Six Nato troops have been killed in Afghanistan in the worst single-day loss for international forces since the launch of a big offensive to drive Taliban insurgents from the town of Marjah.
The deaths on Thursday, followed by the loss of another soldier on Friday, underscore the risks US, UK and Afghan troops face as they seek to clear what commanders describe as pockets of resistance by fighters digging in to resist one of the biggest operations launched by Nato in Afghanistan since 2001.
EDITOR’S CHOICE
Islamabad steps up terror arrests - Feb-18
Marjah’s real test will come after offensive - Feb-17
Marjah inroads slowed by new bombs - Feb-17
Marines help push insurgents out of Marjah - Feb-17
Top Taliban commander captured - Feb-16
Mastermind who holds vital intelligence - Feb-16
The seven casualties brought the death toll of international troops from the six-day operation to 12, an official for the Nato-led force in Afghanistan said.
More than a dozen civilians have also lost their lives in the operation. Provincial officials said several dozen insurgents had been killed.
Nick Carter, the British commander of Nato forces in southern Afghanistan, said late on Thursday via a video link to the Pentagon that the offensive was facing resistance in Marjah and might take another month to clear the area of Taliban fighters.
“In Marjah itself there remains stiff resistance from the insurgents,” Maj-Gen Carter told reporters. “It will be some days before we can be completely confident that Marjah is secure.”
Maj-Gen Carter said it could take another three months to determine how successful the operation had been.
It is the first big offensive launched since Barack Obama, US president, ordered an extra 30,000 troops to Afghanistan in December, and is seen as an important test of whether the latest troop surge can have a lasting impact on the Taliban.
Commanders have said the assault on Marjah is part of a wider plan to secure population centres in southern Afghanistan, the focal point for the insurgency, that will give the Afghan government time to start building the institutions needed to deny insurgents support.
The offensive has taken place alongside signs that the Taliban is facing growing pressure in Pakistan, where the movement’s second-in-command and military chief, Mullah Abdul Ghani Baradar, was arrested last week in a joint US-Pakistan operation. Pakistani security officials said on Thursday they had also arrested two Taliban “shadow governors” – appointed by the movement to set up parallel administrations in two Afghan provinces.
An important part of US strategy for stabilising the region is to encourage Pakistan to crack down on Afghan insurgents operating from its territory while Nato forces increase the military pressure on the movement in Afghanistan.
Saturday, February 20, 2010
Pakistan Air Strike Kills 30 Militants in Northwest
Pakistan security forces killed 30 militants during an air strike in the tribal region of South Waziristan near the Afghanistan border today, the military said.
The forces attacked militant hideouts in the Shawal mountains after receiving a tipoff, Pakistan’s military said in a statement on its Web site.
Pakistan’s army is engaged in an operation against the Taliban in South Waziristan that has forced rebels to flee to remote areas near the border with Afghanistan. Since October, 28,000 troops have fought insurgents, triggering suicide bombings and gun attacks in major Pakistani cities.
A police official was killed and six officers wounded in suicide attacks on two police stations in northwest Pakistan, Agence France-Presse reported, citing a the authorities.
In the first attack a gunfight broke out when two suicide bombers stormed a police station in Mansehra, station chief Waheed Khan told AFP. In a separate attack in the neighboring mountain town of Balakot, a suicide bomber killed station chief Khalil Khan and wounded three policemen, AFP reported, citing local police official Sabir Ullah.
At least 3,000 people were killed in terrorist attacks across the country last year, according to the Islamabad-based Pakistan Institute for Peace Studies.
The forces attacked militant hideouts in the Shawal mountains after receiving a tipoff, Pakistan’s military said in a statement on its Web site.
Pakistan’s army is engaged in an operation against the Taliban in South Waziristan that has forced rebels to flee to remote areas near the border with Afghanistan. Since October, 28,000 troops have fought insurgents, triggering suicide bombings and gun attacks in major Pakistani cities.
A police official was killed and six officers wounded in suicide attacks on two police stations in northwest Pakistan, Agence France-Presse reported, citing a the authorities.
In the first attack a gunfight broke out when two suicide bombers stormed a police station in Mansehra, station chief Waheed Khan told AFP. In a separate attack in the neighboring mountain town of Balakot, a suicide bomber killed station chief Khalil Khan and wounded three policemen, AFP reported, citing local police official Sabir Ullah.
At least 3,000 people were killed in terrorist attacks across the country last year, according to the Islamabad-based Pakistan Institute for Peace Studies.
