Obama Picks New York Fed Chief to Lead Treasury

http://www.washingtonpost.com/wp-dyn/content/article/2008/11/21/AR2008112102811.html?wpisrc=newsletter

President-elect Barack Obama has selected New York Federal Reserve Bank President Timothy F. Geithner as Treasury secretary, handing the post to a primary architect of the Bush administration's response to the financial crisis, according to Democratic and industry officials yesterday.


At 47, he is the same age as Obama and would represent a generational change in the highest levels of Washington economic policymaking, heading a remarkably young team of White House economic advisers tasked with sorting out one of the worst financial messes since the Great Depression.

A Democrat and a relative unknown outside the world of high finance, Geithner has worked closely with Treasury Secretary Henry M. Paulson Jr. to devise responses to the most critical events of the market turmoil, including the bailouts of the investment bank Bear Stearns and the insurance giant American International Group. Like Paulson, Geithner believes that the Treasury should be given vast powers to develop experimental strategies for responding to the crisis and the flexibility to abandon them if they don't work.

Geithner's mentor is Lawrence H. Summers, 53, a Treasury secretary during the Clinton administration who also was in the running for the job. Summers instead will go to the White House and serve as a senior economic adviser to Obama, according to a senior Democratic official familiar with the matter. Meanwhile, Obama is seriously considering a former opponent in the primary campaign, New Mexico Gov. Bill Richardson, to head the Commerce Department, according to the official.


Joining Summers in the White House would be Jason Furman, 38, as a top economic adviser; Peter R. Orszag, 39, as White House budget director; and Austan Goolsbee, 39, on the president's Council of Economic Advisers, sources familiar with the matter said.

The rollout of the economic team is expected to take place in Chicago on Monday, according to a transition source who spoke on condition of anonymity because the announcements have not been made yet. As for the timing, this source said, "Everything has been accelerated on the economic front because of the news of the last few months" but not in reaction to any specific market trends this week.

The problems facing the new administration are dire as the government's effort to rescue the banking system falters. Yesterday, Goldman Sachs said it expected the economy to shrink even faster during the fourth quarter of this year, at a 5 percent annualized rate. The investment bank predicted that unemployment would soar to 9 percent by the end of next year.

The stock markets cheered the would-be appointment of Geithner, who is well-known to Wall Street. The Dow Jones industrial average had been down as much as 1.4 percent in the morning. Around 3 p.m., when news of Obama's pick broke, the index shot up, ending the day 494.13, or 6.5 percent, higher.

"Geithner is uniquely situated and has the business experience and the political experience and the policy experience to handle this crisis," said Scott Talbott, senior vice president of the Financial Services Roundtable, which lobbies for the nation's largest financial firms. "Everyone I talked to at the New York banks have had positive comments or no negative comments."

He also has experience in addressing complex crises. In the late 1990s, he worked under Treasury Secretary Robert E. Rubin and Summers to guide the Clinton administration's response to currency collapses in Russia, Mexico and Asia. In the last years of the administration, Summers became Treasury secretary and Geithner was promoted to undersecretary.

Geithner "will get a very favorable response in the Senate," said Sen. Kent Conrad (D-N.D.), chairman of the Senate Banking Committee. "You saw the relief rally in the market today. . . . These are the kind of people you want with their hand on the till in a storm. And we're in a Category 4."

Others wondered whether Geithner, who has a youthful manner, could inspire confidence in the markets.


"Tim at 47 looks 32, and you need to have in these compelling times gray hair and gravitas," said Ken Duberstein, a former chief of staff in the Reagan White House, who was interviewed on the possibility of a Geithner Treasury earlier in the fall. "It's not that he's not qualified; it's how he looks."


Under Geithner, the Treasury would not be expected to alter its approach to the financial crisis -- or how to spend the $700 billion in emergency rescue funding approved by Congress last month, though skepticism is building among lawmakers about whether Paulson has devised the right remedy to the problems.

Other than Paulson, no one had more say than Geithner in bailing out Bear Stearns in March or in the events leading up to the bankruptcy filing of the investment bank Lehman Brothers. He also was the primary architect of the $85 billion loan to rescue AIG, and then increased that amount to a total of $152 billion as the company's woes continued. All of those actions have been criticized and debated by lawmakers and economists, who say the moves have contributed to the financial system's turmoil.

With Orszag, Goolsbee and Furman, Obama is assembling a team in the White House of pragmatic centrists who believe in promoting free trade, reducing budget deficits, and using the tax code to narrow the widening gap between rich and poor. Unlike officials in the early Bush administration, they also believe in the power of government to enhance and guide market forces.


Orszag and Furman both served as directors of the Hamilton Project at the Brookings Institution, a research group founded by Rubin and others. Furman left that post earlier this year to join the Obama campaign as a senior economic adviser.

Orszag, founding director of the Hamilton Project, left in 2007 to become director of the nonpartisan Congressional Budget Office. He would bring an intimate knowledge of the federal budget to the Office of Management and Budget, where he would be responsible for assembling Obama's first budget next spring.

Goolsbee, a University of Chicago economist, has been an adviser to Obama since his 2004 campaign for the U.S. Senate. Goolsbee would serve on the president's three-member Council of Economic Advisers, which provides the president with economic analysis and recommends policy actions, congressional aides said.

It was unclear yesterday whether Summers's role would be as chairman of the National Economic Council, which coordinates economic policy for the White House. Other candidates for that post were Jacob "Jack" Lew, a former CBO director who works at Citigroup, and Daniel K. Tarullo, a Georgetown University economist who is part of Obama's transition team, according to congressional sources and a senior Democratic official.

Richardson, the leading contender for Commerce, was originally in the mix to be the secretary of state nominee, but Sen. Hillary Rodham Clinton (D-N.Y.) is now expected be announced for that post after Thanksgiving.

Obama promised in a post-election news conference that he would move with "deliberate haste" to fill out his Cabinet and senior White House staff, a recognition that with the global financial crisis and the United States involved in two wars, there was little time to waste.

The Commerce job was originally rumored to go to Penny Pritzker, the finance chairman of Obama's campaign and a close friend of the Illinois senator, but she removed herself from consideration Thursday due to an inability to extricate herself from a series of complex business ties.

Richardson, who was elected governor of New Mexico in 2002 and was reelected with 69 percent of the vote in 2006, has made no secret of his interest in returning to Washington to take a place in the Obama administration. A long-shot contender for the Democratic presidential nomination, Richardson endorsed Obama in his primary battle with Clinton, and, if nominated for Commerce, would help round out Obama's "team of rivals."

Richardson spent 14 years in the U.S. House -- from 1983 to 1997 -- before being named by President Bill Clinton as the U.S. ambassador to the United Nations. A year later, Richardson became Secretary of Energy in the Clinton Cabinet.


Washington Post staff writer Anne E. Kornblut and washingtonpost.com staff writer Chris Cillizza contributed to this report.

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Obama Close to Choosing Clinton, Jones for Key Posts

President-elect Barack Obama, shown getting in his car after a visit to Manny's coffee shop and deli in Chicago, plans to announce his national security appointments on the Monday after Thanksgiving, sources say. (By Charles Dharapak -- Associated Press)

http://www.washingtonpost.com/wp-dyn/content/article/2008/11/21/AR2008112103981_2.html?wpisrc=newsletter&sid=ST2008112104032&s_pos=


By Michael Abramowitz, Shailagh Murray and Anne E. Kornblut
Washington Post Staff Writers
Saturday, November 22, 2008; Page A01

Barack Obama appears intent on naming an experienced and centrist foreign policy team, with Sen. Hillary Rodham Clinton as secretary of state and retired Marine Gen. James L. Jones as national security adviser, sources said yesterday.


A friend of Clinton's said she is ready to accept an appointment that would make the former Obama rival his point person in tackling an array of international crises and restoring the United States' influence around the world, a frequently stated objective of the incoming administration.

Although the Obama transition team and Clinton's Senate spokesman said nothing has been finalized, her office for the first time officially confirmed that she is talking to Obama about the job. "We're still in discussions, which are very much on track. Any reports beyond that are premature," said Philippe Reines, Clinton's spokesman and senior adviser.

Meanwhile, several sources said that Jones has moved to the top of the list to be Obama's national security adviser and that the sides are in advanced talks. Sources familiar with the discussions said Obama is considering expanding the scope of the job to give the adviser the kind of authority once wielded by powerful figures such as Henry A. Kissinger.


The Jones appointment would put the onetime Marine Corps commandant and NATO commander in charge of managing an interagency process that many Democratic foreign policy experts say has been broken under the Bush administration.


With many Democrats expecting Robert M. Gates to remain as defense secretary, the emerging national security team appears to be centrist in orientation, with deep experience in many of the areas likely to be the focus of Obama's foreign policy -- including wars in Iraq and Afghanistan and instability in Pakistan and the Middle East, where Obama advisers have been signaling a desire to make an early mark in the stalled peace process.

While there has been much discussion about the president-elect's purported interest in creating a "team of rivals" in his Cabinet, the emerging group could also be one that works well together. Gates is widely known for being a nonpartisan, congenial manager, while Jones is considered by many who know him to be a self-effacing general who "wears power very gracefully," as one put it. That probably is part of their appeal to Obama, some Democrats said.

One wild card would be Clinton, who clashed sharply with Obama over foreign policy during their battle for the Democratic presidential nomination but worked hard for the party's ticket in the fall. And the past few days have brought increasing signs that, after some hesitation, Clinton and her husband, former president Bill Clinton, want her to take the job. That position comes after the Obama and Clinton sides came to an agreement on how to handle potential conflicts with Bill Clinton's activities.

"It seems more likely today, versus a few days ago, that she will accept," one Clinton loyalist said yesterday.

