for example, whose population is 26 million. Registration procedures are lengthy and cumbersome. For a medicine to eventually come on the Qatari market it can take anywhere between six months to a year or even two. Medicines here are classified into two categories: herbal and chemical. Registration rules are relatively simple for herbal medicine, yet for products of this group too to be on the market the time taken is not less than three to six months, say sources. It normally takes a month to register a pharmaceutical firm in the GCC and Qatar. Sometimes the twin registration (in GCC and Qatar) is automatic but on occasions, Qatar requires separate registration. Subsequently, the products are registered by the company

107 which takes another one to three months. The last stage—of eventually introducing the medicine to the market—is more time-consuming and can take up to six months to a year or even two. Sources point out that their experience suggests that group purchase of medicines by governments and private sector players can sometimes bring down the prices of a product by around five to seven times. A multinational pharmaceutical firm is required to have a local dealer in Qatar. Normally, the dealer charges 10 percent commission on wholesale supplies, while the retailer’s margin is 20 to 21 percent. Fortunately, the GCC Health Ministerial Council, which also has an executive office, has a long-term objective of encouraging specialist private hospitals to resort to group buying of medicines. And the key long-term aim of these states is to have their own pharmaceutical manufacturing units so even expensive medicines are within the reach of the common man, say sources.

GCC parliamentary action meets with cooperation goals: Kharafi The parliamentary action of Gulf Cooperation Council countries meets the goals set by GCC leaders in terms of bolstering cooperation and coordination, Kuwait Parliament Speaker Jassem Al-Kharafi said, addressing a GCC meeting Sunday.

The speaker was addressing the opening of the meeting of GCC heads of parliaments and shura councils which lasts for two days. The speaker said regular meetings must build on what the bloc accomplished this far and noted the current global situation requires utmost coordination to meet many challenges. Joint parliamentary action in particular showed marked improvement in institutional development and building, he pointed out, and particularly after the approval of the regulatory guidelines document in the previous meeting in Oman. Completion of this step requires approval of the regulatory guidelines of the parliamentary and foreign relations coordination committee during this current meeting, he stressed. The speaker pointed out that with completion of the foundation process, attention must now go into realizing goals and initiatives in that direction. Plans and projects must now be launched after dialogue which considers the particulars of the member states while aiming at the collective good. The speaker extended appreciation and welcome to GCC officials taking part at the meeting and added gratitude for currently serving as well as former heads of GCC parliaments and shura councils.

GCC heads of parliaments issue final communique The GCC heads of parliaments and shura councils wrapped up their two-day meetings here on Monday and issued their final communique.

The communique reviewed the items discussed and approved which included the approval of the regulatory guidelines of the parliamentary and foreign relations coordination committee, review of a memo on 2009 activities by the GCC Secretariat, a report by Oman on its presidency over the previous session and activities during that period, and review of developments along the Saudi borders and support to the Kingdom's measures aiming to protect its sovereignty. The heads of delegations expressed hope the 30th GCC summit, due in Kuwait in mid December, would prove fruitful, and also expressed gratitude to Amir of the State of Kuwait Sheikh Sabah Al- Ahmad Al-Sabah for the invitations to attend the summit.

108

Palestine, Iraq top priorities for GCC summit in Kuwait The Secretary General of the Gulf Cooperation Council said on Tuesday that next week’s summit in Kuwait would be “exceptional in the history of Gulf summits.”

Abdul Rahman Bin Hamad Al-Attiyah said that the meeting, to be held on Dec. 14 and 15, had at the top of its list of priorities Palestine and Iraq.“The summit will discuss political and regional issues, most notably the Palestinian Cause and the situation in Iraq, relations with Iran and its nuclear program, as well as security and military issues,” Al- Attiyah said. He said the preparatory meetings scheduled for the day prior to the summit’s commencement, the first of which will gather GCC foreign ministers, will set the summit schedule and program decisions before being passed on to state heads, while also putting the final touches on the closing statement and the summit’s Kuwait Declaration. A further meeting the same day of GCC foreign and finance ministers would prepare the economic issues put before the summit, Al-Attiyah said. The top GCC official added that other areas of discussion would include member-state cooperation in energy, commerce, industry, transport and communications, water and electricity, agriculture, planning, statistics, statistics and patenting.

Arab countries flop on human rights: Report The Peninsula December-09-2009

Human rights deteriorated across the Arab world in 2009 with torture widely practised in several countries, namely Egypt, an Arab watchdog said in a report released yesterday.

The report by the independent Cairo Institute for Human Rights Studies surveyed 12 countries and said that most of them repressed human rights activists, press freedoms and discriminated against religious minorities. The state of human rights in the 12 countries — Algeria, Bahrain, Egypt, Iraq, Lebanon, Morocco, Palestine, Saudi Arabia, Sudan, Syria, Tunisia and Yemen — “has worsened compared to 2008,” the report said. “Arab governments remained wedded to a broad array of repressive laws that undermine basic liberties,” compared to the previous year, said the report, “Bastion of Impunity, Mirage of Reform.” “Peaceful rotation of power through representative politics, and clean and competitive elections remained a dream in most countries covered by this report,” it said.

Egypt and Syria were singled out as leading offenders, with Cairo said to lead the region in practicing torture and Damascus for repressing rights activists. “Egypt continued to top the list of countries in which torture is routinely and systematically practised,” it said, adding that dozens had died in the country of torture or excessive force by police. The report also found torture was “routine” in Bahrain, “rampant” in Tunisia and practised in Saudi Arabia against terrorism suspects.

Iranian president calls for promoting ties among Gulf states Iran's President Mahmoud Ahmadinejad called on states of the Gulf region on Tuesday to expand cooperation and promote ties for welfare of the peoples of the region.

109 The president, speaking during a meeting with the visiting United Arab Emirates Foreign Minister, Sheikh Abdullah Bin Zayed Al Nahyan, at the president's office in the capital, said Iran "sees no obstacle in the face of the approach to promote the cooperation with states of the region including the UAE." Expanding the cooperation among the states of the region "constitutes a factor for prosperity and progress," he said. The UAE official for his part affirmed Abu Dhabi's keenness on promoting the ties with Tehran.

GCC nuclear cooperation reflects Gulf cohesion - study The GCC members' peaceful nuclear cooperation unpalatably bespeaks Gulf cohesion and eagerness to beef up Gulf unity and prop up the regional economic development process, according to a recent study.

It has become ineluctable for the GCC member states to go ahead with a peaceful nuclear program with the purpose of revamping development domains, primarily industry and agriculture, the study - compiled by Kuwait Institute for Scientific Research Information Section Chief Nader Al-Awadhi - indicated. Nuclear energy is an optimum approach to tide over many problems and to meet environmental challenges resultant from growing demand for energy, mainly climate changes, water scarcity, desertification and air pollution, according to the study, released for the 30th Gulf summit due in Kuwait between December 14-15. Furthermore, nuclear energy can act as an effective tool for cutting carbon emissions, easing out heat, generating electricity and finding other sources of national income, it said.

Included in a book to be issued by Kuwait News Agency (KUNA) under the title "Kuwait Summit and Gulf Ambition" on the occasion of the summit, the study pointed to an initiative tabled by Kuwait during the GCC summit in 2006 for a joint peaceful energy program. A key factor for the GCC members to acquire such a program is to produce a generation of scientists and technicians who can run nuclear reactors, it added. Although they abound in oil and natural gas, the GCC members need to adopt a joint project for electricity generation and water desalination through nuclear plants given continuously mounting energy consumption and population growth, the study justified. It is expected to take between 10 and 15 years to put a nuclear program in place, it said, quoting the International Atomic Energy Agency (IAEA).

GCC women conf. an opportunity to discuss major issues: Kuwaiti MPs The Fourth Regional Conference of Women Parliamentarians and Women in Political Positions of the Gulf Cooperation Council States is an opportunity to discuss major issues concerning women in the Gulf, Kuwaiti MPs said here Thursday.

All issues tabled in the conference revolve around women empowerment and national strategies aimed at developing legislative scope of women MPs, MP Dr. Masuma Al- Mubarak told KUNA on the sidelines of the conference. On her part, fellow MP Dr. Salwa Al-Jassar said that despite the fact that the experience of women MPs in Gulf States is limited in terms of time-span, yet it is rich due to relentless efforts exerted by Gulf women in gaining their political rights. The conference, which opened yesterday (Wednesday), is a pure Bahraini initiative that was launched in June 2006.

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Economic Front

Unified GCC currency could become reality in Kuwait: Ahmad Al-Sabah Kuwait's Oil and Information Minister Sheikh Ahmad Al-Abdullah Al-Sabah said Sunday that he expected crucial developments on the issue of the unified Gulf currency during the Gulf Cooperation Council Summit scheduled to be held in his home country later this month. During independence day celebrations at the Embassy of the United Arab Emirates in Kuwait, the minister expressed hope the vision of a unified GCC currency would come to reality on Kuwaiti soil, along with the joint electricity network plan. He also stressed the need for regional media to practice a constructive role in the coverage of events during the summit. Furthermore, Sheikh Ahmad congratulated the UAE President Sheikh Khalifa bin Zayed Al-Nahyan and his people on their independence day.

GCC has among the lowest total tax rates: PwC The GCC has one of the lowest total tax rates (TTR) and simplest taxation compliance requirements worldwide for business establishments, said a new report by PricewaterhouseCoopers (PwC).

The report Paying Taxes 2010: The Global Picture produced as part of the World Bank Group's annual Doing Business project, said GCC states are favourable for investment and business activities as they have amongst the lowest TTRs with the easiest compliance requirements worldwide. However, the report suggested the region needs further government reforms to maintain its leading position, and there was also a need for caution and planning for local companies investing overseas, as tax systems around the world can be more complex to deal with, in addition to multiple layers of taxation. According to the report, among GCC states, Qatar ranked second in the world as a tax leader, followed by the UAE in fourth; Saudi Arabia seventh; Oman eighth; Kuwait 11th and Bahrain stood 13th. Commenting on the GCC's performance, PwC Middle East Tax Leader, Dean Rolfe, who is also one of the authors of the report, said: "It is encouraging to see the Middle East achieve these results, and clearly highlights the attractive tax regimes that are currently in place in many jurisdictions in the region. The Paying Taxes 2010 project shows the GCC, and the Middle East more broadly, have competitive taxation systems that promote investment, business activity and economic growth." He said these results help explain why places such as Dubai have become such popular locations for international organisations doing business in the Middle East.

Gulf petrochemical industry hit by India, China: Sabic Petrochemical anti-dumping measures taken by India and China this year have interrupted the trade flows and hurt businesses in the Gulf region, chief executive of Saudi Basic Industries Corp (Sabic) said yesterday.

“During an economic crisis anti-dumping measures have been taken by many countries and companies as a form of protectionism which is affecting trade flows,” said Mohammed Al Mady during a conference in Dubai. “The Gulf has been affected by India

111 and China’s anti-dumping measures and we can’t wait till the World Trade Organisation issues something, action needs to be taken now.” Despite this challenge, Al Mady believed that market activity has picked up during the second half of this year and will continue in 2010. “It’s been a sluggish recovery, not what we had hoped for but we are seeing positive signs for next year.”

GCC plans $ 60bn railway project A $ 60 billion railway project to connect Saudi Arabia, Kuwait, Bahrain, Qatar, the UAE and eventually Oman will be on the agenda of the summit of the six-nation Gulf Cooperation Council (GCC) heads of state. On the political front, the GCC summit has a full agenda. GCC officials contacted by Arab News said that Iran would not be invited to the summit. Moreover, major regional issues, including Palestine, Iraq, Sudan and Somalia in addition to developments in Lebanon following the formation of the Cabinet of Prime Minister , will be discussed. The summit will discuss relations with Iran with special reference to the three occupied UAE islands, and the necessity of adopting dialogue to resolve disputes between neighboring countries. The summit will also address the issue of preserving Yemen’s unity, security and stability. The 30th GCC summit will see the inauguration of the GCC power-linkage project. The first phase has been finalized by linking Bahrain with Saudi Arabia, Qatar and Kuwait, the statement said. The second stage of the mega-project will link the UAE, Oman and the third, the intersection of the two networks. Another important issue that will be discussed is the creation of a unified currency for Bahrain, Kuwait, Qatar and Saudi Arabia. The GCC’s two remaining states — Oman and the UAE — have currently opted out of the monetary union. Kuwait’s Parliament unanimously ratified the Gulf monetary union pact on Tuesday. The pact, signed by four GCC members in June, stipulates the establishment of a joint monetary council next year. GCC Secretary-General Abdul Rahman Al-Attiyah said that Gulf leaders would discuss reports dealing with the joint Gulf market, launched in Doha in December 2007. Other matters to be addressed include equality, employment of nationals in the teaching and vocational sectors and other regional issues. Topics related to health, family and legislation will also be discussed with the aim of developing a common position in the GCC.

Most Gulf stocks hit milestone lows; Dubai tumbles Dubai's index slumped to a 21-week low yesterday as nervy investors sold stocks in the absence of any concrete news on Dubai World’s debt woes, while similar worries sent other Gulf Arab bourses tumbling to milestone lows. Dubai fell 6.2 percent to its lowest finish since mid-July and it has fallen 22 percent in the five trading sessions since Dubai World asked for a debt standstill as it attempts to sort out $ 26bn of debts. Abu Dhabi dropped 3.4 percent to a 31-week low, Saudi Arabia slumped to its lowest finish since mid-September, Oman returned to August levels and Bahrain hit a two-year low. UAE stocks collapsed in sluggish trading, with Emaar Properties, Dubai Islamic Bank and Arabtec all losing more than 9.8 percent. Qatar’s benchmark fell 2.1 percent to 6,984 points. Investment companies were the biggest losers on Oman’s Index, which fell to a

112 15-week low as investors fretted over firms’ possible exposure to Dubai’s debt crisis. “Oman has many listed investment companies that have money in Dubai, so investors believe they will be affected,” added United’s Nasr. Kuwait’s index made its largest one- day gain for four months after the country’s prime minister agreed to be questioned by parliament in what would be the first time the head of an Opec member country’s government would undergo the process.

SAUDI ARABIA

International Front

Clinton and Saud al-Faisal discuss Mideast peace, Yemen US Secretary of State Hillary Clinton discussed on Monday with Saudi foreign minister Prince Saud al-Faisal the middle east peace process and the situation in Yemen.

State Department spokesperson Ian Kelly told reporters that this meeting "is part of our regular, ongoing consultation with Saudi Arabia". "We expect that they will talk about ways to intensify our cooperation in Afghanistan and also Pakistan, talk about Yemen and ways to promote peace and stability in Yemen, and ways to promote and further a comprehensive peace settlement in the Middle East", he added. Faisal will also meet with US Special Envoy Mitchell for the Middle East peace process.

Saudi 'deplores' Iran charge of kidnapped scientist Saudi Arabia said it "deplored" Tehran's charge that an Iranian nuclear scientist was kidnapped on a pilgrimage to Mecca and hauled off to the United States, a Saudi newspaper reported Wednesday.

Foreign Ministry spokesman Osama Nugali told Asharq Alawsat that he was “stunned by the declarations and allegations” from Tehran, which he “deplored.” Nugali said that nuclear scientist Shahram Amiri’s disappearance had sparked an extensive investigation by the Saudi government. “After having been informed of his disappearance by the Iranian delegation (in Mecca), Saudi authorities undertook an intensive search in Medina as well as in all the hospitals in the region of Mecca,” Nugali told the newspaper.

Iranian Foreign Minister Manouchehr Mottaki on Tuesday accused the United States of abducting nuclear scientist Shahram Amiri, who went missing while on an umrah minor pilgrimage in Saudi Arabia earlier this year. “Based on existing pieces of evidence that we have at our disposal the Americans had a role in Mr. Amiri’s abduction,” Mottaki said at a press conference in Farsi which was translated into English by Press TV channel. “The Americans did abduct him. Therefore we expect the American government to return him.”

Navy destroys 2 boats smuggling arms Saudi-Yemen borders The Saudi Royal Navy has destroyed two boats smuggling arms in the joint waters of the Kingdom and Yemen on Monday.

113 Frigates fired at the boats when they tried to flee after refusing to stop for checks. Helicopters also participated in the chase. The boats exploded violently because of the arms and ammunition they were carrying. Both crews died before the navy could attempt a rescue operation. Meanwhile, the Saudi Armed Forces, which is continuing its operations against infiltrators near the Saudi-Yemeni border, has taken full control of the Dukhan Mountain in Jazan after disarming land mines placed there by militants.

Saudi forces stop Yemen rebel offensive on border Saudi forces have repulsed Yemeni Shia rebels trying to seize a border village inside the kingdom, Saudi state media said yesterday, while fighting continued on both sides of the border.

Saudi troops pushed back the rebels, referred to as “infiltrators” by state television, from the Jaberi village and killed an unspecified number of the insurgents. The report gave no further details. Saudi Arabia launched its assault on neighbouring Yemen’s Shia rebels — known as the Houthis — in early November after they staged a cross-border incursion that killed two Saudi border guards.

Social Front

Jeddah flood toll reaches 113 Jeddah witnessed light rain on Friday afternoon causing locals to fear a repeat of last week’s deluge and ensuing floods that immersed entire districts, destroyed thousands of cars and killed an unknown number of people.

Civil Defense and Director of Disaster Management Brig. Muhammad Al-Qarni told Arab News on Friday that the official number of flood victims stood at 113 and the number of missing increased to 48. Al-Qarni said that the committees formed to find housing for the victims managed to provide shelter to 5,104 families comprising 19,950 people. He said that the committee also distributed aid to 5,341 families comprising 20,729 persons.

The committee has also identified 6,488 properties and 5,812 damaged cars in the floods, he said. Al-Qarni claimed that as of last night only 120 homes in the flooded districts remained without power. More than 1,300 cars have been pulled out of the muck.

Saudi Arabia 'will have 20% more rain this year' The recent heavy rains and floods in some regions do not signify a major shift in weather patterns in the Kingdom, according to a scientist of climate studies in Riyadh.

“We have just witnessed an unpredictable weather phenomenon in Jeddah and it is not possible to predict what havoc such events would wreak. Thunderclouds breaking into heavy downpours as happened in Jeddah is an annual event in the Kingdom,” Nasser Sirhan, assistant professor of climate studies at the King Faisal College, said while speaking to media. However, the scientist added that a difference in the Jeddah rain last

114 week was the increase in the volume of rain compared to previous years and that too after a long dry spell, Al-Watan Arabic daily reported on Friday.

Saudi Shoura Council wants flood plans prepared The Shoura Council on Sunday urged all government departments to draw up strategic plans for dealing with floods and other natural disasters in order to avoid a repeat of the Nov. 25 flashfloods that devastated some districts of Jeddah.

“We should set out precautionary measures in order to prevent, with the help of God, a repeat of such catastrophes,” the 150-member consultative council said following its first weekly meeting since the Jeddah floods and the Eid Al-Adha holidays. The Shoura commended Custodian of the Two Holy Mosques King Abdullah for setting up a high- level committee to investigate the reasons for the calamity and also for the king’s ordering the payment of SR1 million to relatives of each person who died in the Jeddah floods.

Death toll in Jeddah floods higher than declared Arab News has learned that the number of victims of the Nov. 25 flash floods in Jeddah is higher than the official figure of 118 put out by the Civil Defense. The head of Jeddah Health Affairs, Dr. Sami Badawood, has told Arab News that his department had notified the Makkah Governorate and the Civil Defense of seven flood victims. Their bodies were handed over to their families for burial with the knowledge of his department before the Civil Defense set up its disaster management team.

Trust in climate science shaken, says Saudi Arabia Saudi Arabia told global warming talks on Monday that trust in climate science had been "shaken" by leaked e-mails among experts and called for an international probe.

“The level of trust is definitely shaken, especially now that we are about to conclude an agreement that ... is going to mean sacrifices for our economies,” Mohammed Al-Sabban, the Kingdom’s top climate negotiator, told delegates at the opening of the Dec. 7-18 UN talks. Al-Sabban called for an “independent” international investigation, but said that the UN climate science body was unqualified to carry it out. “The IPCC, which is the authority accused, is not going to be able to conduct the investigation,” he said, referring to the Nobel-winning UN Intergovernmental Panel for Climate Change.

Economic Front

Saudi market to reopen amid Gulf uncertainty The Saudi stock market faces selling pressure when it reopens today for the first time since the Dubai debt crisis erupted even though the kingdom has little real exposure to it, analysts said. Closed since November 25 for the Eid Al-Adha holiday, the Gulf's largest bourse could take its cue from sharp plunges in Dubai, Abu Dhabi, Kuwait and Qatar, said Paul Gamble of Jada Investment.

115 Those steep losses came after Dubai's government announced a six-month freeze on debt payments by Dubai World, a state-owned conglomerate whose 59 billion dollars in liabilities the emirate said it would not guarantee. Although up 32.3 percent since the start of the year on the back of buoyant oil prices and strong government investments, the market could easily succumb to the fears that sent the other markets reeling following Dubai's move. "The whole market could get whacked," said a Saudi-based foreign analyst who asked not to be named. But Saudi Arabia's oil export-based economy and its very inward-focused banks "just don't have those issues" that have hit Dubai hard, Gamble said. The (Saudi) banks themselves as far as we understand have minimal exposure" to Dubai generally and Dubai World specifically, he said. Gamble points out Saudi banks cannot fulfill the capital demands of the domestic market and so lend little outside the kingdom. The Riyadh government prevents most external lending in fact, said the head of one local bank. "If Saudi banks want to get cross-border exposure, they have to get approval from SAMA (the central bank) on a case by case basis. It's not that easy, he said. Saudi banks have not disclosed their exposure to Dubai entities, but Deutsche Bank estimates Gulf countries represent 3.3 percent of all their risk assets, with only one percent in Dubai. "The credit risk appears modest," Deutsche Bank said in a report. "We believe the downside risk from such exposures is therefore entirely manageable." Like Dubai, Saudi Arabia's economy is undergoing a massive construction boom.

Saudi Arabia's GDP set to rise by 3% in 2010 Saudi Arabia's real GDP (gross domestic product) growth is expected to increase by three percent in 2010 because of the Kingdom’s aggressive fiscal policy plan which emphasizes capital expenditure as well as indirect fiscal stimulus to the non-oil sector.

In a special report assessing implications of the global financial crisis for Saudi Arabia, the Jeddah-based Financial Transaction House (FTH) said the growth projections were based on a recovery in global demand and a higher oil production level. With Saudi Arabia’s real GDP growth contracting by one percent this year as a result of the marked fall in oil production levels, in addition to the expected slowdown of growth in the non- oil sector due to weakening private consumption and investment expenditures, the government investment expenditure in 2009 is expected to provide the largest contribution to growth. UAE

International Front

Abdullah bin Zayed receives Egyptian FM The Egyptian official described the Egyptian-UAE ties as excellent and historic due to wise directives of the leadership in the two countries. He added in a statement today, "no worries about the economic ties between the two countries and the UAE investments are successful in Egypt", indicating that he discussed with senior UAE officials the relations between the two sisterly countries. He emphasised that the UAE has strong relations with Egypt. Abul Gheit underlined that Egypt backs the UAE in its demands of three Islands occupied by Iran: Tunb Greater, Tunb Lesser and Abu Mousa. The Egyptian official

116 stressed that the Gulf region is vital to Egypt, adding that Egypt and UAE and other Arab countries "represent Arab depth". He added that there were joint committees among the Arab countries on coordination and cooperation. On Egyptian-Saudi relations, Abul Gheit said "our relations with Saudi Arabia are excellent and strong. We support brothers in Saudi Arabia and Yemento deal with dangers in the region. "Egypt fully supports them and hopes the crisis will come to an end soon". The Egyptian official said that "we have discussed the Iranian nuclear file and stressed the region should be not exposed to miscalculation that could affect the Gulf region. We call on Iran to pay attention on potential dangers in the region and heed the international vision to settle the nuclear file amicably without confrontation with West".

UAE and Armenia sign MoU for combating human trafficking UAE and the Republic of Armenia have signed a Memorandum of Understanding (MoU) to combat human trafficking. The MoU was signed by HE Dr Anwar Mohammed Gargash, Minister of State for Foreign Affairs of UAE and His Excellency Edward Nalbandian, Minister of Foreign Affairs of the Republic of Armenia. They also discussed current developments at regional and international levels and issues of mutual interest.

Iran, UAE sign 5 documents for cooperation Iran and the United Arab Emirates signed on Tuesday five documents for cooperation in various spheres namely law and commerce, Mehr news agency reported.

Mehr said Iranian Foreign Minister Manouchehr Mottaki and the visiting UAE Foreign Minister, Sheikh Abdullah Bin Zayed Al Nahyan, signed the accords that stipulated cooperation in criminals' extradition, judicial cooperation in commercial issues, in addition to a memorandum of understanding for specifications and standards of traded commodities and products, as well as the minutes of the first meeting of the joint economic committee.

UAE, US discusses cooperation Undersecretary of the Interior Ministry, Lt. General Saif Al-Sha'afar and Deputy Secretary of Energy Daniel B. Poneman discussed matters of common interest and venues of cooperation between the UAE and the U.S Poneman is leading a delegation from the Department of Energy on a current visit to the UAE. U.S Ambassador to the UAE Richard G. Olson, Jr. and Head of the International Cooperation Department at the UAE Interior Ministry Col. Jamal Saif Fares were present at the meeting.

Social Front

Dubai to set up human rights centre in 2010 A centre to raise awareness about human rights among the public will be established by the Dubai government next year, a top police officer said at a gathering to mark the International Human Rights Day on Thursday. The Dubai Human Rights Village will be a rights education centre and it will open in 2010.

Science and Technology

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Abu Dhabi forum could boost plans for pan-Arab Space Agency The three-day Global Space Technology Forum (GSTF) taking place here from December 7 is expected to accelerate the establishment of a pan-Arab space agency.

Apart from the reduction of satellite-launching cost, such an agency is seen by space experts in the region as essential to combine talent, information and technology among countries in the Middle East and North Africa, Rick Theobald, commercial director at Streamline Marketing Group, told? Khaleej Times here. The group is organising the forum at the Abu Dhabi National Exhibition Centre with official support from the UAE Space Reconnaissance Center, the Emirates Institution for Advanced Science and Technology and the UAE Society of Engineers.

Economic Front

Dubai remains financial and tourism hub: Analysts Dubai remains a regional hub for finance and tourism but must build up those sectors to replace the construction industry, analysts said.

Fears have mushroomed about the viability of its economy after revelations that its main state-run company, Dubai World, is struggling to meet debt repayment deadlines, spurring panic over a possible financial collapse. “Of course, this is not the bankruptcy of Dubai,” said Marwan Barakat, chief economist at Lebanon’s Bank Audi. “There is no other city in the region that has the same assets,” he told AFP, referring to Dubai’s infrastructure and to its success in becoming a regional centre for finance and tourism.

Saudi banks' exposure to Dubai World 'very limited' Saudi Arabia's top monetary official on Friday sought to reassure investors and play down the impact of Dubai World’s debts ahead of the first day of stock market trading in the kindgom since the news broke.

"The group's (of Saudi banks) exposure to Dubai World is very limited," Muhammad al- Jasser, governor of the Saudi Arabian Monetary Agency, told Saudi-owned Al-Arabiya television. Markets in Dubai and Abu Dhabi extended losses on December 1, shedding 5.6 per cent and 3.6 per cent respectively. Stocks in Qatar, Kuwait and Bahrain all suffered steep falls after trading resumed on December 1 but have since stabilised. "There is no danger for the banking sector in the kingdom," Jasser said, adding it would be up to the banks to decide on provisions they may need in the future. Saudi Arabia's index is the best performing market in the Gulf region this year.

UAE stocks recover after Dubai debt crisis losses The Dubai and Abu Dhabi stock markets recovered Sunday amid an apparent return of confidence, closing up more than one and almost four percent, respectively, after heavy losses over Dubai’s debt woes. After a four-day break, Dubai’s DFM Index, which dropped 12.5 percent in two days of trading last week, closed at 1,853.13 points, 1.18 percent up from its closing on Tuesday,

118 in a session of heavy fluctuations. Abu Dhabi Securities Exchange, which shed 11.6 percent of its capitalization last week, closed 3.89 percent up at 2,673.12 points. But as Abu Dhabi stocks firmed up, Dubai stocks appeared volatile with the index fluctuating from a 2.4-percent rise in the morning to a drop of around two percent into the red before recovering ahead of the close.

Dubai Islamic Bank expands presence in Pakistan In a move to strengthen its international operations and capitalize on business opportunities in Pakistan, Dubai Islamic Bank’s fully-owned Pakistani subsidiary, has opened 10 new branches across the country.

This announcement was made by Dubai Islamic Bank Pakistan Ltd. or DIBPL, at a special ceremony held recently in Karachi, attended by Salim Raza, Governor of the State Bank of Pakistan. With the 10 new branches, DIBPL has strengthened its network to a total of 35 branches across 15 major cities in Pakistan. The bank also announced its financial performance for the first nine months of 2009, posting a pre-tax profit of 280 million rupees. Congratulating the bank’s management on this occasion, Raza said: “Dubai Islamic Bank Pakistan Ltd. has been playing a pioneering role in the industry since inception in 2006. The bank has shown impressive performance and has attained a leadership position by introducing several innovative products to the market. I hope DIBPL will continue to work for the growth of Islamic Banking in Pakistan.” DIBPL commenced operations in Pakistan in 2006 and offers an array of Sharia-compliant, world-class products and services catering to institutions, small and medium-sized businesses and individuals.

Dubai Financial Market achieves biggest gain since debt crisis Dubai's stock market closed 7 per cent higher yesterday, its biggest gain since the debt crisis exploded, and led by Emaar Properties after it called off a merger with state-owned entities. The Dubai Financial Market index closed 107.4 points up at 1,640.76 points. Shares in Emaar, the Middle East's largest property firm by market capitalisation, closed 14.84 per cent up, at 2.94 dirhams (80 US cents), after heavy trading and wide fluctuations.

KUWAIT

International Front

Kuwait gives $ 1M to ILO for the benefit of Palestinians The Permanent Representative of the State of Kuwait to the UN and Specialized Agencies in Geneva, Ambassador Dharar Abdul-Razzak Razzooqi, presented Kuwait's annual voluntary contribution to the Regional Director of the Arab Bureau of the International Labor Organization (ILO) Nada Al-Nashif which stands at $ 1 million for 2008-2009.

Iran not invited to GCC summit

119 Deputy Prime Minister and Foreign Minister Sheikh Mohammad Al-Sabah yesterday said Iran will not be invited to the upcoming GCC summit in Kuwait on Dec 14-15. Speaking at a joint news conference with his Egyptian counterpart Ahmed Abul Gheit, the minister underlined deep relations and bonds between Kuwait and Egypt and the significance of coordination between both countries in all domains.

Political Front

Kuwaiti MPs refuse to hold closed door grilling A number of current and ex MPs expressed their refusal to hold a closed door interpellation session. They called on the head of government to have enough 'courage' to face the interpellation motion in order to remove suspicion surrounding his integrity. The MPs claimed that the attempt to hold a closed door session is in itself a 'sign of wrongdoing.' MPs spoke during a seminar held in ex MP Abdallah Al-Barghash's diwaniyah in Riqqa Sunday evening. The gathering, called "The Interpellation Platform and the Positions of MPs," hosted a number of current MPs.

Kuwaiti govt ready for grilling debates State Minister for Cabinet Affairs Roudhan Al-Roudhan said yesterday the government is prepared to debate all four grillings at the session today but only after passing the Gulf monetary union pact. Roudhan told reporters that after the National Assembly discusses the monetary union agreement, the speaker will ask the prime minister if he is ready for debating the grilling and he will say: "Yes, I am ready".

The government's assurance is the latest in a series of statements affirming that the prime minister and ministers of interior, defense and public works are ready for the crucial debate. But the assurances appear to have failed to dispel a feeling among MPs and observers that today's session could be still full of surprises, especially with regards to whether the debates will be behind closed doors or open, and whether the government would still seek a postponement until after the Gulf summit. Opposition MPs however issued stern warnings to the government and its supporters in the Assembly if they decided to seek a secret debate. MP Musallam Al-Barrak said that all three members of the Popular Action Bloc and two of its supporters will sign on a motion for non- cooperation with the prime minister at the end of the grilling. MP Faisal Al-Mislem said if the government and its supporters succeed in forcing a secret debate of the premier's grilling, "We will be able to convince 10 MPs to sign a motion for non-cooperation".

Kuwait parliament grills PM over alleged corruption Kuwait's parliament on Tuesday started quizzing the prime minister of the oil-rich Gulf state in a secret session over allegations of corruption, a lawmaker said.

“Parliament has voted to hold the questioning behind closed doors,” opposition MP Mussallam al-Barrak told reporters, adding 40 deputies voted for the secret session while 23 were against it and one abstained. Shaikh Nasser Mohammad al-Ahmad al-Sabah faces allegations his office misappropriated tens of millions of dinars (dollars) in the run up to the 2008 polls and that he issued a 700,000-dollar cheque to a former MP last year.

120 The request to question the prime minister was filed last month by Islamist opposition MP Faisal al-Muslim. Asked earlier in the session by speaker Jassem al-Khorafi, Shaikh Nasser and the ministers of the interior, defence, and public works and municipalities said they were ready to be questioned over charges they have already denied. The premier, Defence Minister Shaikh Jaber Mubarak al-Sabah and Interior Minister Shaikh Jaber Khaled al-Sabah are senior members of the emirate’s ruling family. It is the first time the assembly has questioned the prime minister since democracy was introduced in the Gulf state in 1962. At the end of the questioning, MPs can file a non-cooperation motion against the premier, which, if passed, is sent to the emir who then decides to either sack him or dissolve parliament and call for fresh polls. Barrak said that if the questioning proves the prime minister is guilty “we will file a non-cooperation motion against him.” If submitted, voting on the motion will take place after two weeks. The grilling of the three ministers, accused of various financial and administrative irregularities, could lead to no-confidence motions and then their automatic dismissal. The Gulf state has been rocked by political chaos since early 2006 when Shaikh Nasser, a nephew of the ruler, was appointed premier. Since February 2006, parliament has been dissolved three times because of disputes with the government, and Shaikh Nasser has been forced to resign five times. In June 2008, parliament voted to ask the independent Audit Bureau to investigate allegations of “suspicious” spending of 23 million dinars (86 million dollars) by the premier’s office in 2007 and in 2008. In February, the cabinet decided to refer the Audit Bureau report to the public prosecution and is still awaiting the response.

Kuwait MPs file motion that could oust premier Kuwait entered a new period of political turmoil yesterday as 10 opposition MPs filed a motion of “non-co-operation” against the premier over corruption charges after a marathon closed session. Sheikh Nasser Mohamed al-Ahmed al-Sabah, the first prime minister to be quizzed by the assembly since democracy was introduced in the Gulf emirate in 1962, could be ousted if the motion is passed. “A motion has been officially submitted, and voting will take place on December 16,” Kuwait’s parliament speaker Jassem al-Khorafi said after the session was reopened to the public. Kuwait’s parliament questioned the prime minister in a secret session for six hours after it voted in favour of holding the grilling behind closed doors.

Kuwait political turmoil worsens Ten opposition lawmakers yesterday filed a non-cooperation motion against the prime minister following a six-hour grilling behind closed doors on charges that his office misappropriated public funds and that he issued a KD 200,000 cheque to a former MP.

Speaker Jassem Al-Khorafi announced after the grilling that the vote on the non- cooperation motion will take place on Dec 16. To pass, it requires a simple majority of elected members of the Assembly, which currently stands at 49. All the 16 Cabinet ministers have no right to vote on the motion. If passed, it will be sent to HH the Amir Sheikh Sabah Al-Ahmad Al-Sabah who will either decide to sack the prime minister and appoint another premier, or dissolve the National Assembly and call for fresh elections. Later, 10 lawmakers filed a no-confidence motion against the interior minister following

121 a grilling that lasted more than three-and-a-half hours. Speaker Khorafi said that motion would be discussed on Dec 17. The cheque issue dominated the media hype that preceded the grilling, especially after a local blog published a copy of two cheques issued by the prime minister to two former MPs and showed their names. The first one was to former MP Nasser Al-Duwailah who categorically denied that the amount went into his account, saying that it went for a partner law firm in the United Arab Emirates against legal services for the prime minister's private business. The second cheque shown was for former MP Hussein Al-Quwaiaan who came to the National Assembly yesterday and told reporters that the cheque is fake and categorically denied that he had ever received any money for himself from the prime minister. Quwaiaan however admitted receiving aid on behalf of poor Kuwaiti families and the amounts have never been credited to his name or account. He was only a mediator, he stressed. Parliamentary sources revealed that MP Faisal Al-Mislem who grilled the prime minister showed no further cheques during the debate which focused more on the alleged irregularities of his office's spending.

Following the grilling, Prime Minister HH Sheikh Nasser Mohammad Al-Ahmad Al- Sabah said in a written statement that he opted to discuss the grilling despite clear constitutional and legal violations. He said the grilling tackled spending of the prime minister's office which has been referred to the public prosecution and accordingly should not be discussed until a decision is taken by the judicial authorities. The premier said that the issue of the cheques is something that relates to his private financial dealings which should not be involved in any way in the grilling. Nevertheless, the prime minister expressed complete faith in the Kuwaiti democratic system and thanked MPs for political maturity and awareness they exhibited during the debate. MP Mislem told reporters after the grilling that Kuwait witnessed a historical day that is unprecedented in the whole Arab world when the prime minister was questioned. He said he was pained by the fact that the debate was held behind closed doors but "Kuwait has recorded a democratic achievement". Late yesterday, 29 MPs issued a joint statement in which they declared their total backing of the prime minister and said they are opposed to the non-cooperation motion. The figure means that the motion against the premier is doomed to fail since it requires at least 25 votes of the 49 elected MPs to pass.

After that the National Assembly began debating the grilling of Minister of Public Works and Municipality Fadhel Safar. The griller MP Mubarak Al-Waalan charged him over a number of administrative and financial allegations regarding illegal promotions of senior staff, wasting hundreds of millions of dinars of public funds and failure to pursue court cases of the Kuwait Municipality that cost public funds huge sums. He also charged him of promoting employees who were involved in corruption and referred to investigation or to the public prosecution. The minister categorically denied any wrongdoing, insisting that most of the alleged violations in the grilling were in fact committed before he was appointed minister. Safar also insisted that he had rectified a number of illegal decisions taken by some senior municipality employees and denied any wrongdoing in the breakdown of the Mishref sewage plant, adding that he has taken all necessary actions to launch proper probes into the case. The grilling ended without MPs filing a no- confidence motion. The Assembly then moved to debate the grilling of Interior Minister Sheikh Jaber Al-Khaled Al-Sabah by MP Musallam Al-Barrak over allegations that he

122 provided the Assembly with false information during an earlier grilling on June 23. During the grilling, the minister told the Assembly that he had referred a suspicious KD 5.3 million contract to the public prosecution on June 1. He however failed to inform the Assembly that the prosecution had already replied to him on June 7 saying it found no grounds to launch an investigation into the contract. Barrak claimed that the minister deliberately hid the information because if he had announced it, that would have shown to MPs that his referral of the contract to the public prosecution was faulty and lacked any evidence. The minister categorically denied any wrongdoing and described Barrak's second grilling since June as an attempt to dismiss him out of office because this was one of his election campaign promises. The Assembly then began well after midnight the debate of the grilling of Defense Minister Sheikh Jaber Mubarak Al-Sabah.

MPs hail victory of Kuwait democracy A number of MPs yesterday said the grilling of the prime minister and three other ministers in a record-breaking 20-hour session on Tuesday was a clear victory of Kuwaiti democracy and called for paying greater attention to development projects. The marathon grilling session which began at 9 am on Tuesday and finished at 5 am the next morning and witnessed four grillings was the longest parliamentary session in Kuwait and has no parallel.

The session ended when the grilling of the defense minister, which took place in a secret session, was completed without filing any a no-confidence motion. The griller Dhaifallah Buramia said he could not garner the support of 10 MPs to file the motion. The same result was reached at the end of the grilling of Public Works and Municipality Minister Fadhel Safar. But the grillings of the prime minister, which also took place in a secret session, and that of the interior minister both ended with motions being submitted. Ten MPs filed a non-cooperation motion against the prime minister and voting will take place on Dec 16. The prime minister looks set to survive after about 30 MPs issued a statement Tuesday night declaring their support to him and saying they totally opposed the motion against him.

Supporters rejoice victory of Premier in Parliament: Kuwait After long hours of debate in the National Assembly, the Kuwaiti government won the battle of interpellations yesterday. The series of interpellations started Tuesday morning with the quizzing of the Prime Minister His Highness Sheikh Nasser Al-Mohammad Al- Sabah by hard-line Islamist MP Faisal Al-Mislem. It was followed by three other interpellations of three other ministers: the Minister of Defense Sheikh Jaber Al-Mubarak Al-Sabah, the Minister of Interior Sheikh Jaber Al-Khaled Al-Sabah, and the Minister of Public Works and Municipality Affairs Fadhel Safar. The parliamentary session ended in the early hours of yesterday, and the outcome was a non-cooperation motion filed against the Premier, and a no-confidence vote was filed against the Minister of Interior. The highlight of the event was the interpellation of the Prime Minister Sheikh Nasser Al- Mohammad Al-Sabah who was severely criticized by a number of MPs and some political formations in the past weeks. On Monday, protestors gathered opposite the Parliament in Irada Square demanding that the Prime Minister resign from his post.

123 Bahrain

Social Front

Drive to lower the voting age launched in Bahrain A campaign has been launched for the voting age in Bahrain to be lowered to 19. The Hewar Society is spearheading the drive and aims to push through the law before next year's parliamentary and municipal council elections. Being held under the slogan 19@2010, it aims to encourage more young people to take an interest in politics and help shape the future direction of the country.

Bahrain 'facing climate threats' Bahrain is at higher risk than most countries from threats such as rises in sea levels, Foreign Ministry director of bilateral relations Ambassador Dr Dhafer Alumran told delegates at Banyan Tree Desert Spa and Resort, Al Areen.

However, he warned efforts to safeguard the country's future could prove futile unless business leaders and members of the public started taking responsibility for their own actions. He issued the stark warning at the opening of the Second Global Environment Conference and Exhibition, which was timed to coincide with the start of the biggest climate talks in history in Copenhagen, Denmark. World leaders are coming together in Denmark for two weeks of talks aimed at reaching a global consensus on tackling climate change.

New plan to fight climate change: Bahrain Bahrain could soon adopt new guidelines to tackle climate change and help protect the environment following a key two-day conference, which concluded yesterday.

Recommendations are being compiled by the Public Commission for the Protection of Marine Resources, Environment and Wildlife, academics, environmentalists, ministry officials, business leaders and students. They will be presented to Public Commission for the Protection of Marine Resources, Environment and Wildlife president Shaikh Abdulla bin Hamad Al Khalifa and then forwarded to the authorities and groups concerned. The Second Global Environment Conference and Exhibition was held under the theme, Environment Campaign Dynamics - Recognising Compliance, Urgency, Responsibility and Accountability.

Economic Front

Bahrain's economic strategy review urged A top banker yesterday urged a rethink on Bahrain's strategic financial sector to ensure its sustainability and growth momentum. We need to review the strategy of our financial sector to ensure its sustained growth," Central Bank of Bahrain (CBB) Governor Rasheed Al Maraj said. He was speaking at the weekly meeting of the Economic Development Board on recent financial developments. His Royal Highness Crown Prince Salman bin

124 Hamad Al Khalifa chaired the meeting at Riffa Palace. Deputy Premier Shaikh Mohammed bin Mubarak Al Khalifa attended.

Bahrain in major push to promote key events Bahrain has dramatically expanded its meetings incentives conference and exhibition (MICE) business in the last three years, according to a leading industry professional.

"From my perspective, it is fascinating to see the tremendous work that has been done in terms of positioning the country as a destination," Meeting Professionals International (MPI) Europe, Middle East & Africa Chapter (EMEA) director of global training practice Joyce Dogniez told members of Team Bahrain at a seminar on "Defining the Meeting Management Profession" at the Bahrain International Exhibition and Convention Centre yesterday. "Bahrain has rapidly developed in three years with bigger events such as the Formula One Grand Prix and the forthcoming Bahrain Air Show that the destination is hosting certainly put Bahrain on the map," she said. Team Bahrain is an initiative of Bahrain Exhibition and Convention Authority (BECA) to bring together all companies relating to promoting Bahrain. It is comprised of more than 50 representatives from Bahrain's business and leisure tourism sectors.

Bahrain ready to back a GCC unified currency Bahrain has fulfilled all obligations required by it to become a member in the unified GCC currency, Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa told parliament yesterday. He was responding to a question by Al Wefaq MP Dr Jassim Hussain on Bahrain's moves to ensure they were in line with requirements for the unified currency. Parliament and the Shura Council have approved the unified currency. Once ratified by His Majesty King Hamad, Bahrain will have a unified currency with Kuwait, Qatar and Saudi Arabia. The UAE and Oman have pulled out. Meanwhile, responding to a question, Municipalities and Agriculture Minister Dr Juma Al Ka'abi said they were working with the municipal councils to come up with unified regulations for buildings' fronts.

QATAR

International Front

Qatar, France to sign pact on judicial ties Qatar and France are expected to sign an agreement on judicial cooperation in January next year, the visiting French Justice Minister told reporters yesterday. Michele Alliot- Marie, Minister of Justice and Liberties and Keeper of the Seals speaking at a news conference held at the Museum of Islamic Art, said: “We have set the rules and our teammates will work on the text and we will only have to sign in January.” Qatar and France have agreed to undertake a series of joint projects between the judicial bodies of the two countries. Besides, cooperation between the upcoming Grand Doha Library and Parisian university libraries specialised in law is to be established and which would assist the joint judicial projects.

125 Qatar, Georgia hold talks Foreign Minister Sheikh Hamad bin Jassim bin Jabor al-Thani with the visiting Minister of Internal Affairs of Georgia Vano Merabishvili. They reviewed co-operation between the two countries and issues of mutual concern.

Social Front

Qatar Labour Dept puts online tabs on law violations The Ministry of Labour is set to introduce an online system which will enable it to detect any violation of labour law by employers, including the delay in disbursement of salaries.

The Labour Department is also planning to introduce a campaign — Qatar Gate— to create awareness of workers’ rights. According to the online system, which is proposed to be launched early next year, employers have to enter the details of workers in a specially designed electronic programme. Mohammed Saeed Al Nuaimy, Director of Labor Inspection Department at the Ministry of Labour, told an Arabic daily that the new system will help monitor whether firms are strictly abiding by the Labour Department’s guidelines on the operation of labour camps. The booklets would be published in different languages for the convenience of the workers. The duty officer at the counter would give necessary instructions to the representative of the companies who reach the airport to receive the new employers. Specific directives have been given to the companies on the facilities to be offered to the workers at the camps — more than four workers should not be living in a room; windows must be covered with iron nets as well as glass. The rooms, in addition to being properly ventilated, must be big enough to meet the specified size requirement. The employer must make sure that there is proper air circulation in the rooms. In no way, are labourers to be allowed to sleep in corridors or on roof-tops.

Degree fraud worries Qatar health panel With the rising popularity of Qatar in the job market, an increasing number of healthcare practitioners from across the world are trying to get into the country using falsified medical documents, a senior official of the Supreme Council of Health (SCH) has said.

The Medical Licencing Department at SCH has since April detected more than 60 cases where foreign applicants seeking a private licence to practise in Qatar had submitted fake documents. In April, the Department had signed an agreement with DataFlow, a leading international document verification and screening company, to scrutinise the credentials of all foreign healthcare workers who apply for a licence. This was to prevent fraudulent medical practitioners from operating in the country.

Economic Front

Qatar's $ 23b rail project to be completed in 2026 Qatar aims to have most of a 17 billion euro ($ 22.79 billion) rail project with Deutsche Bahn built by 2022, officials said recently after signing one of the biggest-ever foreign deals for German industry. The whole project - which includes freight and passenger

126 trains and a metro - is expected to be completed in 2026. But a major portion of the work will be completed by 2022, when Qatar hopes to host the FIFA World Cup, officials said. Qatar also aims to build a connection to neighboring Saudi Arabia via a 40-kilometer causeway, one of the world’s longest, to Bahrain. The network will integrate Qatar’s east coast rail link, a passenger and freight railway line, and connect oil and natural gas hub Ras Laffan in the north with the refinery town of Mesaieed in the south, via Doha, and a high-speed link between the new Doha international airport and the city’s centre.

Qatar inflation seen low, rates on hold Qatar’s inflation will keep well below last year’s record peak in 2009 despite breakneck economic growth and interest rates should remain stable, Central Bank deputy governor Sheikh Fahad bin Faisal Al-Thani said. Inflation has slowed sharply in the Arab Gulf after oil and property prices plunged. Qatar’s economy enjoyed strong growth rates, unlike the rest of the Gulf, as the world’s top natural gas exporter kept its oil and gas output intact. “Inflationary pressures in Qatar are also expected to be lower as demand pressures are low,” Sheikh Fahad said on Thursday in an e-mailed response to Reuters’ questions.

Trade between Qatar, Japan rises The volume of trade between Qatar and Japan rose to around $ 28bn in 2008, compared to $ 16bn in 2007, reflecting a 75 percent increase. For the first six months of this year, Japan’s exports to Qatar totalled $ 817.98m compared to the $ 655.1m in the corresponding period last year, a Japanese Embassy official said. The Japanese Embassy also reported a total of $ 2.334m Japanese investment in Qatar as of April 2009. Japanese Ambassador Yukio Kitazume said the total amount of Japanese imports from Qatar rose to around $ 26bn in 2008, compared to the $ 16.9bn in 2007, while the total amount of Japanese exports to Qatar rose to $ 2bn in 2008, compared to the $ 1.8bn in 2007. Japan’s exports to Qatar for the first six months of this year totalled $ 817.96m compared to $ 655.1m in the corresponding period last year, reflecting a 24.86 percent increase.

Qatar tops world managerial spending index Qatar has once again emerged as the leading country in terms of managerial spending power in the world, according to a latest report by the Hay Group. The Global Management Pay Report shows that all the oil-driven economies of the Middle East are towards the top of the management spending power index. The Gulf countries still dominate the ranking in the Global Management Pay Report which provides a snapshot of two key indicators of the global talent market: managerial spending power and the pay gap between management and clerical workers in over 55 countries.

OMAN

International Front

Oman-Egypt joint panel meets today

127 The Omani-Egyptian Joint Committee will today begin its 12th session here at the ministerial level. The meeting will be chaired by Yusuf bin Alawi bin Abdallah, Minister Responsible for Foreign Affairs, and Egyptian Foreign Minister Ahmed Abul-ghait. The committee will discuss aspects of co-operation between the two countries in economic, commercial, educational, cultural and social fields. They will also review the progress made on the joint panel’s programme since the convening of the 11th session in Cairo in 2006.

Oman, China to hold talks An Oman-China session of bilateral consultations will be held in China as part of the strategic talks between the two countries foreign ministries. The session is being held yearly and alternatively between the two sides. The Omani side is led by Sayyid Badr bin Hamad al Busaidy, Secretary-General of the Foreign Ministry, who will begin a three-day visit to China shortly. During the visit, the two sides will sign an agreement on mutual exemption of visa charges for diplomatic, special and civil passports. They will also sign an executive programme on enhancing cultural, health and media cooperation.

Oman, Iran discuss ways of developing bilateral relations Sayyid Ali bin Hamoud al Busaidy, Minister of the Diwan of the Royal Court, received at his office here yesterday Murtadha Rahimi Zarji, Ambassador of Iran to the Sultanate, who called on Sayyid Ali to bid him farewell at the end of his tour of duty in the Sultanate. The meeting touched on ways of developing bilateral relations.

Social Front

New expat recruitment rules soon in Oman Manpower Minister Shaikh Abdullah bin Nasser al Bakri has said that the Ministry of Manpower is drafting new procedures to regulate the recruitment and employment of expatriate manpower with a view to achieving development and providing private establishments with their exact requirements to help them carry out their projects. The Ministry will be working in co-operation with government departments and private institutions concerned, he added.

Report # 97

BUSINESS AND POLITICS IN THE MUSLIM WORLD Fertile Crescent Aisha Rehman From, 5th-11th December2009 Presentation, 16th December, 2009 ______

(OUT LINE) Summary ………………………………………………………… p # 3

128

Egypt Political front:

• 146 investigation requests submitted against gov’t in PA session • Egypt detains 10 senior Brotherhood members Geo strategic front: • Swiss have made a 'grave mistake' with minaret ban: Egypt FM • Egypt says Israel stalling on prisoner swap • Israel mulling security fence on Egypt border to halt migration • Egypt envoy to return to Algiers after compensation, says report • Egypt to host Darfur conference next year • Egypt digs at Gaza border amid report of smuggling barrier • Egypt Denies Building Iron Wall On Gaza Border, Says Report Economic front • Egyptian gold follows global trends, remains pricey Social front

Lebanon Political front: • Sectarianism, Hizbullah's arms top debate at Parliament • Hariri's Cabinet wins record number of confidence votes Geo strategic front: Security front: • Sfeir rejects presence of two armies in Lebanon Economic front: • Privatization almost ignored Lebanon's policy statement • offers incentives to Lebanese companies • EIU forecasts Lebanon's real GDP growth at 5.8 percent in 2010 Social front: • Lebanon's Palestinians: refugees for life • Lebanon's 'non-ID Palestinians': no legal status, no hope • Pleas to end domestic violence fall on deaf ears • Women's group asks Berri to back nationality law

Palestine Geo strategic front

• Egypt Invites The Reconciliation Committee To Resume Unity Talks Social front: • LRC: “14 Homes Demolished In Jerusalem In November” Iraq

Political front:

129 Elections: • Iraq sets March 7 for poll after political wrangling • US welcomes passing of Iraqi election law • Iraq likely to hold poll on Feb 27as rift ends • ‘Optimistic’ signs on election accord: Iraq VP • Iraq’s vote won’t affect US drawdown: Pentagon • Iraqi MPs reach agreement on vote law Geo strategic front: • Ex-UN inspector condemns Blair, Bush on Iraq Economic front Social front • Iraqi PM arrives at parliament for grilling over blasts • 90 killed in spate of Baghdad explosions

Summary Egypt Political front: Egyptian authorities have detained 10 senior members of the opposition , the group's secretary general told AFP. The officials were arrested in the Nile Delta province of Kafr El-Sheikh during a meeting, Mahmoud Ezzat said, adding authorities provided no reason for the arrests. Geo strategic front;Egypt has announced its intention to host a conference for the reconstruction and development of Darfur within the first three months of 2010. Egypt denied building an anti-smuggling underground iron wall on its border with the Gaza Strip. “Egypt is dealing with smuggling seriously and capable of stopping it without this wall,” the report quoted a security source as saying. Economic front;The term “gold standard” refers not to the best standard, but to that which is impervious to change, coming from political struggles that occurred when countries first decided to un-peg their currencies from the actual value of their gold reserves. Lebanon Prime Minister Saad Hariri’s government was granted a record number of confidence votes, as 122 out of 124 lawmakers present at Parliament voted in favor of the Cabinet. In a short address before the vote, Hariri stressed his government’s commitment to the Taif Accord as well as unity between its members. Economic front: the ministerial committee finally released the long-awaited Cabinet declaration which will be endorsed this week by Parliament without any modification. The divided ministers were at loggerheads over two main themes: resistance and privatization. Both March 14 and March 8 ministers reached a common understanding about the role of the resistance despite some reservations by some ministers. The Economist Intelligence Unit (EIU) said in 2009 that Lebanon has proven its ability to buffer external shocks, and the year turned out to be one of the best for the country in terms of economic performance, and consequently real GDP growth. The report was published by Bank Audi Weekly Monitor. The EIU forecasted an economic growth in Lebanon of 5.8 percent in 2010 and 5.5 percent in 2011, bearing in mind that such rates are deemed noteworthy, as they stem from a high base in 2009, since Lebanon was among the few MENA countries whoseeconomies did not curb in 2009 as a result of the

130 crisis. Social front: Palestinian president Mahmud Abbas's visit to Beirut casts the spotlight on the plight of nearly 300,000 Palestinians in Lebanon who fear they are doomed to be refugees for life. Palestinian children sit on a pile of dirt at the war-battered refugee camp of Nahr Al-Bared. His brief trip comes amid renewed efforts to revive the Middle East peace process and concern. Palestine The Egyptian leadership issued an invitation to the Palestinian National Reconciliation Committee to visit Cairo in an attempt to resume the talks and efforts to end internal divisions and achieve national unity. Iraq Iraq set a long awaited date for a general election next year, but later pushed it back by one day to March 7. Naseer al-Ani, President Jalal Talabani’s chief of staff, told Reuters the presidency council had picked the new date late on Tuesday, after an earlier date of March 6. The United States welcomed the passing of the election law in Iraq. "We welcome the approval of the revised election law by the Iraq Council of Representatives. Iraq’s decision to hold parliamentary elections in March will not interfere with the US military’s plans to reduce the number of troops in the country, the Pentagon said. President Barack Obama has pledged to end U.S combat operations in Iraq by Aug. 31, 2010, ahead of a full pullout by the end of 2011.

Detailed news

Egypt Political front:

146 investigation requests submitted against gov’t in PA session Daily News Egypt: December 10, 2009: A total of 146 investigation requests were submitted against the government by MPs in a special session of the People’s Assembly (PA) Tuesday evening to set a schedule for the requests. Of these, 128 requests were accepted, but tensions ensued between opposition and independent MPs and members of the ruling National Democratic Party (NDP), who form the majority of parliament. Additionally, some opposition MPs rescinded their requests due to the high number of submissions, fearing their queries would get lost amidst the high number. Things reached a head when Minister of Parliamentary Affairs Mufid Shihab expressed his “sympathy” for Independent MP Gamal Zahran for the 22 investigations requests he had submitted. Zahran duly replied that the high number of requests reflected the level of corruption that has blighted Egyptian politics. He later told Daily News Egypt, “The corruption in Egypt has grown to such an extent … that this number of investigation requests is necessary. Every request rattles the government, if it does not appear so on the surface.” Zahran’s requests center on a plethora of issues, including national projects in Toshka and Sinai which he felt were a misappropriation of public resources. Zahran also alleges that NDP MPs benefit financially from government projects to the tune of around LE1 billion. Other requests revolve around the deterioration in education and the inability of the government to curb the price of consumer goods. Zahran expected that only a quarter of his 22 requests would be discussed in the PA, adding, “we asked for more sessions to

131 discuss these investigation requests, but the NDP majority have managed to prevent this.”NDP Secretary of Organization Ahmed Ezz requested an opportunity for NDP members to respond to the numerous requests, as many did not attend these sessions. House speaker Fathi Sorour responded by saying they should have attended. Shihab said it takes six months for an appropriate response to one investigation request.

Egypt detains 10 senior Brotherhood members AFP: December 6, 2009: Egyptian authorities have detained 10 senior members of the opposition Muslim Brotherhood, the group's secretary general told AFP. The officials were arrested in the Nile Delta province of Kafr El-Sheikh on Saturday during a meeting, Mahmoud Ezzat said, adding authorities provided no reason for the arrests. "Detentions in Egypt are like death, they can happen at anytime to anyone and no one knows why," Ezzat said. Saturday's arrests were "a continuation of the same politics that infringe on the rights of all citizens. Arrests are arbitrary and release orders are arbitrary. "Today, there are 227 of the group's members still behind bars," including those arrested Saturday, Ezzat said. The Muslim Brotherhood, the largest and most organized opposition group in the country, controls 20 percent of seats in parliament. It is officially banned but fielded candidates as "independents" in the 2005 legislative elections which were marred by violence and reports of irregularities. The movement's popularity stems from its social work, in contrast to the ruling National Democratic Party which is widely seen as corrupt. Ezzat said the government was currently tearing down a building intended to be a hospital in the Cairo district of Heliopolis because it was set up and funded by a charity affiliated with the group. Authorities repeatedly accuse the Brotherhood of seeking to topple the regime. But the group's members have accused the regime of carrying out arrests against its members in order to distance them from political life ahead of next year's parliamentary elections. –AFP

Geo strategic front:

Swiss have made a 'grave mistake' with minaret ban: Egypt FM AFP: December 4, 2009: Egypt's top diplomat said on Thursday that a Swiss vote to ban the construction of minarets was a "grave mistake" and Europe could no longer lecture his country on human rights. "The Swiss people will some day come to realize what a grave mistake they have made," Ahmed Aboul Gheit told Egyptian television in comments carried by the official MENA news agency. "The human rights situation in Egypt is good... Europe cannot talk to Egypt about its human rights record at a time when Switzerland is supporting a ban on minaret building," Aboul Gheit said. On Sunday, more than 57 percent of Swiss voters approved a right-wing motion to ban minarets on mosques, a decision that was met with an international backlash and charges of intolerance. Aboul Gheit expressed "regret that there is an increasing fear of Muslims in (European) societies as a result of the acts of some groups," in allusion to attacks committed in the name of Islam. –AFP

Egypt says Israel stalling on prisoner swap AFP: December 7, 2009: Foreign Minister Ahmed Aboul Gheit accused Israel on Sunday of stalling on a prisoner swap with Hamas for a captured Israeli soldier by refusing to free

132 certain Palestinian prisoners. "Israel is still placing obstacles toward releasing all those demanded by the Palestinians," said Aboul Gheit, according to a statement released by the foreign ministry. "We hope that the Israeli side, which decided to achieve this exchange, will go through with it and not place further obstacles," he said. Israel and the Islamist Hamas have held indirect talks sponsored by Egypt and mediated by Germany to finalize a swap which would see the release of Israeli soldier Gilad Shalit in exchange for hundreds of Palestinian prisoners held by Israel. Both Israel and Hamas reported progress last month in the negotiations, which have dragged on since Shalit was captured in a cross-border raid from the Gaza Strip three years ago. But both sides downplayed reports of an imminent deal after the secretive negotiations snagged over a group of prisoners Israel said it would not release. Israeli MP Daniel Ben Simon said on Saturday that prisoner swap deal could go ahead in the next "week or two." On Saturday, Egypt's state- run MENA news agency quoting Aboul Gheit as saying that Israel should not "exaggerate its demands." According to Arab media, negotiations have stalled over Israel's refusal to free Arab-Israeli prisoners or Hamas members responsible for particularly deadly attacks and its insistence on expelling some of the released prisoners. The prisoners under dispute include popular Palestinian leader Marwan Barghouti, who is seen as a possible successor to president Mahmoud Abbas. Ultra-nationalist Israeli Foreign Minister Avigdor Lieberman has vowed Barghouti would remain in jail. Also on Sunday, the pan-Arab daily Al-Hayat reported that a team of four French doctors entered Gaza a week ago and performed medical check-ups on Shalit. An Egyptian security official confirmed to AFP that three French doctors went into the enclave through the Egyptian border crossing of Rafah but there was no indication that they treated Shalit. – AFP

Israel mulling security fence on Egypt border to halt migration Daily News Egypt: December 9, 2009: Israeli Prime Minister Benyamin Netanyahu is mulling the construction of a security fence along the border with Egypt to halt smuggling and attempts by African migrants to enter Israel. The Israeli newspaper Maariv reported Tuesday that Netanyahu had approved the construction of the security fence after discussions with cabinet members over the increased numbers of Africans seeking to enter Israel via the border with Egypt. An Israeli official told Daily News Egypt that it would be similar to security fences Israel has with Jordan, Lebanon and Syria and not a barrier wall like the one Israel constructed in the West Bank. Netanyahu supposedly instructed the Israeli Justice Ministry to assess the legality of erecting such a fence in a manner that did not contravene international human rights laws. Currently the border between Egypt and Israel is lined with barbed wire though in some mountainous areas there is none. Democratic Front Party member in the area Mohamed El-Menei questioned the possible success of such a fence, telling Daily News Egypt that a similar system has not curbed the smuggling that takes place between the Egypt-Gaza border. Additionally, “it is these smugglers that transport the African migrants to the border and leave them there,” El-Menei added. Many African migrants attempt to breach the border into Israel to seek work or asylum, often with fatal consequences. Earlier this month an African migrant was shot and killed by Egyptian border police as he tried to cross into Israel. Last Sunday, an Eritrean couple was also shot when attempting to cross the border. On Monday evening another Eritrean was shot and is currently receiving treatment at Al-

133 Arish hospital from a critical gunshot wound. Seventeen Africans have been killed in 2009 while attempting to cross the border.

Egypt envoy to return to Algiers after compensation, says report AFP: December 7, 2009: Egypt will return its ambassador to Algeria who was recalled last month over a bitter football row only if it receives compensation for vandalized Egyptian property, a newspaper reported. Algeria and Egypt engaged in a diplomatic row after Algerian fans attacked the buses of Egyptians fans in a World Cup qualifier hosted by Sudan in November, which Algeria won. Algerians ransacked and burned the offices of Egyptian companies in Algiers, including telecommunications giant Orascom, and Foreign Minister Ahmed Aboul Gheit has estimated the damages at tens of millions of dollars. "The companies will ask for compensation for this damage and we hope ... the Algerian government... will comply when these companies submit their compensation requests," the foreign ministry quoted Aboul Gheit as saying in a statement. Aboul Gheit also said that Egypt hoped to resume good relations with Algeria, stressing that the two countries were joined by "brotherhood and affection."On Friday, Algerian Oil Minister Chekib Khelil said Friday that Egyptian-Algerian ties were improving and the two nations will set up a joint oil company. He said he would be signing an agreement to set a joint oil exploration and production company after his meeting with his Egyptian counterpart. The company, to be named Selene Petrol, will be a 50-50 joint venture between Algeria's SONATRAC oil company and two Egyptian oil firms. It will operate in Algeria, Egypt and third countries, the minister said. The company is named after Selene, the daughter of Egypt's Queen Cleopatra who ruled Egypt more than 2,000 years ago, and was married to Algerian King Juba II. –AFP

Egypt to host Darfur conference next year Daily News Egypt: December 9, 2009: Egypt has announced its intention to host a conference for the reconstruction and development of Darfur within the first three months of 2010. Director of the Sudan Affairs department at the Foreign Ministry Mohamed Qassem told the Arab Affairs Committee at the People’s Assembly Tuesday that it had received a request from the unity government in Sudan to host the conference. Qassem added that the invitation list would include all possible donor countries and organizations as well as the IMF and World Bank to help contribute to the redevelopment of the war- torn region, whether in infrastructure or education. Quite how it would be possible to begin this reconstruction while the conflict continues was not covered in the committee meeting. Last June, David Phillips, director of the Darfur Early Recovery and Development Initiative at Columbia University in New York said in Cairo that moving from humanitarian assistance to development in Darfur will be impossible in areas where the conflict is still ongoing. Egypt hosted an unannounced meeting on Darfur last August between the US, Sudan and Libya which drew the ire of rebel factions in Darfur due to what they perceived was the bias of US envoy to Sudan Scott Gration. Since the beginning of conflict in Darfur in 2003, some 300,000 people have lost their lives and 2.7 million have been displaced according to UN estimates. Earlier this month, The Cairo Institute for Human Rights Studies blasted Arab states for their poor human rights records in a report entitled “Bastion of Impunity, Mirage of Reform,” and highlighted — amongst other cases — conflicts in Sudan as a hot spot rife with abuses.

134

Egypt digs at Gaza border amid report of smuggling barrier AFP: December 9, 2009: Egyptian engineers were carrying out major excavation work at the Gaza border on Wednesday as an Israeli daily reported that an anti-smuggling barrier was under construction, an AFP reporter said. Workers were placing 20-meter long pipes every four meters or so along the border with the Palestinian territory which Israel has long complained has been vulnerable to arms smuggling, the reporter witnessed. Security forces prevented the journalist from getting nearer than 200 meters away from the works but residents said that heavy construction equipment had been deployed the length of the fence that separates the two sides of the divided border town of Rafah. Municipal official Suleiman Al-Bair said residents whose property had been affected had received compensation but he said he could not confirm the purpose of the work. The Israeli daily Haaretz reported that the aim was to construct a massive underground iron wall the whole nine-to-10 kilometer length of the border. The newspaper cited Egyptian sources as saying that the barrier would extend 20 to 30 meters underground in a bid to block all but the most determined smuggling. Israel has repeatedly complained that Egypt has not done enough to prevent trafficking into Gaza, including arms smuggling by its Islamist Hamas rulers. But in recent months Cairo has destroyed large numbers of tunnels, using detection equipment provided by Washington. Israel has closed off Gaza to all but very limited basic supplies since Hamas seized it from loyalists of Western-backed Palestinian president Mahmud Abbas in June 2007. The territory has since been dependent on smuggling for all but those supplies and the border is honeycombed with tunnels, which often collapse, sometimes claiming the lives of the smugglers. –AFP

Egypt Denies Building Iron Wall On Gaza Border, Says Report DailyNewEgypt: December 10, 2009: According to local Al-Shorouk daily on Thursday. Egypt denied building an anti-smuggling underground iron wall on its border with the Gaza Strip. “Egypt is dealing with smuggling seriously and capable of stopping it without this wall,” the report quoted a security source as saying. A later report published by the Associated Press (AP) Thursday evening, however, quoted an unnamed security official as saying that “a project is under way along the Gaza border to stem smuggling into the Palestinian territory through underground tunnels.” An area resident also told AP that he had seen Egyptian crews near his home clearing a corridor about 90 meters from the border over the past 20 days. He said that “they are drilling holes about 20 meters deep and filling them with sand.” The Israeli daily Haaretz reported that Egyptian engineers were carrying out major excavation work at the Gaza border on Wednesday as an anti- smuggling barrier was under construction. According to Haaretz, the assumed wall will extend 20 to 30 meters underground in a bid to block the smuggling from Egypt to Gaza. Egypt beefed up security measures along its border with the Hamas-run Gaza Strip to combat smuggling to the Israeli-blockaded enclave. –Daily News Egypt

Economic front

Egyptian gold follows global trends, remains pricey Daily News Egypt: December 6, 2009: The term “gold standard” refers not to the best standard, but to that which is impervious to change, coming from political struggles that

135 occurred when countries first decided to un-peg their currencies from the actual value of their gold reserves. Although the world’s total wealth no longer reflects the world’s total amount of gold, confidence in the “gold standard” remains strong. When the real estate bubble popped in the United States and Europe and funds once considered secure evaporated into thin air, investors rushed to buy gold, seeing it as one of the only truly secure investment. Global gold prices have remained strong all over the world despite signs of economic recovery. The past weeks have seen record-breaking highs as various global factors combine to create a “perfect storm” of gold prices. In the first week of December prices broke through the $1,200 per ounce ceiling for the first time ever. Fears of inflation and efforts to diversify assets away from a weak dollar were cited by Arab Finance as two contributing factors. Dollar-dominated gold is an especially appealing investment for stronger non-dollar currencies, whose interest continues to keep prices high. In addition, central banks have been purchasing the precious metal, reaffirming its desirability to private investors and driving prices higher. The Central Bank of Sri Lanka purchased 10 tons of gold from the International Monetary Fund (IMF) at $375 million as the country seeks to restructure its financial resources. Rumors abound that India is also planning to buy additional gold from IMF. The giant Canadian mining company Barrick Gold gave out the news that it had eliminated all of its hedges on the world’s largest gold production and reserves. All over the world, hopes are high to benefit from sky-high gold prices. In Egypt, prices are at similar record highs. Although this is good news for private gold owners who decide to liquidate their gold into cash, Cairo’s jewelers are suffering. Ahmed El Sirgany, a jeweler with Aly El Sirgany Jewelry, laments the perpetually high prices. El Sirgany explains that the past weeks have seen remarkably low numbers of gold buying, as usually Eid brings out engaged couples looking for wedding jewelry, the shabka. He warns potential sellers hoping to cash in that gold remains the most stable back-up, and that selling all one’s gold this year may lead to regrets next year. Asked whether record process would lead to market glut that would drive prices back down, he replied that Egypt’s gold prices can only reflect the global market, where sellers are rife. He explained feeling helpless. Jewelers like El Sirgany have relatively little insights to the market forces that dictate their daily transactions, and even if they know the reasons behind high prices, they are powerless to affect them. The gold market can fluctuate wildly as well. On Friday, El Sirgany explained that a major drop per ounce in US market, from $1,220 per ounce to $1,170 on same day represents a challenge for markets like Egypt that just have to hang on. Asked who regulates the price of Egyptian gold, he said, “Customers buy and sell from jewlers, who buy and sell from gold sellers, who deal in ‘rough gold’. When I sell to them, for example, I cast the gold as a bar of a half kilo, for instance.” El Sirgany’s predicament gives insight to the greater financial market, where profits are based on transaction rather than actual wealth at any given time.

Social front

Lebanon Political front: Sectarianism, Hizbullah's arms top debate at Parliament

136 Daily Star staff Thursday, December 10, 2009: Lebanese MPs held a second day of debate on Wednesday on the cabinet’s policy statement, with opposition lawmakers underlining the need to adopt consensual democracy as the basis of Lebanon’s political regime. Meanwhile, majority MPs criticized article six of the statement, stressing that clauses relating to security issues in the Taif Accord were more pressing than the abolishment of political sectarianism. Hizbullah MP Nawaf Moussawi said the new national unity cabinet was in accordance with constitutional norms and the Taif Accord given its embracement of all Lebanese factions based on the national coexistence pact. “This cabinet is the rule rather than an exception since it is in accordance with the Taif resolutions,” Moussawi said in response to statements by several majority figures, who had argued that a cabinet embracing the majority and opposition contradicted democratic principles.