In Turmoil, Sunni Party in Iraq Calls for Vote Boycott
BAGHDAD — The Sunni political party whose two most prominent leaders were disqualified from next month’s parliamentary elections in Iraq because of supposed ties to Saddam Hussein’s Baath Party called Saturday for a boycott of the vote, raising fears of worsening sectarian tensions in an already volatile campaign.
It remains to be seen how deeply the call for a boycott will resonate in Iraq’s Sunni heartland. Sunnis largely boycotted the country’s last election in 2005 and as a result were disproportionately underrepresented in Parliament.
Even the party’s leader, Saleh al-Mutlaq, questioned the usefulness of a boycott last week, and on Saturday at least some prominent Sunni leaders indicated they would not heed the call.
Mr. Mutlaq’s party belongs to a broader coalition, known as Iraqiya, that has made it clear that it has no intention of boycotting. The coalition includes secular Shiite and Sunni parties and is led by a former prime minister, Ayad Allawi.
It has emerged as a powerful challenger to the electoral bloc led by Prime Minister Nuri Kamal al-Maliki and another dominated by Shiite parties.
So far no other Sunni parties have indicated they would join a boycott. And in Kirkuk Province, officials of Mr. Mutlaq’s own party said Saturday that they would not boycott the election there.
Still, the call for a boycott further taints what many Iraqis — and the United States and United Nations — hoped would be an election that moved the country beyond its recent history of sectarian bitterness and bloodshed.
The action was prompted by the disqualification of hundreds of candidates, most of them Sunni, by a parliamentary commission last month.
In announcing its boycott, Mr. Mutlaq’s party, the National Dialogue Front, cited not only Mr. Mutlaq’s disqualification, but also a volatile security situation, the arrest or harassment of candidates and the influence of Iran on the country’s Shiite parties, a recurring suspicion among Sunnis.
One of the party’s candidates in Diyala Province, Najim al-Harbi, was arrested at his home on Feb. 7, part of what Mr. Maliki’s opponents have called a wave of intimidation against challengers.
The party’s statement on Saturday also cited recent statements by the top American military commander, Gen. Ray Odierno, and the ambassador, Christopher R. Hill, that the leaders of the commission disqualifying candidates had close ties to Iran.
“The National Dialogue Front cannot continue in a political process run by a foreign agenda,” the statement said.
Mr. Mutlaq, a former agronomist and a member of Parliament since 2006, has a strong following in Sunni strongholds. His campaign posters could still be seen Saturday on the road from Baghdad to Baquba, the capital of Diyala, whose population is a mix of Sunnis, Shiites and Kurds.
Mr. Mutlaq was expelled by the Baath Party in 1977, but he emerged after the American invasion as a powerful voice for Sunni sentiments. He has become increasingly critical of his disqualification, which he appealed unsuccessfully, but he has stopped short of calling for a boycott.
“We have experienced the bitter taste of boycott before,” he said last week. He could not be reached Saturday to clarify his position and that of his party.
In Diyala, a prominent tribal leader in Baquba, Sheik Sadoon al-Dulaimi, said a boycott would only allow “non-patriotic parties” to gain control of the new Parliament.
“It will take us back to what happened in 2005,” he said.
Marc Santora and an Iraqi employee of The New York Times contributed reporting from Baquba, Iraq.
It remains to be seen how deeply the call for a boycott will resonate in Iraq’s Sunni heartland. Sunnis largely boycotted the country’s last election in 2005 and as a result were disproportionately underrepresented in Parliament.
Even the party’s leader, Saleh al-Mutlaq, questioned the usefulness of a boycott last week, and on Saturday at least some prominent Sunni leaders indicated they would not heed the call.
Mr. Mutlaq’s party belongs to a broader coalition, known as Iraqiya, that has made it clear that it has no intention of boycotting. The coalition includes secular Shiite and Sunni parties and is led by a former prime minister, Ayad Allawi.
It has emerged as a powerful challenger to the electoral bloc led by Prime Minister Nuri Kamal al-Maliki and another dominated by Shiite parties.
So far no other Sunni parties have indicated they would join a boycott. And in Kirkuk Province, officials of Mr. Mutlaq’s own party said Saturday that they would not boycott the election there.
Still, the call for a boycott further taints what many Iraqis — and the United States and United Nations — hoped would be an election that moved the country beyond its recent history of sectarian bitterness and bloodshed.
The action was prompted by the disqualification of hundreds of candidates, most of them Sunni, by a parliamentary commission last month.
In announcing its boycott, Mr. Mutlaq’s party, the National Dialogue Front, cited not only Mr. Mutlaq’s disqualification, but also a volatile security situation, the arrest or harassment of candidates and the influence of Iran on the country’s Shiite parties, a recurring suspicion among Sunnis.
