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1150 GMT – FRANCE: France has launched an investigation into the July 20
bomb attack on a tax office in Nice that injured 16 people. No one has
claimed responsibility for the attack, in which two bombs exploded. However,
Corsican separatists, who called off a cease-fire during the week of July
14, are suspects in a similar attack on the same office six months ago.

1145 GMT – SOLOMON ISLANDS: The first contingent of Australian soldiers
slated to go to the Solomon Islands left aboard the naval frigate HMAS
Manoora on July 21. Defense Minister Sen. Robert Hill said that no timetable
has been set for the soldiers' return from the island. The rest of the
2,000-member force is expected on the island on July 24. Australian Prime
Minister John Howard decided to send the troops in hopes of containing the
island and keeping it from degenerating into a "lawless haven for
terrorists, drug runners and money launderers."

1129 GMT – IRAN: Iran armed its elite Revolutionary Guard with the Shahab-3
missile during a military inauguration ceremony July 20 as Iran's supreme
leader Ayatollah Ali Khamenei looked on, state-run Iranian television
reported. The Shahad-3 has a range of 810 miles and can strike targets in
Iraq, Israel, Turkey, Saudi Arabia, Afghanistan and Pakistan. However, U.S.
intelligence agencies have said that although the missile is suspected of
having this ability, Iran has not yet developed a completely reliable
missile.

1127 GMT – VENEZUELA: Venezuelan army commander Gen. Jorge Luis Garcia
Carneiro told Caracas television station Globovision on July 20 that it's
not likely a presidential recall referendum can be held in 2003 because "the
new National Electoral Council (CNE) still has to be named, the required
signatures have to be collected, the Permanent Electoral Registry (of
voters) has to be purged, election material has to be printed and the
personnel that will participate in the electoral process has to be trained."

1122 GMT – RUSSIA: Six Russian servicemen and three rebels were killed and
eight were wounded overnight on July 20 in a firefight near the village of
Dyshne-Vedeno, Interfax reported, citing sources inside the headquarters of
the Combined Federal Force in the Northern Caucasus. The incident occurred
when Russian forces intercepted the rebels, who reportedly were planning to
take over the village.

1118 GMT – CHINA: British Prime Minister Tony Blair arrived in China on July
21 to meet with Chinese officials, including President Hu Jintao and former
President Jiang Zemin. Blair, accompanied by British businessmen, opened a
new British Chamber of Commerce in Beijing, as well as discussed North
Korea's nuclear ambitions, postwar Iraq and trade relations between Britain
and China. This is the third leg in Blair's Asia tour, with the first two
being in Japan and South Korea.

1115 GMT – IRAQ: One U.S soldier from the 1st Armored Division and an Iraqi
interpreter were killed July 21 after being ambushed with grenades and
small-arms fire just north of Baghdad, Cpl. Todd Pruden said. Pruden did not
elaborate on the incident. To date, 152 U.S. soldiers have died in combat
since the war in Iraq started March 20.

1110 GMT – LIBERIA: A 41-member contingent of U.S. Marines from the Fleet
Anti-Terrorism Team in Rota, Spain, is expected to arrive July 21 in
Monrovia, Liberia, European Command spokesman Maj. Bill Bigelow said. The
team is expected to reinforce security around the U.S Embassy. Currently,
there are 20 U.S. troops in the country -- sent to assess the situation and
the possible need for a U.S.-led peacekeeping force. The United States and
African leaders still are pressing Liberian President Charles Taylor to step
down and go into exile in hopes of ending the civil war.

1103 GMT – MEXICO: Mexican counterterrorism investigators found information
on how to manufacture chemical weapons and other militant-oriented
information in a safe house used by Spaniards and Mexicans suspected of
having ties with the Basque militant group ETA, Reuters reports. Six Spanish
citizens and three Mexicans were arrested across Mexico on July 18, and a
seventh Spaniard was arrested in northern Spain. Police forces
simultaneously raided suspected safe houses in the Pacific coast resort of
Puerto Escondido, Cancun on the Yucatan Peninsula, Monterrey in northern
Mexico, Puebla and Mexico City. All of the cities have easy and frequent
international air connections to multiple destinations in Europe and the
United States.

************************************************************************

Geopolitical Diary: Monday, July 21, 2003

Four U.S. soldiers were killed in action over the weekend -- including two
members of the 101st Airborne Division who were killed in an ambush west of
Mosul that left another soldier injured. Sunday's ambush occurred near Tall
Afar. The interesting thing about these attacks is that both took place
outside the "Sunni Triangle" north and west of Baghdad, where attacks have
been focused. The guerrillas appear to be expanding their operations
deliberately, trying to unnerve U.S. troops and force their commanders to
expand the combat arena -- and thereby stretch their resources even more.
What is unclear is whether these were special operations at long distances
by the Iraqis, or whether they indicated a sustained move into these
regions -- and the answers to these questions will be critical.

U.S. officials have decided to raise an Iraqi army, designated as an Iraqi
"civil defense corps." Paul Bremer, the U.S. administrator in Iraq, said the
force "will be made up of Iraqis who will be under American military command
to help us basically with the armed part of the work we're doing." If they
do nothing but help interpret both language and culture to the American
troops, they will be beneficial. If they are not expected to engage in
combat operations on their own, they can be spun up fairly rapidly."