Hariri's Cabinet wins record number of confidence votes Daily Star staff- Friday, December 11, 2009: Prime Minister Saad Hariri’s government was granted a record number of confidence votes on Thursday, as 122 out of 124 lawmakers present at Parliament voted in favor of the Cabinet. In a short address before the vote, Hariri stressed his government’s commitment to the Taif Accord as well as unity between its members. Hariri said his government was committed to defending its territories and its water. “This issue concerns all the Lebanese and this is what we agreed upon in article 6 of the ministerial statement,” he added, referringto the clause related to the resistance’s arms. He said the clause does not overlook the right of the state to defend Lebanon. Hariri is expected to visit Syria next Monday to hold talks with President Bashar Assad, media reports said Thursday. Four out of 128 lawmakers missed the sixth parliamentary session aimed at holding the government accountable for its policy statement. MP Nicholas Fattouch from the Zahle in the Heart bloc, a member of the parliamentary majority, did not grant the Cabinet the vote of confidence, while Jamaa al- Islamyia MP Imad al-Hout, also a member of the majority, abstained from voting. Both MPs protested that they were not represented in the Cabinet. Prior to Hariri’s speech, MP and former Premier Fouad Siniora slammed Hizbullah lawmakers’ call to adopt consensus as the basis of governance until the abolishment of sectarianism, saying such proposal violated the Constitution since the Taif Accord did not grant any religious faction veto power. Siniora added that the extended period of negotiations prior to the cabinet formation should also be an exception rather than a rule. Also on Thursday, Hizbullah’s Loyalty to Resistance bloc leader MP Mohammad Raad stressed that consensual democracy should remain the basis of governance of Lebanon’s political regime until the abolishment of political sectarianism. Raad added that political sectarianism constituted an obstacle to majority rule, which grants the majority the right to govern and the opposition the right to oppose. Raad also called for arming the Lebanese Army with modern and advanced weapons and slammed the US for supporting Israel and refusing to grant the army any advanced equipment. Meanwhile, Phalange Party MP Sami Gemayel stressed that article six of the ministerial statement was illegitimate and void since it was enforced under the pressure of the May 7, 2008 incidents and weapons. Article six deals with the right to liberate Lebanon’s territories by means of its army, resistance and people. Gemayel said the Lebanese were witnessing the implications of the Doha agreement and the May 7 events. He added that compromises

137 had governed Lebanese politics since the country’s independence. In May 2008, clashes broke out in Beirut and the Chouf between pro-government and opposition gunmen following a government decision to dismantle Hizbullah’s private communications network. Feuding groups reconciled in Doha and agreed to elect Michel Sleiman as the new head of the state and form a national unity cabinet. Gemayel said the clauses of the Doha agreement and the Taif Accord were approved by MPs “under the threat of arms.” Gemayel also called for special bilateral ties with Syria after settling problematic issues between both countries. In response, Amal Movement MP Ali Hassan Khalil said Gemayel’s stance toward the Taif Accord was dangerous since all Lebanese factions were committed to and had approved the agreement. Khalil stressed that a clause in the Constitution called for forming a committee tasked with abolishing sectarianism, and that all parties should take responsibility for either implementing or abolishing that clause.

Opposition Baath Party MP Assem Qanso also slammed Gemayel, saying that his grandfather, the founder of the Phalange Party Pierre Gemayel, was the one who had asked Syria to get militarily involved in Lebanon to defend the Christian community against Palestinian factions. Separately, Phalange head Amin Gemayel said Thursday his party rejected a logic that legitimizes the presence of two armies and authorities over Lebanese territories, expressing his objection to article six of the ministerial statement. Asked about whether the party would grant the vote of confidence to the Cabinet, Gemayel said that the Phalange party supported the government and its premier, adding that the party was represented in the Cabinet. Gemayel also called for “positive neutrality” when it comes to the Arab-Israeli conflict in order to prevent foreign interference in Lebanon’s domestic affairs and to prevent the use of Lebanese territories as a land of war between foreign powers. Gemayel also questioned Berri’s call for the abolishment of political sectarianism, particularly under the current circumstances and prior to granting the Cabinet confidence. Addressing lawmakers, Democratic Gathering Bloc MP Marwan Hamadeh voiced concern about the lack of any guarantee with regard to who holds authority over war and peace decisions and the duality in weapons possession, a reference to Hizbullah’s weapons. He also warned against turning Lebanon into an arena for settling regional and international disputes and called on his “partners in the Cabinet to refrain from involving Lebanon in any adventure or pointing arms again in the direction of domestic strife.” Hamadeh also slammed process of forming the new government which led to “an illusionary majority and dominant minority.” Reform and Change bloc MP Abbas Hashem stressed that the resistance was a “sacred right to Lebanon” which supported, protected and defended it. Tackling the issue of abolishing political sectarianism, Hashem said there was no need to create illusionary disputes since all parties agreed that the formation of a committee tasked with abolishing political sectarianism in accordance with the Taif Accord did not mean the immediate abolishment of sectarianism. Meanwhile, Fattouch criticized lawmakers who expressed reservations regarding article six of the statement saying rejecting one article was a rejection of the whole statement. “The policy statement dictates the cabinet’s course of action and he who grants the government confidence grants not only the majority within the cabinet confidence but the minority as well,” Fattouch said. Fattouch also slammed March 14 parties, particularly Christian ones for misrepresenting Zahle city in the government. March 14 MP Nayla Tueini meanwhile said the Cabinet’s statement was an attempt to

138 cover up sharp divisions among Lebanese parties over several issues, including Hizbullah’s weapons. Geo strategic front: Security front: Sfeir rejects presence of two armies in Lebanon Daily Star staff- Wednesday, December 09, 2009- Maronite Patriarch Nasrallah Butros Sfeir stressed his rejection on Tuesday of the presence of two armies in the country, a reference to Hizbullah, while urging the transfer of the party’s weapons to the Lebanese Army. The patriarch’s call came ahead of scheduled talks during national dialogue sessions, under the sponsorship of President Michel Sleiman, aimed at reaching an agreement over a defense strategy that defines the resistance’s role, its relation to the Lebanese Army and the state’s authority over war-and-peace decisions. Following the formation of the new national-unity Cabinet, a heated debate arose between March 14 Christian parties and opposition groups over a clause in the ministerial statement on the resistance’s right to liberate occupied territories independently from the state. The Lebanese Forces and the Phalange Party along with several independent MPs said article six in the statement conflicted with international resolutions and the state’s monopoly of authority by granting the resistance an independent status. Article six of the statement highlights “Lebanon’s right to liberate its occupied territories by means of its army, resistance and people.” “The conventional army is alone to defend the nation and the resistance along with its arms should join the Lebanese Army when everyone resists the enemy,” Sfeir said. Sfeir’s statement preceded talks with Sleiman at Baabda Palace during which they tackled the issue of Hizbullah’s weapons, upcoming discussions over a national defense strategy, the abolishing of political sectarianism and the Palestinian refugees’ right of return. Sfeir, heading the Maronite Bishops Council, had earlier held talks with Free Patriotic Movement leader MP Michel Aoun after a break in contact between both men in the previous months. The meeting, which was described as positive, did not, however, lead to an agreement over the issue of Hizbullah’s weapons, though the bishops called for the restriction of arms to the Lebanese Army. The issue of Hizbullah’s weapons and Aoun’s alliance with the party has been the source of tensions between the patriarchy and the FPM leader in recent months. On Tuesday, Sfeir argued that a party which works for its personal interests at the expense of nation’s would “be working toward the destruction of the nation.” Bloody clashes broke out on May 7 between pro- opposition and government supporters in Beirut following a Cabinet decision to dismantle Hizbullah’s telecommunication network. Tackling Parliament Speaker Nabih Berri’s call to abolish political sectarianism, Sfeir reiterated his earlier statement, stressing the need to abolish political sectarianism from souls before records. Sfeir also emphasized that “democracy dictated that a majority rules and a minority opposed but today they joined in a national unity Cabinet; nevertheless, there are still obstacles which have not been removed yet.” Christian leaders rejected Berri’s call to form a national committee tasked with abolishing political sectarianism in the current circumstances, saying it would instigate a schism among the Lebanese while others tied it to the full implementation of the Taif Accord.

Economic front:

139 Privatization almost ignored Lebanon's policy statement December 7, 2009 Lebanonwire- After weeks of labor and excruciating and painstaking debate on every paragraph, line, word and period, the ministerial committee finally released the long-awaited Cabinet declaration which will be endorsed this week by Parliament without any modification. The divided ministers were at loggerheads over two main themes: resistance and privatization. Both March 14 and March 8 ministers reached a common understanding about the role of the resistance despite some reservations by some ministers. March 14 ministers, especially Telecom Minister Charbel Nahhas, who is not keen on transfering the entire state assets to the private sector, gave only somewhat obscure support to the concept of privatization. Privatization was mentioned in only one paragraph in the 22-page ministerial statement. According to the text, the government will proceed with the implementation of the economic and fiscal reform programs that were proposed in the five-year plan presented to donor countries during Paris III donor conference. “These reforms are designed to modernize the structure of the national economy, preserve its stability and bolster the chances of growth. Furthermore, Lebanon should liberate the rest of grants, assistances and loans form nations and international institutions which were pledged by the donor states. Also, the privatization programs will be executed according to the laws and rules set up by the public departments and to encourage the Lebanese to contribute to this (privatization) programs,” the paragraph said. Unlike other major developed countries that sold public assets to the private companies, Lebanon has few items for sale on its menu. Apart from electricity, water and a handful of properties partly owned by the central bank, Lebanon can only tempt investors with one mouth-watering product: the telecoms sector. Privatization has been supported by every government since 1998 but none of them has had the courage to translate these promises into real action. During talks on the current Cabinet statement, ministers had different views on how to approach privatization, with some calling for full privatization of state assets while others prefer to sell only some companies to the private sector. The head of the Progressive Socialist Party MP repeatedly warned against selling all of the state assets to the private sector, arguing that this step could come at the cost of both employees and consumers. Jumblatt, like other conservative economists, quickly pointed out the collapse of the capitalist system as evidenced by the global financial crisis over a year ago. Furthermore, the anti-privatization campaigners say the telecom generates over $1 billion in net revenues to the treasury, the second source of income for the state after the value-added tax. Some privatization advocates did not mask their fear that Nahhas may delay or even jeopardize the entire process of transferring part of the state equities to the private sector. Nahhas told reporters in his first press conference last month that he opposes transferring state-owned entities from public monopoly to private monopoly. This statement infuriated some freewheeling economists and investors who are hoping that Premier Saad Hariri will succeed where others have failed: privatizing state entities in less than two years. But Nahhas was careful to use the term full monopoly instead of partial, suggesting that he favors privatization only under tight and transparent conditions. Nahhas, who was personally named by opposition Free Patriotic Movement leader Michel Aoun, will probably proceed in the same path set by his predecessor Jebran Bassil. Bassil unequivocally supported selling a chunk of the lucrative cellular networks to a consortium of companies while the state retains a solid share in order to secure steady revenues. The former

140 telecom minister earlier said that the Lebanese public must be involved in the privatization process through the issuance of Initial Public Offerings (IPOs). Privatizing the cellular networks will probably be the easiest task of the state since this sector is lucrative and above all does not need major restructuring. International consultant firms estimated the value of the telecom sector in Lebanon before Bassil increased the number of cellular subscribers from 1.3 million to 2.4 million at $6 billion at least. Now with more subscribers, the sector will likely fetch a higher price. But the government will surely not find any investor with a shred of common sense to invest in electricity. With an annual deficit of more than $1.3 billion a year which mostly goes to buy fuel and gas oil, electricity has become a curse and a burden for every energy minister who thought that he could salvage the state-controlled Electricite du Liban (EDL). The Energy Ministry has more than a dozen plans prepared by successive ministers and consultant groups. But none of them saw the light of day or were even debated by Cabinet or Parliament. Economist Kamal Hamdan told The Daily Star earlier that restructuring electricity should precede any effort to privatize the telecom. Besides the financial troubles, EDL is also plagued with administrative and technical problems. Nearly 70 percent of Lebanon experiences severe power rationing, prompting officials to increase the capacity from the current 1,500 MW to more than 2,300 MW. New Finance Minister Raya Haffar Hassan explicitly said that the government will not spend an extra penny on electricity production. The minister added that involving the country’s private sector in other government projects should not be interpreted as privatization. “The private sector can, for example, help build certain projects under the concept of Build, Operate and Transfer. There are plenty of things the private sector can do to help the government,” Hassan added. She also argues that the state should make use of the massive amounts of cash held by Lebanese commercial banks. Caught between two diverse schools of thinking, the prime minister will try to neutralize all the obstacles standing before him in order to meet the promises he made to the donor countries and financial institutions. Hariri is eager to meet the conditions his father made to the donors at the Paris I and Paris II conferences. He will likely give his ministers a deadline to restructure and liberalize the productive sectors and most notably telecom and electricity. But Hariri cannot afford to sleep on the promises of his ministers as he is fully aware that the United States, Europe and leading international institutions will closely monitor the performance of the government in the economic and financial fields. The International Monetary Fund and all the rating agencies have heaped praise on the achievements of the Finance Ministry, but have cautioned that any delay in privatization could affect the credibility of Lebanon in the medium and long terms. Liberal economists say that the entire proceeds from privatization should be used to reduce the public debt which now stands at $48 billion. But the question remains whether Lebanon will see its first privatization transactions under the new Cabinet or will politicians again spoil the game? - Daily Star

Hong Kong offers incentives to Lebanese companies Daily Star staff- Wednesday, December 09, 2009- Lebanese companies will benefit from a $10.3 million buyer sponsorship package offered by the Hong Kong Trade Development Council (HKTDC) in 2010, said Peggie Liu, exhibitions manager of HKTDC. Providing more details of the package, Liu said that the initiative offers subsidized air ticket and hotel stay packages for international buyers to trade fairs

141 organized by HKTDC to be held up to March 2010. HKTDC is staging several major international trade fairs in the first quarter of 2010 at the Hong Kong Convention and Exhibition Center. Those fairs are of interest to Lebanese companies, some of which are the largest of their kind in Asia,” she said. She added that more than 300 Lebanese buyers visited HKTDC fairs in two consecutive years from 2008. Her remarks came during a conference held by HKTDC at Crown Plaza Hotel in Beirut to discuss matters of business cooperation to maximize trade potential between Lebanon and Hong Kong. HKTDC is the official trade promotion government body for Hong Kong and was established in 1966. It is the global marketing arm and service hub for Hong Kong-based manufacturers, traders and service exporters with more than 40 offices around the world. Liu described Hong Kong as being a region of free trade, world class infrastructure characterized by free flow of information which makes it an ideal platform. “Lebanon is an emerging market with tremendous potential. In 2008, the total trade value of Hong Kong and Lebanon reached $65 million, 33 percent higher than in 2007. In the first 10 months of 2009, the bilateral trade value increased by another 12 percent to $57 million,” she said. Liu added that a rise of export from Hong Kong to Lebanon was witnessed where the export value between the two counties jumped by 34 percent in 2008 and then a further 15 percent till October 2009. “To harness the potential of Lebanon, we will market our fairs intensively to encourage more trade with this market,” she said. For his part, Stephen Wong, HKTDC regional director in the Middle East and Africa region, said Hong Kong’s size is only around 1,000 square kilometers, which represents 10 percent of Lebanon’s area. However, he added, it is the largest trading market in the world with a trade volume of $700 billion. “Our sea port handles 26 million TEUs and we ship 6 tons of cargo every minute in Hong Kong,” he said. Wong also added that despite the fact that Hong Kong enjoys a trade volume of $700 billion, it suffers from a trade deficit because it buys more than it sells. The good news at the conference was given by Jihad Tannir, head of foreign relations at Beirut traders association, who said that a memorandum of understanding will be signed between HKTDC and Beirut traders associations in the aim to establish cooperation in terms of economic exchange. “This will allow us to promote fair exhibitions, and encourage bilateral relations which will reinforce the past business relations between the two countries,” he said. “This will enable us to regain our previous position as a commercial hub in the Middle East, and this goes with the policy of the new government.”

EIU forecasts Lebanon's real GDP growth at 5.8 percent in 2010 Daily Star staff- Wednesday, December 09, 2009: The Economist Intelligence Unit (EIU) said in 2009 that Lebanon has proven its ability to buffer external shocks, and the year turned out to be one of the best for the country in terms of economic performance, and consequently real GDP growth. The report was published by Bank Audi Weekly Monitor. The EIU forecasted an economic growth in Lebanon of 5.8 percent in 2010 and 5.5 percent in 2011, bearing in mind that such rates are deemed noteworthy, as they stem from a high base in 2009, since Lebanon was among the few MENA countries whoseeconomies did not curb in 2009 as a result of the crisis. According to the EIU, Lebanon’s forecasted real GDP growth rates in 2010 and 2011 compare well with the 3.1 percent annual average growth rate between 1998 and 2007, the last year for which actual data are available. It also indicated that there’s still room for further improving such

142 forecasts, especially if the political scene in Lebanon continues to demonstrate stability. “Exports of goods and services are likely to remain a strong driver of growth, as Lebanon benefits from renewed economic expansion elsewhere in the region, as domestic private consumption and investment growth remain constrained by the high cost of borrowing and as government consumption growth, though still positive, is curbed by the already large size of the fiscal deficit,” the EIU said. It added that development will remain uneven across sectors and growth would be highly concentrated in the capital. The EIU noted that the only risk that could threaten such healthy growth in Lebanon is political downturn. Regarding inflation in Leba-non, the EIU indicated that it has dropped sharply in 2009, mainly because of lower world commodity prices. In 2010 inflation is expected to pick up to an average of 3 percentas world commodity prices rise owing to strengthening global growth, before falling back slightly, to 2.9 percent, in 2011 as commodity price growth slows. The trajectory of the US dollar, to which the Lebanese pound is pegged, could however alter such forecasts if it varies beyond expectations in the coming two years. The note moved on to the country’s external sector and noted that Lebanon will continue to face a large, structural current-account deficit, which has averaged 13 percent of GDP a year over the past decade, but is usually offset by strong inflows of capital. Despite the sharp drop in oil prices in 2009, data for January- September suggest that the trade deficit widened, as spending on non-oil imports increased and export earnings fell slightly. However, the EIU estimated that strong growth in tourism receipts will have more than offset the trade deficit, taking the current- account deficit to 10percent of GDP in 2009 from 10.5 percent of GDP in 2008. The trade deficit is expected to widen in both 2010 and 2011 as the rise in the import bill more than offsets the rise in export earnings, especially in 2010 when oil prices are forecast to rebound strongly. However, as tourism grows further and remittances from Lebanese working abroad advance further, the current-account deficit would contract to 8.7 percent of GDP in 2011. Lastly, the formation of a new government should allow some progress with economic policymaking, which has largely remained frozen since the election campaign. Privatization is likely to remain a sensitive issue and consequently, the structural fiscal deficit, which is driven mainly by the cost of servicing the massive public debt stock, is unlikely to be seriously addressed by spending cuts. Lack of progress on the fiscal reforms sought by donors, along with global liquidity constraints, is likely to lead to further delays in disbursement of conditional aid pledged at the “Paris III” donor conference in 2007. – The Daily Star

Social front:

Lebanon's Palestinians: refugees for life December 6, 2009 Lebanonwire- Palestinian president Mahmud Abbas's visit to Beirut on Monday casts the spotlight on the plight of nearly 300,000 Palestinians in Lebanon who fear they are doomed to be refugees for life. Palestinian children sit on a pile of dirt at the war-battered refugee camp of Nahr Al-Bared. His brief trip comes amid renewed efforts to revive the Middle East peace process and concern in Lebanon's political circles that any deal struck on the refugee issue would be at the expense of the Lebanese. The majority of the refugees arrived in Lebanon following the creation of Israel in 1948. A second wave arrived in the 1970s after Jordan's then king Hussein kicked out the

143 Palestine Liberation Organisation and thousands of its fighters. The UN Relief and Works Agency for Palestine refugees (UNRWA) lists nearly 400,000 refugees in Lebanon. But Lebanese and Palestinian officials say the number actually resident in Lebanon may be as low as 250,000 as UNRWA does not strike off its figures Palestinians who move to other countries. The refugees that remain live in dire conditions in 12 camps across the country of four million inhabitants. They rely heavily on UNRWA for educational, health and other assistance because under Lebanese law they are banned from practising most professions or from owning property. While their presence in Lebanon was supposed to be short-lived, their chance of ever returning to their homeland has dimmed with every failed attempt to settle the Israeli-Palestinian conflict. And the glimmer of hope raised following US President Barack Obama's bid to reinvigorate the peace process has been replaced by more bitterness and cynicism as each side digs in its heels. For the Lebanese, any mention of permanently settling the Palestinians in the tiny Mediterranean country prompts an outcry and warnings that this would upset the country's confessional balance and further exacerbate political divisions. Fresh in the minds of many is the key role the Palestinians played in Lebanon's 1975-1990 civil war, Israel's 1982 assault on Beirut and, more recently, the deadly 2007 battle at a Palestinian refugee camp in northern Lebanon between an Al-Qaeda-inspired group and the Lebanese army. But specialists and human rights groups warn that unless the refugee issue is addressed, the camps, already considered breeding grounds for extremism, could one day explode. Mekkawi said that although UNRWA requested 50 million dollars in 2006 to improve conditions in the camps, donors had responded with only 16 million dollars which represent "a drop in the ocean". Souheil El-Natour, a Palestinian analyst and member of the leftist Democratic Front for the Liberation of Palestine, said the refugee issue had fallen victim to Lebanon's sectarian divisions. Analysts warn that denying Palestinians basic rights and putting the camps off-limits to the Lebanese army allow extremist groups and outlaws to gain a foothold. "Their plight is not only the responsibility of the Lebanese government, it's an international responsibility." -AFP

Lebanon's 'non-ID Palestinians': no legal status, no hope Feature, December 6, 2009 Lebanonwire- Saeed Mohamed Hammo technically does not exist as far as the world is concerned. But as he recounts his life as a Palestinian refugee in Lebanon, his story is very much real. Hammo, 61, is among an estimated 3,000 to 5,000 so-called "non-ID Palestinians" in Lebanon who are considered illegal aliens and who have lived in legal limbo, many of them for decades. They have no freedom of movement, no right to work and no access to medical services or education. And their plight, due to be discussed on Monday during a brief visit to Lebanon by Palestinian president Mahmud Abbas, is passed on to their children and grandchildren. "These are people who are very much alive but at the same time they are not recognised as such," said Souheil El-Natour, a Beirut-based Palestinian analyst. "How can you consider a physically living person as non-existent? "This is a complete negation of humanitarian principles." Lebanon recognises as refugees only Palestinians who fled here following the creation of the state of Israel in 1948. The UN Relief and Works Agency for Palestine refugees (UNRWA) lists nearly 400,000 of them. But Lebanese and Palestinian officials say the number of refugees actually resident in Lebanon may be as low as 250,000 as UNRWA does not strike off its figures Palestinians who move to other countries. The

144 majority of the non-ID Palestinians came to Lebanon in the 1970s following the events known as Black September, when Jordan kicked out the Palestine Liberation Organisation (PLO) and thousands of Palestinian fighters. As such, they are not considered refugees by Lebanese authorities and have no official status. The issue of the non-ID Palestinians has grown in prominence since the end of Lebanon's 1975-1990 civil war as many of them have begun having children and grandchildren who have inherited their status. Ali Mahmud Ahmed Abu Ali, 62, arrived in Beirut in 1973 when he was a member of the PLO. He has since settled as a refugee and married twice in Lebanon. His six children however have inherited his shadowy legal status and do not exist on paper. "I want for my children what any normal parent would want," he lamented. "But I know that because I am Palestinian I was put on this earth to suffer." Jamileh Mohammed Salloum, 40, is Lebanese and married a non-ID Palestinian at the age of 18 without realising the hardships that awaited her and the three children she would bear. A Lebanese woman is legally not entitled to pass on her citizenship to her children or spouse. Human rights groups, non-governmental organisations and analysts warn that the issue of the non-IDs needs urgent attention as they face more obstacles than fellow refugees and could be recruited by extremist groups. "There is a political and security aspect to all this," said Jaber Abu Hawash of the Beirut-based Palestinian Human Rights Organisation. "More than 90 percent of these people have problems, whether mental, social or otherwise. "And the pressure they are under just to survive can push them towards terrorism." But such arguments have fallen on deaf ears with successive Lebanese governments that have largely turned a blind eye to the fate of the refugees who are barred from practising most professions in Lebanon or from owning property. The political unrest that has plagued Lebanon in recent years has also done little to improve their bleak existence. The government began issuing identification papers to the undocumented Palestinians in 2008 but that process was abruptly stopped on the grounds that some of the applications were fraudulent. Plans are underway, however, for the government to resume issuing the IDs. -AFP

Pleas to end domestic violence fall on deaf ears Daily Star staff- Monday, December 07, 2009: For years, Umm Radwan’s (not her real name) daily routine never changed. Her husband would start beating her and her children early in the morning, only stopping to rape her, eat, and sleep. If the mother of four pleaded with her husband to stop his aggression, he would take a knife to their throats or shove their heads down the toilet. If they fell unconscious, her husband would rouse them witha cold shower and then continue his beatings. Although she eventually left her husband, Umm Radwan and her children remain deeply scarred by their experiences. Despite repeated pleas, the police never intervened to help Umm Radwan. When her husband was sent to prison, it was for theft, not family violence. “My son started acting like his father and carrying a knife. He said to me once he remembered being 6 years old, when his dad would hit him, and how I would run to the police to get help and they wouldn’t come.” Umm Radwan’s son now lives on the streets, and she says she is both scared of and for him. “I have been screaming for 20 years and no one has listened to me or helped me,” she said. It might be too late for Umm Radwan, but women’s rights activists are stepping up action to ensure no women have to endure such suffering in the future. KAFA, a Lebanese non-governmental organization dedicated to eradicating

145 gender-based violence, child abuse and human trafficking, last week defended the need for a family-violence bill. Speaking at the Lebanese Parliament, KAFA representatives said such a law was needed urgently. No statistics about domestic violence exist in Lebanon, where the issue is heavily stigmatized, but KAFA estimates at least 75 percent of women have experienced some form of physiological or physical violence. Lebanese law also favors men: the penal code has no specific laws relating to domestic violence and does not criminalize marital rape. Currently, Lebanon’s 15religious courts preside over cases dealing with domestic violence and usually disadvantage women on such issues as custody and divorce. Because of the social and legal obstacles surrounding domestic violence, many women often choose to stay with violent partners for the sake of their children, campaigners say. “Domestic violence is still considered a private matter and talking about it is still a social taboo,” KAFA’s director Zoya Rouhana told MPs. “This prohibits traditional legal systems from defining domestic violence and from making it public so that it can fall under the authority of the law.” If introduced, the KAFA family-violence bill would see a special, secular family court established, where cases of domestic violence would by ruled on in the presence of judges, psycho-therapists, social workers, and forensic experts. Specialized police units with female officers trained in domestic violence issues, would be opened across Lebanon’s six governorates. A law would also be formulated obliging anyone who witnesses domestic violence to report it. The Lebanese government should pass the bill “to show a clear refusal of these violent actions and to send a clear message rejecting popular traditions justifying domestic violence,” Rouhana said. According to KAFA lawyer Layla Awada, the law also gives women the right to ask for restraining orders. “The restraining order also states that a man must provide a safe place of residence for his wife and family, cannot use her personal belongings, pay alimony and undergo a rehabilitation treatment.” The Woman and Child Parliamentary Committee began coordinating with women rights activists in 2007 and has discussed and presented draft laws on several laws. However, political bickering has held back progress on crucial gender-equality issues like nationality, personal status or a women’s political quota, the committee’s head, MP Gilberte Zouein said. “A huge responsibility falls on the Lebanese government … because it is unable to guarantee gender equality,” she added. The state of women’s rights in Lebanon stands in stark contrast with the Lebanese Constitution, which guarantees equality between men and women before the law, and Lebanon’s obligations to gender equality in accordance with its adherence to international agreements, Rouhana said. – Additional reporting by Carol Rizk and Omar Katerji

Women's group asks Berri to back nationality law Daily Star staff- Thursday, December 10, 2009- A delegation of the National Gathering for Eliminating Discrimination against Women presented a letter to Speaker Nabih Berri Wednesday asking him to include the issue of nationality laws on the Parliament’s agenda. The letter was presented in the name of the campaign “My Nationality: a Right for me and my Children” and in the name of all Lebanese women with foreign husbands. It asked Berri to tackle the case of giving these women the right to pass their nationality to their children during parliamentary sessions to discuss the ministerial statement because it was a just, humanitarian and social cause. –The Daily Star

146 Palestine Geo strategic front

Egypt Invites The Reconciliation Committee To Resume Unity Talks Saturday December 05, 2009 - IMEMC & Agencies The Egyptian leadership issued an invitation to the Palestinian National Reconciliation Committee to visit Cairo in an attempt to resume the talks and efforts to end internal divisions and achieve national unity. Secretary-general of the Committee, Eyad Al Sarraj, said that committee delegates would be traveling to Egypt on Sunday to hold a meeting with Egypt’s General Intelligence Chief, Omar Suleiman in an attempt to resolve some issues mentioned in the Egyptian document for national unity. Al Sarraj told the Man News Agency that the delegates will look into the means to conduct the needed modifications especially since Hamas is refusing to sign the document as it is. Committee members met Saturday with Hamas leaders in Gaza, while Hamas said that it would sign the deal after the modifications it suggested are implemented.

Social front:

LRC: “14 Homes Demolished In Jerusalem In November” Tuesday December 08, 2009 Saed Bannoura - IMEMC News- Land Research CenterThe Land Research Center (LRC) of the Arab Studies Society in Jerusalem reported that the Israeli authorities conducted 187 against Jerusalem in November, and demolished 14 Palestinians homes in addition to issuing orders to demolish 170 homes. The center prepares and publishes its reports in cooperation with the Civil Coalition to Defend Palestinian Rights in Jerusalem. The LRC stated that it documented 187 violations against East Jerusalem including 186 violations against the Palestinian natives of the city. The Jerusalem Municipality demolished 14 Palestinians homes in the city; 7 in Silwan, 2 in Al Thoruy, 2 in Beit Hanina, 2 in Al Esawiyya and one in Jabal Al Mokabbir neighborhood. 122 Palestinians were rendered homeless. A society for women in Silwan neighborhood in the Old City was also demolished. The municipality also issued 170 orders to demolish Palestinian homes in occupied East Jerusalem; the orders target 60 homes in Jabal Al Mokabbir, 34 homes and 10 structures in Al Esawiyya, 25 homes in Beit Hanina, 22 homes in Samir Amis, 3 homes in Al Thoury, 3 homes in the Old City, and one home in Al Tour. This came while Israeli settlers forced three families out of their homes in Sheikh Jarrah. The Center stated that Israel has a plan to change the demography of Jerusalem by decreasing the percentage of Palestinians living in the city. In 2000, the Jerusalem Municipality said that at maintaining a %78 majority for the Jews in Jerusalem. The LRC further reported that the Annexation Wall built around the city aims at annexing more Palestinian lands and isolating Jerusalemite Palestinians from their city. An example of this issue is Al Esawiyya, Abu Dis, and Al Sawahra as the Annexation Wall isolated the three areas from Jerusalem although the neighborhoods are considered part of the Old City of Jerusalem. This prevented the residents from having access to publish facilities, educational facilities and even hospitals. On November 9, 2009, an 18-year-old from Al Z’ayyim neighborhood in east Jerusalem, died at an Israeli roadblock after the army prevented an ambulance from transferring him to Al Makassid Hospital. The center added that the Israeli claim to ‘temporarily freeze’ settlement

147 activities in Jerusalem is fake as Israel is ongoing with its violations against the Palestinians and their homes while at the same time encouraging the settlers to occupy more Palestinian homes and to build illegal outposts. LRC further said that the violations against Jerusalem are parallel to ongoing violations against the West Bank as Israel issued 825 orders targeting Palestinian homes since the beginning of 2009. Israel also uprooted 14000 trees in the West Bank this year and act that directly violates the International Law and the Fourth Geneva Conventions.

Iraq

Political front: Elections:

Iraq sets March 7 for poll after political wrangling Reuters- December-09-2009- Iraq set a long awaited date for a general election next year, but later pushed it back by one day to March 7. Naseer al-Ani, President Jalal Talabani’s chief of staff, told Reuters the presidency council had picked the new date late on Tuesday, after an earlier date of March 6. The date was announced a few hours after a series of car bombs ripped through Baghdad, killing 112 people and wounding 425, a brutal reminder of the threat still posed by the Sunni Islamist insurgency 6-1/2 years after the U.S. invasion. The election date reduces risk to a U.S. plan to end combat operations in Iraq next August ahead of full withdrawal by 2012. “The new date is March 7. We don’t want to upset anyone, we want this to go smoothly,” al-Ani said, without elaborating on the reason for the last-minute change. Tareq Jawher, adviser to the parliament of Iraq’s semi-autonomous region of Kurdistan, said Kurds had rejected the March 6 date because it coincided with the anniversary of a 1975 treaty between former dictator and Iranian Shah Reza Pahlavi that Kurds say marginalised them. March 7 comes after a constitutional deadline for the poll, but is still just before Prime Minister Nuri al-Maliki’s mandate expires, thus reducing the risk of a political vacuum that could undermine Iraq’s young democracy and fuel instability. The ballot was initially expected in mid-January, but Vice President Tareq al-Hashemi, a Sunni Arab, on Nov. 18 vetoed parliament’s election law. He argued it did not provide enough representation for refugees, many of whom are Sunni. Hashemi then threatened to veto a revised law that did not address his concerns and instead allocated more seats to Kurds. Lawmakers, cajoled by U.S. and U.N. officials, late on Sunday agreed to a last-minute compromise on the distribution of seats, and Hashemi dropped his objections. The political wrangling over the election law reveals how deep sectarian divides still run in Iraq. Many Sunnis, a minority that controlled Iraq under dictator Saddam Hussein, have at times struggled to accept the dominance of the country’s Shi’ite majority since Saddam’s overthrow. That has fed a Sunni Islamist insurgency, believed to be behind Tuesday’s attacks, which were the deadliest bombings in Iraq in more than a month.

US welcomes passing of Iraqi election law Kuwait News Agency -December-08-2009- The United States welcomed on Monday the passing of the election law in Iraq. "We welcome the approval of the revised election law by the Iraq Council of Representatives yesterday. This action paves the way for Iraq to

148 hold national elections in 2010, in accordance with Iraq's constitutional framework", said State Department Spokesperson Ian Kelly in a press briefing. "We see it as an important and positive step for the development of democracy, and we commend the Iraqi political leaders for negotiating seriously to reach an agreement on the law. We look to the Independent High Election Commission to ensure transparency in election procedures and to take the necessary steps to create and maintain an informed citizenry," noted Kelly.

Iraq likely to hold poll on Feb 27as rift ends Gulf Times December-08-2009 Iraq is likely to select February 27 as the date for next year's general election after lawmakers overcame fierce disagreements over the distribution of seats, officials in the presidency council said. A late February election, although after the constitutional deadline for the ballot to be held, should not interfere with the US military’s plans to wrap up combat operations in Iraq next August ahead of a full withdrawal by 2012. Vice President Tareq al-Hashemi, whose veto of a law needed for the election to take place had thrown vote preparations into disarray, indicated to his colleagues on the three-person council that the February 27 date suited him, a spokesman said. Hashemi blocked the original election law because he said it did not give sufficient representation to Iraqis who fled overseas when their country exploded into bloodshed. Many of them are Sunnis. But Hashemi, a Sunni Arab, has now told President Jalal Talabani and Vice President Adel Abdul-Mehdi to issue a decree setting the election date, spokesman Ali al-Mashhadani said. Talabani, an ethnic Kurd, was due to address the nation later yesterday. An official in Abdul-Mehdi’s office said the vice president, a Shia, had also agreed to the February 27 date. The parliamentary election comes at a critical juncture for Iraq as it emerges from years of sectarian slaughter triggered by the 2003 US invasion and prepares to stand on its own feet as US troops pull out. The debate in parliament over the law exposed how raw religious, sectarian and ethnic tensions remain in Iraq despite a sharp fall in overall violence in the past 18 months. After Hashemi’s veto, lawmakers from the majority Shia and minority Kurd communities joined forces to pass an amended election law that reduced the number of seats in Sunni areas, such as the volatile northern province of Nineveh. As a result, Hashemi had been expected to veto the amended law as well. But a last-minute deal between parliamentarians on Sunday night, 10 minutes before the expiry of a deadline for Hashemi to cast a second veto, rescued the election law and set the ballot back on track. The agreement restored some seats to Sunni areas and also placated Kurdish complaints by giving their semi- autonomous northern provinces a handful more seats. Under the new law—welcomed by Washington as a “decisive moment for Iraq’s democracy”—the number of seats in parliament will increase from 275 to 325, including three additional ones for provinces in Kurdistan. Of the remaining 15 seats, eight will be allocated to minorities, including Christians, and seven to smaller parties who win national support but not enough votes to gain seats at provincial level. The UN yesterday urged Talabani to announce “as soon as possible” the date for the general election. A spokeswoman for the UN Assistance Mission for Iraq (Unami) said a quick announcement was needed. “We now want the Iraqis to set a date as soon as possible so that election organisers can start the administrative process,” said Unami’s Eliana Nabaa.

149 ‘Optimistic’ signs on election accord: Iraq VP Associated Press December-06-2009 Iraq's vice president said Saturday there are "optimistic signs" toward a political agreement on parliamentary elections, but warned he could again veto the plan if it does not meet his demands for greater Sunni outreach in the balloting. Tariq al-Hashemi has held up the planning for scheduled Jan. 16 elections because he wants to give a greater voice to Iraqis living abroad, most of whom are fellow Sunni Arabs and could boost Sunni seats in the new 323-seat parliament. Some officials have proposed a delay in the election until late February or early March — which could complicate the Pentagon withdrawal timetable that calls for U.S. combat missions to halt at the end of August. Al-Hashemi has until Sunday to decide to reinstate his veto. Parliament is expected to convene to discuss possible compromise plans, but lawmakers failed Saturday to get a quorum for an emergency session on the election impasse. Al- Hashemi told state-run al-Iraqiya television he sees progress. But he left open the option of using the veto again if parliament failed to address his demands. “There are optimistic signs and I hope the remaining simple points of dispute will be resolved by the political groups,” he said. He added, however, a message to some Shiite blocs that have objected to the possibility of concessions to Sunnis, who were privileged under Saddam Hussein. After the U.S.-led invasion in 2003, Iraq’s majority Shiites took command of the nation’s political leadership and security forces. “I hope the hard line adopted by some people in parliament will not compel me to use the veto again,” al-Hashemi said without naming specific lawmakers.

Iraq’s vote won’t affect US drawdown: Pentagon Khaleej Times December-10-2009 Iraq’s decision to hold parliamentary elections in March will not interfere with the US military’s plans to reduce the number of troops in the country, the Pentagon said. President Barack Obama has pledged to end U.S combat operations in Iraq by Aug. 31, 2010, ahead of a full pullout by the end of 2011. The U.S. force in Iraq is supposed to be reduced to 50,000 by end of August from around 115,000 now. “Gen. (Ray) Odierno does not anticipate any delay in getting down to 50,000 troops by the end of August 2010,” Pentagon Press Secretary Geoff Morrell said when asked whether the March 7 date for the parliamentary election would affect the U.S. drawdown schedule. Morrell is accompanying U.S. Defense Secretary Robert Gates on a trip to Afghanistan. Political bickering had delayed the vote from mid-January. U.S. officials say the 60-day period after Iraq’s election will likely reveal whether the country will tip back into sectarian bloodshed or move toward stability and peace. Odierno, the top U.S. commander in Iraq, wants to retain a muscular U.S. presence in the country, capable of assisting Iraqi troops or police, until there is clarity about the security situation. Under a bilateral security pact signed last year, all U.S. troops must withdraw from Iraq by the end of 2011. The date for the end of combat operations is not included in the agreement but was set by Obama as part of a pledge to U.S. voters to end the war in Iraq. The Pentagon has played down any connection between the drawdown in Iraq and plans to send 30,000 more troops to Afghanistan. Violence in Iraq has fallen sharply in the past 18 months but a series of car bombs on Tuesday ripped through Baghdad, killing 112 people, Iraq’s deadliest attack in six weeks.

Iraqi MPs reach agreement on vote law

150 The Peninsula December-07-2009 A spokesman for Iraq’s parliament speaker says a political accord has been reached to clear the way for parliamentary elections next year. Omar Al Mishhadani, the spokesman for Parliament Speaker Ayad Al Samarie, had no details of the pact reached after marathon talks yesterday. A late-night emergency session was called for parliament members to vote on the deal. But it appears to resolve objections from Vice President Tariq Al Hashemi, who has vetoed the election law on complaints it didn’t give an adequate political voice to fellow Sunnis. Kurds had also objected to the distribution of seats among the country’s 18 provinces. The election is scheduled for January 16, but a delay of a month or more now appears likely. Meanwhile, Gunmen killed four Iraqi policemen at a checkpoint west of Baghdad in an early morning attack yesterday, police officials said. Political leaders held urgent talks to try to clear the way for parliamentary elections, which are scheduled for next month but likely to be delayed because of the bickering over voting rules and allocation of seats. The attack came as security officials warned of a possible rise in insurgent attacks before next year’s election and the US withdrawal of combat troops due by the end of August. It also follows an attack last month that left 13 dead in the same area. Gunmen stormed the checkpoint in Abu Ghraib, on the outskirts of the Iraqi capital, at about 7am yesterday, killing one policeman on duty and three others on a break, according to two police officials who spoke on condition of anonymity because they were not authorised to give information to the media. Last month, 13 villagers in the Abu Ghraib area were killed in an attack possibly linked to tribal rivalries. Witnesses said gunmen in Iraqi army uniforms abducted and killed the 13, whose bodies were later found with gunshot wounds to the head. They included a local leader of Iraq’s largest Sunni party, which once helped fight Al Qaeda. Overall violence has decreased sharply across Iraq, but major bombings and other attacks still occur. But it seems very unlikely the elections could be held on time. Some officials have proposed a delay in the election until late February or early March — which could complicate the Pentagon withdrawal timetable that calls for US combat missions to halt at the end of August.

Geo strategic front:

Ex-UN inspector condemns Blair, Bush on Iraq Khaleej Times December-05-2009 George W. Bush and Tony Blair’s conviction that Iraqi leader Saddam Hussein was a threat blinded them to the lack of evidence justifying a war to depose him, an ex-UN weapons inspector said Saturday. Hans Blix, who led the UN weapons inspection team in the run-up to the 2003 invasion, told the Daily Mail that the then US and British leaders had “misled themselves and then they misled the public” about the reason for the conflict. The presence of weapons of mass destruction was the main justification for the US-led war in the absence of explicit UN approval, but Blix’s team found nothing in the run-up to the invasion, nor were such weapons found afterwards. “They were convinced they had their witch in front of them, and they searched for the evidence and believed it without critical examination,” the 81-year-old told the newspaper. Blix said he warned Blair not to invade, saying: “It would prove paradoxical and absurd if 250,000 troops were to invade Iraq and find very little.” He added that if Britain had been committed to seeking UN approval for the invasion in the form of a Security Council resolution, “they could have slowed the military build-up ...

151 but that wasn’t the case”. The last of Britain’s combat troops withdrew from Iraq earlier this year, but an official inquiry into the conflict launched last month has renewed questions about why Blair took the country to war and why. The Daily Mail said that, contrary to reports, Blix had not been called to give evidence to the inquiry, which is expected to hear from Blair himself early next year.

Economic front Social front

Iraqi PM arrives at parliament for grilling over blasts Agence France-Presse- December-11-2009- Iraqi Prime Minister Nuri al-Maliki arrived at parliament Thursday for questioning by MPs over devastating attacks that wreaked havoc in Baghdad this week, an AFP reporter said. He was received on what is a rare visit by political ally and deputy parliament speaker Khalid al-Attiya. Earlier, one of the prime minister’s advisors said Maliki would submit to a grilling over Tuesday’s bombings. “Parliament will host Maliki over the recent attacks,” said Yassin Majid, Maliki’s media advisor. He will go alone, and if there is sufficient time, then parliament will listen to the ministers in charge of security,” who have also been summoned. Lawmakers have demanded answers over five coordinated blasts in the capital that killed 127 people and wounded around 450, undermining government claims of improved security ahead of March 7 elections. Wednesday evening, Maliki sacked Baghdad’s security chief over the bombings, which have been claimed by Al-Qaeda.

90 killed in spate of Baghdad explosions Khaleej Times December-08-2009 An official at Iraq's Interior Ministry says at least 90 people have been killed and more than 115 wounded in a series of coordinated blasts around Baghdad. Three bomb-rigged cars exploded in quick succession on Tuesday, striking the Labor Ministry, a court complex and the new site of Iraq’s Finance Ministry — whose previous building was destroyed in an August blast. Earlier, a suicide bomber struck a police patrol in southern Baghdad. The Interior Ministry official spoke on condition of anonymity because he was not authorized to speak to media. These were the latest high-profile blasts apparently aimed at sensitive Iraqi government buildings, police said. The explosions rattled buildings across the capital, and undermined a fragile sense of security ahead of an auction of oilfield contracts this weekend, when executives from top oil firms will fly into town, and before an election next year. Three people died and five were wounded in a first blast in a southern Baghdad suburb, police said. Others were killed and wounded in at least three successive explosions in the city centre half an hour later, police said. Some police sources said there had been five explosions, two near judicial buildings, one near a university, another near in a central Baghdad commercial district and the earlier one in the south. Smoke billowed from at least two sites. The blasts are the first large, high-profile explosions in Baghdad since Oct. 25, when two massive truck bombs killed 155 people at the justice ministry and Baghdad governorate headquarters. A smaller blast, which some police officials said might have involved the accidental explosion of a hidden stockpile of munitions, killed seven children at a school in the Shi’ite slum of Sadr City on Monday. The major bomb attacks in the heart of the Iraqi capital in October and a similar earlier attack in August marked a change of tactics

152 for Iraq’s stubborn insurgency. Rather than stage frequent smaller-scale attacks against soft targets like marketplaces or mosques, insurgent groups like al Qaeda now appear to be aiming for spectacular and less frequent strikes against heavily defended government targets. Overall violence triggered by the 2003 U.S.-led invasion has fallen dramatically. The health ministry in November reported the lowest monthly death toll of Iraqi civilians in 6-1/2 years.

Business & Politics in the Muslim World News Monitoring Dec 1, to Dec 11, 2009 Weekly Report Central Asia Uzma Siraj

Table of Contents Azerbaijan Political Front………………………………………………………………………..4 Geo Strategic Front…………………………………………………………………..4 Economic /Energy Front……………………………………………………………..5 Social Front…………………………………………………………………………..6 Kazakastan Political Front………………………………………………………………………..6 Geo Strategic Front…………………………………………………………………..7 Economic /Energy Front……………………………………………………………..7 Social Front…………………………………………………………………………..7 Kyrgyzstan Political Front………………………………………………………………………...8 Geo Strategic Front…………………………………………………………………..8 Economic /Energy Front……………………………………………………………..8 Social Front…………………………………………………………………………..9 Tajikistan Political Front………………………………………………………………………...9 Geo Strategic Front…………………………………………………………………..9 Economic /Energy Front…………………………………………………………….10 Social Front………………………………………………………………………….10 Turkmenistan Political Front………………………………………………………………………..10 Geo Strategic Front………………………………………………………………….10 Economic /Energy Front…………………………………………………………….11 Social Front………………………………………………………………………….11 Uzbekistan Political Front………………………………………………………………………..12 Geo Strategic Front………………………………………………………………….12 Economic /Energy Front…………………………………………………………….12

153 Social Front……………………………………………………………………….....12

Outline Azerbaijan Political Front • Council of Europe selects observation mission members to monitor municipal elections in Azerbaijan • Azerbaijani opposition to start talks to combine efforts in early 2010: opposition leader • It is wrong to oppose unification of opposition: Azerbaijan Classic Popular Front Party Geo Strategic Front • Iran To Lift Visa Regime For Azerbaijanis • Azerbaijan Insists On 'Self-Rule' For Karabakh • Azerbaijani president receives former British PM Tony Blair • Washington makes efforts to achieve final solution to Nagorno-Karabakh conflict: U.S. Deputy Secretary of State • Iran willing to expand bilateral ties with Azerbaijan: FM Economic /Energy Front • Azerbaijan will keep cutting Internet prices • U.S forecasts five scenarios for Azerbaijan's oil production • Azerbaijan announces most sold car brand in capital • Average price on non-residential premises in Baku made public • ADB energy mission to visit Baku • SOCAR is confident of demand for any volumes of Azerbaijani gas Social Front • Azerbaijani Lawmakers Tighten Child Labor Law • Azerbaijani parliament to hold hearings on violence against women • Azerbaijan releases statistics of domestic violence against women • New synagogue to be built in Baku Kazakastan Political Front • Kazakh Uranium Magnate Charged With Corruption • Kazakh President Signs 'Privacy' Law • Kazakhstan Approves New National Security Committee Chief Geo Strategic Front • Doubts Rise As Kazakhstan Prepares For OSCE Chairmanship Economic /Energy Front • Kazakhstan sets ceiling on key fuel price • Kazakhstan ratifies a number of trade agreements for Customs Union • Nazarbayev urges businessmen to get involved in social projects • Kazakh leader says to enforce diverse economy Social Front • Kazakh Teacher Not Allowed To Wear Hijab At School • Kazakh Protesters Detained At Rally For Sacked KNB Chief

154 • Kazakh Health Officials Unveil Swine-Flu Vaccine • Kazakhstan's Rights Record Comes Under Fresh Criticism Kyrgyzstan Political Front • Kyrgyz Emergency Situations Minister Resigns • Former Kyrgyz Security Council Chief Attacked • Kyrgyz High Court Returns Journalist's Murder Case To Osh Court • Kyrgyz Activists To Rally For Former Minister; Verdict Delayed • Parliament reveals no violations in Justice Ministry’s work Geo Strategic Front • Kyrgyz Opposition Figure: U.S.'s Afghan Success Vital For Central Asia • NATO launches project for reserve troops in Kyrgyzstan • Former Kyrgyz Foreign Minister appointed SCO Secretary General Economic /Energy Front • Kyrgyzstan's Largest Hydropower Station Hit By Shutdown • Malaysia to assist Kyrgyzstan in construction of 20 mini hydropower plants • Kyrgyzstan signs supply deal for 540MkWh with Kazakhstan • Utility hikes to affect purchasing power of Kyrgyz population • New Kyrgyz property tax to ruin business-community Social Front • Kyrgyz, Chechen NGOs Receive French Award • HRW Tells Kyrgyzstan To Stop Harassing Rights Monitors • Kyrgyzstan to attend UN Conference on Social Impacts of Economic Crisis Tajikistan Political Front • Tajik Politician Questions President's Election Order • President Rahmon addresses the Public Council Geo Strategic Front • Tajikistan supports all measures taken to stabilize the situation in Afghanistan: MFA Economic /Energy Front • Sangtuda-1 HPP administration announces reduction in electricity generation • ADB continues energy sector support in Tajikistan • Tajik CCI head, Russian trade representative discuss cooperation issues Social Front • Tajiks Fear First Swine-Flu Death • 'SMS Divorces' Cut Tajik Migrants' Matrimonial Ties To Home Turkmenistan Political Front • Chief of Ashgabat Police Department dismissed • Head of Turkmenistan's State Service on Drugs reprimanded Geo Strategic Front • Turkmenistan to host International Conference on disarmament • Ambassador of Belgium accredited in Turkmenistan • Turkmenistan and European Union discuss prospects for partnership

155 Economic /Energy Front • Second International Power Industry Forum opens in Ashgabat • New marine terminal for storage and shipment of liquefied natural gas commissioned on Turkmen coast of Caspian Sea • Inauguration of Turkmenistan-China gas pipeline scheduled for December 14

Social Front • Turkmenistan To Pardon Thousands Of Prisoners • At Least 10 Turkmen Children Die In Bus Accident • Turkmenistan attempts to lure tourists • International conference opens in Turkmenbashi city under auspices of UNESCO Uzbekistan Political Front • Uzbekistan Cracks Down Ahead Of Elections • Dozens Of Uzbeks Detained For Islamic Extremism • Excluded Aspirant Criticizes Uzbek Election Process Geo Strategic Front

Economic /Energy Front • Uzbekistan Withdrawing From Regional Power Grid • Uzbekistan withdraws from Central Asian power grid • Uzbek power grid withdrawal set to cause shortages Social Front • Uzbek Students 'Regularly' Expelled For Not Picking Cotton • Uzbek Government Demands Repayment From Students Abroad • Rights Group Criticizes Uzbekistan's Repressive Policies

Summery Azerbaijan Political Front • Council of Europe selects observation mission members to monitor municipal elections in Azerbaijan The Congress of Local and Regional Authorities of the Council of Europe has selected members of the observation mission to monitor municipal elections in Azerbaijan. Turkish MP Gaya Doganoglu will lead the delegation composed of Nigel Mermagen (UK), Istvan Borbely (Hungary), Dobrica Milovanovic (Serbia), Gudrun Mosler- T?rnstr?m (Austria) to observe the local elections. • Azerbaijani opposition to start talks to combine efforts in early 2010: opposition leader “The politics requires the opposition to combine efforts under current circumstances,” Azerbaijan Democratic Party Chairman Sardar Jalaloglu said. He said Azerbaijani opposition will again mull combining efforts in a run up to the parliamentary elections. • It is wrong to oppose unification of opposition: Azerbaijan Classic Popular Front Party

156 “If we receive a proposal to join some opposition union in run up to the coming municipal elections, we will accept it,” Azerbaijan’s opposition Classic Popular Front Party Chairman Mirmahmoud Miralioglu said. Geo Strategic Front • Iran To Lift Visa Regime For Azerbaijanis Iran plans to unilaterally cancel its visa regime with Azerbaijan, RFE/RL's Azerbaijani Service reports. Iranian Ambassador to Azerbaijan Mammad Bagir Bahrami told a press conference in Baku today that any Azerbaijani citizen will be able to travel to Iran without a visa and stay there for one month. • Azerbaijan Insists On 'Self-Rule' For Karabakh Azerbaijani Foreign Minister Elmar Mammadyarov says Baku insists on restoring control over Nagorno-Karabakh despite accepting the right to self-determination as a core principle for resolving the Armenian-Azerbaijani dispute over the territory, RFE/RL's Armenian Service reports. • Azerbaijani president receives former British PM Tony Blair President of Azerbaijan Ilham Aliyev received former British Prime Minister Tony Blair on Dec. 1. Mr. Blair recalled the Azerbaijani President's visits to the United Kingdom. He pointed out the fact leading British companies were operating in Azerbaijan, saying, he was well aware that the country enjoyed the most rapidly growing economy in the world • Washington makes efforts to achieve final solution to Nagorno-Karabakh conflict: U.S. Deputy Secretary of State "The U.S. efforts toward solving the Nagorno-Karabakh conflict through mediation of OSCE Minsk Group has a significant impact on strengthening of relations between Azerbaijan and Armenia," U.S. Deputy Secretary of State James Steinberg said at the 17th OSCE Ministerial Council in Athens. • Iran willing to expand bilateral ties with Azerbaijan: FM Iranian Foreign Minister Manouchehr Mottaki met outgoing Azerbaijani Ambassador Abbasali Hasanov on Dec. 3. Mottaki praised the role of the two countries` ambassadors in developing relations between Iran and Azerbaijan Economic /Energy Front • Azerbaijan will keep cutting Internet prices Price of broadband Internet services will continue to decline in Azerbaijan, said Elmir Velizade, Deputy Minister of Communications and Information Technologies. He added that the current prices are at the level of prices charged in the CIS area. • U.S forecasts five scenarios for Azerbaijan's oil production The U.S. Energy Information Administration (EIA) repored that in 2015, 2020, 2025 and 2030 hydrocarbon production in the country will be 1 million barrels per day. In the case of high world oil prices, the EIA predicted Azerbaijan's hydrocarbon production would hit 0.9 million barrels per day in 2020, 2025 and 2030. • Azerbaijan produces Azeri Light oil. The Baku-Tbilisi-Ceyhan pipeline exports Azeri Light to the Turkish port of Ceyhan via. The Baku-Supsa pipeline also exports this light crude oil. Azeri Light is extracted from the field Azeri-Chirag-Guneshli operated by BP. • Educational project undertaken by Azerbaijan jointly with World Bank undergoes last audit

157 International audit company Baker Tilly Azerbaijan finished check of project "Development of education sector" implemented on basis of the credit agreement between the Azerbaijani government and the International Development Association (IDA).“Auditors checked financial figures, flow of funds from special currency accounts and procedure of purchases. • Azerbaijan announces most sold car brand in capital Azerbaijan Participants of Property Market Public Union has completed the October monitoring into market of used cars in Baku. The monitoring revealed that prices on cars averaged $16,100 in the capital in October. • Average price on non-residential premises in Baku made public Azerbaijan Participants of the Property Market Public Union has released outcome of October the monitoring into the market of non-residential premises. • ADB energy mission to visit Baku A delegation of the Asian Development Bank led by Pil-Bae Song, the director for energy and natural resources at the Department for Central and Western Asia, will visit Azerbaijan next week. • SOCAR is confident of demand for any volumes of Azerbaijani gas European Union countries are 'scared' that SOCAR is planning to export increasing volumes of oil and gas to Azerbaijan's Eastern neighbours at their prices, SOCAR investment and marketing vice-president Elshad Nasirov said. Social Front • Azerbaijani Lawmakers Tighten Child Labor Law The Azerbaijani parliament has voted to make it illegal to employ children under the age of 15 to work, RFE/RL's Azerbaijani Service reports. The legislation amends the labor code and will become law after it is signed by President Ilham Aliyev. • Azerbaijani parliament to hold hearings on violence against women Parliament of Azerbaijan will hold hearings on “Let`s say no to violence against women." • Azerbaijan releases statistics of domestic violence against women The Azerbaijani parliament held a hearing entitled "Say NO to violence against women" on Dec. 2. Parliament’s Deputy Chairman Bahar Muradova said that currently the problem of violence against is one of the urgent issues facing the country. • New synagogue to be built in Baku A new synagogue will be built in Baku. The new synagogue for mountainous Jews will replace old one at Shamsi Badalbeyli Street, which will be removed because of Winter Garden construction. Kazakastan Political Front • Kazakh Uranium Magnate Charged With Corruption Kazakh prosecutors have filed a criminal case against the Central Asian country's former uranium company boss, Mukhtar Dzhakishev, accusing him of theft and corruption. Several senior Kazakh officials have been jailed in high-profile corruption cases over the last two years, and analysts say this masks an intensifying struggle within the political elite • Kazakh President Signs 'Privacy' Law

158 - Kazakh President Nursultan Nazarbaev has signed a controversial law on privacy protection, RFE/RL's Kazakh Service reports. The law, which Nazarbaev signed on December 8, prohibits any "unsanctioned interference into an individual's private life," including the use or acquisition of any written, audio, or video material related to a person's private life. • Kazakhstan Approves New National Security Committee Chief The Kazakh Senate today approved Adil Shayakhmetov as the new head of the country's National Security Committee (KNB), RFE/RL's Kazakh Service reports. Shayakhmetov told journalists in Astana that his predecessor, Amangeldy Shabdarbaev, should be praised for his "professionalism and contribution to the improvement of the KNB's work. Geo Strategic Front • Doubts Rise As Kazakhstan Prepares For OSCE Chairmanship Proposals for Kazakh President Nursultan Nazarbaev to be named ''president for life'' have contributed to concerns about Kazakh democracy. Even before Kazakhstan's bid to chair the Organization for Security and Cooperation in Europe (OSCE) was accepted in late 2007, controversy over the country's dubious rights record and dedication to democratic principles was simmering. Economic /Energy Front • Kazakhstan sets ceiling on key fuel price Oil-producing Kazakhstan will set a price ceiling on gasoline from next month, the government said on Thursday in a move aimed at easing growing discontent in the crisis- hit Central Asian nation. • Kazakhstan ratifies a number of trade agreements for Customs Union Kazakh President Nursultan Nazarbayev has signed the laws “On Ratification of the Protocol on Common Tariff Preferences in the Customs Union” and “On Ratification of the Protocol for Applying, in Exceptional Circumstances, Import Customs Duties That Are Different from the Unified Tariff of the Customs Union,” the president’s press office said on Tuesday. • Nazarbayev urges businessmen to get involved in social projects – Kazakh President Nursultan Nazarbayev has urged Kazakhstani entrepreneurs to actively participate in social projects. “I believe today is the right time for our businessmen to do something for the public welfare,” the president said at Paryz award ceremony in Astana on Wednesday. • Kazakh leader says to enforce diverse economy President Nursultan Nazarbayev told global oil and metals majors working in Kazakhstan on Friday he would force them to help diversify the economy as the government pledged $67 billion to modernise industries." Social Front • Kazakh Teacher Not Allowed To Wear Hijab At School A high school geography teacher in the southeastern Kazakh city of Taldy-Qorghan has turned to the Prosecutor's Office for permission to wear an Islamic head scarf (hijab) while teaching, RFE/RL's Kazakh Service reports. • Kazakh Protesters Detained At Rally For Sacked KNB Chief -- Five people were detained today outside President Nursultan Nazarbaev's home in the capital, Astana, while protesting the sacking of the chairman of the Kazakh National Security Committee (KNB), RFE/RL's Kazakh Service reports.

159 • Kazakh Health Officials Unveil Swine-Flu Vaccine Kazakh health officials today presented to the media Refluvac, a drug that they say vaccinates against the swine flu, RFE/RL's Kazakh Service reports. • Kazakhstan's Rights Record Comes Under Fresh Criticism Kazakhstan's human rights record came under fresh criticism today as the former Soviet republic prepared to take over the chair of Europe's top security body for the first time from Greece. Kyrgyzstan Political Front • Kyrgyz Emergency Situations Minister Resigns Kyrgyz Emergency Situations Minister Kamchybek Tashiev has resigned, RFE/RL's Kyrgyz Service reports. Tashiev walked out of a cabinet session today saying that he would ask President Kurmanbek Bakiev to release him from the post. • Former Kyrgyz Security Council Chief Attacked A former senior Kyrgyz Security Council official has been hospitalized after a reported attack in the capital, Bishkek, late on December 9, RFE/RL's Kyrgyz Service reports. Bolot Januzakov, who was formerly secretary of the Security Council, suffered a broken leg and has severe bruises on his body. • Kyrgyz High Court Returns Journalist's Murder Case To Osh Court The Kyrgyz Supreme Court has ruled that the case of slain journalist Alisher Saipov should be sent back to an Osh city court for further investigation, RFE/RL's Kyrgyz Service reports. Sapiov's father, Avaz Saipov, initiated the Supreme Court appeal, hoping that his son's murder would be reinvestigated by a different court. • Kyrgyz Activists To Rally For Former Minister; Verdict Delayed -- Supporters of former Kyrgyz Defense Minister Ismail Isakov announced today they will hold protests demanding his release from jail, RFE/RL's Kyrgyz Service reports. Isakov, a lieutenant general who was defense minister from 2005-2008, is being tried in Bishkek for financial mismanagement and corruption while in office. • Parliament reveals no violations in Justice Ministry’s work Working group of the Kyrgyz Parliament did not reveal any gross violations in activity of the Kyrgyz Justice Ministry, a lawmaker Dinara Moldosheva said in Parliament Monday. The Justice Ministry demonstrated the lowest rate of the state service law violation among 11 departments checked by the committee. Geo Strategic Front • Kyrgyz Opposition Figure: U.S.'s Afghan Success Vital For Central Asia A former Kyrgyz government official says U.S. President Barack Obama's Afghan strategy is very important for the stability of Central Asia, RFE/RL's Kyrgyz Service reports. Former State Property Minister Ravshan Jeenbekov told RFE/RL • NATO launches project for reserve troops in Kyrgyzstan Thanks to NATO Kyrgyzstan has launched a new pilot project for social adaptation of reserve troops, Colonel Marat Kenjisariev, the first Assistant Minister of Defense said at the project’s presentation in Bishkek Thursday. • Former Kyrgyz Foreign Minister appointed SCO Secretary General Muratbek Imanaliev, Former Minister of Foreign Affairs of Kyrgyzstan was appointed a Secretary General of the Cooperation Organization (SCO) as official representatives of all member nations supported the nominee.

160 Economic /Energy Front • Kyrgyzstan's Largest Hydropower Station Hit By Shutdown Mechanical problems at Kyrgyzstan's Toktogul hydropower station early today caused two of its four major power generators to shut down, RFE/RL's Kyrgyz Service reports. • Malaysia to assist Kyrgyzstan in construction of 20 mini hydropower plants Kyrgyzstan plans to construct 20 mini hydropower plants with assistance of Malaysia in 3-5 years, press service of the Kyrgyz Foreign Ministry reported. The construction is detailed in framework agreement, signed between the board of directors of small and medium Kyrgyz energy sector development program and a Malaysian company Seloga Holdings in Kuala Lumpur. • Kyrgyzstan signs supply deal for 540MkWh with Kazakhstan Kyrgyzstan has signed a deal with Kazakhstan on supply of 540 kWh to the republic in vegetative period, Daniyar Usenov, the Prime Minister of Kyrgyzstan told the press conference Wednesday • Utility hikes to affect purchasing power of Kyrgyz population Utility hikes will affect purchasing power of population in Kyrgyzstan, Nikolai Biarslanov, chief specialist of the National Center for Mountain Regions Development told the press conference Tuesday. • New Kyrgyz property tax to ruin business-community “New Kyrgyz property tax will ruin business-community,” Asylbek Jeenbekov, Member of Parliament from the Social Democratic Party said at the Tuesday’s session. “Housing tax is yet acceptable, as mostly the rich people will pay it. But for businesses it is inadmissible as it will ruin the business-community. Social Front • Kyrgyz, Chechen NGOs Receive French Award The Kyrgyz nongovernmental organization Citizens Against Corruption is one of the winners of the French Liberty, Equality, and Brotherhood Award for 2009, RFE/RL's Kyrgyz Service reports. • HRW Tells Kyrgyzstan To Stop Harassing Rights Monitors Human Rights Watch is urging the Kyrgyz government to immediately stop harassing human rights monitors doing research in southern Kyrgyzstan. Kyrgyz authorities recently denied entry to prominent Tajik human rights activist Nigina Bakhrieva • Kyrgyzstan to attend UN Conference on Social Impacts of Economic Crisis Kyrgyzstan will take part in the United Nations’ Ministerial Conference on Social Impacts of the Economic Crisis, UN press service in Kyrgyzstan reported. The meeting with participation of ministers from Eastern Europe, Central Asia and Turkey will take place in Almaty, Kazakhstan on December 7-8 Tajikistan Political Front • Tajik Politician Questions President's Election Order A Tajik opposition politician has challenged President Emomali Rahmon to expand on a recent order demanding that government officials avoid interfering in upcoming parliamentary elections. • President Rahmon addresses the Public Council

161 -- Speaking at the session of the Public Council, President Emomali Rahmon noted today that as chairman of the Public Council he is well aware of proposals and requests made members of the Public Council, the national news agency Khovar reports. Geo Strategic Front • Tajikistan supports all measures taken to stabilize the situation in Afghanistan: MFA Davlat Nazriyev, the head of the Tajik MFA information department, yesterday voiced Tajikistan’s position on U.S. President Barack Obama’s Afghan strategy. We will recall that President Obama announced on December 1 that 30,000 additional U.S. troops will be deployed to Afghanistan. Economic /Energy Front • Sangtuda-1 HPP administration announces reduction in electricity generation According to open joint-stock company (OJSC) Sangtudinskaya ES-1, which runs the Russian-built Sangtuda-1 hydroelectric power plant (HPP), only one of four units of the Sangtuda-1 station will operate beginning on December 2, 2009. • ADB continues energy sector support in Tajikistan The Asian Development Bank (ADB) has approved a $500,000 technical assistance (TA) grant to develop a project design and feasibility study for a new regional power rehabilitation project in Tajikistan, according to ADB’s Resident Mission in Tajikistan. • Tajik CCI head, Russian trade representative discuss cooperation issues Head of Tajikistan’s Camber of Commerce and Industry (CCI), Sharif Said, yesterday met here with Russia’s Trade Representative to Tajikistan, Aleksandr Yakovlev, according to the CCI press service. Social Front • Tajiks Fear First Swine-Flu Death A woman suffering from swine-flu-like symptoms has died in northern Tajikistan in what could be the country's first reported death from the H1N1 virus, RFE/RL's Tajik Service reports. • 'SMS Divorces' Cut Tajik Migrants' Matrimonial Ties To Home Aziza Kobilova, a 25-year-old housewife in eastern Tajikistan's Rasht region, recently received notice that her marriage of four years was over. The end was unexpected and quick. Her husband, a migrant laborer working in Russia, first telephoned to tell Kobilova that he was divorcing her. Turkmenistan Political Front • Chief of Ashgabat Police Department dismissed President Gurbanguly Berdimuhamedov signed a decree dismissing Abdy Atanyyazov from the post of Chief of Police of Ashgabat city "for serious shortcomings in the work." • Head of Turkmenistan's State Service on Drugs reprimanded President of Turkmenistan Gurbanguly Berdimuhamedov has reprimanded Haman Garayev, head of the State Service of Turkmenistan on drugs. The official was penalized "for the low level of organization of information and advocacy activities to combat illegal drug trafficking Geo Strategic Front • Turkmenistan to host International Conference on disarmament

162 The first consultative meeting on the preparation and holding of the International Conference on Disarmament Issues in Central Asia and Caspian Basin, scheduled for the first half of 2010 in Ashgabat, was held at the Ministry of Foreign Affairs of Turkmenistan on 2 December 2009. • Ambassador of Belgium accredited in Turkmenistan The speaker of the Mejlis of Turkmenistan, Akja Nurberdieva, accepted credentials of Ambassador Extraordinary and Plenipotentiary of the Kingdom of Belgium, Paul De Witte. • Turkmenistan and European Union discuss prospects for partnership Following the entry into force of the Lisbon Treaty, which is designed to lay the foundations for the functioning of the EU in the coming years, cooperation between Turkmenistan and the EU will successfully continue and reach a new stage of development. Economic /Energy Front • Second International Power Industry Forum opens in Ashgabat The 2nd International Exhibition and Scientific Conference titled "Major Trends in Development of Turkmenistan's Power Industry" started at the Exhibition Palace of Ashgabat on December 7. • New marine terminal for storage and shipment of liquefied natural gas commissioned on Turkmen coast of Caspian Sea A marine terminal for storage and shipment of liquefied gas has been commissioned at the port of Kiyanly on the Turkmen coast of the Caspian Sea. As the Turkmenistan.ru correspondent reports, the opening ceremony was attended by oil and gas industry leaders, representatives of administrations and public organizations of the sea region. • Inauguration of Turkmenistan-China gas pipeline scheduled for December 14 The Turkmenistan-China gas pipelines will be inaugurated on December 14. The inauguration ceremony will be held at Samandepe field in Lebap province of Turkmenistan, and Chinese President Hu Jintao will attend it. "This is an outstanding event. Social Front • Turkmenistan To Pardon Thousands Of Prisoners Turkmen President Gurbanguly Berdymukhammedov has signed a decree granting amnesty to nearly 4,000 convicts in honor of a national holiday, RFE/RL's Turkmen Service reports. A total of 3,934 prisoners will be released on December 12, Turkmenistan's Neutrality Day. • At Least 10 Turkmen Children Die In Bus Accident At least 10 schoolchildren, a teacher, and a bus driver died when their minibus fell into the Karakum canal in Turkmenistan's southern Akhal Province last week, RFE/RL's Turkmen Service reports. • Turkmenistan attempts to lure tourists The billboard depicts white sandy beaches blanketed in sunshine, hotels with gleaming marble facades and swarms of vacationers enjoying Turkmenistan’s newest resort town. Turkmenistan attempts to lure tourists • International conference opens in Turkmenbashi city under auspices of UNESCO The International Conference "The Role of Information and Communication Technologies, Science and Planning in Improving Quality of Education" opened in the

163 city of Turkmenbashi on December 1. The forum is attended by experts and representatives of various agencies of the United Nations on education, science and culture, the European Center of UNESCO for higher education and the regional office of this organization in Bangkok, as well as experts in the field of education from Europe, Asia and America. Uzbekistan Political Front • Uzbekistan Cracks Down Ahead Of Elections New York-based Human Rights Watch says Uzbek authorities have been increasing assaults on human rights activists ahead of upcoming parliamentary elections. Holly Cartner, Europe and Central Asia director at Human Rights Watch, said in a statement that "anyone who tries to report on human rights in Uzbekistan clearly risks getting attacked, arrested, or worse." • Dozens Of Uzbeks Detained For Islamic Extremism An Uzbek rights activist says some 60 practicing Muslims are being detained in southern Uzbek prison on religious extremism charges, RFE/RL's Uzbek Service reports. Isroil Rizaev, from the Tashkent-based human rights organization Ezgulik (Benevolence), told RFE/RL that young practicing Muslim men in the southern Sirdaryo region were initially accused of extremism based on their affiliation with the new religious organization Birodarlar (Brothers). • Excluded Aspirant Criticizes Uzbek Election Process A member of a pro-presidential political party in Uzbekistan has harshly criticized the party chairman and the election process after she was not allowed to run in the upcoming parliamentary elections, RFE/RL's Uzbek Service reports. Komila Sodiqova, a member of the Liberal Democratic Party (LDP) from Asaka, a town in the eastern Andijon Province, told RFE/RL that the regional LDP chairman rejected her candidacy for the December 27 elections despite the fact that she applied on time and provided all necessary documents. Geo Strategic Front

Economic /Energy Front • Uzbekistan Withdrawing From Regional Power Grid Uzbekistan today is expected to officially leave the Soviet-era regional power grid that unites the country with its three Central Asian neighbors. The move could leave Uzbekistan’s impoverished neighbors, Kyrgyzstan and Tajikistan, facing severe electricity shortages during the winter months. • Uzbekistan withdraws from Central Asian power grid The move is expected to lead to power shortages in some countries Uzbekistan is withdrawing from a Soviet-era power grid which linked it to other countries in Central Asia. • Uzbek power grid withdrawal set to cause shortages The authoritarian nation says it will withdraw Tuesday from the Soviet-era power grid that unites four Central Asian countries, prompting fears of electricity shortages that could make for a winter of hardship in impoverished Tajikistan and Kyrgyzstan. Uzbek power grid withdrawal set to cause shortages Central Asia braces for shortages as Uzbekistan plans to pull out of electricity grid

164 Social Front • Uzbek Students 'Regularly' Expelled For Not Picking Cotton Uzbek students who refuse to work in cotton fields during the harvest season in Uzbekistan are being expelled from high schools and universities, RFE/RL's Uzbek Service reports. • Uzbek Government Demands Repayment From Students Abroad The Uzbek government's scholarship foundation is demanding repayments from parents whose children stayed abroad after attending foreign universities on state scholarships, RFE/RL's Uzbek Service reports. • Rights Group Criticizes Uzbekistan's Repressive Policies Human Rights Watch (HRW) says the Uzbek government continues its repressive policies and is still detaining many rights activists despite the recent release of political prisoner Sanjar Umarov, RFE/RL's Uzbek Service reports.

