Saturday, October 22, 2011

Indonesian troops curtail violence in Papaua; CIA, AFP responsible for unrest


CIA, Australian Federal Police responsible for unrest in Papua; attempt to destabilize Indonesia, wreck economy; CIA dupe Al Jazeera prints bogus, sensationalist information as "news" (below), attempt to provoke more unrest, give Indonesia bad name

Al Jazeera*
10/21/2001

Indonesian security forces have dispersed a pro-independence assembly in eastern Papua province, firing tear gas and warning shots, reports and witnesses said.

    Witnesses said hundreds of people taking part in the rally were rounded up in Wednesday's crackdown. Hundreds of paramilitary police and army troops surrounded the estimated 5,000 participants at the rally, held at an open field in Abepura outside the provincial capital Jayapura, witnesses said on Wednesday. Witnesses said there were no immediate reports of casualties, as police dispersed the crowd which included human rights activists, tribal and religious leaders.

Al Jazeera joins U.S, AFP  in trying to deflect attention from crises
"They got in and started firing tear gas, trampling and beating up the crowd with their bare fists and rifle butts until they were black and blue," Paskalis Tonggap, a rights activist, said.

Another witness, Markus Haluk, a leader of a Papuan youth organisation, said that police and troops had surrounded the congress with anti-riot trucks and fired warning shots.

    The participants were attending the Third Papuan Congress, a pro-democracy gathering for the remote eastern region's indigenous Melanesian majority, last held in May 2000.

Referendum demanded

    For decades, ethnic Papuans have rejected the region's special autonomy within Indonesia and demanded a referendum on self-determination for Papua's estimated 3.6 million population.

    Under Indonesian law, peaceful political acts such as displaying the Morning Star flag of Papuan independence are punishable by lengthy prison terms, and the region is off limits to foreign journalists and rights workers.

    The independent MetroTV showed paramilitary police beating the crowd with batons and bare fists, as military vehicles surrounded the area. It said hundreds were rounded up and bundled onto military trucks as they were taken for questioning.

    There was no immediate official comment about the incident.

    The region's special autonomy status, introduced in 2001 after the fall of former president Suharto's military dictatorship, has seen powers including control of most tax revenue from natural resources devolved to the provincial government.



*  This is as bad as "yellow" journalism gets, - Ed.

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Politics of Predator Drone Strikes and Military Invasions

Predator "Death from Above" usage being desensitized for traitor Brain-Dead American sheep; real Americans condemn folly, evil of killing innocents by robot plane but painted with same brush

World News
By Dallas Darling
10/21/2011

In the last several months, predator drone strikes have killed dozens of innocent civilians and suspected "militants" in Afghanistan, Yemen, Pakistan, Somalia, and elsewhere. Like President Richard Nixon, who secretly ordered a military invasion of Cambodia and Laos during the U.S.-Vietnam Conflict, President Barack Obama has denied that such military strikes are invasions. Instead, and like Nixon, Obama's administration and chief advisors have justified these deadly drone attacks that have occurred in sovereign foreign nations, as being necessary to national security interests and needful in protecting American citizens. They have also claimed that those killed by predator drones and Hellfire missiles had threatened free nations and free institutions throughout the world.

Innocent Pakistan victims of U.S. drone attack
Since a military invasion is defined as hostile armed forces entering into a country's territory, again much like Nixon, Obama and his administration are deluded. Whether it be military personnel or deadly stealth technologies, armed aggression towards a nation's people is a military invasion. As in the U.S.-Vietnam Conflict, a disappointment by huge costs and uncertain outcomes in Iraq and Afghanistan, backed by a vague mission, have caused panic and desperation. Obama's administration has embraced the latest advanced weaponry or drones, remotely piloted aircraft armed with missiles that kill. As predatory drones becomes America's new messianic purification machines so as to dominate the world, massive technology corporations stand to make hundreds of billions of dollars.

    But even militant technological determinism has its drawbacks. Military technologies have led to environmental degradation, alienation and callousness, desensitized robotic thinking and feeling, and utter annihilation when considering nuclear weaponry. Technological determinism has also killed tens of millions of people. Still, technology exerts a great influence on social, political, and economic relationships. Military technologies, like deadly computerized drones and global airborne surveillance networks, has stunted, even replaced, humankinds capacity to imagine personal or face-to-face diplomacy. This technological remoteness has its costs, its own catastrophes. It will lead to a Drones Race and Drone Empires. Remote, depersonalized wars and mass murder will become easier.

Drones kill increasing numbers of innocent civilians, soon in U.S.
It is a false notion to believe predator drones and their Hellfire missiles, like other deadly weapon technologies, act as an independent force. But deadly drones and advanced weaponry are not independent, neither are they very democratic. Human error is always probable. They are military invasions from above that kill innocent civilians, even U.S. citizens. Just before World War II, Charles Lindberg warned of the dangers of remote invasions and remote killing when he said "you press a button and death flies down... It is too far away, too separated to hold reality... In modern war one kills at a distance, and in so doing he does not realize that he is killing."(1) What happens to a nation and a people that do not realize they are militarily invading countries and mangling thousands of bodies?

Indiscriminate killings by U.S. aerial  monsters enrage nationals
Micah Zenko, an official at the Council on Foreign Relations who has studied trade-offs in war time, said, "The lessons of the big wars are obvious. The cost in blood and treasure is immense, and the outcome is unforeseeable. Public support at home is declining toward rock bottom. And the people you've come to liberate come to resent your presence."(2) Predator drone invasions and Hellfire missile strikes might at first seem insignificant, but they too cause death and resentment. For now, these stealth drone invasions are veiled from the public. But they too are unforeseeable and will someday be costly in blood and treasure. Just think back to 1945 and recall how two technological devices affected the world when dropped on Japan. Predator drone strikes and invasions will also become big wars.

    Dallas Darling (darling@wn.com)

    Dallas Darling is the author of Politics 501: An A-Z Reading on Conscientious Political Thought and Action, Some Nations Above God: 52 Weekly Reflections On Modern-Day Imperialism, Militarism, And Consumerism in the Context of John's Apocalyptic Vision, and The Other Side Of Christianity: Reflections on Faith, Politics, Spirituality, History, and Peace. He is a correspondent for World News.


(1) Volti, Rudi. Society and Technological Change. New York, New York: Worth Publishers, 2001., p. 235.

(2) Shane, Scott and Thom Shanker. "Drones leading war on terror." New York Times, Sunday, October 2, 2011.


This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc.  We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.




Obama announces total Iraq troop withdrawal; claims lost U.S. lives "worth it"


Suuuuuuuure you will Barry, just like you promised during election, and the last time, and the time before that.....reality is Obama forced out at gunpoint

Associated Press
10/21/2011

 Washington - 

President Barack Obama on Friday declared an end to the Iraq war, one of the longest and most divisive conflicts in U.S. history, announcing that all American troops would be withdrawn from the country by year's end.

    Obama's statement put an end to months of wrangling over whether the U.S. would maintain a force in Iraq beyond 2011. He never mentioned the tense and ultimately fruitless negotiations with Iraq over whether to keep several thousand U.S. forces in Iraq as a training force and a hedge against meddling from Iran or other outside forces.

Obama, Bush, Cheney responsible for U.S. deaths
Instead, Obama spoke of a promise kept, a new day for a self-reliant Iraq and a focus on building up the economy at home.

"I can report that, as promised, the rest of our troops in Iraq will come home by the end of the year," 

Obama said. "After nearly nine years, America's war in Iraq will be over."

    Obama spoke after a private video conference with Iraqi Prime Minister Nouri al-Maliki, and he offered assurances that the two leaders agreed on the decision.