The corps poses two challenges. The first is finding anyone willing to serve
in it. There will be two classes of people volunteering: One class consists
of criminals and down-and-outers who see a chance to come out on top in the
new Iraqi order, with not much to lose if it fails; then there will be the
people that Bremer wants: people rooted in the community with families --
people who in addition to serving in the force can also influence their
communities. This is not an impossible idea by any means, but it does depend
on one thing: being able to protect their families. The men will be safer on
patrol with U.S. forces, but their families will not. If the United States
can't protect them, the whole project fails. And protecting the families of
troops always has been one of the nightmares of guerrilla warfare.

The second problem will be security. This force will be a treasure trove of
intelligence for the Baathists. If we were Baath commanders, our men would
be standing in line to join up. Getting close up and personal with U.S.
troops would provide tactical and operational intelligence. In Vietnam, the
Viet Cong made it a point to place people in the Army of Vietnam (ARVN)
slots where liaison with the Americans was heavy. It is unclear how you do a
background check in Iraq, and we'd love to see the polygraphs. Keeping the
force clean is going to be a nightmare -- that is, if Bremer plans to put up
recruitment posters all over the country to create a force that "looks like
Iraq," in former U.S. President Bill Clinton's old phrase. If, on the other
hand, the bulk of the forces are to be raised from the Shiite regions --
where deals are being made -- and from the Kurdish regions, the security
concerns might be less. Of course, the Kurds will engage in smuggling and
the Shiites will report to Tehran, but they will be motivated to stop the
Baath guerrillas, which is the item on the agenda.

If this is the case, then what is happening is that the United States will
recruit non-Sunni forces to share the burden of occupying the Sunni regions.
As we have argued in the past, this is the only way to do it. It does not
create a pro-American faction inside the Sunni regions, but it does increase
the force available to engage and defeat the Baathists. Both the Kurds and
Shiites have the interest to carry out the mission, but both will have to be
induced to do so with political arrangements. In the case of the Shiites,
those arrangements will be costly.

Since the idea of a general recruitment from the population strikes us as
self-defeating, we suspect that this proposal is the cover for the creation
of a combined U.S.-Shiite force for occupying Sunni areas. Whether we are
right in this will be visible when the recruitment starts. Pay no attention
to the first media reports on this, which will be staged carefully to show
the diversity and motivation of the force. After the cameras leave, we will
take a careful look at the force and see how many of their families live in
the "Sunni Triangle."

CHINESE SPYING AND THE WHITE HOUSE

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CHINA: SOE REFORM TO TEST HU GOVERNMENT

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Date Added: Tuesday, May 27th, 2003
Contributed by: RCN Administrator

Chinese President Hu Jintao has announced a new strategy to reform the country's network of profitless state-owned enterprises. The legacy of the socialist economy in China seriously threatens the state's financial health and Beijing's ability to govern the country effectively. Hu's government will be tested and measured by its ability to stem losses attributed to the SOEs and corruption. Analysis China's new government on May 22 unveiled a fresh agenda for reforming its state-owned enterprises (SOEs) -- abandoning the five-year-old strategy of selling smaller state-owned firms and laying off workers to improve efficiency and productivity. Under the new plan, ownership of state companies will be transferred from numerous ministries and commissions to a central State Assets Supervision and Administration Commission (SASAC). The policy is not only an attempt by new President Hu Jintao to remedy the problem of money-losing SOEs, but also a means for the central government to gain stricter control over the provincial and local governments, which have drifted away from Beijing since the beginning of the reform period. The announcement of a policy to tackle the problem of the SOEs is a major step for an administration that is still testing its power. The legacy of the socialist economy in China poses enormous threats to the financial health of the state and to Beijing's ability to govern effectively. China's network of nearly 200,000 state-controlled companies once formed the backbone of the nation's economy, but now hangs like an albatross around Beijing's neck. The SOEs' contribution to China's gross domestic product fell from nearly 100 percent in the early 1980s to about 30 percent in 2000 as the more efficient private and semi-private sector outpaced the socialist economy. However, because the state firms employ millions of people and comprise the linchpin of China's heavy industry and public utilities, the government refused to allow them to fail. In order to maintain them, Beijing propped up the uncompetitive firms with loans from state-controlled banks and saddled itself with hundreds of billions of dollars of nonperforming loans. In addition to becoming a major drain on state coffers, the SOEs are a primary source of illicit revenue for corrupt cadre. Managers of state firms, usually in cooperation with local officials, have engaged in profiteering -- selling subsidized state commodities and assets at free-market prices. Local Party members and their cronies created fortunes under this system and carved out political fiefdoms at the expense of Beijing's control. Analysts have estimated the total loss of state assets to graft in the later half of the 1990s at approximately $41 billion. In the initial stages of reform, the Communist Party's leadership may have turned a blind eye to the problems, viewing corruption as an externality of market reform and also as a means of lining the collective pockets of the Party. However, by the end of his term, former President Jiang Zemin tried to get a handle on the problem and take some of the burden of the losing enterprises off of the state before the system collapsed upon itself. Jiang's policies were marginally successful but contributed to a sharp rise in social unrest throughout the country, given the wide-scale unemployment they generated. Jiang's government started from the bottom up by closing numerous SOEs and laying off redundant staff; some 27 million urban residents have lost their jobs since 1998 as a result. Many of the newly unemployed did not receive promised wages and benefits and took to the streets in nationwide protests. Hu's strategy of transferring control of the SOEs from ministries and local governments to the central government seems to represent more of a top-down approach. The cornerstone of the new plan is SASAC, a commission designed to separate the ownership and management aspects of the state-owned firms. SASAC's priorities are to ensure better management and curtail the loss of assets to corruption. According to Beijing, the commission's goal is to eventually reconstruct 30 to 50 state enterprises and build them into internationally competitive firms. SASAC already has gained control of 196 of China's largest SOEs, with combined assets of approximately $834 billion. The firms include China's major telecommunications companies, oil, steel and auto manufacturers, the national air carrier Air China and the largest national oil companies. Hu's policy likely will face opposition as Party cadre and their allies move to protect their assets. Jiang did not begin to deal directly with the SOEs and Party corruption until later in his tenure, after he had consolidated his power, but Hu does not have the luxury of time: The burden of the nonperforming loans raises the specter of a financial crisis. As president, Hu has significant support and resources to draw upon, but SASAC and its policies will test the limits of his power. There also is a possibility that ministries and local governments will accelerate the sell-off of the assets of state enterprises before they lose them -- something akin to a socialist golden parachute. The People's Liberation Army (PLA) did this when Jiang undercut its vast business empire in response to the smuggling activities. This will leave SASAC inheriting hollowed-out shells of companies, and it could degrade the commission's ability the revamp the enterprises. While opposition may abound from entrenched Party members who fear losing control of public and private revenue streams, Hu may have an important new set of allies within the party. Under Jiang's control, China's Communist Party began embracing capitalists as potential members. While the about-face in Marxist doctrine caused some consternation within the Party, it has been accepted as a move to co-opt the emerging economic elite. These entrepreneurial people, who made their fortunes largely with the Party's help, could find themselves the captains of China's state-owned industries. If Hu could pull off such a transfer of power, he would be able to create his own powerful bastion within the Party.