Detailed Report Azerbaijan Political Front • Council of Europe selects observation mission members to monitor municipal elections in Azerbaijan The Congress of Local and Regional Authorities of the Council of Europe has selected members of the observation mission to monitor municipal elections in Azerbaijan. Turkish MP Gaya Doganoglu will lead the delegation composed of Nigel Mermagen (UK), Istvan Borbely (Hungary), Dobrica Milovanovic (Serbia), Gudrun Mosler- T?rnstr?m (Austria) to observe the local elections. The delegation is due to arrive in Azerbaijan on Dec. 7-8 to get acquainted with the preparations for the elections and will be in Azerbaijan on Dec. 21-24 to observe the elections. The delegation is scheduled to meet with government representatives, NGOs, media, experts on election and municipalities in Azerbaijan. http://www.today.az/news/politics/57821.html • Azerbaijani opposition to start talks to combine efforts in early 2010: opposition leader “The politics requires the opposition to combine efforts under current circumstances,” Azerbaijan Democratic Party Chairman Sardar Jalaloglu said. He said Azerbaijani opposition will again mull combining efforts in a run up to the parliamentary elections. He noted that the new union will bring together strong opposition parties that have previously collaborated and who are willing to participate in the 2010 parliamentary elections. The ADP chairman said the opposition will launch talks next year. “We will start talks to join efforts in January after we assess the outcome of the municipal elections,” he added. http://www.today.az/news/politics/57887.html • It is wrong to oppose unification of opposition: Azerbaijan Classic Popular Front Party “If we receive a proposal to join some opposition union in run up to the coming municipal elections, we will accept it,” Azerbaijan’s opposition Classic Popular Front Party Chairman Mirmahmoud Miralioglu said. “We have always favored unification of

165 Azerbaijani opposition,” he said. “It is wrong to oppose unification of opposition. Azerbaijani opposition needs to unite.” Miralioglu said. http://www.today.az/news/politics/58008.html Geo Strategic Front • Iran To Lift Visa Regime For Azerbaijanis BAKU -- Iran plans to unilaterally cancel its visa regime with Azerbaijan, RFE/RL's Azerbaijani Service reports. Iranian Ambassador to Azerbaijan Mammad Bagir Bahrami told a press conference in Baku today that any Azerbaijani citizen will be able to travel to Iran without a visa and stay there for one month. "If necessary, Azerbaijanis may return home and then come back to Iran," he said. Bahrami said the new procedure will take effect on January 1. He said that if the change proves successful, the Iranian side may prolong to three months the period that Azerbaijanis may spend in Iran without a visa. Bahrami said he hopes Azerbaijan will reciprocate and lift the existing visa requirement for Iranians who wish to travel to Azerbaijan. However, Baku may decide not to do so, as it fears a mass influx of Iranian citizens. According to unofficial estimates, up to 25 percent of Iran's population of 70 million are ethnic Azeris. They constitute a majority in the northwestern provinces of East and West Azerbaijan, which border the republic of Azerbaijan. http://www.rferl.org/content/Iran_To_Lift_Visa_Regime_For_Azerbaijanis/1897369.htm l • Azerbaijan Insists On 'Self-Rule' For Karabakh YEREVAN -- Azerbaijani Foreign Minister Elmar Mammadyarov says Baku insists on restoring control over Nagorno-Karabakh despite accepting the right to self- determination as a core principle for resolving the Armenian-Azerbaijani dispute over the territory, RFE/RL's Armenian Service reports. Mammadyarov said today in a speech at a Organization for Security and Cooperation in Europe conference in Athens that "Providing self-governance for Nagorno-Karabakh within Azerbaijan will be a just and durable solution, and it can dramatically reduce tensions and challenges for peace and stability in the region." The remark highlighted the conflicting parties' differing public interpretations of the basic principles of a Karabakh settlement put forward by the U.S., Russian, and French cochairs of the OSCE Minsk Group. The proposed agreement calls for the liberation of Azerbaijani territories surrounding Karabakh and a future referendum of self-determination in the Armenian-controlled territory. An Azerbaijani Foreign Ministry spokesman said last month that the principle of self-determination does not call into question Azerbaijan's sovereignty over Karabakh. The region's predominantly Armenian population could only determine the extent of its self-rule within Azerbaijan, he said. Armenian officials insist, however, the Karabakh Armenians would be able to vote for independence, reunification with Armenia or return under Azerbaijani rule in the would-be referendum. In his speech, Mammadyarov also accused Armenia of occupying almost 20 percent of his country's internationally recognized territory, displacing hundreds of thousands of Azerbaijanis, and destroying their cultural heritage. Speaking at the OSCE forum later in the day, Eduard Nalbandian accused Mammadyarov of seeking to "distort" the essence of the Karabakh dispute and international efforts to resolve it. Still, both ministers noted that the parties have moved closer to reaching a compromise peace accord.

166 http://www.rferl.org/content/Azerbaijan_Insists_On_SelfRule_For_Karabakh_/1893635. html • Azerbaijani president receives former British PM Tony Blair President of Azerbaijan Ilham Aliyev received former British Prime Minister Tony Blair on Dec. 1. Mr. Blair recalled the Azerbaijani President's visits to the United Kingdom. He pointed out the fact leading British companies were operating in Azerbaijan, saying, he was well aware that the country enjoyed the most rapidly growing economy in the world. President Ilham Aliyev praised the two countries' relations as “rapidly developing”.“We started our cooperation in the energy sphere and now it covers a wide range of fields,” he said. The President recalled his last visit to the United Kingdom, saying it was “fruitful” and produced “good results”.President Aliyev also pointed out the fact a large number of British firms operated in Azerbaijan, calling them “large investors”. Following the meeting the Azerbaijani President hosted a working dinner in honor of Tony Blair. http://www.today.az/news/politics/57853.html • Washington makes efforts to achieve final solution to Nagorno-Karabakh conflict: U.S. Deputy Secretary of State "The U.S. efforts toward solving the Nagorno-Karabakh conflict through mediation of OSCE Minsk Group has a significant impact on strengthening of relations between Azerbaijan and Armenia," U.S. Deputy Secretary of State James Steinberg said at the 17th OSCE Ministerial Council in Athens. He noted that as the OSCE Minsk Group co- chair, the United States is working for the once and for all solution to the Nagorno- Karabakh conflict, which will have a positive impact on stability and economic development in the region. Steinberg added that the conflict settlement remained one of the issues focused by the OSCE and Corfu process was also directed toward this issue. “The United States also has a number of proposals to develop new mechanisms to solve the conflict." http://www.today.az/news/politics/57852.html • Iran willing to expand bilateral ties with Azerbaijan: FM Iranian Foreign Minister Manouchehr Mottaki met outgoing Azerbaijani Ambassador Abbasali Hasanov on Dec. 3. Mottaki praised the role of the two countries` ambassadors in developing relations between Iran and Azerbaijan. He said the Iranian government was keen to expand the bilateral cooperation with Azerbaijan. Hasanov thanked the ministry for the support “shown to the embassy during my tenure”.On the bilateral relations, the ambassador stressed there was great potential to expand them in a wide range of fields. URL: http://www.today.az/news/politics/57933.html Economic /Energy Front • Azerbaijan will keep cutting Internet prices Price of broadband Internet services will continue to decline in Azerbaijan, said Elmir Velizade, Deputy Minister of Communications and Information Technologies. He added that the current prices are at the level of prices charged in the CIS area. “Providers need time to make next wave of discounts. Each company makes every effort to provide quality services and the quality of broadband Internet is at an acceptable level,” he added. Internet prices were last cut from AZN 130 to AZN 60 per 1 mbps on September 1. The prices were down fivefold from early this year. URL: http://www.today.az/news/business/57921.html

167 • U.S forecasts five scenarios for Azerbaijan's oil production The U.S. Energy Information Administration (EIA) repored that in 2015, 2020, 2025 and 2030 hydrocarbon production in the country will be 1 million barrels per day. In the case of high world oil prices, the EIA predicted Azerbaijan's hydrocarbon production would hit 0.9 million barrels per day in 2020, 2025 and 2030. In the event of low oil prices, the EIA predicted Azerbaijan's hydrocarbon production to hit 1.2 million barrels per day in 2025, and 1.3 million in 2030. In 2010, 2015 and 2020, the country's production levels will be 1.1 million barrels per day. In high economic growth, the EIA predicts liquid hydrocarbon production in Azerbaijan to hit 1.1 million barrels per day in 2010, 2015, 2020, 2025 and 2030. In the event of a low economic liquid hydrocarbon growth rate, production will reach 1.1 million barrels per day in 2010, 1 million in 2015 and 0.9 million in 2020, 2025 and 2030. • Azerbaijan produces Azeri Light oil. The Baku-Tbilisi-Ceyhan pipeline exports Azeri Light to the Turkish port of Ceyhan via. The Baku-Supsa pipeline also exports this light crude oil. Azeri Light is extracted from the field Azeri-Chirag-Guneshli operated by BP. The oil is also extracted by the State Oil Company of the Azerbaijan Republic at its own expense from onshore and offshore fields. Azerbaijan has 57 oil fields; 18 are offshore. According to the EIA forecast, crude oil and condensate production in the Caspian region in 2010 will hit 2.9 million barrels per day, 3.8 million in 2015, 4.1 million in 2020, 4.3 million in 2025, 4and .6 million in 2030. URL: http://www.today.az/news/business/57978.html • Educational project undertaken by Azerbaijan jointly with World Bank undergoes last audit International audit company Baker Tilly Azerbaijan finished check of project "Development of education sector" implemented on basis of the credit agreement between the Azerbaijani government and the International Development Association (IDA).“Auditors checked financial figures, flow of funds from special currency accounts and procedure of purchases. It is said in the report of auditors that sources of funds and use are reflected correctly in accordance with instructions of the World Bank (WB)," the Azerbaijani Education Ministry said. Credit program "Development of education sector" has been implemented since 2003 and WB has provided $18 million in loan for the first stage (5 years) of the program. The loan agreement between WB and the Azerbaijani government on agroindustrial complex was signed on Sept. 1, 2003. Loan in the amount of $18 million was granted under the terms of IDA. Share of the Azerbaijani government makes 2.80 million in the project and funds of the Soros Foundation - $0.18 million. The first stage of Education System Development Strategy, designed for 2003-2013, will be implemented within the framework of the program. The first stage is designed for 2003- 2007, the second one - 2007-2010, the third stage - 2010-2013. The bank is prepared to invest $61 million for 10 years of implementation of the program. URL: http://www.today.az/news/society/57895.html • Azerbaijan announces most sold car brand in capital Azerbaijan Participants of Property Market Public Union has completed the October monitoring into market of used cars in Baku. The monitoring revealed that prices on cars averaged $16,100 in the capital in October. About 40.2 percent of 7,100 cars involved in the monitoring were put on sale in October and the rest in previous months. For already

168 two consecutive years cars of Mercedes-Benz brand hold a solid 1st place with share of 38.6 percent, a rise of 4.6 percent from September. Nine brands hold 82.5 percent of the used car market. The remaining 17.5 percent was shared by vehicles of more than 85 different brands owned by 20 firms. Experts note decline in demand and supply of cars produced in 1997-1998 while demand for cars produced after 2000 is rising. Experts also say demand for SUV has significantly increased (a rise of 26.9 percent). URL: http://www.today.az/news/business/57980.html • Average price on non-residential premises in Baku made public Azerbaijan Participants of the Property Market Public Union has released outcome of October the monitoring into the market of non-residential premises. The monitoring indicates that non-residential premises cost $2,992 per square meter on average in Baku. URL: http://www.today.az/news/business/58019.htm • ADB energy mission to visit Baku A delegation of the Asian Development Bank led by Pil-Bae Song, the director for energy and natural resources at the Department for Central and Western Asia, will visit Azerbaijan next week. The four-day visit aims to consider funding energy projects in the country. URL: http://www.today.az/news/business/58067.html • SOCAR is confident of demand for any volumes of Azerbaijani gas European Union countries are 'scared' that SOCAR is planning to export increasing volumes of oil and gas to Azerbaijan's Eastern neighbours at their prices, SOCAR investment and marketing vice-president Elshad Nasirov said. "Our priority is the European Union, but we need investment and we need participation from other countries," Nasirov said at the first international Azerbaijani investment conference in London today. SOCAR is planning a major series of new projects, including a petrochemical complex and compression facility on Azerbaijan's border with Russia, increased exports to Iran, Turkey, Greece and other countries. "We are in negotiation over a pipeline that will transport gas to the EU through Turkey and Bulgaria. We already have a memorandum of understanding," Nasirov said. "Decisions will be made purely on a commercial basis, they will not depend on political issues," he said. "We cannot compete with Russia. It is and will be for many years the biggest gas supplier. But any buyer and seller needs the market to be as diverse as possible. So it is natural for Europe to seek alternative supplies. Whatever volume we can produce, we can be sure that it will find a buyer," Nasirov said. "We will begin to export gas to Europe from our new fields in 2016, including deep layers of the Chirag field," Nasirov said. URL: http://www.today.az/news/business/58060.html Social Front • Azerbaijani Lawmakers Tighten Child Labor Law BAKU -- The Azerbaijani parliament has voted to make it illegal to employ children under the age of 15 to work, RFE/RL's Azerbaijani Service reports.

The legislation amends the labor code and will become law after it is signed by President Ilham Aliyev. Parliament deputy Hadi Racabli said during the December 4 legislative session that anyone employing children would be punished under the new law. Panah Huseyn, an opposition deputy, said there are some 2 million children in Azerbaijan who are not socially protected. Meanwhile, Siyavush Novruzov of the ruling Yeni Azerbaijan

169 (New Azerbaijan) party, told RFE/RL that the state is taking care of children and providing them with newly built schools http://www.rferl.org/content/Azerbaijani_Parliament_Passes_Child_Labor_Law/1896514 .html • Azerbaijani parliament to hold hearings on violence against women Parliament of Azerbaijan will hold hearings on “Let`s say no to violence against women." The event will bring together representatives of international organizations, including UN, the Council of Europe, OSCE as well as officials of ministries of internal affairs and justice, General Prosecutor's Office, State Committee on Family, Women and Children. : http://www.today.az/news/society/57863.html • Azerbaijan releases statistics of domestic violence against women The Azerbaijani parliament held a hearing entitled "Say NO to violence against women" on Dec. 2. Parliament’s Deputy Chairman Bahar Muradova said that currently the problem of violence against is one of the urgent issues facing the country. “Next year we are to pass a bill on prevention of domestic violence,” she said. It was noted during the hearing that Azerbaijan's law enforcement agencies take relevant states to combat domestic violence against women. Service 102 launched by the Ministry of Internal Affairs operates at a stretch in three languages and accepts complaints in this regard. Azerbaijan has registered 11,389 facts of violence against women in 2009. URL: http://www.today.az/news/politics/57901.html • New synagogue to be built in Baku A new synagogue will be built in Baku. The new synagogue for mountainous Jews will replace old one at Shamsi Badalbeyli Street, which will be removed because of Winter Garden construction. The project of the new synagogue is nearing completion. The construction will begin soon.“We believe that our wishes will be realized because President Ilham Aliyev supports us," Leader of the mountainous Jewish community Semyon Ikhiilov said. URL: http://www.today.az/news/society/57920.html Kazakastan Political Front • Kazakh Uranium Magnate Charged With Corruption ASTANA (Reuters) - Kazakh prosecutors have filed a criminal case against the Central Asian country's former uranium company boss, Mukhtar Dzhakishev, accusing him of theft and corruption. Several senior Kazakh officials have been jailed in high-profile corruption cases over the last two years, and analysts say this masks an intensifying struggle within the political elite. Charges of illegally selling uranium deposits that had previously caused concerns among foreign investors have not been included in the case and will be investigated separately, the Kazakh Prosecutor General's office said.

Dzhakishev, credited with making Kazakhstan a top global uranium producer while also running the state uranium firm Kazatomprom, earlier denied all charges against him."The investigation charges former Kazatomprom president Mukhtar Dzhakishev with theft by way of embezzling a state company's property," Nurdaulet Suindikov, a spokesman for the prosecutor's office, told reporters. He said a total of 100 million tenge ($600,000) had

170 been stolen from Kazatomprom. He did not give a date for the trial. Suindikov said Dzhakishev had also taken bribes from prospective suppliers to secure procurement tenders. Dzhakishev, under arrest and in prison since May, could not be reached for comment. http://www.rferl.org/content/Kazakh_Uranium_Magnate_Charged_With_Corruption/190 0718.html • Kazakh President Signs 'Privacy' Law ASTANA -- Kazakh President Nursultan Nazarbaev has signed a controversial law on privacy protection, RFE/RL's Kazakh Service reports. The law, which Nazarbaev signed on December 8, prohibits any "unsanctioned interference into an individual's private life," including the use or acquisition of any written, audio, or video material related to a person's private life. The legislation has led to protests from journalists, opposition politicians, and human rights activists who say the new law is too general and will be used by authorities to curb opposition media and freedom of speech. Last year, several recorded telephone conversations and transcripts of other discussions between top Kazakh officials were posted on the Internet by Nazarbaev's former son-in-law, Rakhat Aliev, that suggested political and economic wrongdoing by several government officials. Kazakh authorities said the information had been falsified. Aliev, who has been living in self-imposed exile in Austria since 2007, told RFE/RL that the recordings are authentic. http://www.rferl.org/content/Kazakh_President_Signs_Privacy_Law/1900627.html • Kazakhstan Approves New National Security Committee Chief ASTANA -- The Kazakh Senate today approved Adil Shayakhmetov as the new head of the country's National Security Committee (KNB), RFE/RL's Kazakh Service reports. Shayakhmetov told journalists in Astana that his predecessor, Amangeldy Shabdarbaev, should be praised for his "professionalism and contribution to the improvement of the KNB's work. "He added that Shabdarbaev's sacking on December 7 had nothing to do with recent scandals involving the KNB. Shayakhmetov, 53, served as a senator for several years and is a professional security officer. He graduated from the highest class of the USSR's KGB institute in Minsk in 1982. Kazakh President Nursultan Nazarbaev fired Shabdarbaev after a series of media reports about the KNB clashing with other law- enforcement bodies. He reappointed Shabdarbaev as a presidential advisor. Shabdarbaev is a longtime government official who is known for his loyalty to Nazarbaev. He also served as a bodyguard for former Soviet Kazakhstan leader Dinmukhamed Kunaev. http://www.rferl.org/content/Kazakhstan_Approves_New_National_Security_Committee _Chief/1899272.html Geo Strategic Front • Doubts Rise As Kazakhstan Prepares For OSCE Chairmanship

Proposals for Kazakh President Nursultan Nazarbaev to be named ''president for life'' have contributed to concerns about Kazakh democracy. Even before Kazakhstan's bid to chair the Organization for Security and Cooperation in Europe (OSCE) was accepted in late 2007, controversy over the country's dubious rights record and dedication to democratic principles was simmering. Now, with the country just weeks away from beginning its one-year stint as the rotating OSCE chairman on January 1, 2010, those criticisms and concerns have reached a full boil. Just how contentious Kazakhstan's

171 chairmanship has become was on full display in Athens on December 1-2 during a two- day conference of the OSCE's Ministerial Council, the body of 56 foreign ministers that chooses the organization's chairmanship. Kazakhstan was advised not to take its leadership role for granted by Janez Lenarcic, the head of the Office for Democratic Institutions and Human Rights (ODIHR) -- the OSCE institution specifically focused on furthering human rights, democratization, and the holding of free and fair elections. The ODIHR director said that just because Kazakhstan will be taking up the mantle for an organization that espouses respect for basic human rights and freedoms does not mean it should stop working to improve its own record in a number of areas. According to Lenarcic’s spokesman, Jens Eschenbaecher, the ODIHR head said that “taking over the chairmanship of the OSCE is a great responsibility and challenge for each participating state, including Kazakhstan. ODIHR and other parts of the [OSCE] as well have in the past expressed concerns about issues related to, for example, the election framework in Kazakhstan, freedom of the media, and other issues." Lenarcic conceded that Kazakhstan is "in the stage of developing democracy," expressing optimism that its OSCE chairmanship will help keep it on the democratic path, but the essence of the message directed at an incoming OSCE chair was unprecedented. http://www.rferl.org/content/feature/1895964.html Economic /Energy Front • Kazakhstan sets ceiling on key fuel price ASTANA, Nov 26 (Reuters) - Oil-producing Kazakhstan will set a price ceiling on gasoline from next month, the government said on Thursday in a move aimed at easing growing discontent in the crisis-hit Central Asian nation. Gasoline prices are politically sensitive in Kazakhstan, a flat country the size of western Europe where many people rely on cars as the main form of transport. President Nursultan Nazarbayev, in power for two decades, is now worried growing prices for essential goods such as gasoline would galvanise opposition to his rule in a country already hit hard by the global economic downturn. "From December 1, the retail (price should be) no more than 82 tenge ($0.55)," Prime Minister Karim Masimov told a government meeting in the capital Astana, referring to the price of one litre of gasoline with 92 octane rating. The average price is 88 tenge per litre, Masimov said. The new ceiling price equals $2.1 per gallon. Nazarbayev ordered the government this month to "sort out" the issue of growing fuel prices after receiving complaints about it from citizens in a live question and answers session shown on national television. Seasonal price increases and shortages of fuel are common in Kazakhstan but this year the issue is particularly thorny after many people's incomes have been slashed by the crisis. Kazakhstan, Central Asia's biggest economy and oil producer, has struggled to overcome the effects of the economic crisis which has triggered defaults in the banking sector, led to a sharp tenge devaluation and cut crucial export revenues. The economy shrank by 2.2 percent in the first nine months of this year, year-on-year, as the crisis ended a decade of explosive oil-fuelled growth in the former Soviet republic. State oil company KazMunaigas [KMG.UL] controls all three oil refineries in Kazakhstan but retail distribution is dominated by private companies. http://in.reuters.com/article/oilRpt/idINGEE5AP15D20091126?sp=true • Kazakhstan ratifies a number of trade agreements for Customs Union Astana. December 1. Interfax-Kazakhstan – Kazakh President Nursultan Nazarbayev has signed the laws “On Ratification of the Protocol on Common Tariff Preferences in the

172 Customs Union” and “On Ratification of the Protocol for Applying, in Exceptional Circumstances, Import Customs Duties That Are Different from the Unified Tariff of the Customs Union,” the president’s press office said on Tuesday. According to the press office, the president also signed the law “On Ratification of the Protocol on Tariff Preferences.” As reported earlier, Minister of Industry and Trade Aset Isekeshev said that in accordance with the “Protocol for Applying, in Exceptional Circumstances, Import Customs Duties That Are Different from the Unified Tariff of the Customs Union” the member-states of the Customs Union would be allowed to apply, in exceptional circumstances, customs duty rates that were higher or lower than the unified customs tariff for as long as five years in order to ensure national, economic and food security. This will help the national industries to adjust to the new conditions, the minister said. “It is the Customs Union Commission that will decide if customs duty rates that are different from the unified customs tariffs will be applied,” he added. http://www.interfax.kz/?lang=eng&int_id=10&news_id=3125 • Nazarbayev urges businessmen to get involved in social projects Astana. December 2. Interfax-Kazakhstan – Kazakh President Nursultan Nazarbayev has urged Kazakhstani entrepreneurs to actively participate in social projects. “I believe today is the right time for our businessmen to do something for the public welfare,” the president said at Paryz award ceremony in Astana on Wednesday. Paryz is an annual competition for socially responsible companies. It was established last year by the Kazakh president. This year the prize went to Turgai Petroleum, last year to Kazakhmys. Turgai Petroleum is developing the Kumkol field in Kazakhstan. Appraised reserves of the deposit near 170 million barrels of oil (over 20 million tons). Lukoil and PetroKazakhstan own the company 50/50. Kazakhstan's KazMunayGas has a one third share in PetroKazakhstan, and CNPC has the rest. http://www.interfax.kz/?lang=eng&int_id=10&news_id=3128 • Kazakh leader says to enforce diverse economy ASTANA, Dec 4 (Reuters) - President Nursultan Nazarbayev told global oil and metals majors working in Kazakhstan on Friday he would force them to help diversify the economy as the government pledged $67 billion to modernise industries."We will adopt such laws, which will force you - all investors who are tapping Kazakhstan's resources riches - to cooperate closely on the industrialisation programme," he told a foreign investment conference."We will work only with those who propose executing projects directly aimed at diversifying the economy," he told investors including executives from ArcelorMittal (ISPA.AS: Quote, Profile, Research) (MTP.PA: Quote, Profile, Research), Chevron (CVH.N: Quote, Profile, Research), Total (TOTF.PA: Quote, Profile, Research) and ENRC (ENRC.L: Quote, Profile, Research). "And that means that in sectors where required projects are not being realised we will look for new partners, offer them favourable conditions and resources to fulfil projects." He gave no details but has previously identified the chemical and metals industries and agriculture as requiring special support. Kazakhstan has attracted dozens of billion of dollars in investments from global oil and metals majors since the collapse of the to help it tap vast natural resources. As the prices of commodities grew the country became more assertive and regained stakes in many projects while slapping higher taxes on foreign-led projects. The global crisis has ended a decade of explosive growth after crippling booming construction and banking sectors and has highlighted the need to

173 diversify the economy to reduce risks associated with lower commodity prices in the future. The government said in documents prepared for investors some 10.015 trillion tenge ($67 billion) will be spent on an industrialisation programme between 2010-2015. INVESTMENTS BREAKTHROUGH Some 459 billion tenge will be spent from the budget, another 511 billion from the National Fund while 2.4 trillion tenge has already been attracted via loans from China's EximBank, China Development Bank and Russia's state banking agent VEB, the government said, without giving details."As for investment ... we can say that we achieved a real breakthrough in 2009," said Nazarbayev. "Thanks to high-level contacts with countries like South Korea, China, Italy, France, Turkey and Belarus, we reached agreements on various projects worth more than $25 billion". He said had asked Kazakhstan, a flat nation the size of Western Europe populated by only 16 million people, to allow it to use one million hectares of land to cultivate crops such as soya and rape seed. Kazakhstan's GDP growth slowed to 3.2 percent last year from 8.7 percent in 2007 and Nazarbayev said economic growth was still achievable in Central Asia's biggest economy this year despite the lingering effects of the economic crisis. "Industrial production reached last year's levels in the first 10 months of this year, which gives us reason to believe that this year we will achieve some growth, even if just minimal," said Nazarbayev. Kazakhstan has tapped into its rainy-day oil fund to pump billions of dollars into the economy to reinvigorate business activity, but the banking sector remains in a critical state, with several top banks embroiled in tough restructuring talks.Speaking to Reuters earlier this week, visiting European Bank for Reconstruction and Development chief Thomas Mirow expressed a less optimistic view, saying the economy was likely to shrink by up to 2 percent this year. http://in.reuters.com/article/marketsNewsUS/idINGEE5B301920091204?sp=true Social Front • Kazakh Teacher Not Allowed To Wear Hijab At School A high school geography teacher in the southeastern Kazakh city of Taldy-Qorghan has turned to the Prosecutor's Office for permission to wear an Islamic head scarf (hijab) while teaching, RFE/RL's Kazakh Service reports. Aida Dekebaeva says school principal Gulnara Muratbekova "recommended" that she not wear the hijab while teaching. Dekebaeva said the school recently adopted a dress code that bans head scarves for both students and teachers. Muratbekova told RFE/RL that she warned Dekebaeva about the way she dresses and told her to make sure it is in accordance with Education Department guidelines. Meanwhile, local human rights activist Aliya Kasymkhankyzy told RFE/RL that the constitution protects the right of every citizen to worship any religion and school principals should respect Dekebaeva's right to dress as she wishes. Dekebaeva says she is ready for a long-term fight but is awaiting the Prosecutor's Office to respond to her letter. http://www.rferl.org/content/Kazakh_Teacher_Not_Allowed_To_Wear_Hijab_At_Schoo l/1898762.html • Kazakh Protesters Detained At Rally For Sacked KNB Chief ASTANA -- Five people were detained today outside President Nursultan Nazarbaev's home in the capital, Astana, while protesting the sacking of the chairman of the Kazakh National Security Committee (KNB), RFE/RL's Kazakh Service reports. Police arrived at the protest about 10 minutes after it began and detained the demonstrators. The protesters held signs in support of former KNB chief Amangeldy Shabdarbaev and calling on

174 Nazarbaev to fight corruption. Nazarbaev fired Shabdarbaev from his post on December 7 and appointed him as a presidential advisor. Nazarbaev's decision came after a series of reports in the media about the KNB clashing with other law-enforcement bodies. Shabdarbaev, 59, is a longtime government official known for his loyalty to Nazarbaev. He also served as a bodyguard for former Soviet Kazakhstan leader Dinmukhamed Kunaev, who was removed in 1986. http://www.rferl.org/content/Kazakh_Protesters_Detained_At_Rally_For_Sacked_KNB_ Chief/1898711.html • Kazakh Health Officials Unveil Swine-Flu Vaccine ASTANA -- Kazakh health officials today presented to the media Refluvac, a drug that they say vaccinates against the swine flu, RFE/RL's Kazakh Service reports. Kazakh Science and Education Minister Zhanseit Tuymebaev told journalists in Astana that the first strain of the H1N1 flu virus became available for Kazakh scientists in August when swine-flu patients were confirmed in the country. Seidgapbar Mamadaliev, the director of the Biological Safety Institute at the Science and Education Ministry, told RFE/RL that the research and testing needed to create Refluvac took place in the town of Gvardeysky in the southern Zhambyl Oblast. He said Refluvac will be available in pharmacies soon. Oleg Kiselev, the director of Russia's Influenza Research Institute, told RFE/RL that the new vaccine will be officially registered in about eight to 10 weeks. Mamadaliev said Kazkahstan would be able to provide the vaccine to the 60 million people living in Central Asia. Currently, the only swine-flu vaccine available in Kazakhstan is called Influvac and is produced by the Dutch company Solvay. It costs about $13 per dose. Tuymebaev said Refluvac will be 40 percent cheaper than Influvac. http://www.rferl.org/content/Kazakh_Health_Officials_Unveil_SwineFlu_Vaccine/18976 22.html • Kazakhstan's Rights Record Comes Under Fresh Criticism Greek Prime Minister George Papandreou (right) talks with Kazakhstan's Foreign Minister Kanat Saudabaev at the start of the 17th OSCE Ministerial Council in Athens on December 1. ATHENS (Reuters) -- Kazakhstan's human rights record came under fresh criticism today as the former Soviet republic prepared to take over the chair of Europe's top security body for the first time from Greece. Officials at a meeting of the 56-nation Organization for Security and Cooperation in Europe (OSCE) in Athens said the Central Asian state had made some progress but urged it to use its turn at the helm to improve its democratic institutions. "Clearly there is a challenge for the incoming chairmanship, whether it will be able to lead by example," the head of the group's Office for Democratic Institutions and Human Rights, Janez Lenarcic, said as the OSCE held its last top-level meeting before Kazakhstan formally takes over on January 1.

Human rights groups have criticized the decision to hand the chair to Kazakhstan, pointing out that OSCE observers have not validated a single election in the oil- producing state, and urged members to push harder for reforms. "In the two years since Kazakhstan was awarded the chair, its human rights situation has seriously deteriorated, especially in the areas of freedom of expression, religion and assembly," said Vera Tkachenko, representing a coalition of human rights groups, including Freedom House. Human Rights Watch also urged OSCE foreign ministers to push Kazakhstan harder. Kazakh President Nursultan Nazarbaev was a member of the last Soviet politburo and has

175 been in power ever since the breakup of the Soviet Union in 1991. "We need to have conversations with the Kazakh government on the importance and the opportunity for them to use their chairmanship to address some of the concerns on these issues," U.S. Deputy Secretary of State James Steinberg told reporters. http://www.rferl.org/content/Kazakhstans_Rights_Record_Comes_Under_Fresh_Criticis m/1893475.html Kyrgyzstan Political Front • Kyrgyz Emergency Situations Minister Resigns BISHKEK -- Kyrgyz Emergency Situations Minister Kamchybek Tashiev has resigned, RFE/RL's Kyrgyz Service reports. Tashiev walked out of a cabinet session today saying that he would ask President Kurmanbek Bakiev to release him from the post. He left shortly after Kyrgyz Prime Minister Daniyar Usenov had reprimanded him during the session for using reserve funds to build houses for ministry personnel in the southern city of Osh. http://www.rferl.org/content/Kyrgyz_Emergency_Situations_Minister_Resigns/1900889. html • Former Kyrgyz Security Council Chief Attacked A former senior Kyrgyz Security Council official has been hospitalized after a reported attack in the capital, Bishkek, late on December 9, RFE/RL's Kyrgyz Service reports. Bolot Januzakov, who was formerly secretary of the Security Council, suffered a broken leg and has severe bruises on his body. His wife, Jumagul Januzakova, told RFE/RL that the attack was connected to her husband's political activities, since the attackers did not seize money or any personal items. Police are investigating the incident. Januzakov is a longtime associate and political adviser of former Kyrgyz President Askar Akaev, who fled the country in 2005 and currently lives in Moscow. He served as deputy head of the presidential administration in 2005. Januzakov joined the opposition after Akaev was ousted and formed a political party called Kut. http://www.rferl.org/content/Former_Kyrgyz_Security_Council_Chief_Attacked/190042 1.html • Kyrgyz High Court Returns Journalist's Murder Case To Osh Court Avas Saipov, the father of slain journalist Alisher Saipov, had hoped a different court would conduct the new probe. The Kyrgyz Supreme Court has ruled that the case of slain journalist Alisher Saipov should be sent back to an Osh city court for further investigation, RFE/RL's Kyrgyz Service reports. Sapiov's father, Avaz Saipov, initiated the Supreme Court appeal, hoping that his son's murder would be reinvestigated by a different court. But the Supreme Court's ruling means the same court will be conducting the fresh investigation. Former policeman Abdufarid Rasulov has been accused of involvement in Saipov's murder and was awaiting trial. Twenty-six-year-old Alisher Saipov, who was murdered in broad daylight in 2007, was an ethnic Uzbek and editor in chief of an Osh-based newspaper who often wrote articles critical of Uzbek President Islam Karimov and his government. He also worked as a correspondent for RFE/RL and Voice of America. In 2007 Saipov was shot dead as he left his office in central Osh. His father told RFE/RL that he was unhappy with today's Supreme Court decision. He insisted he has evidence that shows

176 his son was killed by agents from Uzbekistan in retaliation for the critical articles he wrote. http://www.rferl.org/content/Kyrgyz_High_Court_Returns_Journalists_Murder_Case_To _Osh_Court/1899852.html • Kyrgyz Activists To Rally For Former Minister; Verdict Delayed BISHKEK -- Supporters of former Kyrgyz Defense Minister Ismail Isakov announced today they will hold protests demanding his release from jail, RFE/RL's Kyrgyz Service reports. Isakov, a lieutenant general who was defense minister from 2005-2008, is being tried in Bishkek for financial mismanagement and corruption while in office. A verdict in Isakov's case was to be announced today but the hearings were postponed due, officially, to issues related to the judge's health. The prosecutor in Isakov's trial asked the court last week to sentence him to eight years in jail, to confiscate his property, and to revoke all his military ranks and awards. Kurmanjan Saparbaeva, the chairwoman of the Committee to Support Isakov, told RFE/RL that activists from Isakov's native region of Alai will begin holding protests in different parts of Kyrgyzstan this week. The committee has asked President Kurmanbek Bakiev to get involved in Isakov's case and release him as soon as possible. Isakov has pleaded not guilty and said the charges against him are politically motivated because of his decision to join the political opposition in October 2008. http://www.rferl.org/content/Kyrgyz_Activists_To_Rally_For_Former_Minister_As_Ver dict_Is_Delayed/1897322.html • Parliament reveals no violations in Justice Ministry’s work Working group of the Kyrgyz Parliament did not reveal any gross violations in activity of the Kyrgyz Justice Ministry, a lawmaker Dinara Moldosheva said in Parliament Monday. The Justice Ministry demonstrated the lowest rate of the state service law violation among 11 departments checked by the committee. “Here, like in the other departments, violations refer to appointment of “incumbent” positions, before the actual competition for the vacancy takes place,” Moldosheva said. Therewith, the commission reportedly outlined shortcomings in documentation management. “Leadership of the ministry should pay special attention to various trainings and seminars aimed at professional improvement of the employees,” she said. “In general, the Justice Ministry implements the State service law on a proper level, but the violations revealed should be corrected,” the deputy added. URL: http://eng.24.kg/politic/2009/12/07/9851.html Geo Strategic Front • Kyrgyz Opposition Figure: U.S.'s Afghan Success Vital For Central Asia WASHINGTON -- A former Kyrgyz government official says U.S. President Barack Obama's Afghan strategy is very important for the stability of Central Asia, RFE/RL's Kyrgyz Service reports. Former State Property Minister Ravshan Jeenbekov told RFE/RL that increased military operations in Afghanistan might cause Taliban fighters to flee to neighboring countries, including Central Asian states. Jeenbekov, who lives in self- imposed exile in the United States, said the weakest countries in the region -- including Kyrgyzstan -- would be the most vulnerable if that occurred. He said Central Asian leaders should fully support Obama's strategy on Afghanistan and contribute to its implementation. Kyrgyzstan hosts a NATO Transit Center at Bishkek's Manas Airport, allowing nonweapon supplies to be sent to NATO troops in Afghanistan. Obama

177 announced on December 1 that 30,000 additional U.S. troops will be deployed to Afghanistan to bring the number of coalition troops there to more than 140,000. http://www.rferl.org/content/Kyrgyz_Opposition_Figure_USs_Afghan_Success_Vital_F or_Central_Asia/1893936.html • NATO launches project for reserve troops in Kyrgyzstan Thanks to NATO Kyrgyzstan has launched a new pilot project for social adaptation of reserve troops, Colonel Marat Kenjisariev, the first Assistant Minister of Defense said at the project’s presentation in Bishkek Thursday. The project has already enlisted 28 participants to study English for four months with teachers from the London School. The project is now sponsored by NATO, but will be soon switched to a trust fund basis. The Colonel believes that soon the project will include courses in all disciplines and provide future employment for the graduates. URL: http://eng.24.kg/community/2009/12/03/9822.html • Former Kyrgyz Foreign Minister appointed SCO Secretary General Muratbek Imanaliev, Former Minister of Foreign Affairs of Kyrgyzstan was appointed a Secretary General of the Shanghai Cooperation Organization (SCO) as official representatives of all member nations supported the nominee. The headquarters of the organization sit in Beijing (China) where the newly appointed secretary will start working since January 2010. URL: http://eng.24.kg/business/2009/12/03/9814.html Economic /Energy Front • Kyrgyzstan's Largest Hydropower Station Hit By Shutdown TOKTOGUL, Kyrgyzstan (RFE/RL) -- Mechanical problems at Kyrgyzstan's Toktogul hydropower station early today caused two of its four major power generators to shut down, RFE/RL's Kyrgyz Service reports. No casualties or significant damage to the station were reported. Maintenance crews are working to restore the downed generators. The Kyrgyz Energy Ministry said the shutdown of the generators will not affect the electricity supply in the country and that the problem should be fixed by December 9 at the latest. The Toktogul hydropower station -- which is Kyrgyzstan's largest -- was built in 1975 and supplies about 40 percent of Kyrgyzstan's electricity. Meanwhile, Bazarbay Mambetov, a Kyrgyz energy expert, told RFE/RL that the Toktogul station could have similar problems to Russia's Sayano-Shushenskaya hydropower station, at which an August accident killed at least 74 workers. Mambetov said the equipment and construction at the Toktogul and Sayano-Shushenskaya stations took place in the same time period and were made by the same Soviet firms. He said repairs at Toktogul are urgently needed, as no upgrades have been made at either of the two hydropower stations since they began operating in the 1970s. http://www.rferl.org/content/Kyrgyzstans_Largest_Hydropower_Station_Hit_By_Shutdo wn/1898631.html • Malaysia to assist Kyrgyzstan in construction of 20 mini hydropower plants Kyrgyzstan plans to construct 20 mini hydropower plants with assistance of Malaysia in 3-5 years, press service of the Kyrgyz Foreign Ministry reported. The construction is detailed in framework agreement, signed between the board of directors of small and medium Kyrgyz energy sector development program and a Malaysian company Seloga Holdings in Kuala Lumpur. The sides reached agreement over establishment of a joint

178 enterprise. The project was supported by the Malaysian External Trade Development Corporation. As to Samsudin Bin Abu Hassan, executive director of Seloga Holdings, value of the joint project reaches $300 million, while the total power of 20 planned mini plants will come to 240 megawatt. A group of Malaysian specialist will reportedly arrive in Kyrgyzstan in the nearest future to work out a business plan on construction of mini hydropower plants at selected areas. URL: http://eng.24.kg/business/2009/12/01/9791.html • Kyrgyzstan signs supply deal for 540MkWh with Kazakhstan Kyrgyzstan has signed a deal with Kazakhstan on supply of 540 kWh to the republic in vegetative period, Daniyar Usenov, the Prime Minister of Kyrgyzstan told the press conference Wednesday. The total sum of the agreement comes to $20 million. Moreover, Kazakhstan plans to transfer the first half of the amount to Kyrgyzstan up to December 15 and the rest - by January 15. Usenov called the transaction “credit financing of our system in winter period.” URL: http://eng.24.kg/business/2009/12/02/9806.html • Utility hikes to affect purchasing power of Kyrgyz population Utility hikes will affect purchasing power of population in Kyrgyzstan, Nikolai Biarslanov, chief specialist of the National Center for Mountain Regions Development told the press conference Tuesday. Research of the permanent mission of the United Nations to Kyrgyzstan has shown that 36 percent of country’s population live on the breadline, while 20 percent of them are constantly underfed. “It is possible that number of starving will increase due to tariffs’ increase. We need special measures to provide stable development of the republic,” Biarslanov said. International sponsors reportedly raise funds to provide the most vulnerable population of Kyrgyzstan with humanitarian assistance. URL: http://eng.24.kg/community/2009/12/08/9862.html • New Kyrgyz property tax to ruin business-community “New Kyrgyz property tax will ruin business-community,” Asylbek Jeenbekov, Member of Parliament from the Social Democratic Party said at the Tuesday’s session. “Housing tax is yet acceptable, as mostly the rich people will pay it. But for businesses it is inadmissible as it will ruin the business-community. In other countries, government tries to support businessmen amid the global recession. In Kyrgyzstan it is different: they introduce new taxes and raise electricity and heating tariffs when the country suffers significant economics losses. Businessmen will hardly survive such conditions,” he said. Roman Shin from the communist party supported his colleague saying that was too early to introduce property tax in Kyrgyzstan. “Most of the enterprises do not function today and you are trying to hamper them even more. We should prolong the moratorium and work more in order not to harm the entrepreneurs,” Shin said.

URL: http://eng.24.kg/politic/2009/12/08/9859.html Social Front • Kyrgyz, Chechen NGOs Receive French Award PARIS -- The Kyrgyz nongovernmental organization Citizens Against Corruption is one of the winners of the French Liberty, Equality, and Brotherhood Award for 2009, RFE/RL's Kyrgyz Service reports. Tolekan Ismailova, the NGO's chairwoman, told RFE/RL that she will participate in the ceremony in Paris today, which French Foreign

179 Minister Bernard Kouchner is due to attend. Ismailova's NGO received the award for its activities in defense of human rights and for its project "civic journalism on behalf of vulnerable people." The prestigious French award will be given to five NGOs this year: Citizens Against Corruption (Kyrgyzstan), Network (Palestine), the Center for Legal and Social Studies (Argentina), Children's Voice (Nepal), and Save the Generation (Chechnya). The leader of Save the Generation, Zarema Sadulayeva, and her husband Alik Dzhabrailov, were abducted and killed by unknown assailants in August. Their organization helped children who had been physically and emotionally scarred by the hostilities in Chechnya. http://www.rferl.org/content/Kyrgyz_Chechen_NGOs_Receive_French_Award/1900600. html • HRW Tells Kyrgyzstan To Stop Harassing Rights Monitors Human Rights Watch is urging the Kyrgyz government to immediately stop harassing human rights monitors doing research in southern Kyrgyzstan. Kyrgyz authorities recently denied entry to prominent Tajik human rights activist Nigina Bakhrieva. She was the third foreign advocate working in southern Kyrgyzstan to be denied entry or deported in 2009. Bakhrieva was preparing a report about the arrests and sentencing of residents of the southern village of Nookat. Nookat residents had taken to the streets in protest after they were denied the right to publicly celebrate the Eid al-Fitr festival marking the end of Ramadan. In a statement, Andrea Berg, Central Asia researcher at Human Rights Watch, says: "Kyrgyzstan is increasingly harassing rights advocates investigating the government's abusive campaign in southern Kyrgyzstan. It's no coincidence that Bakhrieva was denied entry after having been in touch with Nookat lawyers."HRW says the government is carrying out a campaign in the south against what it views as Islamic extremism. http://www.rferl.org/content/HRW_Tells_Kyrgyzstan_To_Stop_Harassing_Rights_Moni tors/1895334.html • Kyrgyzstan to attend UN Conference on Social Impacts of Economic Crisis Kyrgyzstan will take part in the United Nations’ Ministerial Conference on Social Impacts of the Economic Crisis, UN press service in Kyrgyzstan reported. The meeting with participation of ministers from Eastern Europe, Central Asia and Turkey will take place in Almaty, Kazakhstan on December 7-8. Labor and Social Security Ministers, high ranking representatives of Finance, Economy and Agriculture Ministries, international and regional financial institutions, bilateral cooperation agencies, international associations of employers and employees, civil society and regional scientific circles from 13 countries will discuss antirecession policy in the region. “The conference will afford an opportunity to share experience in conducting efficient policy on recovery of the regional economy, reduction of the crisis impact on the social sphere and working out of long-term strategies on liquidation of the world financial and economic crisis’ effects,” UN press service said. URL: http://eng.24.kg/business/2009/12/01/9779.html Tajikistan Political Front • Tajik Politician Questions President's Election Order DUSHANBE -- A Tajik opposition politician has challenged President Emomali Rahmon to expand on a recent order demanding that government officials avoid interfering in

180 upcoming parliamentary elections. Rajab Mirzo, a journalist and Democratic Party candidate in the 2005 parliamentary elections, said the administration should go further by changing the law to allow "free and transparent elections," RFE/RL's Tajik Service reports. Mirzo said governors and other government officials lead local branches of the ruling National Democratic Party -- which is headed by Rahmon -- and thus must choose between meeting the president's call for noninterference and supporting party interests. Mirzo said he believes most officials will choose the latter and thereby secure their own government posts. More than 3 million voters will vote in February to fill 63 seats for the lower chamber of the Tajik parliament. More than 90 percent of the members of the current parliament are from the National Democratic Party, and party officials have pledged to maintain control of the parliament and even try to take more seats. The opposition Communist Party and Islamic Renaissance Party have just five seats total in the lower house. http://www.rferl.org/content/Tajik_Politician_Questions_Presidents_Election_Order/189 8140.html • President Rahmon addresses the Public Council DUSHANBE, December 4, 2009, Asia-Plus -- Speaking at the session of the Public Council, President Emomali Rahmon noted today that as chairman of the Public Council he is well aware of proposals and requests made members of the Public Council, the national news agency Khovar reports. On the energy situation in the country, the president reminded that the country is experiencing electricity shortages in autumn-winter period and noted that like other countries of the region, Tajikistan is interested in rational use of water-and-energy resources. According to him, the government is currently taking efforts to develop the country’s energy resources. The maximum use of energy resources aimed at solving the country’s energy problems is one of priorities of Tajikistan’s economy and vital for the country. Therefore, construction of the Roghun hydroelectric power plant (HPP) is one of strategic issues and without construction of this plant it will be difficult to ensure sustainable socioeconomic development of the country, Rahmon noted. He also underlined the importance of construction of the other HPPs such as Nourobod-1, nourobod-1, Shurob, Zaravshon, and Sanobod. He added that one of the immediate tasks of the Public Council is to explain the significance of the Roghun HPP for the country to the population. On the upcoming parliamentary elections, the head of state noted that the elections should be organized at a high level. During election campaign, candidates nominated by political parties should not limit themselves to the program directions of their parties, they should also carry out work with regard to the national interests, Rahmon said, noting that parties and persons running in the elections should act within the framework of the Constitution and other laws of the country. He pointed to the necessity of taking measures to ensure transparent and free elections. “However, it is to be noted that transparency of holding of the elections depends on an active position of people and political parties themselves,” said the president, “Political parties should be with the people in the provinces, acting in the interest of state and our homeland. People see managerial abilities, level of patriotism and human resources of each of political parties themselves and they may assess themselves what contribution one or another political party can make to development of society and protection of interests of the nations.” http://www.asiaplus.tj/en/news/16/60021.html

181 Geo Strategic Front • Tajikistan supports all measures taken to stabilize the situation in Afghanistan: MFA DUSHANBE, December 4 2009, Asia-Plus -- Davlat Nazriyev, the head of the Tajik MFA information department, yesterday voiced Tajikistan’s position on U.S. President Barack Obama’s Afghan strategy. We will recall that President Obama announced on December 1 that 30,000 additional U.S. troops will be deployed to Afghanistan. “Tajikistan as Afghanistan’s near neighbor sharing common history, culture and language with it cannot stand aside from complications in the military and political situation in Afghanistan; in this connection, Tajik authorities has been taking measures to support speedy establishment of stability in this neighboring country and will support all measures taken to stabilize the situation in Afghanistan,” Nazriyev said. According to him, a new Afghan strategy of President Obama to increase the U.S. military contingent in Afghanistan by 30,000 military personnel is one of important aspects of the abovementioned elements of the stabilization. This step will allow preventing intensification of activities of destructive forces in Afghanistan and help provide security and establish peace and stability in this country, the MFA spokesman said. We will recall that in this televised speech on Tuesday, President Obama said the goal of raising U.S. troop levels is to step up the battle against the Taliban, secure key centers and train Afghan forces so they can take over, allowing for a U.S. withdrawal. "We always wanted to take over the responsibility for the destiny of our nation," Afghan Defense Minister Gen. Abdul Rahim Wardak told reporters, adding that Obama's speech confirmed that the U.S. wants to help them do that, Reuters reported on December 2. Radio Liberty reported on December 3 that a former Kyrgyz government official says U.S. President Barack Obama's Afghan strategy is very important for the stability of Central Asia. Former State Property Minister Ravshan Jeenbekov told RFE/RL that increased military operations in Afghanistan might cause Taliban fighters to flee to neighboring countries, including Central Asian states. Jeenbekov, who lives in self-imposed exile in the United States, said the weakest countries in the region -- including Kyrgyzstan -- would be the most vulnerable if that occurred. He said Central Asian leaders should fully support Obama's strategy on Afghanistan and contribute to its implementation. http://www.asiaplus.tj/en/news/48/60005.html Economic /Energy Front • Sangtuda-1 HPP administration announces reduction in electricity generation DUSHANBE, December 1, 2009, Asia-Plus -- According to open joint-stock company (OJSC) Sangtudinskaya ES-1, which runs the Russian-built Sangtuda-1 hydroelectric power plant (HPP), only one of four units of the Sangtuda-1 station will operate beginning on December 2, 2009. According to the source, only two units have been kept operational since last month. “They are currently generating 5.4 million kWh of electricity per day and after shutdown of one of them, the station will generate only 2.7 million kWh of electricity per day,” said he, “Two other units of the station are still under the planned maintenance services and the third one will be shut down for maintenance services tomorrow.” We will recall that the Sangtudinskaya GES-1 administration on November 13 sent an official letter to Tajik Prime Minister Oqil Oqilov, warning of possible interruption in generation of electricity by the Sangtuda-1 hydroelectric plant (HPP) as of December 1 due to 28.3 million somoni in arrears that Barqi Tojik power

182 holding owes to Sangtudinskaya GES-1. “Taking into account the hard power supply situation in Tajikistan, we have decided not to stop the station but to reduce generation of electricity,” the source noted. On the Barqi Tojik’s debts, he said that as of November 30, 2009, Barqi Tojik owed 41.4 million somoni to Sangtudinskaya GES-1. “They have remitted to our bank account only 5 million somoni so far and promised to remit another 5 million somoni in the near future; however, we need the whole amount,” the source said. The construction of the Sangtuda-1 hydropower plant located some 110 kilometers southeast of Dushanbe began in the late 1980s. By the early 1990s, only 20% of the construction work had been completed, and further construction was suspended due to a civil war that broke out in Tajikistan in the early 1990s. The talks between Russia and Tajikistan on completing the construction of the Sangtuda-1 HPP began in 2003 and in 2004 the parties signed an inter-governmental agreement. An official ceremony of introduction of the last fourth unit of the Santuda-1 station into operation was held in late July this year. The Sangtuda-1 HPP has an estimated capacity of 670 MW. Russia retains a 75 percent share in the power plant, which is capable to generate 2.7 billion kWh of electricity per annum. http://www.asiaplus.tj/en/news/31/59855.html • ADB continues energy sector support in Tajikistan DUSHANBE, December 3, 2009, Asia-Plus -- The Asian Development Bank (ADB) has approved a $500,000 technical assistance (TA) grant to develop a project design and feasibility study for a new regional power rehabilitation project in Tajikistan, according to ADB’s Resident Mission in Tajikistan. The power rehabilitation project, due to begin in 2010, will upgrade the existing power transmission network to strengthen Tajikistan's inter-connection with neighboring countries and improve the quality and efficiency of electricity supply. A Supervisory Control and Data Acquisition System (SCADA) will also be installed, and the sectors' institutions strengthened. "Regional cooperation and a stable power supply among Central Asian countries is essential for economic growth in the region," said Makoto Ojiro, ADB’s Country Director for Tajikistan. "A reliable inter- country transmission network will enable Tajikistan to make barter arrangements or sell summer surplus electricity and receive or buy electricity in winter and, thus, reduce deficit in winter generation." The total cost of the TA is $610,000, of which the government will finance $110,000 in-kind. The TA was approved in November 2009, and a team of consultants is already in the field. Barqi Tojik is the executing agency for the TA. ADB has been supporting rehabilitation and development of the energy sector in Tajikistan from the start of its operations in the country in 1998. The total amount of ADB's approved assistance in the energy sector of Tajikistan comes to $130 million.

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2008, it approved $10.5 billion of loans, $811.4 million of grant projects, and technical assistance amounting to $274.5 million. http://www.asiaplus.tj/en/news/29/59960.html • Tajik CCI head, Russian trade representative discuss cooperation issues DUSHANBE, December 3, 2009, Asia-Plus -- Head of Tajikistan’s Camber of Commerce and Industry (CCI), Sharif Said, yesterday met here with Russia’s Trade

183 Representative to Tajikistan, Aleksandr Yakovlev, according to the CCI press service. The sides discussed state and prospects of further expansion of bilateral trade and economic cooperation between Tajikistan and the Russian Federation. They, in particular, noted that Tajik-Russia trade volume has amounted to 850 million U.S. dollars this year despite difficult period. Said and Yakovlev also discussed the possibility of holding Russian national exhibition in Tajikistan in 2011 that is expected to be timed to coincide with the 20th anniversary of Tajikistan’s Independence. Tajikistan’s CCI and chambers of commerce and industry of Russia’s regions have singed more than 100 cooperation agreements to this day. http://www.asiaplus.tj/en/news/287/59956.html Social Front • Tajiks Fear First Swine-Flu Death KHUJAND, Tajikistan -- A woman suffering from swine-flu-like symptoms has died in northern Tajikistan in what could be the country's first reported death from the H1N1 virus, RFE/RL's Tajik Service reports. Nasib Ikromov, the regional head of health-care in Sughd Province, told RFE/RL that the 30-year-old pregnant woman was hospitalized on December 5 and died two days later. Ikromov said local laboratories are unable to confirm if the woman had the H1N1 virus and blood samples have been sent to Dushanbe for testing. Tajikistan's deputy health minister, Azam Mirzoev, told RFE/RL last week that there were no Tajiks suffering from swine flu. He added that there were seven people in Tajikistan with a new strain of flu but he stressed that it was not swine flu. http://www.rferl.org/content/Tajiks_Fear_First_SwineFlu_Death/1898304.html • 'SMS Divorces' Cut Tajik Migrants' Matrimonial Ties To Home Aziza Kobilova, a 25-year-old housewife in eastern Tajikistan's Rasht region, recently received notice that her marriage of four years was over. The end was unexpected and quick. Her husband, a migrant laborer working in Russia, first telephoned to tell Kobilova that he was divorcing her. Then he made good on his promise by sending a text message from a mobile phone that read only "talaq," a term of estrangement that according to Sunni Muslim tradition is enough to annul a marriage. In Kobilova's case, her husband's use of modern technology to execute a traditional Islamic divorce left her homeless and with no means of support. She is not alone. With jobs at home in dismally short supply, a significant percentage of Tajikistan's male population depends on seasonal work abroad to earn money that can be sent home in the form of remittances. But as this migrant culture takes root, long-distant marriages are increasingly ending in "SMS divorce," contributing to a spike in the country's divorce rate and leaving countless Tajik women without recourse. Following her own text-based divorce Kobilova returned to her childhood home, where she now she lives with elderly parents along with three older brothers and their families."My husband let me down," Kobilova says, "but most of all I blame labor migration for my marriage breakup. Even though we were married for four years, we only spent a few months together. Most of the time he was away working in Russia." "I guess the money migrants make in Moscow blinds them, and they forget all about their wives back at home," she adds. Tajik law doesn't recognize "talaq" divorce, but things are different in practice.It is estimated that nearly a million Tajiks -- accounting for one out of every seven citizens and consisting mostly of men aged 18 to 60 -- depend on seasonal jobs in Russia or elsewhere abroad to make a living. The migratory nature of the work leads to prolonged

184 periods away from home, a scenario that women's rights activists say negatively affects the institution of marriage in Tajikistan. While reliable, up-to-date divorce figures are unavailable, divorce lawyer Bakhtiyor Nasrulloev estimates that "at least one in four marriages in Tajikistan ends in divorce." While that rate is still low when compared to countries like the United States, where divorce rates hover around 50 percent, it marks a sharp increase in comparison to official data compiled the late 1990s that placed the Tajik divorce rate at only 8 percent. However, the traditional, but unofficial, nature of many Tajik marriages means that the true divorce rate could be higher still. http://www.rferl.org/content/SMS_Divorces_Cut_Tajik/1896511.html Turkmenistan Political Front • Chief of Ashgabat Police Department dismissed President Gurbanguly Berdimuhamedov signed a decree dismissing Abdy Atanyyazov from the post of Chief of Police of Ashgabat city "for serious shortcomings in the work." "Abdy Atanyyazov was also stripped of benefits and privileges under the current legislation of Turkmenistan for staff of law enforcement agencies," the Turkmenistan.ru correspondent reports from Ashgabat quoting the press service of the Turkmen leader. http://www.turkmenistan.ru/?page_id=3&lang_id=en&elem_id=15966&type=event&sort =date_desc • Head of Turkmenistan's State Service on Drugs reprimanded President of Turkmenistan Gurbanguly Berdimuhamedov has reprimanded Haman Garayev, head of the State Service of Turkmenistan on drugs. The official was penalized "for the low level of organization of information and advocacy activities to combat illegal drug trafficking, as well as weakening of control over the implementation of measures against illegal drug users, the Turkmenistan.ru correspondent reports from Ashgabat quoting the press service of the head of state. http://www.turkmenistan.ru/?page_id=3&lang_id=en&elem_id=15967&type=event&sort =date_desc Geo Strategic Front • Turkmenistan to host International Conference on disarmament The first consultative meeting on the preparation and holding of the International Conference on Disarmament Issues in Central Asia and Caspian Basin, scheduled for the first half of 2010 in Ashgabat, was held at the Ministry of Foreign Affairs of Turkmenistan on 2 December 2009. It was attended by diplomats and experts from the Ministries of Foreign Affairs of Turkmenistan, Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. According to the press service of the Turkmen Foreign Ministry, the meeting participants expressed support for the initiative of President Gurbanguly Berdimuhamedov on holding this Conference, which was put forward by the Turkmen leader at the 64th session of UN General Assembly in September this year. In this context, it was stressed that the problem of disarmament, as part of a unified system of international security, is one of the most pressing issues on the international agenda. The multidimensional nature of disarmament issues requires a constructive and consolidated approach by all stakeholders, and, in this respect, the forthcoming international conference aims to become a political arena for the exchange of views and adoption of mutually acceptable solutions. From this perspective, the International Forum, to be held in Ashgabat for the first time, intends to lay the

185 foundations for greater partnership in the name of security at the regional and global level as well as an effective mechanism for interaction between states and international organizations on disarmament issues. The sides discussed the subject areas and format of the upcoming conference, the possibility of inviting representatives of well-known international organizations, as well as organizational and protocol issues. The meeting agreed on the need to focus on three main areas that determine the content of the upcoming forum such as review and analysis of the situation on disarmament issues in Central Asia and Caspian Basin, the importance of the international legal framework and the problem of its further development, the role of international organizations in addressing disarmament issues. The delegations supported the idea to hold the second meeting of senior officials from the Ministries of Foreign Affairs of Central Asia and the Caspian Basin early next year to finalize and coordinate the positions of the sides, the Foreign Ministry press service said. http://www.turkmenistan.ru/?page_id=3&lang_id=en&elem_id=15960&type=event&sort =date_desc • Ambassador of Belgium accredited in Turkmenistan The speaker of the Mejlis of Turkmenistan, Akja Nurberdieva, accepted credentials of Ambassador Extraordinary and Plenipotentiary of the Kingdom of Belgium, Paul De Witte. In the course of the exchange of views on the prospects for mutually beneficial bilateral cooperation, the diplomat noted the increased interest of business circles of Belgium in expanding their presence in the promising Turkmen market in areas such as trade and economy, construction, transport and communications. The Belgian ambassador also called for increased cooperation in the humanitarian field. In this context, was announced a proposal was made to hold Days of Culture of Turkmenistan in Belgium and of Belgium in Turkmenistan. http://www.turkmenistan.ru/?page_id=3&lang_id=en&elem_id=15971&type=event&sort =date_desc • Turkmenistan and European Union discuss prospects for partnership Following the entry into force of the Lisbon Treaty, which is designed to lay the foundations for the functioning of the EU in the coming years, cooperation between Turkmenistan and the EU will successfully continue and reach a new stage of development. This confidence was expressed by Turkmen President Gurbanguly Berdimuhamedov on December 7 during a telephone conversation with High Representative for Common Foreign and Security Policy Javier Solana. According to the press service of the Turkmen leader, Javier Solana, who initiated the telephone conversation, expressed the European Union's interest in establishing close contacts with Turkmen partners, both bilaterally and multilaterally, in particular within the framework of the long-term strategy of the EU cooperation with Central Asian countries, which is being successfully implemented. In this context, the President of Turkmenistan and the EU High Representative for the Common Foreign and Security Policy discussed the possibility of further strengthening and enhancing constructive mutually beneficial cooperation in all its key areas. In particular, the sides discussed the expansion of energy and trade-economic cooperation, humanitarian ties, especially in education and culture, the press-service said. http://www.turkmenistan.ru/?page_id=3&lang_id=en&elem_id=15980&type=event&sort =date_desc

186 Economic /Energy Front • Second International Power Industry Forum opens in Ashgabat The 2nd International Exhibition and Scientific Conference titled "Major Trends in Development of Turkmenistan's Power Industry" started at the Exhibition Palace of Ashgabat on December 7. It has been organized by the Ministry of Energy and Industry, the Academy of Sciences and the Chamber of Commerce and Industry of Turkmenistan. According to official reports, the forum brought together participants from 18 countries, including Austria, Belgium, Germany, France, USA, Turkey, China, Japan, Russia and Kazakhstan. The exhibition features big foreign companies specializing in manufacture of electrical equipment and service works. They include Japanese Itochu, American General Electric, German Boshch and Zeppelin, Turkish Beko, Chalyk Energy, and Polimeks, Swiss ABB, Belgian ENEX, Finnish Wartsila and others. The Turkmen delegation to the forum is represented by state-owned enterprises and concerns such as Turkmenenergo, Turkmenenergogurlushyk, Turkmenmashingurlushyk, as well as several private companies working in the electricity sector. Guests of the exhibition and conference will have the opportunity to get acquainted with the achievements of Turkmenistan's power industry and to demonstrate to the Turkmen colleagues their latest developments and technologies, discuss prospects of mutually advantageous partnership in projects on construction of new power plants, modernization of existing installations, supply of various power equipment and introduction of new technologies in the industry. It is reported that the forum will have a separate session on the creation of modern energy systems in Turkmenistan on the basis of renewable and alternative energy sources. http://www.turkmenistan.ru/?page_id=3&lang_id=en&elem_id=15976&type=event&sort =date_desc • New marine terminal for storage and shipment of liquefied natural gas commissioned on Turkmen coast of Caspian Sea A marine terminal for storage and shipment of liquefied gas has been commissioned at the port of Kiyanly on the Turkmen coast of the Caspian Sea. As the Turkmenistan.ru correspondent reports, the opening ceremony was attended by oil and gas industry leaders, representatives of administrations and public organizations of the sea region. The new terminal has been built by Iranian company Pars Enerji on the order of the Turkmenbashi complex of oil refineries. The terminal's capacity is 200 thousand tons of liquefied gas per year. Products manufactured at the Turkmenbashi complex of oil refineries - a mixture of butane and propane - come here via two 26-km long pipelines, one of which is the backup. Different diameters of pipelines - 219 mm and 273 mm - make it possible to adjust the volume of deliveries of liquefied gas to the sea berth, the platform of which is equipped with everything necessary for the docking of gas carrying tankers with the capacity of 3 thousand tons. According to the Ministry of oil and gas of Turkmenistan, ferries for trains will be able to moor there in the future. For this purpose, a railway line will be built there originating from the gas terminal of the Turkmenbashi complex of oil refineries. In addition, the seabed of the port will be deepened from 5 to 7 meters. http://www.turkmenistan.ru/?page_id=3&lang_id=en&elem_id=15991&type=event&sort =date_desc • Inauguration of Turkmenistan-China gas pipeline scheduled for December 14

187 The Turkmenistan-China gas pipelines will be inaugurated on December 14. The inauguration ceremony will be held at Samandepe field in Lebap province of Turkmenistan, and Chinese President Hu Jintao will attend it. "This is an outstanding event. This project is of strategic importance to both sides, serving the long-term interests of Turkmenistan and China, and consistent with the logic of global economic development, in which energy supplies play an increasing role," said President of Turkmenistan Gurbanguly Berdimuhamedov in an interview with the Chinese media on December 9. "In this sense, the implementation of the Turkmenistan-China gas pipeline project is an example of a genuine partnership based on equality, mutual awareness of the benefits of large-scale vision of the prospects and possibilities that open up with the beginning of the practical implementation of this project. This is real, practical embodiment of the goal of balancing the interests of all participants of the energy pipeline projects - producers, transit countries and consumers," the Turkmen leader stressed. In accordance with previous agreements, 40 billion cubic meters of gas will be supplied to China annually for the next 30 years through this pipeline which is stretching for more than 7000 km through Uzbekistan and Kazakhstan, and Turkmenistan. At the initial stage, the transit of 13 billion cubic meters of gas will be ensured by the construction of gas treating facilities at Samandepe and Altyn Asyr gas fields, and the remaining volumes of gas will be supplied from new gas fields. To date, a lot of work has been carried out to develop Samandepe filed and prepare a stock of operating wells. A large group of previously operated wells has been overhauled, and several new wells have been drilled. Chinese experts have also built the Samandepe gas processing plant with the treating capacity of 5 billion cubic meters of sulfur dioxide and other gas, which can be further utilized to produce 170 tons of hydrocarbon condensate and 210 tons of pure sulfur gas per year. A powerful industrial infrastructure has been created to supply natural gas to the plant. The construction of gas gathering points, compressor stations, gas-measuring installation, external and communication networks has been completed. http://www.turkmenistan.ru/?page_id=3&lang_id=en&elem_id=15992&type=event&sort =date_desc Social Front • Turkmenistan To Pardon Thousands Of Prisoners ASHGABAT -- Turkmen President Gurbanguly Berdymukhammedov has signed a decree granting amnesty to nearly 4,000 convicts in honor of a national holiday, RFE/RL's Turkmen Service reports. A total of 3,934 prisoners will be released on December 12, Turkmenistan's Neutrality Day. Turkmen media outlets have published a list of the prisoners to be pardoned and some 80 percent of them are aged between 20-35 years. There are no political prisoners on the list. The amnesty will be the third one in 2009. The first amnesty was granted ahead of National Flag Day on February 19, and the second prisoner release was done to mark Gadyr Gijesi, the final night of Ramadan. Amnesty International spokeswoman Lidia Aroyo told RFE/RL from London that Berdymukhammedov has still not lived up to his promises about improving the human rights situation in the country. She said that the disappearances, detention, and imprisonment of people exercising their right to freedom of expression and association as well as torture and ill treatment in prison continues in Turkmenistan. Aroyo said Amnesty

188 International is concerned that when government amnesties are arbitrary they do not necessarily serve justice http://www.rferl.org/content/Turkmenistan_To_Pardon_Thousands_Of_Prisoners/189460 5.html • At Least 10 Turkmen Children Die In Bus Accident ASHGABAT -- At least 10 schoolchildren, a teacher, and a bus driver died when their minibus fell into the Karakum canal in Turkmenistan's southern Akhal Province last week, RFE/RL's Turkmen Service reports. The accident was not reported by the domestic media, which is state controlled. The minibus was driving to the Archman Resort Center to celebrate the first day of the Islamic holiday Eid al-Adha (Kurban Bayram). President Gurbanguly Berdymukhammedov had been scheduled to appear. The Turkmen government has prohibited its citizens from going to Mecca, Saudi Arabia, for the hajj this year because of the swine flu epidemic. The government has instead offered Turkmen citizens the chance to make an "internal hajj" to holy places in Turkmenistan. Schoolchildren and university students in Turkmenistan are often obliged to take part in government-organized events. http://www.rferl.org/content/At_Least_10_Turkmen_Children_Die_In_Bus_Accident/18 93448.html • Turkmenistan attempts to lure tourists (AFP) - The billboard depicts white sandy beaches blanketed in sunshine, hotels with gleaming marble facades and swarms of vacationers enjoying Turkmenistan’s newest resort town. Turkmenistan attempts to lure tourists The billboard depicts white sandy beaches blanketed in sunshine, hotels with gleaming marble facades and swarms of vacationers enjoying Turkmenistan's newest resort town. Opposite the massive billboard, however, rain has turned the rutted road leading to the Avaza beach complex into a muddy river, painting a less flattering portrait of this resort with virtually no visitors. Avaza, the brainchild of Turkmen President Gurbanguly Berdymukhamedov, has risen in less than two years from the shores of the Caspian Sea in the impoverished western reaches of this former Soviet republic. Berdymukhamedov hopes this shining city by the sea will attract thousands of tourists from Russia and her neighbours, helping to diversify his country's economy, heavily reliant on exports of oil and natural gas. But with a season only six weeks long, an oil refinery filling the air with noxious fumes and many other alternatives for foreign tourists, the question seems not to be "can they build it?", but rather "should they?" "They would have to make an enormous effort to attract foreign tourists: advertisements in all major media, low prices and, most importantly, the highest quality of service," said an architect familiar with the project. "But right now they have none of these things. Why should Russians come here? After all, they have Turkey and Thailand, and there everything is already set," added the architect, who requested anonymity to speak openly.