    The U.S. military presence in Iraq stands at just under 40,000. All U.S. troops are to exit the country in accordance with a deal struck between the countries in 2008 when George W. Bush was president.

    Obama, an opponent of the war from the start, took office and accelerated the end of the conflict. In August 2010, he declared the U.S. combat mission over.

    "Over the next two months our troops in Iraq, tens of thousands of them, will pack up their gear and board convoys for the journey home," Obama said. "The last American soldier will cross the border out of Iraq with their heads held high, proud of their success and knowing that the American people stand united in our support for our troops."

Obama:  Liar, scumbag, murderer, War Criminal
More than 4,400 American military members have been killed since the U.S. and its allies invaded Iraq in March 2003.

Two U.S. officials had told The Associated Press last week that the United States would not keep troops in Iraq past the year-end withdrawal deadline, except for some soldiers attached to the U.S. Embassy.

In recent months, Washington had been discussing with Iraqi leaders the possibility of several thousand American troops remaining to continue training Iraqi security forces.

    Throughout the discussions, Iraqi leaders refused to give U.S. troops immunity from prosecution in Iraqi courts, and the Americans refused to stay without that guarantee.

    Moreover, Iraq's leadership has been split on whether it wanted American forces to stay.

Obama responsible for these dead U.S. Servicemen
When the 2008 agreement requiring all U.S. forces to leave Iraq was passed, many U.S. officials assumed it would inevitably be renegotiated so that Americans could stay longer.

The U.S. said repeatedly this year it would entertain an offer from the Iraqis to have a small force stay behind, and the Iraqis said they would like American military help. But as the year wore on and the number of American troops that Washington was suggesting could stay behind dropped, it became increasingly clear that a U.S. troop presence was not a sure thing.

    The issue of legal protection for the Americans was the deal-breaker.

Suicides, homelessness plague Iran/Afghan Veterans
Pulling troops out by the end of this year allows both al-Maliki and Obama to claim victory.

Obama kept a campaign promise to end the war, and al-Maliki will have ended the American presence and restored Iraqi sovereignty.

The president used the war statement to once again turn attention back to the economy, the domestic concern that is expected to determine whether he wins re-election next year.

    "After a decade of war the nation that we need to build and the nation that we will build is our own, an America that sees its economic strength restored just as we've restored our leadership around the globe."

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Arab Spring: Libya over, Syria next, says France


Sarkozi will do anything to retain power, with a little help from his friends Obama and lapdog NATO

Times of India
10/21/2011

NEW DELHI - 

With NATO operations in Libya coming to an end with the killing of Muammar Gaddafi, France on Friday said Syria could be the next target as it pushed for UN taking the "responsibilities" and sanction the "bloody repression".

     However, France did not intend to launch unilateral military action against Syria but strictly follow international law in this regard, French foreign minister Alain Juppe said.

Ooh la-la Barry, und ze many pretty Syrian bitches ve vill rape.....
With the death of Gaddafi, NATO operations in Libya can be considered over and the new government there was in control of the entire country, Juppe said here.

"Turning to Syria, given the crimes against humanity committed by the Gaddafi regime, France is asking the UN Security Council to assume its responsibilities and sanction the bloody repression," he said in a speech at the French Embassy here.
     "I hope we will soon reach an agreement on multilateral action that can step up pressure on the Syrian regime," Juppe said.


This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc.  We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.



Youngest Planet Seen As It is Forming



New planets wanted, be required after Earth
"governments," corporations manage
kill off all life in name of greed

W.M. Keck Observatory
 10/21/2011

 Kamuela, HI –

The first direct image of a planet in the process of forming around its star has been captured by astronomers who combined the power of the 10-meter Keck telescopes with a bit of optical sleight of hand.

Planet LkCa 15 b.  Graphic Credit: Karen L. Teramura, UH IfA
What astronomers are calling LkCa 15 b, looks like a hot “protoplanet” surrounded by a swath of cooler dust and gas, which is falling into the still-forming planet. Images have revealed that the forming planet sits inside a wide gap between the young parent star and an outer disk of dust.

    “LkCa 15 b is the youngest planet ever found, about 5 times younger than the previous record holder,” said astronomer Adam Kraus of the University of Hawaii’s Institute for Astronomy. “This young gas giant is being built out of the dust and gas. In the past, you couldn’t measure this kind of phenomenon because it’s happening so close to the star. But, for the first time, we’ve been able to directly measure the planet itself as well as the dusty matter around it.”

    Kraus will be presenting the discovery at an Oct. 19 meeting at NASA’s Goddard Space Flight Center. The meeting follows the acceptance of a research paper on the discovery by Kraus and Michael Ireland (of Macquarie University and the Australian Astronomical Observatory), in The Astrophysical Journal (available at http://arxiv.org/abs/1110.3808)

    The optical sleight of hand used by the astronomers is to combine the power of Keck’s Adaptive Optics with a technique called aperture mask interferometry. The former is the use of a deformable mirror to rapidly correct for atmospheric distortions to starlight. The latter involves placing a small mask with several holes in the path of the light collected and concentrated by a giant telescope. With that, the scientists can manipulate the light waves.

    “It’s like we have an array of small mirrors,” said Kraus. “We can manipulate the light and cancel out distortions.” The technique allows the astronomers to cancel out the bright light of stars. They can then resolve disks of dust around stars and see gaps in the dusty layers where protoplanets may be hiding. 

Credit: Kraus & Ireland 2011
 Figure 1 Left: The transitional disk around the star LkCa 15. All of the light at this wavelength is emitted by cold dust in the disk. the hole in the center indicates an inner gap with radius of about 55 times the distance from the Earth to the Sun. Right: An expanded view of the central part of the cleared region, showing a composite of two reconstructed images (blue: 2.1 microns, from November 2010; red: 3.7 microns) for LkCa 15. 

    “Interferometry has actually been around since the 1800’s, but through the use of adaptive optics has only been able to reach nearby young suns for about the last 7 years.” said Dr. Ireland. “Since then we’ve been trying to push the technique to its limits using the biggest telescopes in the world, especially Keck.”
The discovery of LkCa 15 b began as a survey of 150 young dusty stars in star forming regions. That led to the more concentrated study of a dozen stars.

    “LkCa 15 was only our second target, and we immediately knew we were seeing something new,” said Kraus. “We could see a faint point source near the star, so thinking it might be a Jupiter-like planet we went back a year later to get more data.”

Credit: Adam Kraus/IAU/Sky & Telescope
Figure 2 The location of LkCa 15 can be found using this chart. 

In further investigations at varying wavelengths, the astronomers were intrigued to discover that the phenomenon was more complex than a single companion object.

    “We realized we had uncovered a super Jupiter-sized gas planet, but that we could also measure the dust and gas surrounding it. We’d found a planet, perhaps even a future solar system at its very beginning” said Kraus.

    Drs. Kraus and Ireland plan to continue their observations of LkCa 15 and other nearby young stars in their efforts to construct a clearer picture of how planets and solar systems form.

# # #

    The W. M. Keck Observatory operates two 10-meter optical/infrared telescopes on the summit of Mauna Kea on the Big Island of Hawaii. The twin telescopes feature a suite of advanced instruments including imagers, multi-object spectrographs, high-resolution spectrographs, integral-field spectroscopy and a world-leading laser guide star adaptive optics system which cancels out much of the interference caused by Earth’s turbulent atmosphere. The Observatory is a private 501(c) 3 non-profit organization and a scientific partnership of the California Institute of Technology, the University of California and NASA.




This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc.  We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.




STRATFOR Special: Assessing the Damage of the European Banking Crisis


Obama, Eurozone dictators seek new wars to cover theft of national treasuries; remain in power, out of jail or wind up like Ghadaffi


STRATFOR
10/20/2011

Europe faces a banking crisis it has not wanted to admit even exists.

