UN PACTO ENVENENADO

Pero ellos respondieron: ¿Había él de tratar a

nuestra hermana como a una ramera?

Genesis 34:31 (Casiodoro de Reina, 1569)

Every October, on Columbus Day, pundits ponder the significance of the voyages of Christopher Columbus to the New World and whether, in fact, Columbus “discovered” America. Heated arguments ensue, and ink, if not blood, is spilled. But the issue of “who discovered America” is and should be a simple question of scientific fact.. Did Columbus “discover” America? The only reasonable answer is, “No, certainly, not.”

The scientific facts are so clear it is perplexing that the point is argued at all. When Columbus arrived in the Caribbean in 1492, he found people already there. In fact, it is estimated that the New World was home of tens of millions of people whose languages and ways of life were more diverse than those of Europe. The New World was not the territory of a bunch of nomadic foragers who, as it has been grotesquely suggested, simply became the unfortunate victims of a cultural version of “survival of the fittest.” The New World was home to a myriad of cultures including hunters and gatherers in the Alaskan artic, pyramid-building farmers in the midwestern United States, mobile hunter-gatherers in the desert west, and corn-farming, town dwellers in the southeast. The New World also was home to a number of full-blown civilizations including the Aztec, Inca and Maya. These cultures were, in the view of the conquering Spaniards themselves, the equal to any in the Old World. What the Aztec, Inca, Maya, and others were lacking, however, was gunpowder (a Chinese, not European, invention) and, even more significantly, immunity to European diseases, which killed more of them than any conquistadors with swords or guns. So why do people argue the point at all? At least part of the reason this is still a political issue is good old European ethnocentrism.

FEDER, K.L. Frauds, Myths, and Mysteries: Science and pseudoscience in Archeology. Mayfield Publishing Company. USA. Third Edition. 1999. Pp. 79.

1492 (Christopher Columbus sighting land)

No sólo existe la memoria histórica. El Clima también guarda en su memoria por lo menos los acontecimientos más recientes. Con El Niño en plena fase de crecimiento y una deprimida temporada de huracanes, es difícil determinar con precisión si las aguas llegarán apenas a tiempo -y en cantidad suficiente-, para aliviar un poco la contingencia climática antes del fin de la época de lluvias en la República Mexicana.

Justo al principio de este año la vida dio un drástico vuelco para uno de los sobrinos de La Mujer Maravilla. Camino al hospital sobra el tiempo pa´ charlar.

_ ¿Y qué pasó?

_ Es que el compa que traía atrás se espantó cuando nos rebasó un trailer, y me desequilibró toda la moto; ya no pude controlarla.

_ ¿Y a qué iban a Zumpango? ¿Qué ya se habían bebido todo el parque de Chilpo?

_ Pues la neta sí, andando así, y con cierta clase de compañías, uno se come el mundo. No te voy a decir que andábamos bien, pero esta vez ni a eso íbamos.

_ ¿´Tonz?

_ No, pus mi cuate, ese día me pidió ese día que lo recomendará en la constructora porque la cosa está muy cañona.

_ Así es, aún para uno bueno y sano esto está del cocol.

_ Yo no me voy a quedar así, me quiero regresar a estudiar. No me quiero achicopalar porque si no me muero pronto.

_ ¿Ya has pensado qué?

_ No mucho, ¿tú qué me recomiendas?

_ Pues lo primero que se me ocurre es alguna actividad en la que no necesites andar de allá pa´ acá. Creo que los que se reciben en informática y esas ondas todavía son muy solicitados.

_ Y en eso puedes empezar con la carrera técnica y comenzar a trabajar, ¿no?

_ Sí, creo que sí. Terminando de técnico puedes comenzar a chambear y seguir estudiando al mismo tiempo la licenciatura.

Echarse el viajecito a Lomas Verdes y de regreso en un solo día nos ha dejado exhaustos, y con un humor de perros a todos nosotros.

_ No manches, bato. Aguanta vara, ya mañana te vas temprano, al fin entras hasta en la tarde.

_ Nel, wey. Yo me voy ahorita.

_ Tranquilo, carnal. La neta yo no quiero perder la otra también. Checa, la jefa está muerta también.

_ ¡Ya vámonos, má!

_ ¡Ah, qué viento sopla! No la jodas, loco.

_ Déjalo que se vaya, Marco.

No pudimos convencerlo y… se fue. La Mujer Maravilla tuvo que trastornar sus planes para el fin de semana: tomar el vochito por económico, echarnos el tiro de ida y vuelta en un solo día y utilizar la carretera federal para ahorrarnos las casetas. Todo esos pequeños contratiempos valen quequi cuando de cosas de familia se trata, ¿no?.