Turkmenistan, an energy-rich Central Asian nation bordering Afghanistan, is one of the world's most isolated and repressive states, often barring its own citizens from leaving and maintaining a Byzantine visa process for visitors. It is best known for the antics of former dictator Saparmurat Niyazov, who died in 2006 after a two-decade rule marked by a bizarre personality cult complete with gold statues and gaudy monuments to his own rambling book of philosophy. But if Niyazov's architectural style was a mix of Ancien

189 Regime grandeur -- he reportedly loved Versailles -- and Silk Road opulence, Berdymukhamedov seems to find inspiration in his country's more recent Soviet past. Five almost identical hotels line the Avaza beach resort just 12 kilometres (7.4 miles) from the industrial city of Turkmenbashi, where the briny sea air combines with the brackish scent of flared gas from a Soviet-era refinery. Each is owned by and assigned to a government ministry, and discounted rooms are handed out as a perk to ministry employees, a relic of the incentives pledged to productive workers in Soviet times. In the cavernous lobby of the Hotel Watanchy (Patriot), Berdymukhamedov looks down sternly from a massive gilded portrait attired in his finest military dress. This is, after all, the Defence Ministry hotel. But besides the ever-present visage of the president, there appeared to be few, if any, guests, lending the abandoned marble corridors an air of suspense and sadness. When dinner was served at 7:00 pm -- meals are at fixed times and if you aren't there, you don't eat -- an AFP reporter sat alone among hundreds of place settings, their starched napkins standing at attention. A pair of young waitresses, helpful and well-mannered like all the hotel's staff although speaking no foreign language besides Russian, milled awkwardly under a massive chandelier before approaching the table. Despite all evidence to the contrary, they insisted nervously that there were other guests in the hotel, where empty hallways conjured up memories of the haunted hotel in Stanley Kubrick's classic horror film "The Shining". What they really wanted to know, the waitresses said, was what life was like in other countries. Neither had ever left Turkmenistan."It's fun to talk with foreigners. We haven't had any foreign guests before. All the foreigners here stay in the hotels in the city (Turkmenbashi)," one of the waitresses remarked. Given the numerous problems facing Avaza -- visa restrictions, poor infrastructure, boring architecture -- critics have been quick to dismiss the project as financially unsustainable and aesthetically undesirable. "It is not suitable to discuss any high aesthetics. They are more like tall apartment buildings than prestigious, high-class hotels," the architect complained. But despite such problems, Avaza is not without its own peculiar underdog charm. Standing on a marble balcony branching off one of the hotel's three-room executive suites -- a bargain at 108 dollars (72 euros) -- it is possible to observe a sunset unlike any other in the world. Miles away in the waters of the Caspian Sea, a string of offshore oil platforms flare their gas in unison, and for an instant it seems that not one, but seven suns are setting behind the inky black horizon. http://silkroadintelligencer.com/2009/12/03/turkmenistan-attempts-to-lure-tourists/ • International conference opens in Turkmenbashi city under auspices of UNESCO The International Conference "The Role of Information and Communication Technologies, Science and Planning in Improving Quality of Education" opened in the city of Turkmenbashi on December 1. The forum is attended by experts and representatives of various agencies of the United Nations on education, science and culture, the European Center of UNESCO for higher education and the regional office of this organization in Bangkok, as well as experts in the field of education from Europe, Asia and America. The conference program is designed for three days and includes sessions and round tables on topical issues of information and communication technologies in education, familiarization with best international practices in this area, as well as the study of positive experience of Turkmenistan and priorities for further development of fruitful partnerships. The conference also provides for a cultural

190 program, including seeing the facilities of the national tourist zone Avaza being built on the Caspian Sea coast. http://www.turkmenistan.ru/?page_id=3&lang_id=en&elem_id=15950&type=event&sort =date_desc Uzbekistan Political Front • Uzbekistan Cracks Down Ahead Of Elections New York-based Human Rights Watch says Uzbek authorities have been increasing assaults on human rights activists ahead of upcoming parliamentary elections. Holly Cartner, Europe and Central Asia director at Human Rights Watch, said in a statement that "anyone who tries to report on human rights in Uzbekistan clearly risks getting attacked, arrested, or worse." The statement described a rise in attempts to intimidate activists ahead of the December 27 parliamentary and local elections, including an attack on human rights researcher Tanya Lokshina. The statement added that key international actors, including the United States and the European Union, have grown increasingly silent in the face of Uzbek government abuses, arguing in favor of what they term "quiet diplomacy" with Tashkent. But the statement says Uzbek authorities do not deserve any praise for human rights improvements. Uzbekistan has been ruled for more than two decades by President Islam Karimov. http://www.rferl.org/content/Uzbekistan_Crack_Down_Ahead_Of_Elections/1901103.ht ml • Dozens Of Uzbeks Detained For Islamic Extremism PRAGUE -- An Uzbek rights activist says some 60 practicing Muslims are being detained in southern Uzbek prison on religious extremism charges, RFE/RL's Uzbek Service reports. Isroil Rizaev, from the Tashkent-based human rights organization Ezgulik (Benevolence), told RFE/RL that young practicing Muslim men in the southern Sirdaryo region were initially accused of extremism based on their affiliation with the new religious organization Birodarlar (Brothers). But they are now being charged with being jihadists. Rizaev said police who investigated the charges say that Avazbek Soipov is a leader of the Jihadists in Sirdaryo, which is about 100 kilometers from Tashkent. Soipov, 33, was arrested on October 2. His home was searched and religious documents were confiscated. Soipov is being kept in pretrial detention in the region. His mother, Dilbar Soipova, told RFE/RL that he is being accused of threatening Uzbekistan's constitutional system and has been tortured in jail. http://www.rferl.org/content/Dozens_Of_Uzbeks_Detained_For_Islamic_Extremism/189 4610.html • Excluded Aspirant Criticizes Uzbek Election Process

Komila Sodiqova is a member of the Liberal Democratic Party (LDP) from Asaka, a town in the eastern Andijon Province. PRAGUE -- A member of a pro-presidential political party in Uzbekistan has harshly criticized the party chairman and the election process after she was not allowed to run in the upcoming parliamentary elections, RFE/RL's Uzbek Service reports. Komila Sodiqova, a member of the Liberal Democratic Party (LDP) from Asaka, a town in the eastern Andijon Province, told RFE/RL that the regional LDP chairman rejected her candidacy for the December 27 elections despite the fact that she applied on time and

191 provided all necessary documents. Sodiqova said she was told that one must apply as a candidate for elections one year before the campaign officially starts. She said that she was also told that the list of candidates for the elections has already been made. Sodiqova said she has not received a reply from Uzbekistan's Central Election Commission regarding the unexplained refusal to list her as a candidate. She added that although she has never met President Islam Karimov, she does not think he is aware of the level of political corruption in Uzbekistan. She added that if Karimov would find out about the corruption committed by some people he would "kick their asses." Sodiqova said she is going to file a lawsuit against her party chairman. Uzbekistan has never held presidential or parliamentary elections that were deemed free and fair by Western-based international monitoring organizations. http://www.rferl.org/content/Excluded_Aspirant_Criticizes_Uzbek_Election_Process/189 3284.html Geo Strategic Front

Economic /Energy Front • Uzbekistan Withdrawing From Regional Power Grid Uzbek power lines supply electricity to its neighbors, including Afghanistan. (RFE/RL) -- Uzbekistan today is expected to officially leave the Soviet-era regional power grid that unites the country with its three Central Asian neighbors. The move could leave Uzbekistan’s impoverished neighbors, Kyrgyzstan and Tajikistan, facing severe electricity shortages during the winter months. Khusrav Ghoibov, a top official at the Tajik Foreign Ministry, criticized Uzbekistan’s decision as an effort to put pressure on neighbors. "We view the move as a political step by our neighboring country,” Ghoibov said. “Needless to say, each sovereign country has the right to participate in intergovernmental treaties or stop its participation. However, international norms in modern days would not support it if such political decisions harm another country’s interests." Uzbekistan’s geographic location has made it one of the most important members of the unified system, as many regions in Kyrgyzstan and Tajikistan are supplied with electricity through power lines crossing Uzbek territory. Kyrgyzstan depends on lines traversing Uzbekistan to supply electricity from its Jalalabad Province to its Osh and Batkent regions. Both Kyrgyzstan and Tajikistan import Uzbek electricity during the winter. To ease crippling energy shortages during winter, Tajikistan depends on 1.2 billion kilowatt hours of Turkmen electricity delivered through Uzbekistan. Tajikistan does not share a common border with Turkmenistan, and Tashkent’s withdrawal from the regional grid will cut off the cash-strapped country from its vital electricity supplier. 'Outdated' System

Uzbek officials have criticized the regional grid as an “outdated and unreliable" union that caused problems and disagreements among its members. Esso Sadullaev, a high- ranking official at the state-owned electricity company, Uzbekenergo, has told news agencies that the unified power system “is becoming a source of conflict among member countries." Last month, Kazakhstan accused Tajikistan of stealing electricity from the unified system and threatened to leave the regional grid. Officials in Dushanbe deny the accusation. Uzbek officials say Tashkent’s participation in the regional system endangers

192 the flow of electricity to its domestic consumers. In recent years, Tashkent has invested over $1 billion to update its power supply system and end its dependency on neighbors to deliver electricity to Uzbekistan’s southern areas. Uzbekistan’s Husar-Surkhan power line, which transfers electricity to Surkhandarya Province, was due to be launched today. The Uzbek province has so far relied on the Tajik branch of the regional power grid for power. Speaking to reporters in Dushanbe, Uzbek Ambassador Shokosim Shoislomov said Uzbekistan has a “national program, under which $3.6 billion will be spent during the period until 2014 for enhancement of the country’s power grid." “This will allow us to meet the increasing requirements of our economy in electricity and export surplus electricity to other countries, in particular to Afghanistan as we are currently doing," Shoislomov said. Electricity, gas, and water resources have been the source of disagreements between Uzbekistan and its neighbors since the collapse of the Soviet Union in 1991. The gas-rich country has repeatedly cut off gas supplies to Kyrgyzstan, Tajikistan, and southern Kazakhstan in past years, often without prior notice. Uzbekistan vigorously opposes plans by Kyrgyzstan and Tajikistan to build major hydropower plants that would pave the way for them to become energy independent and key electricity producers in the region. Tashkent insists the power plants would create environmental threats and leave Uzbekistan facing water shortages. The Central Asian power grid brings together Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Turkmenistan left the unified system in 2003. http://www.rferl.org/content/Uzbekistan_Withdrawing_From_Regional_Power_Grid/189 2220.html • Uzbekistan withdraws from Central Asian power grid The move is expected to lead to power shortages in some countries Uzbekistan is withdrawing from a Soviet-era power grid which linked it to other countries in Central Asia. The country has spent $1bn (£607m) on new power lines, enabling it to become independent of the system. But Tajikistan and Kyrgyzstan, the poorest nations in the region, rely heavily on gas and electricity supplies sent through the grid. Critics say Uzbekistan's move is politically motivated and the countries are now likely to experience shortages. Tajikistan and Kyrgyzstan are both working on large hydroelectricity projects, which Uzbekistan says will restrict the flow of water in Uzbek territory. This would be damaging to the Uzbek cotton production industry, on which its whole economy is based. The new Uzbek power distribution system will allow the country to transmit electricity without using power lines in neighbouring countries. The head of Uzbekistan's state utility company, Uzbekenergo, told state media the shared grid had been "a real threat to the stability and safety of Uzbekistan's own power system".

"Uzbekenergo sees no possibility of continuing to operate," Esso Sadullayev was quoted as saying by the Associated Press news agency. Tajikistan and Kyrgyzstan both experience bitter winters with many people living in adequate housing, so any shortage of electricity and gas are expected to be harshly felt. The power grid was set up in a time when the states shared resources freely across their borders. But correspondents say the failure to continue to do so has been a source of tension between the former Soviet states. The mismanagement of energy and water resources has also become one of the biggest problems in Central Asia. http://news.bbc.co.uk/2/hi/asia-pacific/8388406.stm

193 • Uzbek power grid withdrawal set to cause shortages (AP) - The authoritarian nation says it will withdraw Tuesday from the Soviet-era power grid that unites four Central Asian countries, prompting fears of electricity shortages that could make for a winter of hardship in impoverished Tajikistan and Kyrgyzstan. Uzbek power grid withdrawal set to cause shortages Central Asia braces for shortages as Uzbekistan plans to pull out of electricity grid The authoritarian nation says it will withdraw Tuesday from the Soviet-era power grid that unites four Central Asian countries, prompting fears of electricity shortages that could make for a winter of hardship in impoverished Tajikistan and Kyrgyzstan. Each country in the region contributes to the area's power supply and draws electricity from the same system. Their contributions shift as seasons change, because some are hydropower producers that have excess capacity after the spring snowmelt, while others use coal and gas. Uzbekistan's plan to stop all power flowing in and out of neighboring countries along its transmission lines is expected to deplete overall supplies in the other nations and in some cases cut off entire areas fed by lines leading from Uzbekistan. Snaking Soviet-era borders left Central Asian nations deeply intertwined and interdependent after Moscow's empire fell apart in 1991. Wealthier Uzbekistan accuses Tajikistan of stealing electricity and says continued participation in the unreliable Central Asian power grid imperils electricity supplies to its factories and households. It has spent more than $1 billion (euro0.67 billion) building a new transmission route designed to enable it to transport electricity to its southern provinces without relying on neighbors' lines. "The way the Central Asia unified energy system currently works contains a real threat to the stability and safety of Uzbekistan's own power system," the chief of Uzbek state utility company Uzbekenergo's dispatch center, Esso Sadullayev, said in a government-run newspaper. The company claimed Tajikistan had illegally appropriated some 100 million kilowatt hours from the system since late last year. "Uzbekenergo sees no possibility of continuing to operate" in the grid, he said. In Tajikistan and Kyrgyzstan, the planned pullout has prompted fears of crippling power shortages and a repeat of the trials many faced two winters ago, when blistering cold disrupted electricity production and claimed hundreds of lives. Many in the region live in Soviet-era apartments that are poorly equipped to protect dwellers from harsh winter weather. Because of the geography of the grid and the twisting national borders, Uzbekistan's withdrawal threatens to cut off some southern districts in Kyrgyzstan supplied with electricity from a hydropower plant through lines traversing Uzbek territory. Tajikistan, meanwhile, says the move will cut it off from gas-rich Turkmenistan, which has committed to deliver 1.2 billion kilowatt hours annually via Uzbekistan over the winter period. Turkmenistan lies west of Uzbekistan and does not border Tajikistan or Kyrgyzstan. More tension looms in the future. Mountainous Kyrgyzstan and Tajikistan have vast hydropower potential and are both working on ambitious projects that could serve much of their electricity needs, while creating enough surplus for export in the months of peak production. But Uzbekistan, which lies downstream from those proposed dam projects, strenuously objects amid fears that its crucial agricultural heartland could be cut off from precious irrigation water. Tajik economist Khodzhimuhamad Umarov said Uzbekistan's plans amounted to an energy blockade. Observers say Uzbekistan's decision to quit the grid could, however, prompt neighboring government to take energy security in into their own hands. On Monday,

194 Tajikistan unveiled a Chinese-built 500-kilowatt transmission line that will link the northern and central parts of the country, adding to the poor nation's debt to China but reducing reliance on Uzbekistan. http://silkroadintelligencer.com/2009/12/03/uzbek-power-grid-withdrawal-set-to-cause- shortages/ Social Front • Uzbek Students 'Regularly' Expelled For Not Picking Cotton Uzbek students who refuse to work in cotton fields during the harvest season in Uzbekistan are being expelled from high schools and universities, RFE/RL's Uzbek Service reports. Bobur Rashidov, a university teacher, told RFE/RL that an average of five to 10 students who do not attend or leave the compulsory work in the cotton fields are expelled from his university on an annual basis. He said that of some 3,000 students at his university -- which he asked not be named -- about 1,000 do not participate in the obligatory cotton harvest. Rashidov added that this is the case in the majority of high schools and universities in Uzbekistan. He said that some of the nonparticipating students are threatened with expulsion unless they pay $130-$600 to university officials. A student from the western Karakalpakstan region told RFE/RL that it was extremely difficult to get a medical exemption from the cotton harvest if someone was physically unable to work. He said one student with a broken hand had to pay the medical commission in order to get an exemption. Another Uzbek university official told RFE/RL that they are told that students opting out of the cotton harvest should be expelled. Uzbekistan is the second-largest cotton exporter in the world and has been criticized frequently by international organizations about its use of children and students to harvest cotton. The practice has prompted boycotts in the past. http://www.rferl.org/content/Uzbek_Students_Expelled_For_Not_Picking_Cotton/18965 18.html • Uzbek Government Demands Repayment From Students Abroad The Uzbek government's scholarship foundation is demanding repayments from parents whose children stayed abroad after attending foreign universities on state scholarships, RFE/RL's Uzbek Service reports. Hamida Masimova, a Tashkent resident whose son left Uzbekistan eight years ago to study in Great Britain on a government scholarship, told RFE/RL that the foundation is demanding that she pay some $35,000 for his education. Masimova said she is willing to repay the cost of her son's education, but does not believe it cost that much. Abdurakhmon Tashanov, the chairman of the Tashkent-based rights organization Ezgulik, told RFE/RL that the number of Uzbek students who used the "Umid" government scholarship and stayed abroad after graduating is increasing.

The Umid Foundation was established in 1997 to help talented Uzbek youth study abroad and was later transformed into the Iste'dod Foundation of the President to enhance the professional skills of perspective teachers and scientists. Mardon, a student who graduated from a U.S. university, told RFE/RL that students selected for a state scholarship sign a contract with the foundation that requires them to work for state institutions for five years after they return to Uzbekistan. He said that if a student violates the contract the student or his family are obliged to pay the costs of the education. Tashanov said that many "Umid" alumni are given jobs upon their return to

195 Uzbekistan that do not match their education level and are low paid, which is the reason many graduates stay abroad. http://www.rferl.org/content/Uzbek_Government_Demands_Repayment_From_Students _Staying_Abroad_/1893628.html • Rights Group Criticizes Uzbekistan's Repressive Policies Human Rights Watch (HRW) says the Uzbek government continues its repressive policies and is still detaining many rights activists despite the recent release of political prisoner Sanjar Umarov, RFE/RL's Uzbek Service reports. In a statement on December 1, the New York-based rights group called on the international community -- in particular the European Union and the United States -- to continue to press Uzbek officials to free political prisoners. Holly Cartner, HRW's director for Europe and Central Asia, said HRW was happy about the release of Umarov, "who should have never been imprisoned in the first place." Umarov, a prominent businessman, founded the opposition Sunshine Uzbekistan Coalition early in 2005. He was arrested later that year on embezzlement and tax-evasion charges and in 2006 a court sentenced him to 14 years in jail. Umarov has denied any wrongdoing. On November 15, after serving four years of a seven-year prison sentence, Umarov was released under a government amnesty. HRW said that on November 21 Umarov was reunited with his wife and children in the United States. The group said Umarov was released in poor health and has not yet been acquitted of the charges against him, which HRW said are politically motivated. http://www.rferl.org/content/Rights_Group_Criticizes_Uzbekistans_Repressive_Policies/ 1893605.html

Business and Politics in Muslim World China Fareeha Sarwar 6th to 12th December 2009 Presentation Date: 16th December 2009

REPORT PATTERN:

Outline

National report

Political front • Setback for KMT in election could affect mainland (7th December) • 45,000 governmental websites available online (7th December) • Chinese VP calls for strengthening Party building in non-public sector, social groups (9th December) • SCO governance schools pledge greater cooperation (10th December) • Security on alert for island talks (11th December) • Senior CPC official meets Vietnam guest (11th November)

196 Foreign relations • Fatah delegation wraps up China visit • Peruvian president meets Chinese navy senior officer (6th December) • China pledges to advance strategic partnership with Indonesia (7th December) • Chinese President hails strategic security talks with Russia (8th December) • China, Philippines pledge to promote military ties (8th December) • China expects U.S.-DPRK dialogue to restart stalled Korean nuclear talks (8th December) • China investigates Japan's detention of fishing boat (8th December) • China awards top ten international friends (8th December) • China condemns terror blasts in Pakistan (8th December) • China, Arab nations vow to promote media cooperation (8th December) • Canadian PM's visit to China re-energizes ties (9th December) • China regards Egypt important strategic cooperative partner, says top legislator (9th December) • Chinese president to visit Kazakhstan, Turkmenistan (9th December) • Chinese, Ethiopian premiers hold phone talks (9th December) • "Friendship pipeline" boosts cooperation with neighbors: Kazakh manager (9th December) • US envoy says China can help Afghans (10th December) • Cultural exchange enhances U.S.-China relations and understanding (10th December) • Vice-president to kick off Asia circuit in Japan (11th December) • Chinese, Kazakh presidents meet on ties (12th December) • Cooperation between China, Turkmenistan to enter new stage: ambassador (12th December)

Economic front • Chinese wind power companies target global markets • Chinese businessmen suffer from Dubai property crunch, but still keep confident (6th December) • China approves firm's bid for Australian Felix (6th December) • China likely to remain net importer of coal in 2009: expert (6th December) • Larry Lang warns of China's asset bubble risks (7th December) • Mainland Taiwan affairs official meets island's business delegation (7th December) • Peru ratifies free trade deal with China (7th December) • China vows to promote transformation of development pattern in 2010 (7th December) • China's trade surplus to US to narrow (7th December) • Israeli expert says Dubai-style crash highly unlikely in China (7th December) • Economic planners meet to fine tune policies (7th December)

197 • China's economic growth estimated to be 8.3% (7th December) • 87 mln Chinese shopping online in 2009 (7th December) • Sovereign wealth fund speeds up overseas investment (7th December) • China to continue fiscal and monetary policies next year (7th December) • Chinese shares close down 1.06% (8th December) • China's centrally-administered SOEs shrink to 131 (8th December) • China's farm produce prices up 1% (8th December) • China leads the world in auto sales, production (8th December) • China bans import, export of ractopamine (8th December) • BHP and Rio Tinto's merger spurs Chinese companies (8th December) • Taiwan may raise wages for Chinese fishing laborers soon (8th December) • Banking authority reitertates credit quality, pace control (9th December) • China shares extend losses on Wall Street retreat (9th December) • China to further boost domestic consumption in 2010: State Council (9th December) • China to raise earnings of middle-and-low income groups: official (9th December) • China's economic recovery, restructuring make foreign investors more confident (9th December) • Nomura plans to expand in India, China next year: Report (9th December) • Auto stimulus retained for 2010 (10th December) • Buyout funds face dilemma in raising RMB in China (10th December) • Exchange rate kept stable against all odds (10th December) • New lending cap of 8 trillion yuan (10th December) • Small steel mills face 'big' problems (10th December) • South China Sea gas find to fuel CNOOC dreams (10th December) • State reveals 1st steps to lift economy (10th December) • System to ensure sustainability, legality of logging (10th December) • US companies find an oasis of profit in China (10th December) • Tech: Is China Catching Taiwan? (11th December) • China industry output soars, inflation returns (11th December) • China's imports, exports grow 9.8% in Nov (11th December) • Nov CPI ends nine-month decline (11th December) • China's retail sales up 15.8% in November (11th December) • China reports 32.6% rise in fiscal revenue for Nov (11th December)) • China's electricity power production up 26.9% in Nov (11th December) • China's new loans rise to 294.8b yuan in November (11th December) • Chinese vice premier stresses economic structure rebalance (12th December) • Oil rises after report shows record runs at Chinese refineries (12th December) • Export slump eases as demand revives (12th December)

Social front • Madagascar's Confucius Institute celebrates first anniversary (6th December) • China to relax residence permit rule (7th December)

198 • China to enact online community network (7th December) • 76% of Chinese white-collars are sub-healthy (7th December) • China faces difficulties in cultural relics protection: official (8th December) • China is "catching up" in English proficiency: Philippine official (8th December) • Senior leader congratulates publication of authoritative Chinese dictionary (8th December) • Chinese cultural ministry donates office equipment to Pak counterpart (8th December) • Scholars bid government to abolish housing law (9th December) • 13.7% of China's A/H1N1 flu deaths were pregnant women: ministry (9th December) • 22 Chinese cities to get subways (9th December) • Recognition of China schools will not spur Taiwan student exodus: MOE (9th December) • NGOs play more important role (10th December) • Officials warn of China flu peak in next two months (11th December) • Govt cracks down on illegal commercials (11th December) • Senior official calls for enhancing int'l education (11th December)

Ethnic issues

• Crackdown nabs 94 riot suspects (10th December)

Environmental front • UNEP lauds China's commitment to combating climate change (6th December) • China makes efforts to boost negotiations on climate change (7th December) • China expects developed countries to meet commitments on emissions (8th December) • China on track of low-carbon development (8th December) • Chinese entrepreneurs fight against climate change (9th December) • Chinese vice premier calls for development of environmental protection industry (9th December) • CNOOC announces new deepwater gas finding in South China Sea (9th December) • New book chronicles China's green movement (10th December) • Clear climate message to the Chinese (11th December) • Chinese Premier stresses development of meteorological service (11th December) • Copenhagen: US, China clash in climate ping-pong (11th December) • China refuted the idea of G2 in climate change (11th December) • Chinese premier, U.N. chief discuss climate change (12th December) • China calls on rich nations to deliver on climate pledges (12th December)

Regional report

199

North

Politics • China to hold Confucius Institute conference (6th December)

Social front

• China spends 6.5 bln yuan protecting northern grasslands (7th December) • Corrupt securities trader executed in Beijing (8th December) • Illegal production, slack supervision cause deadly landslide in north China: State Council (12th December)

Economic front • Chinese laborers await payoff from employer (7th December) • Labor disputes skyrocket in Beijing (10th December) • Roaring trade for tiger gold bars in city (10th December) • Fast train drowning flight price (10th December)

Northwest Politics Social front • China Daily enhances publicity in (11th December) Economic front • New Xinjiang railway expected to boost transport to Europe, central Asia (7th November)

Northeast Politics Social front • Pipeline leak leaves thousands of families without water (9th December)

Economic front

Southwest

Politics Social front • "Green bank" helps China reduce carbon emission (7th December) • Gang boss gets 20 years (10th December) • Workers stranded waiting for unpaid wages (10th December) Economic front • Air China to launch Chengdu-Bangalore route (6th December)

200 • China Unicom to invest 1.8b yuan in Tibet's telecommunications (7th December)

South central Politics Social front • Themed activity of Hakka people held in (6th December) • 2009 Bi-city Biennale of Urbanism Architecture kicks off (7th December) • First self-government owners' committee rebuffed (8th December) • Police criticized for targeting migrants (10th December) • Protesters offered a platform (10th December) • Schools told to avoid stampede repeat, compensation agreed (10th December) • Italian, Chinese cities launch tourism co-op program (11th December)

Economic front • CNOOC plans Zhuhai terminal to receive deepwater gas (7th December) • China to launch high-speed railway from central to south China (9th December) • Special: Accelerated growth mooted for area's industrial zones (10th December) • 'Double transfer' success for center (10th December) • Guangdong Special: Guangdong earmarks 250 bn yuan for industrial renaissance (10th December) • Priorities drastically revised as region aims for major turnover (10th December) • Wuhan builds waterborne passenger transport system (11th December)

East

Politics • Shanghai Party chief meets Canadian PM • Surfing officials chided (10th November) Social front • Auto fair held in Jinan, Province (7th December) • Eco-friendly automobile (10th December) • Rich getting richer, but poor becoming resentful (10th December) • Smoking ban in public places in Shanghai to be enforced (11th December)

Economic front • Shanghai's Bund renovated before Shanghai Expo • Mercedes-Benz names first arena in China (7th December) • China's largest lender opens first village bank (7th December) • Taiwan Bank to set up Shanghai bureau (9th December)

201 HONGKONG AND Politics • Chinese state councilor gives speech ahead of Boao youth forum in Hong Kong (7th December)

Social front Economic front • HK, Canada sign working holiday scheme (7th December) • Tsang predicts return to growth in Q4 (8th December) • Hong Kong stocks close 1.44% lower (9th December)

National report

Political front

• Setback for KMT in election could affect mainland (7th December) The electoral setback of Taiwan's ruling Kuomintang (KMT) in Saturday's local elections may pose a new challenge to its Chinese mainland-friendly leader Ma Ying-jeou as well as cross-Straits relations, experts warned Sunday. Seventeen counties and cities were up for grabs in Saturday's poll, and Ma's KMT lost control of two, while the pro-independence opposition Democratic Progressive Party (DPP) gained one. "It is definitely bad news for the mainland," said Li Jiaquan, a senior researcher with the Institute of Taiwan Studies at the Chinese Academy of Social Sciences. He expected more of a power struggle between the KMT and DPP on major political issues, ranging from bilateral talks to the proposed trade pact across the Straits. Ma and his government will likely face more obstacles if he continues his push for closer ties with the mainland, the Taipei-based United Daily newspaper said in a commentary yesterday.

202 Speaking to reporters in Taipei on Saturday, DPP Chairwoman Tsai Ing-wen called the results "an important step in the DPP's comeback", saying they also show people are not happy with the government. The DPP took more than 45 percent of the vote, compared to 38 percent in the magistrate and mayoral polls four years ago. "The outcome is not as good as we'd hoped," said Ma, who also acts KMT chairman. He promised to improve the government's performance and reflect on the warnings delivered by the electorate. But Ma insisted his positive cross-Straits policies are welcome by most Taiwan people. The DPP, however, got a boost in its morale, and DPP's Tsai, a possible candidate for the island's "presidential" elections in 2012, is putting more pressure on Ma. Tsai interpreted the poll as a resounding rejection of Ma's policies, which center on improved relations with the mainland, AFP reported. Li Jiaquan said it is still difficult to evaluate how Ma will adjust his cross-Straits policy. "If he links the KMT's electoral setback with the mainland policy, there is only a slim chance for him to open political talks with the mainland." Ma was seen a favorable figure by the Chinese mainland because of his promotion of positive cross-Straits ties, which froze up during the DPP's rule of Taiwan from 2000 to 2008. He also once enjoyed a high support rate with his incorruptible character and refreshing image. Ma had an approval rating of 66 percent when he took office in May 2008, and polled 52 percent on his first anniversary. But challenges keep popping up as the financial crisis loomed over Taiwan and a serious typhoon hit the island in August. George Tsai, a political scientist at Taipei's Chinese Culture University, was quoted by AFP as saying "this is a warning sign for Ma that he has been stereotyped as incompetent following the financial and typhoon crises". Ma will become more cautious and conservative if he interprets the people's dissatisfaction as mistrust of his mainland policies, Tsai said.

• 45,000 governmental websites available online (7th December) China has launched 45,000 governmental websites as of January 2009, xinhuanet.com reported, citing a report from the "First China Governmental Websites Development Forum" in Bo'ao, Hainan province on Sunday. The central government opened the first governmental portal in China on January 1st, 2006. So far, all central government department levels have established their own websites to distribute information and provide online services. Most provincial governments, autonomous regions, municipalities and cities, as well as some counties, now have their own government portals, the report said. C:\45,000 governmental websites available online.mht

• Chinese VP calls for strengthening Party building in non-public sector, social groups (9th December) Chinese Vice President Xi Jinping Wednesday called for strengthening Party building in the non-public economic sector and social organizations. Xi, also a Standing Committee member of the Political Bureau of the Communist Party of China (CPC) Central Committee, told a symposium that efforts should be made to

203 expand Party organizations in the non-public sector and social organizations, and select right persons to head the Party committees. Xi also urged to absorb more people from the non-public sector to join the CPC and to explore ways for the CPC organizations to play a more effective role. He said measures should be constantly improved to ensure the scientific development of the non-public sector and social organizations. C:\Chinese VP calls for strengthening Party building in non-public sector, social groups_English_Xinhua.mht

• SCO governance schools pledge greater cooperation (10th December) Representatives of top Chinese, Russian and Central Asian schools for government officials pledged Tuesday to improve training and innovation of governance. Chinese State Councilor Ma Kai met with delegates from the member states of the Shanghai Cooperation Organization (SCO), which groups China, Russia, Uzbekistan, Tajikistan, Kyrgyzstan and Kazakhstan. The National School of Administration of China would enhance exchanges and cooperation with counterpart institutes in a bid to learn from each other and share experiences, said Ma, also president of the Chinese school. The delegates on Tuesday signed a joint statement at a forum that focused on governance innovation and was hosted by the Beijing-based National School of Administration of China on Monday and Tuesday.

• Security on alert for island talks (11th December) A senior Taiwan negotiator Thursday pledged to ensure the safety and dignity for Beijing's top envoy when he visits the island for the upcoming cross-Straits talks. Chen Yunlin, president of the Association for Relations Across the Taiwan Straits (ARATS) and Chiang Pin-kung, chairman of the Straits Exchange Foundation (SEF), will hold their highly anticipated discussions from Dec 21-25 in the island city of Taichung. The frame and scope of the discussions were finalized by Kao Koong-lian, SEF vice- chairman, and Zheng Lizhong, ARATS vice-president, who met Thursday in Fuzhou, capital of East China's province. "(Chen's) visit will be arranged under the principles of safety, convenience and dignity," Kao told reporters Thursday. "Our security departments have made the utmost preparations and I believe there will be no problems." Negotiations between the two organizations will occur specifically on Dec 22-23, after which Chen's delegation will tour central Taiwan. Talks between Chen and Chiang will be the fourth since relations between the two sides began to improve last year. Safety was an issue for Chen last November when he was trapped in a Taipei hotel by protestors of Taiwan's opposition Democratic Progressive Party (DPP) for more than three hours ahead of high-level meetings. After the anticipated visit was announced Thursday, several pro-independence groups promised to stage the largest demonstration ever in Taichung to greet the mainland delegation. Lin Yi-cheng, an organizer of the protest, said he and his followers will hold rallies wherever the mainland delegation goes during its stay in Taiwan.

204 Taiwan media reported earlier that Taichung authorities will deploy more than 5,000 police, with 40 bodyguards for Chen, to ensure a smooth visit. A mainland delegation, led by ARATS vice president Zheng Lizhong, will arrive in Taiwan on Dec 18 to make final arrangements for Chen's visit. Zheng said Thursday that negotiations will focus on four topics: avoidance of double taxation, inspection of farming produce, cooperation in the fisheries industry, and industry standards certification. But a proposed trade pact across the Straits, or the so-called economic co-operation framework agreement (ECFA), will not be negotiated, much less inked, in the fourth round of negotiations, according to the island's "mainland affairs council." Council chief Lai Shin-yuan said Thursday in Taipei that Chiang and Chen are expected to agree on possible talks on the signing of the ECFA in a fifth round of talks. It is uncertain when the fifth round of talks will be held.

• Senior CPC official meets Vietnam guest (11th November) Liu Yunshan, head of the Publicity Department of the Communist Party of China (CPC) Central Committee, met with To Huy Rua, a member of the Political Bureau of the Communist Party of Vietnam (CPV) Central Committee in Xiamen of southeast China's Fujian Province on Friday. The two officials are here to attend the fifth seminar on theories of the CPC and CPV to be held on Saturday. Hailing the development of China-Vietnam relations in recent years, Liu said further deepening of the traditional friendship between China and Vietnam is conducive to the reform, construction and development of the two countries, as well as the peace, stability, cooperation and development of the region and the world. China will work with Vietnam to continue expanding the comprehensive strategic relationship of cooperation between the two countries, he said. Rua echoed Liu by saying that exchange of the two parties' experience ruling the country and governance will give more impetus for the development of bilateral relations.

Foreign relations

• Fatah delegation wraps up China visit

A delegation from Palestinian President Mahmoud Abbas' Fatah movement ended a one- week visit to China to boost cooperation, a member of the delegation said Saturday.

The delegation included six members from the newly-elected Fatah Central Committee and the Revolutionary Council and a group of younger members.

Following Fatah's general conference in August, "the movement decided to draw Palestinian strategic plans on international level and China is the great, the most important and the first country to be visited in this regard," said Abbas Zaki.

205 "China is a message for peace, living and development in the world," Zaki added.

Zaki said the delegation held "positive and fruitful discussion" with Chinese officials and briefed the Chinese leadership on the latest development in the Israeli-Palestinian conflict as well as the stalled peace talks in the Middle East.

During the visit, the two sides reached an agreement "to intensify training for Palestinians in diplomacy and higher education," Zaki said.

• Peruvian president meets Chinese navy senior officer (6th December) Peruvian President Alan Garcia met Friday with visiting Major General Wang Fushan, vice-commander of the North Sea Fleet of the Chinese People's Liberation Army Navy. Garcia, who held a grand ceremony in Plaza Mayor of Lima, said he welcomed the visit of the Chinese squadron led by Major General Wang. Garcia and Vice President Luis Giampietri Rojas went to Peru's largest port of Callao to visit the Chinese missile destroyer Shijiazhuang. Wang said the visit of the Chinese naval fleet was aimed at promoting the communication and cooperation between both armies, particularly between naval forces, adding that both parties could learn from each other and further enhance the friendship between the two peoples and armies. Garcia said China had not only achieved great accomplishments in social development but also reached a high level in defense and arms production technology. The president said Peru was interested in China's national defense and missile technologies, as well as navy technology and equipment. He hoped Peru could learn more about the Chinese navy by visiting its warships. Garcia also declared the free trade agreement between Peru and China signed in April would enter into force on Dec. 6. The Chinese fleet, composed of missile destroyer Shijiazhuang and supply ship Hongzehu, departed from China's eastern port of Qingdao on Oct. 18. It arrived in Callao from Chile on Dec. 3 to start a four-day visit in Peru.

• China pledges to advance strategic partnership with Indonesia (7th December) China on Monday pledged to work with Indonesia to push forward the bilateral strategic partnership.

China's top legislator Wu Bangguo and top political advisor Jia Qinglin made the remarks in separate meetings with Taufik Kiemas, Chairman of the People's Consultative Assembly of Indonesia. "We always attach great importance to the relations with Indonesia," said Wu, chairman of the Standing Committee of the National People's Congress (NPC), China's top legislature.

Hailing the sound development momentum of China-Indonesia ties, Wu said the countries had enjoyed increasing mutual political trust, fruitful cooperation in various sectors, and close coordination in regional and international organizations.

206 "We applaud Indonesia's long-term adherence to the one-China policy," he noted, expressing appreciation for the country's support in issues concerning Taiwan, Tibet and Xinjiang.

The two nations, both as important nations in the Asia-Pacific region, enjoyed broad common interests, Wu said, hoping that the two sides would enhance parliamentary exchanges and cooperation to enrich the contents of bilateral ties.

Jia Qinglin, chairman of the Chinese People's Political Consultative Conference (CPPCC) National Committee, told Taufik that the China-Indonesia ties had stepped into a new phase of rapid, healthy and stable growth.

"We are ready to work with Indonesia to expand cooperation in economy, trade and culture to advance our strategic partnership," Jia said, noting that this would benefit the two peoples and help regional and world peace and development.

Jia hoped the CPPCC, the top political advisory body, and the People's Consultative Assembly of Indonesia would maintain close exchanges and learn from each other to help promote relations between the two nations.

This China trip from Dec. 6 to 9 was Taufik's first visit abroad since taking office in October this year. Taufik told Chinese leaders that this showed the importance attached by Indonesia to relations with China.

Indonesia valued the friendly and cooperative ties with China, he said, hoping that the two nations would increase pragmatic cooperation in infrastructure construction and resources exploitation.

He said the People's Consultative Assembly was ready to strengthen exchanges and cooperation with the NPC and the CPPCC to contribute to comprehensive growth of Indonesia-China ties.

Taufik reiterated that his country would firmly stick to the one-China policy. C:\China pledges to advance strategic partnership with Indonesia_English_Xinhua.mht

• Chinese President hails strategic security talks with Russia (8th December) Chinese President Hu Jintao Tuesday spoke highly of the strategic security talks with Russia that helped to promote bilateral ties, pledging to further the bilateral strategic partnership of cooperation in the coming year. The security talks, initiated in February 2005, served as a platform for the two states to enhance political trust and cooperation in various fields, especially in law-enforcement and security aspects. Chinese State Councilor Dai Bingguo and Russian Security Council Secretary Nikolai Patrushev attended the fourth round of talks in Beijing early Tuesday.

207 They discussed bilateral ties, saying it witnessed a balanced, smooth and quality development this year, which marks the 60th anniversary of the establishment of diplomatic relations between the People's Republic of China and Russia. They applauded the frequent high-level visits, improved strategic coordination, enhanced strategic mutual trust, and the expanding economic and humanitarian cooperation. "The two sides believed that the strategic coordination between China and Russia played an important role in safeguarding the two states' strategic security interest, development, and the world peace and stability," the Chinese Foreign Ministry said in a press release. The two sides pledged to further strengthen coordination in their strive to promote the reform on global governance mechanism, maintain close cooperation on major international and regional issues, enhance regional cooperation and preserve their common interest. They also discussed the nuclear issue on the Korean Peninsula, Iran's nuclear program, the Group of 20, the reform of the United Nations, climate change, nuclear disarmament, the BRIC and the Shanghai Cooperation Organization, Chinese diplomatic sources said. "The world is experiencing dramatic change and adjustment, which will offer new opportunities and challenges for the development of both China and Russia," Hu said during a 40-min meeting with Patrushev in the Great Hall of the People in central Beijing. It will also raise new task and requirements for the development of the China-Russia strategic partnership of cooperation, Hu told the senior Russian security official. China will work along with Russia, take the opportunities and enhance the all-round strategic coordination and substantial cooperation in various fields in a bid to lift bilateral ties into a new phase, Hu noted. Hu proposed the two sides to tap the full potential of the strategic security talks so as to make further contribution to the development of bilateral ties. Patrushev echoed Hu's remarks on world situation, adding that it is of great significance for Russia and China to speed up strategic coordination under the context of the global financial crisis. The frequent exchange of high-level visits and cooperation in various fields fueled the development of bilateral ties, he said, vowing to further enhance cooperation with China in a bid to bolster bilateral ties. C:\Chinese President hails strategic security talks with Russia_English_Xinhua.mht

• China, Philippines pledge to promote military ties (8th December)

Chinese Defense Minister Liang Guanglie met here Tuesday with Chief of General Staff of the Armed Forces of the Philippines (AFP) Victor S Ibrado.

Liang, also a state councilor, said Chinese and Philippine people enjoy a long history of friendly exchanges, and the two countries have maintained effective cooperation in such areas as politics, economy and military affairs and coordination on the international and regional issues.

208 He said China attached importance to strengthening military cooperation and exchanges with the Philippines, and was ready to work with the country to promote their military relations so as to boost the comprehensive development of bilateral ties.

China appreciated the Philippines' adherence to the one-China policy, and hoped the country would continue to support China on issues concerning its core interests, Liang said.

Ibrado said the bilateral military ties had developed smoothly in recent years featuring lots of friendly exchanges. The Philippines appreciated China's support for its state and army building, and hoped to deepen bilateral exchanges and cooperation. C:\China, Philippines pledge to promote military ties_English_Xinhua.mht

• China expects U.S.-DPRK dialogue to restart stalled Korean nuclear talks (8th December)

A Chinese Foreign Ministry official said Tuesday the government hoped dialogue between the United States and the Democratic People's Republic of Korea (DPRK) will revive the stalled Korean nuclear talks.

"We back the U.S.-DPRK engagement and dialogue. We expect the dialogue to help restart the six-party talks," spokeswoman Jiang Yu told the regular briefing on Tuesday.

Jiang's comments coincided with U.S. President Barack Obama's special envoy to the DPRK Stephen Bosworth's arrival in Pyongyang on Tuesday.

The first visit to the DPRK by a representative of the Obama administration, Bosworth's three-day trip is widely expected to concentrate on persuading the DPRK back to the six-party nuclear talks.

The U.S. has repeatedly stressed that it is not interested in engaging in any nuclear dialogue beside the six-party talks that involve China, the DPRK, the United States, the Republic of Korea (ROK), Russia and Japan.

"We hope the dialogue between Bosworth and DPRK officials will help increase mutual understanding and address their own concerns," Jiang said.

Jiang said Bosworth would also travel to Beijing later this week. C:\China expects U_S_-DPRK dialogue to restart stalled Korean nuclear talks _English_Xinhua.mht

• China investigates Japan's detention of fishing boat (8th December) China's Foreign Ministry confirmed Tuesday that Japanese authorities have detained a Chinese fishing boat for alleged illegal fishing.

209

Ministry spokeswoman Jiang Yu gave no details of the vessel or its crew, but she urged Japanese authorities to ensure the crew members' legal rights.

Jiang told a regular press conference that the Japanese fisheries department had informed China's Consulate-General in Osaka that the boat was detained for "fishing across the border."

The ministry gave no details on when the boat was detained and how many crew members were in custody.

Jiang said the Chinese authorities were investigating the case.

C:\China investigates Japan's detention of fishing boat _English_Xinhua.mht

• China awards top ten international friends (8th December) China on Tuesday awarded the top ten international friends selected by Internet users for "making exceptional contributions to the country in the past 100 years."

Those who came onto the list include Norman Bethune, a Canadian doctor who died during the anti-Japanese war in the 1930s for saving Chinese soldiers; John Rabe, a German who rescued 250,000 Chinese people during the Nanjing Massacre committed by the Japanese invaders; Juan Antonio Samaranch Toriello, honorary president of the International Olympic Committee who supported China's bid for the 2008 Olympics; Edgar Snow, an American journalist who wrote the renowned book "Red Star over China" in the 1930s to make the Chinese Red Army world famous; Dr. Joseph Needham, a British scientist who spent some 50 years writing a milestone masterpiece "Science and Civilization in China".

Also on the list are Poland-born Chinese citizen Israel Epstein, New Zealand educator Rewi Alley, Indian doctor Kwarkanath Kotnis, Thai princess Maha Chakri Sirindhom and Morihiko Hiramatsu of Japan.

Top political advisor Jia Qinglin extended appreciation for the great support and help of the prize winners and their representatives, adding the Chinese people would never forget their contribution.

"China cannot develop without the support of foreign friends from various countries, neither can the world proper in the absence of China," said Jia, chairman of the Chinese People's Political Consultative Conference National Committee, while meeting with the winner or their representatives.

As globalization continues, countries and people around the world need to enhance understanding and boost cooperation to promote world peace and development, he said.

210 "The Chinese people are willing to join hands with friends around the world to contribute to the building of a harmonious and beautiful world," he said.

Princess Sirindhom said she was greatly moved to receive the honor, as that meant the Chinese people had never forgotten those old friends who had extended helping hands to China.

The online voting was organized by China Radio International as part of the activities to celebrate the 60th anniversary of the People's Republic of China. Altogether 56 million eligible votes had been collected in the voting which lasted from Aug. 31 to Oct.10.

C:\China awards top ten international friends_English_Xinhua.mht

• China condemns terror blasts in Pakistan (8th December) China on Tuesday condemned a series of terrorist blasts in Pakistan that killed at least 40 people and injured more than 100.

"We condemn the terrorist blasts in Lahore and Peshawar of Pakistan. We stand against terrorism in whatever form," Chinese Foreign Ministry spokesperson Jiang Yu told the regular briefing on Tuesday.

Two explosions killed 29 people, and injured at least 60 others in eastern Pakistan's Lahore on Monday evening. Earlier Monday, 11people were killed and almost 50 injured when a suicide bomber blew himself up outside a court in Peshawar, capital of North West Frontier Province.

"As a friendly neighbor, the Chinese government will continue to staunchly support the Pakistan government and people's unremitting efforts to seek national stability," Jiang said. C:\China condemns terror blasts in Pakistan _English_Xinhua.mht

• China, Arab nations vow to promote media cooperation (8th December)

China hoped to lift media cooperation with Arab countries to a new level, said a senior official of the Communist Party of China (CPC) here Tuesday.

Liu Yunshan, head of the Publicity Department of the CPC Central Committee, made the remarks when meeting with a media delegation composed of 25 press officers and heads of mainstream media organizations from 14 Arab nations.

Liu said China and the Arab countries had enhanced political mutual trust and cooperated closely on many major regional and international issues in recent years.

"China appreciated the Arab nations' support on issues concerning its sovereignty and core interests," he noted.

211 He said China attached great importance to developing ties with the Arab nations, and was willing to cement China-Arab friendship and enhance mutually beneficial cooperation on the basis of the Five Principles of Peaceful Coexistence.

Exchanges and cooperation between media circles were important components of China-Arab cooperation, he said, adding he hoped the two sides to make concerted efforts to boost China-Arab media cooperation.

Sarwat Mekky, head of the delegation and secretary-general of the Egyptian Radio and Television Union, said the members of the delegation expected to deepen their understanding of China through the current visit and to promote exchanges and cooperation with China's media circles. C:\China, Arab nations vow to promote media cooperation_English_Xinhua.mht

• Canadian PM's visit to China re-energizes ties (9th December) Observers here have rated the recent Canadian prime minister's visit to China as having re-energized stagnated ties with the Asian country. "I think the results (advanced) the relationship between the two countries," said Barbara MacDougall, former Canadian secretary of state for external affairs, in an interview with Xinhua. Canadian Prime Minister Stephen Harper visited China last week, and embarked on his first tour of Beijing since he took office in 2006. Before the prime minister left Ottawa, local media described his visit as the "most important foreign visit," adding that it showed Canadian goodwill despite the country's high duty on Chinese steel imports. MacDougall said that Canada and China signing a tourism accord during Harper's visit was as surprising as it was important, especially after China has added Canada to its tourist destination list. The accord is expected to allow Canada to tap into China's lucrative market of large numbers of outbound tourists. Dr. Gregory Chin, a senior fellow at the Center for International Governance Innovation and an assistant professor of political science at York University in Canada, said that Canadians can now expect to see agreements with China on cooperation in green technology, science and the energy sector as well. MacDougall said Harper's Beijing trip has reset China-Canada relations, and the two governments would have more regular discussions and exchanges following this trip. She added that the opening of four more Canadian commercial offices in China was "very positive." The offices will be located in Nanjing, Qingdao, Shenyang and Wuhan. She predicted there would be an increase in business activities between China and Canada, now that Canada has 11 diplomatic and commercial offices in the Asian country, according to information from the Canadian prime minister's office. "This trip," said Chin, "gave the green lights to both sides for more high-level exchanges and more business agreements." The scholar said Harper's trip showed Canada's interest in building a stronger, broader relationship with China.

212 Canada's shift from a critical approach toward a constructive effort in its relations with China has been underway for about a year and half, local observers said. "Once you visit a place in person, then you'll develop a human connection. Walking on the Great Wall and visiting the Forbidden City can help the prime minister understand China's long political history," Chin said. "A visit like this in an official capacity can only help," he added.

• China regards Egypt important strategic cooperative partner, says top legislator (9th December) China's top legislator Wu Bangguo said Wednesday the country regards Egypt as one of the most important strategic cooperative partners among Arabian and African nations. "We attach great importance to the relations with Egypt," Wu, chairman of the Standing Committee of the National People's Congress (NPC), China's top legislature, told visiting Deputy Speaker of Egyptian People's Assembly Zeinab Radwan. To promote relations between China and Egypt, both influential countries in the world, conformed to the fundamental interests of the two nations and the two peoples, and was also conducive to regional and world peace and prosperity, Wu said.

"We are ready to work with Egypt to maintain high-level exchanges, increase friendly cooperation and strengthen coordination in international affairs," Wu said, noting that this would help achieve common development and benefit the two peoples.

Wu also applauded Egypt's long-term and firm support to China on issues concerning Taiwan, Tibet and Xinjiang.

Radwan was here to attend the third meeting under a regular exchange mechanism between the parliaments of China and Egypt.

Hailing the role of the regular exchange mechanism, Wu said it provided the two parliaments with direct, in-depth and effective channels to communicate with each other, and had become an important platform for parliamentary exchanges.

Under the active promotion of the leaders from both nations, the two parliaments set up the regular exchange mechanism in 2007.

Wu hoped the two parliaments would further improve the mechanism.

Echoing Wu, Radwan said the Egyptian People's Assembly would make use of the mechanism construction to advance the level of parliamentary cooperation between the two sides.

As to Egypt-China ties, Radwan said the two countries in recent years had witnessed frequent high-level visits and fruitful cooperation in investment, tourism, economy and trade.

213 Egypt valued the relations with China, and would work with the country to enhance exchanges and cooperation in various sectors.

Radwan is visiting China from Dec. 4 to 10 at the invitation of the NPC Standing Committee. C:\China regards Egypt important strategic cooperative partner, says top legislator_English_Xinhua.mht

• Chinese president to visit Kazakhstan, Turkmenistan (9th December) Chinese President Hu Jintao will pay a working visit to Kazakhstan and Turkmenistan from Dec. 12 to14 at the invitation of President Nursultan Nazarbayev and President Gurbanguly Berdymukhamedov, Foreign Ministry spokesperson Jiang Yu said here Wednesday. C:\Chinese president to visit Kazakhstan, Turkmenistan_English_Xinhua.mht

• Chinese, Ethiopian premiers hold phone talks (9th December) Chinese Premier Wen Jiabao on Wednesday held a telephone conversation with his Ethiopian counterpart Meles Zenawi on relations and major international issues of common concern.

The two leaders pledged to work together to push forward the new type of strategic partnership between China and Africa.

They also exchanged views on China-Africa cooperation, China-Ethiopia relations and climate change. C:\Chinese, Ethiopian premiers hold phone talks_English_Xinhua.mht

• "Friendship pipeline" boosts cooperation with neighbors: Kazakh manager (9th December) The Central Asian gas pipeline, which will go into operation next year, will boost cooperation with Kazakhstan's neighbors and bring benefits to all in the region, the general manager of the Chinese-Kazakh joint venture Asian Gas Pipeline says. In a recent interview with Chinese media, Beimbet Shayakhmetov said the construction of Line A of the dual pipeline has already been completed and ready for operation, while Line B is expected to begin to deliver gas in April or May next year. The construction of the pipeline, which runs from the border between Turkmenistan and Uzbekistan, passing through Uzbekistan and Kazakhstan before reaching China, began in 2007. Shayakhmetov said the 1,833-km pipeline is currently the longest gas pipeline in the world, with Turkmenistan, Uzbekistan, Kazakhstan and China directly involved in the project and Russia, Germany, Britain and the United States participating to varying extents. The project has drawn a lot of international attention and the entry into operation has great significance, said the general manager.

214 The project has created large numbers of jobs in Kazakhstan and the country will also benefit by collecting gas transit fees, he said, adding that gas needs in Almaty region will be met after Phase II of the project is completed. The pipeline has opened a new gateway for energy exports for both Turkmenistan and Uzbekistan, with the latter also benefiting from receiving large amounts of transit fees. "In fact, most important of all, through this project, we and our neighbors have found more common interests and opportunities for cooperation between us," Shayakhmetov said. Energy cooperation between Kazakhstan and China has reached a high level and bilateral cooperation in other areas has also been fruitful, Shayakhmetov said. The two countries share a long border and China's powerful economy has an important impact on Kazakhstan's economic development, he said. "During the Soviet era, Russia built a "friendship" natural gas pipeline leading to Europe. But in comparison, this Central Asian gas pipeline fully deserves the title of a "friendship pipeline," as it can well rival that pipeline in its immediate significance," he said. C:\Friendship pipeline boosts cooperation with neighbors Kazakh manager_English_Xinhua.mht

• US envoy says China can help Afghans (10th December) China can offer Afghanistan and Pakistan "peaceful economic development", said US Ambassador to China Jon Huntsman in Beijing yesterday. The US has been struggling with its war on terror in Afghanistan. Just more than a week ago, US President Barack Obama has declared to send 30,000 more troops to the battlefield. China responded to Huntsman's message yesterday, saying Beijing wishes to work with the international community to help those war-torn neighbors achieve peace, stability, development and progress. Huntsman noted that Beijing and Washington can both bring such help. Huntsman made the remarks after addressing in Beijing an annual conference of the Committee of 100, a group of prominent Chinese-Americans aiming to encourage stronger relations between China and the US. He stressed during the speech that many global challenges can only be resolved through cooperation between China and the US. In response, the Chinese Foreign Ministry said Beijing and Washington have maintained "good communication" on the situation in South Asia. Jiang Yu, the ministry's spokeswoman, said China, as a friendly neighbor of Afghanistan and Pakistan, has offered help "within its might" to help both countries achieve "peace, stability, development, and progress". "We wish to work with the international community to further promote efforts to achieve above goals," she told China Daily. Late last month in Beijing, Obama reached consensus on the South Asia situation with his Chinese counterpart, President Hu Jintao. The two leaders' joint statement said both countries "welcome any effort that helps achieve peace, stability, and development in South Asia", and they also agreed to "support anti-terror combat in Afghanistan and Pakistan."

215 Commenting on Huntsman's latest message, Afghanistan's ambassador to China said he "welcomes cooperation between China and the US" to contribute to his country's reconstruction, especially in the economic sector. "The government of Afghanistan believes that Afghanistan is a place of cooperation for civilizations," said Ambassador Sultan Baheen. "China, as a good friend, neighbor and big regional power, could and should have a contribution in the Afghanistan's reconstruction," Baheen added. Meanwhile, a senior Pakistan government official said Islamabad and Beijing "have a strong and independent trajectory of relations". "Pakistan is also working with the US in the war against terrorism and economic development," the official said. Pang Zhongying, an expert on international affairs at the Beijing-based Renmin University of China, said Huntsman has adopted "a very pragmatic stance" by calling for Beijing's economic contribution rather than troops. Since Obama unveiled his troop surge plan in Afghanistan, NATO countries and South Korea have said they would also send more troops to Kabul. "The US knows it's not likely for China to send troops to the region, so it persuades China to play a role in the economy and reconstruction," Pang said, even though "China is already a stakeholder in Afghanistan". China has been active in the reconstruction of Afghanistan since the US invaded the country following the 9/11 terror attacks. The China Metallurgical Group Corp and China's top integrated copper producer, Jiangxi Copper Corporation, in July started work in Logar, a province southeast of the country's capital Kabul, to explore and develop the vast Aynak copper mines. The $4 billion investment was the biggest in Afghanistan's history.

• Cultural exchange enhances U.S.-China relations and understanding (10th December) No relationship between two countries in this century is more important than that of China and the United States, and people-to-people and cultural exchange can help enhance this relationship, said a distinguished musician in Chicago during a recent interview with Xinhua. "Music as a universal language has been playing an important role in promoting cultural exchange. As Chinese musicians, we can play an even more effective role to nurture and enhance this relationship. We should really treasure this opportunity to achieve this goal," Li-Kuo Chang, Assistant Principal Viola at Chicago Symphony Orchestra, told Xinhua. Chang was the very first musician from the Chinese mainland in the Chicago Symphony Orchestra, which he joined in 1988. In 2002, Chang organized a trip with Shanghai Media Group, which took about 40 musicians from the Chicago Symphony Orchestra to the Shanghai Spring Musical Festival. They played together with the Shanghai Symphony Orchestra during the festival. "This is the very first time for these people to step on China's soil. After a whole week, they came back and said that finally they knew about China first-hand. They told me that now no matter what the U.S. media or politicians say about China, they can explain to

216 them this is the real China! So this is the kind of the result if we do cultural exchange -- it really goes into people's heart," Chang said. Commenting on the development of Chinese music on the world stage, Chang said that it is more and more known in the United States because of the achievement and high status of some distinguished Chinese musicians such as Lang Lang and Dun Tan. He is very proud of the growing influence of Chinese musicians and music, but believes this is far from being enough. "I hope we can think of more ways to export more Chinese-style high-quality original music and introduce them to Western audiences. We have that and just need to package it better," he noted. "Small or big we have to start somewhere and push for it. I hope someday I can introduce more Chinese performers to this very stage at Chicago Symphony Orchestra. This kind of cultural exchange is more effective than anything else to promote mutual understanding between Chinese and Americans," Chang said. In January 2009, after about two decades' efforts, the Chicago Symphony Orchestra finally took its very first historical trip to China and achieved great success in Shanghai and Beijing. "Only a few days ago I was informed that we won the prestigious music award in Shanghai in the most important category 'The Concert of the Year' and 'The Conductor of the year.' I will be there in mid December to receive the award on behalf of Chicago Symphony Orchestra," Chang said. On Chinese symphonic music, Chang said: "I think right now is a very exciting time for Chinese symphonic music to develop and to gradually emerge as an important part of symphonic world. Japanese has achieved that. With so many talented Chinese musicians, China has started to achieve that too." As part of the efforts, Yu Long, Shanghai Symphony Orchestra's music director, has officially invited Chang to be the guest principal viola to spend 5 to 10 weeks each year to play with musicians over there. "Nine other overseas Chinese musicians from Los Angeles, New York, Germany are also invited to be the guest principal or concert master. Chinese orchestra's level is not very balanced but it has great flexibility and capability to do great things. From the first day of rehearsal to the first day of concert, it sounds like two different orchestras. I experienced that -- they can improve quickly," Chang said. The most exciting news is that Riccardo Muti, the new musical director at the Chicago Symphony Orchestra and a huge international star, accepted the invitation from Yu Long of the Shanghai Symphony Orchestra and is going to conduct a New Year concert with the Shanghai Orchestra. The Chicago Symphony Orchestra currently has eleven Chinese musicians and they have been playing a very important role to make the orchestra one of the best in the world

• Vice-president to kick off Asia circuit in Japan (11th December) Vice-President Xi Jinping will kick off a nine-day tour of four Asian countries on Monday with his first stop in Japan, the Foreign Ministry announced Thursday.

217 Xi will be the highest-ranking Chinese official to visit Japan since Prime Minister Yukio Hatoyama's Democratic Party of Japan (DPJ) took over the country's leadership in September. Analysts said Japan, under the leadership of the DPJ, is growing increasingly closer to the rest of Asia by having more high-level interactions with China. "We hope to increase political trust, expand mutually beneficial cooperation, establish a good-natured atmosphere between people from both nations and promote the continuous development of bilateral relations," said Foreign Ministry spokeswoman Jiang Yu. She said Xi would depart from Japan on Wednesday for three destinations - the Republic of Korea, Cambodia and Myanmar - before returning to China on Dec 22. "One of Xi's main missions is to build confidence and trust with Japan's new leadership," said Yang Bojiang, director of Japanese studies at the China Institute of Contemporary International Relations. Yang said that the global financial recession accelerated cooperation between China and Japan. "Exports to East Asia, especially China, has helped Japan's economy a lot in the third quarter this year," the expert said. China and Japan have maintained frequent exchanges between high-level officials since Hatoyama came to power. State leaders from each nation met in the US when attending the United Nations meetings in New York in September. Last month, China's foreign and defense ministers toured Japan. Defense Minister General Liang Guanglie made a historical visit to the destroyer ship Chokai, which is equipped with the advanced Aegis combat system. Yesterday in Beijing, President Hu Jintao met with Ichiro Ozawa, the DPJ's secretary- general. Both vowed to use interparty exchanges better to enhance "strategic and mutually beneficial" ties. Zhou Yongsheng, an expert on Japanese studies with China Foreign Affairs University, said these high-level meetings indicate that Japan holds the Asian community in high esteem. "China and Japan are engaging in healthy interactions. These meetings also prepare the two for improvements to Sino-Japanese relations next year," said Zhou. One possible setback to relations occurred yesterday when Hatoyama "urged" China to make progress on democracy and human rights, Reuters reported. Hatoyama "could irritate Beijing" with his comments at the Bali Democracy Forum in Indonesia, which brings together officials from across Asia, including China, the report said. "There is great expectation that China will continue to make progress, as a responsible power, on the issue of democracy and human rights," Hatoyama said in Japan. Yang, however, said Hatoyama was speaking to a domestic audience before next year's House of Councilors election.

• Chinese, Kazakh presidents meet on ties (12th December) Visiting Chinese President Hu Jintao met his Kazakh counterpart, Nursultan Nazarbayev, here Saturday to discuss further development of the two countries' close ties. The two leaders will also exchange views on major international and regional issues of common concern, Chinese diplomats said.

218 President Hu arrived here earlier in the day for a working visit. Shortly after his arrival, the Chinese leader attended an inauguration ceremony of the China-Kazakhstan natural gas pipeline, which is part of the China-Central Asia pipeline. The China-Central Asia pipeline starts on the border between Turkmenistan and Uzbekistan, runs through Uzbekistan and Kazakhstan before reaching China's northwest region of Xinjiang. President Hu and leaders of Turkmenistan, Uzbekistan and Kazakhstan will take part in a ceremony marking the completion of one of the two pipelines that make up the project, on Monday. The pipeline, initiated by leaders of China and Turkmenistan, served the long-term interests of the two nations and would promote social and economic development of the countries in the region, Chinese officials said. This is Hu's fourth visit to the Central Asian country as Chinese president, having previously visited in 2003, 2005 and 2007. China and Kazakhstan established diplomatic relations in 1992 and forged a strategic partnership during Hu's visit in July 2005. In recent years, the two countries have maintained frequent high-level contacts, enhanced political mutual trust, and expanded cooperation and collaboration within the multilateral framework. Pragmatic cooperation between the two countries has yielded fruitful results. In 2008, two-way trade volume between China and Kazakhstan reached 17.5 billion U.S. dollars, up 26 percent from 2007. The Chinese leader is on a two-nation tour to Central Asia. He will also visit Turkmenistan on Sunday.

• Cooperation between China, Turkmenistan to enter new stage: ambassador (12th December) Chinese President Hu Jintao's upcoming working visit to Turkmenistan will further consolidate the momentum of bilateral cooperation, enhance political mutual trust, and effectively push the bilateral comprehensive mutual trust and cooperation into a new stage, said Chinese Ambassador to Turkmenistan Wu Hongbin. At the invitation of Turkmen President Gurbanguly Berdymukhamedov, Hu will pay a working visit to Turkmenistan on Dec. 13-14. The Chinese president is scheduled to attend a launching ceremony of a Central Asia gas pipeline, and hold formal talks with Berdymukhamedov. The two leaders will exchange ideas on major international and regional issues, and map out future directions of the bilateral reciprocal cooperation, Wu said. Wu said China attached great importance to the development of comprehensive mutual trust and cooperation with Turkmenistan, which is an important force to maintain stability in Central Asia and is enjoying increased status in regional affairs. Wu said China and Turkmenistan had been keeping desirable cooperation in all fields since the establishment of diplomatic relationship 17 years ago. The two countries enjoyed high-level political mutual trust, had the same or similar positions on almost all major international issues, and conducted mutual support and close coordination on the world multilateral stage.

219 On issues related with Taiwan, Tibet and Xinjiang which closely involve China's core interests, the Turkmen side has adopted firm standpoints and clear-cut attitudes in resolute support for China's various efforts for safeguarding national unification and stability, Wu said. The ambassador said that the Central Asia natural gas pipeline exemplified the multilateral cooperation in the Central Asian region and bore important strategic significance to social and economic development of participating countries. Wu stressed that the two countries were also accelerating cooperation in non-resource fields, and enjoyed broad prospects on cooperation in the introduction of railway locomotives, communications update and agricultural products processing. He added that the Chinese enterprises took interest in Turkmenistan's major large-scale infrastructure projects in the construction of railways, bridges and plants. Wu said China and Turkmenistan had great potential in further expanding the people- to-people cooperation, which has drawn special attentions from leaders of the two countries. He said China was willing to further promote exchanges with the Turkmen side on education, culture, sports and tourism among other fields, and welcome more Turkmen students to study in China.

Economic front

• Chinese wind power companies target global markets

China's Goldwind Science & Technology Ltd. is one of the world's biggest makers of wind turbines -- a cornerstone of the booming clean power business -- but is virtually unknown outside its home country.

Goldwind aims to change that. In a Minnesota farmer's cornfield, the company is erecting three 20-story-tall windmills in its first American project and hopes it will help to woo other buyers.

"There are a lot of leads and we are following them up," said Kerry Zhou, Goldwind's director of development. "We certainly expect that by 2011 we can get good results."

China's market for wind equipment is on track to overtake the U.S. this year as the world's largest, spurred by a government campaign to promote renewable energy to clean up its battered environment and curb surging demand for foreign oil and gas.

Now the biggest Chinese manufacturers want to expand to the United States, Europe and other markets. Western suppliers could face new competition as low-priced Chinese rivals seek to profit from global efforts to limit climate change.

220 Chinese manufacturers could get a boost if officials at this week's U.N. climate summit in Copenhagen, Denmark, agree on new measures to spread use of clean energy.

Beijing is promoting the industry as part of sweeping efforts to transform China into a creator of profitable technologies. Utilities have been told to step up clean energy spending even as the global economic crisis cuts into investment elsewhere.

"China is a major player and will dominate the future development of wind," said Lars Andersen, president for China of Denmark's Vestas Wind Systems A/S, the world's biggest maker of wind turbines.

Chinese wind companies' technology lags behind global leaders such as Vestas and General Electric Co. But their prices are up to 50 percent lower, which industry analysts say should make them competitive abroad.

"The performance-to-price ratio is quite attractive," said Victoria Li, who follows the industry for Credit Suisse in Shanghai. "I think they could see strong growth from export revenue within two years."

Last year, China accounted for 22 percent of new global wind capacity, while the United States accounted for 29.6 percent, according to BTM Consult, a Danish research firm. This year, Credit Suisse says China will install up to one-third of new capacity.

The industry has gotten a boost from a flow of money through the Clean Development Mechanism, a U.N. program that allows industrialized economies to meet commitments to reduce greenhouse gas emissions by paying developing countries to cut their own instead. China is the biggest recipient of CDM money.

Chinese demand is so huge that with almost no foreign sales, Goldwind and rivals Sinovel Wind Co. and Dongfang Electric Co. already rank among top global manufacturers.

Sinovel, Goldwind and Dongfang together made one of every eight wind turbines sold worldwide in 2008, according to BTM. Vestas led global sales with 19.8 percent and GE was second with 18.6 percent.

Beijing-based Sinovel made its first foreign sale last year, shipping 10 1.5-megawatt turbines to India, said a company spokeswoman, Liu Chang. Also in 2008, Goldwind sold six of its smaller 750-kilowatt units to Cuba.

In Minnesota, Goldwind is installing three 1.5-megawatt turbines on a farm in the town of Pipestone. Zhou said the company hopes the site will prove its turbines operate reliably under U.S. weather conditions.

Beijing's tactics in promoting its suppliers have caused strains in trade ties at a time when other governments are scrambling to preserve jobs.

221 The European Union Chamber of Commerce in China complains that foreign producers have been shut out of bidding for major wind projects. Beijing also required that 70 percent of parts in turbines used in China be domestically made -- a rule that was dropped in September only after major foreign producers had set up Chinese factories.

November's announcement that a Chinese manufacturer, A-Power Energy Generation Systems, would build a Texas wind farm prompted an outcry from American critics that stimulus money the project might receive should not go to China. A-Power and its American partners said they would open a U.S. factory.

"We definitely are closely watching the controversy and obstacles for this current project to see what will happen," said Goldwind's Zhou.

Aggressive government goals issued in 2005 call for at least 15 percent of China's power to come from wind, solar and hydropower by 2020. Officials say that target might be boosted to 20 percent.

In July, Beijing raised its wind power goal to 150 gigawatts of generating capacity by 2020 -- the equivalent of 300 standard coal-fired power plants -- up from the 2005 plan's target of 30 gigawatts.

But the industry faces technical hurdles to its growth.

Wind farm construction has raced ahead so fast that 25 percent have yet to be connected to the national power grid. Like the United States, China faces the problem that its windiest areas in the desert northwest and northern grasslands are far from populous cities, requiring expensive transmission lines.

Other companies are developing technology ranging from solar panels and fuel cells to more far-out systems that make power from garbage and used cooking oil.

China's solar cell producers have competed abroad in Spain, Germany and California since they got into the business early this decade because the technology was too expensive for Chinese buyers. The biggest, Suntech Power Holdings Ltd., is on track to pass Germany's Q-Cells SE as the world's top supplier as early as this year.

"In an incredibly short space of time China has taken the lead in the race to develop and commercialize a range of low-carbon technologies," said the Climate Group, a London- based environmental organization, in a report in August.

Many manufacturers still rely on technology licensed from GE and other foreign producers but Goldwind, Sinovel and others are developing their own. Zhou said Goldwind has spent 500 million yuan ($75 million) since 2007 on research and owns the technology used in its turbines in Minnesosta.

222 Goldwind, founded in 2001, says more than 1,200 of its 1.5-megawatt units have been installed at 40 wind farms across China. Last year, it bought a German company, Vensys, with a factory that can produce 100 turbines a year.

Zhou stressed that Goldwind plans to make or buy most components wherever its turbines are installed, rather than shipping bulky towers and blades up to 300 feet (90 meters) long from China. That could help avert political strains by creating local jobs.

"We don't want to aggressively enter a market with simple thinking that we can just export our equipment there," Zhou said.

C:\Chinese wind power companies target global markets - BusinessWeek.mht

• Chinese businessmen suffer from Dubai property crunch, but still keep confident (6th December) When many mega-constructions, including the world's tallest building Dubai Tower, kept on rising from the sands in the Middle East, Chinese investors' confidence had been sky high on Dubai property market as well. But all seem to have become a passing memory, as the confidence was humbled by a debt crunch that pricked the property bubbles in the emirate. "Investing in real estate was quite popular among Chinese businessmen in Dubai for quite a long time. No one expected property market would tumble: the property price rose only to about 20,000 to 30,000 yuan a square meter in the emirate favored by global investors," said Chen Zhiyuan, director of Wenzhou Chinese Chamber of Commerce in Dubai. Dubai is the first emirate in the United Arab Emirates (UAE) to allow foreigners to buy property. Although Dubai's economy was originally built on the oil industry, the emirate's main revenues are from tourism, property and financial services. Global stock markets fluctuated after Dubai on Nov. 25 said it was asking for a six- month reprieve on paying Dubai World's 59-billion-U.S.-dollar debts as a first step to restructure the emirate's leading state-owned company. "More than 100,000 Chinese are doing businesses or working as labors in Dubai and most businessmen bought property after having worked there for more than two years," Chen said. Local property prices tripled or rose fourfold in ten years, said Wang Weisheng, board chairman of the Dubai-based Asia Business TV. "Villa price was only priced at 8,000 yuan (1,171 U.S. dollars) per square meter in 2001, but common apartment price had soared to 20,000 to 30,000 yuan a square meter before the crisis," Wang said. Speculation in property actually is quite profitable before the bubbles burst, Wang said. "It yielded money more quickly than traditional businesses and thus attracted increasing hot money," Wang said. He said Chinese investors usually bought one or two apartments at first, then the profits drove them to join hands and purchase a whole floor or building. Take Wenzhou investors for example, they usually nailed down investment at a dinner, about which project to invest and how much they would invest, Wang said.

223 Wenzhou, in east China's Province, is known for its emigrants who leave their native land to do business overseas, with a reputation for being enterprising to start restaurants, retail and wholesale businesses overseas. Most investors believe the crunch in Dubai property sounded the alarm bell for China's property market. "China's property market took off almost at the same time as Dubai's, but at a speed much higher than Dubai's in the past ten years," Chen said. In many Chinese leading cities, common apartment prices have exceeded 30,000 yuan in core areas, Chen said. Feng Fei, director of the Research Department of Industrial Economy under the Development Research Center of the State Council, said China should closely watch bubbles in property and stock markets amid current rich capital fluidity. Despite losses in property investment, Chinese businessmen reported little impacts from Dubai debt woes in other sectors. "The crisis was mainly caused by debt woes in mega-projects and exodus of foreign investment, hitting hard property and financial services. Import and export with Dubai are not seriously affected," said Fang Xiaoqiang, general manager of Longfei Import and Export Company Limited based in Yiwu, Zhejiang Province. Chen echoed Fang's opinion, saying that only those who borrowed hugely to speculate in property suffered great losses and most Chinese businessmen felt lucky as they only spared a part of capital on property investment and did not give up their main businesses. Hu Bin, board chairman of Shanghai Zhongzhou International Group Company, invested 28 million U.S. dollars to buy an artificial island in Dubai in 2007. Construction of the island, with 1.2 billion yuan of investment, were scheduled to be finished in 2010, but have been suspended after the global financial crisis, Hu said. "It's normal for businessmen to suffer crisis. The Dubai World debt crunch this time is not as devastating as the global financial crisis last year," Hu said. "Despite a lot of uncertainties around, most Chinese investors are confident in Dubai's future and the recovery of its property market," Chen said. C:\Chinese businessmen suffer from Dubai property crunch, but still keep confident _English_Xinhua.mht

• China approves firm's bid for Australian Felix (6th December) China's Yanzhou Coal Mining Co. Ltd. has got an official approval to take over Australian coal mining company Felix Resources, according to the company's bulletin on the Hong Kong Stock Exchange on Friday. The deal involving A$3.3 billion (US$3 billion) in a contractual agreement reached by the two companies in August would be the largest of its kind between Chinese and Australian firms. Yanzhou Coal said in the bulletin that the National Commission of Development and Reform has approved the company's bid to take over 100 percent of the stake in Felix. The company said that after the takeover of Felix, it will obtain an approved coal reserve of 1.5 billion tons in Australia. Its annual coal output in Australia is expected to exceed 10 million tons, accounting for one third of the company's production in China. Yanzhou Coal, headquartered in east China's Shandong Province, is listed on stock exchanges in Hong Kong, New York and Shanghai. It owns Austar Coal Mine in

224 Australia, and mines in north China's Province and Shandong Province, according to information on the company's website. C:\China approves firm's bid for Australian Felix.mht

• China likely to remain net importer of coal in 2009: expert (6th December) China's position as a net importer of coal is unlikely to change although domestic supply is expected to increase next year, said an industry expert.

