Latest News Clips 2013.12.02

      

1. Why China's new air zone incensed Japan, U.S. 

CNN   November 27, 2013  

 

(CNN) -- Tensions magnified among the world's top three economies over China's controversial new air defense zone. 

The issues range from disagreements on air space as well as disputed islands between China and Japan. 

On Saturday, China declared the creation of an air defense identification zone in the East China Sea, eliciting strong criticisms from the United States and its close ally, Japan. 

Both countries refuse to recognize China's newly created zone. 

What is China's "Air Defense Identification Zone"? 

China released a map and coordinates that identify its air defense zone on November 23. 

It declared that aircraft in the area must report their flight plans to China, maintain two-way radio and clearly mark their nationalities on the aircraft. The new rules went into effect 10 a.m. that day, Xinhua reported. 

 Japan, China in dispute over claimed space U.S. defies China with B-52 flight Disputed islands buzzing with activity 

This space included a swath of the East China Sea, including a disputed island chain known as Daioyu in China and Senkaku in Japan. 

China vowed to "adopt defensive emergency measures to respond to aircraft that do not cooperate in the identification or refuse to follow the instructions." 

2. 3-decade gridlock broken: The nuclear deal with Iran in Geneva 

CNN   November 24, 2013 

 

Diplomacy leads to Iran nuclear deal 

Geneva, Switzerland (CNN) -- The diplomatic gridlock between Iran and the West seemed immovable for decades. But on Sunday, diplomats made history when Iran and six world powers came together on an agreement over Iran's nuclear program. 

The deal dials back Iran's ability to work toward a nuclear weapon and at the same time loosens the choke hold of international sanctions on Iran's economy. 

The two sides now have six months to find out how historic the breakthrough really is. That's the duration of the preliminary agreement hammered out in Geneva, Switzerland, by Iran and the P5+1 -- the five permanent members of the U.N. Security Council plus Germany. 

"There are lots of things, regrettably, that we still have to work on. Our hope is that Iranian President Hassan Rouhani and Foreign Minister Javad Zarif want to build this different relationship, want to show in clear ways as we go forward that the program is peaceful," U.S. Secretary of State John Kerry told CNN's State of the Union. 

Iran has stumbled from one economic crisis to the next under the sanctions, and unemployment currently runs over 24%. 

The breathing room is intended to buy Iran and the negotiating powers time to arrive at a more comprehensive agreement. But it represents an opportunity, not a guarantee. 

"It's a little too early to break open champagne bottles and put on the party hats on this one," said Middle East diplomatic expert Aaron David Miller. "Its success hinges on whether or not it leads to a bigger agreement to "put Iran's nuclear weapons program to rest." 

That the diplomats came to any accord at all represents a momentous budge in a nearly 35-year deadlock marked by distrust, suspicion and open animosity between the United States and Iran, which broke off diplomatic relations after Iran's revolution in 1979. 

Iran happy with 'first step' 

Obama reacts to Iran nuclear deal Iran deal 'important step forward' 

It was the first such agreement in 10 years of attempts to negotiate over Iran's nuclear program. 

"What happened over the last several weeks is by any standard extraordinary," Miller said. 

Kerry told CNN that it will be vital to verify Iran's compliance with the deal. 

3. 10 questions: What's behind the protests in Thailand? 

CNN    November 27, 2013 

 

 

Thai protesters march to oust government 

STORY HIGHLIGHTS 

• At the heart of the unrest is the polarizing figure of Thaksin Shinawatra 
• His sister is now prime minister, and critics say she's his puppet 
• A recent move to grant amnesty to Thaksin and others caused anger 
• Protesters say they won't stop until "Thaksin's regime is wiped out" 

(CNN) -- In order to understand the turbulent world of Thai politics, you have to start with one name: Thaksin Shinawatra. 

The former prime minister has dominated the country's political scene for more than a decade despite going into exile after his ouster in a 2006 coup. 

Back in 2010, deadly clashes took place between security forces and Thaksin supporters who had occupied central Bangkok. They were demanding his return. 

Now, his sister is in power and she recently tried to pass an amnesty law that could have allowed his return. The attempt failed, but it provided fuel for the current protests shaking the capital. 

Here's a quick primer to make sense of it all. 

