Erica blog

At G20, U.S. Pushes China on Currency Policy

WASHINGTON, DC – President Barack Obama took his ongoing push against Chinese currency undervaluation, which imbalances U.S.-Chinese trade and contributes to the deeply problematic U.S. trade deficit, to this week's G20 economic summit in South Korea. But he found only mixed success; the resulting G20 resolution does not include his requested language pledging against allowing "competitive undervaluation" of currencies. Here's what happened, what it means, and why it matters. But before we get to the analysis, here's a cartoon music video that pretty elegantly explains, in a surprisingly entertaining rap, both sides of the U.S.-China currency dispute.

G20 Wary of U.S. as Well as Chinese Currency Policy  Despite U.S. pressure to call attention to Chinese behavior, the world economies represented by G20 have been especially suspicious of the U.S., putting Obama on the defensive. The Washington Post's write, "Obama said a recent Federal Reserve decision to add more money to the financial system is distinct from the 'competitive devaluation' that all the countries foreswore in the G-20 agreement. China has used such devaluation, U.S. officials argue, to advance its exports. The Fed decision, Obama said, 'was not one designed to have an impact on the currency, on the dollar. It was designed to grow the economy.' Obama said. "World Must Push China to Take Responsibility  The Guardian's , "The US and China, then, are pursuing mutually inconsistent economic policies reflecting diametrically opposite circumstances, but centred around a common exchange rate, so the yuan moves little against the US dollar. On this basis, there never will be a meaningful agreement by G20 nations to resolve the underlying problem of imbalances in global trade or local economies.Ultimately the G20 must recognise that the US has already been dealt its hand by the financial crisis and that China has both choices and flexibility. This would refocus attention where it should be - namely, on the wide-ranging economic and political reforms that China has to pursue."Obama: No Home Run, but 'Important Single'  Foreign Policy's , "The final agreement commits G20 nations to curb deficits and move toward more flexible exchange rates. ... Obama said the agreement showed that the G-20 countries are in 'broad agreement on the way forward.' Acknowledging the watered-down nature of the final proposal, he said, 'Instead of hitting home runs sometimes we're gonna hit singles. But they're really important singles.' It has been a tough visit for Obama, who also failed to secure a free trade agreement with South Korea on Thursday."Could Currency Dispute Escalate?  the concerns. "Behind today's hand-wringing over currency wars is the fear that it's one small step from currency intervention and capital controls to traditional, noxious protectionism: tariffs, quotas, subsidies, etc." They include quotes from a Cato analyst arguing that such protectionism could be imminent. However, The Economist is doubtful. "But is it true? Does monetary protectionism breed traditional protectionism? I could argue the opposite. If monetary protectionism softens the pain felt by the trade sector, it weakens demands for the traditional variety."Global Economics Increasingly About U.S-China  The Washington Post's take a step back. "The [G20] accord reflects a core dynamic at the meeting: There may be many seats at the table, but the central debate revolves around the 'G-2' - the United States and China - and the struggle between those two top economies. Both sides kept the relationship front and center as the sessions approached."

Israeli Cabinet to consider US settlement proposal

JERUSALEM – Israel's prime minister will ask his Cabinet Sunday to consider a package of security and diplomatic incentives the U.S. has proposed to entice Israel to renew limits on settlement construction and revive moribund peace talks with the Palestinians.

The chief Palestinian negotiator expressed strong reservations about the proposal because the 90-day moratorium on new construction would only apply to the West Bank and not east Jerusalem, the Palestinians' hoped-for capital. But Saeb Erekat did not reject it outright, saying the Palestinians would consult among themselves and with Arab leaders.

Peace talks ground to a halt, just three weeks after they began, after Israel rejected U.S. and Palestinian pressure to extend a 10-month moratorium on new construction that expired Sept. 26. Palestinians refused to return to the negotiating table if construction resumed on land they want for a future state and gave the U.S. until later this month to come up with a formula to salvage the talks.

The diplomatic climate soured even further last week after Israel pressed ahead with plans to build 1,300 apartments in east Jerusalem.

In a seven-hour meeting with Israeli Prime Minister Benjamin Netanyahu in the U.S. last week, U.S. Secretary of State Hillary Rodham Clinton said that in exchange for a new construction moratorium, the White House would ask Congress to sell Israel 20 stealth fighter jets, an Israeli diplomatic source said.

The U.S. would also commit to fight international resolutions that would be critical of Israel or unilaterally advance the Palestinian quest for statehood, he said.

He spoke on condition of anonymity pending the presentation of the deal to the Cabinet on Sunday.

Netanyahu can expect some stiff opposition to the proposal from some members of his hawkish Cabinet. It was unclear if any decisions would be taken at Sunday's meeting.

