Special briefing: How radical Islamists see the world

from the August 02, 2005 edition - http://www.csmonitor.com/2005/0802/p04s01-wogi.html

By Dan Murphy and Howard LaFranchi Staff writers of The Christian Science Monitor

Persistent suicide bombings in Iraq. Attacks on London subways. Explosions at an Egyptian resort.

Whether related or not, these recent incidents have heightened global concern about the spread of radical Islamist militancy. And they raise questions about the current reach of Al Qaeda and groups with similar ideology. Today and tomorrow, the Monitor examines the origins of Islamic terrorism and how it is evolving now.

What is Al Qaeda today compared to five years ago?

In some ways it is less like the Al Qaeda of 2001 than like the Al Qaeda of the mid-1990s, before it was able to build up organizationally with a base of operations in Afghanistan. It is best understood as a radical ideology loosely inspiring a disparate and very decentralized set of localized Islamist extremist organizations.

For some terrorism experts, Al Qaeda as an organization simply no longer exists. Its Afghan training and indoctrination sites are gone. Key leaders have been killed or captured, or are on the run. Yet Al Qaeda as an ideology of global confrontation and jihad, "struggle" or "holy war," still exists.

"That is why I speak of 'Al Qaedaism' as more of a factor today than Al Qaeda," says Magnus Ranstorp of the Center for the Study of Terrorism and Political Violence at the University of St. Andrews in Scotland.

Who are Al Qaeda's leaders?

Osama bin Laden, still at large, founded the organization in 1988, along with Mohammed Atef (aka Abu Hafs al-Masri), an Egyptian who was killed in a US airstrike in Afghanistan. The group has a shura, or consultative council, the composition of which is unknown. But some of the people "most wanted" for organizing operations under Al Qaeda's name or ideology, such as Abu Musab al-Zarqawi, are not believed to be part of any centralized leadership.

Are they still organizing operations?

The Al Qaeda leadership may maintain some command-and-control capability from suspected locations in or near Pakistan - despite Pakistani President Pervez Musharraf's recent declaration about a smashed Al Qaeda. One possible example: In a tape released June 17 by the Arab television network Al Jazeera, Al Qaeda No. 2 Ayman al-Zawahiri called for revenge against Britain for allying with the US. Some experts believe such tapes are directives to proceed with an operation. In any case, the London bombings soon followed.

What do the militants want?

For Islamist militants, the long-term objective is an Islamic superstate, or caliphate. Narrower objectives include the end of the state of Israel and toppling secular Middle Eastern regimes like Egypt's. It is an article of faith that the US and all secular Western states stand in their way, and weakening those states is seen as positive for all their objectives.

Who is their main enemy?

The global jihad has long named two types of targets: the "near enemy" (Israel or secular Arab regimes) and the "far enemy" - America and its allies. Zawahiri was always more interested in the "near enemy" that stood in the way of an Islamic state in his homeland, Egypt. Bin Laden was more interested in the "far enemy," because he felt success could not be achieved closer to home until US financial and military backing for these regimes was eroded. When Zawahiri merged his Egyptian Islamic Jihad with Al Qaeda in 1998, the two trends were brought together.

What Is their ideal society?

They want a society that applies the Koran literally and adheres to the social practices that prevailed at the time of the prophet Muhammad. It would not be democratic in any modern sense, though there are provisions for shura, or consultation - generally interpreted to mean the leader should take advice from trusted community members. In their interpretation of Islam, women and men have defined roles, and women generally have fewer rights.

Their views stem from the Salafi movement within Islam's Sunni sect, the religion's largest. For a Salafi adherent, interpretation of the Koran stops 1,300 years ago, with Muhammad, his companions, and the three generations that followed them.

What about Wahhabi thinking - is that behind Al Qaeda?

While many in the West use the term Wahhabi, practitioners of this Sunni school reject the notion that they belong to any particular sect. To their thinking, they are simply following the true path of Islam. They are Salafi followers of Mohammed ibn abd al-Wahhab, an 18th century Arabian preacher. Although the vast majority of Salafis are not involved in violence, almost all attacks linked to Al Qaeda have been carried out by people under the Salafi umbrella. The House of Saud helped this school become Saudi Arabia's dominant interpretation of Islam. Many Saudis refuse to view Osama bin Laden as a Wahhabi, rejecting his thirst for overthrowing the Saudi regime. Wahhabis are supremely intolerant of Shiites, seeing practices such as the veneration of historic Imams Hussein and Ali as a breach of monotheism.

What are the roots of violent jihad?

Ibn Taymiyah, a 13th century scholar, is an intellectual forerunner of the modern Salafis. He rejected Sufi and Shiite Muslims, describing the latter as apostates who deserved death. Appearing in an era when crusaders remained in the Middle East, he advocated a muscular approach to Islam that called on believers to fight infidel invaders. The modern Salafi revival is generally traced to late 19th and early 20th century opposition to colonial rule, and was particularly taken up by Egyptian thinkers, who saw in it a way to oppose Western colonialism and modernize without giving up Islamic values. The foundation of Israel was seen by most Muslims, of all strains, as a hostile act that undermined Islam. For Salafis it was a call to jihad, to regain the land and holy places they felt had been usurped. Frustration mounted with the 1967 Arab defeat by Israel, which many Muslims interpreted as a sign of God's displeasure.

But the Salafi group around bin Laden really took hold after the 1991 Gulf War. Bin Laden was a wealthy Saudi who had helped support Afghans and Arab volunteers in the jihad against the Soviet Union in the 1980s, with financial support from Pakistani intelligence and the CIA. He wanted to lead an Arab and Muslim effort to end Saddam Hussein's occupation of Kuwait. He and his followers were enraged and humiliated that a US-led coalition repelled Hussein and that US troops were then stationed in Saudi Arabia, home to Islam's holiest places. Citing this issue, bin Laden and Zawahiri announced the "World Islamic Front for Jihad Against Crusaders and Jews" in 1998.

What does the Koran say about violence against civilians?

As with most religions, it is a question of where emphasis is placed. The Koran has fairly clear injunctions against murder, including "Whoever slays a human being, unless it be for murder or for spreading corruption on earth, it shall be as though he had slain all mankind" (5:32). Suicide is warned against even more strongly: "Do not kill yourselves ... whoever does so, in transgression and wrongfully, we shall roast in a fire" (4:29). Warfare in certain circumstances is condoned, even urged, just as in the Old Testament, but there are limits. "Fight in the cause of God against those who fight against you, but do not transgress limits. God loves not transgressors" (2:190) and "let there be no hostility, except to those who practice oppression" (2:193).

In the most widespread interpretations, such verses bar both attacks on civilians and suicide attacks, while allowing Muslims to fight against those who directly attack them. But how does one define the meaning of "those who practice oppression" or "spreading corruption on earth" or even "those who fight against you?" It is here that the minority of Islamist radicals who attack civilians find their wiggle room.

An Al Qaeda timeline

1988: Osama Bin Laden establishes Al Qaeda ("the base") to channel arms and funds to the anti-Soviet Afghan resistance.

1989-1991: Bin Laden becomes involved in movements opposing the Saudi monarchy, fueled by the kingdom's acceptance of US troops after Iraq invaded Kuwait.

1996: Bin Laden joins the Taliban in Afghanistan as they seize Kabul. He now has a base for his training operations.

AUG. 7, 1998: East African attacks: Nearly simultaneous car bombings hit US embassies in Dar es Salaam, Tanzania, and Nairobi, Kenya, killing 224 on the anniversary of the Saudi King's 1991 invitation to US troops to defend his country from Iraq.

OCT. 12, 2000: Suicide bombers ram the USS Cole off Yemen, killing 17.

SEPT. 11, 2001:Al Qaeda hijackers fly jetliners into the World Trade Center and the Pentagon, while a fourth hijacked jet crashes in a Pennsylvania field. Nearly 3,000 are killed.

OCT. 12, 2002: In an attack blamed on Jemaah Islamiyah, a Southeast Asian group linked to Al Qaeda, 202 are killed bombing on the Indonesian island of Bali.

2003 through present: Iraq becomes a locus for radical Islamists, as insurgents battle the fledgling Iraqi government and the US-led forces that ousted Saddam Hussein. A key mastermind, Abu Musab al-Zarqawi, aligns himself with Al Qaeda.

MARCH 11, 2004: Bombs hit four commuter trains in Madrid, killing 191 people and injuring more than 1,600. Attacks are blamed on Islamic militants with suspected ties to Al Qaeda.

JULY 7, 2005: A group calling itself the Secret Organization of Al Qaeda in Europe claims responsibility for bus and subway bombings in London that killed 56 people. Two weeks later another coordinated London subway bombing is attempted.

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How to find forgiveness for the costliest of mistakes

from the August 02, 2005 edition - http://www.csmonitor.com/2005/0802/p14s01-bogn.html

Most families long to hear 'I'm sorry.'

By Gregory M. Lamb

Part of being human is making mistakes. But what we say and do after the mistake makes a tremendous difference.

When a mistake involves serious injury or even death, the stakes are high. A highly publicized 1999 report from the Institute of Medicine, "To Err Is Human," estimates that nearly 100,000 hospital deaths each year may be caused by preventable errors.

The report has energized efforts to reduce mistakes in a medical system that is complex and in many ways archaic. Hospitals are adopting new practices such as computerizing records and prescriptions to curtail medication errors, requiring surgeons to complete airline-style checklists before operating, and having the patients themselves mark the correct locations for their surgeries.

But what role should be played by the latter half of Alexander Pope's famous maxim: "To err is human; to forgive, divine"? What actions promote forgiveness, and how might a greater attention to seeking forgiveness improve our medical system? What part does forgiveness play in healing?