One of the party’s candidates in Diyala Province, Najim al-Harbi, was arrested at his home on Feb. 7, part of what Mr. Maliki’s opponents have called a wave of intimidation against challengers.
The party’s statement on Saturday also cited recent statements by the top American military commander, Gen. Ray Odierno, and the ambassador, Christopher R. Hill, that the leaders of the commission disqualifying candidates had close ties to Iran.
“The National Dialogue Front cannot continue in a political process run by a foreign agenda,” the statement said.
Mr. Mutlaq, a former agronomist and a member of Parliament since 2006, has a strong following in Sunni strongholds. His campaign posters could still be seen Saturday on the road from Baghdad to Baquba, the capital of Diyala, whose population is a mix of Sunnis, Shiites and Kurds.
Mr. Mutlaq was expelled by the Baath Party in 1977, but he emerged after the American invasion as a powerful voice for Sunni sentiments. He has become increasingly critical of his disqualification, which he appealed unsuccessfully, but he has stopped short of calling for a boycott.
“We have experienced the bitter taste of boycott before,” he said last week. He could not be reached Saturday to clarify his position and that of his party.
In Diyala, a prominent tribal leader in Baquba, Sheik Sadoon al-Dulaimi, said a boycott would only allow “non-patriotic parties” to gain control of the new Parliament.
“It will take us back to what happened in 2005,” he said.
Marc Santora and an Iraqi employee of The New York Times contributed reporting from Baquba, Iraq.
Friday, February 19, 2010
Japan’s Bonds Fall on Weaker Yen, Fed’s Discount Rate Increase
Feb. 20 (Bloomberg) -- Japan’s bonds fell, pushing up 10- year yields from a three-week low, as the yen’s decline to the lowest level in a month boosted the profit outlook for exporters and damped demand for government debt.
Japan’s long-term bonds also dropped after the Federal Reserve raised its discount rate for the first time in three years as it took another step toward withdrawing its stimulus measures. Bonds also fell on speculation primary dealers will cut debt holdings before Japan sells 20-year bonds next week.
“Selling pressure should mount on bonds as the yen weakens following the Fed’s action,” said Tetsuya Miura, chief market analyst in Tokyo at Mizuho Securities Co., a unit of Japan’s second-largest banking group.
The yield on the 2.1 percent bond due December 2029 rose 1.5 basis points to 2.165 percent this week at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price dropped 0.206 yen to 99.098 yen.
Ten-year bond futures for March delivery rose 0.10 over the week to 139.47 on the Tokyo Stock Exchange.
The yen fell to as low as 92.09 per dollar in Tokyo yesterday, the weakest since Jan. 12, after the Fed raised its discount rate by a quarter point to 0.75 percent. The central bank said the move will encourage financial institutions to rely more on money markets rather than the central bank.
‘Rather Difficult’
“It’s getting rather difficult for investors to keep buying mid-term bonds with the dollar in an uptrend,” Chotaro Morita, head of fixed-income strategy research at Barclays Capital, wrote yesterday in a note to clients.
The Finance Ministry will sell 1.1 trillion yen ($11.97 billion) of 20-year bonds on Feb. 23. Primary dealers, companies required to bid at government debt sales, often reduce holdings of bonds before an auction in case prices decline before they can pass on the new securities to investors.
“Investors will try to secure a 2.2 percent coupon for next week’s 20-year auction,” said Akihiko Inoue, chief market analyst in Tokyo at Mizuho Investors Securities Co., a unit of Japan’s second-largest bank. “That should keep a lid on bonds.”
The decline in debt was tempered on speculation that deflation will boost the value of the fixed payments from government securities.
The Bank of Japan on Feb. 18 said deflation remained a “critical challenge,” as it left its benchmark interest rate on hold at 0.1 percent.
‘Firm Environment’
“Bonds are in a firm environment as investors focus on deepening deflation,” said Takafumi Yamawaki, a senior strategist in Tokyo at BNP Paribas Securities Japan Ltd., a unit of France’s largest bank. “Supply-demand conditions remain good for bonds.”
Japan’s gross domestic product deflator fell 3 percent in the fourth quarter from a year earlier, the Cabinet Office said Feb. 15. The deflator is used to calculate economic growth adjusted for price changes.
Five-year inflation bonds yield 1.01 percentage points more than similar-maturity regular notes, according to data compiled by Bloomberg. Inflation-adjusted securities typically yield less than regular bonds because their principal payment increases at the same rate as inflation.