Obama has also been meeting with possible candidates for other posts, including director of national intelligence. One name that has surfaced as a possibility in recent days is retired Adm. Dennis Blair, a former chief of the U.S. Pacific Command. Others said to be possibilities include John Brennan, a former CIA analyst who worked his way up the agency ladder, and Sen. Chuck Hagel (R-Neb.). A member of the Senate Select Committee on Intelligence and a former Army officer and businessman, Hagel has strong Capitol Hill support and is respected within the national security community as a nonpartisan analyst of intelligence issues.

Sources said the announcement of the national security appointments will be made on the Monday after Thanksgiving.

In picking Jones, Obama would be sending a powerful sign that he wants to conduct a nonpartisan national security policy. Jones is also close to Sen. John McCain (R-Ariz.), his colleague as a military liaison to Capitol Hill in the 1970s, and stayed publicly neutral during the presidential campaign, though he quietly provided advice to Obama in telephone conversations, according to a source who knows both men. Jones is one of the few public figures who probably would have been courted for government service regardless of the election's outcome.


"He would bring a lot of the military dimension to the job," said Wesley K. Clark, a retired four-star general who was one of Jones's predecessors as NATO commander. "And his nonpartisanship at this juncture is really important. He provides a nonpartisan standard for the national interest -- that would be the presumption given his previous experience."


Said Jessica Tuchman Mathews, president of the Carnegie Endowment for International Peace: "I think that would be a very strong appointment. He's got very broad experience, both geographically and substantively, and he's been outstanding in everything he's done."

Mathews and other officials said they expected that Jones would also help impose order in the national security bureaucracy. Over the course of the Bush administration, national security advisers Condoleezza Rice and Steven J. Hadley have been criticized by some for not resolving interagency conflicts, although some of those disputes have receded in recent years.

Jones "is certain to be viewed as a very formidable figure," said David Rothkopf, who served in the Clinton administration and wrote a book about the NSC. "This is a general right out of central casting. He is extremely strong and forceful and thoughtful. . . . If you want a disciplined NSC process, this is your man."


Jones also has experience with many of the big issues that will confront the new administration. As NATO commander, he was intimately involved in assembling troops and other resources for the mission in Afghanistan. He also knows something about energy, a subject the Obama team expects to figure prominently in foreign policy discussions. Jones currently heads the U.S. Chamber of Commerce's Institute for 21st Century Energy.

He is known for being low-key but blunt: Journalist Bob Woodward wrote that Jones told then-Joint Chiefs Chairman Peter Pace that he "should not be the parrot on the secretary's shoulder," referring to Donald H. Rumsfeld.

Sources said another possibility for the national security job is James B. Steinberg, a close Obama adviser who was deputy national security adviser to Clinton, but Jones appears to be the strong favorite.

Sources also said yesterday that Rep. Raul M. Grijalva (D-Ariz.) has emerged as a leading contender for interior secretary. The son of a migrant worker who grew up in Tucson, Grijalva boasts a strong environmental record and chairs the House Natural Resources subcommittee on national parks, forests and public lands.

Also yesterday, transition officials announced the selection of five new White House staff members.

Patrick Gaspard, a longtime labor activist, will be the White House political director. He served as national political director for much of Obama's general-election campaign and was named deputy director of personnel for the transition effort. Prior to his work with Obama, Gaspard was a political operative for the Service Employees International Union.

Vice President-elect Joseph R. Biden Jr. named Cynthia Hogan as his counsel. She has been his legal adviser since 1991, when she became a counsel to the Senate Judiciary Committee.

Biden also named Moises V. Vela Jr. as his director of administration. Vela, a businessman in Denver, was a chief financial officer and senior adviser on Hispanic affairs for Vice President Al Gore.

Incoming first lady Michelle Obama has tapped Jackie Norris, who was Iowa state director for the Obama campaign, to be her chief of staff. Norris, a high school government and history teacher and longtime Iowa Democrat, was Iowa political director for Gore's 2000 presidential campaign and was finance director for future Iowa Gov. Tom Vilsack in 1998.

In addition, the vice president-elect's wife, Jill Biden, has named Catherine M. Russell to be her chief of staff. A former adviser to the Senate Foreign Relations Committee, she served as chief of staff for Jill Biden during the campaign and is the wife of Thomas E. Donilon, a co-chairman of Obama's transition team for the State Department.

Staff writers Michael A. Fletcher and Walter Pincus and staff researcher Madonna Lebling contributed to this report.

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The System Implodes: The 10 Worst Corporations of 2008

http://www.multinationalmonitor.org/mm2008/112008/weissman.html

by Robert Weissman

AIG
Cargill
Chevron
CNPC
Constellation Energy
Dole
General Electric Imperial Sugar
Philip Morris Int’l.
Roche

2008 marks the 20th anniversary of Multinational Monitor’s annual list of the 10 Worst Corporations of the year.

In the 20 years that we’ve published our annual list, we’ve covered corporate villains, scoundrels, criminals and miscreants. We’ve reported on some really bad stuff — from Exxon’s Valdez spill to Union Carbide and Dow’s effort to avoid responsibility for the Bhopal disaster; from oil companies coddling dictators (including Chevron and CNPC, both profiled this year) to a bank (Riggs) providing financial services for Chilean dictator Augusto Pinochet; from oil and auto companies threatening the future of the planet by blocking efforts to address climate change to duplicitous tobacco companies marketing cigarettes around the world by associating their product with images of freedom, sports, youthful energy and good health.

But we’ve never had a year like 2008.

The financial crisis first gripping Wall Street and now spreading rapidly throughout the world is, in many ways, emblematic of the worst of the corporate-dominated political and economic system that we aim to expose with our annual 10 Worst list. Here is how.


Improper political influence: Corporations dominate the policy-making process, from city councils to global institutions like the World Trade Organization. Over the last 30 years, and especially in the last decade, Wall Street interests leveraged their political power to remove many of the regulations that had restricted their activities. There are at least a dozen separate and significant examples of this, including the Financial Services Modernization Act of 1999, which permitted the merger of banks and investment banks. In a form of corporate civil disobedience, Citibank and Travelers Group merged in 1998 — a move that was illegal at the time, but for which they were given a two-year forbearance — on the assumption that they would be able to force a change in the relevant law. They did, with the help of just-retired (at the time) Treasury Secretary Robert Rubin, who went on to an executive position at the newly created Citigroup.

Deregulation and non-enforcement: Non-enforcement of rules against predatory lending helped the housing bubble balloon. While some regulators had sought to exert authority over financial derivatives, they were stopped by finance-friendly figures in the Clinton administration and Congress — enabling the creation of the credit default swap market. Even Alan Greenspan concedes that that market — worth $55 trillion in what is called notional value — is imploding in significant part because it was not regulated.

Short-term thinking: It was obvious to anyone who cared to look at historical trends that the United States was experiencing a housing bubble. Many in the financial sector seemed to have convinced themselves that there was no bubble. But others must have been more clear-eyed. In any case, all the Wall Street players had an incentive not to pay attention to the bubble. They were making stratospheric annual bonuses based on annual results. Even if they were certain the bubble would pop sometime in the future, they had every incentive to keep making money on the upside.

Financialization: Profits in the financial sector were more than 35 percent of overall U.S. corporate profits in each year from 2005 to 2007, according to data from the Bureau of Economic Analysis. Instead of serving the real economy, the financial sector was taking over the real economy.

Profit over social use: Relatedly, the corporate-driven economy was being driven by what could make a profit, rather than what would serve a social purpose. Although Wall Street hucksters offered elaborate rationalizations for why exotic financial derivatives, private equity takeovers of firms, securitization and other so-called financial innovations helped improve economic efficiency, by and large these financial schemes served no socially useful purpose.

Externalized costs: Worse, the financial schemes didn’t just create money for Wall Street movers and shakers and their investors. They made money at the expense of others. The costs of these schemes were foisted onto workers who lost jobs at firms gutted by private equity operators, unpayable loans acquired by homeowners who bought into a bubble market (often made worse by unconscionable lending terms), and now the public.

What is most revealing about the financial meltdown and economic crisis, however, is that it illustrates that corporations — if left to their own worst instincts — will destroy themselves and the system that nurtures them. It is rare that this lesson is so graphically illustrated. It is one the world must quickly learn, if we are to avoid the most serious existential threat we have yet faced: climate change.

Of course, the rest of the corporate sector was not on good behavior during 2008 either, and we do not want them to escape justified scrutiny. In keeping with our tradition of highlighting diverse forms of corporate wrongdoing, we include only one financial company on the 10 Worst list. Here, presented in alphabetical order, are the 10 Worst Corporations of 2008.

AIG: Money for Nothing

There’s surely no one party responsible for the ongoing global financial crisis.

But if you had to pick a single responsible corporation, there’s a very strong case to make for American International Group (AIG).

In September, the Federal Reserve poured $85 billion into the distressed global financial services company. It followed up with $38 billion in October.

The government drove a hard bargain for its support. It allocated its billions to the company as high-interest loans; it demanded just short of an 80 percent share of the company in exchange for the loans; and it insisted on the firing of the company’s CEO (even though he had only been on the job for three months).

Why did AIG — primarily an insurance company powerhouse, with more than 100,000 employees around the world and $1 trillion in assets — require more than $100 billion ($100 billion!) in government funds? The company’s traditional insurance business continues to go strong, but its gigantic exposure to the world of “credit default swaps” left it teetering on the edge of bankruptcy. Government officials then intervened, because they feared that an AIG bankruptcy would crash the world’s financial system.

Credit default swaps are effectively a kind of insurance policy on debt securities. Companies contracted with AIG to provide insurance on a wide range of securities. The insurance policy provided that, if a bond didn’t pay, AIG would make up the loss.