Forgiveness on the part of an injured patient, or the family if the patient has died, comes as a result of both words and actions on the part of doctors and hospitals, says Nancy Berlinger in her thoughtful and well-researched book "After Harm: Medical Error and the Ethics of Forgiveness."

Judeo-Christian principles can inform proper action, regardless of the religious backgrounds - or lack thereof - of those involved, she says.

The victims of true mistakes, unintentional harm, include the doctors or other medical workers themselves.

"Most medical harm does not result from the negligence of 'bad' doctors," she writes. "Most physicians feel genuine remorse, even anguish, when they realize that their well-intentioned actions have injured or killed a patient who was under their care."

Telling the truth about mistakes is hard and humbling for anyone, she says. But fear of lawsuits makes many doctors even more reluctant to speak candidly with patients and families.

Yet less than 2 percent of patients who are harmed in hospitals actually sue their doctors, according to The Harvard Medical Practice Study, Ms. Berlinger says.

Ironically, lawsuits are often filed because families feel their grief is being ignored. The silence suggests that - to the doctor and hospital - nothing important has happened. Mistakes can be forgiven, she says, but indifference is much harder to forgive.

Often lawsuits are undertaken, at least in part, not to win compensation, but to discover the truth. Said the mother of one victim: "[I]f we can't have Jesse back, we want to be paid in understanding, and if we can't have understanding, then we want to be paid in money."

The keys to evoking forgiveness include promptly acknowledging the error, apologizing and expressing sincere remorse, and offering compensation, Berlinger says. A number of states have passed "I'm Sorry" laws that encourage doctors to apologize by exempting the apology itself from being used in court against them.

But alone, apologies are not enough, she says. Fair compensation must be considered. Apologies that lack accompanying actions, Christian theologian Dietrich Bonhoeffer suggests, result only in "cheap grace" or "cut-rate forgiveness."

In the King James Bible's version of the Lord's Prayer, she notes, the words "Forgive us our debts" employ a financial metaphor for forgiveness.

One result - or, in a religious sense, a blessing - from apologies and compensation can be a reduction in lawsuits and costs to hospitals and insurers.

One veteran's hospital in Kentucky with an active policy of seeking forgiveness reduced the average settlement to victims of medical errors to $15,000, compared with an average of $98,000 at all veterans' hospitals.

COPIC, a medical insurer based in Denver, instituted what it called a 3R program - Recognize, Respond, and Resolve - toward patient injuries. The cost of its claims dropped from an average of $78,741 to $1,820. COPIC's guidance to doctors restates Jesus's imperative to "do unto others as you would have them do unto you."

"[W]e must treat our patients as we would want ourselves or our families to be treated," COPIC says.

Recent studies suggest that an inability to forgive, and its accompanying feelings of hostility and anger, may be harmful to one's physical health. With this in mind, hospitals and physicians who free injured patients and their families to forgive medical mistakes can be seen as advancing their own fundamental goal: healing.

• Staff writer Gregory M. Lamb covers healthcare issues for the Monitor.

After Harm: Medical Error and the Ethics of ForgivenessBy Nancy BerlingerJohns Hopkins University Press156 pp., $35

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Cities turn to humiliation to fight prostitution

from the July 21, 2005 edition - http://www.csmonitor.com/2005/0721/p03s02-ussc.html

Police are posting photos of 'Johns' on websites or billboards, but critics say the tactic ignores causes.

By Amanda Paulson Staff writer of The Christian Science Monitor

CHICAGO - Anyone who's ever wondered just who the men are who cruise this city's seedier strips looking for sex can now satisfy their curiosity.

Starting last month, the Chicago Police Department has been posting the names of "johns" arrested for engaging or soliciting prostitutes - along with their photo, address, age, and place of arrest. A recent sample included men from low-income Chicago neighborhoods and relatively well-to-do suburbs, of all ages and ethnicities.

It's part of a tactic more and more cities are using, cracking down on prostitution by focusing on demand, often using tactics of humiliation - like Chicago's website or billboards in Oakland, Calif. - to try and convince potential customers to stay home.

It's a trend that some applaud, saying the men who drive the trade have been overlooked too often while prostitutes get arrested. Others question its effectiveness, suggesting that websites and "john schools" that educate customers about the realities of prostitution accomplish little.

"The first thing you have to ask is why are people involved in prostitution - overwhelmingly it's related to economic issues," says Juhu Thukral, director of the Sex Workers Project at the Urban Justice Center in New York. Focusing on demand, Thukral says, won't reduce the amount of prostitution; rather, more resources should go toward supportive housing, job training, and legal services - "programs that teach people how to get mainstream jobs that will provide a living wage."

Still, others involved in the issue say that efforts like Chicago's are an encouraging sign that cities are both waking up to the problems around prostitution and are recognizing that customers play as important a role as the prostitutes.

In Chicago, the website has been up for only a month, but has gotten more than 497,000 hits, says David Bayless, a spokesperson for the Chicago Police Department. [Editor's note: The original version incorrectly counted the traffic to the police website.]

"If we can get them to think twice about coming here, if they think they're at risk of being arrested and having their picture online, then the website's done its job," he says. "It's an acknowledgment that customers are contributors to the problem."

In addition to getting their photo online and having their vehicle impounded, arrested men have to attend a local "john school" run by Genesis House, an organization that helps Chicago sex workers.

The men pay $500 to attend the eight-hour class, and the money goes to support Genesis House's programs. During the day, they learn about the law, the health risks of patronizing prostitutes, and the reality of what life is like for prostitutes.

"This is not a victimless crime," says Patti Buffington, director of Genesis House. "There is a victim here, and it's the women performing this. About 95 percent of these women were abused."

For the men who attend john school, the biggest impact often comes when they learn more about the women themselves, says Norma Hotaling, a former prostitute who founded The Sage Project in San Francisco and started the nation's first john school about 10 years ago.

Midway through the class, she often reveals her own background. "You see them turn to Jell-O," Ms. Hotaling says with a laugh. "They say, 'You're smart, and you have power here, but you're' " a prostitute.

She's helped numerous cities around the US, including Chicago, launch their own john schools, and says the programs are remarkably successful; in San Francisco, she only sees about two percent of the men a second time.

Hotaling also has sympathy for the men who come through her classes; most, she says, simply don't have all the facts to make good decisions. As a result, she's not a fan of humiliation tactics.
"You don't tear down their support system and humiliate them," she says. "Do you want them to be total outcasts?"

Advocates at the Sex Workers Outreach Project, a San Francisco organization that favors legalizing prostitution, have also been outspoken against the humiliation efforts, such as the new campaign in Oakland that has billboards springing up with customers' faces - blurred in early versions - saying "Don't John in Oakland." "It's not going to stop the problem," says Robyn Few, director of the Sex Workers Outreach Project. "It's just going to move the problem from one place to another."

Still, many advocates of the efforts say the crackdown on customers is just one piece of an overall effort to reduce street prostitution and help sex workers move on to other jobs. In Chicago, where police estimate the number of prostitutes at anywhere between 16,000 and 25,000, Mayor Richard Daley has jumped with vigor on the new initiative. He cites not just the harm prostitution wreaks on neighborhoods and their quality of life, but also the harm done to the prostitutes themselves - a sign that politicians are starting to look at sex workers as victims rather than simply criminals.

"Once they become prostitutes, they're subject to even more violence, abuse, and possible death from their pimps and their customers," Daley said at a press conference to announce the new Internet site. "It's a terrible life, and a caring society has a responsibility to help these women turn their lives around, and to keep other young women from entering the profession."

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Case of cruelty, or compassion?

from the July 25, 2005 edition - http://www.csmonitor.com/2005/0725/p11s02-lire.html

By Anna Levine-Gronningsater Contributor to The Christian Science Monitor

Public distaste for the practice of euthanizing unwanted dogs and cats has led many communities and shelters to adopt "no kill" policies. As a result, today almost half of such animals in the US live out their lives in adopted homes or in shelters, compared with just 12 percent 35 years ago.

But even as the trend swings toward no-kill, a debate has erupted among animal-rights groups about the merits - and possible dangers - of keeping "adoptable" animals alive at all costs.

In the middle of the controversy, not surprisingly, is PETA (People for the Ethical Treatment of Animals), a group whose in-your-face protests have sometimes flirted with illegality. Two PETA workers, employees at the group's headquarters in Norfolk, Va., were arrested last month on animal-cruelty charges, alleged to have euthanized dogs and cats they had picked up from area shelters. Police in Ahoskie, N.C. - just over the state line - say they watched the two move animals' bodies from a PETA van to a dumpster.

The case has stirred outrage among some local officials and animal-rights groups, who say they had entrusted PETA to find homes for the dogs and cats - not to euthanize them within the hour. PETA, for its part, has not commented on the June 15 arrests specifically, but it is not alone in arguing that euthanasia is more humane than conditions in overcrowded shelters.

The result is an increasingly hot war of words over animal-control policy in localities across the United States.

"One side is arguing for the ethical, philosophical concept that an animal deserves not to be euthanized just because at that particular moment it is unwanted," says Annette Rauch at the Cummings School of Veterinary Medicine at Tufts University. "But every shelter has limited space, so when they adopt no-kill, they fill up. That leads us to the next question: What happens to the animals that get turned away?"

The debate is likely to intensify as more cities designate themselves "no kill" zones. Earlier this year New York set a goal to forgo animal euthanasia by 2015. Upstate, Tompkins County, which includes Ithaca, became America's first "adoption guaranteed" community about two years ago, meaning all shelters, organizations, and public agencies work together to promote adoption for healthy animals and to find lodging and care for unwanted or unhealthy animals.

"Organizations that do euthanize do not want to do that task. They do it because they do not think they have an alternative," says Rich Avanzino of Maddie's Fund, which pledged $16 million to help New York City achieve no-kill status.