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SHORT CHINA - A TO THE POINT â„¢ REPORT

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Date Added: Monday, April 28th, 2003
Contributed by: RCN Administrator

By Jack Wheeler --

The World Health Organization or WHO announced today that “the worst is overâ€� regarding the SARS epidemic in Vietnam, Hong Kong, Singapore, and Canada.  WHO pronounced Vietnam for being the first country to eradicate the disease, and praised it for doing so transparently, quickly, and efficiently.

One reason Vietnam was able to do so is because it closed its border with China.  For notably absent in the WHO announcement was any praise for China.  The worst is not over for China.  The worst – far worse – is yet to come.

90% of SARS cases worldwide to this day are in China.  This percentage will climb.  By covering the epidemic up when it first emerged in Guangdong province last November, rather than institute the sort of health security actions performed by Vietnam, the PRC government has let the SARS toothpaste out of the tube. 

Much has been made by the mandarins of Beijing shutting down theaters et all, taking all sorts of measures to bolt the Beijing barn door shut.  Too late – SARS is streaking across the Chinese countryside now, on the loose and uncontrollable.

Further, the cover-up continues.  TIME Magazine Asia Edition today (4/28/03) disclosed the city government of Shanghai is suppressing info on SARS, treating SARS cases as “a state secretâ€� to prevent panic not only among its 17 million citizens but among international businessmen doing business there.

Thus while the rest of the world – provided it remains alert and doesn’t let it’s guard down – may have dodged the SARS bullet, China may be gut shot.  The economic consequences for both China and America may be enormous.

For the first time in years, China admitted that it ran an overall trade deficit for the 1^st Quarter of 2003, in the amount of $1.03 billion.  China has been claiming huge trade surpluses year after year, but as with most stats coming out of Beijing, these are phony – as imports from Hong Kong are not counted.

The putative reason given for the deficit was higher oil prices, but the real reason is people doing less business and buying fewer Chinese goods due to SARS.

From Wal-Mart on down, company after major company is banning all travel to China.  Nike, which produces almost 40% of its shoes in China, is planning to move its production out of the country. The Canton Trade Fair, the single largest in China, is canceled.

The reverse quarantining of China by international businessmen is bad enough, but as SARS really explodes throughout the countryside, and within major cities like Shanghai, Americans and others will become afraid of buying Chinese-made goods.

It is already starting to happen with Nike shoes labeled “Made in China.â€�  There is little rational chance of such shoes, or other items such as shirts and clothing being infected, but once fear sets in, that rational chance doesn’t matter.  China’s exports are set to fall off a cliff.

The World Bank reported 8.0 economic growth for China in 2002, and projected 7.2 for both 2003 and 2004.  You can kiss that latter number goodbye.

These growth numbers are just as phony as the trade numbers, in any regard.  They are pumped up by state spending and subsidies for state-owned enterprises (SOEs) making stuff nobody buys.  The “state secretâ€� the Chinese government is more afraid of being exposed than SARS in Shanghai is that its banking system is bankrupt.  That system goes over the SARS cliff with the exports.

As the fragile China economy implodes, the Beijing Mandarins will be forced to start spending their stash of over $240 billion in foreign reserves.  The Chinese currency – called renminbi domestically, yuan internationally – is de facto pegged to the dollar.  As they spend those reserves to import goods and prop up the banks and currency, the dollar’s value against the euro (already improving since the end of the Iraq war) will accelerate.