Japan’s long-term bonds also dropped after the Federal Reserve raised its discount rate for the first time in three years as it took another step toward withdrawing its stimulus measures. Bonds also fell on speculation primary dealers will cut debt holdings before Japan sells 20-year bonds next week.
“Selling pressure should mount on bonds as the yen weakens following the Fed’s action,” said Tetsuya Miura, chief market analyst in Tokyo at Mizuho Securities Co., a unit of Japan’s second-largest banking group.
The yield on the 2.1 percent bond due December 2029 rose 1.5 basis points to 2.165 percent this week at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price dropped 0.206 yen to 99.098 yen.
Ten-year bond futures for March delivery rose 0.10 over the week to 139.47 on the Tokyo Stock Exchange.
The yen fell to as low as 92.09 per dollar in Tokyo yesterday, the weakest since Jan. 12, after the Fed raised its discount rate by a quarter point to 0.75 percent. The central bank said the move will encourage financial institutions to rely more on money markets rather than the central bank.
‘Rather Difficult’
“It’s getting rather difficult for investors to keep buying mid-term bonds with the dollar in an uptrend,” Chotaro Morita, head of fixed-income strategy research at Barclays Capital, wrote yesterday in a note to clients.
The Finance Ministry will sell 1.1 trillion yen ($11.97 billion) of 20-year bonds on Feb. 23. Primary dealers, companies required to bid at government debt sales, often reduce holdings of bonds before an auction in case prices decline before they can pass on the new securities to investors.
“Investors will try to secure a 2.2 percent coupon for next week’s 20-year auction,” said Akihiko Inoue, chief market analyst in Tokyo at Mizuho Investors Securities Co., a unit of Japan’s second-largest bank. “That should keep a lid on bonds.”
The decline in debt was tempered on speculation that deflation will boost the value of the fixed payments from government securities.
The Bank of Japan on Feb. 18 said deflation remained a “critical challenge,” as it left its benchmark interest rate on hold at 0.1 percent.
‘Firm Environment’
“Bonds are in a firm environment as investors focus on deepening deflation,” said Takafumi Yamawaki, a senior strategist in Tokyo at BNP Paribas Securities Japan Ltd., a unit of France’s largest bank. “Supply-demand conditions remain good for bonds.”
Japan’s gross domestic product deflator fell 3 percent in the fourth quarter from a year earlier, the Cabinet Office said Feb. 15. The deflator is used to calculate economic growth adjusted for price changes.
Five-year inflation bonds yield 1.01 percentage points more than similar-maturity regular notes, according to data compiled by Bloomberg. Inflation-adjusted securities typically yield less than regular bonds because their principal payment increases at the same rate as inflation.
Thursday, February 18, 2010
Obama-Dalai Lama Meeting Shows U.S., China Must Accept Rivalry
Feb. 19 (Bloomberg) -- President Barack Obama went into yesterday’s meeting with the Dalai Lama on notice that it would anger China’s leadership and add tension to an already strained relationship.
China reacted swiftly, saying, “the U.S. act grossly violated the norms governing international relations,” in a statement today by Ma Zhaoxu, a spokesman for China’s Foreign Ministry. The meeting ran counter to longstanding U.S. commitments to recognize China’s sovereignty over Tibet and refrain from supporting separatist forces, the statement said.
The rhetoric isn’t likely to fray economic ties secured by $366 billion of mutual trade and $755 billion in Chinese-held U.S. Treasury bills, according to analysts.
And the path to a more constructive overall relationship may lie in both sides dropping any pretense at friendship and acknowledging they are competitors as much as partners, said Yan Xuetong, director of the Institute of International Studies at Tsinghua University in Beijing.
“If China and the U.S. identified each other as rivals I don’t think they would be disappointed with each other,” Yan said. “Both sides pretend to be friends. Actually, they are not.”
During the 70-minute White House meeting today in the Map Room, Obama “stated his strong support for the preservation of Tibet’s unique religious, cultural and linguistic identity and the protection of human rights for Tibetans in the People’s Republic of China,” according to a statement from White House press secretary Robert Gibbs.
‘Genuine Concern’
The Tibetan spiritual leader said it was a “great honor” to meet with Obama and that they talked about his emphasis on the “promotion of human value.” He said after emerging from the White House that the president showed “genuine concern” about Tibet.
Speaking to reporters later in the day, the Dalai Lama said Tibet “should have meaningful autonomy so that we can preserve the Tibetan unique cultural heritage.”
He said he wasn’t frustrated about the pace of progress for autonomy in Tibet. Asked how Obama can help Tibet, the Dalai Lama said, “time will tell.”