AIG’s eventual problem was rooted in its entering a very risky business but treating it as safe. First, AIG Financial Products, the small London-based unit handling credit default swaps, decided to insure “collateralized debt obligations” (CDOs). CDOs are pools of mortgage loans, but often only a portion of the underlying loans — perhaps involving the most risky part of each loan. Ratings agencies graded many of these CDOs as highest quality, though subsequent events would show these ratings to have been profoundly flawed. Based on the blue-chip ratings, AIG treated its insurance on the CDOs as low risk. Then, because AIG was highly rated, it did not have to post collateral.

Through credit default swaps, AIG was basically collecting insurance premiums and assuming it would never pay out on a failure — let alone a collapse of the entire market it was insuring. It was a scheme that couldn’t be beat: money for nothing.

In September, the New York Times’ Gretchen Morgenson reported on the operations of AIG’s small London unit, and the profile of its former chief, Joseph Cassano. In 2007, the Times reported, Cassano “described the credit default swaps as almost a sure thing.” “It is hard to get this message across, but these are very much handpicked,” he said in a call with analysts.

“It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those transactions,” he said.

Cassano assured investors that AIG’s operations were nearly fail safe. Following earlier accounting problems, the company’s risk management was stellar, he said: “That’s a committee that I sit on, along with many of the senior managers at AIG, and we look at a whole variety of transactions that come in to make sure that they are maintaining the quality that we need to. And so I think the things that have been put in at our level and the things that have been put in at the parent level will ensure that there won’t be any of those kinds of mistakes again.”

Cassano turned out to be spectacularly wrong. The credit default swaps were not a sure thing. AIG somehow did not notice that the United States was experiencing a housing bubble, and that it was essentially insuring that the bubble would not pop. It made an ill-formed judgment that positive credit ratings meant CDOs were high quality — even when the underlying mortgages were of poor quality.

But before the bubble popped, Cassano’s operation was minting money. It wasn’t hard work, since AIG Financial Products was taking in premiums in exchange for nothing. In 2005, the unit’s profit margin was 83 percent, according to the Times. By 2007, its credit default swap portfolio was more than $500 billion.

Then things started to go bad. Suddenly, AIG had to start paying out on some of the securities it had insured. As it started recording losses, its credit default swap contracts require that it begin putting up more and more collateral. AIG found it couldn’t raise enough money fast enough — over the course of a weekend in September, the amount of money AIG owed shot up from $20 billion to more than $80 billion.

With no private creditors stepping forward, it fell to the government to provide the needed capital or let AIG enter bankruptcy. Top federal officials deemed bankruptcy too high a risk to the overall financial system.

After the bailout, it emerged that AIG did not even know all of the CDOs it had ensured.

In September, less than a week after the bailout was announced, the Orange County Register reported on a posh retreat for company executives and insurance agents at the exclusive St. Regis Resort in Monarch Beach, California. Rooms at the resort can cost over $1,000 per night.

After the House of Representatives Oversight and Government Reform Committee highlighted the retreat, AIG explained that the retreat was primarily for well-performing independent insurance agents. Only 10 of the 100 participants were from AIG (and they from a successful AIG subsidiary), the company said, and the event was planned long in advance of the federal bailout. In an apology letter to Treasury Secretary Henry Paulson, CEO Edward Liddy wrote that AIG now faces very different challenges, and “that we owe our employees and the American public new standards and approaches.”

New standards and approaches, indeed.

Cargill: Food Profiteers

The world’s food system is broken.
Or, more accurately, the giant food companies and their allies in the U.S. and other rich country governments, and at the International Monetary Fund and World Bank, broke it.

Thirty years ago, most developing countries produced enough food to feed themselves [CHECK]. Now, 70 percent are net food importers.

Thirty years ago, most developing countries had in place mechanisms aimed at maintaining a relatively constant price for food commodities. Tariffs on imports protected local farmers from fluctuations in global food prices. Government-run grain purchasing boards paid above-market prices for farm goods when prices were low, and required farmers to sell below-market when prices were high. The idea was to give farmers some certainty over price, and to keep food affordable for consumers. Governments also provided a wide set of support services for farmers, giving them advice on new crop and growing technologies and, in some countries, helping set up cooperative structures.

This was not a perfect system by any means, but it looks pretty good in retrospect.

Over the last three decades, the system was completely abandoned, in country after country. It was replaced by a multinational-dominated, globally integrated food system, in which the World Bank and other institutions coerced countries into opening their markets to cheap food imports from rich countries and re-orienting their agricultural systems to grow food for rich consumers abroad. Proponents said the new system was a “free market” approach, but in reality it traded one set of government interventions for another — a new set of rules that gave enhanced power to a handful of global grain trading companies like Cargill and Archer Daniels Midland, as well as to seed and fertilizer corporations.

“For this food regime to work,” Raj Patel, author of Stuffed and Starved, told the U.S. House Financial Services Committee at a May hearing, “existing marketing boards and support structures needed to be dismantled. In a range of countries, this meant that the state bodies that had been supported and built by the World Bank were dismantled by the World Bank. The rationale behind the dismantling of these institutions was to clear the path for private sector involvement in these sectors, on the understanding that the private sector would be more efficient and less wasteful than the public sector.”

“The result of these interventions and conditions,” explained Patel, “was to accelerate the decline of developing country agriculture. One of the most striking consequences of liberalization has been the phenomenon of ‘import surges.’ These happen when tariffs on cheaper, and often subsidized, agricultural products are lowered, and a host country is then flooded with those goods. There is often a corresponding decline in domestic production. In Senegal, for example, tariff reduction led to an import surge in tomato paste, with a 15-fold increase in imports, and a halving of domestic production. Similar stories might be told of Chile, which saw a three-fold surge in imports of vegetable oil, and a halving of domestic production. In Ghana in 1998, local rice production accounted for over 80 percent of domestic consumption. By 2003, that figure was less than 20 percent.”

The decline of developing country agriculture means that developing countries are dependent on the vagaries of the global market. When prices spike — as they did in late 2007 and through the beginning of 2008 — countries and poor consumers are at the mercy of the global market and the giant trading companies that dominate it. In the first quarter of 2008, the price of rice in Asia doubled, and commodity prices overall rose 40 percent. People in rich countries felt this pinch, but the problem was much more severe in the developing world. Not only do consumers in poor countries have less money, they spend a much higher proportion of their household budget on food — often half or more — and they buy much less processed food, so commodity increases affect them much more directly. In poor countries, higher prices don’t just pinch, they mean people go hungry. Food riots broke out around the world in early 2008.

But not everyone was feeling pain. For Cargill, spiking prices was an opportunity to get rich. In the second quarter of 2008, the company reported profits of more than $1 billion, with profits from continuing operations soaring 18 percent from the previous year. Cargill’s 2007 profits totaled more than $2.3 billion, up more than a third from 2006.

In a competitive market, would a grain-trading middleman make super-profits? Or would rising prices crimp the middleman’s profit margin?

Well, the global grain trade is not competitive.

In an August speech, Cargill CEO Greg Page posed the question, “So, isn’t Cargill exploiting the food situation to make money?” Here is how he responded:

“I would give you four pieces of information about why our earnings have gone up dramatically.

The demand for food has gone up. The demand for our facilities has gone up, and we are running virtually all of our facilities worldwide at total capacity. As we utilize our capacity more effectively, clearly we do better.
Fertilizer prices rose, and we are owners of a large fertilizer company. That has been the single largest factor in Cargill’s earnings.
The volatility in the grain industry — much of it created by governments — was an opportunity for a trading company like Cargill to make money.
Finally, in this era of high prices, Cargill over the last two years has invested $15.5 billion additional dollars into the world food system. Some was to carry all these high-priced inventories. We also wanted to be sure that we were there for farmers who needed the working capital to operate in this much more expensive environment. Clearly, our owners expected some return on that $15.5 billion. Cargill had an opportunity to make more money in this environment, and I think that is something that we need to be very forthright about.”
OK, Mr. Page, that’s all very interesting. The question was, “So, isn’t Cargill exploiting the food situation to make money?” It sounds like your answer is, “yes.”

Chevron: “We can’t let little countries screw around with big companies”

The world has witnessed a stunning consolidation of the multinational oil companies over the last decade.

One of the big winners was Chevron. It swallowed up Texaco and Unocal, among others. It was happy to absorb their revenue streams. It has been less willing to take responsibility for ecological and human rights abuses perpetrated by these companies.

One of the inherited legacies from Chevron’s 2001 acquisition of Texaco is litigation in Ecuador over the company’s alleged decimation of the Ecuadorian Amazon over a 20-year period of operation. In 1993, 30,000 indigenous Ecuadorians filed a class action suit in U.S. courts, alleging that Texaco had poisoned the land where they live and the waterways on which they rely, allowing billions of gallons of oil to spill and leaving hundreds of waste pits unlined and uncovered. They sought billions in compensation for the harm to their land and livelihood, and for alleged health harms. The Ecuadorians and their lawyers filed the case in U.S. courts because U.S. courts have more capacity to handle complex litigation, and procedures (including jury trials) that offer plaintiffs a better chance to challenge big corporations. Texaco, and later Chevron, deployed massive legal resources to defeat the lawsuit. Ultimately, a Chevron legal maneuver prevailed: At Chevron’s instigation, U.S. courts held that the case should be litigated in Ecuador, closer to where the alleged harms occurred.

Having argued vociferously that Ecuadorian courts were fair and impartial, Chevron is now unhappy with how the litigation has proceeded in that country. So unhappy, in fact, that it is lobbying the Office of the U.S. Trade Representative to impose trade sanctions on Ecuador if the Ecuadorian government does not make the case go away.

“We can’t let little countries screw around with big companies like this — companies that have made big investments around the world,” a Chevron lobbyist said to Newsweek in August. (Chevron subsequently stated that “the comments attributed to an unnamed lobbyist working for Chevron do not reflect our company’s views regarding the Ecuador case. They were not approved by the company and will not be tolerated.”)

Chevron is worried because a court-appointed special master found in March that the company was liable to plaintiffs for between $7 billion and $16 billion. The special master has made other findings that Chevron’s clean-up operations in Ecuador have been inadequate.