    The formal authority on financial stability, International Monetary Fund (IMF) chief Christine Lagarde, made her institution’s opinion on European banking known back in August when she prompted the European Union to engage in an immediate 200 billion-euro bank recapitalization effort. The response was broad-based derision from Europeans at the local, national and EU bureaucratic levels. The vehemence directed at Lagarde was particularly notable as Lagarde is certainly in a position to know what she was talking about: Until July 5, her title was not IMF chief, but French finance minister. She has seen the books, and the books are bad. Due to European inaction, the IMF on Oct. 18 raised its estimate for recapitalization needs from 200 billion euros to 300 billion euros ($274 billion to $410 billion).

 

Sovereign Debt: The Expected Problem

 

    The collapse in early October of Franco-Belgian bank Dexia, a large Northern European institution whose demise necessitated a state rescue, shattered European confidence. Now, Europeans are discussing their banking sector. A meeting of eurozone ministers Oct. 21 is largely dedicated to the topic, as is the Oct. 23 summit of EU heads of government. Yet European governments continue to consider the banking sector largely only within the context of the ongoing sovereign debt crisis.

This is exemplified in Europeans’ handling of the Greek situation. The primary reason Greece has not defaulted on its nearly 400-billion euro sovereign debt is that the rest of the eurozone is not forcing Greece to fully implement its agreed-upon austerity measures. Withholding bailout funds as punishment would trigger an immediate default and a cascade of disastrous effects across Europe. Loudly condemning Greek inaction while still slipping Athens bailout checks keeps that aspect of Europe’s crisis in a holding pattern. In the European mind — especially the Northern European mind — a handful of small countries that made poor decisions are responsible for the European debt crisis, and while the ensuing crisis may spread to the banks as a consequence, the banks themselves would be fine if only the sovereigns could get their acts together.

    This is an incorrect assumption. If anything, Europe’s banks are as damaged as the governments that regulate them.

    When evaluating a problem of such magnitude, one might as well begin with the problem as the Europeans see it — namely, that their banks’ biggest problem is rooted in their sovereign debt exposure.

Most EU zone citizens want out and rightfully so
The state-bank contagion problem is fairly straightforward within national borders. As a rule the largest purchaser of the debt of any particular European government will be banks located in the particular country. If a government goes bankrupt or is forced to partially default on its debt, its failure will trigger the failure of most of its banks. Greece does indeed provide a useful example. Until Greece joined the European Union in 1981, state-controlled institutions dominated its banking sector. These institutions’ primary reason for being was to support government financing, regardless of whether there was a political or economic rationale justifying that financing. The Greeks, however, have no monopoly on the practice of leaning on the banking sector to support state spending. In fact, this practice is the norm across Europe.

    Spain’s regional banks, the cajas, have become infamous for serving as slush funds for regional governments, regardless of the government in question’s political affiliation. Were the cajas assets held to U.S. standards of what qualifies as a good or bad loan, half the cajas would be closed immediately and another third would be placed in receivership. Italian banks hold half of Italy’s 1.9 trillion euros in outstanding state debt. And lest anyone attempt to lay all the blame on Southern Europe, French and Belgian municipalities as well as the Belgian national government regularly used the aforementioned Dexia in a somewhat similar manner. 

Greek despots just don't get it; what will it take?
Yet much debt remains for outsiders to own, so when states crack, the damage will not be held internally. Half or more of the debt of Greece, Ireland, Portugal, Italy and Belgium is in foreign hands, but like everything else in Europe the exposure is not balanced evenly — and this time, it is Northern Europe, not Southern Europe, that is exposed. French banks are more exposed than any other national sector, holding an amount equivalent to 8.5 percent of French gross domestic product (GDP) in the debt of the most financially distressed states (Greece, Ireland, Portugal, Italy, Belgium and Spain). Belgium comes in second with an exposure of roughly 5.5 percent of GDP, although that number excludes the roughly 45 percent of GDP Belgium’s banks hold in Belgian state debt.




    When Europeans speak of the need to recapitalize their banks, creating firebreaks between cross-border sovereign debt exposure dominates their thoughts — which explains why the Europeans belatedly have seized upon the IMF’s original 200 billion-euro figure. The Europeans are hoping that if they can strike a series of deals that restructure a percentage of the debt owed by the Continent’s most financially strapped states, they will be able to halt the sovereign debt crisis in its tracks.



    This plan is flawed. The figure, 200 billion euros, will not cover reasonable restructurings. The 50 percent writedowns or “haircuts” for Greece under discussion as part of a revised Greek bailout — likely to be announced at the end of the upcoming Oct. 23 EU summit — would absorb more than half of that 200 billion euros. A mere 8 percent haircut on Italian debt would absorb the remainder.

   Moreover, Europe’s banking problems stretch far beyond sovereign debt. Before one can understand just how deep those problems go, we must examine the role European banks play in European society.

 

The Centrality of European Banking

 

    Several differences between the European and American banking sectors exist. By far the most critical difference is that European banks are much more central to the functioning of European economies than American banks are to the U.S. economy. The reason is rooted in the geography of capital.

   Maritime transport is cheaper than land transport by at least an order of magnitude once the costs of constructing road and rail infrastructure is factored in. Therefore, maritime economies will always have surplus capital compared to their land transport-based equivalents. Managing such excess capital requires banks, and so nearly all of the world’s banking centers form at points on navigable rivers where capital richness is at its most extreme. For example, New York is where the Hudson meets the Atlantic Octen, Chicago is at the southernmost extremity of the Great Lakes network, Geneva is near the head of navigation of the Rhone, and Vienna is located where the Danube breaks through the Alps-Carpathian gap.

Americans have finally had enough; begin to revolt
Unity differentiates the U.S. and European banking system. The American maritime network comprises the interconnected rivers of the Greater Mississippi Basin linked into the Intracoastal Waterway, which allows for easy transport from the U.S.-Mexico border on the Gulf of Mexico all the way to the Chesapeake Bay. Europe’s maritime network is neither interlinked nor evenly shared. Northern Europe is blessed with a dozen easily navigable rivers, but none of the major rivers interconnect; each river, and thus each nation, has its own financial capital. The Danube, Europe’s longest river, drains in the opposite direction but cuts through mountains twice in doing so. Some European states have multiple navigable rivers: France and Germany each have three major ones. Arid and rugged Spain and Greece, in contrast, have none.

    The unity of the American transport system means that all of its banks are interlinked, and so there is a need for a single regulatory structure. The disunity of European geography generates not only competing nationalities but also competing banking systems.

     Moreover, Americans are used to far-flung and impersonal capital funding their activities (such as a bank in New York funding a project in Nebraska) because of the network’s large and singular nature. Not so in Europe. There, regional competition has enshrined banks as tools of state planning. French capital is used for French projects and other sources of capital are viewed with suspicion. Consequently, Americans only use bank loans to fund 31 percent of total private credit, with bond issuances (18 percent) and stock markets (51 percent) making up the balance. In the eurozone roughly 80 percent of private credit is bank-sourced. And instead of the United States’ single central bank, single bank guarantor and fiscal authority, Europe has dozens. Banking regulation has been expressly omitted from all European treaties to this point, instead remaining a national prerogative.

Big, brave NYPD cops beat unarmed protesters
As a starting point, therefore, it must be understood that European banks are more central to the functioning of the European system than American banks are to the American system. And any problems that might erupt in the world of European banks will face a far more complicated restitution effort cluttered with overlapping, conflicting authorities colored by national biases.