Lamentablemente no se puede pactar con cualquiera. Do you think you can tell heaven from hell?

¿Realmente cree usted posible conciliar la incontenible aspiración transformadora y el aletargante status quo? ¿Deveras pretende su merced, hipotecar en forma vitalicia su fuerza de trabajo, con tal de mantener a una inservible clase político-empresarial? ¿Apoco son intercambiables el Spring Break en Miami por los interminables turnos frente a la fresadora?

Policia Fresa- Best Commercial

It seems that only the politicians haven´t seen that we already reached the turning point, or to be even more precise the point of no return. “Nuestros bonos por productividad son inamovibles, ¡ah, pero eso sí!, hace falta una exhaustiva revisión de las prestaciones laborales que conquistaste cuando te mangoneaban los rojillos.”

¿Queda verdaderamente acaso algo más que estirar? Mientras los análisis macroeconómicos pintan un promisorio futuro para los pisos de remates de las principales bolsas de valores del mundo (las subdesarrolladas imitaciones bien pueden largarse mucho al carajo), el desempleo se agudiza en la base de la pirámide social.

El remedio a esta desesperante situación actual solo puede ser acordado en las bases; porque es justo ahí donde, como en los indisolubles lazos familiares, se comparten los mismos intereses de clase. Sólo hay una fuerza capaz de desafiar to that gluttonous economic black hole: you. Yes, you the tireless working class.

Ya que aún no hemos sido derrotados en esta interminable guerra desarmada, supongo que se pacta para ganar. Que alguien me convenza de que es victoria nuestra, alargar el actual sistema económico que ha incrementado la aberrante desigualdad social en nuestro país. Ojalá algún erudito me explique la razón por la que esperaría resultados satisfactorios de un esquema, que nos ha empobrecido con una empecinada consistencia que seguramente no envidian nuestros socios comerciales norteamericanos.

En la cumbre se acuerda una solidaridad criminal que propone extender el éxito económico, well not down here, I´m afraid, buddy. Deception, delusion or just plain lies, everything is permitted on this side to pimp all those pretty women of our backyard.

By my side, i.e., your side, are we all still waiting for a miracle? A leader that fulfills our wildest dreams.. one of us. Is that possible without a fight? Without pushing our everyday necessities up? Si usted como yo desea, aunque no sea lo expedito que se requiere –we probably are gonna need to keep on fighting… restlessly-, una distribución equitativa de la riqueza nacional, entonces usted y yo, sin duda alguna, pactaremos un plan conjunto que al final logre en verdad cambiar nuestro México. AL TIEMPO.

M@RCOnvenio;

Iguala de La Independencia, Gro(ndona);

21/08/09.

… pus, vamos pensando en la confiscación.

El rancho ´La estancia´ de Vicente Fox

PREGUNTAS SIN RESPUESTA:

¿Qué pensarán los brasileiros de un mandatario que en la misma semana, por un lado justifica el alquiler de las bases militares estadunidenses en territorio colombiano, y por otro busca un acuerdo estratégico entre PEMEX y PETROBRAS?

SPECIAL REQUESTS:

Pelen bien los oclayos, y más temprano que tarde comprobarán que very deep inside no hay un conflicto irresoluble entre el expresidente de los blanquiazules (que en Tampico utilizaba a Uruguay como uno de los ejemplos a seguir por su actual esquema económico), y el primer mandatario que recién ha visitado a quizás su único cuatacho en nuestro barrio latinoamericano. At the end of the day, La Sagrada Familia y los (¿ex?)doctrinarios comparten un mismo fin supremo, que es capaz de conciliar cualquier superficial desavenencia

Un reconocimiento público al excelente concierto in memoriam de esta semana.

Morte a Venezia / Death in Venice

SITIO INTERNÉ DE LA SEMANA:

Der Spiegel International Version:

http://www.spiegel.de/international/

Leaders In Alternative Energy

Germany Turns On World's Biggest Solar Power Project

ENCORE IMPERIAL:

La Antorcha Encendida : El Abrazo de Acatempan

http://marcosalas.spaces.live.com/blog/cns!BDFACA893D7CA374!1566.entry

http://www.4shared.com/file/126689700/7c0577c7/un_pacto_envenenado.html

China launches more probes into U.S. steel subsidies

China will ensure transparency in its first dual trade investigation

On August 19, 2009, China's Ministry of Commerce (MOFCOM) announced on its website that it will investigate into another six US steel subsidies, including U.S. governments' coal subsidies and power and natural gas offered at low prices.

