U.S. Federal Reserve Balance Sheet Worries Paul Volcker

Former U.S. Federal Reserve Chairman Paul Volcker warned the Fed’s independence and credibility could be harmed by the many different sorts of assets it took on to its balance sheet to stave off a credit crisis.

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Drug cartel murdered Mexican official

Edgar Millan Gomez, the chief coordinator of Mexico’s government crackdown on organized crime was murdered in his home. The Los Angeles Times says the Sinaloa drug cartel seems the likely culprit.

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Europe and US want a stronger dollar

U.S. and European officials have come together in the belief that the U.S. dollar should strengthen against the euro, following more than a year of sharp decline.

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Rising financial protectionism

The Wall Street Journal reports on how rising nationalism has provoked a trade backlash and may hinder global environmental negotiations.

“Some of the world’s biggest new investors are government-run investment funds. In the Middle East and Russia, sovereign wealth funds are powered by oil revenue; in Asia, they’re fed by other export earnings. In all, the funds have a total of $3 trillion in revenue and have used the money to buy stakes in Citigroup Inc., Merrill Lynch & Co. and other battered Wall Street firms. While the infusions have been lauded by the U.S. Treasury and capital-short Wall Street firms, they also aroused suspicions here and internationally that the investors could have political agendas.

Now, many national governments are raising barriers against such foreign investment. The U.S., Canada, Germany, France, Japan, South Korea, Australia, Hungary and Greece are proposing or enacting restrictions on investment by state-owned firms from other countries, according to a forthcoming study by the Council of Foreign Relations. China and Russia, which have sovereign wealth funds, are staking out ’strategic sectors’ where foreign investment would be restricted, say the study’s authors, investment-law specialist David Marchick and Dartmouth economist Matthew Slaughter.”

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Oasis Economies

A new article from the journal strategy + business says Middle Eastern oil states, particularly in the Persian Gulf, are investing the proceeds of the recent oil boom more cleverly than they did the last time they reaped such windfalls.

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Mexico’s Crime Crackdown

Newsweek International reports on the showdown between Mexico’s military and the country’s drug cartels and corrupt police.

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China’s Exchange Rate Policy

An excerpt from a new book by two experts at the Peterson Institute for International Economics looks at the main policy issues dominating discussion of China’s exchange rate.

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CDU-Fraktion Expertenanhörung Flughafen Tempelhof

EINLADUNG

Am 27. April 2008, entscheiden die Berlinerinnen und Berliner in einem - in der Verfassung verankerten - Volksentscheid darüber, ob der Flughafen Tempelhof weiter erhalten bleibt, oder als Wiese ohne Nutzungskonzept verödet.

Die CDU-Fraktion hat sich bereits während des Volksbegehrens mit aller Kraft für die Offenhaltung des Flughafens Tempelhof eingesetzt. Denn seit der Berlin-Blockade im Jahr 1948 ist er das Freiheitssymbol unserer Stadt, vor allem aber ist er ein Chancenflughafen für Investitionen und Arbeitsplätze.

Wenige Tage vor dem Volksentscheid haben wir hochrangige Experten zu einer Anhörung eingeladen. Sie werden herausarbeiten, wie Tempelhof als ideale Ergänzung zum Großflughafen BBI den Berliner Wirtschaftsstandort nachhaltig stärken kann. Auch das Konzept der Investoren Lauder und Langhammer soll intensiv erläutert werden.

Expertenanhörung zur Offenhaltung des Flughafens Tempelhof

Begrüßung:
- Dr. Friedbert Pflüger, MdA, Vorsitzender der CDU-Fraktion

Podium:
- Friedrich Merz, MdB, CDU-Wirtschaftsexperte
“Standortvorteil Tempelhof bei wachsendem Geschäftsflugverkehr nutzen”
- Prof. Dr. Elmar Giemulla, Luftverkehrsexperte der TU Berlin
“Weiterbetrieb von Tempelhof ist Null-Gefahr für BBI”
- Wolf-Dieter Siebert, Vorstand der Deutschen Bahn
“Die Deutsche Bahn als Betreiber von Tempelhof”
- Robert Salzl, Projektplaner der CED GmbH (Lauder)
“Das Lauder-Konzept - neue Arbeitsplätze für Berlin”