The prediction is based on exorbitant cost of domestic transportation and the current export and import policy, said Jiang Zhimin, vice chairman of the China National Coal Association at an industrial forum held in Jinan, the capital city of eastern Shandong Province.

The economic recovery led by aggressive investment will continue to drive up coal consumption, Jiang said.

China's coal exports declined 50.6 percent year on year to 18.9million tonnes in the first ten months, while imports nearly tripled to 97.68 million tonnes.

To meet the growing domestic coal demand, China established export quotas and lowered import tariff to offset dwindling domestic output after the government shut down a number of illegal small pits.

As a result, China became a net importer of coal for the first time in the first quarter of 2007, with net import hitting 2.91 million tonnes.

C:\China likely to remain net importer of coal in 2009 expert _English_Xinhua.mht

• Larry Lang warns of China's asset bubble risks (7th December) "If China's asset bubble bursts, a new round of global economic crisis will break out in 2010," said Larry Hsien Ping Lang at a conference on December 6.

Lang pointed out that China will encounter new challenges in 2010, and should keep cautious.

"Currently, Renminbi is facing mounting global pressure for its appreciation. And this makes me anxious," he said. Renminbi appreciation will have a great impact, while growing trade frictions hit China's export-oriented economy hard.

Meanwhile, recent price hikes of water, power, oil and iron ore have brought considerable cost pressure. Lang said that after the outbreak of the global financial crisis, Renminbi exchange rate pressure and trade barriers have become more severe. All these are requiring Chinese enterprises to be extremely cautious in 2010.

Lang was also pessimistic about China's personal investment environment. He showed great anxiety over the booming property prices. He quoted World Bank President Robert

225 B. Zoellick's words that China's asset bubble was sparking global concern.

"What worried I most is that rigid demand is not the factor that pushes property prices." Lang concluded that the current property price hikes were driven by capital that wanted to avoid inflation risks. "Worsening investment environment and overcapacity spurred capital to flow from real economy to the property market."

"If the government doesn't deal with this issue promptly, there will be grave consequence," Lang warned.

• Mainland Taiwan affairs official meets island's business delegation (7th December)

Chinese Mainland Taiwan affairs official Wang Yi met here Monday with a delegation of Taiwan businessmen and entrepreneurs.

Wang, director of the Taiwan Work Office of the Communist Party of China (CPC) Central Committee, said the mainland's efforts in promoting cross-Strait relations were focused on bringing tangible benefits to the compatriots across the Strait.

"I believe through the joint efforts from both sides, more Taiwan compatriots will feel the goodwill and sincerity of the mainland, benefit from the development of cross-Strait relations and get actively involved in the peaceful development of cross-Strait relations," said Wang.

Wang said the preparation for the fourth round of talks between the mainland-based Association for Relations Across the Taiwan Straits and the Taiwan-based Straits Exchange Foundation has been going smoothly.

He said he hoped the event would accelerate the normalization of cross-Strait economic and trade relations and have a positive effect on the revival and development of the island's economy.

The 20-plus-member delegation of Taiwan's Council for Industrial and Commercial Development arrived here Monday. The delegation will visit the Ministry of Commerce and Ministry of Industry and Information Technology in Beijing.

• Peru ratifies free trade deal with China (7th December) Peru's government on Sunday ratified a free trade agreement with China, the president's office announced. The measure "favors Peru's interests," a brief government statement said.

It did not indicate when the agreement -- made by executive decree, without Congressional input as allowed by the constitution -- would go into effect. The Peru-China free trade agreement was signed April 28 in Beijing during a visit by Peruvian Vice President Luis Giampietri.

226

The deal will lead to the gradual removal of tariffs on more than 90 percent of goods ranging from Chinese electronic products and machinery to Peruvian fishmeal and minerals, Xinhua news agency said when the pact was signed.

Under the deal, the two nations also pledged to further open their service sectors and offer favorable treatment to investors. China has become Peru's second largest trading partner after the United States.

Peru is a major producer of lead, zinc, copper, tin and gold. Two-way trade totaled about 6.46 billion dollars in the first 10 months of last year, according to figures published by the Chinese commerce ministry.

• China vows to promote transformation of development pattern in 2010 (7th December) The Chinese government pledged Monday to push forward the transformation of its economic development pattern next year while maintaining stable and comparatively fast economic growth. Participants at the three-day annual Central Economic Work Conference agreed that the global financial crisis highlighted the urgency to transform China's economic development pattern. They agreed that the government should coordinate efforts to maintain stable and comparatively fast economic growth and speed up the transformation of the economic development mode. The government would focus more on economic structure adjustment and improving the quality and efficiency of economic growth in 2010, according to a decision made at the conference. More efforts would be spent to deepen economic system reform and enhance the momentum and vigor of economic growth. The Central Economic Work Conference comprises policy-making officials from central and provincial-level governments, including President Hu Jintao and Premier Wen Jiabao. C:\China vows to promote transformation of development pattern in 2010_English_Xinhua.mht

• China's trade surplus to US to narrow (7th December) China's exports have dropped considerably to the United States since the financial meltdown and its trade surplus to the US will decrease this year by $100 billion, according to Chinese Ambassador to the United States Zhou Wenzhong.

"We're aware of the importance of changing the growth mode," he said. "We're decreasing exports while increasing domestic consumption. But that will take time."

Zhou made the remarks after a speech addressing the 2009 Gala Dinner of the National Committee on United States-China Relations (NCUSCR) held last Thursday in New

227 York.

According to China's General Administration of Customs, China's exports from January through October dropped by 20.5 percent compared with the same period last year. During the same period, its export volume to the US dropped by 11.3 percent, while the export price declined by 5.3 percent.

China-US trade volume decreased by 15 percent, according to Chinese customs.

"We're in the same boat [in fighting against the financial crisis]," the ambassador added. "I truly believe that in the new situation, the interests of China and the US are interconnected to such a degree that one could hardly do without the other."

Such "comprehensive, strategic and cooperative" bilateral relations were also acknowledged by US President Barack Obama, who sent a letter of congratulations to the committee on its gala. In the letter, he said the US "welcomes China's efforts to play a greater role on the world's stage, a role in which its growing capability will be joined by greater responsibility."

The gala also honored Google and ITT Corporation for their contributions to the China- US relationship.

The NCUSCR is set to hold a China Town Hall event next week to provide American businesses a chance to discuss with scholars how the development of Sino-US relations is impacting Americans. It will also co-host a forum with the China Center for Economic Research early next month on the prospect of China's economy in 2010. C:\China's trade surplus to US to narrow - People's Daily Online.mht

• Israeli expert says Dubai-style crash highly unlikely in China (7th December) An Israeli analyst said the Dubai crash will leave the world largely unaffected, with China in particular able to look at its own economy with some pride and say "a Dubai- style crash almost certainly won't happen here." "Dubai doesn't have a real economy. It has always been a bubble economy. The country has no real consumption and no real markets," Ornit Avidar, a partner in the China-Israel Value Capital Fund, told Xinhua in a recent interview. A former Israeli commercial attache to Hong Kong and Macau, Avidar is also familiar with the Gulf, where she used to be Israel's commercial representative to Qatar and Oman. She saw a world of difference between the approach of Beijing to that of Dubai. While Avidar does not see meaningful parallels between the Dubai and Chinese economies, she does stand by the theory that there is one bubble in the Chinese economy that should be closely observed. Some Chinese citizens see their domestic stock exchange as a way to make money in a quick manner. Speculators are not like those in the West. The Chinese markets are less sophisticated, according to Avidar. A large number of Chinese individuals are not looking for long-term investments, nor are they akin to the typical investors in the West.

228 When the Dubai construction giant Nakheel announced late last month that it could not keep up with debt repayments, billions of U.S. dollars were knocked off the value of world stock exchanges. The leading Dubai-based companies owe billions of dollars to British and Asian banks. The lending houses look set to swallow much of that debt. The news led to a feeling of deja vu just months after the world financial crisis hit the headlines. These small-time investors do not know how to play the markets and could in theory pose a threat to stability, Avidar cautioned. "However, because of the volume, this bubble is still balanced. Even if there was a big fall, not everyone would lose as we have seen over the last three years. There have been heavy losses in China but profits have continued to remain significant enough that people continue doing this," Avidar added. Those who are able to extract their money from Dubai right now are probably looking for new investment opportunities. As far as Avidar is concerned, they need to look no further than China. "Run and quickly. Invest, because today China is the economy with the most opportunities," she said. Avidar believed that Chinese companies are generally under-valuated, as are their potential, which is yet another major contrast to the Dubai experience. Any new company that sets foot in China has an immediate market of hundreds of millions of people, something that cannot be said of the United States or Europe, and most certainly not of Dubai. "The market is there. It's vibrant, developing, growing and will only continue to get bigger, and so far the Chinese government has done exactly what it said it would," said Avidar. Another Israeli analyst who spoke with Xinhua over the weekend said that the story of Dubai began as a praiseworthy vision a couple of generations back, yet the grand prospect all too rapidly became a case of the megalomania of its leaders. The problem with an economy based on investments, and in Dubai's case on "over- investment," is that when the market stutters, it can roll backwards very quickly, said Aron Shai, vice-rector of Tel Aviv University, who is an expert on modern China. "This really isn't the case in China. Chinese are very cautious and have not opted for over-investment, rather they have very sizable savings, totaling some 2.2 trillion U.S. dollars," said Shai. C:\news\Israeli expert says Dubai-style crash highly unlikely in China_English_Xinhua.mht

• Economic planners meet to fine tune policies (7th December) China's top economic planners were meeting Monday in an annual closed-door session said to be focused on fine-tuning policies to ensure the recovery is sustained.

The gathering in Beijing, headed by President Hu Jintao, began Saturday and was expected to wrap up later Monday with a pledge to keep in place stimulus policies aimed at preventing a relapse of the downturn, with adjustments to reflect mounting worries over excess investment in some industries, media reported.

229 A year after the country launched a 4 trillion yuan ($586 billion) stimulus package aimed at countering the impact of slumping exports, economists say they expect growth for the year to exceed the government's target of 8 percent.

This year's meeting also was expected to include preliminary work on the country's next five-year plan, for the years 2011-1015.

Late last month, the country's policy makers indicated they planned to stick to stimulus spending and easy credit to ensure growth is sustained despite weakness in the US and other key export markets.

The emphasis, however, is shifting to promoting consumer spending and private investment, rather than the state-led investment of this year's recovery program, which has focused heavily on construction of railways, roads and other public works, newspaper China Business News and other reports said.

China's economy grew 8.9 percent over a year earlier in the third quarter of this year, after dipping to a 12-year low of 6.1 percent in the first quarter, a stunning rebound from last year's slowdown. But the government has struggled to control the expansion of industries viewed as already overheated, such as steelmaking and cement.

The rapid credit expansion has added to risks in China's banking sector, the Basel, Switzerland-based Bank for International Settlements warned in a quarterly report issued Sunday.

Apart from the easing of standards to allow banks to issue some 8.95 trillion yuan ($1.3 trillion) in new loans in January-October, up from a total of 4.2 trillion yuan the year before, future tightening of monetary policies might leave some projects short of funds before they are completed, leading to a buildup of bad loans, it said.

Meanwhile, inflows of outside capital into the world's fastest growing major economy are adding to inflationary pressures, especially in real estate and stock markets, the BIS report warned. C:\Economic planners meet to fine tune policies - People's Daily Online.mht

• China's economic growth estimated to be 8.3% (7th December) China's GDP is estimated to reach 8.3 percent growth this year with next year surpassing nine percent, according to the "Blue Book of China's economy" released Monday which analyzes and predicts China's economy, xinhuanet.com reported. "China's economic situation will be mild next year, for the book predicts the investment, consumption, export and price index to show a tendency of slow climbing in the coming year, "said Chen Jiagui, the chief editor of the book. C:\\China's economic growth estimated to be 8_3%.mht

• 87 mln Chinese shopping online in 2009 (7th December)

230 More than 87 million Chinese bought goods on the Internet this year, about 24 million more than last year and an increase of 38.9 percent year-on-year, the Beijing Times reported, citing a recent report by the China Internet Network Information Center (CNNIC). Most online shoppers are students or white-collar workers between the ages of 18 and 30, with a monthly income of 1,000 yuan (146 U.S. dollars) to 3,000 yuan (439 U.S. dollars). More women shop online than men, and clothing and home-use products are the most popular goods bought online. According to the "Report on China's Online Shopping 2009", the total sum of national online consumption for the first half of the year was 119.5 billion yuan (17.5 billion U.S. dollars), 89 percent of which through consumer to consumer websites like Taobao.com. CNNIC estimates the total sum of annual online shopping will reach 250 billion yuan (36.6 billion U.S. dollars) this year. C:\87 mln Chinese shopping online in 2009_English_Xinhua.mht

• Sovereign wealth fund speeds up overseas investment (7th December) China's sovereign wealth fund, the China Investment Corporation (CIC), has nearly doubled its overseas investment this year compared with last year, putting most of the funds into foreign energy and mining companies.

The sovereign fund, established in 2007 with $200 billion in assets, half designated for overseas investment, has turned to bulk commodities this year, with a dozen investments in en-ergy and mining companies around the world, totaling $9.5 billion, almost twice last year's $4.8 billion overseas investment.

CIC's latest investment was in US power company AES Corporation. CIC announced November 16 that it had purchased a 15 percent stake in AES for $1.58 billion, and also intends to buy a 35 percent stake in AES's wind generation business for $571 million.

Since July, the sovereign fund has also invested in companies such as Canada's SouthGobi Energy Resources, Russian oil company Nobel Oil, Indonesian coalminer PT Bumi Resources Tbk and Kazakhstan's JSC KazMunaiGas Exploration Production.

"CIC has stepped up its overseas investment pace this year, and is eyeing opportunities in commodities such as energy, minerals and real estate after asset bubbles burst in the financial crisis, which could help CIC hedge against accelerating inflation," Lou Jiwei, chairman of CIC, told a forum in Beijing this October, adding that CIC had $50 billion left for overseas investment.

CIC slowed its investment pace in July 2008 due to the global economic downturn. Its overseas investment only amounted to $4.8 billion in 2008, and the rate of the return on its global investment portfolio for 2008 was minus 2.1 percent, according to its annual reports released in August.

The loss of overseas investment was largely caused by CIC's investment in overseas financial institutions, including a $3 billion stake in US private equity giant Blackstone

231 and a $5.6 billion stake in US investment bank Morgan Stanley.

"CIC has turned its investment interest from financial institutions to resources companies, and this will help CIC improve long-term investment returns," said Li Mingxu, an analyst at Anbound Group, a Beijing-based consulting company.

Li said it is still a good time for CIC to acquire overseas resources assets, as commodity prices have growth potential when the economy recovers.

"CIC's investment strategy reveals its optimism on the energy and mining companies, but it is hard to evaluate whether these companies' stocks could bring money," said Zhao Xijun, deputy dean of the School of Finance at Renmin University of China.

• China to continue fiscal and monetary policies next year (7th December) China would continue to adopt the proactive fiscal policy and moderately easy monetary policy next year and endeavor to improve the economic growth quality, according to the Central Economic Work Conference Monday. Chinese President Hu Jintao and Premier Wen Jiabao addressed the meeting, which is held once a year to set the tone for economic development during the next year. It was agreed at the conference that 2010 is the last year in the counry's 11th five-year plan, and to do a good job in the country's economic and social development next year was of great importance to dealing with the impact of the international financial crisis successfully in an all-around way and laying a sound foundation for China's 12th five- year plan. More efforts would be made to promote the transformation of the economic development pattern and structural adjustments and to enhance the focus and flexibility of economic policy in the following year in line with new situations next year, according to the attendees of the meeting. More efforts would also be laid on reform and opening-up, innovation, enhancing the vigor and momentum of the economic growth, improving people's livelihood, maintaining social harmony and stability, said participants of the conference. It was agreed at the meeting that a good balance should be kept in maintaining a relatively fast and stable economic growth, economic restructuring and dealing with predicted inflation next year. The government would strengthen financial support to sectors including farming, science and technology, education, health care, social security, affordable homes, energy saving and environmental protection in 2010, according to participants of the conference. The country would tightly control loans targeted at high energy-consuming, high polluting industries and those with excessive production capacity in a bid to improve loans quality and efficiency, according to the meeting. The Central Economic Work Conference comprises policy-making officials from central and provincial-level governments. C:\China's Central Economic Work Conference_English_Xinhua.mht

• Chinese shares close down 1.06% (8th November)

232 Chinese equities dropped dived 1.06 percent Tuesday, led by declining financial stocks. The benchmark Shanghai Composite Index went down 1.06 percent, or 35.24 points, to close at 3,296.66. The Shenzhen Component Index dipped 0.86 percent, or 121.24 points, to close at 13,930.28. Combined turnover shrank to 275.4 billion yuan (40.32 billion U.S. dollars) from 277.3 billion yuan on the previous trading day. Losers outnumbered gainers by 561 to 311 in Shanghai and 418 to382 in Shenzhen. C:\Chinese shares close down 1_06%_English_Xinhua.mht

• China's centrally-administered SOEs shrink to 131 (8th December) China's centrally-administered state-owned enterprises (SOEs) have shrunk to 131 enterprises from 132, China's state property regulator State-owned Assets Supervision and Administration Commission (SASAC) said Tuesday. With approvals from the State Council, China State Farms Agribusiness (Group) Corp. became a subsidiary of China National Agricultural Development Group Corporation (CNADC), China's largest state-owned agricultural enterprises. The SASAC was aiming to reduce the number of centrally-administered SOEs to between 80 and 100 by 2010 through mergers and restructuring. It had 196 centrally- administrated SOEs under its supervision when it was set up in 2003. C:\China's centrally-administered SOEs shrink to 131_English_Xinhua.mht

• China's farm produce prices up 1% (8th December) Prices of edible farm produce in 36large and medium-sized Chinese cities rose 1 percent in the week from Nov. 30 to Dec. 6, compared with the previous week, according to figures released by the Ministry of Commerce (MOC) Tuesday. Forty-three out of 57 kinds of farm produce saw week-on-week price hikes, while prices of nine types saw slumps, said a report on the MOC website. Vegetable prices climbed the most by 6.2 percent week on week. Aquatic product prices and egg prices expanded 0.1 percent. The wholesale prices of pork and mutton rose 1.4 percent and 0.3 percent respectively. Production materials prices rose 0.1 percent week on week. Forty-nine out of 112 kinds of production materials saw week-on-week price increases including non-ferrous metal, chemical products and minerals, while prices of 16 types saw slumps including liquefied gas and diesel. C:\China's farm produce prices up 1% _English_Xinhua.mht

• China leads the world in auto sales, production (8th December) China's passenger vehicle production and sales in November both more than doubled from a year earlier, continuing the robust growth and causing China's auto market to lead the global industry for the whole year. It's also the first time the domestic monthly production and sales broke the 1 million units barrier. Sales of passenger vehicles, including cars, multi-purpose vehicles (MPVs), sports- utility vehicles (SUVs) and minivans, reached 1.01 million last month, surging 103.7

233 percent year-on-year, and increased 9.5 percent from October, Rao Da, secretary-general of China Passenger Car Association, said yesterday. The total output of the sector hit 1.08 million units, 101 percent higher than that of November 2008. "It is strong evidence of how hot automobile sales are in China, despite the oil price hike and bad snow which had an impact on logistics in November," said Rao. He predicted that the market performance of the passenger vehicle segment would continue to hit record highs in December, with production and sales figures 80,000 to 10,000 units more than those in November. "And the sales peak is coming in January," he added. "It will be unprecedented in any country's auto industry that the monthly sales continued to break records for seven months in a year," said Rao. China's total vehicles sales exceeded 12 million in the first 11 months, retaining its lead as the world's top auto market since January, reported Xinhua News Agency, citing the China Association of Automobile Manufacturers. The association is going to release the details this week. Boosted by government stimulus measures such as tax cuts and subsidies for trade-ins, sales of all automobiles for the whole year are set to break the 13 million barrier, compared with 9.38 million units last year. C:\China leads the world in auto sales, production_English_Xinhua.mht

• China bans import, export of ractopamine (8th December) China is to ban both import and export of ractopamine and ractopamine hydrochloride, the country's Ministry of Commerce and the General Administration of Customs announced Tuesday. The ban is to take effect on Wednesday. Ractopamine and ractopamine hydrochloride are stimulant drugs that are used as feed additives to promote leanness in pigs raised for their meat. Most countries around the world had not approved their use as veterinary drugs or additive in animal feed. China prohibited their use in 2002 because of possible health risks to humans. An official with the foreign trade division under the Ministry of Commerce, who asked not to be named, told Xinhua ractopamine and ractopamine hydrochloride had no other major uses apart from use in feed additives. The official said countries around the world had different views on ractopamine. Countries such as the United States and Australia approved its use, but it is banned in China and in EU countries. China was banning the import of ractopamine, but also the export because of possible health risks, the official said. C:\China bans import, export of ractopamine _English_Xinhua.mht

• BHP and Rio Tinto's merger spurs Chinese companies (8th December) The merger between BHP and Rio Tinto is expected to push the iron ore price higher and accelerate integrations in Chinese iron and steel industry next year, insiders and analysts said.

234 BHP and Rio Tinto, two of the world's top three iron ore suppliers, signed a binding agreement covering the operation and management in their future joint venture on Dec 5 with the companies saying they will complete the merger in the second half of 2010. "Chinese companies are highly relying on the Big-three iron ore suppliers. Chinese iron and steel industry anticipated prices will go up," an unnamed insider told Shanghai Securities News. Chinese industry insiders said the merger is conveying severe price pressure to domestic iron and steel companies. Chinese companies have to concentrate and strengthen the bargaining power in price negotiations by integrating numerous smaller companies into several big strong players. Chinese industry has been considering the integrations, but must speed up. "We will see lenders' stronger loan support to iron and steel industry to fuel mergers and buyouts next year," said an industry analyst Su Lifeng, from Guoyuan Securieties. The joint venture will operate all the current iron ore in West Australia and the resources explored in future as well as the debts. Shanghai Securities News reported that BHP and Rio Tinto, holding 50 percent stakes each in the JV, has submitted a document to Australian Competition & Consumer Commission. BHP and Rio Tinto expected the JV will "realize the objectives that to boost iron ore output while cutting the costs," and generate magnificent synergies worth of a $10 billion cash value. The two giant iron ore suppliers have an over 30 percent market share in total on the global iron ore market, and the merger makes a stronger monopoly. C:\BHP and Rio Tinto's merger spurs Chinese companies.mht

• China's central bank says to manage credit pace after lending spree (8th December) China's central bank said on Tuesday that more efforts would be made to keep credit expansion in reasonable pace after record lending to echo government's call to rebalance economic growth pattern. More credit support should go to promote employment and industries of strategic importance, said Zhou Xiaochuan, governor of the People's Bank of China. The central bank would continue to implement the moderately easy monetary policy in 2010 to ensure stable and relatively fast economic development, Zhou said. The move was in response to the directives of the annual Central Economic Work Conference, which was concluded Monday agreeing to advance economic structure adjustment to lift the quality and efficiency of economic growth. The central bank would exert more strength to beef up rural development and stimulate domestic demand, as well as enhance balance of payment, and hold down potential financial risks, Zhou said. Chinese banks lent a record 8.92 trillion yuan (1.31 trillion U.S. dollars) in the first ten months, far exceeding the government's target of 5 trillion yuan for this entire year, prompting fears of bad loans and unprofitable investment. C:\China's central bank says to manage credit pace after lending spree_English_Xinhua.mht

• Taiwan may raise wages for Chinese fishing laborers soon (8th December)

235 Taiwan may raise the wages of the Chinese crewmen employed on Taiwanese fishing boats before the fourth round of cross-Taiwan Strait talks to secure China's help in streamlining the system used to hire such workers, a fishing official said Tuesday. The anonymous official from the Fisheries Agency said the decision may be taken Dec. 9 when Kao Koong-lian, vice chairman of the Straits Exchange Foundation meets Chinese officials in Fuzhou, southern China, to finalize the details of the fourth round of talks between Taiwan and China. The negotiations will be conducted by Taiwan's top negotiator Chiang Pin-kung and his Chinese counterpart Chen Yunlin in Taichung City Dec. 21-24. Fisheries Agency chief James Sha, who will take part in the preparatory meeting along with Kao, is expected to broach the issue with Chinese officials, the official said. Taiwan could propose to raise the monthly wage of Chinese crewmen from the current NT$12,000 (US$372) to NT$14,000 per month but would not raise it as high as Taiwan's minimum wage of NT$17,280, which could blunt the competitiveness of the Chinese workers. The possible monthly salary of NT$14,000 would be higher than the NT$12,000 typically paid to Indonesian crewmen and NT$13,000 to Filipino seamen, the official said. There are 4,669 Chinese working on Taiwan's offshore fishing boats compared to 4,485 from other foreign countries, and 12,000 to 13,000 Chinese on Taiwan's deep sea fishing vessels, accounting for 40 percent to 45 percent of foreign workers on those ships. Taiwan has asked for Chinese cooperation in streamlining the system used to employ Chinese nationals on Taiwanese fishing boats, but in exchange for setting up the system, China asked that Taiwan sweeten the wages paid to its nationals. Under the revamped system, Taiwan fishing boat owners would be able to recruit seamen through Chinese fishermen dispatch associations set up by state-run companies rather than through brokers, as is the case today. The associations in turn would be required to keep and provide information on potential laborers, including their ID card numbers, photos, and proof of seaworthiness and training, according to the official. Kao and his delegation will also work out an agreement with Chinese officials on institutionalizing the inspection and quarantine mechanism for agricultural products, according to a source close to the negotiations. The source said Taiwan wants to set up an official channel of communication with China on the issue through which each side may access the official interpretations of related regulations of the other side and get official answers to related questions. Taiwan may also ask Chinese authorities to expand their standards on pesticide residues during the meeting. China has standards on 161 agricultural chemicals, only a quarter of the 657 chemicals for which Taiwan has set norms. Substances not covered by the standards are banned altogether, which severely limits the exports of Taiwanese products to China despite their high quality, the source said.

• Banking authority reitertates credit quality, pace control (9th December)

236 China's banking authorities vowed to step up efforts to improve credit quality, and keep credit expansion in reasonable pace after record lending, to echo government's call to rebalance economic growth pattern. Chairman of the China Banking Regulatory Commission Liu Mingkang said bank loans should play a bigger role in economic restructuring as he put it the regulator would strictly control lending to industries that were energy-intensive, polluting and had overcapacity. More credit support should go to promoting employment and industries of strategic importance, Zhou Xiaochuan, governor of the People's Bank of China told an insider meeting. The central bank would continue to implement the moderately easy monetary policy in 2010 to ensure stable and relatively fast economic development, Zhou said. The move was in response to the directives of the annual Central Economic Work Conference, which was concluded Monday agreeing to advance economic structure adjustment to lift the quality and efficiency of economic growth. The central bank would exert more strength to beef up rural development and stimulate domestic demand, as well as enhance balance of payment, and hold down potential financial risks, Zhou said. Chinese banks lent a record 8.92 trillion yuan ($1.31 trillion) in the first ten months, far exceeding the government's target of 5 trillion yuan for this entire year, prompting fears of bad loans and unprofitable investment. C:Banking authority reitertates credit quality, pace control.mht

• China shares extend losses on Wall Street retreat (9th December) Chinese shares slid further Wednesday following losses overnight on Wall Street, with banks and other financial institutions leading the decline. The benchmark Shanghai Composite Index fell 57.1 points, or 1.7 percent, to 3,239.57. The Shenzhen Composite Index for China's second exchange lost 1.4 percent to 1,211.79. Major Asian markets, especially Hong Kong, where many Chinese companies are listed, fell Wednesday amid renewed worries over weak American corporate earnings. "The slump in U.S. shares sent the market lower, but it's only a short-term drop, because the positive outlook of Chinese economic recovery is unchanged," said Mao Sheng, an analyst for Guotai Junan Securities in the western city of Chengdu. Investors were also somewhat disappointed with the outcome of a top-level economic planning meeting than ended Monday with no major policy initiatives, said Zhai Peng, an analyst for Guotai Junan Securities in Shanghai. Pledges by the central bank governor and top banking regulator to keep credit under reasonable control also weighed on sentiment. Industrial & Commercial Bank of China Ltd., China's biggest commercial lender, fell 1.5 percent to 5.22 yuan. Bank of China Ltd. lost 2.1 percent to 4.14 yuan, while China Construction Bank Ltd. declined by 1.3 percent to 6 yuan. Heavyweight PetroChina Ltd., Asia's biggest oil and gas producer, fell 1.1 percent to 13.63 yuan after crude prices slid overnight, although they rose above US$73 a barrel Wednesday in Asia after an unexpected drop in U.S. crude supplies suggested demand may be recovering.

237 Nonferrous metals were lackluster after commodity prices dropped in Asia. Jiangxi Copper Ltd., the country's biggest metal producer, shed 2.8 percent to 41.42 yuan, while Aluminum Corp. of China sank 3 percent to 15.45 yuan. However, car makers were buoyed by strong sales figures for November. Tianjin FAW Xiali Automobile Co. surged by the daily maximum of 10 percent to 10.12 yuan, while Xiamen King Long Motor Group Co., a major bus maker, advanced 8 percent to 11.44 yuan. In currency markets, the yuan edged lower to 6.8281 to the U.S. dollar, down from Tuesday's close of 6.8280. C:\China shares extend losses on Wall Street retreat - Taiwan News Online.mht

• China to further boost domestic consumption in 2010: State Council (9th December) China's State Council said Wednesday that the government will continue to tap into the domestic market for a stable and relatively rapid economic growth next year. Policies to boost consumption will be further strengthened and most of the current policies will be continued, according to an executive meeting of the State Council, chaired by Premier Wen Jiabao. China will continue to expand domestic consumption next year and especially to highlight consumption's role in boosting economic growth, as China's economy will still face many challenges next year, according to the meeting. Policies to subsidize rural households to buy electric appliances will be continued next year and policies to subsidize rural households to buy automobiles will be prolonged to the end of next year. After home appliance replacement ended trial operation in May next year, the policies will be fully carried out and further promoted. Measures to subsidize agricultural equipment will be continued. Policies to reduce purchase tax on passenger cars will be continued but adjusted to 7.5 percent for models with engine displacements of less than 1.6 liters. The central government has implemented a series of policies in improving people's living standards and promoting consumption since the fourth quarter in 2008 to fight the global financial crisis. The policies have effectively tapped consumption potentials and boosted China's economic recovery, according to the meeting. The meeting also issued a guideline on trial operation of social insurance fund budget to put social insurance fund under government budget management. C:\China to further boost domestic consumption in 2010 State Council.mht

• China to raise earnings of middle-and-low income groups: official (9th December)

The Chinese government is to raise the earnings of the middle and low income groups to boost consumer spending, said a senior economic planning official here Wednesday.

Zhang Ping, minister in charge of the National Development and Reform Commission (NDRC), the country's top economic planning agency, made the remarks at a national meeting on development and reform.

238 The government will step up research on and optimization of the income distribution mechanism to improve residents' spending capability, Zhang told the meeting.

The government will also raise the pensions for enterprise retirees and improve treatment for those who enjoy special care, Zhang said, adding the government will continue to make improving people's livelihood a priority in 2010.

He said the government will exert more efforts to well address problems that have close bearing on public interests and ensure that all public members share the fruits of the development and reform, so as to safeguard social harmony and stability.

Participants to the annual Central Economic Work Conference which concluded Monday agreed to fully implement and continuously improve the stimulus package and policies to cope with global financial crisis and boost development, and strengthen the role of domestic demand, especially consumption demand, in driving economic growth. C:\China to raise earnings of middle-and-low income groups official_English_Xinhua.mht

• China's central bank says to manage credit pace after lending spree (9th December) China's central bank said on Tuesday that more efforts would be made to keep credit expansion in reasonable pace after record lending to echo government's call to rebalance economic growth pattern. More credit support should go to promote employment and industries of strategic importance, said Zhou Xiaochuan, governor of the People's Bank of China. The central bank would continue to implement the moderately easy monetary policy in 2010 to ensure stable and relatively fast economic development, Zhou said. The move was in response to the directives of the annual Central Economic Work Conference, which was concluded Monday agreeing to advance economic structure adjustment to lift the quality and efficiency of economic growth. The central bank would exert more strength to beef up rural development and stimulate domestic demand, as well as enhance balance of payment, and hold down potential financial risks, Zhou said. Chinese banks lent a record 8.92 trillion yuan ($1.31 trillion) in the first ten months, far exceeding the government's target of 5 trillion yuan for this entire year, prompting fears of bad loans and unprofitable investment. C: \China's central bank says to manage credit pace after lending spree.mht

• China's economic recovery, restructuring make foreign investors more confident (9th December) Heads of both Siemens AG from Germany and the U.S.-based Motorola's Tianjin operation have had their confidence strengthened about the companies' future development in China, after the nation's annual central economic conference concluded Monday in Beijing. Ruey-Bin Kao, chairman of Motorola (China) Electronics Ltd. based in Tianjin, a leading manufacturing base in northern China, told Xinhua Wednesday that the ongoing

239 global economic downturn would not negatively affect his company's business in China. Twenty-two years of experience in the country ensures the company's confidence in the Chinese market. "In the worldwide recession, China has been an anchor for the global economy by carrying out policy measures quickly and by making massive investments in sustainable infrastructure," said Peter Loscher, president and CEO of Siemens AG. It would continue to be tough for the global economy in 2010, but China would be one of the economic engines worldwide, he said in Beijing Wednesday. To prove his confidence, Siemens Ltd., China signed a series of new orders and cooperation agreements, which worth approximately 2billion yuan (293.3 million U.S. dollars) in total, with Chinese partners over the past few days. Most of the orders and accords cover products from Siemens' environmental portfolio. According to policy makers who attended the central economic conference, which set the tune for China's economic and social development next year, pointed out that to speed up transformation of the nation's economic growth mode would be a priority for the coming year. They said it was imperial to integrate the promotion of independent innovation with cultivation of strategic, emerging industries. Loscher predicted that by 2013, China would become an enormous market for green technologies, which would be valued at 1 trillion U.S. dollars. His colleague, Richard Hausmann, president and CEO of Siemens Ltd., China, said demand from big Chinese cities was especially strong for technologies for sustainable development and for emissions-reduction solutions. At the beginning of this year, Siemens China vowed to add 1.35 billion yuan to its investment in environmental protection business in China. On Monday, it announced that it would inject more than 500 million yuan into its two operations in Tianjin. Most of the money will go to expansion of generating capacities of wind power equipment to meet rapidly growing demand for such clean and recoverable energy in the Chinese market. Hausmann estimated that Siemens China's sales in the Chinese mainland would grow 7 percent or so this year upon last year, which would be a good achievement against the global economic slump. According to the Ministry of Commerce, China actually used 7.899 billion U.S. dollars in foreign capital over the first three quarters of this year, a growth of 18.93 percent on the same period of last year. Siemens is not unique among foreign investors in China in terms of confidence about the nation's future development. Bernd Blumenberg, president of BASF-YPC Co., Ltd.(BYC), a 50-50 joint venture between BASF from Germany and China's leading oil refiner, Sinopec, noted that the company's performance in China was better than expected, and the joint venture would invest more. BYC has already started construction work on a second-phase project, which will cost 10.4 billion yuan and begin to produce downstream and specialty chemicals in 2011. Blumenberg said to start the second-phase project despite the ongoing global economic downturn, was because that the company was confident about investment climate in China and the nation's future development.

240 The Inter IKEA Center Group (IICG), which is headquartered in Copenhagen of Danmark, has recently decided to enter the Chinese market and sited two "super regional shopping centers" in Beijing, China's capital, and , a city in eastern China's province. The reason why the company chose China as the first foothold to explore its overseas markets was that it expected the nation would become more economically powerful and consumption there would be stronger, said John Leif Tegner, president of IICG. The U.S.-based carbon black supplier, Cabot, recently expanded the total annual production capacity of its Tianjin operations to 300,000 tonnes and made the city the world's largest manufacturing base for the raw material of tyre. The company's CEO and president, Patrick Prevost, said the economic growth in China was driving up production and consumption of motor vehicles and accordingly, demand for tyre was expanding in the nation. He predicted that China would need 2 million tones of carbon black every year, and the demand would increase at an average annual rate of 12 percent to 15 percent. At the beginning of December, the Department of Economic and Social Affairs of the United Nations, predicted that in 2010 the world economy would rebound more or less with developing nations as the leading forces and that China would expect an economic growth of 8.8 percent for the whole of next year. C:\China's economic recovery, restructuring make foreign investors more confident _English_Xinhua.mht

• Nomura plans to expand in India, China next year: Report (9th December) Japanese financial services major Nomura today said it is planning to significantly expand its base in India and China next year, says a media report.

Nomura acquired the European and Asian operations of collapsed Lehman Brothers in 2008.

In an interview with the Financial Times, Nomura Chief Executive Officer (Asia operations, excluding Japan) Minoru Shinohara said the bank intended to expand significantly in China and India next year.

The report quoted Shinohara as saying that the bank planned to establish an onshore presence in China. He added that Nomura was in discussions with several Chinese groups with a view to launch a fixed-income and securities business.

"In a short period of time, more than 70-80 per cent of investment banking fees in China will be generated by locally transacted business and we want to be a leading player in that market," he said.

In India, Nomura offers fixed income products, trades local equities and has investment banking and asset management capabilities. In addition, the report said it has applied for other banking licences to expand its footprint.

241 Apart from expanding its presence in India and China, the financial entity is also stepping up its recruitment drive in the US.

• Auto stimulus retained for 2010 (10th December) China will extend stimulus measures in the automobile industry for one more year, with small adjustments, to further support the world's biggest and fastest-growing auto market. The government announced the decision yesterday after an executive meeting of the State Council chaired by Premier Wen Jiabao. The stimulus package, which was due to expire at the end of this month, includes a 50 percent cut in the 10 percent purchase tax for cars with an engine capacity of, or less than, 1.6 liters and subsidies for trade-in cars. It will now be extended to Dec 31, 2010. However, the purchase tax for smaller cars will be lifted from the current 5 percent to 7.5 percent of the total vehicle price. Furthermore, the government also decided to raise the subsidy for trade-in cars from between 3,000 and 6,000 yuan to between 5,000 yuan and 18,000 yuan per vehicle. The stimulus package launched by the government in January helped China's automobile sales to exceed an expected 13 million units this year, making the country surpass the US as the world's biggest auto market. "It's unusual that demand for automobiles in a country increases more than 4.5 million units within 12 months, and sales break the monthly record for seven months in a year," said Rao Da, secretary-general of China Passenger Car Association. Statistics from the China Association of Automobile Manufacturers (CAAM) show that the smaller cars, with engine capacity of, or less than, 1.6 liters, contributed 85 percent of the sales increase in the domestic auto market. Most of the best-selling cars in China are smaller cars. The association estimated that the stimulus measures boosted the sales of smaller cars by 2.6 million units this year. Because of the favorable policy, sales of the battery and electric car pioneer BYD in the first 11 months surged 150.2 percent to 388,246 units. About two-thirds of the car sales were of the F3 model, a compact sedan that topped China's best-selling car list for seven months, with monthly sales surpassing 30,000 units, nearly double the figure for last year. According to CAAM, China's auto production and sales almost doubled from figures a year ago to reach 1.39 million and 1.34 million units respectively in November. Overall auto sales topped 12.23 million units in the first 11 months, up 42.39 percent from the same period last year. C:\Auto stimulus retained for 2010.mht

• Buyout funds face dilemma in raising RMB in China (10th December) The allure of raising a Chinese currency fund is strong for private equity firms. But setting up a yuan fund risks alienating private equity's most prized stakeholders: U.S., European, and Middle Eastern pension funds and fund-of-funds, which have committed billions of dollars to the buyout industry over the last decade. These investors expect exposure to China deals. Yet they won't get it through a yuan fund because only Chinese investors are allowed access under current Chinese rules.

242 While this issue is in its early phases, and may well be smoothed over, it is surfacing with certain investors, including such names as the Blackstone Group (BX.N) and Microsoft's (MSFT.O) Bill Gates. The development may complicate China's moves to draw foreign private equity investors, an effort that has included tax incentives for fund managers who set up in Shanghai, which aims to catch up with Hong Kong, New York and London as a new global financial center before 2020. Private equity executives have promised their investors, known as limited partners (LPs), a slice of China's red-hot economy, either through global funds or Asia-focused funds. A yuan fund is seen as allowing easier access to Chinese deals and faster closure, but Beijing forbids non-China investors from taking part. So if you're The Blackstone Group, which has a global buyout fund active in Asia and is raising a yuan fund, it's possible for a non-Chinese LP to wonder: Are you going to use my money to invest in China or will you use Chinese money? Partly to help internationalize its financial centers, Beijing is encouraging global funds such as Blackstone and The Carlyle Group CYL.UL to launch yuan funds and set up offices in Shanghai and Tianjin. Neither the LPs nor the private equity fund managers, known as general partners (GPs), want to miss the hot investment opportunities in China. "Usually the most convincing way to deal with conflicts of interest between RMB and offshore funds is to align their investment scopes and target returns," said John Fadely, a partner specializing in fund formation at Clifford Chance. "So that they always invest together, pro rata to their capital commitments, unless that wouldn't be feasible for some objective, readily understandable reason," said Fadely. Fadely acknowledged that China's regulatory hurdles make this difficult today. The yuan is also known as Renminbi, or RMB, and was introduced by the Communists and literally means "people's money." In August, Blackstone said it aimed to launch a 5 billion yuan ($732.3 million) fund, one of the first Shanghai-registered yuan private equity funds by a foreign investor. An LP source close to Blackstone told Reuters that some investors in the United States had raised concerns about Blackstone's plan to launch the yuan fund. The LP source declined to be identified as the source was not authorized to speak to the media. C:\Buyout funds face dilemma in raising RMB in China Reuters.mht

• Exchange rate kept stable against all odds (10th December) China had "good reason" to depreciate its currency during the global financial crisis as exports fell and chose instead to keep the yuan stable, central bank Deputy Governor Zhu Min said. "We took the same policy as we did in the Asian financial crisis; we decided to stabilize the renminbi exchange rate," Zhu said at a forum in Beijing yesterday. Exchange rates aren't likely to play a "key role in rebalancing" the global economy, he said. The People's Bank of China has kept the renminbi effectively pegged to the US dollar since July last year. Premier Wen Jiabao last month rebuffed Europe's calls for the currency to strengthen. "Policymakers have kept the yuan stable mainly out of consideration for China's exports and jobs," said Zhao Qingming, a Beijing-based senior analyst at China Construction

243 Bank Corp. "The yuan's dollar peg will be shifted to a currency-basket link in the second half of next year as China's economy recovers, and the dollar may rebound." Twelve-month non-deliverable forwards fell to 6.6555 per dollar as of 9:30 pm in Hong Kong yesterday, indicating traders expect the yuan to strengthen 2.6 percent in a year, according to data compiled by Bloomberg. In the spot market, the yuan traded at 6.8276 from 6.8275 on Tuesday, according to China Foreign Exchange Trade System. China's exports may slide about 16 percent this year, Zhu said. The decline in overseas shipments has put "tremendous pressure" on jobs and production in the world's third- biggest economy, he said. In that sense, there had been "good reason for China to depreciate the renminbi", Zhu said. Exports rose 1.4 percent in November from a year earlier, the first gain since October 2008, after dropping 13.8 percent the previous month, according to the median estimate of economists surveyed by Bloomberg. A stable yuan is important for the world's economic recovery, Zhu said, echoing Wen's comments to European officials on Nov 30. C:\Exchange rate kept stable against all odds.mht

• New lending cap of 8 trillion yuan (10th December) China's banking regulator plans to cap new lending at around 8 trillion yuan next year, but the target might be subject to instant changes according to the economic environment, a source with knowledge of the matter said. The regulator has retained flexibility in its credit policy, as there were still uncertainties lying ahead, the source, who declined to be named, told China Daily yesterday. The credit policy is in line with the tone set by the Central Economic Work Conference that ended on Monday, in which the government pledged to continue with its expansive fiscal and monetary easing policies but reserved leeway for possible policy fine-tuning. "We will guide Chinese banks to maintain the continuity and stability of their credit policy and enhance the banks' role in supporting the economic development," the China Banking Regulatory Commission (CBRC) said in a statement on its website in response to the pivotal economic conference. However, it is still up to the People's Bank of China, the nation's top monetary authority, to set the loan target for next year. Conventionally, the central bank will disclose the target sometime after the Central Economic Work Conference. "So far the central bank is still working on the loan target," the source said. The CBRC's 8 trillion yuan loan target is less than the record-setting 8.9 trillion yuan that Chinese banks advanced in new loans in the first 10 months of this year, doubling the 3.4 trillion yuan that banks gave out in the whole of 2008. The rapid credit expansion helped China to emerge from the economic doldrums earlier this year, but it eroded Chinese banks' capital position, causing wide speculation that banks were planning to raise a hefty amount of capital from the equity market next year. Wang Zhaoxing, vice-chairman of the CBRC, made it clear in an article published last week that big State-run lenders and medium-sized banks were now obliged to maintain their capital adequacy ratio above 11 percent and 10 percent respectively, from the earlier requirement of a unified 10 percent for all the banks.

244 With the more stringent regulatory standards, Chinese banks are expected to raise some 200 billion yuan in fresh capital next year, including 160 billion yuan needed by the top three lenders, to keep their capital adequacy ratio above 12 percent, major domestic brokerage Haitong Securities estimated. The news that big banks planned to raise funds through new share sales has already weighed on the stock market, which plunged more than 3 percent in one day last month on the market rumor that Bank of China, the nation's third-largest lender, had to raise 100 billion yuan from the bourse. Yin Zhongli, a senior researcher at the Chinese Academy of Social Sciences, said that although credit growth might slow next year, banks' thirst for capital was still pressing. He suggested diverting some of the new share sales to the international market to avoid a heavy blow to the domestic capital market, as most Chinese banks were dual-listed in the mainland and Hong Kong and had a good prospect for growth in the eyes of international investors.

• Small steel mills face 'big' problems (10th December) Consolidation moves in the fragmented domestic steel industry are set to gather pace in the coming days as the government is contemplating restricting sector entry to mills having production capacity of at least 1 million tons or more annually. The biggest casualties of such a move would be the small steel mills, who would now have no choice but to come together or get snapped up by bigger rivals, said industry sources. The government has also decided to raise environmental standards for steel mills, forcing them to upgrade their equipment or have their licenses revoked, said a draft policy document released yesterday by the Ministry of Industry and Information Technology. The proposals are yet to be implemented and have currently been sent for public feedback, the statement said. As per the new guidelines, steel mills would now have to install blast furnaces of over 400 cu m, compared with the 300 cu m standard set in April this year. "We may add two 500-cu-m blast surfaces to meet the standards and expand our capacity to 1 million tons, but it also depends on our ability to get bank credit," said a sales manager from Shandong Jintai Steel Corp, a steelmaker with an annual capacity of 600,000 tons. "Most of the smaller mills may find the going tough once the new norms come into place. Their survival would depend on the ability to tie up financing requirements and failure to do so would trigger a spree of mergers in the sector or closures," he said. "The planned moves look contradictory to the government's intention to curb oversupply, especially when small steel mills expand their capacity to over 1 million tons," said Du Wei, a steel analyst with Umetals Research Institute. "The norms should also be backed up with supporting credit policies," he said. According to the new environmental standards, mills should cap sewage discharge at 2 cu m and sulfur dioxide emission at 1.8 kg for every ton of steel made. Government departments should not approve construction and upgrading if steel mills can't meet the requirements and should not issue sewage discharge and land permits, the draft proposal said.

245 Industry sources, however, maintain that Chinese government has taken the first steps as the fragmented industry could find itself at the mercy of the "Big Three" miners, namely BHP Billiton, Rio Tinto and Vale, for future iron ore supplies. They point out that even big miners like Rio Tinto and BHP Billiton are on a consolidation mode, after they decided to merge their Australian iron ore operations into a new venture. By forcing the small steel mills to join hands, the Chinese government expects to build up enough firepower to match up to the international miners. However, the industry also faces an acute oversupply situation and that could dent future profitability, said China Iron and Steel Association (CISA). "Oversupply problems have weighed heavily on steel prices and squeezed profit margins. This could lead to a more difficult situation next year also," Luo Bingsheng, vice- chairman of CISA, said earlier.

• South China Sea gas find to fuel CNOOC dreams (10th December) China's biggest offshore oil company CNOOC Ltd said yesterday its Canada-based partner Husky Energy had made a second significant deepwater gas discovery in the South China Sea, showing high potential in energy resources in the region. The newly discovered Liuhua 34-2 field, located in the Pearl River Mouth Basin in the eastern South China Sea, is capable of producing 55 million cubic feet of natural gas per day during test drilling, CNOOC said in a statement yesterday. In order to determine the full potential of the field, an appraisal well would be drilled in early 2010 by Husky, said the statement. CNOOC is entitled to hold a 51 percent stake in the production-sharing contract for the discovery, it said. The discovery of Liuhua 34-2 follows the finding of Liwan 3-1 field in 2006 in the same region. "We are excited about the new deepwater discovery, which further demonstrates the huge potential in the deepwater area in South China Sea. We expect the two adjacent discoveries to be developed in a more efficient way by sharing development facilities," said Zhu Weilin, executive vice-president of the company and general manager of exploration department. "This exciting exploration discovery, combined with the development of the Liwan 3-1 field, is a significant milestone towards our goal of strategic commercial development and production from this promising area," said John Lau, president & CEO of Husky Energy Inc. Husky, controlled by Hong Kong billionaire Li Ka-shing, started exploring in offshore China in 2002. The company is now one of Canada's largest energy and energy-related companies. Cooperation with overseas companies can help CNOOC Ltd better develop the rich deepwater energy resources off China's coast, as at present domestic companies still lag behind in technology, said analysts. "We need advanced technology," said Qiu Xiaofeng, an analyst with China Merchants Securities. "These kinds of cooperation can reduce risks in project development." CNOOC is also planning to double its crude oil and natural gas production in the western part of the South China Sea.

• State reveals 1st steps to lift economy (10th December)

246 The State Council, the nation's top administrative authority, said the country will push to boost consumer spending in line with a strategy laid out at the recent Central Economic Work Conference. The top cabinet will also raise the cost of second-hand house transactions in a move that analysts said is aimed at curbing speculative housing deals that have pushed up prices and created a lot of headaches among buyers. Another key move was an increase to the purchase tax on small cars to 7.5 percent, from the current 5-percent level, effective until the end of next year. At the end of last year, when the Chinese economy was mired in the global recession, China decided to exempt sales taxes on houses if they had been held for two years or more. Previously, the limit was five years. Now the government has decided to resume the five-year sales tax exemption to curb speculative deals, said Dong Yuping, economist with the Chinese Academy of Social Sciences' Institute of Finance and Banking. The move can cut the cost of house transfers, ultimately benefiting the housing market. "It is not aimed at dampening the whole sector," he said. The Central Economic Work Conference, which concluded on Monday, said that the government encourages people to buy houses for their own use and increase the supply of ordinary and low-cost houses. Yesterday, Xinhua reported that Zhang Ping, minister of the National Development and Reform Commission, said at the commission's annual work conference that China will curb speculative home purchases. Speculation is a major factor behind soaring house prices, Dong said, adding that the move was expected and should have been carried out earlier. By October, housing prices in China's 70 big- and medium-sized cities had been on the rise for eight consecutive months compared to monthly prices from 2007. Many people, especially the young, have complained that houses have become unaffordable. "The State Council meeting's decision will weaken the momentum of further price rises, although I'm not sure whether it will push down prices," Dong said. The new vehicle tax policy, which applies to cars with an engine size of 1.6 liters or less, is a sign that the government may want to reduce subsidies for the rich who can afford cars due to the wide income gap between people in cities and the countryside, said Dong. It is in line with the Central Economic Work Conference platform to improve the country's distribution of income, he said. The new tax rate is still lower than the original 10 percent purchase tax, which was cut last year to encourage people to buy cars. Analysts said the latest change may slow white- hot car sales in China, the world's largest market. Sales of cars in the nation jumped 98 percent in November from a year earlier. The cabinet meeting said it will also enhance the "cash for clunkers" plan, which was initiated last year to help boost spending. The subsidy cap will be raised to 18,000 yuan ($2,640) from 5,000 yuan ($730) per car. It will also continue to subsidize individual purchases of electric household appliances and agricultural machines and provide financial assistance to the unemployed.

• System to ensure sustainability, legality of logging (10th December)

247 In an effort to ease possible trade friction with the United States and the European Union, China is establishing a system to verify its timber products have been logged legally. The pilot project is being tested with a group of companies and is working back through their supply chains to find out where the timber is harvested. "China is determined to strengthen its domestic logging and to enhance the legality and sustainability of the wood trade," said Zhang Yanhong with the State Administration of Forestry. Admitting that the process is very lengthy, Zhang said the new system, once established, will verify imports from China's major timber importing countries that include Russia, countries in Africa and Southeast Asia, as well as those in South America. One-third of the timber is used to make furniture. Of all wood furniture exported in 2007, 47 percent headed to North America, 20 percent to Europe and 24 percent to other countries in Asia. By summer 2011 when the project is complete, recommendations will be made to policy makers, said Hugh Speechly with the UK's Department for International Development (DFID). "Though it is still too early to say when and in what way the system will be established, we have every expectation that the project will result in a good system," Speechly said. The new legislation will require all businesses that sell any product in the European Union to minimize the risk that it has been produced from illegal logging, said Adrian Davis, head of DFID North East Asia. "This will change the nature of European markets for timber products," Davis said. "Buyers will want evidence that the products they buy are legal," he said. "Recent US legislation places similar demands on imported wood products." "These changes will clearly create new challenges for China's timber trade," Davis said. In China, the world's largest timber product exporter and manufacturer, it is hard to determine where more than half of the timber comes from, which makes any claim to its legality impossible, Davis said. Zhu Guangqian, director of the China Timber and Timber Products Association, said it is very difficult to put a system into practice, given the complexity of China's role in the supply chain for timber, and that "one system for all countries is almost impossible". He said it is a misunderstanding to blame the traders and manufacturers for the damage to forests since deforestation has been the main factor destroying the world's tropical forests. "Restriction will only make developing countries poorer," he said. "Industrial countries should work on solutions to help finance developing ones to eliminate deforestation."

• US companies find an oasis of profit in China (10th December) Many US companies hit hard around the world by the global economic downturn have reported profits from their dealings in China, according to a survey by the American Chamber of Commerce in Shanghai. The chamber's China Business Report 2009, which was released yesterday, shows most corporate members saw a growth in revenue and profit in China and the report ranked the nation a top investment destination for 2010.

248 "Many American companies are finding that their performance in China has outshone those in other markets," said J. Norwell Coquillard, chairman of AmCham Shanghai. "This year's report offers businesspeople, policymakers and opinion leaders a valuable resource to better understand the China market, which is sure to play an even larger role in the world economy for years to come," Coquillard said. More than 40 percent of respondents said the profit margins of their China operations in 2009 were better than their global averages. This was in stark contrast to the situation a decade ago, when 58 percent of US companies surveyed said their margins in China were narrower than in many other countries. Most respondents were positive about doing business in China. More than 90 percent said they were "optimistic" or "slightly optimistic" about the five-year outlook. That compared to 81 percent in 2008. Eighty-two percent of survey respondents expected even more revenue from China operations in 2010. Some 74 percent ranked China one of their top-three investment priorities - among them, 64 percent planned to increase their investments in China in 2010. Fifty-eight percent increased their investment in China this year. Only 5 percent were planning to scale back on their investments in China. The survey was based on the responses of 369 US companies with operations in China. "China remains a recommendable investment spot for American companies, the majority of which are focused on competing in China's growing domestic market," said Brenda Foster, president of AmCham Shanghai. Companies said they faced new challenges in 2009 that were mainly centered on sales and the retention of customers. Competition from Chinese companies was also increasing, said the US firms. One silver lining from the global financial crisis was the fact that it had become easier to recruit new talented individuals, said the report.

• Yuan funds outperform rivals (10th December)

249 Yuan-denominated funds outperformed their foreign currency peers in China's venture capital/private equity (VC/PE) market during the first 11 months of 2009, when overseas investors found themselves on shaky ground with the global economic meltdown. According to figures released by the market researcher Zero2IPO Group, of the 90 venture capital funds raised for investments in China from January to November, 82, or 91.9 percent, were yuan-denominated, up 15.2 percentage points from the entire 75.9 percent in 2008. The local currency funds raised the equivalent of $3.5 billion during the period, accounting for 69.4 percent of the total, compared with 32 percent in 2008. The central government has backed the development of local currency funds by drawing up helpful laws and regulations, while the requirement for foreign VC/PE enterprises remains stringent. Foreign VC/PE firms have to go through very complicated regulatory and legal procedures to do business in China, which hampers their growth in the country, said Andrew Y. Yan, managing partner of Hong Kong-based PE firm SAIF Partners, at a China Venture Capital and Private Equity Annual Forum in Shanghai yesterday. Currently, foreign VC/PE firms have to set up their consulting companies or representative offices in China to source deals to be conducted through the General Partners' offshore vehicles, according to Hubert Tse, managing director at law firm Yuan Tai. By comparison, the government's preferential policies targeting domestic VC/PE firms amid the debut of the NASDAQ-style board ChiNext in October, which offers an efficient exit channel for VC/PE investors, have beefed up the growth of the home-grown PE firms behind the yuan-denominated funds. As such, international VC/PE funds facing intense competition for deals in China have to start adopting new investment strategies by raising local currency funds. "We're raising 1 billion yuan for our renminbi-denominated fund that is planned to start operation by the end of this year," said Roman Shaw, founding partner of DT Capital Partners, a VC firm that manages more than $500 million in assets. But Shaw projected that, globally speaking, the local currency fund will not surpass the dollar-denominated fund in terms of the capital amount in three to five years unless institutional investors are allowed to enter the industry. Some veteran venture capitalists have said the top authorities should ease the current stringent regulatory framework for VC/PE investments, as more foreign limited partners have considered raising yuan-denominated funds in what will inevitably become the future trend. In June, the Shanghai municipal government issued a pilot measure to allow foreign PE/VC firms to operate in the Shanghai Pudong New District. The move attracted PE giant Blackstone to set up its first yuan-denominated fund in Shanghai by raising 5 billion yuan. "As... the government looks to further strengthen the domestic private equity market, foreign General Partners can expect more favorable rules to come in the foreseeable future," said Tse.

• Tech: Is China Catching Taiwan? (11th December)

250 The technology gap between Taiwanese and Chinese companies is closing, according to a new survey by Deloitte. The consulting firm yesterday released its annual report on the 500 fastest-growing tech companies in Asia, as measured by revenue growth, and once again Taiwan came out on top, with four companies in the top 10 and 99 total on the list. No great surprise there, since Taiwan is famous for its steady supply of high-growth tech companies. What is interesting, though, is the impressive rise of China in the Deloitte rankings. Four mainland Chinese companies also make the top 10, including the No. 1 company, online retailer Vancl.com. And with 97 companies overall, China is now virtually tied with Taiwan. That’s a big jump: Only two years ago, the number of Chinese companies on the Deloitte list was about half that of Taiwanese. “We’ve seen a significant upswing in the number of Chinese companies,” says Jolyon Barker, Deloitte’s global managing partner for technology, who notes that Chinese companies targeting domestic demand have a big edge. “We are starting to see China beginning to compete at an R&D level and an innovation level in a market that, of course, is colossal,” he says. China’s rise isn’t necessarily a setback for Taiwan. Many of the fast-growing Chinese companies have Taiwanese ties, points out William Chou, managing partner for technology in Deloitte’s China office. As evidence of the rapid integration of the two sides, Chou cites estimates that more than 1 million Taiwanese (out of a total population of just 23 million) now live in the Shanghai area. “This is one economy,” he says. “You can’t distinguish between these two areas. The market is in the mainland and the talented people follow the market.” So who’s to say what’s really a fast-growing Chinese tech company and what’s a fast- growing tech company based in China but run by people who have moved across the Taiwan Strait? Either way, China wins. For years, people who follow China’s tech sector have predicted that the world will see a surge in innovation coming from the mainland. With a few exceptions (Huawei and ZTE come to mind), that hasn’t happened. The latest Deloitte report could be a sign that the long-awaited wave of innovative Chinese tech companies might finally be upon us. http://www.businessweek.com/globalbiz/blog/eyeonasia/archives/2009/12/tech_is_china_ c.html

• China industry output soars, inflation returns (11th December) Chinese industrial output surged in November to its fastest pace since June 2007, underlining the economy's brisk recovery from the global downturn and accompanying the return of consumer inflation. Output rose 19.2 percent from a year earlier, beating economists' expectations of an 18.0 percent rise and picking up from 16.1 percent in October. Consumer price rose in November over a year earlier after nine straight months of falls. The increase of 0.6 percent beat expectations of a 0.4 percent rise.

• China's imports, exports grow 9.8% in Nov (11th December) China's imports and exports rose 9.8 percent in November year on year, ending a 12- month decline, to stand at $208.2 billion, the General Administration of Customs announced Friday.

251 The trade surplus was $177.96 billion in the January-November period, down 30.6 percent from a year earlier. Exports stood at $113.65 billion in November, down 1.2 percent from a year earlier, but were up 2.6 percent from October for the fifth consecutive monthly increase. Imports rose 26.7 percent in November to $94.6 billion. From January to November, the country's imports and exports totalled $1.96 trillion, down 17.5 percent compared with the corresponding period last year. Imports for the first 11 months were $893.02 billion, down 15.8 percent year on year; exports dropped 18.8 percent to $1.07 trillion. The EU remained China's biggest trading partner, though bilateral trade declined 17 percent to $326.27 billion in value in the first 11 months; the United States was second with trade at $266.54 billion, down 13.4 percent; Japan followed with trade down 17.4 percent to $203.33 billion.

• Nov CPI ends nine-month decline (11th December)

China's consumer price index (CPI), a main gauge of inflation, increased 0.6 percent year-on-year in November, ending nine months of decline, the National Bureau of Statistics (NBS) said Friday. The CPI figure declined 0.5 percent in the previous month and increased 2.4 percent in last November. The producer price index (PPI), a major measure of inflation at the wholesale level, dropped 2.1 percent year-on-year in November, according to the NBS. The rate of decline was 3.7 percentage points lower than that in October.

• China's retail sales up 15.8% in November (11th December) China's retail sales rose 15.8 percent year on year to 1.13 trillion yuan ($166 billion) in November, the National Bureau of Statistics (NBS) announced on Friday. The rise was 5 percentage points lower than that of a year earlier. It was also down 0.4 percentage points from that in October, the NBS data showed.

252 In the first 11 months, total retail sales topped 11.27 trillion yuan, up 15.3 percent year on year. The rate was 6.6 percentage points down from that of the corresponding period last year, but unchanged from the first 10 months this year, the data showed. In November, urban retail sales rose 16.5 percent year on year to 760.6 billion yuan, while those in counties and sub-county areas were up 14.4 percent to 373.3 billion yuan. Retail sales grew 14.5 percent year on year for grain and edible oils in November, 24.9 percent for household electric appliances, and 61.5 percent for autos. To stimulate domestic consumption, the government put into place a series of measures, including tax cuts for auto and property purchases and introduced subsidies for home appliances in rural areas. In November, auto sales reached 1.34 million units, bringing the total sales from January to November to 12.23 million, up 42.39 percent year on year, according to the China Association of Automobile Manufacturers.

• China reports 32.6% rise in fiscal revenue for Nov (11th December) China's fiscal revenue for November reached 502.93 billion yuan ($73.64 billion), up 32.6 percent year-on-year, the Ministry of Finance (MOF) announced Friday. Overall fiscal revenue in the first 11 months topped 6.34 trillion yuan, up 9.2 percent year-on-year, said a report on the MOF website. Of the total fiscal revenue for November, the central government collected 273.47 billion yuan, up 34 percent year-on-year, while local governments collected 229.46 billion yuan, up 31 percent year-on-year. The ministry attributed the rise in fiscal revenue to the growing economy, which had helped drive up tax takes, and to the low basis figures of last year and the increased tax takes after oil tax and fees reforms. Of the total fiscal revenue for January-November, the central government collected 3.41 trillion yuan, up 6.7 percent year-on-year, while local governments collected 2.93 trillion yuan, up 12.1 percent. In the first 11 months, consumption tax was up 86.7 percent year-on-year; corporate income tax up 3.6 percent; individual income tax up 5.3 percent; while duty tax income was down 21.5 percent; and stamp tax was down 52.6 percent. Meanwhile, fiscal expenditure grew 20.9 percent to 634.99 billion yuan in November year-on-year. Fiscal expenditure rose 22.7 percent to 5.62 trillion yuan in the first 11 months year-on-year. The major expenditure sectors for the first 11 months included transport, up 72.4 percent; agriculture, forestry and water management, up 44.9 percent; environmental protection expenditure, up 38.5 percent; and science and technology, up 30.3 percent, according to the ministry.

• China's electricity power production up 26.9% in Nov (11th December) China's electricity power production increased by 26.9 percent in November year on year, the National Bureau of Statistics said Friday. In October, the country's power production climbed 17.1 percent.

• China's new loans rise to 294.8b yuan in November (11th December)

253 China's new yuan-denominated lending in November rose to 294.8 billion yuan ($43.2 billion) from October's 253 billion yuan, the People's Bank of China or the central bank, said Friday. The November figure brought new yuan-denominated loans in the first 11 months to 9.21 trillion yuan, 5.06 trillion yuan more than the corresponding period last year. In November's new lending, about a third was offered by the nation's top four State- owned banks, said a report released Friday by the Bank of Communications (BOCOM), China's fifth largest lender. "Small and medium-sized banks, especially local banks have played a major role in new lending in November," the report said. The BOCOM report forecast new lending next month would be about the same as that in November at between 250 billion to 300 billion yuan. It also forecast new loans for 2010 was likely to reach about 8 trillion yuan as infrastructure projects under construction would need more funding and exports began recovering. China's banking authorities had vowed to step up efforts to improve credit quality, and keep credit expansion at a "reasonable" pace after record lending. "Bank lending this year has largely gone to basic infrastructure building, such as railway, road and airport construction projects. China needs to expand credit to small and medium-sized companies." said Zhuang Jian, a senior economist with the Asian Development Bank. The broad measure of money supply, M2, which covers cash in circulation and all deposits, rose 29.74 percent from a year earlier to 59.46 trillion yuan at the end of November. The narrow measure of money supply, M1 (cash in circulation plus current corporate deposits), was up 34.63 percent to 21.25 trillion yuan. Renminbi deposits were up by 582.4 billion yuan in November, bringing the rise for the first 11 months to 12.63 trillion yuan, 5.32 trillion yuan more than the corresponding period last year. Personal loans in November rose by 237.7 billion yuan, with 201.2 billion yuan being long-term and medium-term loans.

• Chinese vice premier stresses economic structure rebalance (12th December) Chinese Vice Premier Li Keqiang said Friday the government will beef up efforts to coordinate economic growth and structure rebalance as the economy is expected to face more complexity. The government should better handle the relationship between growth, structure rebalance and inflation management to realize fast and sound development, Li told a national meeting on development and reform. The policy will maintain its continuity and stability next year, and meanwhile be more targeted and flexible to cope with new situation, he told delegates from central and local economic planning agencies. He said domestic demand, the foothold of sustainable growth, should be stimulated while external demand be stabilized.

254 To enhance the consumer spending capabilities, Li stresses the improvement of social security and raise of the earnings for low-income residents. As new year festivals near, Li urged local authority to step up oversight of prices that have close bearing on people's daily lives to ensure their well-beings and keep market in order. Chinese economic growth accelerated to 8.9 percent in the third quarter and consolidated a V-shaped recovery after timely government stimulus package took effect. But overcapacity in some industries and lukewarm consumption have cast shadow on the sustainability of the growth. The record bank loans also pushed fears for asset bubble, notably after the consumer inflation ended nine months of fall to rise 0.6 percent in November from a year ago.

• Oil rises after report shows record runs at Chinese refineries (12th December) Oil rose for the first time in eight days after China’s government said the country’s refineries processed a record amount of crude last month. Refining volume in China, the world’s second-largest energy consumer, climbed 21 percent from a year earlier to 33.4 million metric tons, or 8.1 million barrels a day, according to government statistics. China’s industrial production grew more than estimated in November.

“This is the fastest growth in Chinese oil demand since 2004,” Amrita Sen, a London- based oil analyst at Barclays Capital, said by phone. “China has really surprised to the upside this year.”

Crude oil for January delivery rose as much as 55 cents, or 0.8 percent, to $71.09 a barrel in electronic trading on the New York Mercantile Exchange. It was at $71.05 a barrel at 9:32 a.m. London time.

Oil prices have fallen 8 percent since the beginning of this month and fell 3 percent on Dec. 9, when a U.S. government report showed U.S. gasoline inventories rose to the highest level since April. Futures are up 59 percent this year.

China imported 17.1 million metric tons of crude oil in November, 28 percent more than a year earlier, government data showed. Imports of crude oil in the first 11 months gained 11 percent to 182.5 million tons, according to preliminary data from the Beijing-based General Administration of Customs on Friday.

The International Energy Agency cut its forecast for oil supplies from outside the Organization of Petroleum Exporting Countries next year because of delays to North American projects.

• Export slump eases as demand revives (12th December) China's exports fell at a much slower pace in November, the smallest decline this year as recoveries in the US and Europe helped revive demand, according to statistics released by the Customs department on Friday.

255 Exports fell by merely 1.2 percent last month to $113.65 billion over the same period last year, compared with the 13.8 percent decline in October. Imports also rebounded strongly, rising 26.7 percent over the same month last year to $94.56 billion, compared with the 6.4 percent decline in October. The nation's trade also climbed 9.8 percent from a year earlier. "There has been considerable improvement, but it is still below forecasts," said Denise Yam, economist with Morgan Stanley Asia. "The stronger performance (of exports and imports) has been due to the growing demand from overseas, and the low reference point of last year," said Dong Xian'an, chief economist with Shanghai-based Industrial Securities. In November 2008, the nation recorded its first year-on-year decline in exports and imports, largely due to the global financial crisis. In the third quarter of this year, the US economy registered its first year-on-year growth since late 2008. The latest figures also show that the eurozone economy has grown by 0.4 percent from July to September, a signal that the regions are finally shrugging off the recession blues. The only gloom that looms on the horizon is the hazy short-term outlook for overseas demand. Federal Reserve Chairman Ben S. Bernanke recently indicated that "tight credit" and "high unemployment" continue to weigh on the US economy. "Exports may continue to be sluggish and inch up slowly in the months ahead, and probably record positive growth in December," said Li Wei, economist with Standard Chartered. Both Standard Chartered and Industrial Securities are of the view that China's exports would grow by 10 percent in the first quarter of 2010. Imports have been outperforming exports in the past few months. "The strong demand for commodities is eyeball-catching, and the momentum would continue," said Li. Imports of crude oil, iron ore, copper and refined petroleum products have been the major drivers for November, surging 28, 8.3, 57.8 and 47.7 percent in value. Imports of plastics and motor vehicles also jumped 58.1 and 74.7 percent. But with the government's efforts to boost domestic consumption taking off, import growth during the first quarter of next year may remain stagnant at 20 percent, said Industrial Securities. The sharp improvement would also increase the calls for yuan revaluation, feel analysts. Premier Wen Jiabao said recently that such calls are "unfair" as China faces rising protectionism and a stable yuan would be beneficial to global recovery. According to figures from the Ministry of Commerce, nearly 101 trade-remedy investigations have been filed against China by 19 countries, involving sales of over $11 billion. Wang Chao, Assistant Minister of Commerce, said China would strive to enhance its industrial competitiveness by leveraging its hi-tech prowess and also help brands to battle trade disputes.

Social front

• Madagascar's Confucius Institute celebrates first anniversary (6th December)

256 The Confucius Institute at the Antananarivo University, an institute for higher education of Chinese language and culture, celebrated its first anniversary on Saturday.

At the celebration ceremony, the Chinese side has presented by the charge d'affaires of the People's Republic of China to Madagascar, Ms. Lu Huiying, and a strong delegation of Jiangxi Normal University, led by its president, Mr Fu Xiuyan, who arrived in Madagascar on Friday for a three-day visit.

The Madagascan side was represented by the Secretary General of the Ministry of Higher Education, Mr. Christian Ralijaona and the Antananarivo University, led by its Vice-President, Monique Ramanamihantantsoarana, as well as students of the Confucius Institute.

The President of Jiangxi Normal University said that based on the teaching of Chinese language, a variety of communication activities of Chinese culture, namely Chinese festivals and celebrations, folklore, crafts, old literature and the current state, are taught at the Confucius Institute at Antananarivo University, opened on Nov. 13, 2008.

"Activities of cultural exchanges enhanced development of Confucius Institute in Madagascar, in-depth knowledge of Chinese culture by Madagascans and strengthened friendship between the two countries," said Fu.

In her speech, Ms. Chargé d'affaires presented her best wishes for the Confucius Institute at Antananarivo University that it would be one of the best universities outside of China in the framework of Chinese language studies.

Informing the gathering that 16 Madagascan students have brilliantly studied at the Jiangxi Normal University brilliantly for four years, the Antananarivo University vice- president said that the cooperation between Jiangxi Normal University and Antananarivo University was fruitful and promising.