According to a statement MOFCOM exchanged views with its U.S. counterpart on that case on August 13.

On June 1, MOFCOM announced the launch of an anti-dumping investigation into imports of grain oriented flat-rolled electric steel (GOFES) from the U.S. and Russia, as well as a countervailing investigation into 22 subsidies related to US GOFES.

That is China's first countervailing investigation and first dual trade remedy investigation into its imports from the same country.

The complaints were filed by Baosteel Group Corp. and Wuhan Iron & Steel Group, whose gross output of electric steel between 2006 and January to February 2009 accounted for 100 percent of the gross output of this type of product in China during that period.

In 2008, China imported 59,000 tons of grain oriented flat-rolled electrical steel. In the first half of 2009, the figure stood at 18,000 tons. Imported electrical steel has strong impacts on China's domestic steel market due to its low price.

The investigation is supposed to conclude in one year, but it could extend half a year under special circumstances. China will impose special tariffs on electrical steel from the U.S. if the findings of the investigation are affirmative.

By People's Daily Online

China's surplus in current, capital accounts down in H1 2009

China's forex reserve hits 2.1316 trln USD, up 17.84%

The State Administration of Foreign Exchange (SAFE) released the preliminary data of the country's international payment on its website on August 20, showing that China still keeps surplus of both the current account and the capital account in the first half of 2009.

In the first six months of the year, China's current account surplus reached 130 billion USD, down 32 percent year on year. The surplus in goods stood at 118.3 billion USD while the deficit in service reported 18.6 billion USD.

The surpluses in income and in current transfers were 16 billion and 14.3 billion USD respectively.

The capital and financial account had a surplus of 33.1 billion USD in the first half of the year, a year on year slump of 54 percent. The net FDI inflow reached 20.6 billion USD. The inflow of portfolio investments valued 16.9 billion USD. Other outflow of other investments reached 5.6 billion USD.

The country's forex reserves had increased by 185.6 billion USD to 2.1 trillion USD by the end of June from the end of 2008.

SAFE will officially announce the balance sheet of the international payment in September or October.

By People's Daily Online

China to trim US treasury holdings, diversify Forex reserves

China sold off 25.1 billion US dollars worth of U.S. treasury bills in June to bring its holdings to 776.4 billion dollars, according to data released by the U.S. treasury Department Monday. This has gratified people in China, whereas the United States keeps a close eye on the move.

Judging from the perspective of its people, however, China is in an urgent need to alter its structure imbalance with its Forex reserves, so that the value of reserve assets could be preserved and increased.

U.S. treasury bonds seem to have the good safety and strong fluidity with a higher interest rate than that of same-term bank deposits, and it is exempt from interest tax. Against this rising mist, the devaluation trend of the US dollar will result in an intangible devaluation of its treasury bonds. Under such circumstances, China’s first large-scale reduction of US treasury debt is, beyond any doubt, within the bounds of reason.

The reduction of US treasury bonds also shows that China "is seeking to diversity its Forex reserves." Such diversification is, nevertheless, poses a complex topic. To date, the main problem China has been facing has two aspects:

One aspect is to make a scientific value assessment of Forex structure, so as to maximize the return and minimize the risk and, the other aspect is to train the competent personnel well versed in the international game rules, who have rich managerial experience.

Behind the reserve diversification, there is a diversification choice on excess value. First, China has to retain a certain proportion of US dollar reserves since the nation should have the basic means to ensure emergency or contingency international payments. Second, China must have a certain amount of gold reserves, a strategic national asset to serve as a strong prop or backing at the critical moment and, third, China must keep a certain proportion of other stable currencies, such as the euro, British pound and Swiss franc, to offer a useful hedge against dollar devaluation.

Besides, the use of Forex reserve should take the substantial form in kind. Since Forex reserves are not money of fiscal resource, the use of the reserves should be made mainly in external investment and international trade, or to purchase large-scale machinery and electrical equipment and sophisticated technologies and to make strategic asset investment or to join investment holding companies, focusing on high-growth investment opportunities where potential returns will exceed the cost of capital. Such an endeavor, however, has already been foiled repeatedly due to trade barriers and "fire walls" put up by a few Western countries.

Furthermore, granting loans to other countries, or directly buying real estates and housing and purchasing large-scale commodities. The issue on the table now is to acquire a correct appraisal of diversified channels for foreign exchange reserves and define the Forex mix in a scientific way. To diversify foreign exchange reserves and define their scientific, rational structure is the procedure China has to accomplish, and some new areas for investment need badly to be explored.