Another of Chevron’s inherited legacies is the Yadana natural gas pipeline in Burma, operated by a consortium in which Unocal was one of the lead partners. Human rights organizations have documented that the Yadana pipeline was constructed with forced labor, and associated with brutal human rights abuses by the Burmese military.

EarthRights International, a human rights group with offices in Washington, D.C. and Bangkok, has carefully tracked human rights abuses connected to the Yadana pipeline, and led a successful lawsuit against Unocal/Chevron. In an April 2008 report, the group states that “Chevron and its consortium partners continue to rely on the Burmese army for pipeline security, and those forces continue to conscript thousands of villagers for forced labor, and to commit torture, rape, murder and other serious abuses in the course of their operations.”

Money from the Yadana pipeline plays a crucial role in enabling the Burmese junta to maintain its grip on power. EarthRights International estimates the pipeline funneled roughly $1 billion to the military regime in 2007. The group also notes that, in late 2007, when the Burmese military violently suppressed political protests led by Buddhist monks, Chevron sat idly by.

Chevron has trouble in the United States, as well. In September, Earl Devaney, the inspector general for the Department of Interior, released an explosive report documenting “a culture of ethical failure” and a “culture of substance abuse and promiscuity” in the U.S. government program handling oil lease contracts on U.S. government lands and property. Government employees, Devaney found, accepted a stream of small gifts and favors from oil company representatives, and maintained sexual relations with them. (In one memorable passage, the inspector general report states that “sexual relationships with prohibited sources cannot, by definition, be arms-length.”) The report showed that Chevron had conferred the largest number of gifts on federal employees. It also complained that Chevron refused to cooperate with the investigation, a claim Chevron subsequently disputed.

Constellation Energy: Nuclear Operators

Although it is too dangerous, too expensive and too centralized to make sense as an energy source, nuclear power won’t go away, thanks to equipment makers and utilities that find ways to make the public pay and pay.

Case in point: Constellation Energy Group, the operator of the Calvert Cliffs nuclear plant in Maryland. When Maryland deregulated its electricity market in 1999, Constellation — like other energy generators in other states — was able to cut a deal to recover its “stranded costs” and nuclear decommissioning fees. The idea was that competition would bring multiple suppliers into the market, and these new competitors would have an unfair advantage over old-time monopoly suppliers. Those former monopolists, the argument went, had built expensive nuclear reactors with the approval of state regulators, and it would be unfair if they could not charge consumers to recover their costs. It would also be unfair, according to this line of reasoning, if the former monopolists were unable to recover the costs of decommissioning nuclear facilities.

In Maryland, the “stranded cost” deal gave Constellation (through its affiliate Baltimore Gas & Electric, BGE) the right to charge ratepayers $975 million in 1993 dollars (almost $1.5 billion in present dollars).

Deregulation meant that Constellation’s energy generating assets — including its nuclear facility at Calvert Cliffs — were free from price regulation. As a result, instead of costing Constellation, Calvert Cliffs’ market value increased.

Deregulation also meant that, after an agreed-upon freeze period, BGE was free to raise its rates as it chose. In 2006, it announced a 72 percent rate increase. For residential consumers, this meant they would pay an average of $743 more per year for electricity.

The sudden price hike sparked a rebellion. The Maryland legislature passed a law requiring BGE to credit consumers $386 million over a 10-year period. At the time, Constellation was very pleased with the deal, which let it keep most of its price-gouging profits — a spokesperson for the then-governor said that Constellation and BGE were “doing a victory lap around the statehouse” after the bill passed.

In February 2008, however, Constellation announced that it intended to sue the state for unconstitutionally “taking” its assets via the mandatory consumer credit. In March, following a preemptive lawsuit by the state, the matter was settled. BGE agreed to make a one-time rebate of $170 million to residential ratepayers, and 90 percent of the credits to ratepayers (totaling $346 million) were left in place. The deal also relieved ratepayers of the obligation to pay for decommissioning — an expense that had been expected to total $1.5 billion (or possibly much more) from 2016 to 2036.

The deal also included regulatory changes making it easier for outside companies to invest in Constellation — a move of greater import than initially apparent. In September, with utility stock prices plummeting, Warren Buffet’s MidAmerican Energy announced it would purchase Constellation for $4.7 billion, less than a quarter of the company’s market value in January.

Meanwhile, Constellation plans to build a new reactor at Calvert Cliffs, potentially the first new reactor built in the United States since the near-meltdown at Three Mile Island in 1979.

“There are substantial clean air benefits associated with nuclear power, benefits that we recognize as the operator of three plants in two states,” says Constellation spokesperson Maureen Brown.

It has lined up to take advantage of U.S. government-guaranteed loans for new nuclear construction, available under the terms of the 2005 Energy Act [see “Nuclear’s Power Play: Give Us Subsidies or Give Us Death,” Multinational Monitor, September/October 2008]. “We can’t go forward unless we have federal loan guarantees,” says Brown.

Building nuclear plants is extraordinarily expensive (Constellation’s planned construction is estimated at $9.6 billion) and takes a long time; construction plans face massive political risks; and the value of electric utilities is small relative to the huge costs of nuclear construction. For banks and investors, this amounts to too much uncertainty — but if the government guarantees loans will be paid back, then there’s no risk.

Or, stated better, the risk is absorbed entirely by the public. That’s the financial risk. The nuclear safety risk is always absorbed, involuntarily, by the public.

CNPC: Fueling Violence in Darfur

Many of the world’s most brutal regimes have a common characteristic: Although subject to economic sanctions and politically isolated, they are able to maintain power thanks to multinational oil company enablers. Case in point: Sudan, and the Chinese National Petroleum Corporation (CNPC).

In July, International Criminal Court (ICC) Prosecutor Luis Moreno-Ocampo charged the President of Sudan, Omar Hassan Ahmad Al Bashir, with committing genocide, crimes against humanity and war crimes. The charges claim that Al Bashir is the mastermind of crimes against ethnic groups in Darfur, aimed at removing the black population from Sudan. Sudanese armed forces and government-authorized militias known as the Janjaweed have carried out massive attacks against the Fur, Masalit and Zaghawa communities of Darfur, according to the ICC allegations. Following bombing raids, “ground forces would then enter the village or town and attack civilian inhabitants. They kill men, children, elderly, women; they subject women and girls to massive rapes. They burn and loot the villages.” The ICC says 35,000 people have been killed and 2.7 million displaced.

The ICC reports one victim saying: “When we see them, we run. Some of us succeed in getting away, and some are caught and taken to be raped — gang-raped. Maybe around 20 men rape one woman. ... These things are normal for us here in Darfur. These things happen all the time. I have seen rapes, too. It does not matter who sees them raping the women — they don’t care. They rape girls in front of their mothers and fathers.”

Governments around the world have imposed various sanctions on Sudan, with human rights groups demanding much more aggressive action.

But there is little doubt that Sudan has been able to laugh off existing and threatened sanctions because of the huge support it receives from China, channeled above all through the Sudanese relationship with CNPC.

“The relationship between CNPC and Sudan is symbiotic,” notes the Washington, D.C.-based Human Rights First, in a March 2008 report, “Investing in Tragedy.” “Not only is CNPC the largest investor in the Sudanese oil sector, but Sudan is CNPC’s largest market for overseas investment.”

China receives three quarters of Sudan’s exports, and Chinese companies hold the majority share in almost all of the key oil-rich areas in Sudan. Explains Human Rights First: “Beijing’s companies pump oil from numerous key fields, which then courses through Chinese-made pipelines to Chinese-made storage tanks to await a voyage to buyers, most of them Chinese.” CNPC is the largest oil investor in Sudan; the other key Chinese company is the Sinopec Group (also known as the China Petrochemical Corporation).

Oil money has fueled violence in Darfur. “The profitability of Sudan’s oil sector has developed in close chronological step with the violence in Darfur,” notes Human Rights First. “In 2000, before the crisis, Sudan’s oil revenue was $1.2 billion. By 2006, with the crisis well underway, that total had shot up by 291 percent, to $4.7 billion. How does Sudan use that windfall? Its finance minister has said that at least 70 percent of the oil profits go to the Sudanese armed forces, linked with its militia allies to the crimes in Darfur.”

There are other nefarious components of the CNPC relationship with the Sudanese government. China ships substantial amounts of small arms to Sudan and has helped Sudan build its own small arms factories. China has also worked at the United Nations to undermine more effective multilateral action to protect Darfur. Human rights organizations charge a key Chinese motivation is to lubricate its relationship with the Khartoum government so the oil continues to flow.

CNPC did not respond to repeated requests for comment.

Dole: The Sour Taste of Pineapple

Starting in 1988, the Philippines undertook what was to be a bold initiative to redress the historically high concentration of land ownership that has impoverished millions of rural Filipinos and undermined the country’s development. The Comprehensive Agricultural Reform Program (CARP) promised to deliver land to the landless.

It didn’t work out that way.

Plantation owners helped draft the law and invented ways to circumvent its purported purpose.

Dole pineapple workers are among those paying the price.

Under CARP, Dole’s land was divided among its workers and others who had claims on the land prior to the pineapple giant. However, under the terms of the law, as the Washington, D.C.-based International Labor Rights Forum (ILRF) explains in an October report, “The Sour Taste of Pineapple,” the workers received only nominal title. They were required to form labor cooperatives. Intended to give workers — now the new land owners — a means to collectively manage their land, the cooperatives were instead controlled by wealthy landlords.

“Through its dealings with these cooperatives,” ILRF found, Dole and Del Monte, (the world’s other leading pineapple grower) “have been able to take advantage of a number of worker abuses. Dole has outsourced its labor force to contract labor and replaced its full-time regular employment system that existed before CARP.” Dole employs 12,000 contract workers. Meanwhile, from 1989 to 1998, Dole reduced its regular workforce by 3,500.