Moderation:
- Jochim Stoltenberg, Berliner Morgenpost

Schlusswort:
- Ingo Schmitt, MdB, Mitglied im Verkehrsausschuss, Landesvorsitzender der CDU Berlin

Dienstag, 22. April 2008, 18:00 Uhr im Abgeordnetenhaus von Berlin, Preußischer Landtag, Raum 311 Niederkirchnerstraße 5, 10111 Berlin

Wir würden uns freuen, wenn wir Sie zu unserer Expertenanhörung begrüßen könnten. Um sich anzumelden, bitte hier klicken.

Mit freundlichen Grüßen
Gina Schmelter - Referentin für Presse- und Öffentlichkeitsarbeit

CDU-Fraktion des Abgeordnetenhauses von Berlin
Preußischer Landtag
10111 Berlin
Telefon: (030) 23 25-21 20
Telefax: (030) 23 25-27 52
E-Mail: schmelter@cdu-fraktion.berlin.de
Internet: www.cdu-fraktion.berlin.de

Delta-Northwest Deal

The Wall Street Journal reports on the agreed merger between U.S. airlines Delta and Northwest, a deal which faces resistance from regulators and employees but would create the world’s largest airline by traffic.

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Massive Chinese investment in Tibet produces few results

A report from the Economist Intelligence Unit looks at Chinese economic investment in Tibet and argues that the inflow of capital hasn’t brought the payoffs Beijing wanted.

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Swiss energy deal with Iran finances Terror

The Wall Street Journal, April 8, 2007

In an effort to draw attention to Switzerland’s $30 billion energy deal with the world’s leading sponsor of terrorism - Iran - the Anti-Defamation League (ADL) has taken out advertisements in major international newspapers and in leading Swiss dailies with a message to the Swiss government that, “When you finance a terrorist state, you finance terrorism.”

The series of ADL ads, appeared on April 8, 2008 in The New York Times, The International Herald Tribune, The Wall Street Journal  and The New York Sun.  Additional ads will appear in Switzerland in Le Matin Bleu and Le Temps and Neue Zürcher Zeitung.

ADL is concerned that Iran’s profits from the energy deal could help the regime to accelerate and complete its nuclear weapons program and provide tens of thousands of additional missiles to Hezbollah and Hamas, two terrorist groups and sworn enemies of Israel who routinely benefit from Tehran’s largess.

These concerns about the Swiss-Iran energy deal, as well as Switzerland’s foreign policy record vis-à-vis Israel, are explained in the following op-ed by Abraham H. Foxman, ADL National Director.

Swiss Err on Iran, Israel

by Abraham H. Foxman
National Director of the Anti-Defamation League
This article originally appeared in the JTA on April 7, 2008

Swiss Foreign Minister Micheline Calmy-Rey’s visit to Tehran was billed as an opportunity to deliver a stern message about the need for Iran to end its human rights violations and its threats to destroy Israel. This was according to the government’s official announcement of her March 17 diplomatic visit.

As a secondary matter, the announcement noted, Calmy-Rey would attend the signing of a gas deal between Iran and a Swiss energy company.

But Calmy-Rey herself inadvertently exposed the flimsy human rights pretext when she acknowledged on the day of her departure that she was traveling to Tehran in response to Iran’s invitation.

It is highly unlikely that Iran invited Switzerland’s foreign minister to chat about Iran’s bleak record on human rights or its belligerent statements about Israel. The real purpose of the visit, which included photo ops with President Mahmoud Ahmadinejad, was to raise the profile of a $28 billion energy deal, one that has consequences for Iran’s continued pursuit of a nuclear weapons capability.

The Swiss are not alone in signing gas contracts with Iran, but the size of the deal and its timing so soon after the latest round of United Nations sanctions will surely encourage Iran on its march toward nuclear weapons and in its defiance of international demands to stop enriching uranium.