China has had "no ability to make other option" before but to shrink U.S. treasury holdings. Today, it must be recognized that China is still unfamiliar with the international game rules and the nation is only a pupil with regard to the performance of capital. People in China could be entirely unaware of "manipulation" by banking tycoons or financiers. So, China is in an urgent need of ace professionals in the banking sector good at strategic investment and management.

Forex reserves belong to the national wealth, and it is natural and inevitable that the general public pays high heed to their safety. Therefore, while explaining some suspicions to the public to win their trust, confidence and understanding, the relevant departments should also consider it an issue to pander how to conceal their strategic intention to the maximum.

By People's Daily Online and contributed by PD reporter Chen Jiaxing

Typhoon turns into a political storm

By Cindy Sui

TAIPEI - It was just a routine viewers' survey, but a CNN online "poll" on whether Taiwanese President Ma Ying-jeou should step down over his administration's response to Typhoon Morakot made headlines in newspapers and top-of-the-hour TV news in Taiwan, with traditionally anti-ruling party outlets running wild with it.

"CNN poll shows 80% people want Ma to step down," shouted a front-page headline on Liberty Times. Even television stations typically partial towards Ma played up the story.

The killer typhoon that caught everyone by surprise with its extraordinarily destructive power, pounding Taiwan with record rainfall from August 6 to 10 and causing massive mudslides which killed an estimated 500 people, is turning out to be Ma's biggest challenge yet as president.

Since taking office in May 2008 after winning 58% of the votes in the presidential election, his approval ratings have slid due to the economic downturn and concerns about his China policy, but now they are at a near record low of 29%.

The hardest-hit areas - Kaohsiung, Pingtung and Tainan counties, are all headed by officials from the opposition Democratic Progressive Party (DPP). Little focus, however, has been placed on mistakes made by local officials, despite the argument that they should have been the most aware of the local rainfalls, flooding and the potential risk of landslides affecting villages in their areas.

That's not surprising, said Andrew Yang, secretary general of the Taipei-based Council of Advanced Policy Studies and a former government advisor under ex-president Lee Teng-hui.

"People had already experienced inefficiency and incompetence at the lower levels, so they were looking to Ma Ying-jeou for leadership," said Yang. "One way or another, the system should've worked to reduce damages and loss of lives, but it didn't. That's why people are targeting Ma Ying-jeou. They want to get the problem solved. People want results."

It's still unclear what went wrong. Ma and the Executive Yuan, his cabinet, have only been in office a little over a year and they did not create the disaster response system - it was already there.

Information revealed since the typhoon hit indicates that the Central Weather Bureau initially predicted low rainfalls for the south and had no idea the typhoon would bring about 2,800 mm of rainfall in just four days - half or two-thirds of the total amount of annual rainfall in the areas. Only when rains started falling hard did the bureau steadily upgrade its rainfall forecast.

But it is unclear whether officials at the National Fire Agency's disaster relief center were informed and if they had been informed, why they had not reacted promptly to alert local officials to evacuate residents.

With so many agencies that could've and should've done something, it was unclear why everyone dropped the ball.

Ma himself gave the impression in a recent news conference that he himself is not clear about the chain of command that should have been followed in these situations. He repeatedly pointed out that in the seven hardest-hit areas, thousands of lives were saved in three or four of these areas because the village or township chiefs there had had the smarts to evacuate their residents, some of them having undergone training in this.

But this raises the question - why was it left to local officials, some of whom might not be fully aware or informed, to decide whether or not to evacuate people?

The Ministry of National Defense has been roundly blamed for not sending out troops until the third day of the typhoon, and then for not sending enough.

In the worst-hit village of Siaolin, where nearly 400 people are believed to have been buried by a mudslide, it would not have made much difference. Sides of mountains near the remote village located in a narrow valley at the foothills of Alishan came crashing down on the village shortly after dawn on Sunday, August 9. Residents said that due to damaged telecommunications lines, no one outside knew, and help did not come until the next day.

Despite repeated questions from the media about what Ma was doing during the days of the typhoon disaster, he has not answered them or revealed how much information he was given.

"He didn't receive abundant information," said Yang.

But that remains unclear.

"Did they [the government] have sufficient information? Or did they have the necessary information but made wrong judgments?" asked Ethan Tseng Yi-ren, a political scientist from the National Sun Yat-sen University in southern Taiwan's Kaohsiung City, traditionally a DPP stronghold. "If we have such types of civil servants who have the necessary information but still failed to act accordingly, then that's bad."