Relations between the Obama administration and China have suffered recently as the U.S. announced a planned $6.4 billion arms sale to Taiwan, Google Inc. threatened to exit China on the grounds that user e-mail accounts were being hacked and China taxed American chicken imports after the U.S. imposed tariffs on Chinese tires.
The two countries also have differed on steps to halt global warming and nuclear programs in North Korea and Iran.
China’s Foreign Ministry on Feb. 4 rejected Obama’s call to strengthen the Chinese currency, saying that “accusations and pressure will not help solve the issue.”
‘Cruising Altitude’
All this since U.S. Ambassador to China Jon Huntsman told reporters during Obama’s November visit that the relationship was at “a cruising altitude that is higher than any other time in recent memory.”
Still, there is little chance that these differences will fundamentally damage the network of economic and political ties that China expert Orville Schell calls the “most important bilateral relationship” in the world today. He is director of the Asia Society’s Center on U.S.-China Relations in New York.
In a positive sign, the USS Nimitz aircraft carrier and four other U.S. warships yesterday anchored in Hong Kong, where more than 5,000 sailors will get shore leave.
In 2007, China prevented the USS Kitty Hawk from visiting the city, with Foreign Ministry spokesman Liu Jianchao saying China was angered that President George W. Bush met the Dalai Lama and presented him with the Congressional Gold Medal. Although China belatedly approved the port-call, the fleet had already turned back.
Ratchet Down
“I don’t see anything that could destabilize the relationship right now,” said Elizabeth Economy, director of Asia studies at the Council on Foreign Relations in New York. “Leaders on both sides will ratchet this back down at an appropriate time, but not right now, because a little chest-thumping serves domestic purposes.”
Neither nation can afford to sabotage the economic relationship, said Carl Lantz, an interest-rate strategist at Credit Suisse Group AG in New York.
“We are kind of joined at the hip economically,” Lantz said. “People refer to it as Chimerica, and in general it’s worked out relatively well, where they finance our borrowing and consumption and we buy their exports to finance their social stability.”
China’s holdings of U.S. Treasuries have increased more than 10-fold in the past decade, from $71.7 billion in 2000 to $755.4 billion in December.
Largest Creditor
China surpassed Japan as the largest creditor abroad to the U.S. in September 2008, although it fell back to second place in December when its Treasury holdings declined for the second consecutive month, the Treasury Department said on Feb. 16. China allowed its short-term Treasury bills to mature and replaced them with a smaller amount of longer-term notes and bonds, the Treasury data showed.
The December reduction in China’s holdings didn’t prompt a sell-off in U.S. bonds as investors focused instead on an overall increase in foreign holdings of U.S. Treasuries, which rose by a net $69.9 billion. The yield on the benchmark 10-year note fell three basis points, or 0.03 percentage point, to 3.66 percent on Feb. 16, according to BGCantor Market data.
The Obama administration is also convinced that the recent tensions won’t fundamentally change the countries’ relationship, said an administration official who asked not to be identified out of concern for Chinese sensitivities.
Trading Blows
That hasn’t stopped both sides from trading rhetorical blows.
China demanded last week that Obama cancel the meeting with the Dalai Lama, even though Obama informed Chinese President Hu Jintao during his Beijing visit that he planned to receive the Tibetan leader, according to the administration official.
The U.S. also told China in advance of the Taiwan arms sale, the official said.
‘Thorough Investigation’
Secretary of State Hillary Clinton said she expected China to conduct a “thorough investigation” of charges from Mountain View, California-based Google that hackers had entered e-mail accounts it hosted belonging to Chinese dissidents. Free access to information and protecting what she called the “basic rights” of Internet users is essential, Clinton said.
Such exchanges may paradoxically allow both countries to pursue their own agendas and work together on larger issues without fear of domestic backlash, said Robert Barnett, director of Modern Tibetan Studies at Columbia University in New York.
“We’re seeing a slightly more confident America, which is trying to communicate that distinction between interests and values,” Barnett said.
Visits by the exiled Tibetan spiritual leader are a perpetual irritant to China. It has opposed any outside pressure on how the country runs Tibet, which was brought under its rule after a military invasion in 1950.
The Dalai Lama has met with every U.S. president since George H.W. Bush in 1991. While China has exacted diplomatic punishment on leaders who met him -- it canceled a China-European Union summit after French President Nicolas Sarkozy met the Dalai Lama in 2008 -- trade relations have been little affected, said Schell.
China received the Dalai Lama’s envoys at the first talks on Tibet in 15 months, which ended Feb. 1. China’s top negotiator rejected calls for greater autonomy for the region, the Tibetan exile administration said.
Douglas Paal, vice-president of the Carnegie Endowment for International Peace in Washington, said the discussions probably were partly to prepare for the effect the Obama meeting could have on Chinese public opinion.