The stock of any US companies who are exporters, or whose US-made products have been suffering from Chinese competition, should be good buys.  Short those folks who are in China deep, who are dependent on selling stuff labeled “Made in China.â€�

Following Nike, companies are going to flood out of China to set up shop elsewhere in Southeast Asia, particularly Vietnam, Thailand, and Malaysia.  The stock exchanges of these countries will be buys.  Possibly India as well, but only if Indian bureaucrats can miraculously evolve from ponderously slow-moving elephants to critters that can move quickly to drain regulatory swamps and barriers to competition.

History moves in funny ways.  China has sought to insulate itself from being infected with the economic maladies of its neighbors, from Thai banking crises to Japanese stagnation.  Now an infection from within – a homegrown disease coming from nowhere out of the filthy mixture of ducks and pigs and people living tightly together in vast numbers – may prove lethal to its economy, its social structure, and its communist government.

No matter how bad SARS gets, China will recover.  Business and businessmen will return.  But that is later.  Right now, there is a disaster, and it’s going to get a lot, lot worse before it gets better.  There is no virtue or altruistic nobility in ignoring the opportunity this represents to make money by shorting China.

©Copyright Dr. Jack Wheeler and www.tothepointnews.com

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FACTS ON WHO BENEFITS FROM KEEPING SADDAM HUSSEIN IN POWER

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Date Added: Wednesday, April 23rd, 2003
Contributed by: RCN Administrator

According to the CIA World Factbook, France controls over 22.5 percent of Iraq's imports.

[1] <http://www.heritage.org/Research/MiddleEast/#_ftn1>  French total
trade with Iraq under the oil-for-food program is the third largest,
totaling $3.1 billion since 1996, according to the United Nations.

[2] <http://www.heritage.org/Research/MiddleEast/#_ftn2>  In 2001
France became Iraq's largest European trading partner. Roughly 60 French
companies do an estimated $1.5 billion in trade with Baghdad annually
under the U.N. oil-for-food program.

[3] <http://www.heritage.org/Research/MiddleEast/#_ftn3>  France's
largest oil company, Total Fina Elf, has negotiated a deal to develop
the Majnoon field in western Iraq. The Majnoon field purportedly
contains up to 30 billion barrels of oil.

[4] <http://www.heritage.org/Research/MiddleEast/#_ftn4>  Total Fina
Elf also negotiated a deal for future oil exploration in Iraq's Nahr
Umar field. Both the Majnoon and Nahr Umar fields are estimated to
contain as much as 25 percent of the country's reserves.

[5] <http://www.heritage.org/Research/MiddleEast/#_ftn5>  France's
Alcatel company, a major telecom firm, is negotiating a $76 million
contract to rehabilitate Iraq's telephone system.

[6] <http://www.heritage.org/Research/MiddleEast/#_ftn6>  >From 1981
to 2001, according to the Stockholm International Peace Research
Institute (SIPRI), France was responsible for over 13 percent of Iraq's
arms imports.

Germany:

[7] <http://www.heritage.org/Research/MiddleEast/#_ftn7> Germany Direct
trade between Germany and Iraq amounts to about $350 million annually,
and another $1 billion is reportedly sold through third parties.

[8] <http://www.heritage.org/Research/MiddleEast/#_ftn8>  It has
recently been reported that Saddam Hussein has ordered Iraqi domestic
businesses to show preference to German companies as a reward for
Germany's firm positive stand in rejecting the launching of a military
attack against Iraq. It was also reported that over 101 German companies
were present at the Baghdad Annual exposition.

[9] <http://www.heritage.org/Research/MiddleEast/#_ftn9> During the 35th
Annual Baghdad International Fair in November 2002, a German company
signed a contract for $80 million for 5,000 cars and spare parts.

[10] <http://www.heritage.org/Research/MiddleEast/#_ftn10>  In 2002,
Daimler Chrysler was awarded over $13 million in contracts for German
trucks and spare parts.

[11] <http://www.heritage.org/Research/MiddleEast/#_ftn11> German
officials are investigating a German corporation accused of illegally
channeling weapons to Iraq via Jordan. The equipment in question is used
for boring the barrels of large cannons and is allegedly intended for
Saddam Hussein's AlF, a Supercannon project.

Russia:

[12] <http://www.heritage.org/Research/MiddleEast/#_ftn12> Russia.
According to the CIA World Factbook, Russia controls roughly 5.8 percent
of Iraq's annual imports.

[13] <http://www.heritage.org/Research/MiddleEast/#_ftn13>  Under the
U.N. oil-for-food program, Russia's total trade with Iraq was somewhere
between $530 million and $1 billion for the six months ending in
December of 2001.

[14] <http://www.heritage.org/Research/MiddleEast/#_ftn14>  According
to the Russian Ambassador to Iraq, Vladimir Titorenko, new contracts
worth another $200 million under the U.N. oil-for-food program are to be
signed over the next three months.

[15] <http://www.heritage.org/Research/MiddleEast/#_ftn15>  Soviet-era
debt of $7 billion through $8 billion was generated by arms sales to
Iraq during the 1980â€"1988 Iranâ€"Iraq war.  Russia's LUK oil
negotiated a $4 billion, 23-year contract in 1997 to rehabilitate the 15
billion-barrel West Qurna field in southern Iraq. Work on the oil field
was expected to commence upon cancellation of U.N. sanctions on Iraq.
The deal is currently on hold.