While Ma has vowed to launch a thorough investigation and punish those found guilty of dereliction of duty, the media have also questioned whether he will punish himself, with some people calling for his resignation.

People, perhaps long frustrated by a government system notorious for being bureaucratic and unresponsive, are venting their frustration. Perhaps because Ma tends to apologize easily and appears to be caring, he is getting an earful.

"What's interesting is that people who are traditionally critical of the [ruling] Kuomintang (KMT) and don't watch TVBS, which traditionally supports Ma Ying-jeou, are now watching TVBS instead of the TV channels that tend to criticize Ma. They are interested in seeing how TVBS is scolding Ma Ying-jeou," said Tseng.

The fallout from the typhoon would have an impact on elections in December for county and city leaders, Tseng said. "It will definitely have a negative impact on the KMT," said Tseng. "But it's unclear how great the impact will be because people are also upset at local officials in the south."

At play in the unfettered criticism of Ma's government are lingering suspicions about his intentions in building closer economic and trade ties with China, Tseng said. Since taking over as president, Ma and the KMT have adopted unprecedented measures to improve cross-strait ties, including launching direct flights, shipping and postal links, allowing thousands of Chinese tourists to visit each day, and opening the door to Chinese investment in about 100 sectors, including public infrastructure.

What he plans to do next is actually what most worries Taiwanese suspicious of China - negotiations on an "economic cooperation framework agreement" (ECFA). Similar to a free-trade agreement, talks will begin with China in October over the ECFA and Ma hopes to reach agreement by next year.

Ma believes this is important so that Taiwan does not lose out as China signs free-trade agreements with other countries, giving them a competitive edge in lower tariffs or tariff-free trade with Beijing. But critics worry it will not only hurt Taiwanese local industry but also harm the island's sovereignty.

"Politics is involved in some of the criticism against Ma Ying-jeou. Taiwanese people won't say 'It's because I'm unhappy with your China policy', but of course in the back of their mind, they think this," Tseng said. "Come October, when ECFA negotiations begin, the opposition party will use this opportunity to say this government is not worthy of trust."

The DPP and its chairwoman Tsai Ing-wen have been conspicuously absent in the typhoon debates. That's intentional, said Tseng, as they do not want the public to view the criticisms against Ma as the two parties going at each other's throat again.

What's missing in the debate, analysts said, is an honest, objective look at what is wrong with a system that allowed hundreds of villagers to be buried in a mudslide during a major typhoon. Even China, which Taiwan often looks down on in terms of its standards of governance, routinely evacuates as many as a million people when typhoons approach.

To be fair, this typhoon was extraordinary. It was slow-moving, staying three to four days, unlike most typhoons which leave within a day or two. And while it was not considered a powerful typhoon, it brought much more rain than most typhoons.

Still, unless the public and the government look at the root of the problem, instead of just calling for resignations of this or that official, the problem could reoccur, analysts said.

Tough questions will also have to be answered - including whether Taiwan will suffer more such extreme weather conditions due to climate change and whether it should allow people to live in dangerously located mountain villages.

"Everyone is criticizing Ma's ability, but by not analyzing why this typhoon caused so much damage, the people at the grassroots will suffer again," said Tseng.

The media focus of late is allegations that Premier Liu Chao-shiuan had the nerve to get a hair cut or have his hair dyed on August 11, at the height of the rescue effort, and that the Executive Yuan's secretary general Hsueh Hsiang-chuan, who is responsible for coordination between ministries, had a Taiwanese Father's Day dinner with his father-in-law on August 8 when the typhoon brought flooding to the south. Hsueh's initial defensive remarks were, "It was Father's Day! And we only ate yam porridge."

Defense Minister Chen Chao-min was criticized for not dispatching soldiers in time and dispatching too few troops to rescue typhoon victims, while Vice Foreign Minister Andrew Hsia was slammed for initially rejecting international aid.

Hsueh, Chen and Hsia have all tendered their resignations, but the premier has not accepted them yet.

President Ma said he will not resign, insisting his duties were needed at this time. He has promised the results of an investigation into wrongdoings in the disaster-relief fiasco will be revealed next month, and that for now, the focus should be on resettlement and reconstruction.

Analysts said it's unlikely that Ma will step down. According to Taiwan's constitution, he must serve his full term. And if the opposition party were to try to recall him, it would need a majority in the Legislative Yuan, which it does not have as Ma's KMT party controls more than two-thirds of the seats.

What Ma will have to do in the coming days is take a hard look at his cabinet, including the premier, and see if changes need to be made, analysts said. From the beginning, his team has been criticized as being inexperienced. Liu, while reputed as a clean official, has only served a short stint as transportation minister in the 1990s. Coming from a chemistry background, almost all his experience is in academia, where he headed two universities.