Thai  

1. Who is Thaksin? 

He's a deeply polarizing figure -- a billionaire telecommunications mogul who built his political power on policies popular with Thailand's rural villagers. His success ruffled a lot of feathers among the country's established elites, and critics accused him of corruption and autocratic rule. He was prime minister between 2001 and 2006, when the military deposed him in a bloodless coup. 

2. What happened in 2010? 

Thaksin's ouster spurred the protest movement that developed over the years into the widespread "red shirt" demonstrations that occupied upscale parts of Bangkok in 2010. By that stage, the movement had broadened to represent other issues, including resentment at the military's involvement in politics and economic inequality. The crackdown by security forces on the red shirts resulted in clashes that left around 90 people dead. It has been described as the worst civil violence in Thailand's history, and the country remains severely scarred by the experience. 

4.  German coalition: Concessions but Merkel will get her way 

BBC News     27 November 2013 

 

Germany's coalition leaders Sigmar Gabriel, Angela Merkel and Horst Seehofer 

The "six eyes" of Sigmar Gabriel, Angela Merkel and Horst Seehofer 

German parties reach coalition deal 

Germany's Angela Merkel has sewn up a coalition with the Social Democrats and a third term in power, but how much has she had to give away? 

It was a "Six-Eye Negotiation" - in German, an "Unter Sechs Augen Gespraech". Three leaders, and so three pairs of eyes, sat down together in the small hours in a private room and haggled amongst themselves, eyeball to eyeball. 

In the 185-page agreement which resulted, the Social Democrats (SPD) came away with a minimum wage of 8.50 euros (£7.10) an hour, uniformly applied across the country. The counter-argument had been that insisting on the minimum wage in the old East Germany would dent the region's ability to attract work. 

The SPD's chief negotiator Sigmar Gabriel also got a lowering of the retirement age and some extra public spending. That may be welcomed by those outside Germany, who have argued that the country is "beggaring its neighbours" by not increasing German spending to match the country's amazing excess of exports over imports. 

The SPD also secured the introduction of a minimum percentage of women on German company boards. 

For her part, Chancellor Merkel got an acceptance from the SPD that its election demand of higher taxes on the rich would not happen. She also emphasised that the new government would continue to balance its budgets - there will be no move away from the belief that spending is tied to revenue. 

Road-toll diversion 

The third pair of eyes in the room belonged to Horst Seehofer, the leader of the Bavarian Christian Social Union, sister party to Mrs Merkel's CDU. He got the inclusion of his pet policy: foreign drivers should pay more than Germans to use German roads. 

A lot of people involved in the broader negotiations had poured cold water on this, saying it was unworkable and illegal under European law. One SPD leader said the private-car road-toll would be introduced on the day that Christmas and Easter coincided. 

But it would be unwise to discount Mr Seehofer. He has clout. Apart from anything else, Mrs Merkel needs CSU votes just as much as SPD ones. If the SPD can hold out for its measures, so can the CSU. 

Latest News Clips 2013.11.25

  

1. China's mysterious Third Plenum 

China's mysterious Third Plenum has ended much as it started: 

With a brief word from the official Chinese media that the meeting had begun and now a short communique announcing its conclusion. 

BBC   12 Nov. 2013  

  

Among the few phrases in the short communique, the key ones are "comprehensively deepening reform" and "crossing the river by feeling stones". 

The reference to "comprehensive" reforms fits with the billing in the Chinese state media that this meeting of the top Chinese Communist Party officials will result in significant reforms under the new president and premier during their decade in power. 

The details of their economic policies are scant from the communique. In the coming weeks and months, the official media may divulge more at the whim of the Chinese leaders. 

So far, allowing the market to play a "decisive" role in the economy has emerged as a message in the state media. 

This sums up the aims of the Chinese leaders which is to introduce more market forces into the economy. It would be key to achieving the "breakthrough" reforms that were discussed in the "383" plan that was circulated by the government's top think tank beforehand, which I wrote about before. 

Not easy 

The three "breakthrough" reforms involved reforming capital markets, labour in the form of improving social welfare, and land. 

Basically, the factors of production all need reform and much of it requires raising productivity in order to support growth. 

Now, that's no easy task for any economy, much less one where powerful state-owned enterprises dominate the financial sector and key parts of the economy. 

So, the devil will be in the details as to how these reforms will be implemented. 

2. Prince Alwaleed bin Talal: An Ally Frets About American Retreat 

Influential Saudi royal Prince Alwaleed bin Talal talks about the U.S. debacle in Syria, the Iranian threat, and 'this perception that America is going down.' 