 

Demographic Limitations

 

    European banks also face less long-term growth. The largest piece of consumer spending in any economy is done by people in their 20s and 30s. This cohort is going to college, raising children and buying houses and cars. Yet people in their 20s and 30s are the weakest in terms of earning potential. High consumption plus low earning leads invariably to borrowing, and borrowing is banks’ mainstay. In the 1990s and 2000s much of Europe enjoyed a bulge in its population structure in precisely this young demographic — particularly in Southern European states — generating a great deal of economic activity, and from it a great deal of business for Europe’s banks.

    But now, this demographic has grown up. Their earning potential has increased, while their big surge of demand is largely over, sharply curtailing their need for borrowing. In Spain and Greece, the younger end of population bulge is now 30; in Italy and France it is now 35; in Austria, Germany and the Netherlands it is 40; and in Belgium it is 45. Consumer borrowing in general and mortgage activity in particular probably have peaked. The small sizes of the replacement generations suggests there will be no recoveries within the next few decades. (Children born today will not hit their prime consumptive age for another 20 to 30 years.) With the total value of new consumer loans likely to stagnate (and more likely, decline) moving forward, if anything there are now too many European banks competing for a shrinking pool of consumer loans. Europe is thus not likely to be able to grow out of any banking problems it experiences. The one potential exception is in Central Europe, where the population bulges are on average 15 years younger than in Western Europe. The younger edge of the Polish bulge, for example, is only 25. In time, these states may be able to grow out of their problems. Either way, the most lucrative years for Western European banking are over.


Too Much Credit

 

    Germany has extremely high capital accumulation and extremely competent economic management. One of the many results of this pairing is extremely inexpensive capital costs. When Germans — governments, corporations or individuals — borrow money, it is accepted as a near-fact that they will pay back what they owe, on time and in full. Reflecting the high supply and low risk, German borrowing rates for governments and corporations have long been in the low to mid single digits.

    The further you move from Germany the less this pattern holds. Capital availability shrivels, management falters and the attitude toward contract law (or at least as defined by the Germans) becomes far less respectful. As such, Europe’s peripheral economies — most notably its smaller peripheral economies — have normally faced higher borrowing costs. Mortgage rates in Ireland stood near 20 percent less than a generation ago. Government borrowing rates in Greece have in the past topped 30 percent.

    With that sort of difference, it is not difficult to see why many European states have striven for inclusion in first, the European Union, and second, the eurozone. Each step of the European integration process has brought them closer in financial terms to the ultra-low credit costs of Germany. The closer the German association, the greater the implicit belief that German financial resources would help them in a crisis (despite the fact that EU treaties explicitly rejected this).

London riots; a precedent for the UK
The dawn of the eurozone era prompted lenders and investors to take this association to an extreme. Association with Germany shifted from lower lending rates to identical lending rates. The Greek government could borrow at rates that only Germany could demand in the past. Irish borrowers were able to qualify for 130 percent mortgages at 4 percent. Compounding matters, the collapse of borrowing costs and the explosion of loan activity occurred at the same time as Southern Europe’s demographic-driven consumption boom. It was the perfect storm for explosive banking growth, and it laid the groundwork for a financial collapse of unprecedented proportions.

    Drastic increases in government debt are the most publicly visible outcome, but it is far from the only one. The least visible outcome is that extraordinarily cheap credit to consumers triggers an explosion in demand that local businesses cannot hope to fill. The result is unprecedented trade deficits as money borrowed from foreigners is used to purchase foreign goods. Cyprus, Greece, Portugal, Bulgaria, Romania, Lithuania, Estonia and Spain — all states whose cheap labor when compared to the Western European core should encourage them to be massive exporters — instead have run chronic trade deficits in excess of 7 percent of GDP. Most routinely broke 10 percent. Such developments do not directly harm the banks, but as credit costs return to more rational levels — and in the ongoing debt crisis borrowing costs for most of the younger EU members have tripled and more — consumption is coming to a halt. In the few European markets that demographically may be able to generate consumption-based growth in the years ahead, credit is drying up.

 

Foreign Currency Risk

 

    Much of this lending into weaker locations was carried out in foreign currencies. For the three states that successfully made the early sprint into the eurozone — Estonia, Slovenia and Slovakia — this was a nonfactor. For those that did not make the early leap into the eurozone it was a wonderful way to get something for nothing. Their association with the European Union resulted in the steady strengthening of their currencies. Since 2004, the Polish, Czech, Romanian and Hungarian currencies gained roughly one-third versus the euro, driving down the monthly payments on any euro-denominated loan. That inverted, however, in the 2008 financial crisis. Then, every regional currency but the Czech koruna (and Bulgarian lev, which is pegged to the euro) gave back their gains. For Central Europeans who had taken out loans when their currencies were at their highs, payments ballooned. More than 10 percent of Polish and Hungarian mortgages are now delinquent, largely because of currency movements.

 

New Banking ‘Empires’

 

    The cheap credit of the eurozone’s first decade allowed several peripheral European states a rare opportunity to expand their network of influence, even if they were not in the eurozone themselves. They could borrow money from core European banking centers like Germany, France, Switzerland and the Netherlands and pass that money on to previously credit-starved markets. In most cases, such credit was offered without the full cost-increase that these states’ poorer and smaller statures would have justified. After all, these would-be financial centers had to undercut the more established European financial centers if they were to gain meaningful market share. This pushed far more credit into Central Europe than the region otherwise would have attracted, speeding up the development process at the cost of poor underwriting and a proliferation of questionable lending practices. The most enthusiastic crafters of new banking empires have been Sweden, Austria, Spain and Greece.



    Sweden has the happiest record of any of the states that engaged in such expansionary lending. Being one of the richest countries in Europe and yet not being a member of the eurozone, Sweden did not experience a credit expansion nearly as much as other states, instead it served as a conduit for that credit — augmented by its own — to its former imperial territories. Alone among the forgers of new banking empires, Sweden’s superior financial stability has allowed it (so far) to continue financial activities in its target markets — Estonia, Latvia, Lithuania and Denmark — despite the ongoing financial crisis. But instead of lending, Swedish banks are now purchasing regional banks outright. Swedish command of the Danish banking sector, for example, has increased by 80 percent since the crisis. Through its new local subsidiaries, Swedish banks now lend more in per capita terms to Danes than they do to their own citizens, and there is no longer a domestic Estonian banking sector — it is 97 percent Swedish-owned. Such expansionary activity is likely to continue so long as Sweden can sustain it, as there is a geopolitical angle to Sweden’s effort: It is seeking to deepen its regional influence not only for economic purposes, but also to mitigate the rising role of its longtime competitor, Russia.

    Austria has tapped not only eurozone credit but also taken advantage of favorable carry trades to serve as a conduit for Swiss franc credit into Central Europe. Just as Sweden is using foreign capital to re-create its historic sphere of influence in the Baltic, Austria is doing the same in the lands of the former Austro-Hungarian Empire. Now, the majority of all mortgages in Poland, Hungary, Croatia and Romania — and a sizable minority in Austria — are denominated in foreign currencies, courtesy of Austrian banking activity. With the Swiss franc now locked in at record highs, many of these mortgages are not serviceable. The Hungarian government has felt forced to abrogate the terms of many of these loans, knowing that the Austrian banks are now so overexposed to Central Europe that they have no choice but to take the losses. As the financial crisis has continued apace, Austria has found itself with more exposure, fewer domestic resources and greater vulnerability to external forces than Sweden. So instead of being able to take advantage of regional weakness, it is finding itself losing market share both at home and in its would-be financial empire to Russia.

The people of pain have had it also
Spain’s banking empire isn’t even in Europe. Spanish firms BBVA-Compass and Santander have used the cheap euro credit to massively expand credit to Latin America. And Spain’s expansion took a somewhat novel route: The combination of cheap lending at home and in Latin America encouraged more than a million Latin American Spanish speakers to relocate to Spain and gain citizenship. To smooth the naturalization process, Madrid mandated that the new Spaniards be granted top-notch credit, a factor that only added to an already hyperactive construction sector. Spanish banks’ nearly 500 billion-euro exposure to Latin America is, for now, holding; only time will tell its impact to Spain’s bottom line.