According to the constitution, the president is in charge of defense and foreign affairs, while the day-to-day running of the government is left to the premier. Ma, a trained lawyer, has been strict about following this formula, but time and again he has shot himself in the foot for doing so, taking criticism afterwards for not being on hand and involved at a time when the highest-ranking leader was needed.

What Ma has done the most since the typhoon disaster struck is to apologize. He has also met with many bereaved family members, not shying from their cries of anger and complaints, and is promising a variety of assistance, including living stipends, temporary housing, rental subsidies and school meals. It seems to be making a difference, at least to some people, even though the media continue to be tough on him.

The host and guests speakers of a local TV station's on-air panel discussion on Wednesday to criticize Ma were surprised when the first of several incoming calls from the audience criticized the media, not the president. "All you do is spend all day scolding Ma Ying-jeou. Let's unite and not differentiate between blue [KMT] or green [DPP]," said one woman on the phone.

Ultimately, Ma's survival will depend on whether he can meet people's demands and fix the problems in Taiwan's disaster response system, said analysts. "I think he is capable of doing this," Yang said. "He's putting his ears to the ground."

Cindy Sui is a freelance journalist based in Taipei.

(Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

Russia steps up role in German industry

By Vladimir Socor

German Chancellor Angela Merkel visited Russian President Dmitry Medvedev in Sochi on August 14 - their third bilateral meeting thus far this year - in an atmosphere of conviviality staged primarily for German television channels.

Merkel was in the Crimean resort as a "favor-seeker" - the chancellor's Christian Democratic Union and other parties face a general election next month and three major enterprise bankruptcies with their attendant threat to jobs spurred her decision to rush to Sochi.

These short-term considerations, however, are only adding impetus to an existing long-term strategy of linking the German economy to Russia.

Topping the bilateral agenda at the moment are Russian takeovers in Germany of the insolvent Opel automobile plants, the Wadan shipyards and the semiconductor producer Infineon-Qimonda, as well as ambitious projects involving the nuclear power industry and natural gas supplies.

The Wadan shipyards, in Wismar and Rostock-Warnemuende on the German Baltic coast, are being offered to a Russian investors' group close to the Kremlin. The German government takes the position that an investor connected with the Russian political leadership can guarantee Russian state orders for the yards.

As recently as 2008, the German government allowed an individual Russian investor (identified in the German and Russian media as Andrei Burlakov) to acquire the Wadan shipyards in unclear circumstances. Burlakov had promised to secure Russian state orders, but he did not deliver by the time the crisis hit. The shipyards became insolvent despite their capacities for building liquefied natural gas (LNG) tanker ships, Arctic transport ships, and ice-breakers.

Gazprom, Russia's biggest natural-gas producer, and the Russian merchant fleet lack such vessels and are unable to build them. Russia needs them in order to break into the LNG trade (lest this become Western Europe's answer to Russian pipeline dominance) and to compete for Arctic resources.

At the Sochi meeting, Medvedev and Merkel tentatively agreed on handing over the Wadan shipyards to a Russian group, represented by Igor Yusupov and his son Vitaly. The senior Yusupov, a member of Gazprom's board, was a cabinet minister in 2001-2004 and later a special Russian representative for external economic relations and energy issues. He has been closely associated with both Medvedev and Vladimir Putin during their respective presidential, governmental, and Gazprom tenures.
Yusupov junior is now the head of the Moscow office of Nord Stream, the Gazprom-led Russo-German project for a gas pipeline on the Baltic seabed. Thus, both are colleagues with Germany's former Social Democrat chancellor Gerhard Schroeder, being in Gazprom's employ in one way or another. Schroeder joined the Gazprom payroll soon after leaving office in 2005. The incumbent Christian-Democrat chancellor's chosen solution for Wadan reflects the bipartisan nature of Berlin's new Ostpolitik.

According to Russian and German press reports, the Yusupovs have pledged 40.5 million euros (US$57.6 million) upfront, ostensibly as private investors, for the Wadan shipyards. According to these reports, the Yusupovs are believed to represent a consortium that includes the Russian Vyborg shipyards - working largely on orders from Gazprom - and the construction and banking magnate Sergei Pugachov, who has been described as belonging to Prime Minister Putin's inner circle and as the "Kremlin's cashier".

At the Sochi meeting, Medvedev told the media that the proposed takeover of Wadan would be a purely "private" business. Nevertheless, Merkel held out the prospect of German government credits or guarantees to support this solution for the shipyards.