If Switzerland were committed to ending the Iranian nuclear threat, it would join with other responsible countries to reinforce the isolation of the ayatollahs’ regime. If Switzerland were serious about supporting an effective strategy, it would join the movement to target Iran’s energy industry.

This gas deal is just the latest example of Swiss actions that are out of step with the West’s determination to confront Iran and commitment to the security of Israel.

Switzerland joined Saudi Arabia, Cuba and other dictatorships in support of the U.N. Human Rights Council resolution that condemned Israel’s reaction to the rockets from Gaza while ignoring the actions of Iran’s terrorist client, Hamas. The resolution was so biased that Canada, an international leader in human rights promotion, voted against it, and every European Union member of the council abstained.

The Swiss ambassador feebly explained that the importance of condemning Israel’s alleged wrongdoing outweighed all other considerations.

That decision logically followed from Switzerland’s apparent policy of censuring all Israeli military operations, no matter how justified. In their condemnations, the Swiss invariably invoke international humanitarian law, with which they are closely associated as the depository for the four Geneva Conventions. Missing, though, is evidence of understanding the proper application of those laws of war.

In one egregious example, Israel’s 2006 raid on a Palestinian prison in Jericho was denounced for “violat[ing] the principle of proportionality.” In that incident, Israeli soldiers had surrounded the prison, in which armed terrorists, including the assassins of an Israeli government minister, were granted free reign and permitted to communicate with the outside world.

One prisoner and one prison guard were killed in an exchange of fire, but the terrorists and other Palestinian prisoners were convinced to surrender without any further hostilities. Even that successful operation the Swiss condemned as a disproportionate use of force.

Switzerland hasn’t been content to undermine Israel’s right to self-defense. Calmy-Rey has also tried to undercut Israel’s diplomacy. Brazenly disregarding Israel’s sovereignty and democratically elected government, Switzerland sponsored negotiations between private Israeli and Palestinian individuals, known as the Geneva Accord.

Unlike the Oslo negotiations, which were backed by the Israeli government after the first couple of private meetings, the Swiss project was officially rejected by Israel and the Swiss ambassador summoned to receive a protest.

Regardless of the content of the resulting document, the Swiss action represented an inexcusable intrusion by a foreign government in the peace process and an end run around the “road map” that reflected the will of the international community and demanded an end to Palestinian terrorism as a condition of further Israeli steps.

Some of the above examples of unfriendly behavior toward Israel could be explained away as soft-headed do-goodism. But one incident in particular punctures that theory.

In December 2006, Tehran hosted its infamous Holocaust denial conference, which responsible nations condemned unequivocally. Switzerland’s reaction was different. A week after the Tehran conference, Calmy-Rey met with Iran’s Deputy Foreign Minister Said Jalili in Switzerland.

According to the Swiss government’s minutes of the meeting, subsequently leaked to the Swiss press, she proposed that “a seminar about different perceptions of the Holocaust could be organized in one of the Geneva centers.” Public outrage killed that idea, but the fact that Calmy-Rey made the proposal provided encouragement to the Holocaust deniers in Iran and elsewhere.

In the battles against the Nazi regime during World War II and communism during the Cold War, Switzerland pursued its narrow self-interest by professing neutrality.

Today the Swiss appear to be taking the same approach in the current global war against the radical Islamist threat, spearheaded by Iran, which menaces Israel’s existence and the security of the West. But neutrality isn’t an option. And for Switzerland, a country that takes pride in its liberal democracy and claims to have learned from its history, it shouldn’t even be considered.

***

Abraham H. Foxman is the National Director of the Anti-Defamation League and author of “The Deadliest Lies: The Israel Lobby and the Myth of Jewish Control.”

The Anti-Defamation League, founded in 1913, is the world’s leading organization fighting anti-Semitism through programs and services that counteract hatred, prejudice and bigotry.