[16] <http://www.heritage.org/Research/MiddleEast/#_ftn16>  In October
2001, Salvneft, a Russianâ€"Belarus company, negotiated a $52
million service contract to drill at the Tuba field in Southern Iraq.

[17] <http://www.heritage.org/Research/MiddleEast/#_ftn17>  In April
2001, Russia's Zaruezhneft company received a service contract to drill
in the Saddam, Kirkuk, and Bai Hassan fields to rehabilitate the fields
and reduce water incursion. A future $40 billion Iraqiâ€"Russian
economic agreement, reportedly signed in 2002, would allow for extensive
oil exploration opportunities throughout western Iraq.

[18] <http://www.heritage.org/Research/MiddleEast/#_ftn18>  The
proposal calls for 67 new projects, over a 10-year time frame, to
explore and further develop fields in southern Iraq and the Western
Desert, including the Suba, Luhais, West Qurna, and Rumaila projects.
Additional projects added to the deal include second-phase construction
of a pipeline running from southern to northern Iraq, and extensive
drilling and gas projects. Work on these projects would commence upon
cancellation of sanctions.

[19] <http://www.heritage.org/Research/MiddleEast/#_ftn19>  Russia's
Gazprom company over the past few years has signed contracts worth $18
million to repair gas stations in Iraq.

[20] <http://www.heritage.org/Research/MiddleEast/#_ftn20>  The former
Soviet Union was the premier supplier of Iraqi arms. From 1981 to 2001,
Russia supplied Iraq with 50 percent of its arms.

China:

[21] <http://www.heritage.org/Research/MiddleEast/#_ftn21>  China
According to the CIA World Factbook, China controls roughly 5.8 percent
of Iraq's annual imports.

[22] <http://www.heritage.org/Research/MiddleEast/#_ftn22>  China
National Oil Company, partnered with China North Industries Corp.,
negotiated a 22-year-long deal for future oil exploration in the Al
Ahdab field in southern Iraq.

[23] <http://www.heritage.org/Research/MiddleEast/#_ftn23>  In recent
years, the Chinese Aero-Technology Importâ€"Export Company (CATTIC)
has been contracted to sell meteorological satellite and surface
observation equipment to Iraq. This contract was approved by the U.N.
oil-for-food program.

[24] <http://www.heritage.org/Research/MiddleEast/#_ftn24>  CATIC also
won approval from the U.N. in July 2000 to sell $2 million worth of
fiber optic cables. This and similar contracts approved were disguised
as telecommunications gear. These cables can be used for secure data and
communications links between national command and control centers and
long-range search radar, targeting radar, and missile-launch units,
according to U.S. officials. In addition, China National  Electric
Wire & Cable and China National Technical Import Telecommunications
Equipment Company are believed to have sold Iraq $6 million and $15.5
million worth of communications equipment and other unspecified
supplies, respectively.

[25]
<http://www.heritage.org/Research/MiddleEast/#_ftn25>  According to a
report from SIPRI, from 1981 to 2001, China was the second largest
supplier of weapons and arms to Iraq, supplying over 18 percent of
Iraq's weapons imports.

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CHINA URGED TO STOP ABUSING NORTH KOREAN REFUGEES

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Date Added: Thursday, February 13th, 2003
Contributed by: RCN Administrator

      While global attention is focused on North Korea, nuclear and ballistic missile threat, famine and brutal repression are driving thousands of people across North Korea, northern border into China. The flood of refugees is reaching crisis proportions, yet China is either abusing North Koreans or deporting them to an uncertain fate back in their troubled homeland.

      The United Nations and several international aid agencies have offered food, shelter, and medical assistance to the North Korean refugees. But China has rebuffed these offers on the grounds that the refugees are Economic immigrants. In turn, China is imprisoning the refugees (along with many foreign relief workers), deporting them or placing them in labor camps or houses of prostitution.

       It is our fervent hope that China will allow these refugees safe passage to a third country and not allow any of the North Korean refugees to be repatriated,??says Suzanne Scholte, president of the Defense Forum Foundation, a Washington-based humanitarian relief organization. It is well-documented that when these refugees are returned to North Korea they face severe punishment, imprisonment and, in many cases, execution.

      Last fall Scholte sent a letter to Beijing, urging Chinese president Jiang Zemin to release seven North Koreans who had been arrested after being invited to the Ministry of Foreign Affairs to officially apply for refugee status.

      The seven had tried all the indirect and officially unacceptable ways of seeking assistance, which usually meant seeking asylum in a foreign embassy, says Scholte. Then the Chinese government offered them the opportunity to do things officially, they were rewarded with imprisonment.

      The Defense Forum Foundation, Doctors Without Borders, the Virginia-based Aegis Foundation, and dozens of other global humanitarian groups have strongly lobbied China to comply with international agreements and give the North Korean refugees aid or safe passage to neighboring countries. The relief organizations have repeatedly protested China policy of repatriating refugees to North Korea to face certain persecution and probable execution: a practice, says Scholte, "that is not just cruel, but a crime against humanity."

Pressure on China by Scholte organization and others humanitarian groups appears to be yielding results: Last month, Yang Jiechi, China ambassador to the United States, took the extraordinary step of writing Scholte to acknowledge receipt of her October 30 communication to President Jiang Zemin, and to assure her that China has been handling these cases both in accordance with domestic and international laws and out of humanitarian considerations.