PETA argues that while animals wait for homes or safe shelters tomorrow, they are suffering today. "We can't in good conscience oppose euthanasia as a means of overpopulation control when the alternative is animals being chained, deprived of companionship and exercise," says Daphna Nachminovitch, director of PETA's domestic animals issues and abuse department.

No-kill shelters often limit admission, adds Ms. Nachminovitch, leaving people little recourse but to abandon animals or take them to traditional shelters, where overcrowding can lead to discomfort and disease and where the least adoptable animals are often euthanized.

Even the adoptable animals don't always have a chance at a better life, says Kate Pullen of the Humane Society of the United States, which shares many of PETA's positions. "Just because an animal's considered adoptable and healthy doesn't mean there's a home for it," she says.

The two PETA workers, Adria Hinkle and Andrew Cook, are charged with eight counts of illegal disposal of animals and 31 felony charges for animal cruelty. Each animal-cruelty count could cost them up to 15 months in prison. As the pair await a probable cause hearing, set for mid-August, PETA is trying to draw the public to its side of the no-kill debate. It has posted pictures on its website of the shelters from which the animals were taken and has written a newspaper article in their defense.

Local officials in North Carolina say PETA was supposed to try to find homes for the 31 animals, and to euthanize only the unadoptable ones, in Norfolk. PETA says the shelters agreed to hand over unwanted animals to PETA for euthanization by lethal injection.

Animal control officers identified the cats and dogs as the ones Ms. Hinkle and Mr. Cook had picked up from local shelters and animal hospitals earlier that day, says Det. Jeremy Roberts, the arresting officer in Ahoskie.

Veterinarian Patrick Proctor of Ahoskie Animal Hospital, who had released a cat and two kittens to the PETA workers, says Hinkle told him they would be adopted. The hospital no longer entrusts its orphaned animals to PETA representatives, he says.

Northampton and Bertie counties in North Carolina have also cut ties with PETA. The group had agreed to assess each animal and its suitability for adoption before euthanizing it, says Sue Gay, Northampton County's health director. "The question is, did that occur?" she says.

The US currently has 5,000 traditional animal-control shelters and 1,000 adoption-guaranteed shelters, estimates Mr. Avanzino. By accepting euthanasia, he argues, people are giving up on alternatives to animal overpopulation. "If we say, 'This life that we're responsible for right now can't find a home, and therefore it's all right to kill it,' that animal has no chance. It's a self-fulfilling prophesy."

He cites San Francisco's no-kill philosophy. The city now euthanizes about 2,000 dogs and cats annually, compared with 65,000 four years ago, he says.

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An asteroid, headed our way

from the July 26, 2005 edition - http://www.csmonitor.com/2005/0726/p01s04-stss.html

By Peter N. Spotts Staff writer of The Christian Science Monitor

Humans live in a vast solar system where 2,000 feet seems a razor-thin distance.

Yet it's just wide enough to trigger concerns that an asteroid due to buzz Earth on April 13, 2029 may shift its orbit enough to return and strike the planet seven years later.

The concern: Within the object's range of possible fly-by distances lie a handful of gravitational "sweet spots," areas some 2,000 feet across that are also known as keyholes.

The physics may sound complex, but the potential ramifications are plain enough. If the asteroid passes through the most probable keyhole, its new orbit would send it slamming into Earth in 2036. It's unclear to some experts whether ground-based observatories alone will be able to provide enough accurate information in time to mount a mission to divert the asteroid, if that becomes necessary.

So NASA researchers have begun considering whether the US needs to tag the asteroid, known as 99942 Apophis, with a radio beacon before 2013.

Timing is everything, astronomers say. If officials attempt to divert the asteroid before 2029, they need to nudge the space rock's position by roughly half a mile - something well within the range of existing technology. After 2029, they would need to shove the asteroid by a distance as least as large as Earth's diameter. That feat would tax humanity's current capabilities.

NASA's review of the issue was triggered by a letter from the B612 Foundation. The foundation's handful of specialists hope to demonstrate controlled asteroid-diversion techniques by 2015.

Last Wednesday, representatives from the foundation met with colleagues at NASA's Jet Propulsion Laboratory (JPL) to review the issue. The foundation's letter marks the first time specialists in the asteroid-hazard field have called for a scouting mission to assess such a threat.

"We understand the risk from this object, and while it's small, it's not zero," says David Morrison, the senior scientist at NASA's Astrobiology Institute at the Ames Research Center at Moffett Field, Calif.

The call for a reconnaissance mission also illustrates how far the field of asteroid-hazard assessment has come.

"Ten years ago, we would have been blissfully ignorant," says Donald Yeomans, who heads NASA's near-Earth object project at JPL. Today, at least five programs worldwide are hunting down near-Earth objects. NASA is well on its way toward achieving its goal of cataloging 90 percent of the near-Earth objects larger than 0.6 miles across by 2008. And it is devising ways to ensure that information about potential hazards reaches top decisionmakers throughout the government.

Based on available data, astronomers give Apophis - a 1,000-foot wide chunk of space debris - a 1-in-15,000 chance of a 2036 strike. Yet if the asteroid hits, they add, damage to infrastructure alone could exceed $400 billion. When the possibility of the asteroid passing through two other keyholes is taken into account, the combined chance of the asteroid hitting the planet shifts to 1 in 10,000, notes Clark Chapman, a senior scientist with the Southwest Research Institute in Boulder, Colo.

"A frequent flier probably would not want to board an airliner if there's a 1-in-10,000 chance it's going to crash," he says.

The asteroid in question was discovered last June. Initially, it looked as though it might strike Earth in 2029. But additional observations eliminated that possibility. Instead the asteroid will come within 22,600 miles of Earth - just inside the altitude where major communications satellites orbit. The asteroid will be visible to the naked eye in the night skies over Europe and western Africa, where it will appear a bit dimmer than the North Star.

But this estimated distance carries an uncertainty that spans several thousand miles either side of its expected path - a region of space that includes three gravitational keyholes.

JPL's analysis will look at several factors. One involves estimating whether additional ground observations will be sufficient to resolve the question of whether the asteroid will pass through one of the keyholes. The asteroid belongs to a class known as Atens, which orbit the sun in less than a year and pass through Earth's orbit. Because Atens spend so much of their time in the direction of the Sun, observations from Earth are difficult. After next year, the next opportunity to gather data on the asteroid from the ground will come in 2012-2013.

In addition, questions remain over how long a tagging mission - and if necessary a deflection mission - would take to plan and execute. If missions can be mounted in six years or less, NASA could postpone a decision to tag the asteroid until 2014. This would give astronomers time to incorporate their latest observations as they refine calculations of Apophis's orbit. But if a tagging mission took seven to eight years and a diversion mission took another 12 years, the case grows for launching the tagging mission sooner rather than later.

Dr. Yeomans, the head of the near-Earth-object program at JPL, says the next step is to examine whether additional ground-based observations are likely to solve the collision riddle in a timely fashion.

"I can't stress this enough: The overwhelming most-likely scenario is that radar and optical data this year and next or in 2012 and 2013 will completely remove the impact probabilities," he says.

"If this is the case, why are we worried now? If it's a 1-in-15,000 shot and we come up a loser," there's still time to mount a tagging and a deflection mission, he says.

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Lawyers-to-be give free help to environmental groups

from the July 26, 2005 edition - http://www.csmonitor.com/2005/0726/p14s02-legn.html

By Eliza Strickland Contributor to The Christian Science Monitor

WHITE PLAINS, N.Y. - One student negotiated a $40,000 settlement. Another faced off against a roomful of Exxon-Mobil's high-powered lawyers. A third got snapped at by a judge for failing to stand while addressing the court.

Relaxing around a broad conference table, the students of Pace University Law School's environmental law clinic share the triumphs and crises of the past year, when they received their first taste of professional practice. Even before they took the bar exam, many already had legal victories on their résumés.

Founded in 1987, the clinic at the White Plains, N.Y., school offers experience in the application of environmental law. The second- and third-year students negotiate settlements, write briefs, and appear in court.

"On the first day of class, you become a lawyer," says Pete Putignano. "Ready or not."
The budding lawyers are beneficiaries of "student practice rules" common to many states, which allow them to represent clients and argue cases under the supervision of an instructor. But clinic codirectors Karl Coplan and Robert Kennedy Jr. take a back seat, insisting that students act as lead attorneys.

Mr. Putignano was well aware that the work he did for the clinic had weightier repercussions than other coursework. His primary client - a Long Island environmental group fighting the use of a pesticide - couldn't afford the expert witness and per-hour professional fees that environmental litigation normally includes. The pro-bono services from the clinic gave the group its one shot at a day in court.

"It can be a bit scary the first few weeks," Putignano says. "It's not about getting a grade; it's about winning a case."

Pace's program is one of the most prestigious environmental law clinics, but it's far from alone. About 30 such clinics operate in law schools around the United States, almost half of them founded in the past decade.

Their proliferation points to a larger trend: the addition of real-world cases to law school classrooms, says Catherine Carpenter, who completed a survey of law school curricula for the American Bar Association earlier this year. The survey found that 85 percent of American law schools now offer at least one clinic where students work with real cases and clients.

Clinics exist in just about every legal field, from family law to securities arbitration, in keeping with the move toward specialization in legal training.

But environmental clinics grapple with conflicts that don't often arise in other fields, says Jeremy Clemans, a student at Vermont Law School and former chairman of a student committee of the National Association of Environmental Law Societies. Environmental clinics often make powerful enemies, because of "the kind of cases they take on, who they're likely to be representing, and who they're likely to be going after," Mr. Clemans says. When challenging a large corporation or a government-funded project, an environmental clinic needs "the right level of support from the administration to make it work."