Under such arrangements, Russian capital would acquire the Wadan shipyards at a fraction of their real value. The shipyards possess a highly trained workforce, modern machinery, and advanced patents, such as Russia could not hope to develop on its own any time soon. From the German government's standpoint, guaranteeing Russian state orders through the investors' links to the Kremlin is a decisive consideration in favor of this solution.

In Sochi, Merkel urged Medvedev to go ahead with the Nord Stream project as a priority, "even if South Stream is also being pursued". The proposed South Stream gas pipeline would transit the Black Sea from Russia to Bulgaria before feeding gas to Europe. Such remarks have been heard repeatedly from the German side, reflecting anxiety that South Stream might divert Russian resources of gas and investment capital away from Nord Stream. Such anxiety is gratuitous, however, inasmuch as South Stream remains an implausible project.

Also on the inter-governmental agenda is a proposed Russia-Germany joint energy agency. If created, such an agency could nip the European Union's common energy policy in its fragile bud.

Vladimir Socor is a senior fellow and long-time senior analyst with the Jamestown Foundation. He was formerly a senior research analyst with Radio Free Europe/Radio Liberty in Munich, and is a specialist in the non-Russian former republics of the USSR, Commonwealth of Independent States affairs and ethnic conflicts.

(This article first appeared in The Jamestown Foundation. Used with permission.)

(Copyright 2009 The Jamestown Foundation.)

US tax investigators win fight to force UBS to disclose accounts worth $18bn

• Three-year battle brought Swiss bank to its knees
• Fears in Zurich that many lawyers will be extradited

• Nick Mathiason
• guardian.co.uk, Wednesday 19 August 2009 20.55 BST
• Article history

UBS, the world's biggest wealth manager, has been forced to hand over 4,450 accounts that contain a staggering $18bn (£10.9bn) to American tax investigators.

The information haul represents a triumph for the US Internal Revenue Service. It ends a three-year investigation that brought Europe's most powerful bank to its knees, opening up a deep diplomatic rift between the United States and Switzerland.

A final legal settlement in the acutely damaging investigation for UBS means Switzerland has to co-operate with the US in ensuring account details are handed over to American investigators within 12 months. Fears are growing in Switzerland that US investigators will turn their attention to Credit Suisse and other Swiss banks. There are also concerns in Zurich that Swiss lawyers will be extradited to America to face charges for aiding and abetting tax evasion.

The 4,450 accounts soon to be in the possession of US investigators are expected to reveal the secretive world of international wealth management in which complicated webs of sham trusts and shell companies are created in tax havens to protect the assets of the super-rich. Switzerland shields nearly a third of the world's $7tn of privately held wealth. Under US law, the IRS must be notified of offshore accounts holding more than $10,000.

"This settlement will reverberate throughout the globe," said Tom Cardamone, managing director of the influential Washington-based thinktank, Global Financial Integrity. "We are going to see patterns of behaviour that will lay bare the entire infrastructure constructed by attorneys and accountants which will also provide an opportunity for Germany and France to attack this problem."

Jay Krause, partner at international law firm Withers, said: "The IRS scored a major victory in the ever-expanding international campaign against tax avoidance. The decision will provide a useful roadmap for obtaining US taxpayer information from other Swiss financial institutions and will likely be tailored to target institutions in other jurisdictions.

"But it is not just financial institutions that should be concerned. The information obtained by the IRS will inevitably lead to audits of law and accountancy firms and other tax advisers."

Earlier this year UBS paid a $788m fine and handed details of 250 private accounts to US investigators after court documents revealed that its wealth managers had smuggled diamonds in toothpaste tubes, deliberately destroyed offshore bank records on behalf of clients and assisted wealthy Americans to conceal ownership of their assets by creating "sham" offshore trusts using misleading and false documentation.

Initially the US authorities demanded details of all 52,000 UBS accounts held by American citizens. It is now clear that the 4,450 accounts Switzerland has agreed to hand over represent the bulk of UBS's $20bn US wealth management business which earned the firm $200m in fees. Since the investigation, UBS has seen a rapid withdrawal of funds from its wealth management arm.

Doug Shulman, IRS commissioner, said: "I believe this agreement gives us what we wanted – access to information about those UBS account holders most likely to have been involved in offshore tax evasion."

Dr Andreas Missbach from the Swiss economic justice campaign group, Berne Declaration, said: "This is the nail in the coffin of total protection of tax evaders by Swiss banks and we must now hope that the level of Swiss co-operation will not be limited just to powerful industrial countries, but will extend to poorer nations to help them reclaim the vast wealth that has been stashed here."