    The Greek government used its access to cheap credit to build up debt levels that are now the subject of much discussion across Europe. But much less is made of its banks, who encouraged consumers both at home and across the southern Balkans to increase their own debt levels. Being the least experienced of the four would-be financial centers, Greek banks offered the steepest credit breaks to the countries with the weakest repayment potential. Like Spain, Greece also did not make EU membership a condition for lending; vast volumes accordingly were fed into Macedonia, Serbia and even Albania.

 

Housing Bubbles

 

    Large volumes of suddenly cheap credit made available to eager consumers obviously generated a series of sizable housing bubbles.

    Spain’s tapping of European credit markets also underwrote the largest housing boom in Europe. More construction projects have been completed in Spain in recent years than in Germany, France, Italy and the United Kingdom combined. The construction sector — both commercial and residential — has now collapsed and there are about 1 million homes now sitting vacant in a country with just 16.5 million families. Outstanding loans to various real estate interests total some 400 billion euros, all backed by collateral that has lost 20 percent of its value since the housing market peaked.

    In relative terms, Ireland actually did more than Spain. At its peak, nearly 10 percent of Irish gross national product was dependent upon construction, with 70 percent of that purely from residences. Half of the mortgages extended during the Irish real estate boom were made at the peak of the market between 2006 and 2008. That sector remains in the midst of a fairly rapid collapse. Residential home prices have reduced by half since their peak in 2007 and are showing few signs of stabilizing. The Irish government hopes that with their eurozone bailout package, their banking sector will become functional again by 2020. Until then, Ireland in effect has no banking sector and has been financially sequestered from the rest of the eurozone.

    Two other European states — the United Kingdom and Sweden — have both experienced massive increases in home price growth, and both suffered from price corrections due to the 2008 financial crisis. But prices in both markets have recovered smartly, with Sweden even bouncing back above its pre-crisis highs. Sweden, in fact, is still experiencing a massive housing boom, with annual mortgage credit still expanding at a 30 percent annualized rate.


This STRAFTOR report republished with permission and thanks from The 5th Estate.


Ding, Dong, the Mad Dog is Dead...


Longest-serving dictator in world keeps promise to never leaving Libya unless in body bag; NATO, Obama hypocrites now "worried" how hated dictator died after ordering Ghadaffi's execution themselves

The Mark
10/21/2011

Moammar Gadhafi is dead at the ripe old age of 69, compliments of what appears to be a shot to the head and one to the chest. The New York Times' Neil McFarquhar offers an exhaustive obituary of the "Mad Dog of Libya," from his humble beginnings as the child of illiterate Bedouin nomads to joining the army to the end of his reign today, when he left Libya with "no parliament, no unified military command, no political parties, no unions, no civil society and no nongovernmental organizations. His ministries were hollow, with the notable exception of the state oil company."

Dead doofus:  Gadhafi
 As for what Gadhafi's death means for Libya, The Globe and Mail's Doug Saunders says that all we really know is that "it is abundantly clear that his ideas will not outlive him. His was the first, and will be the last, Socialist People’s Arab Jamahiriya." His concept of "utopian pseudo-Maoist socialism" has no champions left, and regarding those that did support him, "we don't know how many of Col. Gadhafi’s loyalists stayed at his side because they felt loyal to him, how many because they feared the revenge of the rebels, and how many because they knew Col. Gadhafi would kill their families if they defected." This uncertainty, of course, extends to the unstable government that usurped him. Just yesterday, Mahmud Jabril, the head of Libya's National Transitional Council, said he intended to quit soon amid the political chaos that's developed since the fall of Tripoli in August. Granted, Gadhafi's death could change Jabril's mind, but as Saunders notes, "as they cheer the richly deserved death of their abusive father, Libyans are slowly realizing just how little he left them."

Gadhafi in death
Jonathan Kay of the National Post figures there are three lessons for Canada and the rest of the West to learn from their little adventure into North Africa. First, "NATO pilots need partners on the ground" if they're going to be successful in preventing massacres and ousting unwanted dictators. Second, "we don’t really care that much about foreign affairs." Kay notes that both the Libyan war (and Afghanistan) were a nonissue during the federal election campaign, and south of the border, Barack Obama, "who not only has won the war in Libya, but also killed Osama bin Laden and Anwar al-Awlaki, secretly sold bunker busters to Israel, expanded a successful drone campaign in Pakistan, sent military advisors to Uganda, humiliated Iran with the disclosure of a Washington assassination plot, presided over numerous successful terrorism trials, and otherwise conducted what is arguably a more hawkish and successful foreign policy than is Republican predecessor," still has to fend off criticisms that he's not up to the task of being commander-in-chief. Third, echoing Saunders, Kay remarks "we have no idea how any of this will turn out," which is pretty self-explanatory. For all we know, in five years, Libya could be a "thriving democracy, a neo-Gaddafyite dictatorship, an ungoverned Somalia-style Mad Max wasteland, or a jihadi-dominated North African Waziristan." We're going to split the difference and call ... an Islamist-tinged, sclerotic pseudo-democracy.

Dual dimwit dictators:  Italian PM Berlesconi and Gadhafi
Over at Al Jazeera, Mahmood Mamdani supposes NATO's intervention in Libya and the rebellion's subsequent success means "the conditions for external intervention in Africa are growing, not diminishing." Increased interest in Africa's economic potential, combined with the United Nations Security Council somewhat legitimizing foreign intervention, could lead to opposition parties in African countries actively seeking out international partners to remove their despotic rulers. Governments could also seek out more foreign support to weed out insurgent militias, as proven by Obama's decision to send in military advisers to Uganda to help them deal with the brutal Lord's Resistance Army once and for all. Notes Mamdani: "One thing should be clear: those interested in keeping external intervention at bay need to concentrate their attention and energies on internal reform." Otherwise, they, too could end up brandishing a golden gun in a drain pipe before getting to meet their maker.

    And finally, Alaa al-Almeri, the pen name of a Libyan-British economist, calls in The Guardian for his countrymen "to forget [Gadhafi] ... to expunge his influence from every aspect of our lives." Today would be much better served by remembering "those who resisted him throughout the decades and gave their lives for us to have this opportunity. Those who were publicly hanged on makeshift gallows or snatched from their homes, murdered and dumped in mass graves. Those who were driven into exile, only to be followed there by death squads. Most fittingly of all, it is time to remember the ordinary men and women who stood up in February 2011 against unspeakable odds to make their voices heard and tell Muammar that his time was up." Hear hear.


This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc.  We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

Afghanistan Will Pay for NATO's Failures; Part 1 of 3


Failing to learn from history, NATO finding out that it isn't cool to imitate War Criminals Bush, Obama, Blair, Part 1

Centre for International Governance Innovation
By Mark Sedra

As we approach the 10th anniversary of the commencement of NATO's intervention in Afghanistan, The Mark begins a three-part series examining the outcomes and legacy of the Afghan war. Part 1 argues that the NATO military intervention has been a massive failure. It suggests that, with the war almost assuredly lost, Afghans are likely to face an all-too-familiar future of violent conflict.

    As we pass the 10th anniversary of 9/11 and the beginning of the invasion of Afghanistan, just as NATO’s war begins to wind down, the legacy of the Afghanistan intervention is certain to become a hot topic of debate. A sober analysis of the failures of the intervention and its consequent implications for Afghanistan in a post-NATO landscape suggest the hope for any positive legacy is very bleak.
Afghans have never lost a war
Of course, for the Afghans, the immediate legacy will be a continuation of the war, albeit in a different and likely much bloodier form. In 1919, French General Ferdinand Foch reacted to the signing of the Treaty of Versailles, which brought an end to the First World War, with the prophetic statement: "This is not a peace. It is an armistice for 20 years." The same could perhaps be said of the 2001 Bonn Agreement, which paved the way for a new western-backed Afghan regime in the aftermath of the ouster of the Taliban. In this case, however, the armistice period will likely be shorter.