Several environmental clinics have run afoul of state governments. The one at the University of Pittsburgh, founded in 2000, was nearly done in by one of the first cases it accepted, representing a citizens' group that opposed the construction of a $2 billion turnpike between Pennsylvania and West Virginia.

State legislators, angered by the opposition, passed a bill forbidding the university from using state funds on the law clinic. University faculty took up the clinic's cause in the name of academic freedom, and the school eventually agreed to fund the clinic with private money.

Pace University's clinic hasn't gotten embroiled in a controversy of that magnitude, but Mr. Coplan says the possibility of turmoil comes with the clinic's watchdog role. "We usually take the cases that government agencies aren't willing to step in and take the lead on," he says.

The Pace clinic's main client is Riverkeeper, an environmental organization that Mr. Kennedy helped found to protect the Hudson River from pollution. Inside the modest brick building that houses the clinic, its riverine focus is evident: A freshwater aquarium greets visitors in the foyer, and the conference room is decorated with detailed maps of the Hudson, from source to harbor.

According to Alex Matthiessen, Riverkeeper's executive director, the Pace clinic donates about $1 million worth of pro bono services to Riverkeeper each year.

Coplan says the clinic's work is an attempt to level the legal playing field. "We make these legal resources available to ... environmental groups, which allows them to go head-to-head with corporations that have the best staff, unlimited budgets, and armies of lawyers.... We don't quite have an army, but we have a good contingent of students, and they've got a lot of energy."

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Who will be left to govern San Diego?

from the July 20, 2005 edition - http://www.csmonitor.com/2005/0720/p02s01-uspo.html

An acting mayor has been convicted in a bribery scandal, the latest setback in a string of woes for City Hall.

By Randy Dotinga Correspondent of The Christian Science Monitor

SAN DIEGO - After scandal scuttled the Republican Party's plans to bring its national convention to San Diego in 1972, this low-profile Navy town tried to fix its reputation with a cheery slogan: "America's Finest City."

But the catchiest motto these days comes courtesy of the media: "Enron by the Sea." Considering the events of this week, just days before an election to replace a disgraced mayor, "America's Most Corrupt City" may be next.

Here, where there are more pending crises than pandas at the San Diego Zoo, a federal jury on Monday convicted two councilmen of multiple corruption charges in a case of strip-club bribery uncovered by FBI wiretaps of City Hall.

"People didn't think trust in the government could get any lower," says Thad Kousser, a political scientist at University of California at San Diego. But it has, he says.

One of the councilmen, Michael Zucchet, automatically became acting mayor on Friday after the previous mayor quit. He and fellow defendant Ralph Inzunza have now been suspended. Dick Murphy, the elected mayor, had resigned in the face of continued questions about the handling of San Diego's pension fund deficit.

It's not clear who will run the city if no one wins a majority in Tuesday's mayoral election. In that case, a runoff will be held in the fall.

The ultimate victor will inherit a pension fund deficit estimated at well over $1 billion. Amid a blizzard of accusations and indictments, courts may ultimately allocate blame for the pension debacle, which arose after city leaders guaranteed benefits to employees without paying for them. For now, the bills are coming due, and the city is making a variety of cutbacks.

So far, the impact on residents has been limited. According to news reports, pothole and streetlight repairs are taking longer, and police officers are applying for jobs elsewhere because of pay issues.

But the city expects to soon take actions that will reveal financial straits to the public. Among other things, the city may close branch libraries one weekday per week. Bankruptcy looms as a possibility.

Even the San Diego County Taxpayers Association, a watchdog group, admits that the city will have to tap the pockets of its 1.2 million residents. "You know things are bad when the taxpayers association acknowledges that a tax hike may be there sometime down the road," says president Lisa Briggs.

According to observers, the top two mayoral candidates are maverick Councilwoman Donna Frye, a Democrat, and former police chief Jerry Sanders, a Republican. Other hopefuls include a well-financed businessman, a motorcycle dealer, and a lawyer who supports municipal bankruptcy.

Normally, voters would seem likely to "throw the bums out," especially in light of the convictions of the councilmen, accused of taking bribes from strip clubs eager to lift "no touch" rules. But in this election, the sole "insider" candidate, Ms. Frye, is about as outside as you can get. "The question," Mr. Kousser says, "is who are voters going to turn to to clean house?"

The frontrunner appears to be Ms. Frye, but she may not get the required majority vote. An unabashed liberal Democrat in a city with a history of staid Republican mayors, Frye has often been a lone voice on the Democrat-dominated council, calling for more financial responsibility and openness. "She's not tainted with all the scandals of the past," says local lobbyist John Dadian.

Both adored and mocked for her trademark beach-lover style, complete with sunbleached hair and well-tanned skin, Frye won the most votes in a last-minute write-in campaign for mayor last fall. But a judge ruled that a few thousand ballots - the margin of victory - didn't count because the voters failed to fill in the proper bubbles in addition to writing in her name.

Despite her reputation among critics as a lightweight, Frye is actually a "surfer policy wonk" who's well-versed in city affairs, Kousser says.

The mild-mannered Mr. Sanders, meanwhile, has fostered a "Mr. Clean" reputation, claiming credit for turning around troubled local chapters of the Red Cross and United Way.

Another Republican candidate, healthcare company founder Steve Francis, is running on an antibankruptcy platform and threatens Sanders' expected second-place finish.

Come January, when governance over the budget and city staff will shift from away from the city manager to the mayor's office, the winner will have to focus on "damage control," Mr. Kousser says.

"The question is whether [the winner] is really going to have a chance to send the city in the direction they want to go or be constrained by the debt," he says.

Councilwoman Toni Atkins, a Democrat, is temporarily in charge of the city. But even if she stays on through a runoff election, her influence may be limited, considering that she'll leave the position before the new strong-mayor powers kick in.

Meanwhile, elections will be held to replace the two convicted councilmembers, both Democrats. Their replacements could alter the dynamics of the Democrat-dominated council.

Then again, as the taxpayer association's Ms. Briggs puts it, "none of the normal rules apply anymore. We really are in uncharted territory."

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A conservative with few hard edges

from the July 21, 2005 edition - http://www.csmonitor.com/2005/0721/p01s01-uspo.html

By Warren Richey Staff writer of The Christian Science Monitor

In nominating federal appeals-court judge John Roberts to the US Supreme Court, President Bush is laying the groundwork for a significant rightward shift at the nation's highest court.
The move seeks to establish a presidential legacy that could influence one of America's most respected institutions decades after George W. Bush has left the White House.

The Bush administration's conservative push at the high court would have been more sweeping, however, if the president had named a judicial clone of Justice Antonin Scalia or Justice Clarence Thomas, as he had promised during his campaigns. Instead, Roberts's record suggests his voting pattern would be closer to that of Chief Justice William Rehnquist, a solid member of the court's conservative wing though not as doctrinaire as his two conservative colleagues.

But the replacement of centrist swing voter Justice Sandra Day O'Connor with someone likely to vote more consistently with the court's conservative bloc means that an entire range of 5-to-4 O'Connor precedents over the past two decades may soon be in jeopardy. They include abortion-rights restrictions - such as parental notification laws and bans on so-called "partial birth" abortions. Affirmative-action programs may also be at risk.

At the same time, Roberts appears to be a reliable vote in support of the high court's revival of states' rights. And last Friday, he was a member of the three-judge appeals-court panel in Washington, D.C., that upheld the president's wartime power to conduct terrorism tribunals at the Guantanamo Bay Naval Base.

In selecting Roberts, Mr. Bush dipped into the very top of the conservative legal elite in the United States. Few candidates at age 50 have a résumé that can match Roberts's. And although he is a white male, rather than a woman or member of a racial minority, his personal story is not without compelling touches.

His background

Captain of his high school football team, he worked summers in a steel mill to help pay his way through Harvard. After graduating magna cum laude at Harvard Law School, he clerked for federal appeals-court judge Henry Friendly. The following year, he clerked at the Supreme Court for Mr. Rehnquist, then an associate justice.

Roberts served in both the Reagan and the first Bush administrations - working for three years as principal deputy solicitor general, arguing the government's side in cases before the Supreme Court. In 1993, he left government service and became one of the nation's top appellate lawyers specializing in Supreme Court cases. Overall, he has argued 39 cases at the high court.

"He is a man of extraordinary accomplishment and ability. He has a good heart," Bush said of Roberts in his speech from the White House Tuesday night. "He has the qualities Americans expect in a judge: experience, wisdom, fairness, and civility."

Roberts, who has served on the US Court of Appeals for the District of Columbia Circuit since June 2003, said in brief remarks that he has "a profound appreciation for the role of the court in our constitutional democracy and a deep regard for the court as an institution."

He added, "I always got a lump in my throat whenever I walked up those marble steps to argue a case before the court, and I don't think it was just from the nerves."

Roberts's sterling résumé and calm, friendly demeanor will make him a difficult target for liberal advocacy groups and certain Democratic senators who are poised for a confirmation battle.

Moments after the Roberts announcement, a barrage of critical statements were released questioning his position on various issues. People for the American Way distributed a 10-page report calling his record "disturbing." NARAL Pro-Choice America delivered three pages charging that Roberts is hostile to reproductive rights.

Much of the material is recycled from Roberts's first confirmation hearings to the D.C. Circuit in 2003. At that time, one of the most frequently repeated charges against him was that he helped author a legal brief filed by the Solicitor General's Office urging the Supreme Court to overturn the 1973 landmark abortion precedent, Roe v. Wade.

The government brief said in part: "We continue to believe that Roe was wrongly decided and should be overruled.... The court's conclusion in Roe that there is a fundamental right to an abortion ... finds no support in the text, structure, or history of the Constitution."

In written questions submitted to Roberts in 2003, Sen. Edward Kennedy (D) of Massachusetts asked if he still believes that Roe should be overturned.