Erekat, the Palestinian negotiator, said the Americans had not officially informed the Palestinians about the details of the proposal, but "they know we have a major problem in not including east Jerusalem."

Palestinian President Mahmoud Abbas will put the U.S. plan before Palestinian decision-makers and call for an immediate session of Arab League officials before announcing an official decision, Erekat said.

Palestinians say construction in the West Bank and east Jerusalem — even in areas Israel is expected to retain under a final peace deal — undermines the talks because it eats up land they want for their future state.

They have said that if negotiations fail they will consider sidestepping Israel and seek U.N. recognition of a Palestinian state.

According to the Israeli diplomatic source, the construction freeze would apply to all new construction that began in the West Bank after the moratorium expired on Sept. 26. Anti-settlement watchdog Peace Now reported Sunday that construction has begun on 1,649 apartments.

That number includes 1,126 apartments where foundations have been dug — the government's definition of a housing start. In all of 2009, there were 1,888 housing starts in the West Bank.

"It turns out that the settlement freeze was no more than a 10-month delay in construction, and the settlers managed to fill in the gap very fast," Peace Now said in a statement.

The U.S. incentives package was presented after a contentious week in which the U.S. repeatedly criticized Israel for pressing ahead with new construction in east Jerusalem.

Netanyahu defiantly insisted that all of Jerusalem — including the eastern sector annexed in 1967 in a move not recognized by the international community — "is not a settlement. It is the capital of the state of Israel."

Police: Mail bomb could have exploded over US

LONDON – A mail bomb intercepted last month at an English airport could have exploded over the East Coast of the United States, British police said Wednesday. Forensic evidence showed the device, originally sent from Yemen by way of Cologne, Germany, was timed to be detonated about six to seven hours after the cargo aircraft carrying it left the U.K. for the U.S. The package was removed by police in Britain during transit.

"If the device had not been removed from the aircraft, the activation could have occurred over the eastern seaboard of the U.S.," police said in a statement.

In Washington, the White House said the British finding showed how serious the attack was. Earlier this month, a senior U.S. official had said that while the exact aim of the attack was unclear, evidence pointed to a plot to blow up cargo planes inside the U.S., either on runways or over American cities.

The UPS cargo plane intercepted in England left the country without the package at 3:20 a.m. GMT on Oct. 29 (11:20 p.m. EDT on Oct. 28), two hours after landing, police said. The device was timed to be activated at 9:30 a.m. GMT. (5:30 a.m. EDT), said British police.

Authorities on both sides of the Atlantic said they only narrowly thwarted the plot, in which terrorists in Yemen hid two powerful bombs inside printers and shipped them to addresses in Chicago aboard two cargo planes. The printer cartridges were filled with PETN, an industrial explosive that, when X-rayed, would resemble the cartridges' ink powder.

One bomb was intercepted at central England's East Midlands Airport and the other was discovered at a FedEx cargo facility in Dubai.

The Yemen-based al-Qaida in the Arabian Peninsula has claimed responsibility for the bombs and has vowed to send more explosives-packed parcels.

In Washington on Wednesday, White House spokesman Nicholas Shapiro said: "We greatly appreciate the highly professional nature of the U.K. investigation and the spirit of partnership with which U.K. authorities have pursued this matter."

He praised the efforts of intelligence and law enforcement professionals in the U.K., the UAE, Saudi Arabia and the United States, and said they will continue to work together "to address and counter the threat posed by al-Qaida in the Arabian Peninsula."

Finance official urges vigilance in E. Europe

VIENNA – Continued vigilance is necessary to ensure growth in Eastern Europe in the wake of the financial crisis, a senior international banking official urged Friday.

While the situation has stabilized, the region is still far from returning to where it was before the economic downturn hit, said Thomas Mirow, president of the European Bank for Reconstruction and Development.

"Probably, yes, the worst is over but we need to stay vigilant," Mirow told The Associated Press on the sidelines of an Austrian Finance Ministry conference. "Some countries obviously still are struggling, especially in Southeastern Europe."

Romania and Bulgaria are among states having the toughest time overcoming the effects of the crisis, Mirow said.

Among the problems facing the region is the fact that countries are rather export-dependent and have much of their trade with Western Europe, he added.

"And as we have seen, apart from Germany, the economic growth prospects for Western Europe aren't that great either," Mirow said.

Hungary, in particular, was still struggling to cope with borrowing in foreign currencies by households because its local currency, the forint, was in a "relatively weak position."

"What we aim to do is to work with those countries on reinforcing their local capital markets and on increasing possibilities to lend in local currency," Mirow said.