      Scholte is encouraged by the Chinese ambassador’s letter, which was delivered to the Defense Forum Foundation shortly before President Jiang met last fall with US president George W. Bush. "The Chinese are clearly feeling the heat. We believe a dialogue is starting," says Scholte. "As signatories of United Nations Convention Relating to the Status of Refugees of 1951 and the Protocol Relating to the Status of Refugees of 1967, China is supposed to help these people not abuse them. Now they are finally seeing the wisdom in acknowledging this responsibility."

      Groups like the Defense Forum Foundation and now the US Congress are continuing to apply pressure: In late January, Scholte sent a letter to Chinese Foreign Minister Tang Jiaxuan that includes the names, birth dates and other details of several dozen refugees and aid workers including citizens of Japan and South Korea who have been illegally seized and imprisoned.

      Though you view them as `economic migrants, "they are, in fact, refugees as defined by the United Nations," Scholte writes in her January 28 letter. We are deeply concerned over the continued repatriation of North Korean refugees to North Korea and urge you to request that your government abide by these international conventions affecting refugee protection.

      "While China also has a legitimate concern about being overwhelmed by North Korea refugees," her letter continues, "there are many organizations that are willing to work with China to help feed, clothe, and shelter these refugees and help re-locate them to a third country. Hence, there would be no burden on China, and China would find it had numerous partners to assist."

      Meanwhile, United States Senator Jon Kyl (R-Arizona), chairman of the Subcommittee on Technology, Terrorism and Government Information, is sponsoring aid legislation targeted at displaced North Koreans. Kyl measure ensures American aid directly benefits North Korean refugees, bypassing the corrupt government in Pyongyang.

      Scholte thinks the increased global focus on the North Korean refugee crisis could enable China to change public perception that Beijing tolerates the abuse of human rights: "China has the opportunity to show bold leadership and respond to this humanitarian crisis by acting humanely," she says. "We are imploring the government of the People’s Republic of China to respond to the international community’s growing concern for the safety of these refugees and humanitarian workers."

      According to Scholte, several "Third countries" have offered to accept North Korean refugees, including Japan, South Korea, Vietnam, Russia, Mongolia, and Cambodia. She estimates building a temporary re-location camp in one of these countries would cost just under $1 million.

      Scholte believes China’s unwillingness to deal more aggressively with its refugee crisis stems from Beijing acceptance of North Korea’s iron-fisted leader, Kim Jong Il. She is also convinced South Korea shares China’s desire to see a continuation of Jong Il’s brutal regime.

      "I think, sadly, China and South Korea have the same fear about regime change in North Korea," says Scholte. "China doesn’t want a change because it likes having a strong and totalitarian communist regime on its border. And South Korea doesn’t want regime change because it worries that with Kim Jong Il out of power there would be a flood of refugees across its border. They worry they’ll experience a repeat of what happened to Germany’s economy at the end of the Cold War," explains Scholte.

      However, Scholte believes South Korea’s economic concerns are unfounded: "personally, I think they’re looking at the wrong economic model. South Korea -- which has the world’s 12th largest economy -- should look at what happened to all the Vietnamese who fled when that country fell in 1974. These former refugees who, like Koreans, have a strong work ethic are now some of the most productive and successful people in the world."

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A MASKED CHALLENGE

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Date Added: Wednesday, February 12th, 2003
Contributed by: RCN Administrator