“More is imputed to these meetings than actually occurs,” said Paal, who was at the White House National Security Council from 1989 to 1993. “Presidents have to check the political box of seeing the Dalai Lama.”
China reacted swiftly, saying, “the U.S. act grossly violated the norms governing international relations,” in a statement today by Ma Zhaoxu, a spokesman for China’s Foreign Ministry. The meeting ran counter to longstanding U.S. commitments to recognize China’s sovereignty over Tibet and refrain from supporting separatist forces, the statement said.
The rhetoric isn’t likely to fray economic ties secured by $366 billion of mutual trade and $755 billion in Chinese-held U.S. Treasury bills, according to analysts.
And the path to a more constructive overall relationship may lie in both sides dropping any pretense at friendship and acknowledging they are competitors as much as partners, said Yan Xuetong, director of the Institute of International Studies at Tsinghua University in Beijing.
“If China and the U.S. identified each other as rivals I don’t think they would be disappointed with each other,” Yan said. “Both sides pretend to be friends. Actually, they are not.”
During the 70-minute White House meeting today in the Map Room, Obama “stated his strong support for the preservation of Tibet’s unique religious, cultural and linguistic identity and the protection of human rights for Tibetans in the People’s Republic of China,” according to a statement from White House press secretary Robert Gibbs.
‘Genuine Concern’
The Tibetan spiritual leader said it was a “great honor” to meet with Obama and that they talked about his emphasis on the “promotion of human value.” He said after emerging from the White House that the president showed “genuine concern” about Tibet.
Speaking to reporters later in the day, the Dalai Lama said Tibet “should have meaningful autonomy so that we can preserve the Tibetan unique cultural heritage.”
He said he wasn’t frustrated about the pace of progress for autonomy in Tibet. Asked how Obama can help Tibet, the Dalai Lama said, “time will tell.”
Relations between the Obama administration and China have suffered recently as the U.S. announced a planned $6.4 billion arms sale to Taiwan, Google Inc. threatened to exit China on the grounds that user e-mail accounts were being hacked and China taxed American chicken imports after the U.S. imposed tariffs on Chinese tires.
The two countries also have differed on steps to halt global warming and nuclear programs in North Korea and Iran.
China’s Foreign Ministry on Feb. 4 rejected Obama’s call to strengthen the Chinese currency, saying that “accusations and pressure will not help solve the issue.”
‘Cruising Altitude’
All this since U.S. Ambassador to China Jon Huntsman told reporters during Obama’s November visit that the relationship was at “a cruising altitude that is higher than any other time in recent memory.”
Still, there is little chance that these differences will fundamentally damage the network of economic and political ties that China expert Orville Schell calls the “most important bilateral relationship” in the world today. He is director of the Asia Society’s Center on U.S.-China Relations in New York.
In a positive sign, the USS Nimitz aircraft carrier and four other U.S. warships yesterday anchored in Hong Kong, where more than 5,000 sailors will get shore leave.
In 2007, China prevented the USS Kitty Hawk from visiting the city, with Foreign Ministry spokesman Liu Jianchao saying China was angered that President George W. Bush met the Dalai Lama and presented him with the Congressional Gold Medal. Although China belatedly approved the port-call, the fleet had already turned back.
Ratchet Down
“I don’t see anything that could destabilize the relationship right now,” said Elizabeth Economy, director of Asia studies at the Council on Foreign Relations in New York. “Leaders on both sides will ratchet this back down at an appropriate time, but not right now, because a little chest-thumping serves domestic purposes.”
Neither nation can afford to sabotage the economic relationship, said Carl Lantz, an interest-rate strategist at Credit Suisse Group AG in New York.
“We are kind of joined at the hip economically,” Lantz said. “People refer to it as Chimerica, and in general it’s worked out relatively well, where they finance our borrowing and consumption and we buy their exports to finance their social stability.”
China’s holdings of U.S. Treasuries have increased more than 10-fold in the past decade, from $71.7 billion in 2000 to $755.4 billion in December.
Largest Creditor
China surpassed Japan as the largest creditor abroad to the U.S. in September 2008, although it fell back to second place in December when its Treasury holdings declined for the second consecutive month, the Treasury Department said on Feb. 16. China allowed its short-term Treasury bills to mature and replaced them with a smaller amount of longer-term notes and bonds, the Treasury data showed.
The December reduction in China’s holdings didn’t prompt a sell-off in U.S. bonds as investors focused instead on an overall increase in foreign holdings of U.S. Treasuries, which rose by a net $69.9 billion. The yield on the benchmark 10-year note fell three basis points, or 0.03 percentage point, to 3.66 percent on Feb. 16, according to BGCantor Market data.