Showdown on U.S.-Colombia Free Trade Agreement

United States House of Representatives Speaker Nancy Pelosi has signaled she will take the unusual step of changing House rules to effectively stop the 90-day clock on the Colombia free trade deal after President George W. Bush had submitted the measure for action.

The Brookings Institution examines the showdown on Capitol Hill over the U.S.-Colombia free-trade pact and says Colombian leaders may react sharply if the deal is shot down by the U.S. Congress.

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Online newspapers challenge Japan’s mainstream media

The Christian Science Monitor reports on the rise of citizen journalism and online newspapers in Japan — and the concern it has brought from the country’s mainstream media.

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The Top 10 Risks for Business

A new report from Ernst & Young surveys the top ten “strategic risks” for U.S. companies, including emerging market pressures, energy shocks, and cost inflation.

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Shirakawa to head Bank of Japan

The Wall Street Journal reports on the new nominee to run Japan’s central bank, Masaaki Shirakawa. The article says Shirawaka is likely to be a candidate the country’s opposition can tolerate, potentially ending a political standoff that has lasted weeks.

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Index of State Weakness in the Developing World

A new report written by Susan E. Rice from the Brookings Institution and Stewart Patrick from the Center for Global Development ranks 141 countries on economics, politics, security, and social welfare - as well as twenty other “sub-indicators” - and derives an “index of state weakness”.

“This paper presents the Index of State Weakness in the Developing World (hereafter, the Index), which ranks all 141 developing countries according to their relative performance in four critical spheres: economic, political, security, and social welfare. We define weak states as countries that lack the essential capacity and/or will to fulfill four sets of critical government responsibilities: fostering an environment conducive to sustainable and equitable economic growth; establishing and maintaining legitimate, transparent, and accountable political institutions; securing their populations from violent conflict and controlling their territory; and meeting the basic human needs of their population.”

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Russian Energy and European Security

A report from the Nixon Center, a research organization focused on U.S. foreign policy, examines Europe’s energy dependence on Russia and its ramifications for the future of EU energy security.

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The Iranian Web of Influence in the United States

Dear colleagues,

My new article: “The Iranian regime’s web of influence in the USA” has been published.

Article in FrontPage Magazine

Article in The American Chronicle

This is a VERY IMPORTANT issue regarding the relation between the Mullahs’ lobby and the economic Mafia in Iran.

This issue will be examined with more reports.

Yours sincerely,

Hassan Daioleslam

About the author: Hassan Daioleslam is an independent Iran analyst and writer. He is well published in Farsi and English. He has appeared as an expert guest on the Voice of America-TV as well as in other Persian media. Hassan Daioleslam has three decades of history of political activism and political scholarly analysis.

Credit crunch and opportunities for corporate banking in Europe

A new article from the McKinsey Quarterly examines the credit crunch with an eye toward possible opportunities it opens up in Europe’s corporate banking sector.

“Continuing turmoil in global capital markets after the credit crunch of mid-2007 has clouded the short-term outlook, especially in investment banking. We believe, however, that corporate banking in Europe will benefit from several profitable growth areas over the next 18 months and that shrewd players should position themselves accordingly.”

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Iran “central banker of terrorism”

At a hearing of the United States Senate’s Finance Committee, a senior official in the US Treasury Department has called Iran “the central banker of terrorism”.

Outlining some of what Iran is known to be doing to support anti-American and anti-Israeli fighters, the under-secretary for Terrorism and Financial Intelligence, Stuart Levey, said Iran “uses its global financial ties and its state-owned banks to pursue its nuclear and ballistic missile programs, and to fund terrorism.”

He also told lawmakers that Iran used front companies and “cut-outs” to “engage in ostensibly innocent transactions that are actually related to its nuclear missile programs.”

“We have seen Iran’s banks request other financial institutions take their names off of transactions when processing them in the international financial system. This practice, which is even used by the central bank of Iran, is intended to evade the controls put in place by responsible financial institutions and has the effect of threatening to involve those financial institutions in transactions that they would never engage in if they knew who or what was really involved,” Levey said.