Roberts responded that he was one of nine government lawyers working on the solicitor general's brief. "It was the position of the federal government at the time ... that Roe should be overruled," he said. "I do not believe it is proper to infer a lawyer's personal views from the position taken on behalf of a client."

Roberts added, "Roe is binding precedent and, if I were confirmed as a circuit judge, I would be bound to follow it. Nothing in my personal views would prevent me from doing so."

In the two years that he has served on the federal appeals court in Washington, Roberts has not been involved in a case dealing with the abortion issue. Most of his decisions deal with regulatory agencies and other government disputes. But some opinions offer insight into how he would behave as a justice.

Ruling on a French fry

One is the French fry case. It involved a 12-year-old girl who was arrested, searched, handcuffed, fingerprinted, and detained - all for eating a single french fry in a Washington, D.C., subway station.

At issue in the 2004 case were zero-tolerance policies that required transit-authority police to arrest and detain every minor caught violating the Metro system's no eating or drinking rule. In contrast, adults caught eating received only a citation that subjected them to a fine as high as $50. They were not detained.

The girl's mother sued the Metro system, charging that the two-tier policies that treat adults and minors differently violate the equal-protection mandate of the Fifth Amendment.

Roberts recognized the cruelty of the policies. "The child was frightened, embarrassed, and crying throughout the ordeal," Roberts wrote for the three-judge panel. "The district court described the policies that led to her arrest as 'foolish,' and indeed the policies were changed after those responsible endured the sort of publicity reserved for adults who make young girls cry."

Roberts didn't stop there. "The question before us, however, is not whether these policies were a bad idea, but whether they violated the ... Constitution."

The three-judge panel ruled that they did not. The girl and her mother lost their case and the opportunity to have her arrest record expunged. The report by People for the American Way criticizes Roberts's approach, saying he was "dismissive of the serious concerns raised by the use of police power in this case."

Roberts ruled that the juvenile detention policy was a "reasonable" effort by the city to ensure that parents of minors who violate Metro regulations are notified of the violations by having to pick up their children at the detention facility.

"We too may have thoughts on the wisdom of this policy choice - it is far from clear that the gains in certainty of notification are worth the youthful trauma and tears - but it is not our place to second-guess such legislative judgments," Roberts wrote.

To conservatives, the case illustrates the kind of judicial approach the president says he admires - that is, judges who strictly apply the Constitution and law rather than legislating from the bench.

But to liberals, the case is an example of a judge who adopted a narrow reading of the equal-protection guarantee - a guarantee designed to protect citizens, including teenage citizens, from unreasonable government actions.

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Economist.com Cities Guide: London Briefing - August 2005

News this month

Terror looms

London has suffered two waves of bomb attacks in almost as many weeks. On July 7th, suicide-bombers targeting the capital's transport network killed over 50 people and wounded 700 others. A second wave of attacks on July 21st, broadly mimicking the first, ended in failure after devices left on three Tube trains and a bus failed to explode properly. Police are seeking the would-be bombers—thought to be Islamists with links to al-Qaeda—before they strike again.

Perhaps because Londoners were expecting a terrorist attack, many seem to have taken the bombings in their stride. Buses and Tube trains remain busy—though in the latter's case seriously disrupted. The first attacks also failed to dent economic confidence: the benchmark FTSE 100 share index recovered its 4% loss the following day. But with the threat of a prolonged terror campaign now looming, tourism and London's already troubled retail sector are expected to suffer.

The hunt for the perpetrators took a turn for the worse on July 22nd, when police shot dead a Brazilian man in south London under the mistaken impression he was a suicide-bomber. Sir Ian Blair, the Metropolitan Police's chief, apologised for the killing but defended his force's “shoot to kill” policy. Meanwhile, police carried out a controlled explosion in a park in west London on a package thought to have been an exploded bomb.

Celebrations cut short

The bombings on July 7th came just one day after London won the competition to stage the 2012 Olympic Games. News of the victory prompted noisy celebrations in Trafalgar Square, where a large crowd had gathered to hear the International Olympic Committee’s decision. The prime minister, Tony Blair, hailed the win as “a great chance to develop sport in our country...and then to leave a legacy for the future”.

Already, preparations for the games have begun. On July 15th the bid organisers announced that a new operating company—the London Organising Committee for the Olympic Games—would become responsible for delivering the event. Meanwhile, a bill setting up the Olympic Delivery Authority—the body that will represent the government's and mayor's interests—began its journey through Parliament. Inevitably, the bombing attacks have shone a spotlight on security. Some £225m ($390m) is already earmarked for policing at the games, though this sum could be increased.

Scene change
Andrew Lloyd Webber, the impresario and composer behind “Cats” and “Phantom of the Opera”, announced in early July that he was selling four of his West End theatres. Lord Lloyd-Webber is London's biggest theatrical landlord, and speculation has been rife that he might sell his empire—potentially opening the door to entertainment giants such as Disney and Clear Channel Entertainment. But instead of abandoning the West End, it seems the 57-year-old composer is consolidating his holdings, at least for now.
After weeks of talks, the four theatres—the Garrick, Lyric, Apollo and Duchess, the so-called “paste jewels” in Lord Lloyd-Webber’s crown—were sold to Max Weitzenhoffer, a Broadway producer, and Nica Burns, a production director. The estimated £11.5m raised by the sale will pay for a costly refurbishment programme of the eight theatres still owned by Lord Lloyd-Webber’s Really Useful Group. The proposed revamp is a boost for the cluster of commercially owned theatres in central London, collectively known as “Theatreland”, which have been criticised for their old-fashioned facilities.

City safari

London Zoo in Regent’s Park is to become more like a safari park under an ambitious plan unveiled by the Zoological Society of London on July 18th. The first stage in the zoo’s makeover will see the creation of an “African Rainforest” area incorporating an island enclosure for its gorillas. The new attraction is expected to cost £5.3m and is set to open in 2007. Other animals will be moved to “more naturalistic environments” over the ensuing years, according to the society’s director.

Whether the plan solves the zoo’s long-standing financial problems remains to be seen. Falling attendance and the withdrawal of government funding drove London Zoo nearly to bankruptcy in the 1990s, though new attractions such as “Meet the Monkeys” have since boosted visitor numbers. Just how animal-rights activists will respond is uncertain: the new enclosures are an improvement for animals, but ploys, such as heated rocks that lure animals to viewing areas, will probably draw criticism. London's biodiversity has also been enhanced by planning approval for Biota!, a vast £80m aquarium in the East End to be owned and operated by the Zoological Society, which was granted by Newham Council earlier this year.

A clean strike

Cleaners at the Houses of Parliament downed mops and buckets on July 20th in protest against their working conditions. The strikers accused MPs of paying “poverty wages”, and called for a pay increase as well as more holiday and other benefits. A spokesperson for the Transport and General Workers Union—which backed the strike—argued that many of the cleaners needed another job to make ends meet. Complaints were also aired about the lack of sick pay and company pension scheme, and the fact the cleaners get only 12 days’ holiday a year.

Never ones to miss a photocall, particularly on their own doorstep, a gaggle of Labour MPs joined the 170 or so demonstrators outside the Houses of Parliament. Meanwhile, the cleaners revealed their most disliked task was cleaning the toilets in the House of Lords. “Some days they are really nasty,” one complained, while avoiding any scatological detail. The cleaners are employed by two agencies contracted to the Houses of Parliament; the effect of their protests remains to be seen.

Catch if you can

August 2005

“Death of a Salesman” & “Aristocrats”

Until November 5th & October 13th 2005 respectively

Two families live, love and lose their self-deceptions on the London stage this season. Though the plays span continents and decades, both force their subjects to confront unpleasant truths. The Lyric Theatre is staging Arthur Miller’s “Death of a Salesman”. Brian Dennehy won a Tony for his portrayal of Willy Loman, the tragic, broken-down salesman, in the Broadway production of this play. To the good fortune of Londoners, he is reviving this performance in the West End. Douglas Henshall as his son, Biff, can only pale in comparison, and he does, with a hammy Brooklyn accent and sophomoric kitsch. But the show remains moving and magical.

South of the Thames, the National Theatre is hosting Brian Friel’s “Aristocrats”, in which the middle-aged children of a rich, but depleted, Irish-Catholic family return to their family estate and swap reminiscences. Gradually, the little lies are peeled away and their private suffering is exposed. The combination of sharp wit and wilted dreams has a Chekhovian flavour. Expect a strong script and exceptionally good performances, particularly by Andrew Scott as Casimir.

Lyric Theatre, Shaftesbury Ave, W1. Tube: Piccadilly Circus. For tickets phone +44 (0)870 890-1107 or click here.

National Theatre, South Bank, SE1. Tube: Waterloo, Southwark, Embankment. For tickets phone +44 (0)20 7452-3000 or visit the theatre’s website.

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Economist.com Cities Guide: Berlin Briefing - July 2005

News this month

A hot topic

The legacy of the cold war was a hot subject in early July, when workers dismantled a makeshift memorial next to Checkpoint Charlie, the former east-west crossing-point. The memorial, created in 2004 by Alexandra Hildebrandt (owner of the nearby Checkpoint Charlie Museum), was dedicated to those killed trying to cross the East German border. Consisting of a field of wooden crosses and a rebuilt section of the Berlin Wall, it proved a popular attraction, with many viewing it as a needed tribute to suffering under communism.

But the memorial stood on land owned by BAG, a Hamm-based bank, which demanded that Mrs Hildebrandt either pay rent or raise the €35.6m ($43m) purchase price. So Berlin's courts ordered the demolition. About 200 protesters, many of whom had spent time in East German jails, braved a rainy morning to obstruct the process, with several chaining themselves to the crosses. All is not lost: shortly before the removal, the city-state's government voted to build a monument to the wall's victims near the Brandenburg Gate. But Berlin's bankruptcy means this is unlikely to happen in the near future.