The Obama administration is also convinced that the recent tensions won’t fundamentally change the countries’ relationship, said an administration official who asked not to be identified out of concern for Chinese sensitivities.
Trading Blows
That hasn’t stopped both sides from trading rhetorical blows.
China demanded last week that Obama cancel the meeting with the Dalai Lama, even though Obama informed Chinese President Hu Jintao during his Beijing visit that he planned to receive the Tibetan leader, according to the administration official.
The U.S. also told China in advance of the Taiwan arms sale, the official said.
‘Thorough Investigation’
Secretary of State Hillary Clinton said she expected China to conduct a “thorough investigation” of charges from Mountain View, California-based Google that hackers had entered e-mail accounts it hosted belonging to Chinese dissidents. Free access to information and protecting what she called the “basic rights” of Internet users is essential, Clinton said.
Such exchanges may paradoxically allow both countries to pursue their own agendas and work together on larger issues without fear of domestic backlash, said Robert Barnett, director of Modern Tibetan Studies at Columbia University in New York.
“We’re seeing a slightly more confident America, which is trying to communicate that distinction between interests and values,” Barnett said.
Visits by the exiled Tibetan spiritual leader are a perpetual irritant to China. It has opposed any outside pressure on how the country runs Tibet, which was brought under its rule after a military invasion in 1950.
The Dalai Lama has met with every U.S. president since George H.W. Bush in 1991. While China has exacted diplomatic punishment on leaders who met him -- it canceled a China-European Union summit after French President Nicolas Sarkozy met the Dalai Lama in 2008 -- trade relations have been little affected, said Schell.
China received the Dalai Lama’s envoys at the first talks on Tibet in 15 months, which ended Feb. 1. China’s top negotiator rejected calls for greater autonomy for the region, the Tibetan exile administration said.
Douglas Paal, vice-president of the Carnegie Endowment for International Peace in Washington, said the discussions probably were partly to prepare for the effect the Obama meeting could have on Chinese public opinion.
“More is imputed to these meetings than actually occurs,” said Paal, who was at the White House National Security Council from 1989 to 1993. “Presidents have to check the political box of seeing the Dalai Lama.”
Indian Share Sales May Surge in 2010, Citigroup Says
Feb. 19 (Bloomberg) -- Indian equity and equity-linked offerings may jump by as much as a third this year as companies and the government tap a growing pool of domestic capital and the economy recovers, according to Citigroup Inc.
Indian companies may raise $25 billion to $30 billion in share sales in 2010, up from $22 billion last year, said Ravi Kapoor, head of capital markets and origination for South Asia at Citigroup.
“If liquidity keeps coming into the market the way it did last year and equity markets continue to perform, we could possibly cross over $30 billion in primary issuance,” Kapoor said in a Feb. 17 interview in Mumbai.
Two-thirds of the equity capital Indian companies raised last year was from domestic offerings, according to data compiled by Bloomberg. The pool of local capital has grown as insurance companies and mutual funds pour more money into the equity market, said Kapoor, whose bank was the top arranger of domestic stock sales in India in 2009.
The Sensitive Index rallied 81 percent in 2009, making it the third-best performing benchmark in Asia, as the economy weathered the global recession and stock purchases by foreign investors rose. The gauge has fallen 6.5 percent this year.
Real-estate companies, power generators, telecommunication tower operators and insurers may lead equity sales this year, Kapoor said. The government may sell stock worth $10 billion to $15 billion this year, he estimated.
Local Liquidity
The government will sell a 5 percent stake in Rural Electrification Corp., a state-owned lender for power projects, starting Feb. 19, and plans to offer an 8.4 percent stake in NMDC Ltd., India’s largest iron ore miner, next month.
Domestic investors have become an increasingly important source of funding for companies seeking acquisitions overseas, while foreign-currency credit markets remain subdued compared with before the global financial crisis, Kapoor said.
“Recent trends show that Indian corporates have been relying on local liquidity,” he said. “The Indian market understands the risks and the credit worthiness of Indian companies better.”
The International Monetary Fund said last month that banks may need to significantly increase their capital to support the credit recovery and help sustain economic growth. Restarting credit flows remains a “major challenge,” said Jose Vinals, director of the IMF’s monetary and capital markets department, at a briefing in Washington.
“From corporate India’s point of view, they’re in a very sweet spot to raise money between domestic and international capital offerings depending on their requirements,” Kapoor said.