Levey heads the Office of Foreign Assets Control (OFAC), which is responsible for tracking money being filtered into terrorist groups. In all, since June 2005, the OFAC has identified 51 entities and 12 individuals as proliferators of weapons of mass destruction, of whom 36 entities and 11 individuals were tied to Iran, nine entities and one individual were tied to North Korea and three entities were tied to Syria. Levey told senators that efforts to cut off money to Al Qaeda had shown success - especially in the last 18 months. He cited senior al-Qaeda leaders’ complaints that they had suicide bombers ready to go but no money to finance operations.

Click here to read the full statement.

United States presidential election, 2008: Herbert Hoover’s Ghost Haunts Markets

In a her Bloomberg column, Amity Shlaes finds that Bear Stearns evokes the crash of 1929 and the Great Depression that followed it.

“Within 24 hours, Representative Rahm Emanuel, an Illinois Democrat, was weighing in with his own 1930s comparison. Roosevelt had pulled a country out of Depression and united it; President George W. Bush was doing the opposite, he said.

You get the picture: Bush is like Hoover, the do-nothing. Democrats are like Roosevelt, the activist. It’s worthwhile to go back to that Depression period to see what people actually did or didn’t do and who resembles whom. The reality differs from the cartoon.”

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Asia’s Achilles Heel

In a article for Newsweek, David Victor argues that the big challenge in the coming century may not be the strength of Asia’s emerging economic powers but rather their weakness.

Victor shows how China’s recent power crisis was caused by the tensions between China’s burgeoning free-market sector and its residual state-owned and regulated industries. India faces a similar problem: Its state-owned power utilities are supposed to be run for a profit, but incessant political meddling with electricity prices has pushed most into bankruptcy. In both China and India, dynamic economic growth has masked these governance problems. But the power sector conveys a warning: Vestiges of the statist tradition can still obstruct progress.

“Market reforms are making Beijing less and less relevant to what’s really going on in the economy, threatening to turn China into a ‘weak state.’ And it’s not just China - India, too, is having trouble regulating its industry and economy. The phenomenon is a dark cloud on the Asian century.”

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Switzerland’s shabby deal with Iran

In an opinion piece, the president of the World Jewish Congress criticizes Switzerland’s recent gas deal with Iran.

Switzerland’s shabby deal with Iran

by Ronald S. Lauder

The ejection of the populist politician Christoph Blocher from the Swiss government in December 2007 gave rise to hope that Switzerland could restore its tainted image and that the country’s “splendid isolation” on the international stage might soon be over.

In an opinion piece for the Swiss newspaper NZZ am Sonntag on 30 December 2007 I wrote: “Switzerland will not have a glorious future by isolating itself from the European Union and the wider world. In our globalized world (…) you cannot isolate yourself if you want to be heard. Swiss diplomacy can only return to its former strength if the Federal Council and the parties supporting it once again represent an open-minded Switzerland.”

Who would have thought that this call would be heeded so quickly? Two weeks ago, Swiss Foreign Minister Micheline Calmy-Rey appeared, veiled in a headscarf, at the side of Iranian President Mahmud Ahmadinejad to seal an enormous deal with the National Iranian Gas Export Company. She did so on behalf of a private Swiss company, “to safeguard Switzerland’s own strategic interests,” as she put it.

Back home, Calmy-Rey said that she had pressed Tehran on issues such as human rights or the nuclear program. The Iranian newspaper Tehran Times phrased it somewhat differently: “Calmy-Rey appreciated Iran for its cooperation with the IAEA. She also called for the continued Iran-Switzerland dialogue on human rights.” It became clear immediately that the visit by the Swiss foreign minister was a propagandistic triumph for the mullahs.

A few days after the Iranian gas deal, Calmy-Rey’s Foreign Affairs Department secured the election of Jean Ziegler as special adviser of the United Nations Human Rights Council. Ziegler, a self-declared human rights activist, is best known as campaigner for dictators such as Colonel Khaddafi of Libya, Robert Mugabe of Zimbabwe or Fidel Castro of Cuba.