Under current arrangements, Dole now leases its land from its workers, on extremely cheap terms — in one example cited by ILRF, Dole pays in rent one-fifteenth of its net profits from a plantation. Most workers continue to work the land they purportedly own, but as contract workers for Dole.

The Philippine Supreme Court has ordered Dole to convert its contract workers into regular employees, but the company has not done so. In 2006, the Court upheld a Department of Labor and Employment decision requiring Dole to stop using illegal contract labor. Under Philippine law, contract workers should be regularized after six months.

Dole emphasizes that it pays its workers $10 a day, more than the country’s $5.60 minimum wage. It also says that its workers are organized into unions. The company responded angrily to a 2007 nomination for most irresponsible corporations from a Swiss organization, the Berne Declaration. “We must also say that those fallacious attacks created incredulity and some anger among our Dolefil workers, their representatives, our growers, their cooperatives and more generally speaking among the entire community where we operate.” The company thanked “hundreds of people who spontaneously expressed their support to Dolefil, by taking the initiative to sign manifestos,” including seven cooperatives.

The problem with Dole’s position, as ILRF points out, is that “Dole’s contract workers are denied the same rights afforded to Dole’s regular workers. They are refused the right to organize or benefits gained by the regular union, and are consequently left with poor wages and permanent job insecurity.” Contract workers are paid under a quota system, and earn about $1.85 a day, according to ILRF.

Conditions are not perfect for unionized workers, either. In 2006, when a union leader complained about pesticide and chemical exposures (apparently misreported in local media as a complaint about Dole’s waste disposal practices), the management of Dole Philippines (Dolefil) pressed criminal libel charges against him. Two years later, these criminal charges remain pending.

Dole says it cannot respond to the allegations in the ILRF report, because the U.S. Trade Representative is considering acting on a petition by ILRF to deny some trade benefits to Dole pineapples imported into the United States from the Philippines.

Concludes Bama Atheya, executive director of ILRF, “In both Costa Rica and the Philippines, Dole has deliberately obstructed workers’ right to organize, has failed to pay a living wage and has polluted workers’ communities.”

GE: Creative Accounting

General Electric (GE) has appeared on Multinational Monitor’s annual 10 Worst Corporations list for defense contractor fraud, labor rights abuses, toxic and radioactive pollution, manufacturing nuclear weaponry, workplace safety violations and media conflicts of interest (GE owns television network NBC).

This year, the company returns to the list for new reasons: alleged tax cheating and the firing of a whistleblower.

In June, former New York Times reporter David Cay Johnston reported on internal GE documents that appeared to show the company had engaged in long-running effort to evade taxes in Brazil. In a lengthy report in Tax Notes International, Johnston cited a GE subsidiary manager’s powerpoint presentation that showed “suspicious” invoices as “an indication of possible tax evasion.” The invoices showed suspiciously high sales volume for lighting equipment in lightly populated Amazon regions of the country. These sales would avoid higher value added taxes (VAT) in urban states, where sales would be expected to be greater.

Johnston wrote that the state-level VAT at issue, based on the internal documents he reviewed, appeared to be less than $100 million. But, “since the VAT scheme appears to have gone on long before the period covered in the Moreira [the company manager] report, the total sum could be much larger and could involve other countries supplied by the Brazil subsidiary.”

A senior GE spokesperson, Gary Sheffer, told Johnston that the VAT and related issues were so small relative to GE’s size that the company was surprised a reporter would spend time looking at them. “No company has perfect compliance,” Sheffer said. “We do not believe we owe the tax.”

Johnston did not identify the source that gave him the internal GE documents, but GE has alleged it was a former company attorney, Adriana Koeck. GE fired Koeck in January 2007 for what it says were “performance reasons.” GE sued Koeck in June 2008, alleging that she wrongfully maintained privileged and confidential information, and improperly shared the information with third parties. In a court filing, GE said that it “considers its professional reputation to be its greatest asset and it has worked tirelessly to develop and preserve an unparalleled reputation of ‘unyielding integrity.’”

GE’s suit followed a whistleblower defense claim filed by Koeck in 2007. In April 2007, Koeck filed a claim with the U.S. Department of Labor under the Sarbanes-Oxley whistleblower protections (rules put in place following the Enron scandal).

In her filing, Koeck alleges that she was fired not for poor performance, but because she called attention to improper activities by GE. After being hired in January 2006, Koeck’s complaint asserts, she “soon discovered that GE C&I [consumer and industrial] operations in Latin America were engaged in a variety of irregular practices. But when she tried to address the problems, both Mr. Burse and Mr. Jones [her superiors in the general counsel’s office] interfered with her efforts, took certain matters away from her, repeatedly became enraged with her when she insisted that failing to address the problems would harm GE, and eventually had her terminated.”

Koeck’s whistleblower filing details the state VAT-avoidance scheme discussed in Johnston’s article. It also indicates that several GE employees in Brazil were blackmailing the company to keep quiet about the scheme.

Koeck’s whistleblower filing also discusses reports in the Brazilian media that GE had participated in a “bribing club” with other major corporations. Members of the club allegedly met to divide up public contracts in Brazil, as well as to agree on the amounts that would be paid in bribes. Koeck discovered evidence of GE subsidiaries engaging in behavior compatible with the “bribing club” stories and reported this information to her superior. Koeck alleges that her efforts to get higher level attorneys to review the situation failed.

In a statement, GE responds to the substance of Koeck’s allegations of wrongdoing: “These were relatively minor and routine commercial and tax issues in Brazil. Our employees proactively identified, investigated and resolved these issues in the appropriate manner. We are confident we have met all of our tax and compliance obligations in Brazil.GE has a strong and rigorous compliance process that dealt effectively with these issues.”

Koeck’s Sarbanes-Oxley complaint was thrown out in June, on the grounds that it had not been filed in a timely matter.

The substance of her claims, however, are now under investigation by the Department of Justice Fraud Section, according to Corporate Crime Reporter.

Imperial Sugar: 13 Dead

On February 7, an explosion rocked the Imperial Sugar refinery in Port Wentworth, Georgia, near Savannah.

Tony Holmes, a forklift operator at the plant, was in the break room when the blast occurred.

“I heard the explosion,” he told the Savannah Morning News. “The building shook, and the lights went out. I thought the roof was falling in. ... I saw people running. I saw some horrific injuries. ... People had clothes burning. Their skin was hanging off. Some were bleeding.”

Days later, when the fire was finally extinguished and search-and-rescue operations completed, the horrible human toll was finally known: 13 dead, dozens badly burned and injured.

As with almost every industrial disaster, it turns out the tragedy was preventable. The cause was accumulated sugar dust, which like other forms of dust, is highly combustible.

The Occupational Safety and Health Administration (OSHA), the government workplace safety regulator, had not visited Imperial Sugar’s Port Wentworth facility since 2000. When inspectors examined the blast site after the fact, they found rampant violations of the agency’s already inadequate standards. They proposed a more than $5 million fine, and issuance of citations for 61 egregious willful violations, eight willful violations and 51 serious violations. Under OSHA’s rules, a “serious” citation is issued when death or serious physical harm is likely to occur, a “willful” violation is a violation committed with plain indifference to employee safety and health, and “egregious” citations are issued for particularly flagrant violations.

A month later, OSHA inspectors investigated Imperial Sugar’s plant in Gramercy, Louisiana. They found 1/4- to 2-inch accumulations of dust on electrical wiring and machinery. They found 6- to 8-inch accumulations on wall ledges and piping. They found 1/2- to 1-inch accumulations on mechanical equipment and motors. They found 3- to 48-inch accumulations on workroom floors. OSHA posted an “imminent danger” notice at the plant, because of the high likelihood of another explosion.

Imperial Sugar obviously knew of the conditions in its plants. It had in fact taken some measures to clean up operations prior to the explosion.

Graham H. Graham was hired as vice president of operations of Imperial Sugar in November 2007. In July 2008, he told a Senate subcommittee that he first walked through the Port Wentworth facility in December 2007. “The conditions were shocking,” he testified. “Port Wentworth was a dirty and dangerous facility. The refinery was littered with discarded materials, piles of sugar dust, puddles of sugar liquid and airborne sugar dust. Electrical motors and controls were encrusted with solidified sugar, while safety covers and doors were missing from live electrical switchgear and panels. A combustible environment existed.”

Graham recommended that the plant manager be fired, and he was. Graham ordered a housekeeping blitz, and by the end of January, he testified to the Senate subcommittee, conditions had improved significantly, but still were hazardous.

But Graham also testified that he was told to tone down his demands for immediate action. In a meeting with John Sheptor, then Imperial Sugar’s chief operating officer and now its CEO, and Kay Hastings, senior vice president of human resources, Graham testified, “I was also informed that I was excessively eager in addressing the refinery’s problems.”

Sheptor, who was nearly killed in the refinery explosion, and Hastings both deny Graham’s account.

The company says that it respected safety concerns before the explosion, but has since redoubled efforts, hiring expert consultants on combustible hazards, refocusing on housekeeping efforts and purchasing industrial vacuums to minimize airborne disbursement.

In March, the House of Representatives Education and Labor Committee held a hearing on the hazards posed by combustible dust. The head of the Chemical Safety Board testified about a 2006 study that identified hundreds of combustible dust incidents that had killed more than 100 workers during the previous 25 years. The report recommended that OSHA issue rules to control the risk of dust explosions.

Instead of acting on this recommendation, said Committee Chair George Miller, D-California, “OSHA chose to rely on compliance assistance and voluntary programs, such as industry ‘alliances,’ web pages, fact sheets, speeches and booths at industry conferences.”

The House of Representatives then passed legislation to require OSHA to issue combustible dust standards, but the proposal was not able to pass the Senate.

Remarkably, even after the tragedy at Port Wentworth, and while Imperial Sugar said it welcomed the effort for a new dust rule, OSHA head Edwin Foulke indicated he believed no new rule was necessary.