    Many of Afghanistan’s military commanders and powerbrokers have certainly treated this period of international intervention more as a break in the war than as a permanent peace. They may have dumped some of their old military equipment through UN-supported demilitarization schemes, but they have acquired new and better guns at the same time, all the while maintaining the integrity of their militias and patronage networks.


Did Canada's involvement in Afghanistan undermine democracy at home? Read one expert's opinion here.


    NATO troops have indeed made some progress on the front lines of the insurgency in the South – even if civilian casualty levels continue to increase with each passing year, approaching somewhere between 12,500 and 14,700 since 2001. But with international troop withdrawals looming, and the Afghan National Security Forces (ANSF) still not up to the task, any gains will be short-lived. Despite the investment of nearly $11 billionin the training of its forces each year, the ANSF is still not even close to being able to assume security responsibility for the entire country, making the 2014 handover date appear more fantasy than reality. While NATO public-affairs officials would no doubt respond by quoting seemingly impressive statistics on the number of police officers and soldiers trained and equipped – now up to 300,000 – the reality is far less encouraging.

US forces having asses handed to them by Taliban regularly
The massive increases in international investment in the ANSF have still not enabled it to overcome some of the same fundamental problems it faced in 2003-04: endemic corruption and criminality; bad leadership; low morale; poor desertion and force retention rates; and insurgent infiltration.

    A closer examination of the numbers paints a troubling picture: roughly one in seven members of the Afghan National Army (ANA) deserts every month; less than 20 per cent of the ANSF are literate; and only four Afghan National Army units (and no Afghan National Police units) are capable of operating independently, without NATO assistance. Even if the Afghan government could financially sustain the security sector being built for it, which realistic projections suggest it could not, it appears unlikely to last long in the post-NATO landscape.

    It is important to remember that there is a historical precedent for Afghan security forces fragmenting in the face of weakening external aid and support. When the Soviet Union withdrew from Afghanistan in 1989, the Afghan security forces it constructed – which, in many ways, were more competent and professional than those that exist today – collapsed within three years, with many units defecting to the factional militia groups that would come to battle for control of the country.

Afghan Man mourns dead
A replay of this scenario appears increasingly possible in contemporary Afghanistan, and we know what the outcome was in the 1990s. The country descended into a brutal civil war in which the main mujahidin factions competed for control of the state, destroying it in the process, and individual warlords exploited the security vacuum to carve out mini-fiefdoms in the rural periphery. The chaos that ensued paved the way for a relatively unknown Kandahari Mullah to lead a militia group largely composed of madrassa students, with help from the Pakistani government and al-Qaeda, to capture the state.


How has bin Laden's death changed the war in Afghanistan? One expert weighs in.


    The Taliban attacks in Kabul on Sept. 13, 2011, which involved multiple co-ordinated strikes culminating in a 20-hour gun battle in the heart of the most heavily fortified area of the country, typified the Taliban’s strategic shift and its continuing capability. The Taliban’s attacks were not intended to unseat the regime, drive out foreign forces, or even achieve a major tactical victory, but rather to deliver a psychological blow by proving that the Taliban has the ability to strike anywhere, and at any time. The attacks may have been, as U.S. Ambassador to Afghanistan Ryan Crocker stated, little more than “harassment,” and “not a very big deal” from a tactical standpoint, but strategically, they delivered their intended message loud and clear.

As in all wars:  Kids always suffer
One of the clearest signs that Afghanistan may be entering a new round of conflict is the exodus of many Afghan elites (along with their capital) from the country – both those who returned from exile in the wake of the Taliban’s fall, and, perhaps more disturbingly, those who remained in the country during the Soviet period, the civil war, and the Taliban regime. If neither the Soviets nor the Americans can stabilize Afghanistan, as the logic goes, then what hope is there? Many Afghans have already resigned themselves to the fact that the graveyard of empires has claimed another victim.


Canada is failing to provide visas to Afghan interpreters. Read about it here .

    
    Whatever the legacy of the failure in Afghanistan may be for its interveners (Canada among them), those interveners can walk away. The vast majority of Afghans, of course, cannot. With the absence of an effective state and a meaningful political reconciliation process, one can only hope that a further round of civil war – and the humanitarian disaster and international blowback it would undoubtedly unleash – can be avoided in Afghanistan. But history cautions us against such optimism.

    With those who once provided large-scale international engagement pulling back due to war weariness and a deepening global recession, international leverage to prevent the resurgence of civil war is highly limited. The West will be reduced to a tragic spectator. And we know that Afghanistan’s neighbours – Iran, Pakistan, China, India, Russia, and the Central Asian states – will not sit idly by on the sidelines, which gives any new conflict a dangerous regional dimension. The Great Game for control of Afghanistan and Central Asia could be entering a dangerous new phase.


This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc.  We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

Global Insight: Indonesia Intelligence Report Part 2


Latest report on Advanced-Country; Indonesia
Part 2


Global Insight
01/03/2011

 Executive Summary: Key Taxation Issue to Watch


Tax Amnesty Expires: The government will not extend its tax amnesty beyond the 28 February 2009 deadline, despite another request for extension by businesses. The so-called "Sunset Policy" was a successful programme by which registered tax payers were given the chance to settle their debts to the government after committing previous tax violations. Provided they submitted accurate reports and paid the sums owed, they would not be scrutinised further and would be exempt from paying tax penalties on the previous liabilities. The Sunset Policy was initially due to expire on 31 December 2008, but overwhelming demand to make use of the programme, as well as added pressure from the economic downturn, led to its extension to the end of February.

The programme was designed to improve tax collection, widen the tax base, and enable better detection of tax evasion. The measure was hugely successful, and it is thought that the policy brought in an extra US$500 million in tax revenue in 2008.

Executive Summary: Tax Environment Overview

The Indonesian tax system is in the process of continuous reform, but progress has been slow. The main sources of revenue in Indonesia, besides oil and gas, are income taxes—personal and corporate. Indonesia has a high personal income tax rate and a moderate corporate tax rate. The corporate income-tax reduction was concluded in January 2010, when the rate was brought down from 28% to 25%. The system relies quite heavily on withholding taxes, reflecting the government's difficulties in revenue collection. The government therefore urgently needs to widen the tax base—the Sunset Policy of 2008 greatly aided this endeavour. The decentralisation process that commenced in 2001, allowing for more regional autonomy, has resulted in a greater risk that extra taxes are levied at provincial level. Improved budget allocation along with better public financial management systems would lead to substantial efficiency gains on a regional level, while on the national level efforts to improve tax administration and spending efficiency are a priority.


Executive Summary: Key Operational Issue to Watch

    Corruption Eradication Commission Expands Regional Ties: In January 2009, Indonesia’s Corruption Eradication Commission (KPK) and the Malaysian Anti-Corruption Commission (ACC) signed an agreement to expand their co-operation in investigating corruption cases in their respective countries. The KPK in particular is lending logistical and training support to the ACC, after its successful prosecution of a number of senior officials in 2009. The two are also working together on a few cases involving cross-border corruption. The co-operation agreement between the KPK and ACC is a significant and symbolic step in the fight against graft. The closer the various agencies of the region work together, the more difficult it will be for officials to circumvent domestic legislation by spreading corrupt activities across
borders.