The Wall Street Journal  Nov. 22, 2013 

   

'The U.S. has to have a foreign policy. Well-defined, well-structured. You don't have it right now, unfortunately. It's just complete chaos. Confusion. No policy. I mean, we feel it. We sense it, you know." 

Members of the Saudi royal family have voiced their displeasure with the Obama administration's approach to the Middle East through private channels and recently in public as well. None of them puts it quite like HRH Prince Alwaleed bin Talal bin Abdulaziz Alsaud. 

One of some three-dozen living grandsons of the first Saudi King Abdulaziz, this prince is a prominent but atypical royal. His investment company made him the Arab world's richest businessman. He strikes a modern image for a Saudi, employing female aides and jet-setting on a private Boeing 747. He's at ease with Western media. 

Passing through New York earlier this week, Mr. Alwaleed, who is 58, sits down with the Journal editorial board between a couple of television appearances. He wears a blue suit, shirt and tie. These days, his bouffant widow's peak has more salt than pepper. The prince holds no important government post in Saudi Arabia, but it's hard to shake the impression that here is the uncensored id of the reserved House of Saud. 

"America is shooting itself in the foot," he says. "Saudi Arabia and me, myself, we love the United States. But what's happening right now here, from Republicans and Democrats, is just not helping the image of the United States and is making this perception that America is going down a reality." 

Mr. Alwaleed struggles to understand how a wing of the GOP can shut down the government and threaten a debt default. His company has a significant economic bet on the U.S. through Twitter and New York's Plaza Hotel, among many holdings. As for President Obama, his second term is "going downhill completely," he says, adding on several occasions the disclaimer that "this is the impression I have in Saudi Arabia." But it's clear that the Saudis believe that the president's political troubles shape his actions in their region. 

Mr. Obama's recent Hamlet act on Syria surprised and infuriated Riyadh. After the worst chemical-weapons atrocity of the war, the American leader heeded long-standing calls for military intervention, then hedged by asking for congressional approval, then nixed airstrikes in favor of a disarmament pact with Syria's Bashar Assad. The civil war continued—with Assad and his Iranian allies lately taking the upper hand. Mr. Alwaleed says of Mr. Obama: "He blinked." 

Then came the autumn outreach to Iran's new president, Hasan Rouhani, leading to this week's negotiations in Geneva on Iran's nuclear program. Another "impression" from the prince: President Obama's falling popularity explains his "overeagerness" for an agreement made "very fast to at least put one issue in foreign policy aside" because "he's wounded now across the board." The Saudis view the Shiite theocracy in Tehran as the biggest threat to the Sunni Arab world. 

    

3.  In New Energy Era, Gushers of Opportunity 

Plenty of Profits in the Resurgence of Oil and Gas Drilling 

The Wall Street Journal   Nov. 23, 2013  

It isn't too late to learn important lessons from the surprising resurgence of American oil and gas. It is also not too late to profit from it. 

 

The surge in energy production has confounded giant oil companies, created billionaires who are emerging as the nation's new Rockefellers and Gettys, and altered America's economic and geopolitical outlook. 

Just a few years ago, the country seemed destined to rely on imported energy. Today, the U.S. is moving toward energy independence. 

The dramatic shift is thanks to a few stubborn Americans who developed improved—and controversial—methods to hydraulically fracture, or frack, shale and other tough rock. They also introduced ways to drill horizontally in challenging, compressed rock. 

Pioneers of the new age of energy have scored historic fortunes and rewarded their shareholders, while also creating an environmental backlash. 

They're not yet household names, however. Harold Hamm grew up dirt-poor in a tiny town in Oklahoma. He began school each year around Christmastime because he had to help his parents pick cotton until it became too cold to be in the fields. Today, Mr. Hamm, founder of Continental Resources (CLR), is worth more than $14 billion. His stock is up over 50% in the past year. 

Mark Papa, who helped turn EOG Resources (EOG) into an oil power with huge discoveries in Texas, has seen EOG's shares jump more than 40% in the past year. 

Charif Souki, an immigrant from Lebanon, runs Cheniere Energy (LNG), which is expected to be the first company in the lower 48 states to export natural gas. The stock has climbed 152% in the past year and he's worth $350 million. 

A key lesson from the era: Smaller companies often are best at engineering breakthroughs.