“We believe,” he told the House Education and Labor Committee in March, “that [OSHA] has taken strong measures to prevent combustible dust hazards, and that our multi-pronged approach, which includes effective enforcement of existing standards, combined with education for employers and employees, is effective in addressing combustible dust hazards. We would like to emphasize that the existence of a standard does not ensure that explosions will be eliminated.”

Philip Morris International: Unshackled

The old Philip Morris no longer exists. In March, the company formally divided itself into two separate entities: Philip Morris USA, which remains a part of the parent company Altria, and Philip Morris International.

Philip Morris USA sells Marlboro and other cigarettes in the United States. Philip Morris International tramples over the rest of the world.

The world is just starting to come to grips with a Philip Morris International even more predatory in pushing its toxic products worldwide.

The new Philip Morris International is unconstrained by public opinion in the United States — the home country and largest market of the old, unified Philip Morris —and will no longer fear lawsuits in the United States.

As a result, Thomas Russo of the investment fund Gardner Russo & Gardner told Bloomberg, the company “won’t have to worry about getting pre-approval from the U.S. for things that are perfectly acceptable in foreign markets.” Russo’s firm owns 5.7 million shares of Altria and now Philip Morris International.

A commentator for The Motley Fool investment advice service wrote, “The Marlboro Man is finally free to roam the globe unfettered by the legal and marketing shackles of the U.S. domestic market.”

In February, the World Health Organization (WHO) issued a new report on the global tobacco epidemic. WHO estimates the Big Tobacco-fueled epidemic now kills more than 5 million people every year.

Five million people.

By 2030, WHO estimates 8 million will die a year from tobacco-related disease, 80 percent in the developing world.

The WHO report emphasizes that known and proven public health policies can dramatically reduce smoking rates. These policies include indoor smoke-free policies; bans on tobacco advertising, promotion and sponsorship; heightened taxes; effective warnings; and cessation programs. These “strategies are within the reach of every country, rich or poor and, when combined as a package, offer us the best chance of reversing this growing epidemic,” says WHO Director-General Margaret Chan.

Most countries have failed to adopt these policies, thanks in no small part to decades-long efforts by Philip Morris and the rest of Big Tobacco to deploy political power to block public health initiatives. Thanks to the momentum surrounding a global tobacco treaty, known as the Framework Convention on Tobacco Control, adopted in 2005, this is starting to change. There’s a long way to go, but countries are increasingly adopting sound public health measures to combat Big Tobacco.

Now Philip Morris International has signaled its initial plans to subvert these policies.

The company has announced plans to inflict on the world an array of new products, packages and marketing efforts. These are designed to undermine smoke-free workplace rules, defeat tobacco taxes, segment markets with specially flavored products, offer flavored cigarettes sure to appeal to youth and overcome marketing restrictions.

The Chief Operating Officer of Philip Morris International, Andre Calantzopoulos, detailed in a March investor presentation two new products, Marlboro Wides, “a shorter cigarette with a wider diameter,” and Marlboro Intense, “a rich, flavorful, shorter cigarette.”

Sounds innocent enough, as far as these things go.

That’s only to the innocent mind.

The Wall Street Journal reported on Philip Morris International’s underlying objective: “The idea behind Intense is to appeal to customers who, due to indoor smoking bans, want to dash outside for a quick nicotine hit but don’t always finish a full-size cigarette.”

Workplace and indoor smoke-free rules protect people from second-hand smoke, but also make it harder for smokers to smoke. The inconvenience (and stigma of needing to leave the office or restaurant to smoke) helps smokers smoke less and, often, quit. Subverting smoke-free bans will damage an important tool to reduce smoking.

Philip Morris International says it can adapt to high taxes. If applied per pack (or per cigarette), rather than as a percentage of price, high taxes more severely impact low-priced brands (and can help shift smokers to premium brands like Marlboro). But taxes based on price hurt Philip Morris International.

Philip Morris International’s response? “Other Tobacco Products,” which Calantzopoulos describes as “tax-driven substitutes for low-price cigarettes.” These include, says Calantzopoulos, “the ‘tobacco block,’ which I would describe as the perfect make-your-own cigarette device.” In Germany, roll-your-own cigarettes are taxed far less than manufactured cigarettes, and Philip Morris International’s “tobacco block” is rapidly gaining market share.

One of the great industry deceptions over the last several decades is selling cigarettes called “lights” (as in Marlboro Lights), “low” or “mild” — all designed to deceive smokers into thinking they are safer.

The Framework Convention on Tobacco Control says these inherently misleading terms should be barred. Like other companies in this regard, Philip Morris has been moving to replace the names with color coding — aiming to convey the same ideas, without the now-controversial terms.

Calantzopoulos says Philip Morris International will work to more clearly differentiate Marlboro Gold (lights) from Marlboro Red (traditional) to “increase their appeal to consumer groups and segments that Marlboro has not traditionally addressed.”

Philip Morris International also is rolling out a range of new Marlboro products with obvious attraction for youth. These include Marlboro Ice Mint, Marlboro Crisp Mint and Marlboro Fresh Mint, introduced into Japan and Hong Kong last year. It is exporting clove products from Indonesia.

The company has also renewed efforts to sponsor youth-oriented music concerts. In July, activist pressure forced Philip Morris International to withdraw sponsorship of an Alicia Keys concert in Indonesia (Keys called for an end to the sponsorship deal); and in August, the company was forced to withdraw from sponsorship in the Philippines of a reunion concert of the Eraserheads, a band sometimes considered “the Beatles of the Philippines.”

Responding to increasing advertising restrictions and large, pictorial warnings required on packs, Marlboro is focusing increased attention on packaging. Fancy slide packs make the package more of a marketing device than ever before, and may be able to obscure warning labels.

Most worrisome of all may be the company’s forays into China, the biggest cigarette market in the world, which has largely been closed to foreign multinationals. Philip Morris International has hooked up with the China National Tobacco Company, which controls sales in China. Philip Morris International will sell Chinese brands in Europe. Much more importantly, the company is starting to sell licensed versions of Marlboro in China. The Chinese aren’t letting Philip Morris International in quickly — Calantzopoulos says, “We do not foresee a material impact on our volume and profitability in the near future.” But, he adds, “we believe this long-term strategic cooperation will prove to be mutually beneficial and form the foundation for strong long-term growth.”

What does long-term growth mean? In part, it means gaining market share among China’s 350 million smokers. But it also means expanding the market, by selling to girls and women. About 60 percent of men in China smoke; only 2 or 3 percent of women do so.

Roche: Saving Lives is Not Our Business

Monopoly control over life-saving medicines gives enormous power to drug companies. And, to paraphrase Lord Acton, enormous power corrupts enormously.

The Swiss company Roche makes a range of HIV-related drugs. One of them is enfuvirtid, sold under the brand-name Fuzeon. Fuzeon is the first of a new class of AIDS drugs, working through a novel mechanism. It is primarily used as a “salvage” therapy — a treatment for people for whom other therapies no longer work. Fuzeon brought in $266 million to Roche in 2007, though sales are declining.

Roche charges $25,000 a year for Fuzeon. It does not offer a discount price for developing countries.

Like most industrialized countries, Korea maintains a form of price controls — the national health insurance program sets prices for medicines. The Ministry of Health, Welfare and Family Affairs listed Fuzeon at $18,000 a year. Korea’s per capita income is roughly half that of the United States. Instead of providing Fuzeon, for a profit, at Korea’s listed level, Roche refuses to make the drug available in Korea.

Korea is not a developing country, emphasizes Roche spokesperson Martina Rupp. “South Korea is a developed country like the U.S. or like Switzerland.”

Roche insists that Fuzeon is uniquely expensive to manufacture, and so that it cannot reduce prices. According to a statement from Roche, “the offered price represents the lowest sustainable price at which Roche can provide Fuzeon to South Korea, considering that the production process for this medication requires more than 100 steps — 10 times more than other antiretrovirals. A single vial takes six months to produce, and 45 kilograms of raw materials are necessary to produce one kilogram of Fuzeon.”

The head of Roche Korea was reportedly less diplomatic. According to Korean activists, he told them, “We are not in business to save lives, but to make money. Saving lives is not our business.”

Says Roche spokesperson Rupp: “I don’t know why he would say that, and I cannot imagine that this is really something that this person said.”

Another AIDS-related drug made by Roche is valganciclovir. Valganciclovir treats a common AIDS-related infection called cytomegalovirus (CMV) that causes blindness or death. Roche charges $10,000 for a four-month course of valganciclovir. In December 2006, it negotiated with Médicins Sans Frontières/Doctors Without Borders (MSF) and agreed on a price of $1,899. According to MSF, this still-price-gouging price is only available for poor and very high incidence countries, however, and only for nonprofit organizations — not national treatment programs.

Roche’s Rupp says that “Currently, MSF is the only organization requesting purchase of Valcyte [Roche’s brand name for valganciclovir] for such use in these countries. To date, MSF are the only AIDS treatment provider treating CMV for their patients. They told us themselves this is because no-one else has the high level of skilled medical staff they have.”

Dr. David Wilson, former MSF medical coordinator in Thailand, says he remembers the first person that MSF treated with life-saving antiretrovirals. “I remember everyone was feeling really great that we were going to start treating people with antiretrovirals, with the hope of bringing people back to normal life.” The first person MSF treated, Wilson says, lived but became blind from CMV. “She became strong and she lived for a long time, but the antiretroviral treatment doesn’t treat the CMV.”

“I’ve been working in MSF projects and treating people with AIDS with antiretrovirals for seven years now,” he says, “and along with many colleagues we’ve been frustrated because we don’t have treatment for this particular disease. We now think we have a strategy to diagnose it effectively and what we really need is the medicine to treat the patients.”