Executive Summary: Operational Environment Overview

    Overall, government attitudes towards foreign investment are positive, and vital initiatives are being undertaken to speed up reform. In September 2009, IHS Global Insight upgraded the Indonesian operational risk rating by 0.25 points to 3.0 points, a reflection of the general improvement in Indonesia's operational environment over the medium term.

Photo Imas Kurniawati-Finnegan 2011
As part of President Susilo Bambang Yudhoyono and his government's reform programme, Indonesia has implemented a series of reforms that have enhanced the country's business regulations. Endemic corruption, however, remains a significant problem when conducting business in Indonesia, although the efforts of the Corruption Eradication Commission (KPK) have yielded limited results over the last couple of years. Inefficient bureaucracy and red tape also continue to be a challenge and a deterrent to foreign investment. The Indonesian labour force is under-educated, while labour laws have empowered unions and detracted somewhat from the country's competitiveness in terms of being an attractive destination for foreign investment.

Executive Summary: Key Security Issue to Watch

    Indonesia Faces Numerous Security Challenges: Although the Indonesian government has made significant headway in improving its counter-terrorism capabilities following the 2002 Bali bombings, the regional Jemaah Islamiyah (JI) terrorist network remains a threat. 

Photo Robert S. Finnegan 2001
Splintered factions of the organisation pose the greatest danger, as evidenced by the July 2009 hotel bombings in Jakarta. The organisation also has an interest in fomenting sectarian violence, posing challenges for the security forces. Separatist pressures remain, notably in Papua, although the Aceh peace process has culminated in successful local elections. Meanwhile, the government faces the tremendous task of reining in the country's powerful military, a process that includes dismantling its wide business platform, on which it relies for a major part of its budget. A plan to transfer all armed forces' businesses to the civilian-run Indonesian Military Business Management Body moved forward in October 2009, when a presidential decree was passed making this move legally possible. The process was expected to be concluded by August 2010, but has now been postponed for an unspecified period.

Executive Summary: Security Environment Overview

    The July 2009 hotel bombings in Jakarta provided tragic evidence of the ongoing threat posed by radical splinter factions of Jemaah Islamiyah (JI). Following the spate of major bombings between 2002 and 2005, the security environment has been much improved as a result of better counter-terrorism capabilities. This was underlined by the foiling of several plots, including the break-up of the Palembang JI cell in July 2008. The risk of further terrorist attacks on the interests of Western countries—while much reduced since 2005—must be taken seriously. Although a number of terror suspects, including Noordin Mohammed Top, whose JI splinter faction was responsible for the July 2009 attacks, have been killed, several other high-profile JI members have remained at large. Indonesia is a vast archipelago state, making it difficult to police; the security environment varies from one island to the next, and Papua province is experiencing secessionist unrest.  Indonesian waters also remain subject to piracy attacks.

Executive Summary: Key Facts and Demographics


Indonesia - Key Facts:

Area sq km:  1826440

Capital:  Jakarta




Languages:  Bahasa Indonesia (official, modified form of Malay), English, Dutch, local dialects, the most widely spoken of which is Javanese.

Ethnic Diversity:
Javanese 45%, Sundanese 14%,
Madurese 7.5%, coastal Malays 7.5%,
other 26%

Religions:
Muslim 88%, Protestant 5%, Roman
Catholic 3%, Hindu 2%, Buddhist 1%, other
1% (1985)

Currency: 1 Indonesian rupiah = 100 sen (theoretical)

Dialing Code 62

Population and Health Indicators:

2002, 2003, 2004, 2005, 2006, 2007, 2008

Total Population (mil.) 210.9, 213.7, 216.4, 219.2, 222.0, 224.7, 227.3

Population Growth (%) 1.34, 1.33, 1.30, 1.28, 1.25, 1.22, 1.19

Population, Ages 0-14 Years (mil.) 62.17, 62.19, 62.22, 62.24, 62.24, 62.22, 62.19

Population, Ages 15-64 Years (mil.) 137.86, 140.2,1 142.54, 144.87, 147.19, 149,.51, 151.81

Population, 65 Years and Over (mil.) 10.83, 11.25, 11.68, 12.10, 12.52, 12.94, 13.35

Crude Birth Rate (per 1,000 people) 20.8, 20.5, 20.1, 19.8, 19.4, 19.0, 18.6

Crude Death Rate (per 1,000 people) 6.7, 6.6, 6.5, 6.4, 6.4, 6.3, 6.3

Life Expectancy at Birth (years) 68.3, 68.8, 69.2, 69.7, 70.1, 70.4, 70.8

Urban Population (mil.) 93.87, 97.74, 101.63, 105.53, 109.43, 113.32, 117.20

Rural Population (mil.) 116.99, 115.92, 114.81, 113.68, 112.52, 111.35, 110.15

Income Share Held By Lowest 20% .. .. .. 7.1 .. 7.4 ..

Income Share Held By Second 20% .. .. .. 10.7 .. 11.0 ..

Income Share Held By Third 20% .. .. .. 14.4 .. 14.9 ..

Income Share Held by Fourth 20% .. .. .. 20.5 .. 21.3 ..

Income Share Held by Highest 20% .. .. .. 47.3 .. 45.5 ..

Prevalence of Undernourishment (% of population) 15.0 .. .. .. .. 13.0 ..

Health Expenditure, Public (% of GDP) .. 0.9, 0.8, 0.9, 1.0, 1.2 ..

Health Expenditure, Private (% of GDP) .. 1.5, 1.4, 1.1, 0.9, 1.0 ..
 
Source: IHS Global Insight, World Bank: World Development Indicators

Country Risk Summary

Nature of Risk Rating Summary

Political: Risks 2.50 

    Indonesia under the leadership of Susilo Bambang Yudhoyono has moved to implement its wide-ranging reform programme, providing for a greater degree of political stability and economic well-being. More effective policies on infrastructure development and poverty reduction are gradually being enacted, while the legal and tax frameworks are also set for further reform. Overall, there is a good deal of optimism about ongoing reform in the country and the pace of change is expected to quicken in Yudhoyono's second term, as he enjoys a strong popular and parliamentary mandate. However, the country's transition to a transparent and mature democracy faces obstacles, ranging from powerful vested interests to an immature party system and ongoing security problems.

Bali Bombing 2002  Photo Robert S. Finnegan
Terrorism remains a challenge, although the government has engaged in a comprehensive effort to crack down on militant groups associated with Jemaah Islamiyah (JI).

Measures have been taken to improve the investment climate, but confidence has remained dented by persistent corruption at all levels of officialdom.

 Economic: Risks 2.75

  Having been one of the global economy's brightest spots in 2009, Indonesia's relative appeal appears to have faded somewhat during 2010 as other countries' growth performances have considerably outshined its own. Nevertheless, this is likely a temporary situation and should not obscure the remarkable progress the country has made over the past decade in putting its economy on a more solid, sustainable growth path, improving public finances, and reducing debt. The government has substantially widened the tax base, lowered corporate tax rates, reduced red tape, introduced critical new legislation, and taken concrete steps toward clarifying the regulatory environment. As a result, Indonesia has been inching higher in global competitiveness rankings, although faster progress elsewhere caused a relapse according to the Doing Business 2011 survey. Although continuing to push through its own reforms, Indonesia fell six spots in global rankings to 121. Challenges to economic progress clearly remain, as evidenced by the political row over the Bank Century bailout and the departure of the former finance minister Indrawati, a highly respected reformist technocrat. Prior to the announcement that her replacement will be an equally respected reformer, there had been a real threat that political interference would manage to stem the momentum of economic reforms and possibly even force some steps back. The debacle had highlighted the vulnerability of the reformist branch of government and the strength of vested business and political interests. Corruption eradication remains critical for future progress. Ongoing structural rigidities also have the ability to exacerbate the negative effect of unexpected shocks such as a possible major terrorist attack, a natural disaster, a sudden drop in investor confidence due to contagion effects, a run on the currency, or a political crisis. Within this context, consistent efforts to advance along the path of reforms will be required to ensure that Indonesia takes its rightful place among the leading emerging markets of the world.