The war on terrorism is topping U.S. national security priorities. Meaning, America will continue to aggressively pursue terrorists and disrupt their decentralized organizations. However, rather than these "evildoers," the future shows the true challenge will be the meteoric rise of the People’s Republic of China (PRC) as a "major global competitor."
In order to sustain their growth and modernization, the Chinese will be required to project economic, sociopolitical and military power beyond their existing territories. One glaring example is their encroachment upon the Philippine-owned and resource-rich Spratly Islands. China fully recognizes this will inevitably infringe upon vital U.S., Japanese and Korean interests=
as this maritime trade route becomes jeopardized. As a result, China is preparing psychologically, intellectually and physically for future hostilities.
However, what is widely unknown or dismissed among China watchers is that their military scholars have conceptualized a new paradigm regarding the conduct of future warfare. In conflict, the Chinese will engage in a multidimensional attack designed to induce strategic paralysis within our domestic infrastructure and forward deployed forces. This type of full-spectrum warfare transcends the traditional concepts of what is, and what is not, the known battlefield. Accordingly, the Chinese are developing the interlocking capability to prevail in air, sea, space, cyber and even extended economic warfare contests.
This type of warfare lends itself to one of Sun Tzu’s fundamental precepts of warfare: "Avoid strength, attack weakness." In developing asymmetric lines of attack designed to paralyze America’s strategic battlefield-information platforms, China understands we cannot fight if we are deaf, dumb and blind. Thus, asymmetry will allow the PRC to negate America’s conventional air and sea war-fighting capabilities, as clearly we could not engage them on land. Senior Chinese military officers Qiao Liang and Wang Xiangsui write: "Asymmetry as a principle is an important fulcrum for tipping the normal rules of war. Understanding and employing the principle of asymmetry correctly allows us always to find and exploit an enemy’s soft spots."
The PRC is also envisioning nonmilitary forms of warfare as well, affecting our national security. China has been, and will continue to be engaged in an economic and trade war with the United States. Victory in this invisible contest will allow China to favorably shape and manipulate the geopolitical environment of the next half-century. Consider: the U.S. now runs an estimated $130 billion trade deficit with the three Chinas (Red China, Hong Kong and Taiwan). Taiwan is included in this formula because of their close economic interface with the mainland, and their eventual absorption.
A manifestation of this subtle attack is an overwhelming inundation of products into the American economy. This is seen at Wal-Mart and even our military post exchanges (PX’s), showing that the U.S. is addicted to the PRC’s cheap goods and labor. Accordingly, it is now impossible for the U.S. to
abandon its policy of one-sided engagement, regardless of the growing threat emanating from an expansive Chinese defense modernization just reported by=20=
a closely-held Department of Defense document. This inability to contain China until it is too late is a hallmark of Beijing’s grand strategy.
Historically, China’s perception of its borders has spawned military engagements with surrounding neighbors such as the Indians, Russians, Vietnamese and Filipinos. Our policymakers do not understand that this need to expand will ultimately carry over into outer space. Beijing will inevitably enforce the space above the country as sovereign Chinese territory. American and other countries’ businesses will be made to pay a heavy tax to operate commercial satellites above China, and intrusions by foreign military satellites will be viewed as acts of aggression.
The Chinese as a prelude, have already begun to develop the capacity to strike space-based surveillance, reconnaissance and communication systems in an attempt to exploit the profound U.S. vulnerability to anti-satellite systems.
China is also aware that our domestic infrastructure is information-dependent and vulnerable. Beijing believes the computer hacker is a 21st century network warrior. The Chinese have openly discussed mounting a decisive cyber strike upon telecommunication systems, financial networks and electrical power grids.
What is commonly not told to the American public however is that much of this strategic information attack may come from within the United States. Chinese agent provocateurs, living here legally or illegally, will initiat=
e its execution.
As the United States continues to flail at al Qaeda, the Chinese are patiently waiting to fulfill their "manifest destiny" and take their place as the dominant nation throughout the world. Thus far, we have not proven to
be psychologically prepared to face this. If we fail to accommodate for the future on better terms, we maybe forced to make a very unpleasant choice: either fight to survive, or appease what will soon be a third of world’s population.
F. Andy Messing Jr., a retired major in the U.S. Army, is executive director of the National Defense Council Foundation and has been to 27 conflict areas abroad. Kurt E. Fischman is a research assistant at NDCF.

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CHINA AND RUSSIAS ROLE BY DIPO OLA

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Date Added: Thursday, January 2nd, 2003
Contributed by: RCN Administrator

At a time of escalating tensions with North Korea, perhaps it is now time for China to re-assert itself as a responsible, POTENTIAL ally of the U.S. Now is the time for the Chinese government to show some backbone and some reliability, at a time when the U.S. and actually, the world, needs some help. North Korea
has grown into an extremely belligerent, and potentially lethal problem that MUST be addressed before it spirals out of control, and it behooves all responsible parties to address the problem, as opposed to playing politics with
it. The Axis of Evil speech by President Bush may or may not have limited American influence on North Korea, but it certainly has not limited Chinese influence. Although Chinese-North Korean relations have chilled somewhat over the years, China is still in the best position to exert influence over Kim Jong-Ils regime. China saved it from certain defeat from the U.S., in 1950 (during the Korean war), by placing it under the United Nations Umbr
ella, and playing a huge role in helping them ease out of their self-induced war. China has also been the closest country to North Korea over the years following that war. Russia, although its influence has thinned somewhat, is still in a position to exert influence over North Korea, and bring them back from the brink. After all, in July 2000, President Putin visited North Korea,
and in 2001, a massive deal between North Korea and Russia was concluded, in which the former undertook to provide North Korea with a wide range of modern
weaponry.

The critical issue with Kim Jong-Il is that he should not be isolated and left to his own devices, because he only grows more belligerent, defiant, and potentially irrational. A country that spends over 30% (3.7 - 4.9 billion dollars) of its Gross Domestic Product on a military that possesses chemical weapons and serious nuclear potential, simply CANNOT be ignored. Even more important than NOT ignoring or pacifying Kim Jong-Il, he must not be threatened, or that will only increase the feeling he appears to have, that the U.S. NOT capitulating to his Nuclear Blackmail means that the U.S. is planning to attack him. The U.S. can be firm without being threatening, Resolute without being belligerent. Make it 100% clear that his Nuclear strip-tease will yield him NOTHING but further isolation, increased international opprobrium, and a decreased ability to feed his people (if he cares about that). He must be made to understand that he has a lot more to gain from ending his aggressive behavior, and everything to lose from continuing it. Over a fifth of the North Korean population of 24 million, is confronted by starvation. Since 1995, over a million people have died from starvation, and the chances are that the International aid that has kept things from being even worse than that, will dry up, if the country is further isolated. It is the duty of countries like Russia and China (who have normal relationships with North Korea) to make these basic points forcefully to him.

With the U.S. standing firm and declining to cave into his nuclear blackmail, it is the place of U.S. surrogate-allies (in this situation) to take up the communication baton. Time for China to pay back the U.S. for the latters
restraint and calm over the years, through Chinese shenanigans like the April 2001 collision with a U.S. aircraft, and Chinese actions afterwards. Time to pay
for the almost yearly $100 billion dollars of U.S. imports from China. Time to pay for the continual U.S. renewal of the Most Favored Nation status for China. Time to pay for the U.S. tacit support for Chinese Entrance into the World Trade Organization. Time for Russia to pay for the Billions of Dollars of U.S. assistance, since Glasnost and Perestroika, and other U.S. economic assistance
in restructuring its economy. Time to pay for the U.S. acquiescence to Russian actions in Chechnya, and the recent bloody hijack-rescue.