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The beginning of the China crisis as unemployment rises?

http://china-economics-blog.blogspot.com/2008/11/beginning-of-china-crisis-as.html

Saturday, 22 November 2008
The beginning of the China crisis as unemployment rises?

In this blog I have commented on numerous occasions about the possibility of social unrest in China arising as a result of the export crash and the on going global recession.

To me I felt like I was in the middle of a strange conspiracy. At last the mainstream press and more importantly China's press are beginning to acknowledge what I have been trying to point out for a while:

1. The fall in demand for Chinese goods from the US, Europe and Japan will cause huge unemployment and will not and cannot be absorbed by domestic consumption. This was never even a remote possibility given China's rates of personal saving.

2. Chinese citizens are becoming more vocal and more liable to protest. The Internet and the ability to get information out of the country means that social instability is a real concern.


There is no doubt China's government is still strong enough to quell any trouble and is not afraid to use all the resources at its disposal but at least the issue is quietly sneaking into the real world.

What I like about this article is that China's primary concern is "employment". Forget the global crisis or inflation - employment is all important. Western governments would do well to remember this when asking for favours from China.

The key is that 8% growth is not as great as it seems given China's population structure. If we fall below 7% I would be worried.


Beijing forecasts grim employment outlook [FT]


China's employment outlook is becoming "grim", say officials, as the global financial crisis triggers fresh factory closures in the export sector.

Urban unemployment has begun to rise and will increase next year, Yin Weimin, minister of human resources and social security, said on Thursday.

"Stabilising employment is the top priority for us right now," said Mr Yin, in comments reflecting growing worries about the potential threat to social stability.

"The current situation is grim, and the impact is still unfolding," he said. "Since October, our country's employment situation has been affected along with changes in international economic conditions."

China's official urban unemployment rate is 4 per cent. But this figure includes only registered urban residents. Tens of millions of rural migrants who have moved to cities to work in factories over the past decade are generally not included in unemployment data if they lose their jobs.

The national economy has been slowing gradually since the start of the year. However, the pace at which it is cooling accelerated sharply in September and October, prompting a steep drop in confidence among companies and some consumers.

Even when the economy was growing strongly, China witnessed a stream of localised protests. Recent trouble has included strikes by taxi drivers in three cities and rioting in a city in Gansu province this week.

Statements by Chinese leaders have shown that they were worried about the social impact of a sharp downturn. In an article in a Communist party magazine this month, Wen Jiabao, the premier, said: "We must be crystal clear that without a certain pace of economic growth, there will be difficulties with employment, fiscal revenues and social development . . . factors damaging social stability will grow."

Zhang Xiaojian, vice-minister of human resources and social security, said on Thursday competition for jobs among growing numbers of college graduates would intensify if the economy slumped. The authorities jast week unveiled a huge fiscal stimulus programme aimed at keeping growth at about 8 per cent a year.

The slowdown began in the housing market, spreading to related industries such as steel and cement. With Europe now in recession, and many of its other markets slowing, some economists think that Chinese exporters are about to face an extremely tough patch.

In one indication of the gathering slowdown, Japan saidits exports to the rest of Asia recorded their first decline for seven years last month, with exports to China dropping 0.9 per cent compared with the same period last year. Japanese companies have been large suppliers of components and other products to the array of factories in China that assemble goods for export.

Two provincial governments this week announced measures aimed at deterring businesses from laying off workers. Hubei and Shandong said companies trying to lay off more than 40 staff would need prior approval from the local authorities.



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Posted by ChinaEconomist at 12:26

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2 engineers from China sentenced for espionage

http://news.cnet.com/8301-1001_3-10106100-92.html

Posted by Natalie Weinstein Print E-mail Share 4 commentsYahoo! Buzz Two Silicon Valley engineers from China have been sentenced to prison for stealing chip designs and attempting to smuggle them back into their native country, the Associated Press reported.

The two men, Fei Ye and Ming Zhong, pleaded guilty two years ago. They were sentenced Friday in U.S. District Court in San Jose. According to the AP, they are the first ones convicted of the most serious violations under the Economic Espionage Act of 1996.


Ye is a U.S. citizen, the AP said, and Zhong is a permanent resident of the U.S.

Prosecutors did not allege that China's government actually knew of the crime.

The case started in late 2001 when the two men were arrested at the San Francisco airport. They had been trying to board a plane with suitcases full of chip design documents from four companies they'd worked at, the AP said.

The four companies: NEC Electronics, Sun Microsystems, Transmeta, and Trident Microsystems. Ye and Zhong had been employed at Transmeta and Trident. Ye also had jobs at NEC and Sun.

Prosecutors said documents showed Ye and Zhong were trying to sell the idea of the start-up as a way to boost China's chip-making abilities.
Natalie Weinstein is an associate editor who works out of Austin, Texas. She spent a decade as a reporter and editor in the newspaper industry before joining the CNET News staff in 2000. Natalie Weinstein is an associate editor who works out of Austin, Texas. She spent a decade as a reporter and editor in the newspaper industry before joining the CNET News staff in 2000. E-mail Natalie.
Topics: Corporate & legal

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Japan, Russia agree on 'concrete' steps to end territorial row

http://news.yahoo.com/s/afp/20081123/wl_asia_afp/apecsummitrussiajapan_081123025602

Sat Nov 22, 9:56 pm ET AFP/File – File photo shows a general view of Korsakov port in Sakhalin, part of the disputed Kuril chain of islands … LIMA (AFP) – Japan and Russia have agreed to take "concrete" steps toward resolving a territorial dispute, while urging North Korea to show a clear plan for junking its nuclear program, an official said.

Japanese Prime Minister Taro Aso, who took office in September, held his first talks with Russian President Dmitry Medvedev on the sidelines of a summit of Asia-Pacific leaders in Lima on Saturday.


"As for the territorial issue ... we agreed to order government officials to begin concrete work," said a Japanese government official, who attended the APEC talks.

Russia and Japan have never signed a peace treaty to formally end World War II due to Tokyo's claims over four islands which Soviet troops seized in 1945 off Japan's northern island of Hokkaido.

Aso and Medvedev also called on North Korea to clarify steps it would take to denuclearize under a six-nation aid-for-disarmament pact.

"As for the North Korean issue, we agreed on the need for a document to practically verify" Pyongyang's declearization process, the Japanese official said.

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Democratic deficit-'China is a threat to democracy'

http://world.123goclick.com/2008/11/23/democratic-deficit/

By Vaudine England
BBC News, Hong Kong


The threat looming from China is not to do with cheap exports but the “dooming of democracy”, former Hong Kong Governor Chris Patten has told the BBC.

Lord Patten said China promoted the idea that one could get rich without needing democracy - and such an idea posed a threat to the West.

He said regional bodies such as Asean should be strengthened so they could do more to tackle regional problems.

Lord Patten was mobbed by fans while in Hong Kong to promote his latest book.

The book, What’s Next Surviving the Twenty-first Century, tries to assess where the challenges of the future will come from.

It discusses climate change, trafficking of people, guns and drugs and other aspects of the “dark side of globalisation”.


Most provocative in Asia will be his views on Burma, China and democracy, some of which have sparked anger among Asian governments in the past.

Despite interest in his book, the territory’s former governor remains a divisive figure.

Asia ‘hobbled’

Looking at Asian economics and politics, Lord Patten said much needed to be done to strengthen regional infrastructure, as groups such as the Association of Southeast Asian Nations (Asean) were far too weak.

"China is I think the first example of a country which has done astonishingly well in this international system but challenges its basic foundations"
Chris Patten, diplomat author
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He said he favoured Asean becoming a customs union, as a first step towards an EU-type integration, and as a challenge to the region’s “protectionist instincts” and different degrees of economic development in Asean.

“And because, politically, Asean is hobbled by the membership of Burma and by its inability to address collectively the challenge of a state which abuses the human rights of its citizens so strongly,” said Lord Patten.

In his book he discusses the UN doctrine of “responsibility to protect” - which could justify intervention by the international community in a state where gross abuses are taking place against the population.

But he said, “in cases like Zimbabwe, in cases like Burma, unless the neighbours are prepared to get involved, it’s extremely difficult for the international community to make a difference on the ground.

“If Burma’s neighbours, not only Asean but China and India, had been prepared to take a tougher line during the humanitarian crisis or when the monks were being shot, then it would have been possible for the international community to change events,” said Lord Patten.

Systemic challenge

Asia poses a real challenge where the foundations of recent rapid growth in wealth and freedoms are not acknowledged, he said.

“East Asia in particular, South Asia too, has done extremely well out of a system which was largely created under American leadership, of freer markets, freer trade, leading to freer politics as well.

“China is I think the first example of a country which has done astonishingly well in this international system, but challenges its basic foundations.

“And its challenge is welcomed by autocracies which are a lot less successful, for example, dictatorships in Africa,” he said.

But he said he did not think the Chinese model of “authoritarian, illiberal, proto-capitalism” would win out, because it did not have the “safety valves” provided by democracies when times were tough.

Asked if China was becoming a larger player in international affairs, he noted China’s contribution to peace-keeping forces around the world.

“What they’re reluctant to do I think is to accept a more interventionist role for the UN and that has particularly affected one or two countries where they’ve been developing substantial commercial interests.”

But discussing China’s role in the conflict in the Sudanese region of Darfur, he said that while China had “given some cover” to Sudan’s government in the UN, it would not be “remotely fair” to blame China for the conflict.

Advice for Obama

As a large economic power, China had a large interest in stability. “Failed and failing states are bad for business if you’re a big economic player,” he said.

Lord Patten said he hoped US President-elect Barack Obama would provide the global leadership that had been lacking.

But he offered a word of caution for Mr Obama.

“On the back of this financial crisis the last thing we want is a period of trade protectionism.

“So I hope that [Mr Obama's] first message to Asia is that that is something he is going to resist,” Lord Patten said.