The celebration was an opportunity for Madagascans to see with naked eyes the presentation of the Chinese tradition in a variety of shows such as how to serve tea, Chinese sculpture, music, songs and traditional Chinese dance. C:\Users\mansoor\Desktop\news\Madagascar's Confucius Institute celebrates first anniversary_English_Xinhua.mht • China to relax residence permit rule (7th December) The Chinese government pledged Monday to push forward the process of urbanization, and relax restrictions on residence permits in small and medium-sized towns and cities. The three-day annual Central Economic Work Conference, which concluded Monday, agreed that the government will attach greater importance to employment and settlement of the transformed agricultural population in the cities. C:\China to relax residence permit rule.mht

257 • China to enact online community network (7th December) China will legislate an online community network and grade online network content, the Yangcheng Evening News reported, citing a speech made by a top official from the "First China Governmental Websites Development Forum" in Bo'ao on Sunday. China's Ministry of Culture has approved 615 cultural service websites and 134,000 internet cafes. Online game users have reached 217 million, music users 289 million and video users 222 million, said Tuo Zuhai, vice director of the Cultural Market Department of China's Ministry of Culture. "The network community has become an important part of society; a network social order is needed and the government is considering making legislation," Tuo was quoted as saying. Tuo said a regulation on online gaming is the current focus. The government is calling for relevant companies to add more cultural content and eliminate violence and porn from online video games. "An Internet real-name logging system, Internet virtual property, Internet intellectual property protection, Internet content grading system and Internet addiction prevention are also the main subjects," Tuo added. C:\China to enact online community network.mht

• 76% of Chinese white-collars are sub-healthy (7th December) 76 percent white-collars working in Chinese mainland cities suffer sub-health and nearly 60 percent are overfatigued; among high income group aged between 35 to 50, their biological ages average ten years older than their actual ages. The statistics were issued through the "White Paper on China's city white-collars" Dec. 7, 2009.

The study, which was jointly investigated and issued by Chinese Medical Doctor Association, Chinese Hospital Association, Beijing Health Security Association and Ciming Health Checkup Group, says nearly 80 percent of China's city white-collars sleep without regularity and feel tired everyday; 23.7 percent can not ensure a regular breakfast; over 20 percent eat fast food frequently, but can not ensure the normal ingestion of fruit and vegetables; over 54.4 percent get insufficient sleep, and 32.4 percent sleep badly; only 46 percent of them will do some occasional sports.

In addition, more than half feel irritable; 20 percent feel lonely; over 70 percent lack happiness and gratification.

According to statistics, white collars' sub-healthy rate in main cities is as high as 76 percent, and nearly 60 percent of them are over fatigued; true "healthy people" are only a minority (less than 3%); among high income people, whose ages are between 35 to 50, their biological ages average ten years older than their actual ages.

The health problems of the group are mainly because of metabolic disturbance and sub- health problems caused by fatigue, sleeplessness and mental blocks. Apart from hard work and pressure of extra work as the reasons for resulting disease, some experts also think that a long time of surfing on the Internet, too much parties, unscientific diet, irregular sleep, lack of exercise, inharmonious family and spiritual depression all play

258 important but bad roles.

In addition, females in this group are usually threatened by cardiovascular and cerebrovascular diseases, while males often face the problems of sudden death, over fatigue and cancer. C:\76% of Chinese white-collars are sub-healthy - People's Daily Online.mht

• China faces difficulties in cultural relics protection: official (8th December) Lack of money and weak public awareness hobbled China's efforts to protect famous historic and cultural cities and relics, official said on Monday. Some local authorities did not fully implement the protection measures, and some cultural relics were not comprehensively recorded, said official with the Ministry of Housing and Urban-Rural Development (MHURD) at an insider meeting. Since 1982, the government had listed 110 cities and 780 towns and villages as famous historic and cultural localities for special protection. On July 1, 2008, the State Council, or cabinet, enacted a national protection regulation. The ministry said it would enhance supervision and endeavor to keep the relics on record for better protection. C:\China faces difficulties in cultural relics protection official_English_Xinhua.mht

• China is "catching up" in English proficiency: Philippine official (8th December) The Philippine National Economic and Development Authority (NEDA) has alerted President Gloria Macapagal-Arroyo that China is "catching up" with other rivals in the region, including the Philippines, in terms of English proficiency.

NEDA Acting Director-General Augusto Santos said in a Palace news briefing on Tuesday after the Cabinet meeting that China may erode the gains of the Philippines in the business process outsourcing (BPO) sector if it fails to keep its edge in English proficiency.

"We note that here's this report that China catching up with India in terms of speaking English," Santos said.

He said that when he made the report during the Cabinet meeting presided by Mrs. Arroyo, the Chief Executive said, "Oh, we have to watch out."

"She's very glad that particular information was fed to the Cabinet so we have to work," Santos said.

He said that NEDA had previously stressed to the Cabinet the importance of English proficiency if it wants to be globally competitive.

"As of now, we still have the edge but indications are pointing to China's catching up," he said.

259

When asked, Santos said that China is not yet a threat to the Philippines in terms of the BPO industry "but if we don't watch out, we may be overtaken. They may catch up with us."

Santos said that the main investor draw of China is its cheap labor. C:\China is catching up in English proficiency Philippine official _English_Xinhua.mht

• Senior leader congratulates publication of authoritative Chinese dictionary (8th December)

Senior Chinese leader Li Changchun congratulated Tuesday the publication of the latest edition of the most authoritative encyclopedic dictionary of the Chinese language "Cihai", or "sea of words."

Li, a Standing Committee member of the Political Bureau of the Communist Party of China (CPC) Central Committee, expressed his gratitude to experts for their constant improvement of the dictionary and their "contribution to the prosperity of the socialist culture," in a meeting with the experts engaged in this "significant cultural project."

Liu Yunshan, head of the Publicity Department of the CPC Central Committee, said the sixth edition of the renowned Chinese dictionary systematically reflects the civilization of the mankind, especially the Chinese civilization, and fully displays the development achievements and great changes taking place in China in the past six decades.

The new edition, which took five years to complete, has more than 127,200 entries and over 16,000 pictures. It had removed 7,000 outdated or rarely used terms and included 12,300 new ones.

The latest edition has been on sale in major cities such as Beijing and Shanghai.

The first edition of Cihai came out in 1936. It has been revised every 10 years and this year was published ahead of the National Day on Oct. 1.

• Chinese cultural ministry donates office equipment to Pak counterpart (8th December)

The Chinese ministry of culture donated here Tuesday some office equipment to its Pakistani counterpart.

Chinese Cultural Counselor Yang Linhai and Pakistani Cultural Secretary Moin-ul- Islam Bukhari signed documents for the handing-over of the equipment worth 150,000 yuan (about 22,000 U.S. dollar)at a ceremony held at the Pakistani ministry of culture.

260 Yang said that China and Pakistan are time-tested friends. Chinese can always feel the warmth of their Pakistani brothers and sisters wherever they travel in Pakistan, he added.

Bukhari thanked the Chinese government and the people for the much-needed equipment. He said that the Pakistani government and the people cherish the all-weather friendship between the two countries and the two peoples. C:\Chinese cultural ministry donates office equipment to Pak counterpart_English_Xinhua.mht

• Scholars bid government to abolish housing law (9th December) Five scholars from Peking University have recommended to the country's top legislature that an existing law defining the government's ability to seize urban housing should be abolished or revised to protect property owners. In a letter to the National People's Congress (NPC) Standing Committee on Monday, scholars said the current "Housing Demolition and Relocation Management Regulation" is a breach of the country's constitution and property law. The letter has fired up public attention across the nation, especially after the death of a resident who set herself on fire to prevent local authorities in Chengdu, in southwest China's province, from seizing and demolishing her home. In the letter, law professors Shen Kui, Jiang Ming'an, Wang Xixin, Qian Mingxing, and Chen Duanhong suggested that the NPC Standing Committee urge the State Council Legislative Affairs Office, the organ that issued the existing regulation, to revise or abolish the law. According to the nation's constitution and property law, a citizen's private property is inviolable - governments can only confiscate a citizen's housing for public welfare construction. Compensation must be paid before relocation, Jiang said. But in the housing management regulation, the rights of property owners are not specified. The regulation also stipulates that residents have to move out once the government issues a relocation permit, with a maximum period of a year and a half for residents to relocate and negotiate compensation. But what most often happens, experts said, is that local governments give construction clearance to estate developers or enterprises that pay off officials. It is then up to developers to negotiate with residents. If residents refuse to move, they will be forced out. "Such twisted relations between urban development and personal property has resulted in many social conflicts," Shen told China Daily Tuesday. The top legislature would not make any comments Tuesday. However, South Metro News reported Tuesday that insiders with the legislature said the State Council Legislative Affairs Office and relative government departments are indeed researching possible changes. Shen said they felt it an obligation to push for changes after recent bloody incidents involving residents who were forced out from homes. "It's time we rethink about the unfairness caused by, and price for urbanization and development, especially after the death of Tang Fuzhen," he said.

261 Tang shocked the nation by setting herself on fire to protest the demolition of her former husband's garment processing unit on Nov 13. She died of severe burning 16 days later at a local hospital, and the building was pulled down. However, the local Chengdu government said Tang and her family were actually confronting law enforcement in a violent way. The government referred to the Housing Demolition and Relocation Management Regulation for seizing the garment building. After Tang's death, many people angrily criticized the local authorities for the violent way in which the regulation was enforced. "It's funny that those who conduct housing demolition support themselves with a regulation that disagrees with higher laws," said Jiang Ming'an, one of the five scholars. "It is obvious that the regulation favors the demolishers and infringe upon the rights of residents," said Cai Dingjian, a law professor from China University of Political Science and Law. The regulation also stipulates that even if residents file a lawsuit, local governments still have the right to force relocation before a court verdict. "Residents tend not to sue as their houses are already demolished, and courts would be in a quandary to handle such cases," Cai said. "The regulation has become a tool by local governments and estate developers to make money by exploiting people's land and housing," said He Weifang, a former law professor with Peking University. He said in compensation negotiations, the residents have no say as the prices are decided by local governments. "With land and housing prices going up so fast these years, forced relocations occur more and more often", said Li Jin, a lawyer from Beijing. Shen said the five scholars are not against urban development and progress, but asked "If the price is people's basic rights and sense of security, can we afford that?" However, Shen said there would be difficulties in making changes as the interest of local governments will be violated, and "that will be a great pressure for the top legislature".

• 13.7% of China's A/H1N1 flu deaths were pregnant women: ministry (9th December) About 13.7 percent of the deaths from the A/H1N1 influenza in the Chinese mainland were pregnant women, the Ministry of Health announced Wednesday, correcting an earlier figure of eight percent given by a medical expert. Zhong Nanshan, a medical expert in south China's Guangdong Province, was quoted as saying Wednesday that eight percent of the deaths in mainland were pregnant women. Zhong first gave an overwhelming figure of 80 percent, but later corrected himself. A notice on the ministry's website said that among the dead patients, 47 percent suffered from chronic diseases and 18 percent were obese. Of the 326 death reported so far, the male gender accounted for 58 percent, the notice said. Deaths from the flu had been rising faster as a large part of China experienced wintry weather. The mainland reported 125 deaths in the week from November 30 to December 6, nearly 65 percent of the 194 deaths in whole November.

262 Almost 10,000 new cases had been confirmed in the week, making the total to more than 100,000, according to the ministry. As of Wednesday, 31.61 million people had been vaccinated. C:\\13_7% of China's A-H1N1 flu deaths were pregnant women ministry.mht

• 22 Chinese cities to get subways (9th December) China's State Council has approved plans for 22 cities to build subways with a total investment of 882 billion yuan ($129 billion), the People's Daily Overseas Edition reported Wednesday. Eleven cities in China currently have subways covering a total of 835.5 km. China will also have another 89 subways measuring 2,500 km in total as of 2016 with an investment of 993 billion yuan ($145 billion). C:\22 Chinese cities to get subways.mht

• Recognition of China schools will not spur Taiwan student exodus: MOE (9th December) Taiwan's proposed recognition of Chinese universities will not lead to an exodus of the country's top students, the Ministry of Education (MOE) said Wednesday. According to Vice Minister of Education Lin Tsung-ming, the move will instead prompt universities on both sides of the Taiwan Strait to engage in healthy competition. Lin said that Taiwan universities have the competitive edge, and there is no need to worry about the "magnetic effect" of Chinese schools. He also said that the ministry is planning a phased recognition of diplomas from more than 100 top Chinese universities, with 41 schools to be accredited in the first stage, 55 in the second stage and a yet undecided number in the third stage. This means that Taiwan students wishing to study in China will have limited choices, he said. Besides, Taiwan is an open society and its students can go wherever they wish to pursue higher education, he added. "Local universities, rather than worrying about losing students, should work harder to upgrade their quality so that their students can compete with those from top universities in other countries," Lin said. Lin was responding to Legislator Kuan Bi-ling of the opposition Democratic Progressive Party who expressed misgivings over the possible effects of the government's plan. Kuan said that Chinese universities could indeed attract top Taiwan students, and she cited the example of Premier Wu Den-yih's son who obtained a doctorate in law from China's Tsinghua University. A Cabinet spokesman later in the day responded that Wu's son had studied for his master's degree in the United States and later worked for a Taiwan businessman. He did his doctorate in China under a company personnel development program, the spokesman said. Lin also said that local universities would be allowed to admit Chinese students through a joint entrance examination, and in the initial stage would only accept newly graduates. However, if necessary, specific universities could also hold individual entrance exams, he added. If the proposal is approved by the legislature, Chinese senior high school students and college graduates could enter Taiwan universities by September 2010, according to Lin.

263

• NGOs play more important role (10th December)

China's 410,000 non-governmental organizations are playing a more important role in all fields, Wang Chen, minister of the State Council Information Office, said at the First Global Foundations Beijing Summit Forum yesterday.

• Officials warn of China flu peak in next two months (11th December) China will face increasing pressure to control the spread of A(H1N1) flu in the next two months, said the Ministry of Health here Friday. "As the New Year and Spring Festival are drawing near, the country is expecting a huge number of travelers nationwide, which will further increase pressure to control the flu," said Deng Haihua, ministry spokesman, at a press conference. A(H1N1) flu continued to spread and the number of cases, especially serious cases, was rising, Deng said. "The epidemic showed high activity as about 91 percent of flu cases were A(H1N1) flu in China." The total number of confirmed cases of A(H1N1) flu in the mainland had topped 100,000 and fatalities totaled 326 by Wednesday. In the week from November 30 to December 6, the country reported 125 deaths from the A(H1N1) flu. The next two months would be "very critical" for flu control, Deng said. China started A(H1N1) flu vaccination in September and about 32.38 million people on the mainland have been vaccinated by Wednesday, according to the ministry. "The vaccination proved to be effective in curbing the spread of the flu," he said. By Monday, about 3,631 people had been suspected of having adverse reactions against the vaccine. "About one out of 1 million vaccinated people reported serious adverse reactions in China. This neither exceeded the ratio in clinical tests of A(H1N1) flu vaccines at home and abroad nor figures in other countries where mass vaccinations were conducted, " Deng said. Although the vaccinations proceeded smoothly, the health authorities would work even harder to cover more people, Deng said. More people would be included in priority groups, including expectant mothers, veterinarians and migrant workers, he said. "We will speed up the vaccinations," said Liang Wannian, director of the ministry's emergency reaction office. "Now about 1 million people are vaccinated daily on average. We hope the figure will increase to 1.5 million daily so that as many vulnerable people as possible will be vaccinated before the Spring Festival." The festival and seven-day national vacation, traditionally for family reunions, will run from February 13 to 19.

• Govt cracks down on illegal commercials (11th December) The State Administration of Radio, Film, and Television (SARFT) has banned 3,600 medical and shopping television ads in 2009, saying they were "illegal" recently. "Eliminating illegal ads campaign never comes to a closure. Some ads are extremely vulgar, fake and sex-centered, which accounts for seventy percent of the total complaints

264 in radio and TV regards," said Ren Qian, the administration's vice director of Media Management. Starting on January 1, 2010, regulations for television and radio commercials will be even stricter, according to a report in the People's Daily on Friday. This is the fourth campaign SARFT has launched to eliminate illegal ads. The agency screened 10,000 hours of commercials on 380 television programs and 40 radio programs last year for illegal ads.

• Senior official calls for enhancing int'l Chinese language education (11th December) A Senior Chinese official Friday called for promoting Chinese language education via Confucius Institutes around the globe. State Councilor Liu Yandong told the fourth conference of Confucius Institutes that the institutes had become an important brand of international Chinese language education and a platform for educational and cultural exchanges. The conference was attended by university heads from 87 countries. Liu, also president of the Confucius Institute headquarters council, said different culture should respect and learn from each other and seek common grounds while shelving differences. "Languages as carriers of culture and communication tools are bridges for different civilizations," she said, adding the Chinese government always encouraged cross-cultural communication and advocated the study of other nation's languages. Liu said the Confucius Institutes should innovate and localize teaching methodology and strengthen overseas cooperation. On Friday evening, students of the Confucius Institutes from 22 countries including Japan, Thailand, Mongolia and Australia staged a performing art show, featuring Chinese songs and dances, as well as Peking Opera. Li Changchun, a Standing Committee member of the Political Bureau of the Communist Party of China (CPC) Central Committee, watched the show and praised students' performance. He also visited a Confucius Institute exhibition. Official statistics show 282 Confucius Institutes and 272 "Confucius classrooms" have been set up in 88 countries and regions as of November, since the first one was established in 2004.

Ethnic issues

• Crackdown nabs 94 riot suspects (10th December) The police's "strike hard" campaign in Northwest China's Xinjiang Uygur autonomous region has so far led to the arrests of 94 people in connection with the bloody July 5 riots. The arrests were made last month and were among 382 detained by the region's police within the scope of the dragnet, which began in November and will last until the end of the year, said the regional public security department on Tuesday.

265 The campaign cracks down on all crimes but its focus is to capture suspects connected with the riots on July 5 in the regional capital of Urumqi. Nearly 1,700 were injured and 197, mostly Han Chinese, died in the violent riots. A public security spokesperson did not have any tally of which ethnicities were among the 94 arrested last month. Police said they will continue the manhunt for suspects connected to the riots. They will also "keep a close eye on clues and cases involving terrorism and explosions". According to authorities, 786 troubled areas have been targeted in the region thus far. Security in those areas has improved, the spokesman said. The dragnet led to the dissolution of 66 criminal groups. Police have intensified efforts to combat the trafficking of women and children, illegal manufacturing and trading of explosives, unauthorized gun ownership and counterfeit cash, the spokesman said. Those who spread rumors to cause widespread public panic are also targeted in the campaign, according to the police. A total of 41 people have been convicted so far for murder and other crimes committed during the riots. Seventeen have been sentenced to death. Nine of the 17 have been executed. Police have so far asked the procuratorate to approve the arrests of 575 suspects thought to have been involved in 366 cases. Of the 575 requests, 430 have been granted, the local authority announced earlier. C:\Crackdown nabs 94 riot suspects.mht

Environmental front

• UNEP lauds China's commitment to combating climate change (6th December) The UN environmental agency UNEP Saturday hailed China's commitment to the fight against climate change and the recently-announced measure to render assistance to African countries in clean energy development. China's State Council announced on Nov. 26 that China is going to reduce the intensity of carbon dioxide emissions per unit of GDP in 2020 by 40 to 45 percent compared with the level of 2005. "China's announcement has assisted in triggering fresh momentumin the days running up to the crucial UN climate convention meeting in Copenhagen. It underscores China's determination to continue and accelerate the decoupling of CO2 emissions from economic growth," said Nick Nuttall, spokesman for the office of UN Environment Programme (UNEP) executive director. He noted that China's announcement, alongside commitments and pledges by other countries or blocs like the European Union, Brazil, Mexico and the Republic of Korea, is bringing the opportunity of a decisive agreement in the Danish capital this month far closer than perhaps was the case only a few months ago. "China is one among several nations that has increasingly recognized that development in the 21st century and environmental considerations are not a contradiction, but can be mutually supportive in terms of generating growth and jobs for a healthy, prosperous and stable society," said Nuttall in an exclusive written interview with Xinhua.

266 With regards to the new measures announced by China last month to assist Africa with clean energy projects, the spokesman termed it as "timely". "Africa is the continent that is the least one responsible for climate change, yet it remains the most vulnerable and also has an especially important need for energy with many of the two billion people without access to electricity living in Africa," Nuttall stressed. "The decision (of China) to support 100 projects can assist Africa in economic development and diversification in terms of sectors and wider-employment prospects while assisting towards a more sustainable path," said he, "So in terms of fighting poverty, accelerating development and combating climate change, China's announcement to assist Africa is welcome news." At the fourth ministerial conference of the Forum on China-Africa Cooperation in the Egyptian resort of Sharm el-Sheikh earlier last month, the Chinese government proposed to establish a China-Africa partnership in addressing climate change, as one of the eight new measures to strengthen the cooperation between the two sides in the next three years. Senior officials' consultations with African countries will be held from time to time in this field, while cooperation will be enhanced on satellite weather monitoring. Development and utilization of new energy sources, prevention and control of desertification and urban environmental protection will also be boosted. China has also decided to build 100 clean energy projects for Africa covering solar power, bio-gas and small hydro-power. The spokesman also expressed optimistic about the upcoming Copenhagen conference, "While there is a great deal to be done in Copenhagen to realize a decisive and equitable agreement, there is now a real chance that the UN climate convention meeting can be a success." He also listed several tests which will be faced with by the participates of the crucial meeting, like whether it can agree on a deal that reflects the science of the Intergovernmental Panel on Climate Change, or in other words, whether it can set the stage for a 25 percent to 40 percent emission reduction by 2020 and deeper cuts beyond. The funding was also a bottleneck in the bid to strike a pivotal deal in the meeting. Nuttall elaborated by identifying as a test whether "Copenhagen can develop a global financial partnership in which developing economies are given sufficient resource to adapt to the climate change already underway while being assisted towards a low carbon path". According to UNEP estimates, sums of perhaps 100 billion U.S. dollars a year by 2020 may be needed and there needs to be a quick start fund of several billion dollars almost immediately. Meanwhile, other elements need to be put in place including action that recognizes the mitigation and adaptation role of ecosystems like forests which will be increasingly important in terms of their role in delivering water supplies and stabilizing economically- important soils against extreme weather events, Nuttall told Xinhua. UNEP's recent Blue Carbon report estimated that around half of all the world's transport emissions are being captured and locked away by sea grasses, mangroves and salt marshes.

267 "Copenhagen could and must be the start of a really new and more creative development path for six billion people, rising to nine billion by 2050," Nuttall said determinedly. The Copenhagen climate summit is scheduled for Dec. 7-18, where representatives of about 190 countries are expected to renew greenhouse gas emissions reduction targets set by the Kyoto Protocol, the first commitment period of which is to expire in 2012. It is also expected to outline the post-2012 negotiation path.

• China makes efforts to boost negotiations on climate change (7th December) China has all along actively pushed forward international negotiations on climate change, and made its own contribution in energy saving and emissions cut, said a senior Chinese official on Sunday.

China, with its continuous development and increasing influence, is playing an ever bigger role in climate change negotiations, Xie Zhenhua, vice minister in charge of China's National Development and Reform Commission, told Xinhua.

Xie is in Copenhagen to attend the UN Climate Change Conference, which is slated for Dec. 7 to 18.

"As a responsible country, China takes a serious attitude toward combating climate change. It has always wielded positive and constructive influence on climate change negotiations, and wishes this latest conference a success," said Xie.

He said China's most important measure to boost this conference was its recent announcement of the target to reduce its carbon intensity for per unit of GDP by 40 percent to 45 percent by 2020 against the 2005 level.

He said China has set up a series of energy conservation and emissions reduction targets, and has taken many measures to ensure their implementation.

China would continue to raise energy efficiency, develop nuclear power and renewable energy, plant trees, adopt energy-saving measures in construction and transportation, and develop low-carbon economy, he said.

Developed countries, which shoulder historical responsibilities for climate change due to their emissions, have accomplished their industrialization, while China is still in the process of industrialization, noted Xie.

China, as a developing country, voluntarily put on table its emissions cut target by 2020, although the UN Framework Convention on Climate Change does not demand any numerical limitations from developing countries.

China, on its road to industrialization, will not send off greenhouse gases without restriction, Xie said, adding that China will never repeat developed countries' old paths of high energy consumption and unlimited emissions.

268

He said China holds the view that its efforts in saving energy, cutting emissions and boosting international climate change negotiations represent a responsible attitude to mankind and the country itself. C:\China makes efforts to boost negotiations on climate change_English_Xinhua.mht

• China expects developed countries to meet commitments on emissions (8th December) A Chinese official Tuesday called on developed countries to earnestly fulfill their commitments and take the lead in reducing greenhouse gas emissions in large quantities and to transfer funds and technology to developing nations. Foreign Ministry spokesperson Jiang Yu made the remarks at a regular press briefing Tuesday in response to a question on the UN climate change conference in Copenhagen. More than 15,000 participants, including delegates from 192 countries, gathered in Denmark's capital Copenhagen on Monday for the 15th Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC). The meeting is expected to seal a deal on fighting global warming, as a successor to the Kyoto Protocol, which expires in 2012. Jiang said China would continue to adopt an active and constructive attitude in the Copenhagen conference. The Chinese government believed the key to the success of the Copenhagen conference was to adhere to the principles laid out in the UNFCCC, the Kyoto Protocol and the Bali road map, especially that of common but differentiated responsibilities, said Jiang. The participants were also expected to consolidate and expand the consensus on adaptation to and mitigation of the effects of the climate change as well as funds and technology transfer, Jiang said. Chinese Premier Wen Jiabao would attend the conference at the invitation of Danish Prime Minister Lars Lokke Rasmussen. His detailed schedule was still under discussion, said Jiang. C:\China expects developed countries to meet commitments on emissions _English_Xinhua.mht

• China on track of low-carbon development (8th December) The closing of China's Central Economic Work Conference on Monday, which coincided with the opening of the 15th United Nations Climate Change Conference in Copenhagen, left a message that China was determined to pursue a path of low-carbon development.

The three-day conference, responsible for setting the tone for economic development in 2010, agreed that China would step up efforts to boost low-carbon sectors, as part of the strategy of promoting the transformation of economic development pattern.

"This demonstrates a remarkable change in China's concept of development, and would greatly help upgrade economic growth pattern and adjust economic structure," said

269 Jiang Xinmin, a researcher with the National Development and Reform Commission (NDRC).

The conference agreed to strictly control the issuing of loans to sectors featuring high energy consumption and high carbon emissions, increase credit support to low-carbon industries, strictly reduce exports of high energy-consuming products and rollout low- carbon economic development pilot plans.

Jiang said the government's policies would surely produce more breakthroughs in low- carbon technologies, thus providing new vigor for growth. "We can simply say that China has set foot on a low-carbon development road."

The Chinese government's major task this year had been to maintain growth through its stimulus programs amid the global economic downturn, said Wang Xiaoguang, a researcher with the China National School of Administration.

"As the economic recovery is gaining momentum, the country should shift its focus to the long-term development plan," Wang said.

The conference has put much emphasis on "green" development as 2010 will be the last year of the country's 11th five year plan (2006-2010), a guideline for economic and social development, which set hard targets for reducing energy intensity and emissions.

Under the plan, China would reduce energy consumption per unit of GDP by 20 percent and major pollutant emissions by 10 percent from the 2005 levels by 2010, and the country is still working for that goal.

China announced ambitious plans in late November to cut its energy intensity per unit of GDP by as much as 45 percent by 2020 compared to the levels in 2005.

"The country would be pressured to make more efforts to achieve these targets. It is a tough task we must fulfill. We need to change our growth pattern and find a way to sustainable development," Wang said.

The great importance the government attached to emissions cutting suggested the low- carbon concept has gradually merged into the country's development plans, said Wang.

However, it took more than government policies and enforcement to reach the goal, said Zhou Dadi, a researcher with the NDRC

"A low-carbon development pattern also needs concerted efforts by the public to change their life styles," Zhou said. C:\China on track of low-carbon development_English_Xinhua.mht

• Chinese entrepreneurs fight against climate change (9th December)

270 Chinese entrepreneurs will work together to fight against climate change, four Chinese non-governmental organizations said in Copenhagen on Tuesday.

Wang Shi, Chairman of China’s famous real estate company Wanke, read an announcement on behalf of nearly 200 members from Entrepreneurs & Ecology (SEE), China Entrepreneur Club, China Entrepreneurs Forum, China Urban Realty Association, and Chinese Business Delegation to the Copenhagen meeting.

In the statement, Chinese companies stressed governments, businesses, and all civil society organizations must work together to establish a global coordinating mechanism.

"We Chinese entrepreneurs are willing to work together with our peers, governments and civil society groups from around the globe to embrace a sustainable development and take responsibility for the welfare of future generations,” Wang Shi said. Chinese entrepreneurs promised to give strong support to Chinese Government’s decision to reduce per-unit GDP carbon intensity by 40-45% from 2005 levels by 2020. Besides, they also agreed to demonstrate their own dedication to “exploring models of low-carbon economic growth” on a wide range of issues, including reductions of greenhouse gases emissions.

“We sincerely hope that the conference in Copenhagen will embody the human spirit of cooperation and wisdom, result in a concrete agreement with binding legal benchmarks, and enable us to take a right and steady step on our journey to meet future targets,” the statement said. C:\br- Chinese entrepreneurs fight against climate change.mht

• Chinese vice premier calls for development of environmental protection industry (9th December) Chinese Vice Premier Li Keqiang Tuesday called for advancement of environmental protection industry to strengthen a stable, coordinated and sustainable economic development. The environmental protection industry concerned aspects such as infrastructure building, equipment manufacturing and services and it should be considered as a strategic emerging industry, Li said during an inspection tour in the Chinese Research Academy of Environmental Sciences and China National Environmental Monitoring Center. He said as the Copenhagen conference was held currently to address the climate change, "the development of green, low carbon and recycling economy has become a global trend." "We must seize the opportunity to promote technological innovation and application of research fruit" to promote the green industry so as to gain advantage in the future development, he said. "Inadequate resources and the environment's limited bearing capacity is the country's basic conditions and factors confining the economic and social development," said Li, also a Standing Committee member of the Political Bureau of the Communist Party of China (CPC) Central Committee.

271 Li urged greater efforts for ecological conservation and environmental protection and demanded speeding up the building of an energy-saving and environment-friendly society. It is imperative to take forceful measures to tackle pollution in major rivers and lakes, to step up construction of waste water treatment facilities in urban areas and contain source of pollution in rural areas, Li said. "It is the government's duty to ensure that the masses drink clean water." He said measures must be improved to control air pollution and curb the emission of pollutants such as sulfur dioxide and smoke dust. Li said environmental problems harming people's health should be immediately addressed and the treatment and control of air, water, soil and heavy metal pollution should be stepped up. C:\Chinese vice premier calls for development of environmental protection industry_English_Xinhua.mht

• CNOOC announces new deepwater gas finding in South China Sea (9th December)

China National Oil Company Limited (CNOOC Ltd.) announced Wednesday that its partner, Husky Oil China Limited, a subsidiary of Canada-based Husky Energy Inc., has made a new deepwater gas discovery in the South China Sea.

The Liuhua34-2 finding becomes the second deepwater gas discovery following the Liwan3-1 discovery, made by CNOOC Ltd. And its partner in the Pearl River Mouth Basin in the eastern South China Sea.

The Liwan3-1 discovery was made on deepwater Block 29/26 in the South China Sea in 2006. The Liuhua34-2 discovery is also in the Block 29/26.

The discovery well Liuhua34-2-1 is located about 23 kilometers northeast of Liwan3-1 gas field. The total vertical depth of the well is 3,449 meters, and the water depth is the area is about 1,145 meters.

Test results of the well show that it produced 55 million cubic feet of natural gas per day, which indicates the well's future deliverability could exceed 140 million cubic feet per day.

Zhu Weilin, executive vice president of the CNOOC Ltd. and general manager of exploration department said that the new deepwater discovery Liuhua34-2 further demonstrates the huge potential in the deepwater area in the South China Sea.

The two adjacent discoveries could be developed in a more efficient way through sharing development facilities, said Zhu.

272 In order to determine the full potential of the Liuhua34-2 field, an appraisal well is planned to be drilled in early 2010 by Husky.

Husky started exploring in offshore China in 2002. Husky signed a Petroleum Contract for Block 29/26 in 2004, which is 2,230 square kilometers in area.

The Liwan3-1 natural gas field was discovered in June, 2006. Husky expects the plan of development for the Liwan3-1 Field to be submitted to the regulatory authorities in early 2010. First gas production is targeted to be in the 2013 time frame, according to the statement posted on the website of Husky Energy.

According to the production sharing contract, CNOOC Limited has the right to participate in up to 51 percent working interest in any commercial discoveries on Block 29/26.

CNOOC Ltd. is the listed subsidiary of China National Offshore Oil Corporation, China's largest offshore oil company.

Husky Energy is an integrated energy and energy-related company headquartered in Calgary, Alberta, Canada.

The concept of deepwater varies against time as probing technology develops. For the time being, deepwater refers to the area in the sea where the depths from the sea surface to the seabed are above 300 meters. C:\CNOOC announces new deepwater gas finding in South China Sea_English_Xinhua.mht

• Construction industry asked to go green (9th December) Several real estate developers led by Wang Shi, Chairman of China Vanke Inc called for a green overhaul of construction industry on Tuesday on the sideline of the the UN Climate Change Conference. The urban expansion and housing boom in the past 30 years have caused excessive use of energy and natural resources such as wood and produced a lot of waste with little consideration for taking advantage of renewable energy, Wang Shi said. As a result, China has to import a lot of timber from around the world. The timber is turned into wood panels, which go into landfill as trash after reuse only six times. The barrier is still in place that discourage developers to make full use of solar and wind energy, said Zhang Zaidong, Chairman of Beijing-based real estate company, Tiptop International. There is no way for residential zones to generate their own electricity from solar systems and feed into the power grid. “We need to reexamine the model of our consumption,” said Song Jun, Chairman of Jiu Han Tian Cheng Group, “and place a cap not only for carbon dioxide emissions but also caps for all our behaviors that disrupt the harmony between the ecology and human society.”

273 Wang Shi proposed setting technological standards to reduce the use of wood in construction business. Steel panels can replace wood panels as moulds and the steel products can be reused more than 400 times, Wang Shi said. That alone will be able to save 9,000 hectares of wood a year. Zhang Zaidong proposed that the government adopt policy incentives so real estate developers will spend money on new systems taking advantage of renewable energy. “We should stop building power plants and use the money instead to install low-carbon and renewable energy systems,” Zhang said. C:\Construction industry asked to go green.mht

• New book chronicles China's green movement (10th December) China's first bilingual collection on climate change and environment protection, a joint effort of China Daily journalists and columnists, has been published this week in conjunction with the Copenhagen summit. Published by Beijing-based New World Press, Evolution of Green China: Charting the Challenging Course from Beijing to Copenhagen is an anthology of articles published over the last several years about China's ongoing countermeasures to combat climate change and its energy-use and emission-control efforts. These articles monitor not only the changes drafted by government officials and their climate and energy consultants but also those emerging from the bottom up. They also tell of grassroots campaigns, and feature the voices of entrepreneurs, social movements, scientists and independent researchers - and those of the China Daily writers and editors. The books will be sent to Copenhagen next week to environmentalists and policy makers who are debating the global topics. "This book chronicles the country's initial progress as the world's most rapidly developing economy and its ambition to shoulder greater responsibilities in the post- Kyoto era," Zhu Ling, China Daily editor-in-chief said. "This book is not an alibi for China's foibles," said Zhu. "It is constantly stated at global climate forums that China is the world's largest emitter - a fact repeatedly put forth for many purposes, including the shirking of one's own responsibilities." Zhu said it is his paper's responsibility to look at the responsibility China has already shouldered and what it should do in a fair and balanced approach. In the book's foreword, Achim Steiner, UN Under Secretary-General and Executive Director of the UN Environment Program, said "the efforts China has made toward curbing greenhouse gas emissions and China Daily's publishing Evolution of Green China are of tremendous importance." Chi Fulin, Professor and President of China Institute for Development and Reform, said China is shifting to a low-carbon era. While keeping close eye on development of climate politics, China, as a rising power, should fulfill our global responsibility in such a historic stage. "I am delighted that the writers have enormously explained the points in the collection," he said. Zhou Xun, UNDP Goodwill Ambassadoraward-winning actress, said, "We share environmental responsibility and we should act together. This is the timely message Evolution of Green China has sent."

274 Bertrand Moingeon, professor of Strategic Management and Deputy Dean of HEC Paris School of Management, said, "One of China's competitive advantages is its capacity to mobilize resources toward achieving goals, as we see with green issues presented in this book."

• Clear climate message to the Chinese (11th December)

RICH nations, including the US and Australia, are demanding that China and other major developing-nation greenhouse gas emitters pledge clear reduction targets in an internationally binding agreement that allows the promises to be checked.

The US special envoy on climate change, Todd Stern, arrived in the Danish capital with a clear message: China, the world's largest greenhouse gas emitter, had to take on a binding and verifiable commitment.

Mr Stern said the US accepted its responsibilities, but added "the country whose emissions is going up really rapidly is China".

"You can't even think about solving this problem without China," he said. "You just have to do the math. There is no way to solve this problem by giving developing countries a pass.

"Virtually all of the growth in emissions going forward . . . will be coming from developing countries, of which about 50 per cent will come from China alone."

He said it was critical that developing countries "put their proposals into an international agreement, not just on a press release domestically".

A group of senior Chinese climate officials responded by accusing rich countries of trying to "wriggle" out of their commitments to the developing world and demanded that the US boost its commitments to reductions.

China climate official Su Wei said at the conference that it was "unfair to set a limit on nations that were still developing while emissions from fully developed countries were still rising".

He said an anticipated offer of financial support from rich countries to poorer nations of $10 billion a year to adjust to emission reductions was a "drop in the ocean".

Climate Change Minister Penny Wong, who also arrived in Copenhagen yesterday, said: "A key issue in these negotiations is how actions by developing countries are put into an international context."

275 But China's reluctance to "internationalise" its commitments was exposed yesterday by a proposal from a Queanbeyan-based Australian representing the tiny pacific island of Tuvalu.

Tuvalu negotiator Ian Fry demanded the meeting consider creating a Copenhagen protocol that would enforce developing-nation emission reductions and run alongside the Kyoto Protocol's demands on rich countries.

China is resisting moves to forge a single Copenhagen agreement because developing nations want their developed counterparts to continue to be legally bound by the Kyoto Protocol, while developing nation commitments are included in a separate, less rigorous document under a separate "track" of negotiations. "Turning two tracks into a single one means the principle of `common but differentiated responsibility' does not play a role any more," Xie Zhenhua, vice-minister of National Development and Reform Commission, said.

Mr Fry told The Australian: "They don't like our idea because it ties them in, but they are also afraid of abandoning Kyoto because they want developed nations bound to their promises."

C:\Clear climate message to the Chinese The Australian.mht

• Chinese Premier stresses development of meteorological service (11th December)

Chinese Premier Wen Jiabao on Friday urged fast and sound development of meteorological work, stressing its important role in tackling global climate change, disaster prevention and sustainable socio-economic growth.

Wen made the remarks when visiting the China Meteorological Administration (CMA), which celebrated its 60 founding anniversary on Dec. 8.

Wen urged the meteorologists to improve accuracy and timeliness of the forecasts of major meteorological disasters, and asked them to strengthen their capabilities in dealing with such incidents and improve contingency plans to cope with disasters.

Quality meteorological services should also be provided to all sectors of society, he said.

Wen told the meteorological authority to beef up research on the impact of climate change on grain, economy, energy, and ecological environment, and work out better response to help the nation meet the emission cut target.

The premier also visited the national satellite meteorological center, a subsidiary of CMA and read the real time meteorological information sent by the satellite. He also observed the meteorological conditions in the quake-hit Sichuan province through video.

276 • Copenhagen: US, China clash in climate ping-pong (11th December)

They sang each other's praises in the run up to the Copenhagen climate summit, but China and the United States traded sharp barbs in a superpower standoff that has helped set the UN talks on edge.

On key issues ranging from how to share out the burden of slashing greenhouse gases, whether such efforts should be independently verified, or if the United States owes developing countries -- including China -- a "climate debt," the world's two largest carbon polluters were at loggerheads.

"The atmosphere seems extremely negative. Every one is taking tough positions, talking to their domestic audiences," said Isabel Hilton, editor of online environmental newsletter China Dialogue.

"Its a big change of tone. Before coming, China made positive noises, even suggesting they were ready to announce a date at which their carbon emissions would peak," she told AFP.

"But here they have been hanging very tough."

In late November, China vowed to nearly halve the carbon intensity of its economy over the next decade, one of several major emerging economies to unveil emissions-curbing schemes ahead of the crunch the December 7-18 summit.

In Copenhagen, however, Beijing seems to have dug in its heels, insisting on its status as a developing country no less a victim of the West's legacy of carbon-polluting industrialisation than the poorest of African nations.

"The priority for the developing countries is still the reduction of poverty, is still economic development," insisted Chinese vice minister of foreign affairs He Yafei.

The United States acknowledges the historical responsibility of rich nations for global warming, which has already begun to unleash devastating consequences around the world.

At the same time, Washington -- which rejected the Kyoto Protocol precisely because it failed to do so -- has pushed China and other emerging giants to take on more ambitious targets.

"The United States is not going to do a deal without major developing countries stepping up," US chief negotiator Todd Stern said Friday, pointing out that developing countries are projected to account for 97 percent of global emissions within four decades.

277 "If we are talking about the need to keep the temperature increase below 2.0 degrees Celsius" -- widely seen as the threshold for dangerous warming -- "you can't even have that discussion if the major developing countries are not taking a major role," he said.

China, for its part, has ridiculed the US offer to cut CO2 output by 17 percent from a 2005 benchmark as puny, and a far cry from the levels called for by science.

Part of the standoff is negotiating bluster, said Jennifer Haverkamp, managing director of Washington-based Environmental Defense Fund.

"These negotiators have not only their ministers coming, by their uber-bosses -- heads of state -- showing up in a few days, so the pressure is enormous to reach a deal," she told AFP.

"If sharp words get into the public conversation, that is a reflection of the fact that stakes are high, emotions are high."

But it also reflects, analysts say, a genuine -- and yawning -- gap on key issues.

Two of the most contentious are finance and international monitoring.

Vice minister He said he was "shocked" that Stern had two days earlier rejected the notion that developing countries were owed a "debt" or "reparations."

"We are not asking for donations. Industrialised countries have a legal obligation -- the US included. Whoever created the problem is responsible," said He.

"The Chinese don't use the word 'reparations', but they do talk about the US 'carbon debt' to China," noted Hilton.

Beijing has also objected to the US insistence that even if developing country efforts to stem global warming remain voluntary, they should be independently measured, registered and verified -- "MRVed" in climate change lingo.

"It doesn't mean China will not do what it promises," said He, adding that China's own legal guarantees and verification procedures were adequate.

"But there is no MRV internationally because it is a matter of principle."

At pains to burnish its status as a "developing country", China has also come under pressure from poorer nations who see their interests diverging from the Asian giant with which they have been long been aligned in the G-77.

"The vulnerable and poor states look at China's per capita carbon footprint and see that it is well above India, and the global average," Hilton observed.

278 "At what point do we say to China 'you have graduated', you are no longer a developing country? China is trying to defend that position as long as possible," she said.

• China refuted the idea of G2 in climate change (11th December)

Chinese vice foreign minister He Yefei refuted the idea of G2 in climate change mitigation and highlighted the priority of China for further development.

China is committed to bringing a successful outcome of the United Nations Climate Change Conference, however, mitigating climate change should not be done at the expense of the rights to development by developing countries, He Yafei, vice foreign minister, told the press on Dec 11.

"The final documents should address the needs and aspirations of developing countries, but it should not be in favor of a certain group of countries," He said, and the priority for China and developing countries is poverty reduction.

He said that "the next few days will be crucial and negotiations will be intensified."

"Climate change is matter of survival, and we need to develop," He said.

Over the past few days, the negotiations have run into deadlocks over several issues, which include the long-term goals of limiting global temperature rise by 2 or 1.5 degrees Celsius, emission reduction targets of the developed countries, the amount of financing to be facilitated by developed countries and possible actions taken by developing countries to cut their greenhouse gas emissions.

The idea of having a single one treaty is not "off the table" de Boer said, even though an "overwhelming number of countries" want a two-track outcome, meaning producing two separate documents.

Small island nations have demanded that the conference produce documents that set binding emission reduction targets not only for developed countries but also for major developing countries.

He Yafei said that China has been in close consultation with small island countries.

"We may not see eye-to-eye on specific issues, but we share the same view that the key to the success of the conference is for developed countries to keep promise and to deliver."

"They cannot postpone it," He said, noting that the first implementation period is almost over and yet the developed countries have not kept up their promise.

Meanwhile, the Chinese Vice-Minister stressed that tackle climate change needs multilateral cooperation.

279 "Nations should work together and not against each other," he said.

• Chinese premier, U.N. chief discuss climate change (12th December) Chinese Premier Wen Jiabao and U.N. Secretary-General Ban Ki-moon on Friday exchanged views on climate change during a telephone conversation. Wen said that the United Nations played an important role in the quest of achieving international consensus, as well as in promoting the ongoing U.N. Climate Change Conference in Copenhagen to achieve positive results. China is ready to maintain close communication with the United Nations, and would work together with it in this regard, the premier said. The U.N. chief spoke highly of the efforts by the Chinese government in curbing greenhouse gas emissions, and the carbon emission cut targets it announced, saying it was a major contribution to the international cooperation on climate change. He said the United Nations is willing to strengthen cooperation with China to make the Copenhagen conference a success.

• China calls on rich nations to deliver on climate pledges (12th December) China on Friday called on rich nations to deliver on their promises to cut carbon emissions and provide financial support to help developing nations to cope with the impact of climate change, saying this is key to the success of the UN climate talks. The call came as ministers arrive for the higher segment of the talks that is tasked with sealing a deal to combat global warming. China's Vice Foreign Minister He Yafei said he hoped for a "balanced outcome" of the negotiations. The key to the success of the Copenhagen talks is for developed countries to keep their promises, he told a press conference in Copenhagen. "I would urge all leaders of the developed countries to keep their promises, to have the future of humanity in their minds," he said. He also said China has "a responsible and pragmatic vision" for tackling climate change and is doing no less than developed nations.

Regional report

North

Politics

• China to hold Confucius Institute conference (6th December) China is to hold the 4th Confucius Institute Conference in mid December in Beijing with delegates from 87 countries and regions, according to the Beijing-based Confucius Institute Headquarters.

280 Xu Lin, director of the headquarters, said the conference would focus on the role of Confucius institutes in community services. She said they set community service as the theme because more Confucius institutes have built their reputation in local communities through giving lectures on the Chinese culture and organizing other activities. Delegates to the conference would discuss topics such as how should Confucius institutes and the universities they belong to help local schools open Chinese classes, Xu said. Currently, altogether 282 Confucius institutes have been set upin higher education institutions around the world. They are jointly held by Chinese and foreign universities. Seen as a channel to spread Chinese culture around the world, the Confucius Institute is also a demonstration of China's rising soft power. Confucius was an ancient Chinese philosopher whose thoughts are still cherished today. The Confucius institute conference has been an annual event since 2006. C:\China to hold Confucius Institute conference_English_Xinhua.mht

Social front • China spends 6.5 bln yuan protecting northern grasslands (7th December)

China has invested more than 6.5 billion yuan (959 million U.S. dollars) to preserve grasslands in northern Inner Mongolia Autonomous Region, said the regional government.

The money has been spent on returning grazing land to grassland, restoration of natural grassland and sand source control to prevent sandstorm. The efforts have helped reduce the area of degraded grasslands in Inner Mongolia to 500 million mu (33.5 million hectares) from 700 mu since 2000, it said in a statement.

Since the end of the 1990s, successive droughts, overgrazing and inadequate funding on grassland protection have led to deterioration and desertification of the grasslands in the region.

The region has set the goal of increasing the grasslands' vegetation coverage to 42 percent next year and 48 percent in 2015.

The vast autonomous region, which has a grassland area of 1.3 billion mu, plays a key role in maintaining the country's ecological security, especially in preventing desert threat to Beijing and neighboring Tianjin. C:\China spends 6_5 bln yuan protecting northern grasslands_English_Xinhua.mht

• Corrupt securities trader executed in Beijing (8th December) A corrupt former senior trader with a Chinese securities company was executed Tuesday in Beijing, according to a court statement. Yang Yanming, 51, was sentenced to death on Dec. 13, 2005 by the No.1 Intermediate People's Court of Beijing in a first-instance trail after being convicted of embezzling and

281 misappropriating 94.52 million yuan (13.84 million U.S. dollars) of public funds from 1998 to 2003. The Higher People's Court of Beijing ruled against Yang's appeal and upheld the death penalty on April 21, 2009. The Supreme People's Court approved it after reviewing the case. Yang was a native of Beijing, and the former general manager of the Beijing trading business department with the China Great Wall Trust and Investment Corporation from 1998 to 2003, the court statement said. During the period, his department was renamed first as Hufangqiao trading business department and later as Wangjing Xiyuan trading business department of the China Galaxy Securities Co., Ltd.. He used the public funds for personal benefits, including starting up a private company, purchasing real estate properties and investing in futures business, the verdict said. He has kept silent on the whereabouts of the misused funds, it said.

• Illegal production, slack supervision cause deadly landslide in north China: State Council (12th December) Illegal production and slack safety oversight were main causes for the landslide in north China which killed 45 in early August, investigation result showed Friday. Some 37 had been detained for investigation as they were allegedly responsible for the fatal landslide in Shanxi Province which left another one injured, and resulted in an economic losses of 30.8 million yuan (4.53 million U.S. dollars), according to a statement issued by the investigation team led by the State Council, or cabinet. Thirteen people including Yan Quewa, head of a local iron mine where the tragedy happened, have been prosecuted, while 24 others have received administrative and Party disciplinary punishment. The local mine was imposed a fine of 5 million yuan. On Aug. 1, the landslide toppled a waste dump of the mine and buried Sigou Village of Loufan County in the suburbs of the provincial capital Taiyuan. The waste dump, within 200 meters from the village, belongs to Jianshan Iron Mine. It was operated by Taiyuan Iron and Steel (Group) Company Ltd. Chinese law stipulates such dumps should be at least 500 meters away from residential areas and should have embankments or walls to contain dust or prevent landslides. The dump near Sigou, however, had none.

Economic front • Chinese laborers await payoff from employer (7th December) Fifty-two Hebei laborers are suing their employment agency for getting them into dangerous jobs in Romania at Fengtai district court.

The result of the 5.57 million yuan compensation case is expected on Wednesday.

"My 80-year-old mother is paralyzed and the leg injury I sustained in Romania will stop me from being able to do any farm work. My whole family now depends on my wife,"

282 said Meng Fanxing, one of the labor workers.

Meng is a 45-year-old farmer from Gucheng county, Hebei province.

Gucheng is nationally famous for exporting labor to other countries. Local farmers believe international labor work will allow them to improve their lives.

From October to December 2007, Meng became familiar with Wang Zhanglian, a manager at the Gucheng Shunda Labor Information Consultation Ltd Company.

Wang then introduced Song Yuping, a colleague from China International Economic and Trade Co Ltd and Wa Li, an Israeli property developer, to Meng and the other farmers in Dec 6, 2007.

Wang said Wa Li planned to establish a large-scale supermarket in Romania and wanted to hire labor workers from Gucheng.

The court said that according to Wang, workers signed labor contacts for three to five years for 3 euros per hour. Wa Li would also provide free accommodation.

Wang added that if the workers performed well for 5 years, the agency would help them get the right to do labor work in Europe.

In January 2008, Meng and 68 other farmers each gave 80,000 yuan to Wang and the agency.

Meng told the court he had borrowed money from his relatives and sold all the valuables in his home to save enough.

In the same month they paid Wang another 4,800 yuan each to cover the costs of visas and tickets.

The labor force flew to a town suburb of Romania's capital city, Bucharest, in April 2008.

As planned, they started construction work on a large supermarket.

However, in July 2008 the Romanian Immigration Bureau notified the labor workers that their visas had expired and asked them to leave within 15 days.

According to the bureau, the employment agency didn't provide labor workers with formal labor export work visas, but issued temporary residence visas instead.

• Labor disputes skyrocket in Beijing (10th December) About 80,000 workers had been involved in disputes with their employers by the end of November, double the number of last year, a senior official of the Beijing trade union said.

283 The city's arbitration committee has received more than 70,000 labor disputes cases this year, and many involved more than one employee. There were 26,000 disputes during the same period in 2007 and 49,000 in 2008, said Zhang Hengshun, director of law department of Beijing municipal federation of trade union. The most important reason behind the drastic increase is that arbitration has been free of charges since May 1, 2008, when the Law on Mediation and Arbitration of Labor Disputes took effect, Zhang said. "The payment stopped some employees who wanted to apply for arbitration before the law took effect," Wang Fang, a lawyer from Beijing Zhicheng law firm. Formerly, employees were charged 300 yuan for arbitration. Free arbitration has encouraged more employees to choose legal channels to resolve their labor disputes, Wang said. But as the number of arbitration cases increases, so has the amount of time spent waiting for a result, Wang said. She said that the legal action launched in October, would have to wait until August next year for a result. The number of arbitration cases in Chaoyang, Haidian and Fengtai districts is more than other districts in Beijing. Arbitration is the first step to resolve labor dispute and employees or employers can file lawsuits if they do not agree with the results. Mediation is the best way to reduce the arbitration cases and shorten the waiting list, but the effect is not very good, Wang said, because some employers agree to mediation in order to exhaust employees rather than seeking a solution. Labor dispute cases accepted and heard by Beijing courts increased almost twice on the number last year, a report released by the Beijing Second Intermediate People's Court said yesterday. The court accepted and heard 4,506 labor dispute cases till Nov 10 this year, which is 180 percent what it was in 2008, it said. About 50 percent of the cases were related to overtime rates and payment, the court said. C:\Labor disputes skyrocket in Beijing.mht

• Roaring trade for tiger gold bars in city (10th December) Limited edition gold bars marking the Chinese new year of the tiger have gone on sale in Beijing. But hundreds of customers will likely miss out on the commemorative bar after Caibai department store, the city's only authorized dealer, accepted 1.5 tons of orders, but was only given 1.3 tons of gold. More than 300 kg of the gold bars were sold for 289 yuan per gram yesterday, a record high price that is 73 yuan higher than last year's ox gold bar. About 300 kg is also sold on Tuesday. Caibai store is the first in China to release the gold bars and was given about one third of the total amount available. This year, China Gold Coin, an official company affiliated to the People's Bank of China, issued 3.98 tons to stores around the country.

284 The gold bar - with the image of a tiger on it - comes in six sizes ranging from 50 g to a maximum 1 kg, which is worth 289,000 yuan ($42,298). China Gold Coin began to issue the gold bars in 2003 in the year of goat. The original price of the goat gold bar was only 92 yuan per gram. The price on the Internet for a goat gold bar is now 450 yuan per gram. "Because of the limited quota, we only accept bookings and can't guarantee all the customers will get the gold bars. Each customer can only order 2 pieces," said Niu Jingqi, the public relations manager of Caibai store. According to Niu, about 1,000 customers have already ordered gold bars for 2011, the year of rabbit. "Most customers are keen collectors longing for the limited gold bars. Many of them have collected all of the eight animal gold bars," said Niu. Yesterday, a Beijinger surnamed Jiang collected a 1 kg gold bar, after placing his order last year. Jiang, who has collected all the eight gold bars, placed another order for 2011. "For me, it is not an investment, since I don't need to make money from it. I just want to collect the whole set of 12 animals," said Zheng. Another customer surnamed Xu, who bought a 200-g gold bar, said: "It is a good deal. The limited gold bar is always the best way to insure the value of money. I think the price of gold will keep going up."

• Fast train drowning flight price (10th December) Airlines slashed their airfare from Wuhan to Guangzhou to as low as 260 yuan ($38) to rival against the Wuhan-Guangzhou high-speed train, chaoyang.nen.com.cn reported Thursday. The test run on Dec. 9 of the Wuhan-Guangzhou high-speed train went smoothly. It took less than three hours to travel from Guangzhou to Wuhan on the high-speed train, which reaches 394 km per hour, the highest speed in world railway history, It took four years to build the Wuhan-Guangzhou high-speed railway, which covers 1,068.6 km and has 9 stops. The Wuhan-Guangzhou railway is the fastest and longest high-speed railway in China. The whole project cost 100 billion yuan ($14.6 billion) and is an important project in China’s 11th five-year plan (2006-2010). Only German and Japan have the same kind. A passenger who experienced the trial run said, “I feel comfortable. Even the up-side- down bottle didn’t fall.” The Wuhan-Guangzhou railway is the world's first 350-km per hour ballastless track and is slated to be in operation at the year end.

Northwest Politics Social front • China Daily enhances publicity in Xinjiang (11th December) China Daily opened a bureau with the Xinjiang Production and Construction Corps (XPCC) in the city Thursday to further assist with publicity work in the Xinjiang Uygur Autonomous Region. China Daily's first Xinjiang office opened last November, and the XPCC office is the second bureau the newspaper has set up in the region.

285 The XPCC, which is also known as the China Xinjian Group, has administrative authority over several medium-sized cities, such as Shihezi as well as settlements and farms across Xinjiang. It has its own administrative structure, and fulfills governmental functions such as healthcare and education for areas under its jurisdiction. The XPCC also participates in economic activities. In its 55-year history, it has set up a number of publicly traded subsidiaries as well as agricultural and stock breeding farms. "XPCC has played a very important role in accelerating the region's economic development, promoting unity among ethnic groups, maintaining social stability and consolidating border," said Kang Bing, China Daily's deputy Editor-in-Chief during the opening ceremony. Kang said Zhu Ling, the China Dailiy's Editor-in-Chief believes that as China's global English-language newspaper published around the world, the China Daily serves as a window of the country to the world. As a result, the XPCC bureau is well placed to showcase the corporation’s rapid economic development, and show the world the XPCC's contributions to the region's social stability and ethnic unity. "I firmly believe this new office will contribute to the reform and further opening-up of Xinjiang, promote prosperity and social stability, and help the international community understand more about XPCC," Kang said. Lu Xiaofeng, XPCC's deputy political commissar also attended the ceremony along with Zhao Guangyong, deputy secretary general of XPCC's Party Committee as well as Wan Weiping, director of the Publicity Office of XPCC. “We hope China Daily's new bureau will help to promote XPCC to the world, which is essential to the corporation's development," Li said. During the ceremony, enterprises under the administration of XPCC subscribed to the China Daily on behalf of local universities and schools in order to help the students learn more about China and the world. The opening of the second office in Xinjiang office marks another big step in the China Daily's effort to expand its local coverage. The newspaper has so far opened 23 offices throughout China.

Economic front • New Xinjiang railway expected to boost transport to Europe, central Asia (7th November)

A railway became operational Sunday in west China's Xinjiang Autonomous Region, which is expected to boost the transportation from China to central Asia and Europe, said local railway authorities.

The railway, called Second Urumqi-Jinghe Line, runs 381.5 km and links the region's capital Urumqi and Jinghe county. It has a designed transportation capacity of 67.1 million tonnes, which is expected to grow up to 91.7 million tonnes in the future. With a designed speed of 120 km per hour, the railway cost 2.77 billion yuan, according to a statement from Xinjiang Railway Bureau.

286 Jinghe is linked to Horgos and Alataw Pass, ports on the China-Kazakhstan border, by two other railways. One starts from Jinghe and ends at Horgos. The other runs from Urumqi through Jinghe to Alataw Pass.

The launch of the new railway would greatly enhance China's transportation capacity to Kazakhstan and further into other countries in central Asia and Europe, the statement said. C:/New Xinjiang railway expected to boost transport to Europe, central Asia_English_Xinhua.mht

Northeast Politics Social front • Pipeline leak leaves thousands of families without water (9th December) A pipeline leak has cut water supplies to thousands of families for more than 18 hours in the Northeast China city of Changchun, local authorities said Wednesday. The leak occurred at 10 am Tuesday, but the Changchun Water Group did not halt water supply immediately for fear of disruption, especially during peak hours in the evening, a company spokesman said. About a fifth of the city has seen water cuts since 8 pm Tuesday when workers began fixing the broken pipeline, the spokesman said. "The water supply is expected to be back to normal at about 6 pm today," he said. He did not reveal the cause of the leakage. Changchun, a city of almost 5 million people, is experiencing cold winter weather, and most of the heating supply companies have been using reserve water to provide heating after the water supply was cut. "But in a few areas, heating was suspended," said a spokesman with the Changchun Municipal Heating Supply Office.

Economic front

Southwest

Politics

Social front

• "Green bank" helps China reduce carbon emission (7th December) As the international community pins high hopes on the coming UN climate change conference in Copenhagen, for greenhouse gas emission reduction, farmers in a southwestern China county have already made tangible progress in this regard.

"When I was young, we used to chop down finger-thick trees to make fire for cooking," said Li Xue, a villager from Leishan County in Guizhou Province. "Now we don't even touch big trees."

287

Leishan was located on the upstream of two major water systems, the Yangtze River and the Pearl River. It was once one of the country's most ecologically fragile regions.

Thanks to the afforestation and forest protection measures jointly carried out by the local government and farmers in recent years, 70 percent of the county' land area is now covered with forest, up 11 percentage points from ten years ago.

"We often see wild boars in the forest nowadays. It was a rare thing in the past," said Li.

According to Li Tianyou, deputy director general of the Leishan County's Forestry Bureau, the local government started to contract collective forestland to farmers chronically in 2007. As of now more than 190,000 farmers have been issued forest warrants, covering 84,500 hectares of forest. "This is just like a 'green bank' we have built."

"Through reasonable logging, cultivation in forest and eco-tourism, the trees have been bringing farmers large fortune," said Li, adding that the government also gave compensation fees for local people to manage their forest.

A fruit tree called Litsea cubeba is Leishan people's favorite. It grows fast in barren soil on top of high hills. Its berry is edible and can be extracted to make oil for food flavoring.

Different from the traditional administrative pressure to "safeguard" a certain proportion of forest, China's current forest protection focuses on "smart" measures to let farmers take initiative in the protection work by giving them subsidies and encouraging them to make it a business.

Two years later, the concept of "green bank" once again comes into the spotlight as the international community is joining hands to combat climate change.

Days before the UN climate change conference in Copenhagen, China announced its specific goal of controlling green house gas emission, including the increase of 40 million hectares of forest area and 1.3 billion cubic meters of forest volume from the figures in 2005.

Chinese farmers' environmental protection awareness was also boosted under the "green bank" conception.

In Chuanyan village of Guizhou's Dafang County, where mudslide frequently occurred due to excessive logging, now the forest area has been expanded to 2,000 hectares, with a forest coverage rate of 68.52 percent.

"We suffered too much when our environment was terrible," said Yang Xianfu who contracts 40 hectares of barren mountain land to plant trees and vegetation.

288 In northwest China's Province, where the Yangtze River, the Yellow River and the Lancang River originate, the local government raised the compensation fee from 5 yuan per mu (about 11 U.S. dollars per hectare) to 10 yuan to encourage farmers to take on the forest business.

"For families who contract a large piece of forest, they can get as much as 50,000 yuan (7,353 dollars) per year," said Huang Jiangyong, an official with the Qinghai Provincial Forestry Bureau.

According to Huang, about 1.46 million hectares of forestland will be contracted to local farmers and herdsmen next year, and contract period is 70 years.

However, a dilemma still exists -- as in many developing countries.

After giving up the traditional way of making incomes, how can developing countries find a substitute to compensate the economic loss while protecting the environment?

In Leishan, as the once flourishing wood processing industry was restrained by the government, many started other businesses like restaurants and hotels, most of which are not nearly as profitable as wood processing.

Li Tianyou said the current compensation was too small for some poor families and called upon the government to increase the subsidies.

It'll also be a key issue for this time's climate change summit.

According to statistics from the Chinese State Forestry Administration (SFA), between 1980 and 2005, forests in China had absorbed net 4.68 billion tonnes of carbon dioxide through the afforestation program, and 430 million tons was reduced by controlling deforestation, totaling 5.11 billion tonnes of carbon dioxide, equivalent to 8 percent of the total industrial CO2 emission during that period.

SFA head Jia Zhibang said the increase of forest vegetation and resources proved that China was actively coping with climate change.

However, to Li Tianyou, terms like "forest carbon sinks" were too complicated for ordinary people.

"What we care about the most is how to increase the forest while bringing local people real benefits," he said. C:\Green bank helps China reduce carbon emission - People's Daily Online.mht

• Gang boss gets 20 years (10th December) A man who led a criminal gang that conducted a nine-year reign of terror over a county in southwest China was jailed for 20 years on Wednesday.

289 The Chongqing No 3 Intermediate People's Court convicted Ran Guangguo of running a criminal gang, and sentenced seven members of the gang to jail terms ranging from two to 12 years at the trial. During a crackdown by police in Chongqing, at least 50 others, including 28 judicial and police officers, have been investigated on suspicion of power abuse, including allegations of corruption, malfeasance and infringing people's rights.

• Workers stranded waiting for unpaid wages (10th December) About 500 migrant workers who finished construction jobs here are still hanging around, sleeping on frigid concrete floors and eating plain rice in this wintry city - waiting to get paid. Huddled for 10 days in cheap rented rooms, the cash-strapped workers from neighboring Guizhou, Sichuan and provinces first have to survive. "I don't know how to tell the truth to my family," the local Chongqing Evening News quoted one of the workers, Chen Shiyun, as saying. He said his 89-year-old mother and 8-year-old son are waiting for him to bring money back. They are still waiting for four months' salaries. The migrants began to work for a high-voltage wiring project in early January, erecting steel towers and installing wires on Wuling Mountain among other high mountains in the local Qianjiang district. Their jobs were completed in mid-November. But the labor contractor, surnamed Jiang, reportedly disappeared on Nov 25 with 5 million yuan that was meant to pay the 500 workers, one of the construction squad heads told the newspaper. A local lawyer said Jiang does not represent any legitimate subcontractor and is not eligible to recruit construction workers. Though the lead construction company gave each of the workers 100 yuan to cover their temporary living expenses on Dec 3, survival remains a problem as most of them ran out money on Tuesday. The newspaper reported 28 migrant workers clustering in two small rooms about 30 sq m in a village in Qianjiang district - all sleeping on bamboo mats and curling under thin quilts. "We didn't bring any clothes or bedding to Chongqing for the winter because we thought our wages would be paid in November and we would be back home by now," the newspaper quoted worker Guan Hongyun as saying. A police investigation is under way and the local government is stepping in to help claim the workers' wages. Yesterday, a local pro-labor rights lawyer, who has been helping migrant workers since 1996, told China Daily that since the subcontractor was unqualified, the wages can be sought from the lead construction company through arbitration if needed. "Quite often we see construction jobs are further subcontracted out, but the delayed payment of basic salaries is unusual in Chongqing," said lawyer Zhou Litai. Cases to claim compensation for injury or unpaid perks are more common. Workers rights are seen to have improved significantly since the central government passed a series of policies in 2005, such as requiring contractors to set up a guarantee fund.

290

Economic front • Air China to launch Chengdu-Bangalore route (6th December) Air China, the nation's largest carrier, will launch direct flight linking the southwestern city of Chengdu and Bangalore, the "Silicon Valley in India" to promote mutual exchanges in the software industry.

Air service between the two cities is scheduled to start in late February next year.

Airbus A319 or Boeing 757 of Air China southwestern branch will depart from Chengdu, capital of Sichuan Province, on Wednesdays and Saturdays at 8:30 p.m. (Beijing time), and will arrive in Bangalore on the same day at 11:10 p.m.(local time), company sources said.

Return flights will be on Thursdays and Sundays, leaving Bangalore at 0:20 and arriving in Chengdu at 7:20 a.m.. One way flight lasts about five hours.

Located in south India, Bangalore produces a third of India's IT industry value, or 62 billion U.S. dollars expected for 2009. Software behemoth such as Microsoft and HP had set up subsidiaries there.

Chengdu is striving to make itself a regional base of software industry with its fast development in software outsourcing and hardware production. World heavyweights like Intel and Foxconn had opened factories in the city. C:\Air China to launch Chengdu-Bangalore route _English_Xinhua.mht

• China Unicom to invest 1.8b yuan in Tibet's telecommunications (7th December) China Unicom, the nation's leading telecommunications operator, announced Sunday it would invest 1.8 billion yuan ($265 million) in Tibet to upgrade the information infrastructure on the plateau.

The investment will be put into place in five years, said Lu Yimin, general manager of China Unicom, after the company signed a cooperation pact with the government of on Sunday.

The money will help improve telecommunications infrastructure, E-government, and the information infrastructure of small businesses and rural areas, according to the agreement.

Broadband Internet service is now available only to urban areas of 72 counties in Tibet, while 3,421 Tibetan villages are covered only by dialing service.

Broadband Internet service will be extended to cover 60 percent of 5,931 villages in the

291 region by 2011 after China Telecom, also one of the world's largest fixed telephone and broadband service provider, agreed to invest 2.5 billion yuan at the end of June.

South central Politics Social front

• Themed activity of Hakka people held in Henan (6th December) Distinguished guests pass on sacred soil from the Central Plains in a themed activity of Hakka people in Neihuang County, central China's Henan Province, Dec. 5, 2009. Some 500 people from all walks of life together with representatives of the Hakka People from more than 10 countries and regions were present at the activity.

• 2009 Bi-city Biennale of Urbanism Architecture kicks off (7th December) Visitors pose for photos with an exhibit during the , south China's Guangdong Province, Dec. 6, 2009. The Biennale was opened here on Sunday, displaying exhibits of over 60 architecters and artists from all over the world. C:\2009 Bi-city Biennale of Urbanism Architecture kicks off_English_Xinhua.mht

• First self-government owners' committee rebuffed (8th December) The Chinese mainland's first self-government owners' committee was created on Sunday after receiving votes from more than half of the real estate proprietors in a residential area of the southern city, but the local administration has refused to acknowledge its legal status. The committee was set up to replace the existing owners' committee of Jingzhou Building, which could not work normally without making a record with the local construction authority, committee director Zou Jiajian said. As such, it could not sign a renewal contract with the real estate management firm, he said. The new organization would allow the owners to directly employ professional managers for their real estate, as well as companies that specialize in lifts operation, daily cleaning and security guards once they fail to reach an agreement with the existing real estate management company. "We believe the self-government rights of the owners have been protected by the country's Real Right Law," said Zou, who organized the voting. According to China's Real Right Law, the owners could manage the building and its ancillary facilities on their own, or commission a real estate management company or other professional managers. However, Jinghua community workstation, the lowest-level government organization, said neither of the owners' committees of Jingzhou Building complies with Chinese law. C:\First self-government owners' committee rebuffed.mht

• Police criticized for targeting migrants (10th December) Local legislators are opposing recent police anti-terrorism drills aimed at workers seeking back pay through demonstrations, saying that police should help - not target - people who have not received their due wages.

292 "Why are drills targeting workers who are involved in group disturbances following defaulted wages?" asked Liu Xiaogang, a deputy to the Guangzhou people's congress. But Zhang Yitao, a Guangzhou public security bureau press officer, said "such drills help maintain public security". Guangdong province, which is home to thousands of overseas-invested companies, has become known for mass disturbances due to a rising number of companies that closed in recent years. Police in this southern boomtown launched a series of anti-terrorism drills in the last two months, as part of efforts to maintain public security before next year's Asian Games. As the year comes to an end, local police have strengthened efforts to prevent so-called "mass disturbances" involving workers, mainly migrants. The end of the year is a prime time for such disturbances as a rising number of workers have been seeking defaulted wages from companies. "But police should protect workers from being defaulted," Liu, also deputy director of the Guangzhou labor union, told China Daily yesterday. In the latest drill, riot police detained more than 10 workers seeking back pay by using extreme measures such as burning facilities in a factory. Last year alone, Guangdong reported 211 mass disturbances resulting from defaulted wages, sources with provincial police authorities said. To better protect workers' rights, authorities in the provincial capital have introduced a new wages plan since July, which requires companies and construction operators to deposit up to 2 percent of contracted value before operation. "The margins will be used if firms delay workers' pay," said Lin Zhengsheng, an official with the Guangzhou labor authorities.

• Protesters offered a platform (10th December) Protesters will get their own start and finish line at the 16th Asian Games when they are held in this southern city in November next year. Groups wanting to make a peaceful point during the Games will be able to do so from the confines of a special protest zone in Panyu district, said An Yaozhen, deputy director of the Games organizing committee's security department. The idea of setting up a special protest zone was first tried on the mainland in Beijing in 2008 during the Olympic Games. "Protesters have to abide by Chinese laws and relevant regulations in staging demonstrations," said An, who is also a deputy director of Guangzhou public security bureau's command center. According to Chinese law, individuals and groups wanting to hold a protest must first obtain approval from the police. Mo Wenliang, a police officer with Guangdong's provincial public security department, said authorities were studying the best way to review and approve such applications. Peng Peng, a researcher from the Guangzhou academy of social sciences, said the fact that the city was prepared to set up a special protest zone shows it wants to address people's concerns. The move also complies with the requirements of the International Olympic Committee and common practice among other cities hosting major international events, Peng said.

293 Some locals questioned whether the zone will make much difference. Beijing set up three such zones in the downtown area during the Games last year but no demonstrations were held.

• Schools told to avoid stampede repeat, compensation agreed (10th December) The families of students who died during a stampede at a school in central China on Monday will each receive compensation of around 350,000 yuan ($51,000), the local government said late last night. "By 6 pm today (Wednesday), the school has reached agreements with all families of the dead students," read a statement posted on the official website of Xiangxiang city government following the tragedy that killed eight at the school in Xiangxiang, province. The statement said the compensation was the maximum amount possible and equal for all students. In addition, relatives of seven of the children who died will receive 70,000 yuan. The tragedy at Yucai High School in Xiangxiang happened after the study session at around 9:10 pm Monday when hundreds of students surged toward the door closest to their dormitory to avoid heavy rain. They were jammed into a staircase and walking down when a girl tripped, triggering dozens more to lose their footing and fall. Seven boys and one girl were either crushed or suffocated to death. Twenty-six others were injured. As of 4 pm yesterday, 23 students remained in hospital. Four were in critical condition, said the local government. Safety rules at the school have been improved in the wake of the tragedy to lessen the chance of staircases being crowded with students. Among measures at the private-run school, notices have been posted on all five floors near the staircases reminding students to take the nearest one to classrooms for evacuation. School authorities have also staggered lunch breaks and the ends of study session to ensure fewer students are on the move, said Liu Xiangping, deputy chief of education in Xiangxiang. Liu was put in charge of the school after its principal was detained on Tuesday following Monday's incident. The new schedule, which came into effect on Tuesday, also called for the lights-out time to be delayed by 10 minutes, to 9:40 pm, allowing students more time to get to their dorms, added Liu. The school, which was founded in 1997, has 3,626 junior high students. Most are aged between 11 and 14. There are 140 people on staff. Local family planning authorities, meanwhile, have offered free fertility services to parents who lost children. The Ministry of Education issued a notice late Tuesday for all kindergartens, primary and secondary schools, urging them to prevent similar stampedes. Zhang Fangping, head of the provincial education bureau in Hunan, vowed to penalize school officials responsible for similar accidents.