Poor show

Berlin played host to one of the “Live8” rock concerts on July 2nd, organised to draw attention to poverty in Africa on the eve of the G8 summit in Scotland. On a sunny afternoon, some 150,000 Berliners turned out to the concert along the Strasse des 17 Juni in front of the Brandenburg Gate. But the event was marred by a row between the city-state's government and Marek Lieberberg, the concert's organiser, in the weeks leading up to it.

Mr Lieberberg claims that Berlin did little to promote the event, and that the venue resembled a “soup kitchen line”. He had originally asked that the concert be held on the grassy meadow in front of the Reichstag, the seat of Germany's federal parliament, but authorities declined, wary that the crowd would damage the lawn's sensitive sprinkler system. Germany's corporate sector also offered little support—with the exception of ARD, the television station that broadcast the concert, not a single local sponsor came forward. Even Klaus Wowereit, Berlin's fun-loving mayor, failed to attend. The unseemly dispute (which found local media backing Mr Lieberberg) had the effect of distracting attention from the concert's altruistic remit.

Looking left

Berlin is prickling with politics as parties gear up for federal elections, expected on September 18th pending approval of both Horst Köhler, Germany's president, and the Constitutional Court. Polls are predicting victory for the Christian Democratic Union and its Bavarian sister party, the Christian Social Union, over the ruling Social Democrat (SPD)-Green coalition under Gerhard Schröder, Germany's chancellor.

A new political party is also getting attention: the Democratic Left-PDS, a loose alliance between the Party of Democratic Socialism (PDS), heirs to East Germany's communists, and a west-based left-wing party. It has particular appeal in Berlin, where the city-state is now governed by a SPD-PDS coalition, and a state election is due in 2006. Some regard it as a future force in Berlin state politics, but first it will have to overcome tensions already visible between its populist national leadership and Berlin's pragmatic PDS leaders. Klaus Wowereit, Berlin's SPD mayor, has stressed that he is ruling in partnership with the PDS, not the new alliance—for now, at least. The alliance may have attracted enough support to influence the election result—one recent poll gave it 11%.

Bank on it

Berlin's banking sector is facing a shake-up. The city-state's government is preparing to auction off its publicly owned savings bank, the Berliner Sparkasse. The sale was mandated by European Union regulators as part of a 2001 bail-out package in response to the city's bankruptcy. The bank, with 1.9m customers, is a lucrative prize: in 2004, it made a profit of €60m ($72.4m). But the sale is strongly opposed by the Landesgesellschaft (the body that oversees the state-owned banking sector), which is vowing to stave off privatisation by buying the bank itself.

Private banks, such as Deutsche Bank, are also eager to acquire Sparkasse. Some hope such a move would help to put an end to the fear of privatisation harboured by many Germans. Although the deadline for the auction is not until late 2007, the debate is heating up as players jostle for position. In the meantime, state-owned banks across Germany face another blow to their status: on July 19th, they will have to give up a perk they have enjoyed for over 50 years: state guarantees on their debts.

An icon departs

After 12 years teaching at the city's University of the Arts, Vivienne Westwood, a British fashion designer, is leaving the German capital. But she is departing in style: on July 2nd she hosted a send-off party at Tempelhof Airport, attended by 1,500 people and featuring a show of her students' creations.

Ms Westwood originally made her name in London in the 1970s, designing provocative outfits for the Sex Pistols, a punk band. Her wares then included bondage gear, spiked dog collars and clothes covered in safety pins. The 64-year-old designer, who still sports bright-orange hair, moved to Berlin in 1993 and has frequently praised the city's energy and artistic scene.

Catch if you can

August 2005

Goya: Prophet of the Modern

Until October 3rd 2005

This exhibition promises to be Berlin's art event of the year. After ten years of negotiations with the Prado Museum in Madrid and various other museums and collectors around the world, this is the first show of works by Francisco de Goya (1746-1828) in the German-speaking world. Expect crowds when you view this astounding collection of 80 paintings and 60 etchings and lithographs by the Spanish artist, whom many describe as the father of modern art.

Bright, early canvases, such as “The Parasol” (pictured), and tapestry “cartoons” begin the promenade, which wends towards the gloomier works Goya created at the end of his life, when he was tormented by nightmares, pessimism and illness. Spain's war and Goya's madness infuse these later works with a still-shocking darkness.

Old National Gallery, Bodestrasse 1-3, Museuminsel, Berlin-Mitte. Tel: +49 (30) 266 3669. See the exhibition's website. Queues are long. They can be avoided by purchasing a VIP ticket for €30. Normal tickets cost €10.

More from the Berlin cultural calendar

Worse—and maybe better

Iraq

Jul 21st 2005 BAGHDAD
From The Economist print edition

Despite a recent spate of horrors, the picture is mixed

A RECENT spate of particularly lethal suicide bombs—on July 16th one blew up a petrol tanker near a mosque in the mainly Shia town of Musayib, south of Baghdad, killing at least 90 civilians—makes things look even worse than they are. Not that they are rosy. But there is no sign yet of an impending “tipping point”—either in favour of the insurgents, who seek a return to Sunni Arab dominance through a sectarian war leading to the ignominious departure of the American-led forces, or in favour of the western allies, who want to split the insurgency, beef up the new Iraqi army and police so that they can take over the main burden of security, hold another set of elections under a new federal constitution, and then beat a dignified retreat within the next few years or so.

In fact, the rate of killing in the past year has been going up and down (see charts). For sure, the overall trend, year on year, is up. But so far this year it has levelled off. The violence ebbs and flows. The week before the recent spate of car bombs was the quietest since the new government took office at the end of April. Spikes of violence tend to occur during set-piece events—for instance, the retaking of the rebel stronghold of Fallujah last November, the general election at the end of January, and the installation of a new government in late April. Then the killing rate has tended to come down again.

As parliament's constitutional committee gets close to agreeing to a new constitution and then puts it to a referendum—all being well—in October, a new spike of violence may be expected. In order not to let the insurgents gain momentum, the committee is said to be determined to meet its mid-August deadline, though the temporary constitution allows for a six-month extension. It may even produce a document ahead of time, early next month.
Most strikingly, the death rate for Iraqi civilians has gone up more steadily. Iraq Body Count, a diligent American-British monitoring group that was against the war to oust Saddam Hussein, said this week that nearly 25,000 civilians had been killed in the two years since the invasion by American forces. They, it reckons, caused 37% of those deaths, a third of them in the three weeks of the actual invasion, when bombs and missiles rained down on Baghdad. Since then, the insurgents, “unknown agents” and (most culpable of all) criminal gangs have been responsible for most of Iraqis' violent deaths.
Though foreign Islamists, such as Abu Musab al-Zarqawi, a Jordanian who proclaims a link with al-Qaeda, catch the headlines and perpetrate many (maybe most) of the grisliest acts of violence, such as beheadings and suicide-bombings, most analysts put their number at 5-10% of the insurgents, who, according to the American army, add up to about 15,000 to 20,000 fighters. It is unclear whether more Iraqis are becoming suicide-bombers.
In any event, the country's revamped security forces have been especially hard hit in the past year, partly because their number has risen dramatically, from around 30,000 in July 2004 to some 152,000 by March this year. Recruiting centres and queues have been favourite targets. But the death rate for the American forces and their allies has actually gone down sharply since the peaks of November, when 125 Americans died in action. In March, 23 were killed by insurgents; in June the tally was 70; if this month's current rate is constant, it will be around 30.
But a further, more ominous, feature of the fighting is that it is taking on a more sectarian hue. More recently, Shia gatherings—weddings, funerals and crowds milling around outside mosques—have become particularly vulnerable. In response, the killing of prominent Sunni civilians, such as their clergy, has increased. Many Shias and Sunnis living in districts where they are a minority have moved out. Some people in Baghdad say a low-level civil war has already begun.

Some Shia members of parliament, casting doubt on the effectiveness and loyalty of police and army units, have been demanding a wider call-up of neighbourhood militias. Most peace-minded Sunni Arab politicians, for their part, fiercely oppose such an idea. They also say, gloomily, that Iran is meddling more than before, egging on the government's two main Shia parties, the Supreme Council for Islamic Revolution in Iraq (SCIRI) and the Dawa (“Call”) party, to let their militias off the leash. In particular, they accuse SCIRI's militias, the Badr Brigades, of sectarian murders and of torturing Sunni detainees.

But the political mood may be improving, despite a hiccup this week due to the murder of two peace-minded Sunni Arabs: Mijbal Issa was one of 15 co-opted on to the 55-strong drafting committee; the other was one of ten Sunni Arab observers on it. Friends of both men blamed Shia militiamen, not Sunni rejectionists, for their deaths. Their Sunni Arab committee colleagues said that, in protest, they were temporarily withdrawing.

The drafters, in any case, have been beavering away. The shape of Iraq's federal structure is still at issue. So is the degree of Islam's influence over the law. Women's groups have expressed worry about some clauses leaked from the emerging draft. And several of the thorniest questions, such as where the disputed province of Kirkuk fits into the federation and how to disburse the country's oil revenue, may be addressed in generalities and, in effect, set aside. “Everything can be deferred until judgment day if we get consensus on a draft,” says Adnan al-Janabi, another Sunni Arab on the committee.

More hopefully, out of Iraq's 18 provinces, only the four including Baghdad and surrounding it are relentlessly bloody. No less hopefully, the leaders of the newly dominant Shias, who comprise some 60% of Iraqis to the Kurds and Sunni Arabs at about 20% apiece, have so far refused to be drawn by the overwhelmingly Sunni Arab insurgents into a sectarian tit-for-tat that could presage an all-out civil war. In particular, Grand Ayatollah Ali al-Sistani, Iraq's most influential Shia cleric, has restrained the angriest of the Shia militias. And even in the bloodiest provinces the mayhem is at least not worsening. “It's no more pear-shaped than it was six months ago,” says a hardened foreign observer in Baghdad. “Maybe slightly less so.”