International pressure on Switzerland has seen it excluded from G20 talks aimed at restoring the world's financial system in what is regarded as a humiliation for the country. Switzerland's pariah status means it is on an OECD grey list of countries considered to have harmful tax jurisdictions. The issue has split Switzerland between those who accept the country has to change its secretive ways and others who believe the UK and the US are hypocritical because they oversee the Channel Islands and Delaware.

Bank raid

The UBS case was blown open when former UBS executive Bradley Birkenfeld confessed in May 2007 to helping a Florida-based property tycoon escape taxes. Birkenfeld provided documentation that proved tax fraud was endemic within UBS. The US authorities are now trying to get Birkenfeld's five-year prison sentence halved. The settlement is the most serious challenge to Swiss banking secrecy and ends an awkward diplomatic spat. Switzerland is an important strategic ally for the US and runs its interests in Iran, North Korea and Cuba. But the war against tax abuse that became a centrepiece of the Obama presidential election campaign appears to have overridden diplomatic considerations.

Public finances much worse than feared

The recession has hit tax receipts hard while government spending on unemployment and other social benefits has risen

• Julia Kollewe
• guardian.co.uk, Thursday 20 August 2009 12.30 BST
• Article history

The Treasury said the deterioration had been anticipated in Alistair Darling's April budget. Photograph: Jeff Overs/BBC /Getty Images

Britain's public finances plunged far deeper into the red last month than the City expected, recording a record July deficit of £8bn as tax receipts slumped.

This was the biggest July shortfall since records began in 1993 in a month that traditionally records a surplus.

Public-sector net borrowing was £8.016bn – much worse than analysts' forecasts of a £500m shortfall and the first time the government finances have been in the red in July since 1996. This was in sharp contrast to the surplus of £5.2bn a year earlier, the Office for National Statistics said.

July is usually a "fat month" for tax receipts, economists said, but not this time as public coffers received some £3.75bn less than last year in tax income from recession-hit companies. At the same time, the economic downturn has led to higher government spending on unemployment and other social benefits.

Analysts said the figures confirmed that the public finances are in a "dire state". Colin Ellis at Daiwa Securities said: "The authorities must be hoping that quantitative easing starts working soon, as the only extra support that is at all likely from fiscal policy over the next year is probably an extension of the VAT cut and/or the modest car scrappage scheme.

"But given the underlying weaknesses that are evident into today's data, if the economy remains weak then the toll on the public sector finances could end up being truly horrible."

Vicky Redwood at Capital Economics noted that "the necessary fiscal consolidation is going to be a huge constraint on the economic recovery".

Total central government receipts fell to £44.1bn last month from £52bn a year earlier. Corporate tax income declined by 38% – the biggest drop since records began in 1998 – and proceeds from income and wealth taxes were down 22%. This was compounded by a rise in government expenditure to £46.7bn from £43.4bn, with spending on social benefits climbing to £14bn from £12.7bn.

"The public finances data were far worse than expected," said Peter Dixon at Commerzbank. "Tax revenues have clearly collapsed."

It is the third time this week that City economists have been caught on the hop after Tuesday's higher-than-expected inflation figures and news that Bank of England governor Mervyn King and two others wanted to pump an extra £75bn into the economy this month – but were outvoted by the rest of the monetary policy committee who sanctioned a £50bn stimulus.

Analysts now fear that Alistair Darling's prediction of a record £175bn deficit this fiscal year is too conservative. Stephen Lewis, at Monument Securities said: "Very disappointing figure on public sector finances. It indicates that the downturn in the economy is making deep inroads into tax receipts and that we may well end the year with an even larger deficit than was projected in the Budget."

In the financial year so far, borrowing has risen to £49.8bn – more than three times the £15.9bn in the same period last year. Central government receipts haven fallen by 12% since April while spending has grown by 6.2%.

Richard Snook at the Centre for Economics and Business Research predicts that government borrowing will come close to £200bn this year, "giving which ever government takes power in 2010 a once-in-a-generation challenge to bring the debt and deficit back down to manageable levels".

Britain's net debt shot up £800.8bn, today's figures showed – equivalent to 56.8% of gross domestic product, up from 43.5% a year ago.

The Treasury said the deterioration in the public finances was the result of the deep economic downturn earlier in the year and had been anticipated in the chancellor's April budget.

"Today's public finance data reflects what we knew at the time and other figures have since confirmed: in the first half of the year the whole world was in a steep recession and that affected the public finances here in the UK," said a spokesman.