Foreign banks, including some from Austria, offered euro or Swiss-franc loans at low rates in the region as growth boomed. That was lucrative for both banks and borrowers until local currencies plunged amid the credit crunch, sending borrowers' payments soaring and causing defaults and losses.

In other comments, Mirow said Hungary's medium term economic policy lines were still unclear and also had to be closely watched.

Overall, "the situation certainly has stabilized but we are rather far from returning to the growth rates in the region we have seen before the crisis," Mirow said.

Austria promised continued support to the area during Friday's conference, which drew policymakers and government representatives.

"I haven't met a single banker or businessman who has decided to withdraw," Finance Minister Josef Proell said. "Probably they have become more cautious, but they're still committed to stay in this region."

Proell also said he would like to set up a Vienna-based academy for Central, Eastern and Southeastern Europe to develop common standards for the education of banking supervisors.

____

Online:

European Bank for Reconstruction and Development:

For Cuba's gay community, Castro apology opens old wounds

HAVANA (AFP) – Fidel Castro's recent admission that his government discriminated against gays during the 1960s and 1970s has opened old wounds among Cuba's gay community, and sparked a long-stifled discussion about homophobia here.

In an interview with Mexico's La Jornada newspaper earlier this month, the 84-year-old former president confessed that Cuba's revolution -- synonymous in his thinking with progressive views on race and class -- oppressed homosexuals as deviants.

Cubans who suffered societal homophobia and government oppression said it did not take much for a gay man to be locked up for months at a time.

"I served six months in prison just for having plucked my eyebrows," said Francisco Garcia, 45, who goes by the name "Sisi."

"In those days, if they figured out you were gay, out of their own ignorance they viewed it as an aberration, and they committed barbarous acts," he said.

Some of the worst oppression was carried out at Cuba's now-defunct Military Units to Aid Production or UMAPs, established in 1965 to stamp out "counterrevolutionary" values.

The forced labor camps for re-education and rehabilitation run by UMAP, were shut down in 1968 when Castro became aware of some of the cruelty going on there.

But even after the camps closed, oppression against gays continued, instigated by members of the local Committees for the Defense of the Revolution (CDRs), block monitors who often turned in their gay neighbors.

Discrimination against homosexuals in the 1970s was particularly hard on gay artists and writers, who often were disgraced and marginalized, or in some cases even driven into exile.

The plight of Cuba's gay community was the subject of the 1993 film "Fresa y Chocolate" -- "Strawberry and Chocolate."

That hit movie, one of the most celebrated Latin American films of the 1990's, is set in Havana during the late 1970's, and deals with the budding friendship between a bigoted, heterosexual university student and an older, decadent homosexual artist.

Another film that opened Cuban eyes to the plight of gays 17 years ago was the documentary titled, "En el Cuerpo Equivocado" (In the Wrong Body) -- about a man who makes the difficult transition to a female identity, despite society's opprobrium.

Not only gays, but Catholics too were the targets of discrimination and oppression. Alberto Gonzalez, 67, recalled that the mere fact of having been baptized made him a social outcast.

He was taken away from his family and made to do hard labor at a camp run by UMAP.

"It was a sad, painful time and frustrating time," Gonzalez said.

"My father was a member of the communist party and he even justified it."

Since that time, the situation has greatly improved for gays and lesbians in Cuba. Fidel Castro's niece Mariela -- the daughter of President Raul Castro -- heads the National Sex Education Center and has been campaigning for years for greater rights for gays and transsexuals.

Charlimar, 23, works as a street performer in a transvestite show that has been known to draw up to 2,000 people -- something impossible in an earlier era.

Gender reassignment surgery also can be had more easily in Cuba today, but same-sex marriage is not legal. Mariela Castro in January said that even now there is more than a little reticence towards homosexuality in the Communist Party.

One gay Cuban, a successful professional dancer who did not want to be named, said Castro's apology was not enough to heal all wounds, but was nevertheless an important start.

"It's a belated gesture, but a brave and necesary one if we're ever going to make progress," he said.

Alberto Gonzalez, who now is a pastor, also h been heartened by Castro's belated apology. There is always time to acknowledge one's mistakes," he said.

"Fidel made a brave, historic effort to make amends," he added.

But for many in the gay community, Fidel Castro's apology can not wipe away decades of pain and humiliation.

"Who can make up for all the suffering?" asked Aliomar Janjaker, 33, who carries in his pocket a copy of a 1965 interview in which Fidel Castro calls homosexuality "a deviation that clashes" with being "a true revolutionary" and a "militant communist."

And another homosexual man said he cares less about the former president's regrets about the past than the quality of life for gays in today's Cuba.

Fidel's apology means nothing," said Mario Delgado "as long as the police don't leave us alone."