Brushing aside all criticism leveled against Ziegler by respected international personalities and organizations, Calmy-Rey got her preferred candidate elected by forging alliances with the many Asians and Africans represented on the council - the same countries that rarely miss an opportunity to bash Israel for defending itself against the attacks by Hamas and Hezbollah.

Incidentally, it was Jean Ziegler who in 2006 claimed that Hezbollah in Lebanon was not a terrorist group, but a “national resistance movement”. He even expressed understanding for the kidnapping by Hezbollah of the two Israeli soldiers Ehud Goldwasser and Eldad Regev, who have not been released until this day.

In early March, Micheline Calmy-Rey personally appeared before the Human Rights Council to advocate a one-sided resolution, sponsored by Islamic countries, condemning Israel for its operations in the Palestinian territories - operations that are aimed at protecting Israel’s citizens from the constant rocket attacks by Hamas supporters. While all European Union countries on the council abstained, Switzerland voted in favor of the one-sided resolution, yet the Human Rights Council failed to condemn the deadly terrorist attack at a Jerusalem rabbinical seminary which had occurred shortly before.

There is nothing wrong with governments defending their national interests, but such actions should be centered around certain basic principles, i.e. those of democracy, peace and human liberties.

There is nothing wrong with criticizing Israel, provided equal measures of judgment and criticism are being applied to all countries.

What is horribly wrong, though, is Mrs. Calmy-Rey’s flawed foreign policy. It makes Switzerland a hostage to countries that, rather than respect human rights, pay merely lip service to them. This is especially true of international bodies like the UN Human Rights Council that has lost its credibility in the record-breaking time of 18 months.

Only days after the manipulated parliamentary election in Iran, Mrs. Calmy-Rey chose to lend public support to the Islamist regime in Tehran, whose declared aim is the eradication of Israel, while at the same time strengthening Israel’s (hypo-)critics at the United Nations in Geneva. But beware: placating the mullahs in Tehran comes with a heavy political price tag.

Micheline Calmy-Rey has gravely undermined the efforts of the international community, in particular the five permanent members on the UN Security Council and Switzerland’s neighbor Germany, to prevent Iran from becoming a nuclear power eventually capable of wreaking havoc on Israel and the entire Middle East. How on earth can we expect the sanctions regime to achieve results if a UN member - host country to many UN bodies - makes a mockery of the United Nations?

The current Swiss government has chosen to reduce the country’s natural gas dependence on Russia by helping a Swiss company to clinch a deal with another (the Islamic Republic of Iran).

The Swiss Jewish Community Federation is right to point out that Mrs. Calmy-Rey’s trip to Tehran sends out all the wrong signals. The US government is correct in criticizing Switzerland for setting a bad example for the rest of Europe.

It would be naïve to believe that Micheline Calmy-Rey’s announcement of a “human rights dialogue” with the rulers in Tehran will lead to any concrete improvements of the situation in Iran. The hanging and stoning of dissidents, students, homosexuals and other regime critics; the rigging of elections; the anti-Israel campaign sponsored by Tehran and its allies Hamas and Hezbollah that is violent both in words and in action; the denial of the Holocaust; the apparent quest for nuclear weapons: all that will continue, not only in spite of, but perhaps also because of the gas deal.

The concept of Swiss neutrality has a long tradition, but Switzerland’s credibility as an honest broker in international diplomacy has been badly bruised. Mrs. Calmy-Rey has sold out her government’s international credibility in return for 5.5 billion cubic meters of Iranian natural gas and perhaps for some new friends in the radical Muslim world - definitely not a good investment!

The next months will show if this Swiss diplomacy will be able to undo the damage that has been done.

Paulson plan to combat credit market problems

The Wall Street Journal reports that U.S. Treasury Secretary Henry Paulson today will announce a broad proposal to overhaul regulation of U.S. financial markets. The article says the reforms could eliminate or merge major institutions - including the Securities and Exchange Commission - and might seek to strengthen the authority of the U.S. Federal Reserve.