294 "In the case of similar disasters, the principal will be sacked immediately and we'll advise the local government and Communist Party of China committee to take action against those who are responsible," Zhang said at yesterday's conference with principals of all kindergartens and primary and secondary schools in Hunan. The province also plans to launch a 10-day safety overhaul starting today, he added.

• Italian, Chinese cities launch tourism co-op program (11th December) Italy's southern city Naples and China's southeastern city Wenzhou signed an agreement here on Thursday to enhance bilateral cooperation in tourism and culture. The agreement focuses primarily on information exchange between local authorities on tourism and special cultural events, with relevant news to be posted on the websites of both cities. According to the agreement, cooperation in the tourism industry will be boosted to promote internship and student exchange programs. Private investments will also be facilitated. Naples' City Council President Leonardo Impegno said the agreement "represents a step forward in Sino-Italy relations," especially in the fields of tourism and culture. Wenzhou's deputy mayor Xu Yufei praised the memorandum, saying that it "will offer many new opportunities for bilateral cooperation projects in the tourism industry". The signing followed Impegno's recent visit to Wenzhou, where a friendship agreement was reached between the two cities. The majority of Chinese people living in Italy come from Wenzhou and other areas of Zhejiang province.

Economic front

• CNOOC plans Zhuhai terminal to receive deepwater gas (7th December) CNOOC Ltd will build a terminal in Zhuhai to receive natural gas from China's first deepwater field in the South China Sea, the Xinhua News Agency reported. The receiving terminal in southern Guangdong province includes one production area, one living area and two berths with docking capacity of 30,000 metric tons and 5,000 metric tons each, encompassing an area of 1.45 million square meters, the Xinhua News Agency said. The site, Liwan 3-1, will have initial production capacity of 8 billion cubic meters per year, or 774 million cubic feet per day, and will be expanded to 20 billion cubic meters per year in a second phase, the report said. Total investment in the first phase was estimated to exceed 20 billion yuan ($2.93 billion), the report said. Liwan 3-1 is China's first deepwater gas discovery operated by Husky Energy Inc and set for operation in late 2012. Husky has estimated Liwan reserves at 4 trillion to 6 trillion cubic feet.

C:\CNOOC plans Zhuhai terminal to receive deepwater gas.mht

• China to launch high-speed railway from central to south China (9th December)

295 A railway linking Wuhan in central China's Province and Guangdong's capital Guangzhou city was set for trial run on Wednesday. It took three hours for trains to cover the 1,068.6-kilometer railway, said an official with the railway bureau of Wuhan. The railway costs about 116.6 billion yuan (about 17 billion US dollars) and shortens the 10.5-hour trip between Wuhan and Guangzhou to three hours. Trial operation of the railway shall start on December 20, according to the official. China is in a fervor of improving its railway system amid transportation pressure. As planned, it will build 42 high-speed passenger rail lines with a total length of 13,000 kilometers in the three years. C:\China to launch high-speed railway from central to south China.mht

• Guangdong Special: Accelerated growth mooted for area's industrial zones (10th December) Guangdong has announced plans to accelerate the construction of its hi-tech industrial development zones. The southern coastal province believes this will provide a significant boost for its strategic development, massively enhance its capacity to promote innovation and secure its future industrial competitiveness. As part of this initiative, the province has issued guidelines aimed at fast-tracking the development of the zones. This ambitious proposal will see its 16 State-level and province-level economic zones catapulted to a world class standing within 10 years. According to the guidelines, the hi-tech industrial zones are expected to achieve an annual industrial output of 2.5 trillion yuan by the year 2012, an increase of over 25 percent compared to 2008. Overall hi-tech industrial output is expected to reach 2 trillion yuan by 2012, with R&D funding increasing to 4 percent of the total sales revenues. The province plans to turn the State-level hi-tech industrial development zones in Guangzhou and Shenzhen into nationally leading hi-tech industrial centers within five years and truly global players by 2020. It will also systematically develop the remaining State-level zones in Zhuhai, Zhongshan, Foshan and Huizhou, as well as the province- level zone in Dongguan, into innovation-led science and technology parks and centers for the development of proprietary technology. The province will also seek to evolve the existing province-level hi-tech zones in Dongguan, Zhaoqing and Jiangmen into State-level centers. Li Xinghua, director of Guangdong's science and technology department, is optimistic about the opportunities opening up for the province. He says: "The industries in the emerging and hi-tech industrial development zones offer greater added value than in traditional sectors. They are more technology-intensive and more competitive. This is the key reason why the province is accelerating the development of these zones." According to Li, about half of the province's hi-tech firms and more than half of its R&D facilities are located in these development zones, which also employ a third of the region's scientific and technological professionals. The zones also accounted for 46 percent of the province's total R&D spending during 2008. This represented an R&D investment of 9.2 percent of the zone's industrial output, a figure seven times higher than that of the provincial average. Highlighted sectors

296 According to a report on regional innovation capacity in China, recently issued by the Ministry of Science and Technology, Guangdong comes second only to Shanghai in terms of resources in this sector. The province is also ranked number one nationally for corporate innovation. Commenting on the report, Li says: "This underlines that Guangdong has a solid foundation for accelerating its industrial upgrade process and excellent prospects for achieving its long-term goals." These goals now involve clear targets in a number of sectors, including telecom equipment, precision manufacturing, new materials, bio-medicine, new energy and energy efficiency, software, integrated circuits and resource and environmental protection. The local government guidelines also make recommendations for the development of a number of emerging industries, notably next-generation telecoms, next-generation Internet, new types of electronic components, special types of functional materials, renewable energy, marine equipment, aviation and astronautics. These sectors will be nurtured alongside a number of rapidly-developing tertiary sectors, especially modern information services, industrial innovation, service outsourcing, financial services and logistics. The province has earmarked 400 million yuan in the 2011- 2012 period to boost R&D initiatives in the hi-tech industrial development zones and enable them to secure a number of high-end projects. This will include incubating projects with their own IPR, as well as accelerating the industrialization and commercialization of R&D success stories across the zones. The budget for this year is 100 million yuan. Guangdong established its first hi-tech industrial development zone in 1991. Since then it has founded six State-level and 10 province-level zones across the province, primarily in the delta cities of Guangzhou, Shenzhen, Zhongshan, Zhuhai, Huizhou, Foshan, Dongguan, Jiangmen and Zhaoqing. The 16 State-level and province-level zones generated an added industrial value of 111.21 billion yuan and realized exports of $28.16 billion in the first half of this year, an increase of 23.4 percent and 27.5 percent respectively over the same period in 2008. The average GDP per sq km was 108,375 yuan across the 16 zones in 2008, 23 times higher than the figure in the delta region and 54 times larger than the provincial average. The per capita GDP was 207,700 yuan in the 16 zones last year, four times that of the average in the delta region and five times that of the average in the province. C:\Guangdong Special Accelerated growth mooted for area's industrial zones.mht

• 'Double transfer' success for center (10th December) The Zhaoqing High-Tech Industrial Development Zone, one of Guangdong's model industrial transfer centers, ranked as number one for implementation of the province's "double-transfer" initiative in 2008. The policy, adopted throughout the province in 2008, focuses on the transfer of labor- intensive industries from the Pearl River Delta region to the less developed regions of Guangdong. This, in turn, leads to the subsequent transfer of rural labor to local secondary and tertiary industries or to the delta region from the primary local industry.

297 The zone scored 93 in its local government evaluation, higher than any other of the province's other 29 parks involved in the program. It won the status as being one of the first tranche of model parks for industrial transfer in August 2008, entitling it to 500 million yuan worth of financial subsidy from the provincial government. The zone has now incorporated 351 projects transferred from other delta cities, representing a total investment in excess of 28 billion yuan. This amounts to 70 percent of all the enterprises in the zone. The initiative has seen the zone employ more than 100,000 new members of staff, 60 percent of whom are from outside the zone. Commenting on the program's success, Liu Longping, Party secretary of the zone, said: "The zone will fully capitalize on the opportunities made available by the province's 'double transfer' initiative. It will also strive to achieve an annual industrial output of 500 billion yuan by the year 2020." Liu said the zone will adopt an intensive approach to land usage so as to enhance the yield of every square meter of the land, whilst seeking additional support from the provincial land resources department in the allocation of land for development. The zone will also seek to secure more substantial projects that can boost its industrial chains, whilst offering incentives to encourage its resident businesses to increase their proportion of R&D reinvestment and set up post-doctoral work facilities and national labs. The industries of metal finish machining, advanced equipment manufacturing, automobile and motor-driven vehicle and component manufacturing, as well as electronics and IT will be prioritized in the zone's industrial development, Liu said. In addition to possible projects from other delta cities, the zone will also seek potential investors in Beijing, Japan, South Korea and Taiwan. It will also actively target the world's top 500 companies, major enterprises owned by the central or provincial government and other well-known listed companies. Defining the criteria for the zone's development, Liu said: "Those projects that do not fit in with the industrial planning of the zone, especially those not matching our requirements for environmental protection, will not be pursued." Expanding upon the future policies, Jiang Dongcai, director of the zone's administrative committee, said: "We will spare no effort in refining our investment climate by improving our infrastructure and public facilities, simplifying administrative procedures for investors and offering tailor-made services." The zone has amassed investment of more than 3 billion yuan for the improvement of its infrastructure.

• Guangdong Special: Guangdong earmarks 250 bn yuan for industrial renaissance (10th December) Guangdong is set to invest 250 billion yuan in technological renovation and innovation over the next three years. This unprecedented budget is expected to accelerate the southern coastal region's industrial upgrade, boost the development of its high-end industries, nurture its emerging business sectors and further develop its industrial clusters. The plans were announced by Li Xinghua, director of the province's science and technology department, at a recent

298 conference aimed at highlighting Guangdong's technological renovation and innovation initiatives. Addressing the conference, he said: "The province aims to achieve an industrial yield of 150,000 yuan per capita by the year 2012. We also plan to have between three and five industrial clusters with an annual industrial output in excess of 100 billion yuan by that time." According to Li, technological renovation and innovation will focus on the industrial upgrade process. It will also play a key role in shifting the province's industrial emphasis from "Made in Guangdong" to "Created in Guangdong" or "Invented in Guangdong". For Wang Jun, professor of economics at the Guangzhou-based Sun Yat-sen University, Guangdong's industrial upgrade can only be realized via the relocation of the labor- intensive industries in the highly-developed Pearl River Delta region to less developed regions in the province. He believes this will allow for an upgrade to the traditional industries, equipping them with modern technological solutions and fostering the growth of the more innovative industries. Wang said: "Transferring the labor-intensive industries in the Pearl River Delta region to underdeveloped regions will be a long process, but we have already achieved some initial success in this direction." Wang believes that the strategy of relocating production facilities, whilst retaining headquarters in the Pearl River Delta region, is desirable not only for the businesses concerned, but also for the long-term industrial development of the province. Wang said: "The creation of traditional industry clusters and the nurturing of emerging sectors are equally crucial for the province's industrial future." According to the findings of the research conducted by the Party School of the Central Committee of Communist Party of China, Guangdong's bid to upgrade its industrial base has already made substantial headway. It is also believed to have helped the province counter the impact of the global economic recession. The process of industrial transfer and upgrade has also gained growing support among business people and government officials in the delta region. The report indicates that the initiative is now viewed as a key means of weathering the financial downturn by the region's commercial sector. As a result of the policy, the ratio of the labor-intensive industrial output in 2008 was lower by more than 2 percentage points when compared with the figure for 2007 in the delta cities of Guangzhou, Shenzhen, Foshan, Zhuhai and Dongguan. The province achieved a GDP of 2.64 trillion yuan in the first three quarters of this year, representing an inflation-adjusted growth of 8.6 percent over the same period last year. The growth rate was 1.5 percentage points higher than that in the first half of this year, and 2.8 percentage points in the first quarter of this year. The province's total imports and exports were worth $426.97 billion across the first nine months of this year, down some 17.7 percent compared to a year ago, against a national decline of 20.9 percent. The rate of decline in the province's foreign trade levels in September was only 8.3 percent, as compared to 31.1 percent in January. C:\Guangdong Special Guangdong earmarks 250 bn yuan for industrial renaissance.mht

• Priorities drastically revised as region aims for major turnover (10th December)

299

The Zhaoqing High-Tech Industrial Development Zone is gearing up for its bid to become a State-level economic zone. Its ambitious expansion plans have seen it drastically revise its future development policy in line with its hopes to both become a national center of excellence and to achieve an annual industrial output of 500 billion yuan. According to its newly-adopted development plan, the zone is aiming to reach its 500 billion yuan target by 2020, with its four leading industries each contributing 100 billion yuan apiece. Currently these four key sectors comprise metal finish machining, advanced equipment manufacturing, automotive and motor-driven vehicle manufacturing, as well as electronics and IT. At present the zone is home to around 30 metal finish machining firms, jointly capable of yielding an industrial output of 60 billion yuan when operating to maximum capacity. The zone's 200-plus companies specializing in advanced equipment manufacturing generate more than 50 billion yuan. Its 100 automobile, motor-driven vehicle and component firms currently maintain an industrial output of around 25 billion yuan annually when fully utilized, whilst its 100 or so electronics and IT firms contribute 30 billion yuan. According to Jiang Dongcai, director of the zone's administrative committee, the zone will now look to step up the development of its tertiary industries in the finance, logistics, commerce, innovation, exhibition and convention, catering, entertainment, utilities and telecom sectors. It will also look to nurture a number of emerging industries, notably new energy, biotechnology and fine chemicals. These two new sectors are expected to realize a combined annual industrial output in excess of 100 billion yuan by 2020. Jiang believes the zone will put into practice innovative ideas for the construction of advanced facilities as well as for investor services. He said: "The zone will be developed in an environmentally and ecologically friendly manner and we will handpick those projects that are in line with international and national industrial development trends, instead of simply pursuing all possibilities. We will also improve the human resources environment in a bid to attract more professionals to the zone." Despite the global economic downturn, the zone achieved a GDP of 4.15 billion yuan and an industrial output of 16.21 billion yuan in the first 10 months of this year, an increase of 30.3 percent and 30.2 percent respectively over the comparable period in 2008. Overall revenue was 362 million yuan in the first 10 months of 2009, a growth of 57.5 percent. The zone's investment in fixed assets reached 3.67 billion yuan, up 29.5 percent on last year. The zone's GDP in 2008 was 15 times that of 2002 when the zone first moved to Dawang, a former State-owned farm. Since that time its industrial output has increased 37.4 times, its fiscal revenue 18.2 times, its investment in fixed assets 16 times and its exports 31.1 times. In 2004 the zone was designated as a key industrial park for foreign investment by the provincial government of Guangdong and as a model mountainous zone for foreign investment. It joined the premier league of the province's industrial transfer model parks last year.

300 • Wuhan builds waterborne passenger transport system (11th December) Wuhan, a city perched in the middle reaches of the Yangtze, China's longest waterway, is building a waterborne passenger transport system to ease road traffic congestion. The plan was approved by an evaluation committee Friday, said Zhang Xianfeng, a Wuhan-based urban development specialist who is heavily involved in the planning. "Water traffic will shorten travel times," said Zhang. "Buses in Wuhan travel at an average speed of 15 kilometers per hour, while boats can travel at 25 to 30 kilometers per hour." Road traffic is slow in Wuhan, capital of the central Hubei Province, as the hilly city is divided into three parts by the Yangtze and its longest tributary, the Hanshui River. The city also has 166 lakes covering an area of 942.8 square kilometers. The waterborne system will have 10 commuter routes with a combined length of 149 kilometers to link the city center with four outer districts, he said. He said the system was expected to transport 60,000 to 100,000 commuters daily. "It will have 19 docks, including 11 in the city center and eight in the outer areas," said Zhang. The system will also have taxi services and luxury boats for sightseers, he said. Pan Yuan, head of the evaluation panel, said waterborne transport would effectively supplement the inadequate road traffic system in Wuhan. "We advise the city authorities to use energy-efficient boats," said Pan, an academician with the Chinese Academy of Engineering. Three other Chinese cities -- Shanghai, Nanjing and Hangzhou -- also plan to turn to the water to solve the transport bottlenecks on their roads.

East

Politics • Shanghai Party chief meets Canadian PM Shanghai Party chief Yu Zhengsheng met here Saturday with visiting Canadian Prime Minister Stephen Harper, vowing to take the opportunity of the Shanghai World Expo to upgrade bilateral economic and environmental cooperation. The theme of the 2010 Shanghai World Expo is Better City, Better Life, and the core of this theme is to achieve harmony between man and nature, said Yu, member of the Political Bureau of the Communist Party of China (CPC) Central Committee and secretary of the CPC Shanghai Municipal Committee. "We will step up the transformation of economic development mode and coordinate the various social interests, and promote development through reform and innovation," he said. He appreciated Canada's active participation in the Shanghai World Expo and believed that the Expo would increase the Chinese people's understanding about Canada. Harper said Shanghai was a vibrant city, and the Canadian companies, represented by Bombardier, had been active in Shanghai in the areas of transportation, insurance, food and resources.

301 The 2010 Shanghai World Expo was a very good opportunity for Canada and Shanghai to expand and escalate cooperation, especially in the fields of high-tech and environmental science and technology, he noted. Harper visited the Shanghai World Expo Park Saturday morning and inaugurated the Canada Pavilion. He said Canada's participation in the Shanghai World Expo was one of the earliest decisions of the government under his leadership since he took office, and the Canada Pavilion would be a great success during the Expo. Harper left Shanghai for Hong Kong Saturday afternoon. According to statistics of Shanghai Municipal Commission of Commerce, by the end of the year 2008, Canadian companies have invested in 909 projects in Shanghai, and the amount of contractual foreign capital reached 876 million U.S. dollars. During the past five years, import and export between Shanghai and Canada have maintained rapid growth. In 2008, the total trade volume reached 4.87 billion U.S. dollars. C:\Shanghai Party chief meets Canadian PM_English_Xinhua.mht

• Surfing officials chided (10th November) s many as 40 government officials in Zhejiang province have been reprimanded for wasting work hours surfing the Internet in the past three days, the local discipline agency said yesterday. "We've decided to cut the bonuses of these officials," said Chen Pushun, director of the working efficiency supervision office in the Wenzhou discipline supervision bureau. The bureau ran a spot check on officials from 39 local departments and was forced to block online games as well as using stock analysis and trading systems, Chen said. Inspectors caught an official of the local meteorological bureau playing a farming game on www.kaixin001.com, known as the "Chinese Facebook", during work hours, and another one from the local inspection and quarantine department watching Dwelling Narrowness, a popular TV series. "It is now quite clear why work had taken a backseat in government departments," Chen said. "A significant number of officials are addicted to surfing the Internet." Wenzhou is not the first city to ban casual Internet surfing at work places. Late last month, 19 government officers in Huaihua, Hunan province, were punished for playing online games at work. Xia Xueluan, a professor of sociology at Peking University, said it was high time someone kept a close watch on government officials. "Most would think officials would be reading the newspapers while drinking a cup of tea, all day long. At least now we know, they're busy surfing," Xia said. The culture of playing online games during office hours garnered negative spotlight after a 5-month-old boy died at the Nanjing Children's Hospital while the doctor was playing a game on his computer. More than 500 companies have joined a recently formed "Anti-loser Union", which aims to curb employees from over-indulging in chatting and social networking online. All union members have blocked social networking websites over fears that their employees are spending more time socializing online than working.

302 According to the China Internet Network Information Center (CNNIC), there are more than 1,000 social networking sites in the country. About 124 million people, one-third of Chinese Internet users, are expected to be attracted to these social networks, information portal Chinanews.com reported last month.

Social front • Auto fair held in Jinan, Shandong Province (7th December) People visit a winter auto fair in Jinan, capital of east China's Shandong Province, on Dec. 6, 2009. C:\Auto fair held in Jinan, Shandong Province - People's Daily Online.mht

• Eco-friendly automobile (10th December) Shanghai has released regulations and policies promoting the development of a new hydrogen-powered automobile. The city will support enterprises and individuals to purchase and use the environmentally friendly automobiles. The financial hub is also strengthening the planning and construction of recharging stations, hydrogen refueling stations and other facilities. Similarly, loans will also be given to battery-leasing companies.

• Rich getting richer, but poor becoming resentful (10th December) Amid a widening wealth gap between rich and poor, a new survey has found that 96 percent of the public said they feel resentful toward the rich. The latest survey, released by the Zhejiang Academy of Social Sciences, also shows that 70 percent of 1,159 respondents said they feel "a big gap" between the rich and poor in China now, with more than half of the people saying the gap will become bigger. The survey, launched in the first half of the year, was based on questionnaires handed out to 10 social groups including public servants, entrepreneurs and farmers. "I believe that the wealth gap is a much more serious problem nationwide," said Qiu Liping, a professor of social stratification at Shanghai University. "Our society is in dire need of a platform for dialogue between the rich and poor," he said. Such a platform, he said, will minimize the resentment against the rich. "People do not always hate the rich. People hate those who are immorally rich," he said. But most of time, people do not make that distinction. Cherry Chang, an editor of a luxury magazine in Shanghai, said her car, a red Porsche, has been vandalized three times in the past two weeks. Her friend's Lamborghini fared no better. "I think there are many people in this city who harbor a deep resentment against the rich," she said. The wrath aimed at the wealthy has been a hot-button issue recently, and can go past vandalism to include kidnapping and even murder. Yi Zhao, a civil servant from Guangdong province, admitted that he dislikes the rich.

303 "Most of them collect wealth at the expense of the poor. Take those real-estate manipulators for example. They control the property market aiming for a higher price and a considerable profit," he said. "On the other hand, I simply can't accept the skyrocketing prices. Isn't it unfair to the majority who are unable to afford an apartment, even if we squeeze together the savings of three generations? " However, Xiao Xiaowei, a 24-year-old self-employed from Wuhan, capital of Hubei province, said she actually respects the rich, especially billionaires. "It's true that some of them get rich illegally or at the expense of the poor, but getting rich surely requires some other qualities, such as excellent interpersonal skills. They have the capabilities that others don't have," Xiao said. Chang also said she worked hard to buy herself an apartment and a car. "If those people have the time to hate us and envy us, why don't they spend the time working, using diligence and intelligence?" asked Chang. Zhang Qi, a 28-year-old professional in Beijing, said getting rich and making money are not just about working hard. "I haven't thought much about making a lot of money. Life is hard for me - and I am privileged with a decent job. For those who are less privileged, life must be even harder," Zhang said.

• Smoking ban in public places in Shanghai to be enforced (11th December) The city's ban on smoking in public areas will be enforced beginning March 1, a draft amendment to the anti-smoking law approved by the city's top legislature showed on Thursday. Following months of debate and repeated revisions by the Shanghai People's Congress, the Shanghai Public Places Smoking Control Law now clarifies and expands its scope. The new law also imposes fines on establishments that fail to obey the restrictions. Proponents say the law will better protect its citizens' lives and clean the environment. The revisions to the law make the smoking ban more specific, giving a list of places affected. Smoking will be prohibited at places including kindergartens, schools, hospitals, stadiums, public service places, shopping malls, libraries, theaters and museums. Entertainment venues, public areas of hotels, airports and train/port stations should ban smoking indoors and provide a separate smoking area. The law stipulates that all separate smoking areas or rooms should be ventilated. Public places must also have prominent signs indicating that smoking is prohibited. Government statistics show that 30.2 percent of residents in Shanghai smoke. The national rate is 35.8 percent. Lawmakers attribute a lack of strict rules and lax management to a large number of smokers. The existing smoking control law was carried out in 1994, which was mainly enforced in the medical departments. Under the new law, places that fail to ban smoking could be penalized 2,000 to 10,000 yuan. In the case of a serious violation, they could be fined 10,000 to 30,000 yuan. Individuals who smoke in non-smoking areas will be fined 50 to 200 yuan if they will not agree to snuff out the cigarette.

304 "The city has been devoted to a healthy environment, and there is an urgent need for legislation for a definable smoking control law. It is also the collective suggestions of many legislators and health experts," Ding Wei, vice-director of the Law Commission of the Shanghai People's Congress, said yesterday.

Economic front

• Shanghai's Bund renovated before Shanghai Expo When the diggers drive off into the sea of skyscrapers and the blue boards masking the Huangpu River are torn down at the end of this month, Shanghai's renovated Bund will include a financial square guarded by a bronze bull. The statue created by Italian-American sculptor Arturo Di Modica will mirror his Charging Bull on Wall Street, as city officials look to remind tourists of the waterfront's modern history as a repository for European trading houses, and its current status as the epicenter of booming China's business hub. The new 4,900-sq-m area will play host to a gigantic outdoor plasma screen reeling off the day's share prices for China's three stock exchanges in Shanghai, Shenzhen and Hong Kong as an armada of pleasure cruises trawls the river's waters nearby. The new tweaks are fitting as nowhere better represents Shanghai's cosmopolitan nature and banking credentials than the Bund, home to over 50 buildings of various architectural styles ranging from Gothic to Art Deco. They include some of the finest bars and restaurants in the city, several mercantile banks and an old Customs House with a clock imitating London's Big Ben. As for the statue, it too couldn't have been timed better. Pundits are already predicting another bull run in China's markets before the May 1 Shanghai Expo gets under way to help investors get over seeing their stocks fizzle out this quarter. However for Zhou Wei, governor of Huangpu District, the most pressing concern is the upcoming World's Fair, and ensuring that Shanghai's multi-billion-dollar makeover, which includes new subway lines, roads and social etiquette campaigns, is ready in time to impress expo tourists. "By refurbishing the city's famed historic area, visitors will get a more favorable impression of Shanghai," said Zhou, who is readying to welcome 70 million newcomers to the coastal city's cross-cultural gala next spring. Zhou's office holds jurisdiction over the Bund, but not the expo site. The new Bund will be slicker-looking and free of unsightly blemishes, its shoddy concrete walkways replaced by marble-made paths stretching 12m in width, up from 3m. Long-standing eyesores like the Garden Bridge of Shanghai and Yan'an Highway are also being repaired. C:\Shanghai's Bund renovated before Shanghai Expo_English_Xinhua.mht

• China's largest lender opens first village bank (6th December) China's largest lender, the Industrial and Commercial Bank of China Ltd. (ICBC), opened its first village bank in eastern China's Zhejiang Province Sunday to improve rural financial services.

305 The Zhejiang Pinghu ICBC Village Bank will offer a wide range of financial services tailored to the needs of rural communities in a bid to boost rural economic growth, said ICBC vice president Yi Huiman at an opening ceremony. ICBC holds a 60 percent stake of the village bank's 200-million-yuan (29.28 million U.S. dollars) registered capital. China's banking regulator, China Banking Regulatory Commission (CBRC), lowered admittance standards for financial institutions to branch into rural China in 2006. By June 2009, 708 townships across China did not have any financial services at all, according to CBRC. CBRC said 118 new rural financial institutions, including 100 village banks, had been set up by the end of June 2009 and it planned to add 1,027 more village banks across the country from 2009 to 2011. C:\China's largest lender opens first village bank _English_Xinhua.mht

• Mercedes-Benz names first arena in China (7th December) A Shanghai arena became the first arena in China to have a naming rights partnership as automobile brand Mercedes-Benz signed Monday a ten-year agreement with the arena.

The arena, which is still under construction, is being jointly developed by Oriental Pearl Group, AEG and the National Basketball Association (NBA). The multi-purpose entertainment destination will officially be known as Mercedes-Benz Arena in 2011.

Klaus Maier, President and CEO of Mercedes-Benz (China) Ltd., said, "The new Mercedes-Benz Arena will reinforce Shanghai as culturally-rich city on the world map and create a new destination of arts and lifestyle on the international stage."

"Mercedes-Benz Arena will truly become Shanghai' s and all of China' s state-of-the- art showplace for culture, arts, sports and entertainment events when this world-class arena debuts," said NBA China CEO Tim Chen. "With the help of our partners, we are certain this arena will be the premier destination for sports, entertainment and cultural events in Shanghai."

The 18,000-seat arena was designed by Shanghai Xian Dai Architectural Design Group.

C:\Mercedes-Benz names first arena in China _English_Xinhua.mht

• China's largest lender opens first village bank (7th December) China's largest lender, the Industrial and Commercial Bank of China Ltd. (ICBC), opened its first village bank in eastern China's Zhejiang Province Sunday to improve rural financial services.

The Zhejiang Pinghu ICBC Village Bank will offer a wide range of financial services tailored to the needs of rural communities in a bid to boost rural economic growth, said ICBC vice president Yi Huiman at an opening ceremony.

306 ICBC holds a 60 percent stake of the village bank's 200-million-yuan (29.28 million U.S. dollars) registered capital.

China's banking regulator, China Banking Regulatory Commission (CBRC), lowered admittance standards for financial institutions to branch into rural China in 2006.

By June 2009, 708 townships across China did not have any financial services at all, according to CBRC.

CBRC said 118 new rural financial institutions, including 100 village banks, had been set up by the end of June 2009 and it planned to add 1,027 more village banks across the country from 2009 to 2011.

• Taiwan Bank to set up Shanghai bureau (9th December) The Chinese mainland authority gave approval Tuesday for Taiwan Bank (TB) to establish an office in Shanghai, the chinataiwan website reported. As a leading bank in Taiwan, the move acts as a milestone in cross-Straits financial cooperation, according to financial circles. After the bureau is in place, TB will conduct market research and make contact with local businesses. The TB authority expects to see the Cross-Strait Economic Cooperation Framework Agreement (ECFA) sealed and a TB branch also set up in Shanghai. TB is anticipating that the Memorandum of Understanding on Financial Supervision will be enacted on January 16, 2010 and Taiwan banks will establish more branches and offices on the mainland accordingly after that, the website quoted Taiwan-based CAN as saying.

HONGKONG AND MACAU Politics

• Chinese state councilor gives speech ahead of Boao youth forum in Hong Kong (7th December) Visiting Chinese State Councilor Liu Yandong Sunday gave a speech ahead of the Boao Youth Forum (Hong Kong) that opens Monday, calling for youths across China to contribute to the nation's revival. She said youths stand for the future and are the most creative part in a society. She hoped young people in China, from Hong Kong, Macao as well as the Chinese mainland and Taiwan province, can shoulder the historical responsibility to make their contributions to the great revival of the Chinese nation.

She also urged that the young people in the Hong Kong Special Administrative Region (SAR) should love the motherland and love Hong Kong, and be a united force in preserving the national sovereignty and Hong Kong's prosperity.

Social front Economic front

307

• HK, Canada sign working holiday scheme (7th December) Hong Kong and Canada signed on Sunday a working holiday arrangement to benefit young people from the two places starting on March 1, 2010. The Memorandum was signed by Hong Kong Secretary for Labor and Welfare Matthew Cheung Kin-chung, and Canada's Minister of International Trade Stock well Day. Canada is the sixth country to establish such a bilateral arrangement with Hong Kong. According to the scheme, 200 participants from each side will be allowed to stay for up to one year in each other's place for a holiday, and take up employment to finance their stay. Hong Kong has established such working holiday schemes with New Zealand, Australia, Ireland, Germany and Japan. More than 9,450 Hong Kong young people have benefited from these schemes. C:\HK, Canada sign working holiday scheme _English_Xinhua.mht

• Tsang predicts return to growth in Q4 (8th December) Financial Secretary John Tsang says the local economy continued to improve over the third quarter but expressed the government's continued concern over the potential for a housing price bubble. In an appearance before the Legislative Council yesterday, Tsang said real GDP expanded by 0.4 percent in the third quarter after a notable rebound in the second quarter. The financial secretary said the economy is likely to return to year-to-year growth in the fourth quarter. The GDP, however, is forecast to contract by 3.3 percent for 2009 as a whole. The local economy is expected to return to positive annual growth in 2010. Although the Hong Kong economy has entered the nascent stage of recovery, the risks are still there, Tsang said. Tsang stated that the government didn't rule out the possibility of a double-dip in the global economy in the immediate future. He warned investors and enterprises to undertake good risk management, as the global economic recovery might be slow in the future. "We will continue to adopt necessary measures until the unemployment situation has improved significantly," said Tsang. The government is also very much concerned about the possible asset-price bubble because of the continuing inflow of funds into Hong Kong, Tsang said. The sharp rise of property prices continues to draw attention from the government. "We will watch it closely to ensure the lending in banks is prudent", he said. "We have the ability to cope with substantial capital inflows and outflows," he stressed. He said he believes there is no certain evidence showing that the Linked Exchange Rate System is responsible for the increase in asset prices. He reiterated that revising the system would not be helpful. He also indicated the inflation pressure was not large in the short term as the global recovery continues to be sluggish. Tsang also sought the views of lawmakers on the 2010-11 Budget.

308 Lawmaker Regina Ip suggested the government introduce new taxes such as a departure tax and a soda tax. Tsang replied, voicing a concern that the new taxes might not be accepted by the public. Tsang also indicated that the revenue might be higher than predicted, benefiting from the Land Premium in 2009. However, expenditures also are expected to be higher. Recurrent expenditures have increased 26 percent over the past 10 years. Expenditures on social welfare has risen most, showing an increase of 49.9 percent during the period. He said the new budget will be pragmatic and prudent, and will also take into account the foundation for development and social responsibility in Hong Kong, as the chief executive has promised.

C:\Tsang predicts return to growth in Q4.mht

• Hong Kong stocks close 1.44% lower (9th December) Hong Kong stocks retreated for four consecutive trading days on Wednesday, with the benchmark index closing sharply lower 1.44 percent or 318.76 points at 21, 741.76. The Hang Seng Index opened 154.72 points lower at 21,905.80. It moved between 21,658.27 and 22,034.81 during the session. The turnover rose to 74.53 billion HK dollars (about 9.63 billion U. S. dollars) from Tuesday's 68.46 billion HK dollars (about 8.84 billion U. S. dollars). Analysts said they expect the index to consolidate around 21, 000 in the near term because of the uncertain economic outlook overseas. The Hang Seng China Enterprises Index shed 252.74 points, or 1.92 percent to close at 12,899.36. All of the four major stock categories lost ground. The finance sub-index fell 2.04 percent, the utilities down 0.39 percent, the properties dropped 1.18 percent, and the commerce and industry, 0.76 percent. StanChart slid 4.16 percent to 182.20 HK dollars while HSBC dipped 2.60 percent to 88.20 HK dollars amid the talks of debt arrangement between Dubai World and its creditors. Market heavyweight China Mobile declined 1.04 percent to 71.60 HK dollars. Insurers and lenders were also lower. PICC tumbled 4.08 percent to 7.06 HK dollars, while Ping An and China Life fell 2.68 percent and 1.99 percent to 70.90 HK dollars and 39.50 HK dollars respectively. CCB, Bank of China and ICBC went down by 1.87 percent, 1.84 percent and 1.53 percent. As for oil shares, PetroChina lost 1.65 percent, offshore oil producer CNOOC fell 0.51 percent and Sinopec dropped 0.77 percent. Cheung Kong, the flagship of Hong Kong's richest man Li Ka- shing, shed 1.54 percent to 99.15 HK dollars. Sun Hung Kai Properties, the largest residential housing developer in Hong Kong, fell 0.26 percent to close at 117.00 HK dollars. Henderson Land was 0.61 percent lower at 57.20 HK dollars. Li & Fung bucked the market's trend, rising 0.89 percent to 34.00 HK dollars after reaching a sourcing deal with Hudson's Bay Trading. (7.743 HK dollars = 1 U.S. dollar) C:\Hong Kong stocks close 1_44% lower _English_Xinhua.mht

309 Report # 97

Business and Politics in Muslim World

South East Asia Tatheer Zahra Sherazi

4 December to 11 December

(Outline)

Summary 4 Indonesia

• Political front: 10 • Megawati ready to lead PDI-P again: Daughter • Indonesian president fears plot • Foreign Relations: 11 • Malaysia-Indonesia Media Cooperation Should Continue • Economic Front 11 • Indonesia the world’s largest fish producer in 2015: Minister • Social front 12 • Indonesia Gets US$200 Million To Spur Growth, Cut Poverty • 2,000 demonstrators protest Indonesian corruption • President expected to front AIDS prevention campaign • Corruption, lack of transparency block foreign investment in Indonesia: EU • 7 Iranians arrested carrying drugs into Bali • Environmental Front 15 • Magnitude 5.9 quake shakes Indonesian island-USGS Malaysia • Political Front 15 • Muhyiddin: It’s better for all to resign • Foreign Relations 16 • Najib in Bangkok for talks • Corruption stymies Najib's investment bid • Economic Front 18 • Pakistan And Malaysia To Forge Ties In Halal Food • Malaysian company wins Iraq oil contract • Should Malaysia persue free trade agreements? • Tips on how to make M'sians become high income growth model • Banks confident of robust SME loans growth next year • Malaysia's Oct trade rebound surprises • Japan’s investment in M’sia surges to US$1.87bil • Social Front Philippine

310 • Political Front 25 • Martial law in Maguindanao 'not necessary,' says Erap • Amnesty calls for end to Philippine martial law • Foreign Relations • Economic Front 27 • Privatization, revenue collection woes to persist • Philippines: US relief help now at $30M • 250 killed during Ampatuans’ reign • Philippine tribal gunmen send warning • Talks with MILF rebels end on a positive note • Philippines faces security dilemma, under pressure to disarm militia • Philippine Convoy Attacked Near Site of Massacre, AFP Reports • Abu Sayaaf behead Filipino hostage • Geo-strategic Front • Social Front 35 • Philippine troops arrest 62 people under martial law • Manila, Moro rebels resume peace talks • Environmental front Thailand • Political Front 36 • Thai king develops fever, put on saline drip • Najib To Meet Southern Thailand's Muslim Leaders • Army having failed, give political solutions a chance • Geo-strategic Front 39 • Cambodia opens road building link to Thailand • Economic Front 40 • THAILAND: Strong farming sector key to Thai growth - study • Social Front 41 • Two killed in blast ahead of leaders’ visit to Thai south • Five Thousand Thaksin Supporters Stage Rally Against Abhisit Vietnam • Political Front • Geo strategic Front 42 • Vietnam concerned over South China Sea sovereignty disputes • Foreign Relations 43 • Vietnam-China trade, tourism fair opens in Vietnam • Vietnamese president speaks with Pope, moving toward diplomatic ties • Vietnam releases white paper on national defense • Economic Front 45 • Vietnam expands energy projects to Africa • Vietnam's export to U.S. hits $9.3 bln in first 10 months • Vietnam's import from Indonesia stands at $1.18 bln in first 10 months • Vietnam Signs Agreement With World Bank For $65.26-Million Loan • India asks Vietnam to clear regulatory hurdles for Tata plant

311 • SE Asia Stocks-Indonesia leads falls, Vietnam up • Vietnamese prime minister calls for more renewable energy • Vietnam to sell 400,000 tons of rice to Philippines • Vietnamese exports top US$380m • Social Front Cambodia • Political Front • Economic Front 49 • Hun Sen praises China for building hydropower plants in Cambodia • IMF warns action needed on Cambodia's banks, economy must diversify • Social Front 51 • Cambodia's first war crimes trial marred by flaws • Uighurs flee China, seek asylum in Cambodia • Cambodia reports 480 cases of A/H1N1 flu, 5 die Singapore • Political Front 51 • MM Lee says having younger politicians create better results for S'pore • Economic Front 52 • Singapore to host Asian edition of World Islamic Banking Conference • S'pore drops three spots in survey of top real estate investment markets • Economists upgrade forecasts for Singapore's GDP to grow 5.5% in 2010 • Social Front 55 • Global rise in infectious diseases due to population growth, urbanisation • Environmental Font Laos • Economic Front • Social Front 55 • Vietnam helps build capacity of Lao officials • Vientiane focuses on poverty reduction

312

Summary

At Political Front • Indonesia Chairwoman of the Indonesian Democratic Party Struggle (PDI-P) Megawati Soekarnoputri is ready to lead the party again if re-selected during a national congress next year, a PDI-P executive said. Indonesia’s top brass met yesterday to discuss a supposed threat to the country after President Susilo Bambang Yudhoyono warned that unnamed forces were planning to use an anti-graft rally to topple him. The heads of the armed forces, the police and the intelligence agency were called to the security ministry to examine the alleged threat to the government surrounding the anti- corruption march scheduled for tomorrow, officials said. Yudhoyono’s latest claims of a secret plot to oust him from power - he made similar comments after a terror attack in July - have been dismissed as “paranoid” by his critics. Anti-graft activists have also blasted suggestions that their rally is anything but a popular movement against rampant corruption. They called on Yudhoyono to stand by them rather than portray them as threats to the nation. • Malaysia All elected MCA central committee members should resign to enable for fresh polls to be called, said Deputy Prime Minister Tan Sri Muhyiddin Yassin. In giving this advice, he said the move would enable the delegates to determine the future of MCA, and not leave the decision solely in the hands of the leaders. Muhyiddin said the members should know the solution to bring the party out of its crisis.Muhyiddin said the resignations to trigger fresh elections was one of the initiatives suggested by Prime Minister and Barisan Nasional chairman Datuk Seri Najib Tun Razak to solve the MCA crisis • Philipine Former president Joseph Estrada on Saturday said that the declaration of martial law in the province of Maguindanao is "not necessary" to bring peace and order to the area. "They should be able to arrest those behind the Magindanao massacre and bring justice to the victims without declaring Martial Law," Estrada said in a press statement released by the United Opposition (UNO)."A Martial Law declaration is not necessary to bring peace and order and achieve justice for the victims of the Maguindanao massacre. My administration was able to overrun the 46 camps of the MILF in Mindanao without declaring Martial Law," was quoted as saying. ."Martial Law is the more dangerous approach because any attempt to disarm a member of the MILF, whether intended or mistaken, will lead to further, possibly greater hostilities. It entertains a possibility of an escalation of violence, even to other areas of Mindanao, keeping the situation open- ended," Plaza said in the UNO statement. At Economic Front • Indonesia

313 The government has increased measures to meet its target of catapulting the country to the top fish producer in the world in the coming six years. Fadel said Indonesia’s abundant fishery and maritime potential should be converted into huge foreign exchange reserves so the sector became the backbone of the country’s economy. Indonesia will receive a US$200 million loan from the Asian Development Bank (ADB) for further reforms that support the government's ongoing efforts to spur sustainable growth and cut poverty. "Indonesia has carried out wide ranging economic reforms since emerging from the 1997-1998 Asian financial crisis, and more recently has taken swift and decisive steps to address the threats posed by the global financial crisis. "There have been broad improvements in the investment environment, governance and other key areas, but significant challenges remain. • Thailand Thailand still represents an "attractive opportunity" for investors despite the country's economy taking a "beating" from the global downturn, new research has claimed. Real GDP is forecast to fall by 4.5% in 2009, according to a study by Business Monitor International, but the Thai economy is showing "embryonic signs of recovery", the researchers said.GDP is forecast to grow by 2.2% in 2010 and Thailand's status as a major agricultural producer gives local manufacturers "easy access" to raw materials, BMI's Q1 2010 report into the country's food and drink sector claimed. • Phillpine The failure of the government’s privatization program and the deterioration of revenue collection remain causes for concern as they would lead the Philippines to incur a budget gap equivalent to 4 percent of its economic output, pundits said. In a research note, GlobalSource said it anticipates the budget deficit this year would likely hit closer to four percent of the gross domestic product (GDP) and 3.6 percent in 2010 if revenues continue to decline while spending would grow by double-digits. Although the shortfall will likely not narrow by much next year, it would still be an improvement over this year’s fiscal gap, the think-tank said. • Malysia Malaysia's prime minister has announced an impressive raft of liberalisation measures since he took office in a bid to woo back investors, but his efforts may founder unless he takes steps to stamp out corruption. Najib Razak took the top job in April charged with renewing a government that was rocked in polls last year as many voters forsook the coalition that has ruled this Southeast Asian country for over half a century, tired of broken pledges to tackle graft. Since he came to power, however, a scandal over a port trade zone close to the capital has emerged, exposing links between government politicians and business and worrying holders of $1 billion of bonds who fear they may not be repaid. Najib has promised to prosecute any wrongdoing but was forced at a recent presentation to investors in New York to promise that the government would honour the bonds that were initially sold with a fake government guarantee. The public sectors dealing in halal food in Malaysia and Pakistan are working towards forging linkages to increase cooperation in the field of agriculture and veterinary services. The delegation, he said, will also visit world-class infrastructure established by the private sector in Pakistan, including the Livestock Production Research Institute at Lahore and the Buffalo Research Institute in Punjab.

314 MALAYSIA is a trading nation and its basic trade policy is to promote the development of a liberal and fair global trading environment.At the international level, this work is done largely through the World Trade Organisation.But progress on this front has been slow. So, like many other countries, Malaysia has resorted to concluding regional and bilateral free trade agreements (FTAs) to complement its efforts at the multilateral level. FTAs provide quicker and higher levels of market access between signatories. Traditionally confined to trade in goods, FTAs nowadays include trade in services. They also address issues relating to investment, intellectual property rights, competition policy and industry standards. Financial institutions say employment of highly-skilled labour a key ingredient Banks can innovate and support the high income growth model for which a basic ingredient is the setting up of industries that employ highly-skilled labour. “All over the world, countries with high income would have industries and activities involving highly skilled workers who would be paid high wages,” said Sanjeev Nanavati, CEO of Citibank Malaysia. Japan’s investment in Malaysia between January and September surged to US$1.87bil involving 45 approved projects compared with US$1.6bil total investment in 2008 with 60 approved projects. “This makes Japan the largest foreign investor in Malaysia, surpassing the total approved amount for the whole of last year,” said Deputy Prime Minister Tan Sri Muhyiddin Yassin • Vietnam Vietnam's import from Indonesia stood at 1.18 billion U.S. dollars in the first ten months of this year, down 20 percent from the same period last year, the information center of Ministry of Industry and Trade said on its website on Friday. In this period, paper was the item which Vietnam imported most from Indonesia with an expenditure of 140.47 million U.S. dollars, said the center. Vietnam has won a contract to export 400,000 tons of rice to the Philippines, authorities said Wednesday.Officials at the Vietnam Food Association confirmed Vietnam had won four out of six 100,000-ton lots to export to the Philippines at an auction held Tuesday. The other two lots went to South Korea and Germany. The rice will be delivered between February and May at an average price of about 650 dollars for Vietnam 25-per-cent broken white rice, the state-run newspaper Thanh Nien reported. Domestic rice prices in Vietnam have risen sharply in recent days on rumors of shortages. Unhusked rice has risen to 5,000 dong (0.28 dollar) per kilogram, from 4,000 dong two weeks ago. • Cambodia The International Monetary Fund said Cambodia must undertake 'critical actions' to strengthen its battered banking system, including better supervision by the central bank and faster implementation of measures to boost banks' minimum capital requirements. In a report released late Tuesday following a September visit by an IMF team, the fund's directors said problems inherent in Cambodia's banking sector had been exacerbated by the global economic crisis which had hit the overinflated property market. At Foreign Relations Front

315 • Indonesia China on Monday pledged to work with Indonesia to push forward the bilateral strategic partnership. China's top legislator Wu Bangguo and top political advisor Jia Qinglin made the remarks in separate meetings with Taufik Kiemas, Chairman of the People's Consultative Assembly of Indonesia. Indonesia valued the friendly and cooperative ties with China, he said, hoping that the two nations would increase pragmatic cooperation in infrastructure construction and resources exploitation. He said the People's Consultative Assembly was ready to strengthen exchanges and cooperation with the NPC and the CPPCC to contribute to comprehensive growth of Indonesia-China ties • Malaysia Prime Minister Datuk Seri Najib Tun Razak arrived here last night for the Malaysia- Thailand annual consultation.Najib is also the first head of government to officially visit Thailand under the administration of Prime Minister Abhisit Vejjajiva. At Social Front • Indonesia Vehicles passing through the Sudirman-Thamrin protocol streets are forced to slow down their amid a rally by Islamic organization Hizbut Tahrir Indonesia on Sunday. Protesters from the association demanded the government solve the Bank Century debacle. About 2,000 Muslim protesters urged Indonesian President Susilo Bambang Yudhoyono on Sunday to better fight government corruption that is tainting the leader's second term in office. BALI, Indonesia - Indonesian police say they have arrested seven Iranians flying into the tourist island of Bali carrying at least 5 pounds (2 kilograms) of methamphetamine in their stomachs. • Philippine A political clan in Mindanao blamed for a horrific political massacre in the Philippines was accused on Wednesday of killing more than 250 people during an eight-year reign of terror in a strife-torn southern province. Explosive allegations of chainsaw murders and victims being buried alive were leveled by the nation’s human rights chief as judicial authorities charged the leaders of the Ampatuan clan with rebellion.Police also said that they suspected at least 161 people, including rogue soldiers and policemen loyal to the Ampatuans, of direct involvement in last month’s political massacre in Maguindanao that left 57 civilians death. Tribal gunmen in the southern Philippines warned on Friday they would massacre dozens of hostages if police made a rescue bid, as hundreds of security forces surrounded their mountain lair. The two-day hostage drama was the latest unrest to hit the Philippines' volatile Mindanao region, after a political massacre last month shocked the nation and triggered martial law in one province. The two-day talks between the Philippines government and representatives of the Moro Islamic Liberation Front (MILF) ended Thursday with both sides optimistic over the continuation of the stalled peace parleys. Reports reaching Manila said the formal resumption of the government-MILF peace talks had proceeded as scheduled in the

316 Malaysian capital, Kuala Lumpur, with the presence of members of the International Contact Group (ICG). Thousands of militiamen trained and armed by the Philippine government have protected the country's major cities and towns from Muslim and communist rebels for decades by backing up an overstretched army. Philippine troops arrested 62 people and discovered another major weapons cache after martial law was imposed in a southern province following the country's worst political massacre But the part-time soldiers are often ill-disciplined fighters drawn from the ranks of the unemployed, landless farmers and ex-soldiers, and have gained notoriety for abusing civilians, looting homes or ending up in the pockets of political warlords as their private armies.With militiamen accused in last month's massacre of dozens of civilians and an ongoing standoff to free 47 hostages in the volatile southern Philippines, the strategy of arming these groups is once again being called into question. • Vietnam Pope Benedict XVI met on December 11 with Vietnam’s President Nguyen Minh Triet. It was the first meeting ever between the Pontiff and the head of the Communist nation. After the 30-minute meeting, the Vatican released a statement applauding this “significant stage in the progress of bilateral relations.” The Vatican and Vietnam do not currently have formal diplomatic relations, although diplomatic talks have been taking place for several years. Before leaving for Europe, the Vietnamese leader said that he was hoping to establish diplomatic relations. Without addressing that question directly, the Vatican statement indicated that the December 11 conversation had centered on the prospects for Church-state relations. • Thailnd Five thousand supporters of former Thai leader Thaksin Shinawatra rallied in Bangkok, seeking to put pressure on Prime Minister Abhisit Vejjajiva, whose rule they say lacks legitimacy.

Detailed News Monitoring Report

Indonesia

317 • Political front: • Megawati ready to lead PDI-P again: Daughter Chairwoman of the Indonesian Democratic Party Struggle (PDI-P) Megawati Soekarnoputri is ready to lead the party again if re-selected during a national congress next year, a PDI-P executive said. Puan Maharani said Mega would be ready to carry out the order from the party for the 2010-2015 period.She added 33 regional representatives supported Mega's bid for the party candidacy. During the meeting, head of the Central Java regional representative Murdoko said all 35 branches across the province had confirmed their support for Megawati. The national congress is scheduled to be held in April next year. Earlier in the day, Megawati's brother Guruh Soekarnoputra met with East Java leaders of the Indonesian Democratic Party of Struggle (PDI-P) in Ngawi, East Java, to gain their support for his chairmanship. Head of the Guruh campaign team for East Indonesia, Zainal Abidin, said Guruh had received support from various provinces such as Papua and several provinces in Sulawesi. • Indonesian president fears plot Indonesia’s top brass met yesterday to discuss a supposed threat to the country after President Susilo Bambang Yudhoyono warned that unnamed forces were planning to use an anti-graft rally to topple him. The heads of the armed forces, the police and the intelligence agency were called to the security ministry to examine the alleged threat to the government surrounding the anti- corruption march scheduled for tomorrow, officials said. The meeting came after Yudhoyono cryptically told a gathering of his Democratic party on Sunday that the rally was a front for a “hidden political scenario”.Yudhoyono is under mounting pressure over corruption allegations that have besieged the administration since his landslide election victory in July on the back of promises of good governance and economic growth. The softly-spoken ex-general has been slow to discipline the officials involved and has seemed out of touch with public anger over the endless stream of corruption scandals. His taciturn exterior was shaken when he angrily rejected suspicions that money from a 6.7tn-rupiah ($710mn) government bailout for a failed bank found its way into his campaign coffers. Yudhoyono’s latest claims of a secret plot to oust him from power - he made similar comments after a terror attack in July - have been dismissed as “paranoid” by his critics. Anti-graft activists have also blasted suggestions that their rally is anything but a popular movement against rampant corruption. They called on Yudhoyono to stand by them rather than portray them as threats to the nation. • Foreign Relations: • Malaysia-Indonesia Media Cooperation Should Continue The cooperation programme between the Malaysian and Indonesian media should be continued in future to resolve current issues and maintain close relations between the two countries.

318 Head of the Indonesian Journalists Association Drs Tarman Azzam said although Malaysia and Indonesia occasionally had differences of opinion on culture previously, the media cooperation had benefited both countries in resolving the issues. "The 'Ikatan Setia Kawan Wartawan Malaysia-Indonesia' which was set up in 2007, which aims to forge stronger relations between Malaysian and Indonesian media organisations and practitioners, can play a role as intermediary in resolving problems between the two countries in future," he said. He said this to reporters after attending a dinner in conjunction with the Malaysia- Indonesia Economic Seminar (SEMI 2009) and the visit by 20 Media Senior Editors from Indonesia. Also present at the dinner were Information Communication and Culture Minister Datuk Seri Dr Rais Yatim, chief executive officer of the Malaysian Press Institute (MPI) Datuk Chamil Wariya and chief executive officer of Kuala Lumpur Tower Datuk Zulkifli Mohamad. • Economic Front • Indonesia the world’s largest fish producer in 2015: Minister The government has increased measures to meet its target of catapulting the country to the top fish producer in the world in the coming six years.Maritime Affairs and Fisheries Minister Fadel Muhammad said Wednesday, however, the achievement would require a change in the development program’s orientation from land to marine. Fadel said Indonesia’s abundant fishery and maritime potential should be converted into huge foreign exchange reserves so the sector became the backbone of the country’s economy. “We have projected that the country will emerge as the world’s biggest fish producer in 2015,” Fadel told a ceremony that marked the celebration of Nusantara (archipelago) Day in Makassar.Fadel said the government expected the event to kick-start a new development strategy that relied on maritime resources. • Social front • Indonesia Gets US$200 Million To Spur Growth, Cut Poverty Indonesia will receive a US$200 million loan from the Asian Development Bank (ADB) for further reforms that support the government's ongoing efforts to spur sustainable growth and cut poverty. The ADB Board of Directors Tuesday approved the single-tranche loan for the Fifth Development Policy Support Programme, which provides co-finance for the development policy loans aimed at helping the government strengthen the investment environment, and improve public financial management and the delivery of services to the poor. "Indonesia has carried out wide ranging economic reforms since emerging from the 1997-1998 Asian financial crisis, and more recently has taken swift and decisive steps to address the threats posed by the global financial crisis. "There have been broad improvements in the investment environment, governance and other key areas, but significant challenges remain. "To continue the reform process, the government has sought financial assistance from development partners," the Manila-based ADB said in a statement issued here today.The statement quoted senior country specialist in ADB's Indonesia Resident Mission, Sharad Bhandari, as saying that the primary rationale of this fifth support programme was to reinforce the government's efforts to improve competitiveness, boost public financial

319 management and governance and contribute to poverty reduction and improved public service delivery to the poor. The fifth programme encompasses reforms focused on strengthening the regulatory environment for investors, reducing the cost of regulatory compliance, improving the government's budget process and management of public funds, and fine tuning poverty alleviation programmes to make sure they reach the neediest. The programme loan complements a broad range of ADB assistance to Indonesia, including a US$1 billion equivalent Public Expenditure Support Facility Programme loan and a countercyclical support loan of US$500 million to help the government counter the impacts of the global economic crisis. The loan, from ADB's ordinary capital resources, has a 15-year term with a grace period of three years and an interest rate determined in accordance with ADB's LIBOR-based lending facility. • 2,000 demonstrators protest Indonesian corruption Vehicles passing through the Sudirman-Thamrin protocol streets are forced to slow down their amid a rally by Islamic organization Hizbut Tahrir Indonesia on Sunday. Protesters from the association demanded the government solve the Bank Century debacle. About 2,000 Muslim protesters urged Indonesian President Susilo Bambang Yudhoyono on Sunday to better fight government corruption that is tainting the leader's second term in office. Yudhoyono was re-elected in a landslide victory in July on a promise to stamp out systemic corruption. But his popularity has already been tested by scandals surrounding Indonesia's anti-graft commission and a 6.76 trillion rupiah ($715 million) government bailout of a bank. Supporters of the Hizb ut-Tahrir, an international network that advocates a worldwide Islamic state, staged a peaceful protest in downtown Jakarta calling for the president to bring to justice corrupt government officials. Police estimated some 2,000 protesters attended the rally. "We want the government to really prosecute - as they promised to - all the government officials involved in corruption," protest organizer Ismail Yusanto said. Supporters of the group held similar protests in two other cities, Surabaya and Yogyakarta, involving several hundred people. Organizers said those demonstrations ended peacefully. Yudhoyono faces questions over the last year's bailout of a bank, which critics have alleged is full of irregularities. Indonesian lawmakers last week launched an inquiry into allegations that the bailout benefited Yudhoyono's re-election campaign - a claim he has denied. The Indonesian government's struggle against graft has also been hurt by a monthslong battle between the top anti-graft agency and rival police and prosecutors in Indonesia. An investigation found that senior law enforcers tried to frame anti-graft officials from the Corruption Eradication Commission on fabricated charges of bribery and blackmail. The commission has been key to efforts to fight corruption in recent years. Indonesia is the world's most populous Muslim-dominated nation. According to advocacy group Transparency International's corruption index, Indonesia ranks 111th out of 180 countries. China pledges to advance strategic partnership with Indonesia

320 China on Monday pledged to work with Indonesia to push forward the bilateral strategic partnership. China's top legislator Wu Bangguo and top political advisor Jia Qinglin made the remarks in separate meetings with Taufik Kiemas, Chairman of the People's Consultative Assembly of Indonesia. China on Monday pledged to work with Indonesia to push forward the bilateral strategic partnership. "We always attach great importance to the relations with Indonesia," said Wu, chairman of the Standing Committee of the National People's Congress (NPC), China's top legislature. Hailing the sound development momentum of China-Indonesia ties, Wu said the countries had enjoyed increasing mutual political trust, fruitful cooperation in various sectors, and close coordination in regional and international organizations.China on Monday pledged to work with Indonesia to push forward the bilateral strategic partnership. The two nations, both as important nations in the Asia- Pacific region, enjoyed broad common interests, Wu said, hoping that the two sides would enhance parliamentary exchanges and cooperation to enrich the contents of bilateral ties Jia hoped the CPPCC, the top political advisory body, and the People's Consultative Assembly of Indonesia would maintain close exchanges and learn from each other to help promote relations between the two nations. This China trip from Dec. 6 to 9 was Taufik's first visit abroad since taking office in October this year. Taufik told Chinese leaders that this showed the importance attached by Indonesia to relations with China. Indonesia valued the friendly and cooperative ties with China, he said, hoping that the two nations would increase pragmatic cooperation in infrastructure construction and resources exploitation. He said the People's Consultative Assembly was ready to strengthen exchanges and cooperation with the NPC and the CPPCC to contribute to comprehensive growth of Indonesia-China ties. Taufik reiterated that his country would firmly stick to the one-China policy. • President expected to front AIDS prevention campaign The National AIDS Commission (KPA) estimates there are 298,000 people currently infected with HIV in Indonesia. The KPA recorded 46.2 percent of HIV infections were spread through sexual intercourse in 2008, and 54 percent in the period from January to September this year. The health ministry predicts Indonesia will have 501,400 infected with HIV by 2014 if no special action is taken to curb infection spread. • Corruption, lack of transparency block foreign investment in Indonesia: EU The European Union (EU) identified Indonesia's poor governance and corruption practices as part of key obstacles to expanding trade and investment between European nations and Indonesia, the Jakartapost.com quoted an envoy as saying on Tuesday. That was concluded by the EU's recent study on challenges and opportunities for trade and investment in Indonesia presented by Julian Wilson, Ambassador of the European Commission to Indonesia and Brunei Darussalam. Other key obstacles and constraints identified by the study include the lack of trade facilitation, poor customs administrations, uncertain tariff rates, import controls on some commodities, the lack of transparency in government's procurements, the lack of infrastructure, and the restrictions on foreign ownership in some sectors. Those obstacles and constraints, Julian said, might have been the reasons why the EU traded and invested more with Indonesia's neighboring countries with smaller economies or with other emerging markets of similar size as Indonesia.

321 "The EU, however, still sees Indonesia's growing prospects, as long as Indonesia is willing to undertake reforms to its business and investment climate and to deepen its integration process in the areas of trade in services and investment," he explained. • 7 Iranians arrested carrying drugs into Bali BALI, Indonesia - Indonesian police say they have arrested seven Iranians flying into the tourist island of Bali carrying at least 5 pounds (2 kilograms) of methamphetamine in their stomachs. Bali police officer Col. Kokot Indarto said Thursday that the seven men were nabbed the day before at Bali's international airport. He said they were detected after one man who arrived with no luggage was x-rayed by customs officers. Indarto said the men were thought to be part of an international drug smuggling organization. Eleven Iranians were arrested in October and November carrying a combined $13 million worth methamphetamine into Bali. Those detained included eight women.Drug trafficking carriers the death penalty in Indonesia. • Environmental Front • Magnitude 5.9 quake shakes Indonesian island-USGS A magnitude 5.9 earthquake shook Simeulue Island in northwestern Indonesia on Thursday, the U.S. Geological Survey reported. The quake, quite shallow at a depth of 21.7 miles (35 km), was centered on Simeulue, a small island west of Sumatra in the area that was devastated by the 2004 tsunami that killed more than 230,000 people. The epicenter was 195 miles (310 km) west of Medan in Sumatra.Indonesia sits on the so-called "Pacific Ring of Fire," a rim of intense seismic activity around the Pacific Ocean Malaysia • Political Front • Muhyiddin: It’s better for all to resign All elected MCA central committee members should resign to enable for fresh polls to be called, said Deputy Prime Minister Tan Sri Muhyiddin Yassin. In giving this advice, he said the move would enable the delegates to determine the future of MCA, and not leave the decision solely in the hands of the leaders. “If they see this as a solution to a dead end, then it is best they do it voluntarily,” he said to Malaysian reporters here yesterday. He was asked to comment on MCA deputy president Datuk Seri Dr Chua Soi Lek’s statement that 13 central committee members, including himself, had expressed their willingness to resign to pave the way for fresh party elections. Muhyiddin said the members should know the solution to bring the party out of its crisis.Muhyiddin said the resignations to trigger fresh elections was one of the initiatives suggested by Prime Minister and Barisan Nasional chairman Datuk Seri Najib Tun Razak to solve the MCA crisis. • Foreign Relations • Najib in Bangkok for talks Prime Minister Datuk Seri Najib Tun Razak arrived here last night for the Malaysia- Thailand annual consultation.Najib is also the first head of government to officially visit Thailand under the administration of Prime Minister Abhisit Vejjajiva.

322 Najib is accompanied by his wife Datin Seri Rosmah Mansor, Transport Minister Datuk Seri Ong Tee Keat, Home Minister Datuk Seri Hishammuddin Tun Hussein, Higher Education Minister Datuk Seri Khaled Nordin, International Trade and Industry Minister Datuk Mustapa Mohamed, Works Minister Datuk Shaziman Mansor, Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop, Defence Minister Datuk Seri Zahid Hamidi and Human Resources Minister Datuk Dr S. Subramaniam. The consultation will be held today where a joint statement will be issued by the two leaders. The highlight of Najib’s three-day visit will be his tour of Narathiwat in southern Thailand tomorrow where he will be joined by Abhisit. The province is among the troubled areas in southern Thailand that have seen a surge of violence in recent years that saw nearly 4,000 people killed. Courtesy call: Thai Prime Minister Abhisit Vejjajiva presenting a souvenir to Home Minister Datuk Seri Hishammuddin Tun Hussein during a courtesy call in Bangkok yesterday. Hishammuddin is part of a delegation led by Prime Minister Datuk Seri Najib Tun Razak for the Malaysia- Thailand annual consultation.With various plans in place, Abhisit said he was confident that the Thai government would solve the long-standing conflict. • Corruption stymies Najib's investment bid Malaysia's prime minister has announced an impressive raft of liberalisation measures since he took office in a bid to woo back investors, but his efforts may founder unless he takes steps to stamp out corruption. Najib Razak took the top job in April charged with renewing a government that was rocked in polls last year as many voters forsook the coalition that has ruled this Southeast Asian country for over half a century, tired of broken pledges to tackle graft. Since he came to power, however, a scandal over a port trade zone close to the capital has emerged, exposing links between government politicians and business and worrying holders of $1 billion of bonds who fear they may not be repaid. Najib has promised to prosecute any wrongdoing but was forced at a recent presentation to investors in New York to promise that the government would honour the bonds that were initially sold with a fake government guarantee. Najib has to take hard measures against what has historically been accepted in Malaysia, which is corruption," said a fund manager who attended the presentation and who is a bondholder of the Port Klang Free Trade Zone. Costs for the free trade zone may spiral to 12.45 billion ringgit ($3.67 billion) from an initial 1.8 billion ringgit, according to a report from PricewaterhouseCoopers that identified potential conflicts of interest in land sales. As a result of the concerns over corruption and the questions over repayment, bonds issued to finance the construction yield 5.9 percent, a full 213 basis points (2.13 percentage points) over five year Malaysian government debt. The fund manager, whose company policy does not allow him to be named, is a member of a bondholder group that wants the government to go a step further and issue iron-clad government debt to replace the bonds, removing the risk of non-payment. Despite promises made by both Najib and his predecessor to end corrupt practices, Malaysia has fallen to a record low of 56th place among 180 countries polled in anti-graft watchdog Transparency International's 2009 corruption perception index. That is still

323 better than its emerging Asian neighbours such as 84th placed Thailand and 111th placed Indonesia, but Malaysia has fallen from 29th place in 2004 while Indonesia has risen from 133rd place over the same time period. Najib has taken measures to stem vote buying in his own political party, the United Malays National Organisation, but observers say there has been little change in tolerance of abuse among politicians and in the country as a whole. "There's no denying that the rhetoric coming out from the (Malaysian) government has been extremely sound but the real test is implementation, and so far we have not seen anything yet," said Terence Gomez, economics professor at the University of Malaya. The fall in Malaysia's rankings has coincided with jitters over the stability of the country's political system in the wake of the 2008 elections and portfolio investors withdrew almost $40 billion between the second quarter of 2008 and the second quarter of 2009. Money trickled back in the third quarter but Malaysia is far from having to douse the flows of hot money that have flowed into the developing world's top reformers such as Brazil and Indonesia. Najib's reform efforts so far have seen some elements of the New Economic Policy (NEP), a four-decades-old economic and social affirmative action policy for the Malays and other indigenous communities, rolled back. He has recieved a generally positive response for that and other measures to lift investment caps for foreigners in areas like tourism and financial services so as to boost investment. Malaysia saw its first flicker of interest on Tuesday when US banking giant Goldman Sachs Group Inc took advantage of the liberalisation measures to set up a fund management and advisory business here. Politically, too, Najib has stabilised a government that was so wobbly in September 2008 that it had to ship 40 MPs to Taiwan to put them out of reach of opposition leader Anwar Ibrahim's bid to lure them to join him and topple the National Front coalition. Fights in ethnic Chinese and ethnic Indian parties are occupying the premier's time and stretching his ability to reach out to non-Malay voters who he needs win back in order to have a convincing national mandate when he goes to the polls. The biggest concern is the Malaysian Chinese Association (MCA), the second-largest government party, which represents the 25 percent of the population that is ethnic Chinese and which is paralysed by a leadership row that has forced Najib to mediate. "Even if the MCA were to resolve its problems, it will likely not have enough time to win back the lost support from the community," said James Chin, political science professor at Monash University in Kuala Lumpur • Economic Front • Pakistan And Malaysia To Forge Ties In Halal Food The public sectors dealing in halal food in Malaysia and Pakistan are working towards forging linkages to increase cooperation in the field of agriculture and veterinary services. Wajihullah Kundi, commercial counselor for the Pakistan High Commission here, said a high level delegation from the Agriculture and Agro-Based Industry Ministry and Veterinary Services Department was currently in Pakistan to ascertain prospects for forging strategic cooperation. He said the effort was in line with the Malaysia External Trade Development Corporation's target to increase bilateral trade between the two countries from the

324 existing level of over US$1 billion to US$10 billion by 2015.A delegation comprising of officers from the Agriculture and Agro-Based Industry Ministry and Veterinary Services Department will hold meetings with their Pakistani counterparts, Kundi said in a statement here on Friday. The delegation, he said, will also visit world-class infrastructure established by the private sector in Pakistan, including the Livestock Production Research Institute at Lahore and the Buffalo Research Institute in Punjab. • Malaysian company wins Iraq oil contract Malaysia's state owned oil company Petronas and Royal Dutch Shell have won the rights to develop one of the world's largest remaining untapped oilfields in Iraq. Iraq's Oil Minister says the joint venture outbid the French oil company Total and its partner China's CNPC, in the country's second auction of oil contracts since the 2003 US invasion. The Majnoon field in southern Iraq is one of the largest untapped oilfields left on earth, with an estimated 12.6 billion barrels of reserves. • Should Malaysia persue free trade agreements? MALAYSIA is a trading nation and its basic trade policy is to promote the development of a liberal and fair global trading environment.At the international level, this work is done largely through the World Trade Organisation.But progress on this front has been slow. So, like many other countries, Malaysia has resorted to concluding regional and bilateral free trade agreements (FTAs) to complement its efforts at the multilateral level. FTAs provide quicker and higher levels of market access between signatories. Traditionally confined to trade in goods, FTAs nowadays include trade in services. They also address issues relating to investment, intellectual property rights, competition policy and industry standards. The establishment of the Asean Free Trade Area (Afta) in 1993 was the first such initiative undertaken by Malaysia. The Asean Economic Community will come into being in 2015 and Afta will facilitate the free movement of goods, services, investment, skilled labour and a freer flow of capital, among member countries. To date, Malaysia has concluded bilateral FTAs with Japan, Pakistan and New Zealand, and is actively negotiating with Chile, India and Australia. Together with other Asean members, Malaysia has concluded regional FTAs with China, South Korea, Japan, India and Australia-New Zealand. Negotiations between Asean and the European Union (EU) are paused, pending resolution of the EU’s position on Myanmar. The record shows that Malaysia’s trade performance with its FTA partners has improved following the conclusion of these agreements. Exports to China, for instance, increased from RM42.7bil in 2006 to RM63.2bil in 2008, while trade with Pakistan expanded from RM4.3bil in 2007 to RM5.7bil in 2008. In the case of Japan, there has been an improvement in the terms of trade, with Malaysia recording a trade surplus for the first time in a decade. In 2008, the surplus totalled RM6.7bil, as exports increased by 42.2% to RM71.8bil in 2008 from RM50.5bil in 2005. Malaysian exporters are beginning to realise the importance of FTAs and the benefits they bestow. But this has not assuaged critics who argue that domestic industries and service providers face increased competition from the concessions accorded to countries under such agreements.