Copyright © 2005 The Economist Newspaper and The Economist Group. All rights reserved.

Together at last

India and America

Jul 21st 2005 DELHI
From The Economist print edition

America adds substance to its professions of friendship for India

FOR months, American officials have been insisting, as one put it, that “there is no higher priority” for George Bush's second term in office than “expanding and broadening our relationship with India”. If that could be achieved by pomp and ceremony, the visit this week to Washington, DC, of Manmohan Singh, India's prime minister, would have done the trick. He was showered with honours, including a 19-gun salute and the chance to make a speech to Congress. The president even stayed up late to entertain him to a White House banquet, only the fifth he has thrown in more than four years.

America's professions of friendship have of late started to ring rather hollow. It has remained committed to its strong alliance with India's nuclear-powered neighbour and rival, Pakistan. It has refused to endorse India's chief foreign-policy goal, a permanent seat on an expanded United Nations Security Council. It opposes India's cherished project to pipe gas from Iran across Pakistan. And it has withheld co-operation in military and nuclear technology because India tested nuclear weapons in 1998 and has never signed up to the international non-proliferation regime.

Of these four areas of contention, Mr Singh's visit marked a breakthrough only on the last. But this one matters so much that it has transformed the relationship. America has agreed to help India acquire “the same benefits and advantages” as other states with nuclear weapons. India is to be granted “full civil nuclear energy co-operation”—such as fuel supplies and the transfer of technology.

This is hugely important for India. One of the biggest constraints on the continuing success of its fast-growing economy is an electricity shortage. Nuclear energy, which at present accounts for only about 3% of total generation, is, in many eyes, an attractive alternative to coal and expensive imported oil and gas.

Very well then, keep your bomb

The American move is also a great symbolic victory. For decades India has faced sanctions because of its nuclear-weapons programme. Now, America is, in effect, offering to help it to become a respectable bomb-wielding citizen. In return, to the consternation of critics at home, India has promised to adopt the same responsibilities as other nuclear powers, including separating its civilian nuclear facilities from military ones, opening the former to international inspection and maintaining its moratorium on nuclear testing.

For more upbeat Indian analysts, the nuclear deal is proof that the country has achieved “dehyphenation”—a decoupling of its relations with America from the sometimes vicious America-India-Pakistan triangle. America has close relations with Pakistan, which swiftly followed India into the nuclear club in 1998, but Pakistan does not enjoy any of the new privileges the Americans are bestowing on India. Nor, these days, does America press India to make concessions over Kashmir, the core of its dispute with Pakistan.

The change in America's attitude reflects both India's emergence as an economic force to be reckoned with, and the rise of neighbouring China. India's economy is only about 40% the size of China's, but its fast growth and young population mean that its global role is increasing, not least because of its thriving information-technology and outsourcing industries. Just as the boss of any big American firm needs to tell his shareholders a China story, so he now needs an Indian strategy too. One of the outcomes of Mr Singh's visit was the launch of a new forum of Indian and American chief executives.

American and Indian officials stress that the two countries' relationship is independent of their respective relations with China. Yet America's stated ambition to help India become a great power in the 21st century cannot be detached from apprehensions about China's looming might. Although India is enjoying something of a second honeymoon with China, its own long-standing suspicions, which date to the war of 1962, have not entirely faded.

Despite the instinctive anti-Americanism of many Indian intellectuals, both India and America recognise that, as democracies, they should have common interests. These were obscured by the legacy of the cold war, during which a “non-aligned” India tilted towards the Soviet Union, and the United States played the “China card”. The much-needed rapprochement with India was pursued by President Bill Clinton, but further delayed by India's bomb tests in 1998, and then by the attacks on America on September 11th 2001, which gave Pakistan new importance in the war against terror.

That importance persists, but officials say that Mr Bush is personally committed to better relations with India. Revelations of the Pakistani connections of three of the suicide-bombers who attacked London this month were a reminder that Pakistan is also part of the terrorism problem. India, on the other hand, as Mr Bush pointed out when he introduced Mr Singh to his wife in Moscow in May, has more Muslims than any country other than Indonesia— but no known al-Qaeda recruits.

Pakistan will at least be pleased that America's new love affair with India does not extend to open support of its Security Council bid. Mr Bush went no further than to agree that international institutions should “fully reflect changes” that have taken place since the UN was set up in 1945. India agrees with that—though many Indians suspect that the only change America really wants to preserve is its own emergence as the unchallenged superpower.

Copyright © 2005 The Economist Newspaper and The Economist Group. All rights reserved.

Take a bow

British financial regulation

Jul 21st 2005
From The Economist print edition

The FSA listens and learns

AS CLIMB-DOWNS go, this was as graceful as you'll see. Britain's Financial Services Authority (FSA) said on July 19th that it would change the way it does business in order to give firms suspected of wrongdoing a better hearing. Sir Callum McCarthy, the FSA's chairman, accepted all the recommendations of a review commission set up five months ago in response to widespread criticism. He said that the watchdog was determined to reach a point where firms subject to its discipline could say, however grudgingly, that the process had been fair. With these reforms—give or take a few caveats—he will probably achieve his goal.

The catalyst for this first serious overhaul of enforcement in the FSA's seven-year history was an action for endowment-policy mis-selling brought by the regulator against Legal & General (L&G), a big insurer. Where many had muttered, L&G fought back. An independent review tribunal in January halved L&G's fine, from £1.1m ($1.9m), and criticised the FSA's procedures. It said that the main problem was the regulator's failure to distinguish adequately between those who investigated a case (its enforcement division) and those who decided on its merits (the quasi-independent Regulatory Decisions Committee, or RDC).

This will now be done, in several ways. All communications between the enforcement team and the RDC will be disclosed to firms being investigated. Lawyers from the enforcement division who have not taken part in an investigation will review its findings before these go forward to the RDC, as a sort of “reality check”. The RDC itself will add two lawyers to its strength so that it need not ask the enforcement division for legal help. And face-to-face meetings at which the enforcers and the firm in question make their oral pitch to the RDC will permit more flexible discussion, with no secret recourse afterwards by the in-house team to the RDC.

These are the main changes, and both financial and legal folk seem broadly pleased. L&G's chief executive, Sir David Prosser, welcomes them with no apparent hard feelings. So does Simon Orton, a partner in the law firm that represented the insurer, Freshfields Bruckhaus Deringer: “The FSA have really been listening,” he says. But a few questions remain.

The first is how it will all work in practice. Decision-making, however improved, rests on the quality of the investigation that precedes it, as the FSA knows. Margaret Cole, its new director of enforcement, will be taking a hard look at the troops at her disposal. There are plans to add a seasoned veteran of “complex forensic investigations” to the team, but one man does not a Scotland Yard make.

Then there is the decision to take settlements out of the RDC's remit and hand them over to senior FSA executives, encouraging early settlement by establishing a fixed discount from any penalty imposed. While it is right to deter frivolous contests, settlements are important, as Mr Orton points out, both because they establish a scale of penalties for future application and because they send a message about what is considered good practice. Both might benefit from an outside eye.

A final unknown is the cost of these changes. The FSA reckons that, while a smaller proportion of cases may be referred to the RDC, those that are will be slower and costlier. This is likely to add some £2.5m to the FSA's budget, about 1% of the current total, which might be recouped by raising the fees charged by the FSA to the firms it oversees.

Sir Callum insists that the FSA is determined to remain a risk-based regulator using administrative procedures to correct significant abuses rather than become an enforcer plodding laboriously through the courts. London's light touch is its contribution to the global debate on financial regulation, and one secret of the city's success as an international financial centre. With its own ungrudging acceptance of its critics' case for change, the FSA has given that regulatory model a new lease on life.

Copyright © 2005 The Economist Newspaper and The Economist Group. All rights reserved.

Seeking new beer drinkers in the high Andes

Jul 20th 2005
From The Economist Global Agenda

SABMiller is set to become the world’s second-largest brewer after its proposed takeover of Bavaria, a Colombian firm with strong sales across the Andean region. It is the latest in a string of deals in which big brewers have sought new beer-drinkers in emerging markets to replace those being lost in rich countries. But takeover targets are set to become rarer—and pricier

FOR seasoned beer drinkers, it is often hard to resist just one more glass. But that is just what is happening in the main markets of the world’s big brewers. Beer drinking in western Europe and America is growing negligibly or is in decline. The response of the world’s leading brewers has been to buy up firms in fast-growing new markets in a bid to boost sales and prop up profits as increasingly affluent drinkers in mature markets chose to imbibe wine and spirits instead of ales.

SABMiller, currently the world’s third-largest brewer, said on Tuesday July 19th that it would follow the footsteps of InBev, the world’s largest, into the South American market. Almost a year after InBev was created, with the purchase by Belgium’s Interbrew of Brazil’s AmBev for $11.2 billion, SABMiller said that it would acquire Colombia’s Grupo Empresarial Bavaria in a deal valuing the target firm at some $7.8 billion. Bavaria, South America’s second-largest brewer, is the dominant beer firm in Peru, Ecuador and Panama as well as in its home market and enjoyed revenues of $1.9 billion in 2004. The deal means SABMiller will overtake America’s Anheuser-Busch to become the world’s second-largest seller of beer.