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NEWS: Disabled People Lack Assistance After Myanmar Disaster

http://wecando.wordpress.com/2008/11/23/news-disabled-people-lack-assistance-after-myanmar-disaster/

Posted on 23 November 2008. Filed under: Cross-Disability, Disaster Planning & Mitigation, East Asia Pacific Region, Inclusion, News | Tags: cyclone, Disaster, humanitarian disaster, humanitarian emergency, Myanmar |

In humanitarian disasters, people with disabilities are often more at risk and disproportionately affected by crisis situations. Yet they are persistently forgotten and left behind by most of the mainstream agencies that are supposed to help. Unfortunately, this has happened once again during and after the recent cyclones in Myanmar. (Given how often this situation occurs, it would perhaps be more accurate to term this article “Non-News” rather than “News.”)

It is reported that very little of the relief dollars sent to Myanmar has filtered down to people with disabilities in the country. Yet, despite the fact that people with disabilities are both more likely to need assistance and less likely to actually receive it, they are often not even included in most mainstream reports meant to assess the situation in Myanmar.

Read more detail about the situation for people with disabilities in post-cyclone Myanmar in the article entitled Myanmar: Disabled People Await Post-Cyclone Aid at the humanitarian news and analysis page for the United Nations Office for the Coordination of Humanitarian Affairs.

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Burma: Heed UN Advisor on Constitutional Reform

http://www.hrw.org/en/news/2008/03/04/burma-heed-un-advisor-constitutional-reform

Time for Action, Not More Empty Promises From Military Rulers
March 4, 2008
Gambari should tell the generals that marching a fearful population through a stage-managed referendum will not advance democracy or reconciliation in Burma.
Brad Adams, Asia director at Human Rights Watch
Related Materials: Burma: Referendum a Sham Unless Repression EndsThe Burmese military government should adopt expected calls from UN special advisor Ibrahim Gambari to allow an open and inclusive political process ahead of a planned constitutional referendum in May, Human Rights Watch said today. Gambari arrives in Burma on March 6, 2008.


On February 19, Burma’s ruling State Peace and Development Council (SPDC) announced that a referendum on a new constitution would be held in May 2008, with multiparty elections following in 2010. But, without input from the public and opposition parties, the process fails to be a real step toward democracy, despite the government’s claims.

“Gambari should tell the generals that marching a fearful population through a stage-managed referendum will not advance democracy or reconciliation in Burma,” said Brad Adams, Asia director at Human Rights Watch. “A referendum under these repressive conditions will only cement in place continued military rule.”

Since announcing the referendum, the government issued Law No.1/2008, which denies voting rights to members of religious orders, including monks and nuns. It also imposes a three-year prison sentence on anyone found “lecturing, distributing papers, using posters or disturbing the voting in any other manner in the polling booth or at the public or private place to destroy the referendum.”

Provisions in the draft constitution bar candidates from running for president if they have a foreign spouse or child (such as detained opposition leader Aung San Suu Kyi) and reserve a quarter of parliamentary seats for serving military officers.

Human Rights Watch called on Special Advisor Gambari to seek guarantees from the government to convene an independent election commission, compile a proper voter registration list, lift long-standing restrictions on media, permit freedoms of association, expression, and assembly in Burma, and revoke new regulations that criminalize legitimate debate about the referendum.

“Gambari should not confuse this sham constitutional process with progress,” said Adams. “Opposition parties risk being punished for simply discussing or sharing information about the proposed constitution.”
Human Rights Watch urged the UN special advisor to call on the SPDC to:


Release political opponents and more than 1,800 political prisoners, including Aung San Suu Kyi, leaders of the ‘88 Generation Students, and the leaders of the Shan Nationalities League for Democracy arrested in 2005;
Account for all casualties and missing persons from last September’s crackdown on protests by Buddhist monks and democracy activists, including the whereabouts of missing monks and nuns;
Secure access to Burma for the incoming UN special rapporteur on the situation of human rights in Burma; and
Permit opposition political parties to meet with the special envoy.
Following its brutal crackdown on protesters during August and September 2007, the SPDC promised Gambari to set out clear steps to reform, and to engage in dialogue with the domestic opposition and the international community.

On October 11, 2007, the UN Security Council urged the Burmese government “to create the necessary conditions for a genuine dialogue with Daw Aung San Suu Kyi and all concerned parties and ethnic groups, in order to achieve an inclusive national reconciliation with the direct support of the United Nations.” On November 14, the Security Council expressed its expectation that a “meaningful and timebound dialogue” would take place, and called for the release of political prisoners, accounting for missing persons, and humanitarian access to persons in need throughout the country.

When Gambari visited in November, his activities were closely controlled by the government and he was unable to visit opposition leaders without government supervision. Reforms have not occurred and arrests of political activists and journalists have continued in a climate of fear.

“If the Burmese generals continue their obstructive tactics during Gambari’s visit, the UN Security Council must react to such contempt for UN officials.” said Adams. “Burma’s backers in the international community, including China, Russia, and Thailand, must support Gambari in this effort.”

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Weekly Business Roundup China’s Burma oil conduit threat

http://thepost.com.pk/BizNewsT.aspx?dtlid=193391&catid=7

The Post Monitoring

China's confirmation that it will use Burma as a conduit to ship oil from the Middle East and Africa into its southwestern provinces has triggered alarm among human rights campaigners of heightened risks of abuse.

Chinese state media quoted senior officials from Yunnan Province, which borders Burma, as saying that work on building a pipeline costing US $1.5 billion would begin within the next six months.

Construction work on both sides of the border is starting earlier than previously planned, ironically because of the global economic slump. The Chinese Communist Party has in the last ten days initiated colossal public spending totaling around $600 billion on numerous infrastructure projects to keep the country's slowing economy working.



China has been rumored to be building a deep-draft port at Kyaukphyu on Ramree Island, located just off western Burma's Arakan coast, capable of handling oil supertankers.Xinhua news agency has more or less confirmed this by announcing that Burma will "provide an alternative route for China's crude imports from the Middle East and Africa and ease the country's worries of its over-dependence on energy transportation through the Strait of Malacca."

Concurrent with the oil pipeline, China's state-controlled energy giant China National Petroleum Corp (CNPC) is to build another pipeline through Burma costing just over $1 billion to pump gas from Burma's offshore Shwe field.

International human rights groups have warned of the dangers to Burmese communities through which the pipelines will be built.

"The oil and gas pipelines to China pose massive threats to human rights from Arakan to Shan states-forced relocation, forced labor and other impacts on local populations are likely from pipeline security battalions," Wong Aung, coordinator of the Shwe Gas Movement, told The Irrawaddy on Friday.

It's understood that the South Korean industrial giant Daewoo International, which is the main developer of the Shwe field, will partner with CNPC.

"While CNPC will operate the gas pipeline, Daewoo International will still be culpable for the human rights impacts of the pipeline as the largest stakeholder in the Shwe Gas Project, of which the pipeline is a part," said Matthew F Smith of the US-based EarthRights International (ERI).

ERI recently named Daewoo in a complaint to the Organization for Economic Cooperation and Development (OECD), of which South Korea is a member, for failing in Burma to adhere to corporate responsibility undertakings by OECD countries."From what we understand, the CNPC will virtually own and control the operation of these pipelines even though it has been announced that the Myanmar Oil and Gas Enterprise will be the other shareholding partner," regional energy industries analyst-consultant Sar Watana told The Irrawaddy on Friday.

"These are major undertakings and underline China's influence and utilization of Burma for its growing energy needs."

Junta to Permit Building of 15 More Hydro dams

The Burmese ruling junta is reportedly planning another 15 hydroelectric projects on Burma's rivers in addition to the 22 already on the drawing board or under construction.

If approved, the 15 hydrodams would have an electricity-generating capacity of almost 14,000 megawatts-on top of the 16,500 MW expected to result from dams already being developed.

"These dams, if they reach fruition and their full operating potential, would deliver more electricity than Thailand currently uses," energy consultant Collin Reynolds in Bangkok told The Irrawaddy this week.

"It's ironic, given the paltry level of electricity-generating capacity that Burma lives with in the 21st century. The Burmese have a mere 1,700 MW according to their own government's latest official figures. Such a low level explains why Burma looks black on nighttime satellite pictures of the region."

Neighboring Thailand has a generating capacity of 26,000 MW and will be a major recipient of hydropower generated in Burma. Other countries who will tap this power source are neighboring energy-hungry giants India and China.

The Chinese will not only be major recipients of the Burmese hydropower-their state-owned companies are heavily involved in the construction work to build them, the official Chinese news agency Xinhua said this week.

The companies include Yunnan Machinery and Equipment Import and Export Co, the Farsighted Investment Group Co, Gold Water Resources Limited and the China Power Investment Corporation, which alone will build seven dams, said Xinhua.

Japan to build more vhicles in Burma despite gobal sump

In the midst of a global recession, Japan is stepping up investment in its motorbike and vehicle assembly in Burma.

Nissan and Suzuki have partnership deals with First Myanmar Investment (FMI), a junta-linked leading Burmese business.

FMI president Theim Wai announced last week that the company is to significantly increase local production of vehicles, in particular Suzuki pickup trucks and motorbikes.

Neither side has disclosed how much will be invested in factory production line expansions, but FMI said the number of pickups to be built in 2009 will increase from its current level of 170 per month to 1,200 per month next year.

Suzuki's formal joint venture status via the junta's Ministry of Industry (2) was recently renewed for ten years.Its assembly plant is in the South Dagon Industrial Zone in Rangoon.

Lloyd's Boss also Board Member of Burma-linked Total

The chairman of global insurers Lloyd's of London, the subject of a get-out-of-Burma campaign, has been disclosed as an influential board member of the French oil company Total.

Total is one of the last major European firms still operating in Burma, delivering hundreds of millions of dollars profit per year to the Burma junta via its sales of gas to Thailand from the Gulf of Martaban.

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