325 There is no doubt, however, that properly-negotiated FTAs benefit participating countries over the longer term. In the short term, some companies may find that they have to work harder and become more efficient to stay competitive. But this is an acceptable challenge, given that concessions accorded under FTAs are normally granted in stages over a period of time, sometimes as long as 10 years. This gives domestic producers ample time to adapt their production processes to meet the increased competition in the domestic market. The end result – low tariffs for both exporters and importers – is a win-win outcome for all parties. Exporters will have improved access to the markets of Malaysia’s FTA partners, and local producers will find that their lower cost structure will make them more competitive in the international market. FTAs also aim to create a conducive environment for investments by providing protection to investment and enhancing Malaysia’s standing as an attractive investment destination. They also provide a platform to address technical regulations and standards such as those applied on agricultural products for health and safety reasons. The need to meet these standards will also encourage Malaysians to upgrade themselves through better training, information sharing and the use of more modern technologies. For instance, the cooperation and collaboration being effected through the Malaysia- Japan Automotive Industry Cooperation (Majaico) programme is an important example of this kind of cooperation. One of the programmes undertaken by Majaico seeks to upgrade standards at the Components and Parts Testing Centre in Malaysia. This, in turn, will help local parts and components manufacturers meet Japanese standards. Malaysia will continue to use the FTA mechanism to explore opportunities to expand market access and boost business opportunities for exporters. Among the regions it is exploring are new and emerging markets, such as those in the Middle East. This region has in recent years become an increasingly thriving and lucrative market, and is also an important source of investments. The potential for increased trade and investment opportunities with these new potential partners should not be underestimated. • Tips on how to make M'sians become high income growth model Financial institutions say employment of highly-skilled labour a key ingredient Banks can innovate and support the high income growth model for which a basic ingredient is the setting up of industries that employ highly-skilled labour. “All over the world, countries with high income would have industries and activities involving highly skilled workers who would be paid high wages,” said Sanjeev Nanavati, CEO of Citibank Malaysia. The starting point is the availability of such a pool and in Malaysia’s case, there is an urgent need to iron out some serious human capital issues relating to education, innovation and the rate of emigration.It should consider inviting the top universities in the world to set up an international campus here, setting up more international schools which should be more accessible to Malaysians and making a concerted effort to change the quality of human capital. CIMB group chief financial officer Kenny Kim sees the banking sector’s role as providing financing schemes to grow new sectors of the economy, particularly in the knowledge intensive areas.Banks and the Government should also collaborate to support businesses seeking capital to grow in new areas such as clean energy.This is apart from

326 the bread-and-butter products such as credit cards, personal loans and mortgages. (In 2008, mortgages represented 54% of total consumer loans, vehicle financing 31%, personal loans 9% and credit cards 7%).There will be more emphasis on insurance, unit trust and structured products to complement traditional deposit products as a means of income growth and preservation.Banking services should become more accessible through the growing usage of Internet and mobile banking as well as call centres. A bigger role lies ahead for banks and other financial intermediaries in providing sufficient education and understanding of complex investment options. • Banks confident of robust SME loans growth next year Banks are confident of robust loans growth from small and medium enterprises (SMEs) next year in tandem with recovery in the economy and an increase in consumer spending.Loans growth and applications from the sector, which had been slow in the first half of this year, have since been picking up. OCBC Bank (M) Bhd head of commercial banking Jeffrey Teoh expected the “emerging corporates” from the SME sector, or its middle market segment, to see more active loans applications next year as the economy improved.OCBC gauges companies with an annual turnover of RM15mil and the loan size of above RM3mil as belonging to the middle market. The middle market segment comprises about 4% of OCBC’s total SME customer base. However, given that these are well-established companies, their loans approval amounts constitute more than 30% of the total SME loans it has approved year-to-date. Overall, OCBC’s SME assets currently stand at RM13bil. About a quarter of the bank’s business banking assets is from the SME segment. Teoh said OCBC continued to support viable businesses’ financing needs by participating actively in the government-backed loan guarantee schemes, such as the Working Capital Guarantee Scheme and Industry Restructuring Financing Guarantee Scheme. OCBC has been able to assist over 600 customers to the tune of almost RM700mil in loans approvals under these schemes. HSBC Bank Malaysia Bhd business banking director Peter Cheah said the outlook for next year would be promising as when consumer confidence returned, there would be every reason for SMEs to gear up and execute their growth plans.“When SMEs see the upside potential in the economy, their additional requirements for financial support for either capital expenditure or working capital should certainly spur loans growth,” he said, adding that HSBC’s strength lay with its involvement with the larger SMEs, especially as they began to venture internationally. On the present situation, Cheah said he did not have an accurate figure on how much SMEs business had contracted in the current year, although at the very peak of the economic crisis, its customers order book had shrunk from 30% to 50%.But, if it were any indication, he said, the initiative from the Government’s economic stimulus package, particularly through the recent guarantee funds of RM10bil launched in February, had certainly benefitted SMEs.. Alliance Bank Malaysia Bhd executive vice-president, head of SME banking, Steven Kenneth Miller also expected to see healthy growth in the SME sector, with the assumption that the current recovery would be sustainable.The positive outlook was buoyed by the Government’s expectation of the gross domestic product growth to return to positive in the current quarter which should benefit SMEs, he said, adding: “The

327 combined efforts of the stimulus programmes launched by all governments, and specifically in Malaysia, should act as a catalyst for growth. However, these programmes cannot support SME growth forever. “Instead, we will need to see actual organic growth and an increase in consumer spending in the local and regional markets to be comfortable that the current recovery is indeed sustainable.” • Malaysia's Oct trade rebound surprises The strong trade performance for October has caught many economists by surprise with some wondering if the momentum in external demand can be sustained. “The rebound in global economy is benefiting Malaysia’s exports as evidenced by the broad-based month-on-month growth in exports to key destinations. Year on year, the declines in exports to the United States and Japan are slowing, while shipments to Asean and the European Union rebounded,’’ said Maybank Investment Bank in a note yesterday. Malaysia’s exports grew 1.6% to RM54.3bil in October on a year-on-year basis, the first growth after 12 consecutive months of contraction, with the surprise in the numbers coming from exports of electrical and electronic (E&E) goods, as well as petroleum products. On a month-on-month basis, exports grew by 15%. Maybank said the fasting month of Ramadhan and the subsequent Hari Raya holidays between late August and late September partly explained the month-on-month surge in exports in October following the sluggishness in September.“Export data for Malaysia and Indonesia, the two Muslim-dominated countries in the region, show that these two economies outperformed other regional economies in terms of the month-on-month export growth in October after underperforming in September,’’ it said. AmResearch senior economist Manokaran Mottain noted that the figures in October compared four weeks of work with three weeks in September due to the festive season. The same goes for the year-on-year data as the Hari Raya holidays in 2008 were in October. “You are comparing against seasonal variations,’’ he explained, adding that while the economy had seen its worst days, the latest data could not be taken as a firm trend.Citigroup economist Kit Wei Zheng, in his note, said the October numbers were probably a signal of the long overdue cyclical catch-up story for Malaysia, in line with most other regional tech exporters (except for Singapore), which should be translated into the still weak manufacturing output numbers before long. “However, given the choppy nature of E&E exports in recent months, this catch-up may not take place in a straight line, with a month-on-month technical pullback in November entirely possible. “While recent upside surprise in October export figures suggest that the cyclical export recovery is gaining traction in Malaysia, we suspect that structural issues that preceded the recession could continue to be a drag on Malaysia’s manufacturing sector, after the initial bounce,’’ he said. Affin Investment Bank, in a note, said that while Malaysia’s exports had benefitted from the recovery in global demand for electronics, further recovery in global trade and production volume would also translate into higher demand for other major product groups, such as commodities.

328 • Japan’s investment in M’sia surges to US$1.87bil Japan’s investment in Malaysia between January and September surged to US$1.87bil involving 45 approved projects compared with US$1.6bil total investment in 2008 with 60 approved projects. “This makes Japan the largest foreign investor in Malaysia, surpassing the total approved amount for the whole of last year,” said Deputy Prime Minister Tan Sri Muhyiddin Yassin. To date, 2,260 projects with Japanese participation were being implemented in the manufacturing sector in Malaysia, with investments worth US$14.9bil, he told a meeting between him and captains of industries and businesses here yesterday.The meeting netted RM4.96bil in potential investments, he told Malaysian journalists later.Of the total, projects worth RM1.7bil had the prospects to be realised next year, he said.Muhyiddin is in Japan leading a four-day specific trade and investment mission beginning yesterday. Besides Tokyo, he will also go to Osaka. Present at the meeting were Malaysian Industrial Development Authority director-general Datuk Jalilah Baba and Malaysian Ambassador to Japan Datuk Shaharuddin Mohd Som. The meeting is organised by Mida with Bank of Tokyo-Mitsubishi and Asean-Japan Centre as co-organisers. Among the supporters are Japan Finance Corp, Japan External Trade Organisation, Mizuho Financial Group, Japan Chambers of Commerce and Industry, and Japan-Malaysia Economic Association.Japanese investments are mainly concentrated in the manufacturing of electrical and electronic products, non-metallic mineral products, petroleum products, chemicals and chemical products, transport equipment and fabricated metal products. Well-known Japanese companies from Tokyo and Kanto region operating in Malaysia include Honda, Hitachi, Hoya Electronics, Sojitz, Sony, Itochu, Toray, Taiyo Yuden, Shin-Etsu and TDK-Lambda. Japan had always been an important source of foreign direct investment and technology to Malaysia, said Muhyiddin.Over the last five years, Malaysia’s trade with Japan recorded an upward trend. Last year, Malaysia’s total trade with Japan was US$41.1bil, with exports at US$21.6bil and imports US$19.5bil. Japan was Malaysia’s third largest export market in 2008 and was Malaysia’s second largest import source. Major exports to Japan are liquefied natural gas, electrical and electronic products, wood products, chemicals and chemical products, optical and scientific equipment. Malaysia’s major imports from Japan are electrical and electronic products, machinery, appliances and parts, metal fabricated products, transport equipment, iron and steel products • Social Front Philippine • Political Front • Martial law in Maguindanao 'not necessary,' says Erap Former president Joseph Estrada on Saturday said that the declaration of martial law in the province of Maguindanao is "not necessary" to bring peace and order to the area. "They should be able to arrest those behind the Magindanao massacre and bring justice to the victims without declaring Martial Law," Estrada said in a press statement released by

329 the United Opposition (UNO)."A Martial Law declaration is not necessary to bring peace and order and achieve justice for the victims of the Maguindanao massacre. My administration was able to overrun the 46 camps of the MILF in Mindanao without declaring Martial Law," was quoted as saying. During his presidency, Estrada ordered offensives against the Moro Islamic Liberation Front (MILF) in an all-out war against the separatists. The military overran 46 camps of the MILF, including the main camp, Camp Abubakar. "In the Maguindanao case there is no desire to overthrow the government but there is a complete disregard of the laws of the land and extreme violence. That is why although lawless violence is a basis for Martial Law under the Constitution, President Estrada believes that swift military action is all that is necessary, without having to resort to authoritarian rule in the area," Estrada spokesperson Margaux Salcedo was quoted as saying. "What is needed in Maguindanao is for the government to fully enforce the law. It is ironic that the Arroyo administratrion now considers martial law as a last recourse to discipline a political ally," Makati Mayor Jejomar Binay, Estrada's running mate in the 2010 elections, said in the statement. He also said that the situation in the province is a result of the current administration's "unequal application of the law," attributing the lawlessness to the 'tolerance' of 'misdeeds' of political allies like the Ampatuans. Meanwhile, Agusan del Sur Rep. Ompong Plaza, UNO candidate for senator, warned that declaring Martial Law will cause more hostilities instead of achieve justice and peace and order in Mindanao, despite the declaration being limited to one province."Martial Law is the more dangerous approach because any attempt to disarm a member of the MILF, whether intended or mistaken, will lead to further, possibly greater hostilities. It entertains a possibility of an escalation of violence, even to other areas of Mindanao, keeping the situation open-ended," Plaza said in the UNO statement. • Amnesty calls for end to Philippine martial law Soldiers raid one of the mansions in Davao City in southern Philippines of the powerful Ampatuan clan, accused in the Nov. 23 slaying of 57 people traveling in the convoy of a political rival, to check for possible arms caches Sunday Dec. 6, 2009. Philippine troops arrested 62 people and discovered another major weapons cache in another township of Shariff Agua Sunday after martial law was imposed in a southern province following the country's worst political massacre, officials said. (AP Photo) (AP) Amnesty International called on the Philippine government Tuesday to revoke martial law in a southern province, where troops cracked down on a powerful clan and its armed supporters blamed for the massacre of 57 people. President Gloria Macapagal Arroyo last week declared military rule in Maguindanao province, allowing government forces to arrest members of the Ampatuan clan without court warrants and order some 2,400 loyalists to surrender their weapons. The Ampatuans, who had forged a political alliance with Arroyo and ruled the impoverished province unopposed for years, are the main suspects in the Nov. 23 ambush on an election rival's convoy that included 30 journalists and their staff. On the day martial law was announced Saturday, troops and police arrested Andal Ampatuan Sr., the family patriarch, and more than 20 others, including his sons and relatives. Beside murder, prosecutors plan to file rebellion charges against them for

330 allegedly fomenting armed resistance - a justification for martial law proclamation, Justice Secretary Agnes Devanadera said.A group of lawyers has challenged the proclamation, asking the Supreme Court on Monday to throw it out, arguing the law and order breakdown in Maguindanao did not amount to a rebellion. It was not clear when the high court will issue a ruling.Amnesty International urged authorities to "develop a quick and clear timetable" to end martial law and dismantle the country's armed paramilitary groups. Sam Zarifi, an Amnesty International official who had visited Maguindanao, said he found no evidence of serious violations by military personnel since the imposition of martial law, but that some 70 people had been arrested without warrants.He said more than 2,000 residents fled their homes because of military deployments. The government says troops and police are respecting human rights and that all those arrested will be brought to trial. It did not give a timetable for lifting martial law. The constitution says the law can be in affect for 60 days unless it is revoked, shortened or extended by Congress.Arroyo's proclamation is the first use of military rule in the Philippines since late dictator Ferdinand Marcos declared it nationwide more than 30 years ago.On Wednesday, Congress will convene to discuss the measure and is expected to approve it because Arroyo's allies dominate the lower house. • Foreign Relations • Economic Front • Privatization, revenue collection woes to persist The failure of the government’s privatization program and the deterioration of revenue collection remain causes for concern as they would lead the Philippines to incur a budget gap equivalent to 4 percent of its economic output, pundits said. In a research note, GlobalSource said it anticipates the budget deficit this year would likely hit closer to four percent of the gross domestic product (GDP) and 3.6 percent in 2010 if revenues continue to decline while spending would grow by double-digits. Although the shortfall will likely not narrow by much next year, it would still be an improvement over this year’s fiscal gap, the think-tank said. As of October, the national government has already breached its full-year deficit target of P250 billion, about 3.2 percent of GDP. This was a 326.9-percent growth to P266.1 billion from P62.3 billion in the same 10-month period last year.Tax agencies blamed the economic slowdown and the implementation of several revenue-eroding measures as culprit for the low revenue collection. Total revenues in the January to October period slipped 4.8 percent to P925.4 billion from last year’s P972.6 billion. In October alone, revenues reached P85.6 billion or 7.6 percent lower than last year’s P92.6 billion.Global Source said the government hoped to limit the shortfall through privatization, but asset sales earmarked for the year now seem unlikely. So far, the government has only generated P1 billion out of the P30 billion-goal it has set from privatizing its assets.Without this buffer, the finance department is looking at a P300-billion budget gap—or 3.8 percent of GDP—under a worst-case scenario. In a separate note, the UBS said the potential trend deterioration in revenue growth is still a concern. “Now, there is danger that government revenues—the perennial bugbear of Philippine finances—do not recover with a pickup in the economic activity,” Teather warned.If that

331 happened, he said, the incoming administration after the May 2010 elections will have to quickly make some tough decisions. The resulting deficit is now more easily sustained as the Philippines enjoys a combination of reasonable real and nominal GDP growth prospects, plus—in contrast to the period before 2003—an underutilized pool of domestic savings, he added The lender earlier raised its fiscal deficit forecast to 3.9 percent of GDP this year, or higher than the government’s 3.2 percent ratio. Teather earlier said the Philippines could sustain a wider budget deficit without pushing the debt-to-GDP ratio up in 2010 and beyond.This ratio is a key measure of how manageable is a country’s obligation relative to its annual economic output, with a declining ratio viewed favorable as this means the country would allot a smaller amount to pay off its debt. Union requests WTO panel on Manila’s tax regime on spirits • Philippines: US relief help now at $30M United States (US) Government ups its food aid in its disaster relief and recovery aid to the Philippines by another $ 10 Million, U.S. Ambassador Kristie A. Kenney announced. The additional $10 million brings the total US help to $30 M. According to reports, Kenney said "the additional assistance will help address the continuing needs of our friends in the Philippines, including the needs of communities not far from where we are standing."Kenney was in Baguio then, standing not more that a few kilometers from where the worst landslide of the year left many people permanently buried. Immediately after Tropical Storm Ondoy, Typhoon Pepeng, and Typhoon Santi ravaged the Philippines, the United States provided more than $14 million in rescue and relief aid to help over 10 million victims of the storms.Then on November 12, U.S. Secretary of State Hillary Rodman Clinton announced an additional $5.2 million in disaster relief and recovery assistance during her visit to the Philippines. The additional assistance unveiled by the Secretary will meet vital education, water and sanitation, health, and disaster preparedness needs.The WFP logistics hub is part of the U.S. Government effort to address accessibility concerns in the northern areas of Luzon. Many barangays are still isolated by damaged bridges and severe landslides. The WFP received $1 million to provide logistics support in the distribution of relief goods and much needed supplies.Through the assistance, the Philippine government and humanitarian agencies are now able provide assistance to more than 2 million people.Ambassador Kenney will visit Barangay Little Kibungan in La Trinidad, Municipality of Benguet Province, one of the hardest hit areas in the Cordillera Administrative Region due to a landslide that killed 77 people on October 8. Ambassador Kenney will also participate in the handover of relief items provided with U.S. Government logistical support to 142 Little Kibungan residents still displaced from their homes. • 250 killed during Ampatuans’ reign A political clan in Mindanao blamed for a horrific political massacre in the Philippines was accused on Wednesday of killing more than 250 people during an eight-year reign of terror in a strife-torn southern province. Explosive allegations of chainsaw murders and victims being buried alive were leveled by the nation’s human rights chief as judicial authorities charged the leaders of the Ampatuan clan with rebellion.Police also said that they suspected at least 161 people,

332 including rogue soldiers and policemen loyal to the Ampatuans, of direct involvement in last month’s political massacre in Maguindanao that left 57 civilians dead. Commission’s charges Chairman Leila de Lima of the Commission on Human Rights said that the Ampatuans had murdered more than 200 other people during a brutal eight-year rule that President Gloria Arroyo’s government had ignored because the clan was an important ally. Palace connections The patriarch of the clan, Andal Ampatuan Sr., had been governor of Maguindanao province and an ally of President Arroyo since 2001. Ampatuan Sr. and his relatives were allowed to run private armies as part of a government strategy to contain a long-running Muslim separatist insurgency in Maguindanao and other parts of southern Philippines.The Ampatuans were also a rich source of votes for President Arroyo’s ruling coalition. De Lima said witnesses, who only dared to come forward after the November 23 massacre triggered the clan’s downfall, had given horrifying accounts of people being buried alive and slain with chainsaws in “killing fields.”The President ended the alliance only after the Ampatuan clan was accused of organizing last month’s massacre, which was allegedly carried out to stop a rival politician from running for provincial governor of Maguindanao in next year’s elections. Police probe Police allege that Ampatuan Sr.’s son and namesake, Mayor Andal Ampatuan Jr. of Datu Unsay town, led a militia of more than 100 gunmen in abducting then shooting dead a convoy carrying female relatives of his political rival, plus a group of journalists. Ampatuan Jr. was detained three days after killings and has been charged with 25 counts of murder. After turning against her former allies, Mrs. Arroyo declared martial law in Maguindanao on Friday night and accused the Ampatuans of rebellion. The government says that 3,000 of the clan’s former militia remain on the run and capable of further atrocities. Dangerous task De Lima hit out at the government’s long alliance with the Ampatuans, saying that reports of political opponents and others going missing in Maguindanao had circulated for years. De Lima said that independent forensics experts deputized by her agency would begin excavating two alleged “killing fields” in the next two weeks Among those missing and presumed killed was a former Ampatuan lawyer who had wanted to expose the clan’s atrocities, de Lima said. Others were regular peasants who fell out of favor with the family. “Some were allegedly killed with the use of chainsaws, and others were buried alive,” the commission’s chief said, citing witnesses now in her agency’s protection.Five police officers who had direct knowledge of some of the murders were among those now willing to speak out against the Ampatuans, according to de Lima.One of de Lima’s aides said that the rights commission could not divulge any more details about the 200 plus murders because it wanted to protect witnesses. • Philippine tribal gunmen send warning

333 Tribal gunmen in the southern Philippines warned on Friday they would massacre dozens of hostages if police made a rescue bid, as hundreds of security forces surrounded their mountain lair. The two-day hostage drama was the latest unrest to hit the Philippines' volatile Mindanao region, after a political massacre last month shocked the nation and triggered martial law in one province. But shortly afterwards Perez released 10 of his 57 hostages, according to the negotiator, Josefina Bajade. Nine of those released were women and the other was a boy, Bajade told AFP. Authorities identified the gunmen as members of the Manobo clan, and said they were wanted on charges of murder and other crimes. He also demanded that authorities disarm a rival clan engaged in a bitter land feud with the Manobos.Seventy-five people were initially seized on Thursday morning from a school and neighbouring houses in a small farming village on the outskirts of Prosperidad, the capital of Agusan del Sur province.Bajade secured the release of 18 hostages, all but one of them school children, within eight hours of the kidnapping. The 47 still in captivity are mainly farmers and other residents of the raided village, plus the school principal, according to local officials. They were being kept in an abandoned hut in a clearing of a thickly forested mountain about 2km from their village.The hostages were made to sleep overnight on the ground. At least 400 police and army personnel were deployed on the mountain and preparing to assault the lair if commanders gave the green light, according to an AFP reporter on the scene.Bajade said the Manobo tribesmen launched the raid to prevent police from serving arrest warrants against family members for the murder of four people belonging to the rival family. The mass kidnapping was part of an explosion of violence that has been stunning even for the southern Philippines, a lawless region where Muslim and communist insurgents mix with warring clans, pirates and corrupt officials. Islamic militants on Thursday abducted a college professor on Basilan island, which is part of the Mindanao region, a day after beheading another captive whom they kidnapped on November 10 from a logging company. The al Qaeda-linked Abu Sayyaf, which specialises in kidnappings-for-ransom, were holding three people in total on Basilan, with the two others taken from the logging firm.The Abu Sayyaf are a small group of militants on the US government's list of wanted extremists who have been blamed for a string of abductions in the southern Philippines, as well as the country's worst terrorist attacks. Maguindanao province in Mindanao meanwhile remains under martial law following the massacre last month of 57 people, allegedly by the heads of a Muslim clan that had ruled the area since 2001.Security forces pressed on Friday with efforts to disarm thousands of militiamen loyal to the Ampatuan clan in Maguindanao. The Ampatuans are accused of organising the massacre to stop a rival politician from challenging them for the post of provincial governor in elections next year.President Gloria Arroyo had used the Ampatuans to help contain Muslim separatists, allowing them to maintain a well-armed private army that activists say has terrorised the public.

334 The Moro Islamic Liberation Front is the main Muslim rebel group in Mindanao. Their insurgency has claimed more than 150,000 lives since the late 1970s, according to the military. • Talks with MILF rebels end on a positive note The two-day talks between the Philippines government and representatives of the Moro Islamic Liberation Front (MILF) ended Thursday with both sides optimistic over the continuation of the stalled peace parleys. Reports reaching Manila said the formal resumption of the government-MILF peace talks had proceeded as scheduled in the Malaysian capital, Kuala Lumpur, with the presence of members of the International Contact Group (ICG)."The parties have expressed satisfaction on the results of the peace negotiations," a statement carried in the MILF's Luwaran website said. The ICG is presently made up of representatives from Japan, Britain, Turkey, and non government groups — The Asia Foundation, Conciliation Resources, the Centre for Humanitarian Dialogue and the Mohammadiyah.During the exchanges in Kuala Lumpur, the parties have also agreed to expand the composition of the ICG to include other non- government groups such as the International Non-Violent Peace Force, Mindanao People's Caucus, and the International Committee of the Red Cross. MILF Peace Panel chair Mohagher Iqbal, who led the delegation for the separatist group, said the discussions in Kuala Lumpur between the government and the MILF touched on strengthening of the role and functions of the International Monitoring Team (IMT), the composition of the Civilian Protection Component of the IMT, and renewal of the mandate of the Interim-Implementing Guidelines of Ad Hoc Joint Action Group. • Philippines faces security dilemma, under pressure to disarm militia Thousands of militiamen trained and armed by the Philippine government have protected the country's major cities and towns from Muslim and communist rebels for decades by backing up an overstretched army. But the part-time soldiers are often ill-disciplined fighters drawn from the ranks of the unemployed, landless farmers and ex-soldiers, and have gained notoriety for abusing civilians, looting homes or ending up in the pockets of political warlords as their private armies.With militiamen accused in last month's massacre of dozens of civilians and an ongoing standoff to free 47 hostages in the volatile southern Philippines, the strategy of arming these groups is once again being called into question. The Nov. 23 carnage in Maguindanao province, where militiamen allegedly followed orders of a powerful clan to kill 57 people in a rival's election convoy, prompted President Gloria Macapagal Arroyo to order the dismantling of all clan-dominated private armies and paramilitary groups.But the military faces a dilemma, fearing that if it disarms the 55,000 militiamen, its 120,000 troops won't be able to fight rebels, terrorists and criminals alone.Many far-flung provinces in the sprawling archipelago have largely been outside the government's reach for decades, some ruled by clans, tribal laws and others controlled by armed groups.Those areas on southern Mindanao Island became battle zones between government troops and communist and Muslim rebels, leading late dictator Ferdinand Marcos in the mid-1970s to start arming civilians as a government policy. The south has been awash with weapons since. Following Marcos' 1986 ouster and the restoration of democracy, President Corazon Aquino dismantled the militias. But as the communist rebellion wore on and the Muslim

335 insurgency intensified, the militias were reborn in 1990s as CAFGU, the Citizens Armed Forces Geographical Unit. Police have their own auxiliary force, called the Civilian Volunteer Organization. Militiamen are part-time soldiers under the Department of National Defense and are given a monthly allowance of 1,800 pesos ($38), plus two months of basic training, said Brawner. They carry rusty firearms, like the M1 Garand and carbines.But there have long been concerns the service attracts the wrong types of people.Human rights organizations have regularly warned that militiamen do more harm than good and are responsible for widespread abuses. More than 100 government militiamen are among the suspects in last month's massacre of 57 people, allegedly on orders of the Ampatuan clan, which has ruled Maguindanao province for years with militiamen on its payroll. The Ampatuans, facing murder and rebellion charges, deny involvement. On the other side of Mindanao, in the remote hinterland of Agusan del Sur province, 15 dismissed militiamen who turned bandits took more than 70 villagers hostage Thursday after police tried to arrest them on murder charges. They demanded that the charges be dropped before releasing 47 others. Ten people were freed before nightfall Friday. The gang leader, Joebert Perez, told reporters the charges were fabricated and originate from a bloody feud with a rival family, the Tubays, that has left about 10 dead on both sides since last year. But any action is likely to be taken after Arroyo leaves office following national elections in May, and will be up to her successor to follow through with. Former Defense Secretary Gilbert Teodoro, one of presidential candidates, said criminals among militiamen should be weeded out, but the force was "needed to complement the lack of soldiers in problem areas such as Maguindanao." Robles, the security analyst, blamed the lack of discipline and human rights abuses among militiamen on poor national leadership."The CAFGU concept should be really reviewed because it has become a runaway," he said. • Philippine Convoy Attacked Near Site of Massacre, AFP Reports A Philippine government convoy was attacked today by gunmen near the site of an election-related massacre of 57 people, Agence France-Presse reported, citing the military. • Abu Sayaaf behead Filipino hostage Al Qaeda-linked militants in the Philippines have beheaded one of three Filipino factory workers they seized in the troubled south of the country last month, an official said Wednesday. Philippine soldiers patrol an ambush site in the hinterland village of Indanan town in southern Jolo island in 2007. Al Qaeda-linked militants in the Philippines have beheaded one of three Filipino factory workers they seized in the troubled south of the country last month, an official said Wednesday. Witnesses said they saw two men believed to be militants from the Abu Sayaaf group abandon a package at a park on the southern island of Basilan, triggering panic, said Al Rasheed Sakalahul, the provincial vice governor.Residents feared the package was a bomb and promptly alerted police.

336 But the parcel turned out to contain the severed head of Mark Singson, one of three workers at the Hitech Wood Craft Corp. seized by heavily-armed Abu Sayyaf militants from Basilan's Maluso town on November 10. He said the head was later positively identified by relatives of Singson.There was no immediate word on the fate of the two others, although the factory owner earlier said that Abu Sayaaf militants had warned they would harm the hostages if an undisclosed ransom was not paid, Sakalahul said. Founded in the early 1990s by Afghan-trained Islamic firebrand Abdurajak Abubakar Janjalani with seed money from Osama bin Laden, the Abu Sayyaf or "Bearers of the Sword" initially fought for an independent Islamic state in the southern Philippines. Janjalani however was killed in a gun battle with police in 1998, and the rebels have since morphed into a criminal organisation specialising in bombings and kidnappings targeting foreign missionaries and businessmen.The group is on the US government's list of foreign terrorist organisations and is also blamed for the deaths of two American hostages snatched from an island getaway in 2001. The kidnapping of the three factory workers came just a day after a school principal kidnapped by the group in nearby Jolo island was also beheaded.In that same week, US Secretary of State Hillary Clinton visited the country to re-affirm defence and diplomatic ties with the Philippines. Clinton's visit threw the spotlight on joint efforts by the allies to crush the Abu Sayyaf, a rag-tag group of about 300-400 gunmen fighting out of the jungles of Basilan and Jolo. American Special Forces have been rotating in small numbers in the south since 2001 to train and equip their Filipino counterparts.While they are not allowed to join combat operations, they have provided vital intelligence that has led to the capture or deaths of top Abu Sayyaf leaders in the past eight years. But the group remains well entrenched in the jungles, and has managed to replenish its ranks by promising monetary rewards to impoverished Muslim youths, analysts say.Abu Sayyaf attacks have left at least 48 Filipino soldiers and 70 insurgents dead since January. In September, two US soldiers were killed in a roadside bomb in the deadliest attack on American forces so far by the militant group • Geo-strategic Front • Social Front • Philippine troops arrest 62 people under martial law Philippine troops arrested 62 people and discovered another major weapons cache after martial law was imposed in a southern province following the country's worst political massacre. Thousands of troops, backed by tanks and warplanes, have taken control of Maguindanao province in a government crackdown on the powerful Ampatuan clan, accused in the November 23 killing of 57 people travelling in a convoy of a political rival. The clan has denied involvement. Late Friday, President Gloria Macapagal Arroyo imposed martial law in Maguindanao - the first use of martial law in the Philippines since late dictator Ferdinand Marcos imposed it nationwide more than 30 years ago. The move was announced on national television Saturday morning.

337 The government says it feared the Ampatuans, who have ruled unopposed with an iron fist over predominantly Muslim Maguindanao for years, were fomenting rebellion in response to the crackdown on them since the massacre. Those arrested so far include the clan's patriarch, at least six other family members, and clan followers, national police Chief Jesus Verzosa said. Thirty-nine high-powered firearms and crates of ammunition were dug up Sunday at a farm believed owned by the Ampatuans near the provincial capital of Shariff Aguak, army Brig. Gen. Gaudencio Pangilinan said. Army troops and police were pursuing about 4,000 armed followers of the Ampatuans, some reportedly massing in eight Maguindanao towns. Security forces have sealed off Maguindanao's exit points and mounted checkpoints, said police Director Andres Caro. Pangilinan told reporters Ampatuan's followers were capable of carrying out bombings, arson attacks and abductions. Fearing violence, some residents have fled towns in Maguindanao, about 880 km south of Manila. Heavily armed troops manned checkpoints and frisked motorists along the main highway that cuts through farmland, hills and marshland in the province. The martial law proclamation allows troops to make arrests without court warrants.Pro- democracy advocates have accused Arroyo of overreacting. A group of human rights lawyers has argued there are insufficient grounds for martial law and plan to challenge it in the Supreme Court on Monday. Government and military officials defended Arroyo, saying she acted decisively to bring suspects into custody and head off a rebellion by the Ampatuan clan. The Ampatuans are notorious for running a large private army. They helped Arroyo win crucial votes from Maguindanao during 2004 elections, but her party expelled the clan after the massacre. Among the family members now being held, Andal Ampatuan Sr., a three-term provincial governor, and his son Zaldy - governor of the Autonomous Region in Mindanao, which includes Maguindanao - were taken into military custody early Saturday, Ibrado said. Two other sons were also detained. Another son, Andal Jr., surrendered and was charged last week with multiple counts of murder. Some 30 journalists were among the dead, making it the deadliest single attack on the press anywhere in the world. • Manila, Moro rebels resume peace talks The Philippines resumed stalled peace talks with the country's largest Muslim rebel group Tuesday, with the government's top negotiator expressing optimism of achieving a lasting settlement. The two-day talks in Kuala Lumpur between the Philippine government and the Moro Islamic Liberation Front (MILF), is also joined by a newly set up International Contact Group made up of Britain, Japan and Turkey. The stop-start talks brokered by Malaysia since 2001 aim to end a four-decade Muslim insurgency that has killed 120,000 people and scared off potential investors in a region believed to be sitting on huge oil and gas deposits.An escalation in violence from August 2008 until July this year saw more than 1,000 people killed and nearly 750,000 people displaced. Both sides agreed to a truce in July, opening the way for resumption of talks.

338 The Malaysian facilitator to the talks Othman Razak said in e-mailed comments that the imposition of martial law in Maguindanao where the MILF is based presented technical difficulties to the talks. "But the peace talks resumed this morning after resolving the complications arising out of the imposition of martial law," said Othman. • Environmental front Thailand • Political Front • Thai king develops fever, put on saline drip Thai King Bhumibol Adulyadej, the world's longest-reigning monarch, has been treated with antibiotic medicines and put on a saline drip at Bangkok's Siriraj Hospital, the Royal Household Bureau said on Sunday. The bureau said in a statement that the revered 81-year-old monarch was admitted to the hospital late on Saturday after he developed a fever and showed symptoms of fatigue which reduced his appetite for food. Prime Minister Abhisit Vejjajiva told reporters earlier on Sunday that the king went to the hospital on doctors' advice for a medical check-up, the second visit in four days. "There is no problem with His Majesty's conditions. From my chats with doctors, there is nothing to be concerned about," Abhisit said after signing a visitors' log book at the hospital. Earlier in March the monarch also spent a day in hospital for a check-up. The bureau released no details of the results, saying it was a private visit.Last month, the monarch called for unity in deeply divided Thailand in a rare comment on a four-year political crisis marked by violent rallies, assassination attempts, dissolution of political parties and the seizure of Bangkok's main airports. • Najib To Meet Southern Thailand's Muslim Leaders Prime Minister Datuk Seri Najib Tun Razak will meet with Muslim leaders in Southern Thailand to convey his views so that the conflict between them and the government in Bangkok will end peacefully. Thailand's Prime Minister Abhisit Vejjajiva had invited him to visit the region of conflict and this gives Najib an opportunity to meet with the Muslim leaders. "So, I can give some advice to them that it's important for everyone to cooperate as a common front to reach a settlement that can ensure them security in future," he told reporters after giving away prizes to winners of a badminton competition in conjunction with the annual programme of wives of Barisan Nasional elected representatives, here, Saturday.He said the situation in the region had calmed down slightly but it had still not shown any comprehensive and final settlement.Asked whether he would propose autonomous status for the region, he said: "Whatever proposal that is to be made will be discussed beforehand. We don't call it an autonomous region because to the Thais, the word autonomy has many connotations, but whatever it is, we hope the local community is given an opportunity to make decisions."The decisions included freedom concerning their welfare such as education, religious administration, culture and so on, he said. He was confident that the Muslim community in Southern Thailand would not have any reason to launch armed conflicts if they were assured that their future was guaranteed by Thailand.

339 The visit is actually historical because it will be the first time that Najib, as a leader of an influential Muslim country in the region, makes a visit to Southern Thailand togehter with the Thai Prime Minister. Both leaders are expected to visit the region on Dec 9. • Army having failed, give political solutions a chance Thailand needs to shed its taboos and think the unthinkable if it wants to find political solutions to end the six-year-long southern insurgency that has claimed more than 3,900 lives. The military wants to retain control over policies in the deep South, but the army’s strategies have failed to bring about peace; instead, the violence has increased. Picture shows an armed soldier standing guard on his vehicle in front of a mosque in Pattani.Military suppression has proved ineffective in stemming violence.The distinct ethnic and religious character of the predominantly Malay-Muslim South needs to be acknowledged and new ways explored to enhance dialogue and better address their grievances. Prime Minister Abhisit Vejjajiva pledged upon taking office to shift southern policies away from the heavy hand of the security forces and provide a lighter civilian touch.Nearly a year later, little has changed in the government's approach. The incidence of violence dropped last year, but is now intensifying. The military's cordon-and-search operations begun in July 2007 were only a temporary fix. Recent attacks are more brutal, with some victims shot, beheaded and burned. Insurgents' bombs have increased in size and their techniques more advanced. Insurgents are using radio transceivers to trigger bombs to avoid electronic jammers, making it more difficult to prevent bombings.The government's reliance on the military to cement its own power has hindered its political will to make policy shifts in the South. It fears antagonising the top brass, whose support it needs to suppress the "red-shirt" followers of ousted leader Thaksin Shinawatra. The army has opposed the lifting of the emergency decree and martial law concurrently in place in Pattani, Yala and Narathiwat provinces, arguing that both laws are necessary for its counter-insurgency operations. There have been some compromises, with martial law lifted in the four districts of Songkhla, where violence is low, and the Internal Security Act in force in its place. While apparently more lenient, implementation of the ISA has created new concerns. Human rights advocates fear that its Section 21, which allows legal charges to be dropped in return for "training", would amount to "administrative detention" with insufficient procedural safeguards that could lead to forced confessions. It is also questionable whether indoctrination in Thai nationalism would change the minds of militants driven by ethno-nationalist ideology.The military also opposes the government's plan to enact a law to allow the civilian-led Southern Border Provinces Administrative Centre - in charge of the "hearts and minds" operation - to be independent of the military-controlled Internal Security Operations Command (Isoc). A watered down version is currently before Parliament, but ongoing political turmoil in Bangkok might mean the House could be dissolved before this bill can be passed.Despite the government's pledges, justice still eludes the residents of the conflict-wracked southernmost provinces. No security forces involved in past abuses, including the notorious atrocities committed in Krue Se and Tak Bai, have faced criminal prosecution. There have been no arrests of the perpetrators from the June 8 Al-Furqan mosque attack

340 that killed 10 Muslims and injured 12 others. Police investigations suggest that Buddhists, possibly including some state-sponsored militias, carried out the attack in retaliation for previous killings of their fellow Buddhists. The slaughter raises a concern that arming civilians has deepened communal tensions and exacerbated the conflict. Throwing more money at the problem will not work, either. Without effective oversight the huge budgets could create "an industry of insecurity" and contribute to the inertia because some officials profit from projects. Increased corruption only erodes the government's legitimacy and would be exploited by the militants. Poverty is not driving this conflict, so using economic stimulus to address the political grievances of insurgents does not tackle its root cause. Policy for the South should be driven by hope rather than fear and the publicly declared stance of "no negotiations" should be reversed. Peace talks have proven effective in ending violence in many separatist conflicts without leading to secession. In recent years, "secret dialogues" between Thai governments and those claiming to represent insurgents have taken place without result. The lack of sustained and serious commitment to a peace process has stalled these confidential processes. Reform of governance structures is often part of proposals in a negotiation process. Various alternatives should be explored and special administrative arrangements should not be perceived as a threat to the unitary state. When the government shows its serious commitment to talk, the militant representatives would then need to demonstrate their control of fighters on the ground. • Geo-strategic Front • Cambodia opens road building link to Thailand Cambodia's Prime Minister Hun Sen opened Saturday a road building link to the Thai border in northwestern Cambodia. The 117-kilometer long National Road No. 68, which runs from Kralanh district in Siem Reap province to O' Smach in Udor Meanchey province, will be completed in two years time. Hun Sen said the construction and restoration of the road which costs 33 million U.S. dollars will be fully financed by the Royal Government of Cambodia to respond to the people's actual needs, in spite of the current global financial and economic crisis. Thailand signed an agreement with Cambodia in August this year to provide loans amounting to some 41 million U.S. dollars for building this road, but Cambodia canceled it late last month, and instead used its own funding. Hun Sen said he had identified the area as an economic pole, among Cambodia's other poles, as it is favorable for agriculture and tourism development. He added that his government is firmly committed to the restoration and development of all sectors, especially the restoration, maintenance and development of transportation infrastructure which is the prioritized policy of his new fourth-term government beginning from 2008 through 2013. He added that this road network is located on two main corridors that serve both national and international transport purpose from western to eastern part. The first corridor is the northern sub-corridor of the first southern corridor of the Greater Mekong Sub-region which runs through Laos and heads to Ho Chi Minh City in Vietnam. • Economic Front • THAILAND: Strong farming sector key to Thai growth - study

341 Thailand still represents an "attractive opportunity" for investors despite the country's economy taking a "beating" from the global downturn, new research has claimed. Real GDP is forecast to fall by 4.5% in 2009, according to a study by Business Monitor International, but the Thai economy is showing "embryonic signs of recovery", the researchers said.GDP is forecast to grow by 2.2% in 2010 and Thailand's status as a major agricultural producer gives local manufacturers "easy access" to raw materials, BMI's Q1 2010 report into the country's food and drink sector claimed. The Thai government is promoting the development of value-added production and the sector remains fragmented, the report noted. "Thailand has become one of the world's leading food producers and is the largest food exporter in south-east Asia," BMI said. "The industry consists of more than 10,000 companies, most of which are small companies and cottage industries, only around 15% are medium to large enterprises, although the sector has attracted a number of industry majors - including Unilever and Nestlé." The researchers claim that Thailand could be an "attractive investment choice" for companies wanting a regional hub but put off by higher costs in Hong Kong and Singapore.Revenue from Thailand's mass grocery retail sector is forecast to rise by 46% in 2014, compared to 2009 levels, reaching THB644.7bn (US$19.47bn). • Social Front • Two killed in blast ahead of leaders’ visit to Thai south A bomb ripped through a market in Thailand’s south yesterday, killing two people and wounding nine just days before the Malaysian and Thai premiers were to visit the region, police said. The device was attached to a motorcycle and hit as shoppers were buying food at the crowded market in Narathiwat, a flashpoint city in the Muslim-majority area where a nearly six-year separatist insurgency is raging, they said.The blast happened about one kilometre from a hotel where Thai Prime Minister Abhisit Vejjajiva and his visiting Malaysian counterpart Najib Razak are due to have lunch during a trip to the region tomorrow. “The bomb was hidden in the gas tank of a motorcycle. A Buddhist woman and a Buddhist man were killed in the blast and nine people were hospitalised, three of them in a critical condition,” a police official said.“The militants apparently wanted to show their potential before the two prime ministers visit the region on Wednesday. They wanted to show that they can still carry out attacks despite the security,” the official added. More than 4,000 people have killed since shadowy Islamist insurgents launched a violent rebellion in predominantly Buddhist Thailand’s southernmost provinces bordering Malaysia in January 2004.Tensions have simmered in the Thai region, formerly an autonomous Malay Muslim sultanate, since it was annexed by Bangkok in 1902. Najib was due to arrive in Bangkok late yesterday before he and Abhisit travel to the south tomorrow. They are to attend the renaming of a “friendship bridge” spanning the countries’ river border and visit an Islamic school.The bomb was believed to have contained around eight to ten kilos of explosives and was detonated remotely by a mobile phone signal, officials said. Separately a Muslim imam was killed and four others were wounded in shooting attacks in neighbouring Pattani province yesterday, police said. • Five Thousand Thaksin Supporters Stage Rally Against Abhisit

342 Five thousand supporters of former Thai leader Thaksin Shinawatra rallied in Bangkok, seeking to put pressure on Prime Minister Abhisit Vejjajiva, whose rule they say lacks legitimacy. The protesters, who wear red to distinguish themselves, gathered around the city’s Democracy Monument, Piya Uthayo, a metropolitan police spokesman said by phone today. About 2,500 police are standing by to keep the peace, he said. Thaksin’s followers held regular street protests in the past year after a court disbanded the former ruling party comprised of his allies, paving the way for Abhisit to become prime minister. Rallies in April turned violent, prompting Abhisit to call on the military to disperse demonstrators. Demonstrators plan to stay out until midnight, protest organizer Sean Boonpracong said yesterday. Today is a national holiday celebrating Thailand’s first constitution after absolute monarchy ended in 1932.Political tension has weighed on the SET Index, which has trailed stock benchmarks in Indonesia, Malaysia, the Philippines and Singapore since the 2006 coup that ousted Thaksin. During his five years as prime minister, the SET outperformed Southeast Asian counterparts apart from the Jakarta Composite Index.Today’s protest comes less than a week after head of state King Bhumibol Adulyadej celebrated his 82nd birthday. Royalist protesters, who wear yellow clothes as a sign of respect, have clashed with the red shirts in the past. The monarch, who has served as head of state through 15 successful or attempted coups in more than six decades on the throne, has been hospitalized since Sept. 19 with symptoms of pneumonia. High Season The rally timing is especially sensitive as Thailand receives its highest number of overseas tourists between November and January, when European visitors escape their winter for warmer climes. Thai Airways Pcl, the country’s biggest carrier, has sued Foreign Minister Kasit Piromya and 35 other anti-Thaksin protest leaders for seizing Bangkok’s airports during the high tourist season last year. Two of 17 Thai constitutions since absolute monarchy ended have mandated fully elected parliaments, including one in 1946 that lasted 18 months. The other, promulgated in 1997, was tossed out with the coup against Thaksin, who fled a two-year jail sentence for corruption last year and lives overseas. He says the courts are politically biased against him. Vietnam • Political Front • Geo strategic Front • Vietnam concerned over South China Sea sovereignty disputes Disputes over sovereignty in the South China Sea are increasing and Vietnam’s Deputy Defence Minister Nguyen Chi Vinh said yesterday that was cause for concern but unlikely to lead to conflict. Vietnam, China and other countries have longstanding competing claims of sovereignty over parts of the South China Sea, which Vietnam calls the East Sea, including the potentially oil and gas-rich Spratly and Paracel island chains. Vietnam’s third white paper on national defence, issued by the Ministry of Defence yesterday, said territorial disputes in Asia were more complicated and “in particular those relating to sovereignty and national interests in the East Sea have been on the rise. “But the complications over the East Sea will not lead to a military clash in this region,” he

343 added. The damaging effects, he said, would be felt widely, legal efforts to resolve disputes had intensified and Vietnam sought to solve conflict peacefully. China has said it would step up patrols by maritime vessels of the South China Sea this year. Last month, at a workshop in Hanoi, several scholars voiced concern that the situation in the South China Sea had deteriorated, or was likely to worsen The five-yearly white paper gave figures for Vietnam’s defence budget from 2005-2008, showing growth of 66% during the period while, as a percentage of gross domestic product, it fluctuated between about 2.5 percent and 1.8 %. In 2004, the last time it issued a white paper, the ministry said 2.5% of Vietnam’s GDP was spent on the military.Last year, the overall figure slipped almost 7% to 27.024 trillion dong from 28.922 trillion dong in 2007 in spending on the force that the white paper said had 450,000 active troops and 5mn reservists under arms.Vinh said about 1.8% of GDP was “appropriate” and the budget would likely stay at that level in the coming years. “The (global) economic difficulties have had an impact, but it hasn’t been large on the modernisation of the Vietnamese People’s Army and building of the combat capabilities of the military,” Vinh said. Vinh declined to confirm or deny reports in Russian media that Vietnam was negotiating to buy six Project 636 Kilo-class diesel-powered submarines and 12 Russian Sukhoi Su- 30 supersonic fighter jets.He said Russia was an important partner and source of arms, but added that Vietnam was open to talking to all countries about procurement. • Foreign Relations • Vietnam-China trade, tourism fair opens in Vietnam A Vietnam-China trade and tourism fair opened in Mong Cai city of Vietnam's northern province of Quang Ninh on Friday, drawing more than 300 Vietnamese and Chinese companies. Vietnamese Deputy Minister of Industry and Trade Nguyen Cam Tu addressed the opening ceremony that the trade and tourism fair is an important trade promotion activity, contributing to the development of trade between Vietnam and China. The fair brings an excellent opportunity for Vietnamese and Chinese companies to meet, share experiences and seek partners, said Tu. Nhu Thi Hong Lien, vice chairwoman of the Quang Ninh People's Committee said at the opening ceremony that Quang Ninh has increasingly promoted trade and tourism relations with localities of China, especially Zhuang Autonomous Region. There will be more than 400 booths at the fair, including more than 100 booths of Chinese companies, said Lien. Lien said that the fair will display products of many sectors including agricultural produce and processed food, garment and textile, home appliances, industrial machines and equipments, wood and wood products, and construction materials. Li Daqiu, vice chairman of the Chinese People's Political Consultative Conference (CPPCC) Guangxi Zhuang Autonomous Regional Committee said Vietnam has become the biggest trade partner of Guangxi. The trade and tourism fair should become an example for trade cooperation activities between Vietnam and China, said Li. According to figures from the Vietnamese Ministry of Industry and Trade, bilateral trade between Vietnam and China stood at 20.18 billion U.S. dollars last year. The fair is scheduled to end on Dec. 9.

344 • Vietnamese president speaks with Pope, moving toward diplomatic ties Pope Benedict XVI met on December 11 with Vietnam’s President Nguyen Minh Triet. It was the first meeting ever between the Pontiff and the head of the Communist nation. After the 30-minute meeting, the Vatican released a statement applauding this “significant stage in the progress of bilateral relations.” The Vatican and Vietnam do not currently have formal diplomatic relations, although diplomatic talks have been taking place for several years. Before leaving for Europe, the Vietnamese leader said that he was hoping to establish diplomatic relations. Without addressing that question directly, the Vatican statement indicated that the December 11 conversation had centered on the prospects for Church-state relations. • Vietnam releases white paper on national defense Vietnamese government on Tuesday released a white paper on national defense, providing updated information on the country's military forces and illustrating Vietnam's national defense policy. The white paper, the third one on national defense released by Vietnam, includes three chapters, namely security situation and national defense policy, building the national defense, and building the people's army, the militia and self-defense force. Vietnam has followed a national defense policy of peace and self-defense in the guideline of not using force or threatening of using force in international relations, and solving differences and disputes with other countries by peaceful means, said the paper. The release of the paper demonstrates the desire of the Vietnamese people and the Vietnam People's Army (VPA) for advancing mutual understanding and trust with other peoples and armed forces in the world, said Nguyen Chi Vinh, Deputy Minister of the National Defense at a press conference to launch the white paper here on Tuesday. Vietnam's national defense budget in 2008 was roughly 27 trillion Vietnamese dong (1.46 billion U.S. dollars), accounting for 1.8 percent of the Gross Domestic Product (GDP). The ratio was appropriate for Vietnam and was no significant change over five years earlier, said Vinh. Vinh said that the ratio of 1.8 percent would remain the same in the next five years. If Vietnamese economy continues to grow, there will be more input for the modernization of country's national defense, said Vinh. In response to the recent media reports that Vietnam has the intention to procure military equipment from Russia, Vinh said that to consolidate peaceful situation of the country and modernize the VPA, Vietnam is considering the purchase of military equipment from many sources including Russia. Russia is a traditional friend and an important partner of Vietnam, said Vinh. In military procurement, Vietnam is opening the floor to all possible parties in line with international law and Vienam's needs, according to Vinh. Regarding the settlement of disputes over the sea territory with some neighboring countries, Vinh said that it's the policy of Vietnamese Communist Party and the government to ensure that all disputes should be settled through peaceful means. Vietnam vowed to safeguard the country's independence and sovereignty on the basis of international law and further promote unity and friendship with neighbors and other countries concerned. Vietnam's second white paper on national defense was released in 2004. • Economic Front • Vietnam expands energy projects to Africa

345 Vietnam's state-run oil company said it has signed an oil and natural-gas cooperation agreement with Sudan's national oil producer and plans to do the same with an Angolan oil company later this month as it moves to raise its profile overseas. The agreement with Sudan's Sudapet Ltd. will enable the two companies to jointly invest in oil and gas projects in Sudan, Vietnam and elsewhere, according to Vietnam Oil and Gas Group, known as PetroVietnam. The Vietnamese company said it will sign a similar agreement with state-owned oil company Sonangol in • Vietnam's export to U.S. hits $9.3 bln in first 10 months Vietnam gained 9.29 billion U.S. dollars from exporting goods to the United States in the first 10 months of this year, down 7.27 percent year-on-year, said the information center of Vietnamese Ministry of Industry and Trade on Thursday. During this period, the country's export of garment and textile reached 4.1 billion U.S. dollars, making up 44.33 percent of Vietnam's total export turnover to the U.S. market. It is followed by wood and wood products, and footwear with the export value of 874.1 million U.S. dollars and 851.2 million U.S. dollars, respectively. The country witnessed a year-on-year decrease in most export items to the United States in the first 10 months including crude oil, seafood, cashew nuts and rubber, said the center. Vietnam's export turnover of crude oil plunged 58.83 percent year-on-year to 397.4 million U.S. dollars during the same period. However, there was a year-on-year increase in Vietnam's exports of five items, namely tea, precious stones and metals, computers and electronic components, fruits and vegetables, and footwear, said the center From January to October, the country earned 358.77 million U.S. dollars from selling computers and electronic components to the U.S. market, up 48.19 percent against the same period last year. Eight years after the two sides signed the U.S.-Vietnam Bilateral Trade Agreement in 2001, a milestone agreement in two-way trade development, the United States has become the Vietnam's biggest export market with the export turnover of 11.6 billion U.S. dollars in 2008, said the center. • Vietnam's import from Indonesia stands at $1.18 bln in first 10 months Vietnam's import from Indonesia stood at 1.18 billion U.S. dollars in the first ten months of this year, down 20 percent from the same period last year, the information center of Ministry of Industry and Trade said on its website on Friday. In this period, paper was the item which Vietnam imported most from Indonesia with an expenditure of 140.47 million U.S. dollars, said the center. The country recorded a dramatic decline in import of machines and equipments, cotton, wood and wood products, iron and steel, electronic products and components from Indonesia in the first ten months of this year over the corresponding period of last year. Vietnam saw import of automobiles, pharmaceutical products, plastics and rubber from the Indonesian market go up considerably from January to October this year compared to the same period last year. • Vietnam Signs Agreement With World Bank For $65.26-Million Loan The State Bank of Vietnam said Thursday it has signed an agreement with the World Bank for a $65.26-million loan for a project to support the country's husbandry industry and enhance food safety. The central bank didn't provide further details on the loan. It said the project, which requires an investment of more than $79 million, will be implemented from 2010 to 2015 in 12 provinces throughout the country.

346 • India asks Vietnam to clear regulatory hurdles for Tata plant India is believed to have asked Vietnam to clear roadblocks for Tata Steel-led $5 billion project stuck in regulatory hurdles.Commerce and Industry Minister Anand Sharma raised the issue during a meeting with his Vietnamese counterpart Vu Huy Hoang to discuss bilateral trade here, an official said. Though the Vietnam government has offered over 900 hectares to the joint venture led by Tata Steel for greenfield unit, the project is facing legal and regulatory issues. During the meeting, Sharma asked Hoang to expedite the process of granting all necessary clearances for the Tata Steel's project in Hatinh Province of the southeast Asian nation, the official said."The company is facing certain regulatory hurdles and the visiting Vietnamese ministers assured that his government would take all necessary steps," the official said. Tata Steel, the world's sixth largest steel maker would start construction on the proposed 4.5-million tonnes per annum plant as soon as it gets clearances, said sources.Tata Steel holds 65 per cent stake in the joint venture while Vietnam's Steel Corporation and Vietnam Cement Industries Corporation have 30 and five per cent stake, respectively. Tata Steel has plans to set up a cold-rolling mill at the site. It had earlier thought of commissioning it by 2010-end. Now, construction for the first phase of the steel project is likely to be finished by 2012. • SE Asia Stocks-Indonesia leads falls, Vietnam up Southeast Asian stocks ended mixed on Monday, with Indonesia's key index down 1.1 percent, led by mining and financial stocks, while Vietnam rose 0.7 percent. Big movers in Jakarta included state miner Aneka Tambang , down 5.3 percent, despite news on Monday that it expects higher ferro-nickel sales in 2010.Coal miner Adaro Energy fell 2.3 percent while nickel miner Inco lost 2.7 percent. "I think the Indonesian market is consolidating, they tend to wait and see," said John Teja, head of sales in Ciptadana Securities in Jakarta."Currently there's no fresh news which serves as a catalyst for people to buy. Price of resources stocks are down due to a fall in oil prices today."Oil prices dropped below $75 a barrel on Monday.Singapore's index inched up 0.2 percent, while Malaysia eased 0.38 percent and the Philippines lost 0.5 percent. The market in Thailand was closed on Monday for a holiday. Commodity trading firm Noble Group and Southeast Asia's biggest property developer CapitaLand buoyed the Singapore stock market, with gains of 1.62 percent and 1.22 percent respectively.In Kuala Lumpur, the second-largest mobile phone provider Axiata Group Bhd eased 1.3 percent, while gaming firm Genting Bhd rose 1.1 percent. • Vietnamese prime minister calls for more renewable energy Vietnamese Prime Minister Nguyen Tan Dung called for more renewable energy projects as a response to climate change, but provided no concrete plans, local press reported Tuesday. Dung pushed for more investment in solar and wind power in a meeting with government agencies implementing a national target programme to respond to climate change, the newspaper Thanh Nien reported.Official targets call for Vietnam to generate 3 per cent of its energy from renewable sources by 2015 and 5 per cent by 2020. Current renewable energy capacity is far below those levels, and few new projects are on the horizon.Vietnam has 'great potential for wind power,' said Nguyen Duc Cuong, who directs the renewable energy effort at the state-owned monopoly power company.

347 'But so far only one project of five (wind turbine) towers, with a total capacity of 7.5 megawatts, has been set up. And there is no promise of further action under discussion,' he said. Electricity demand is growing by more 16 per cent per year. The government expects to meet new demand by quadrupling its coal-fired electricity generating capacity by 2015. One recent paper estimated carbon dioxide emissions in Vietnam would rise 14 per cent per year until 2030.'We are arguing seriously, what should Vietnam do?' said Nguyen Van Duc, deputy minister of natural resources and environment. Duc said the national climate change response would begin setting up its projects in detail in 2011, and would not begin implementing them until 2015.Monday's meeting also reviewed a report on the expected effects of climate change in Vietnam published in August by government experts. The scenario predicts a sea level rise of 75 centimetres by 2100, which would flood 19 per cent of the Mekong River delta and 18 per cent of the Red River delta, Vietnam's main rice growing areas.Vietnam is among the developing countries expected to be most affected by climate change, according to the World Bank • Vietnam to sell 400,000 tons of rice to Philippines Vietnam has won a contract to export 400,000 tons of rice to the Philippines, authorities said Wednesday.Officials at the Vietnam Food Association confirmed Vietnam had won four out of six 100,000-ton lots to export to the Philippines at an auction held Tuesday. The other two lots went to South Korea and Germany. The rice will be delivered between February and May at an average price of about 650 dollars for Vietnam 25-per-cent broken white rice, the state-run newspaper Thanh Nien reported. Domestic rice prices in Vietnam have risen sharply in recent days on rumors of shortages. Unhusked rice has risen to 5,000 dong (0.28 dollar) per kilogram, from 4,000 dong two weeks ago. Nguyen Ngoc Nam, head of the Tien Giang Food Company, said some companies had failed to stockpile enough rice to meet their export contracts and were rushing to buy, driving up prices. Other food executives blamed speculative hoarding by farmers. But Nguyen Thanh Bien, the deputy minister of industry and trade, said the domestic price was simply following rising world rice prices, the official Vietnam News reported. Bien noted erratic weather and the shift of India and the Philippines from exporters to importers. Bien said Vietnam would still have 1 million tons of rice in stock after this year's exports are complete, and expects an additional 700,000 to 1 million tons from its winter-spring crop.Vietnam exported 5.7 million tons of rice in the first 11 months of this year, with revenues of 2.3 billion dollars.In 2008, Vietnam exported 4.6 million tons of rice, earning 2.9 billion dollars. That was double the previous year's earnings, due to high global prices that hit 900 dollars per ton in May. • Vietnamese exports top US$380m Fruit and vegetable exports to overseas markets increased by 5.4 per cent through the first 11 months of the yearNew figures released by Vietnam's Ministry of Agriculture and Rural Development have revealed that fresh produce exports climbed 5.4 per cent through the first 11 months of 2009, up to US$388m (€261m).Fruit and Vegetable export volumes actually decreased during the early part of the year, but picked up rapidly from September onwards.

348 "This is a good signal for the Vietnamese fruit and vegetable industry, posting healthy growth despite the world recession," Dinh Van Huong, chairman of the Vietnam Fruit and Vegetable Association, told VOV News.Russia remains the largest market for Vietnam's fresh produce exports, taking in nearly US$40m (€26.9m) worth of fruit and vegetables, followed by China with US$35m (€23.6m), according to the report. Other major markets for Vietnam include Japan, Taiwan and the US, with exports also shipped to Germany, France, Australia, Japan and Singapore among others. The Ministry has estimated that Vietnam will earn around US$420m (€283m) from fresh produce exports by the end of 2009, well up on the US$390m (€262.7m) recorded last year, and has undertaken production reorganisation, farmer training and increased promotion to help reach the target. Vietnam now has over 680ha dedicated to fruit and vegetable production, growing a range of produce including beans, cucumbers, potatoes, onions, garlic, bananas, mangoes, lychees, longan and dragonfruit. • Social Front Cambodia • Political Front • Economic Front • Hun Sen praises China for building hydropower plants in Cambodia Cambodian Prime Minister Hun Sen praised China on Monday for building hydropower plants in his country. Making speech during his visit to a 193-megawatt hydropower plant project being built in Kampot province, Hun Sen said "China is building batteries for Cambodia." Hun Sen said China is well-known in building hydropower not only in China, but also in some African countries and in Cambodia in particular. The already half-way completion of 193-megawatt hydropower plant being built in Kampot province, 150 kilometers southwest of Phnom Penh--is invested by Sinohydro Corporation from China. Sinohydro Corporation is building five hydropower plants in the area and once they are to be completed in 2011, they will generate193 megawatts of power. The power will not only be used in Kampot province, but also to be supplied to Phnom Penh residents.Besides the above project, at least four more hydropower plants in two provinces of Pursat and Koh Kong will be built by Chinese companies. So far, two hydropower plants located in Kirirom mountain area, about 120 kilometers west of Phnom Penh --also built by a Chinese company are already put for operation and are producing 30 megawatts. Hun Sen also said Monday that while Cambodia is still short of power supplies, the government has been spending about 20 million U.S. dollars per year as a subsidy to keep the price of electricity stable despite the higher price of the oil in global markets. • IMF warns action needed on Cambodia's banks, economy must diversify The International Monetary Fund said Cambodia must undertake 'critical actions' to strengthen its battered banking system, including better supervision by the central bank and faster implementation of measures to boost banks' minimum capital requirements. In a report released late Tuesday following a September visit by an IMF team, the fund's directors said problems inherent in Cambodia's banking sector had been exacerbated by the global economic crisis which had hit the overinflated property market.

349 Among those problems were inadequate supervision by the authorities, weak risk management by banks when assessing creditworthiness, and excessive credit growth. The IMF said in its accompanying staff report that 'the authorities should strictly enforce corrective actions plans and urge banks to bring forward compliance with new minimum capital requirements ahead of the end-2010 deadline.' But the fund said that its stress on rapid implementation of some banking reforms is not shared by the government.It also said the central bank must recruit more staff to ensure it can properly monitor the country's banks. Officials from the Ministry of Economy and Finance and the National Bank of Cambodia were unavailable for comment.Looking at the broader Cambodian economy, the IMF noted that average annual growth of 8 per cent over the past decade had helped cut the poverty rate from half of the population in the 1990s to around one third today. The IMF maintained its previously reported estimate that the economy would shrink 2.75 per cent this year and experience modest growth of 4.25 per cent in 2010, although it made it clear that growth next year remains uncertain. The fund again called on the government to diversify its growth base away from the four pillars of agriculture, garment manufacturing, tourism and construction. The last three, which contributed the bulk of the past decade's economic growth, have been hit hard by the global economic crisis. • Social Front • Cambodia's first war crimes trial marred by flaws The trial of Khmer Rouge prison commander Comrade Duch underscores the difficulties of such an endeavor in a country with a reputation for corruption and a compromised judiciary. People arrive for the trial of Comrade Duch, head of the Khmer Rouge prison where 15,000 were slain. About 4,500 people attended watched the proceedings at the Extraordinary Chambers in the Courts of Cambodia, as the war crimes tribunal is officially known. • Uighurs flee China, seek asylum in Cambodia A group of Uighurs who have fled China are seeking asylum through the United Nations High Commissioner for Refugees, an overseas activist group said, adding that other would-be refugees had been captured while fleeing China after ethnic riots in their homeland in July, Reuters reported. Two of the 22 Uighurs who sought asylum through the UNHCR offices in Phnom Penh say they witnessed security forces killing and beating Uighur demonstrators in the far western city of Urumqi on July 5, the Uighur American Association said. On that day, demonstrations in Urumqi by Uighurs protesting fatal attacks on Uighur workers in South China turned into a violent rampage in which 197 people, mostly Han Chinese, died. Han Chinese crowds launched revenge attacks against Uighur neighborhoods two days later. • Cambodia reports 480 cases of A/H1N1 flu, 5 die The Cambodian government said on Monday that the total of influenza A/H1N1 disease in the country has reached 480 cases with five deaths. Ly Sovann, deputy director of the communicable disease control department of Ministry of Health said that as of today, five Cambodians have died of A/H1N1 flu

350 disease and the total cases reach at 480. In October, the government announced that four peopled died of the disease and 237 cases were confirmed. The infected cases are from 13 out of the country's 24 provinces and cities across the country. Cambodia's Ministry of Health and WHO have continued their efforts in advising people around the country to protect themselves and the families, by saying each individual should cover mouth and nose with a tissue when coughing or sneezing and dispose of tissue in a bin; wash hands regularly with soap and hot water; do not spit in public; and avoid close contact with sick people.They also advised that for immediate treatment of the disease, the sick person shall drink lots of liquids; rest and paracetamol to reduce fever and muscle aches. Singapore • Political Front • MM Lee says having younger politicians create better results for S'pore Minister Mentor Lee Kuan Yew said having a system where younger politicians are allowed to take office can create better results for the country. Mr Lee was speaking at a dialogue organised by the Japanese Chamber of Commerce and Industry. He covered a wide range of topics, including Japan's immigration policy, the global economic recovery and challenges faced by the Hatoyama government. Mr Lee noted the economic and political system in Japan is still based on seniority. And he said leaders there could learn from China, which requires its political leaders to step down when they turn 65. This allows a younger, more dynamic generation of leaders to step up. Mr Lee said this is what is being done in Singapore. "But I'm not doing the work; I'm just forecasting... The work is being done by younger people in their late 40s and 50s. So there's an energy and a drive, and an understanding of the contemporary world. And they are also linked up with the younger generation of voters," he added • Economic Front • Singapore to host Asian edition of World Islamic Banking Conference Singapore will be hosting the first Asian edition of the World Islamic Banking Conference (Asia WIBC) in June next year. This was disclosed by the Monetary Authority of Singapore's managing director, Heng Swee Kiat, at the 16th WIBC in Bahrain. The Asian edition is aimed at promoting deeper relations between the Middle East and Asia. It is expected to provide a platform for more established industry players to share their experiences in Islamic finance. The WIBC is seen as the world's largest and most significant gathering of Islamic banking and finance leaders. • S'pore drops three spots in survey of top real estate investment markets Singapore appears to be losing a bit of its shine as one of Asia Pacific's top real estate investment markets. It slipped three notches among Asian markets in PwC's latest survey on where institutional investors prefer to put their money next year. Singapore was ranked number two last year. But it was placed number five among 20 cities in the latest report by PricewaterhouseCoopers (PwC). Shanghai was the top Asian city for real estate investment, according to the annual survey. It jumped from fifth place last year to first, ahead of Hong Kong, Beijing, Seoul and Singapore.

351 The survey said this is due mainly to the Chinese government's decision to inject liquidity into its economy with its massive economic stimulus package. This helped to boost lending and led to a sharp rebound in commercial property prices. The survey polled more than 270 industry players around the world. It found that concern about softening property values next year due to over-supply dented Singapore's ranking among developers. Among the real estate sectors in Singapore, residential investments came up tops in the survey. It attracted a 'buy' recommendation from 37% of respondents. Another 45.1% of respondents gave a 'hold' recommendation on residential properties in Singapore, also the lowest recorded among all other types. However, the survey highlighted some caution as well due to the expected volatile nature of the Singapore market. PwC told MediaCorp that respondents were uncertain about how the residential market will pan out in Singapore next year. Going forward, the report expects real estate investments in Singapore to pick up momentum, boosted by the transparency of its market. Despite the bullish atmosphere, market watchers believe it will largely be a slow and steady recovery for the region. • Economists upgrade forecasts for Singapore's GDP to grow 5.5% in 2010 Private sector economists are tipping the Singapore economy to grow 5.5 per cent next year. This is better than the official projection of a 3 to 5 per cent expansion. The 5.5 per cent prediction is also better than the 4.5 per cent the economists had forecast in September. For this year, they expect a smaller contraction of just 2 per cent, compared to a 3.6 per cent contraction they had predicted three months ago. This is according to the latest survey of professional forecasters by the Monetary Authority of Singapore (MAS). The more upbeat forecasts are a clear reflection of the improving economic climate, both in Singapore and globally. DBS Bank's economist, Irvin Seah, said: "The better-than- expected third quarter GDP numbers have actually provided some very encouraging signs in terms of the pace and the sustainability of this recovery in Singapore, as well as in the global economy. I think that has certainly added a lot of optimism into the outlook going forward." Some economists even think there may be positive surprises ahead.

PK Basu, chief economist at Daiwa Securities, said: "All the leading indicators are pointing to a very strong V-shaped rebound in the global economy. Singapore, being trade dependent, is going to benefit from that. "So, I expect real GDP to grow by 6.7%, given the strength of external demand as well as the residual impact of the fiscal stimulus in the first half of the year." For the fourth quarter of this year, the median forecast of 20 economists is that Singapore economy could expand 4.7 per cent on-year. In the previous survey in September, they had expected only a 1.9 per cent growth in the fourth quarter. Manufacturing, which accounts for about a quarter of Singapore's GDP, is expected to grow at a median rate of 8 per cent in the fourth quarter, after a surprise rebound in the third quarter. Economists also expect other sectors to recover. Financial services are forecast to return to positive growth of about 9.9 per cent in the fourth quarter, after shrinking 0.2 per cent the previous quarter.

352 The services sector is expected to outperform. DBS Bank's Seah said: "For next year, I foresee the services sector being the key driver of growth for Singapore, taking over the place of the manufacturing sector. "During the earlier phase of the economic recovery, manufacturing has been the key driver, but it was largely due to the strong surge in pharmaceutical production on the back of the H1N1 outbreak, but that factor has started to dissipate in recent months. As for the Singdollar, economists surveyed said they expect the local currency to trade around S$1.38 per US dollar by the end of this year, compared to S$1.44 tipped in the earlier survey. On the inflation front, respondents expect the consumer price index to rise 0.3 per cent this year. Previously, the forecast was for inflation to remain at zero. For next year, the economists expect consumer prices to rise to 2.8 per cent. The unemployment rate is expected to hover around 3 per cent. Stephen Blank, senior resident fellow at Urban Land Institute, said: "2010 is going to be a long year, we're not going to have a sudden victory or surprises. The Asia Pacific region is expected to grow at a rate faster than the rest of the world (but) not as fast as it did in 2007. • Social Front • Global rise in infectious diseases due to population growth, urbanisation Factors such as population growth, urbanisation and globalisation - more so than climate change - are the principal drivers of infectious diseases re-emerging worldwide, an infectious diseases expert said on Tuesday. Although experts agree that climate change affects how infectious diseases such as dengue are transmitted, the extent of its impact is actively debated. Professor Duane Gubler, director of Duke-NUS Graduate Medical School's emerging infectious diseases programme, said: "Climate change is important, no doubt about that. "We need to do everything we can to stop the changes that are influenced by human activity, but it's not climate change that's the main driver of this global emergence of infectious diseases (EID)." Other factors include changes in animal husbandry and the boom in air travel, he said on the sidelines of an international conference on EID held here. Since 1980, a new human pathogen has been identified every seven months. 60 per cent of emerging infections can be transmitted between animals and humans. A public health event occurs when all its risk factors align, said Dr David Heymann of the Centre on Global Health Security, Chatham House, in the United Kingdom. For instance, the Severe Acute Respiratory Syndrome (SARS) outbreak in 2003 was stoked by animal-human infection, the spread by health care workers to the community and cross-border air travel. To detect and identify viruses as they emerge, Duke-NUS is working with research institutes and health authorities in Vietnam and Sri Lanka to develop early warning surveillance systems. Indonesia and Myanmar have also invited Prof Gubler to set up such programmes, and he hopes to work with other countries in the region. The EID research programme has 43 staff on board, including 29 doctoral-level staff. • Environmental Font Laos

353 • Economic Front • Social Front • • Vietnam helps build capacity of Lao officials The Ho Chi Minh National Academy of Politics and Public Administration (HNAPPA) opened a training course on advanced political theory for Lao officials in Hanoi on December 7. According to VNA, during the year-long course, trainees will study methods of social science research, the fundamental aspects of Vietnamese culture, the history and geography of Vietnam and the world, the history of socialist thought and the Communist Party of Vietnam (CPV). They will be provided with the foundation of Marxism-Leninism and the ideas of Ho Chi Minh, as well as the CPV s leadership experiences during its renewal process. They will also undertake fact-finding tours in several localities. The course is expected to improve the political quality, revolutionary morality and working capacity of Lao officials to help them adapt to their tasks in the new situation. Speaking at the opening ceremony, HNAPPA Deputy Director Truong Thi Thong said that the CPV and the Lao People s Revolutionary Party (LPRP) consider personnel training a valuable and decisive factor in the success of their revolutionary cause and the fate of their party, country and regime. Over the past years, the academy has held a number of courses for Lao officials in the framework of the two countries cooperation agreement, she said. • Vientiane focuses on poverty reduction Vientiane province has paid attention to the development of irrigation facilities, agriculture and forestry and infrastructure, Vientiane Governor, Mr Khammeung Phongthady said last week. He continued that Vientiane province also focused on the poverty reduction and rural development which were priorities of this central province. Last year, the Government invested 233 billion kip in 319 projects while local and foreign investors injected 244 billion kip in 27 development projects. Foreign assistance in the provincial development project amounted to over 69 billion kip. Thanks to the development project, living conditions of local people in the province, particularly farmers, have improved. Presently, the irrigation facilities in Vientiane province are able to supply water to 37,113 hectares of rice fields in rainy season and 14,000 ha in dry season. Rice harvest in the period of 2008-2009 reached more than 260,000 tonnes.

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