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Demons On Wall Street

Top columnist and macroeconomics expert Sebastian Mallaby writes in  the Washington Post that modern financial engineering has become harder to defend in the wake of Bear Stearns.

March 24, 2008
Washington Post

“One year ago, with spectacular timing, a Wall Streeter named Richard Bookstaber published a book on financial engineering. He called it A Demon of Our Own Design, and his argument was that a new breed of ‘quants’-or ‘quantitative’ number-crunchers like him-had created a system too complex to be manageable. The risks embedded in swaps and options were understood by only a handful of math geeks, and a miscalculation in one corner of the markets could send shock waves globally. Until a week ago, Bookstaber seemed unduly glum. But in the wake of Bear Stearns, modern financial engineering has become harder to defend.

Bookstaber seemed too pessimistic because he understated the ability of Wall Street players to check and balance one another. Yes, modern finance had an alarming tendency to load debt upon debt, so the effect of a mistake was magnified. But the financial engineers who created these tottering cash towers had an incentive to stop building before the whole thing keeled over. If a bank borrowed too much, lenders would shut off the taps and clients would refuse to buy its swaps, options and synthetic bonds: Nobody wants to do business with a bank that is one shock away from bankruptcy. So financial engineers would certainly take risks. But scrutiny from fellow engineers at other firms would prevent them from overdoing it.

Even a year ago, reasonable people disagreed about whether these checks and balances were sufficient.”

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Latin American Drugs: Losing the Fight

A report from the International Crisis Group says cocaine production in the Andes region appears to have set new records in 2007 and questions how policymakers can improve counternarcotics policy in a way that doesn’t jeopardize regional stability.

“Coca leaf and cocaine production in the Andean region appear to have set new records in 2007. Cocaine trafficking and use are expanding across the Americas and Europe. Despite the expenditure of great effort and resources, the counter-drug policies of the U.S., the European Union (EU) and its member states and Latin American governments have proved ineffective and, in part, counterproductive, severely jeopardising democracy and stability in Latin America.

The international community must rigorously assess its errors and adopt new approaches, starting with reduced reliance on the measures of aerial spraying and military-type forced eradication on the supply side and greater priority for alternative development and effective law enforcement that expands the positive presence of the state. On the demand reduction side, it should aim to incarcerate traffickers and use best treatment and harm reduction methods to avoid revolving and costly jail sentences for chronic users.

Well-armed, well-financed transnational trafficking and criminal networks are flourishing on both sides of the Atlantic and extending their tentacles into West Africa, now an important way station on the cocaine route to Europe. They undermine state institutions, threaten democratic processes, fuel armed and social conflicts in the countryside and foment insecurity and violence in the large cities across the Americas and Europe. In Colombia, armed groups derive large incomes from drug trafficking, enabling them to keep up the decades-long civil conflict. Across South and Central America, Mexico and the Caribbean, traffickers partner with political instability.”

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China-U.S. Relations: Current Issues and Implications for U.S. Policy

A new report from the Congressional Research Service gives an overview of China-U.S. relations and questions the implications of developments in Tibet and Taiwan on U.S. policy toward China.

“U.S.-China relations were remarkably smooth for much of the George W. Bush Administration, although there are signs that U.S. China policy now is subject to competing reassessments. State Department officials in 2005 unveiled what they said was a new framework for the relationship - with the United States willing to work cooperatively with China while encouraging Beijing to become a ‘responsible stakeholder’ in the global system.

U.S. Treasury Secretary Henry Paulson in December 2006 established a U.S.-China Strategic Economic Dialogue with Beijing, the most senior regular dialogue yet held with China.

But other U.S. policymakers have adopted tougher stances on issues involving China and U.S.-China relations. They are concerned about the impact of the PRC’s strong economic growth and a more assertive PRC diplomacy in the international arena; about procedures to assure the quality of Chinese pharmaceuticals, food, and other products being imported into the United States; and about trade practices and policies in China that contribute to a strong U.S.-China trade imbalance in the latter’s favor.”

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