Indian companies may raise $25 billion to $30 billion in share sales in 2010, up from $22 billion last year, said Ravi Kapoor, head of capital markets and origination for South Asia at Citigroup.
“If liquidity keeps coming into the market the way it did last year and equity markets continue to perform, we could possibly cross over $30 billion in primary issuance,” Kapoor said in a Feb. 17 interview in Mumbai.
Two-thirds of the equity capital Indian companies raised last year was from domestic offerings, according to data compiled by Bloomberg. The pool of local capital has grown as insurance companies and mutual funds pour more money into the equity market, said Kapoor, whose bank was the top arranger of domestic stock sales in India in 2009.
The Sensitive Index rallied 81 percent in 2009, making it the third-best performing benchmark in Asia, as the economy weathered the global recession and stock purchases by foreign investors rose. The gauge has fallen 6.5 percent this year.
Real-estate companies, power generators, telecommunication tower operators and insurers may lead equity sales this year, Kapoor said. The government may sell stock worth $10 billion to $15 billion this year, he estimated.
Local Liquidity
The government will sell a 5 percent stake in Rural Electrification Corp., a state-owned lender for power projects, starting Feb. 19, and plans to offer an 8.4 percent stake in NMDC Ltd., India’s largest iron ore miner, next month.
Domestic investors have become an increasingly important source of funding for companies seeking acquisitions overseas, while foreign-currency credit markets remain subdued compared with before the global financial crisis, Kapoor said.
“Recent trends show that Indian corporates have been relying on local liquidity,” he said. “The Indian market understands the risks and the credit worthiness of Indian companies better.”
The International Monetary Fund said last month that banks may need to significantly increase their capital to support the credit recovery and help sustain economic growth. Restarting credit flows remains a “major challenge,” said Jose Vinals, director of the IMF’s monetary and capital markets department, at a briefing in Washington.
“From corporate India’s point of view, they’re in a very sweet spot to raise money between domestic and international capital offerings depending on their requirements,” Kapoor said.
Wednesday, February 17, 2010
U.S. Agency Said to Open Inquiry on Toyota Corolla Steering
Feb. 18 (Bloomberg) -- Toyota Motor Corp. faces a U.S. defect investigation after complaints over power steering in the Corolla sedan, the world’s best-selling car, a person familiar with the matter said.
The National Highway Traffic Safety Administration inquiry, known as a preliminary evaluation, will cover about 500,000 vehicles from model years 2009 and 2010, said the person, who asked not to be identified because Toyota hadn’t been formally notified. The agency said Feb. 9 that it was reviewing reports on steering flaws in the Corolla, and according to its online database had received more than 80 complaints.
The agency’s move would come on top of record recalls at the world’s biggest automaker for brake and accelerator-pedal glitches. Toyota is recalling 437,000 hybrids, including the Prius, for brakes, and almost 8 million vehicles on five continents to repair defects linked to unintended acceleration.
“We are aware of complaints regarding 2009 and 2010 Corolla steering systems, are investigating the issue and will cooperate fully,” with NHTSA’s investigation, Cindy Knight, a Toyota spokeswoman, said in an e-mailed message.
Toyota is reviewing the power steering of the Corolla and will recall it if defects are found, Executive Vice President Shinichi Sasaki told reporters earlier yesterday.
At least three U.S. congressional committees plan hearings into how Toyota and the U.S. National Highway Traffic Safety Administration have handled sudden-acceleration complaints.
The Associated Press reported the Corolla steering inquiry earlier.
The National Highway Traffic Safety Administration inquiry, known as a preliminary evaluation, will cover about 500,000 vehicles from model years 2009 and 2010, said the person, who asked not to be identified because Toyota hadn’t been formally notified. The agency said Feb. 9 that it was reviewing reports on steering flaws in the Corolla, and according to its online database had received more than 80 complaints.
The agency’s move would come on top of record recalls at the world’s biggest automaker for brake and accelerator-pedal glitches. Toyota is recalling 437,000 hybrids, including the Prius, for brakes, and almost 8 million vehicles on five continents to repair defects linked to unintended acceleration.
“We are aware of complaints regarding 2009 and 2010 Corolla steering systems, are investigating the issue and will cooperate fully,” with NHTSA’s investigation, Cindy Knight, a Toyota spokeswoman, said in an e-mailed message.
Toyota is reviewing the power steering of the Corolla and will recall it if defects are found, Executive Vice President Shinichi Sasaki told reporters earlier yesterday.
At least three U.S. congressional committees plan hearings into how Toyota and the U.S. National Highway Traffic Safety Administration have handled sudden-acceleration complaints.
The Associated Press reported the Corolla steering inquiry earlier.
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