It is not just in South America that brewers have expanded in an effort to combat the stagnation of growth and profits in their mature home markets: breweries in China and Eastern Europe have also been swallowed up. Last year, Anheuser-Busch, best known for its top-selling brand, Budweiser, bought Harbin, China’s fourth-largest brewery, for $720m, after outbidding SABMiller. And earlier this year the American company upped its stake in Tsingtao, another Chinese brewer, to 27%. Recently, InBev said it was buying Russia’s Tinkoff for €167m ($201m). Heineken of the Netherlands, which lost out to SABMiller in the quest to acquire Bavaria, has recently bought two Russian brewers. And consolidation is set to continue. The world’s top five brewers accounted for 17% of world beer sales 15 years ago. Now they sell 40% of the total and that figure is likely to hit 50% by 2010.

The world’s brewing giants, having been instrumental in the consolidation of brewing in Western Europe and America, can only hope to gain extra market share from rivals in these established markets through costly marketing campaigns. So acquisitions are, on the face of it, a sensible way to achieve decent growth—especially in emerging markets where the numbers with the disposable income to afford beer are rising.

By some estimates China’s beer market, now the world’s largest, is growing by 6-8% a year. Beer consumption in Latin America is set to expand at around 4% a year for the next five years, twice the global average, according to SABMiller. And in both regions, beer consumption per head is far below European and American levels, suggesting plenty of scope for more sales. Beer drinking in Eastern Europe is also burgeoning. Russia is expected to out-consume even famously beer-loving Germany, becoming the world’s third-largest consumer market, towards the end of this decade.

There is some evidence that the strategy of emerging-market takeovers is working. InBev reported that net profits for 2004 had jumped by 23% compared with the year before, to €621m. Its Latin American operations more than made up for declining sales in Britain, Germany and elsewhere. South America, like other markets that the brewers are tapping is big and, broadly speaking, increasingly stable and prosperous, with the sort of youthful populations that tend to drink beer. But it is unlike other markets. Bavaria enjoys a near monopoly in Colombia, Ecuador and Peru and is dominant in Panama. Consequently it makes decent profits.
China, despite its position as the world’s largest beer market, is the world’s least profitable. Price wars between the country’s 400-odd breweries have squeezed profits. Anheuser-Busch’s purchase of Harbin, and other forays into China by western brewing giants, have been criticised as expensive exercises in building market share in the hope of future profits when consolidation someday comes.

There are other ways that these deals can boost the coffers of the big brewers. Some scope exists for savings, through economies of scale in purchasing raw materials and by cutting administration costs. SABMiller has promised savings of $120m a year by 2010 through its takeover of Bavaria, though this is quite a modest sum in the overall context of the deal. The multinational brewers also get distribution and marketing expertise in the countries where their acquisitions operate. This means that, besides growing the local brands they have bought, they can in time introduce their more profitable, premium-priced global brands. As consumers become better-off they tend to move up the value chain from cheaper local beers to these premium products, enhancing the brewers’ margins.

SABMiller, formed by the combination of South African Breweries and America’s Miller in 2002, believes that it has the expertise to exploit emerging markets. Its pre-tax profits in its latest financial year of $2.2 billion were driven by handy growth at its South African business where consumers are switching to its premium brands such as Miller Genuine Draft and Pilsner Urquell. InBev has successfully launched Stella Artois in Brazil and Becks in Poland. And eventually more brands could travel in the other direction to enliven the jaded palates of Western European and American drinkers. This year InBev, launched Brahma, Brazil’s leading beer, in 15 countries including Britain, France and America, to compete against the premium beers offered by rivals.

The big brewers are sure to continue to eye assets in fast-growing markets. All four of the world’s top brewers were said to have considered a bid for Bavaria. And speculation has abounded that other big European brewers, such as Carlsberg or Scottish & Newcastle could also prove tempting targets for the global giants looking to get bigger still. Though there may still be a number of countries ripe for consolidation, the number of brewers with a worthwhile market share in emerging markets is finite. If the rich world’s brewers all start chasing the same assets, they will be forced to pay ever-higher prices in their efforts to keep their businesses growing—making the logic of such moves increasingly less obvious.

Copyright © 2005 The Economist Newspaper and The Economist Group. All rights reserved.

How far will it go?

The revaluation of the yuan

Jul 21st 2005 HONG KONG
From The Economist print edition

China has revalued its currency, the yuan, and linked it to a basket of currencies. By itself, this will do little to slow the economy, but it may ease trade tensions

SOONER or later, it was going to happen, and on July 21st it did. China abandoned the 11-year-old peg of its currency, the yuan, at 8.28 to the dollar. From now on, the yuan will be linked to a basket of currencies, the central parities of which will be set at the end of each day. And the currency has been revalued, although by nothing like as much as America and others have been demanding: the yuan's central rate against the dollar was shifted by 2.1%, to 8.11.

As The Economist went to press, it was not clear exactly how the new system would operate. The Chinese called it a “managed floating exchange-rate regime”, which may well imply more management than floating. The fact that the Chinese have acted at all is important. But the eventual economic and political effects of the revaluation will depend on how far and how fast the yuan moves from now on.

In particular, such a slight revaluation is unlikely to do much to slow China's fast-expanding economy. The day before the currency regime changed, the country's official statisticians said that GDP in the second quarter of 2005 was 9.5% higher than a year before, more than most pundits had forecast and only a shade less than the figure for the same period of 2004 (see chart). Industrial production, ahead by 16.8% in the year to June, and investment in fixed assets, up by 25.4% in the first half, year on year, have both eased from their levels at the end of 2003, but remain strong. Inflation, as measured by the consumer-price index, is mild. It slid to 1.6% last month, down from 5%-plus a year ago.

In truth, the economy is slowing more markedly than these (highly suspect) official figures suggest. Many economists say that China has an institutionalised bias to over-reporting growth at the bottom of a cycle and under-reporting it at the top, to reduce the volatility of the numbers. Judged by physical indicators, such as electricity consumption or freight volumes, GDP growth probably peaked at over 12% in 2003 and should slow to 8% by 2006. Since China's macroeconomic growth is driven more by fixed investment than by household consumption (which dominates in the West), it is especially vulnerable to any slowing of corporate investment or public spending on infrastructure.

“In investment cycles,” says Andy Xie, Asia economist at Morgan Stanley, “the leading indicators are profit margins, product prices and property prices, which forecast corporate cash flow or ability to borrow.” These three are slowing. For the past five years, Chinese industrial firms have enjoyed record profit margins as revenue growth has outpaced the increase in wages and raw-material costs. In 2003 and 2004, industrial production and sales grew at an annual rate of nearly 30% in real terms, analysts estimate, but in 2005 the pace has slowed to around 15%. With commodity prices high, companies' margins are being squeezed: overheated industries such as cars, steel, cement and basic materials are suffering especially.

Property prices are also moderating after a period of extraordinary growth, particularly in big cities. Shanghai house prices, up by half since 1998 and by almost 10% in the first quarter of this year, have fallen back by 10-20% since mid-April. Transaction volumes in most urban centres have also dropped, because the government has imposed a property-sales tax and tightened mortgage requirements.

Overall, however, China seems to be managing the soft landing that it wants. The authorities have acted earlier and more decisively than they did in the mid-1990s, curbing growth before it gets out of hand. Policymakers have also been more sophisticated, targeting selected sectors with administrative restrictions while shifting to market-based measures, including last October's increase in interest rates, to rein in money and credit growth. A dearer yuan—but much dearer, probably, than after this week's move—would give the economy another downward nudge.

In addition, the economy is looking better balanced: there are signs that consumer spending is doing more to support the economy, alongside fixed investment and exports. Rising incomes are boosting households' spending power, lifting retail sales by 13% in the first half of the year, compared with the same period of 2004. And the countryside is finally playing a part: after six years of lacklustre growth, rural incomes rose by 12.5% in the first half.

That said, China's policymakers cannot afford to rest on their laurels. On the one hand, there is a risk that the economy will steam away again as spending for the Beijing Olympics in 2008 takes off. On the other, the vast amount of manufacturing capacity built up over the past few years means that a slightly sharper slowdown, perhaps triggered by lower growth in America, could tip the country back into deflation. Already, a staggering nine-tenths of manufactured goods in China are thought to be in oversupply.

In the short term, the biggest worry is that China becomes a victim of its own international success. Until recently China has been a powerful engine driving the world economy. If it slows, existing political and trade tensions could still worsen. Thus an unfortunate side effect of China's attempts to cool its domestic economy has been an exploding trade surplus, because import growth has softened while exports have remained robust. In June, China's exports rose by 30.6%, year-on-year, while imports grew by just 15.1%, widening the monthly trade surplus to $9.7 billion. The cumulative surplus for 2005 is now nearly $40 billion, more than for the whole of last year. This year's current-account surplus could reach 9% of GDP. “Just one year ago, China was the world's fastest-growing importer of heavy industrial products,” says Jonathan Anderson, chief Asia economist at UBS. “Today, the mainland is actually a growing net exporter, with shipments of not only textiles but also steel, other metals and chemicals accelerating visibly.”

Slowing imports (of everything but commodities) are bad news for international companies, at a time when those doing business in China are already suffering from increased competition and oversupply. And mainland firms are becoming aggressive exporters of everything from textiles and steel to electronics and even cars. Ningbo Bird, based in Zhejiang province, is flooding Asia with cheap mobile-phone handsets it cannot sell profitably at home.

Revaluing the yuan should make some of the tensions created by all this less acute. American politicians, in particular, have been demanding a step in this direction. However, they have been demanding a much bigger stride. And investment is becoming as touchy an issue as trade has been. China is no longer using its huge stock of foreign-exchange reserves—over $700 billion—merely to buy American Treasury bonds, but to snap up physical assets too. The $18.5 billion contested bid by CNOOC, a big Chinese oil company, for America's Unocal is causing an uproar in Washington, DC. China's move this week may dampen calls for trade protection and revaluation for a while. But if China's domestic economy slows and thus becomes less supportive of global growth, such calls are likely to return soon.

Copyright © 2005 The Economist Newspaper and The Economist Group. All rights reserved.