Only when these two countries step in firmly, take risks, and commit to reining in Kim Jong-Il, will there be a real hope of resolving this crisis. Only when debtors pay their debts, can the system survive.
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Dipo Ola was born in Nigeria, but grew up preoccupied with American culture and politics. His family emigrated to Canada in 1993 and is now a Canadian Citizen and a law student. He devotes most of his spare time to studying the politics of the United States and writes political commentaries for publication on various websites, including RCNetwork and Ninamay.com

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VENEZUELA&RSQUO;S ECONOMY: FROM BAD TO WORSE

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Date Added: Thursday, January 2nd, 2003
Contributed by: RCN Administrator

Analysis

Despite record-high global oil prices throughout the year, the Venezuelan economy contracted about 10 percent in 2002. The blame lies with the country’s persistent political turmoil, including a military rebellion in April and a national strike in December that shut down operations of state-run Petroleos de Venezuela
(PDVSA).

However, the economic crisis likely will grow even worse in the first quarter of 2003, as the government runs out of cash to pay its employees, creditors and debts, according to senior government officials, opposition leaders and private economists in Caracas.

Planning Minister Felipe Perez acknowledged Jan. 2 that the government’s $24 billion budget for 2003 would have to be "revised" during January to reflect the fiscal losses accruing from PDVSA’s work stoppage. The government will have to slash its $24 billion budget by at least 20 percent to avoid financial insolvency, according to Central University economics professor
Francisco Vivancos.

However, with new polls showing that President Hugo Chavez is losing substantial support among poor Venezuelans, who represent the base of his political support, the government likely will try to keep budget cuts to a minimum. At the same time, it probably will resort to devaluing the currency, issuing Venezuelan debt paper, deferring payments of external and internal debts and possibly seeking financial assistance from the International Monetary Fund and other multilateral entities.

Still it is unlikely that the IMF will aid Venezuela’s government without substantial economic reforms, which Chavez would be unwilling to make. Venezuelan banks -- already holding $12 billion of domestic government debt -- in turn will be unwilling to absorb more government debt, even at exorbitantly high
interest rates, while the combined work stoppages in the private sector and PDVSA last.

This will leave the Chavez government with three main options for dealing with its fiscal deficit: cutbacks, currency devaluation and deferment of debt payments. However, these options will make a bad economic situation much worse and further cut into Chavez’s
popularity among the poor.

According to private and government economists in Caracas, the combined work stoppage at PDVSA and the strike by approximately 80 percent of the country’s private sector cost the economy more than $10 billion in total losses during December. This is equivalent to slightly more than 8 percent of the country’s $124
billion gross domestic product.

As the national strike continues in January 2003, the economy’s losses will grow and the government’s fiscal deficit will widen as tax revenues collapse. Under normal conditions, Venezuela’s government derives about a third of its annual budget from non-oil-tax revenues, including value-added taxes and income taxes. Oil-tax revenue and royalty payments account for 30 percent of the annual budget, while borrowing represents another 30 percent.

However, PDVSA currently is not generating any tax revenues or royalty payments for the government. In addition, value-added tax revenues plunged more than 80 percent in December -- traditionally a strong sales month in Venezuela. Tax experts in Caracas predict that many large industrial groups likely will report heavy losses for December and, as a result, will pay little or no income tax for the 2002 period.

Meanwhile, the effects of the ongoing strike will be reflected in a steep rise in unemployment during the first quarter of 2003. Fedeindustria, traditionally a pro-government advocate of small-and medium-sized businesses, warned Jan. 2 that more than 25,000
enterprises will go out of business during the first half of 2003 due to the cumulative effects of last year’s economic recession.

Also, private economists in Caracas predict that many large industrial enterprises that granted their workers collective vacations from mid-December to Jan. 6 or Jan. 14 likely will not reopen later this month. Some companies reportedly intend to continue their strike against the Chavez regime, while others will remain closed either because it’s cheaper or they are already bankrupt.

This means that Venezuela’s unemployment rate, estimated at 17 percent to 20 percent by different sources in Caracas, likely will climb by several percentage points as hundreds of thousands of retail and manufacturing workers are laid off from their jobs.

It’s likely that the Chavez regime will heap the blame for the economy’s crisis on private business groups and PDVSA’s striking managers. The president has portrayed PDVSA strikers as traitors, and throughout his four-year regime he has consistently blamed the country’s wealthy elites for the woes of Venezuela’s poor.

However, a late December 2002 survey by Alfredo Keller, an independent Caracas-based pollster, suggests that Chavez has lost substantial credibility and popularity among poor voters. Keller’s survey, which focused exclusively on poor Venezuelans who identified themselves as members of Chavez’s Fifth Republic Movement (MVR) party, found that 85 percent believe that unemployment, poverty and the cost of living have worsened under the Chavez regime, and personal security has collapsed.

The poll also found that 67 percent of the MVR’s poor members feel new general elections should be held as soon as possible. Nevertheless, 28 percent of those surveyed refuse to consider new elections, and instead are willing to take up arms to defend their revolution. Chavez is counting on such sentiment, plus his senior military commanders, to keep him in power.
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