Legal: Risks 3.25 


    Indonesia's regulatory and legal environment can be opaque, incoherent, and time-consuming. The current government has prioritised the modernisation of the legal system and has pledged to continue the major overhaul begun under President Susilo Bambang Yudhoyono's first cabinet (2004–09). It will, however, take some time before the ramifications of these enhancements are felt and the complex legal system is turned into a more efficient one. Entrenched corrupt business practices and deficiencies in law enforcement are also likely to be much harder to remedy than weaknesses in the legal system.

Tax: Risks 2.50 

    The Indonesian tax system is in the process of continuous reform, but progress has been slow. The main sources of revenue in Indonesia, besides oil and gas, are income taxes—personal and corporate. Indonesia has a high personal income tax rate and a moderate corporate tax rate. The corporate income-tax reduction was concluded in January 2010, when the rate was brought down from 28% to 25%. The system relies quite heavily on withholding taxes, reflecting the government's difficulties in revenue collection. The government therefore urgently needs to widen the tax base—the Sunset Policy of 2008 greatly aided this endeavour. The decentralisation process that commenced in 2001, allowing for more regional autonomy, has resulted in a greater risk that extra taxes are levied at provincial level. Improved budget allocation along with better public financial management systems would lead to substantial efficiency gains on a regional level, while on the national level efforts to improve tax administration and spending efficiency are a priority.

Operational:  Risks 3.00

     Overall, government attitudes towards foreign investment are positive, and vital initiatives are being undertaken to speed up reform. In September 2009, IHS Global Insight upgraded the Indonesian operational risk rating by 0.25 points to 3.0 points, a reflection of the general improvement in Indonesia's operational environment over the medium term. As part of President Susilo Bambang Yudhoyono's government reform programme, Indonesia has implemented a series of reforms that have enhanced the country's business regulations. Endemic corruption, however, remains a significant problem when conducting business in Indonesia, although the efforts of the Corruption Eradication Commission (KPK) have yielded limited results over the last couple of years. Inefficient bureaucracy and red tape also continue to be a challenge and a deterrent to foreign investment. The Indonesian labour force is under-educated, while labour laws have empowered unions and detracted somewhat from the country's competitiveness in terms of being an attractive destination for foreign investment.

Security: Risks 2.75

     The July 2009 hotel bombings in Jakarta provided tragic evidence of the ongoing threat posed by radical splinter factions of Jemaah Islamiyah (JI). Following the spate of major bombings between 2002 and 2005, the security environment has been much improved as a result of better counter-terrorism capabilities. This was underlined by the foiling of several plots, including the break-up of the Palembang JI cell in July 2008. The risk of further terrorist attacks on the interests of Western countries—while much reduced since 2005—must be taken seriously. Although a number of terror suspects, including Noordin Mohammed Top, whose JI splinter faction was responsible for the July 2009 attacks, have been killed, several other high-profile JI members have remained at large. Indonesia is a vast archipelago state, making it difficult to police; the security environment varies from one island to the next, and Papua province is experiencing secessionist unrest. Indonesian waters also remain subject to piracy attacks.

Overall 2.76

 MEDIUM

    Indonesia’s democratic system is maturing under the rule of President Susilo Bambang Yudhoyono, who has gradually implemented wide-ranging political and economic reform, providing for a greater degree of stability.

President Susilo Bambang Yudhoyno
However, Indonesia’s democratic transition has faced numerous obstacles, ranging from powerful vested interests to an immature party system and the centrifugal forces of separatism. The government has been active in advancing core causes such as investment promotion, infrastructure development, job creation and anti-corruption efforts. Despite progress on all these fronts, pervasive graft continues to affect business operations, while deficient legal and regulatory frameworks reduce transparency. More far-reaching policies on infrastructure development and poverty reduction are required from Yudhoyono's second cabinet, while the legal and tax frameworks are set for further modernisation. Indonesia also continues to face significant challenges in the security sphere; separatist forces continue to operate in Papua, though the threat has diminished in Aceh since the conclusion of a peace agreement. The regional Islamist terror network Jemaah Islamiyah has its main operational base in Indonesia, and although authorities have made significant headway in rounding up its militants since the 2002 Bali bombing, splinter factions of the organisation remain a threat.

Political: Risks

    Indonesia under the leadership of Susilo Bambang Yudhoyono has moved to implement its wide-ranging reform programme, providing for a greater degree of political stability and economic well-being. More effective policies on infrastructure development and poverty reduction are gradually being enacted, while the legal and tax frameworks are also set for further reform.

Sundanese girl, Cibatu, Photo Imas Finnegan
Overall, there is a good deal of optimism about ongoing reform in the country and the pace of change is expected to quicken in Yudhoyono's second term, as he enjoys a strong popular and parliamentary mandate. However, the country's transition to a transparent and mature democracy faces obstacles, ranging from powerful vested interests to an immature party system and ongoing security problems. Terrorism remains a challenge, although the government has engaged in a comprehensive effort to crack down on militant groups associated with Jemaah Islamiyah (JI). Measures have been taken to improve the  investment climate, but confidence has remained dented by persistent corruption at all levels of officialdom.

Next Report:  Part III,  Political Outlook.

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ANDREW KREIG: EXPERTS REJECT FIRE AS CAUSE FOR 9/11 WTC COLLAPSES

The real truth on 9/11 slowly continues to bleed out

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Technical experts are mounting major challenges to official U.S. government accounts of how three World Trade Center skyscrapers collapsed in near-freefall after the 9/11 attacks 15 years ago.

Many researchers are focusing especially on the little-known collapse of

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The Geopolitics Of The United States, Part 1: The Inevitable Empire

The Empire and the inevitable fall of the Obama criminal regime

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STRATFOR Editor’s Note: This installment on the United States, presented in two parts, is the 16th in a series of STRATFOR monographs on the geopolitics of countries influential in world affairs.

Like nearly all of the peoples of North and South America, most Americans are not originally from the territory that became the United States.

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Geopolitics Of The United States Part 2: American Identity And The Threats of Tomorrow

A look back at 2011 predictions for the future in order to put events of today into perspective

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We have already discussed in the first part of this analysis how the American geography dooms whoever controls the territory to being a global power, but there are a number of other outcomes that shape what that power will be like. The first and most critical is the impact of that geography on the American mindset.

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By Robert S. Finnegan

This e-mail outlines and confirms the acts of espionage against Indonesia and Indonesians by Akiko Makino and the others involved both in Kobe University and in AI Lab at University of Airlangga, Surabaya; Bahasa Indonesia original follows English translation...

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UPDATED 01/07/2015 : New Analysis Challenges Tamiflu Efficacy; Hong Kong Corona Virus Outbreak

UPDATED 01/07/2015 : FOX NEWS CORPORATE PHARMA SHILL MEGAN KELLY AND FOX NEWS QUACK DOCTOR NOW PUSHING TAMIFLU FOR PREGNANT WOMEN AND CHILDREN;

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THE 5TH ESTATE UNEQUIVOCALLY WARNS THE PUBLIC NOT TO TAKE OR GIVE THIS PROVEN DANGEROUS, INEFFECTIVE DRUG TO ANYONE

Obama criminals now resulting to biowarfare in quest to destroy Chinese and ASEAN economy; "novel virus substrain" points directly to a Kawaoka / Fouchier / Ernala-Ginting Kobe lab virus weaponized and genetically altered to specifically target and infect the Asian population: Ribavirin...

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The 5th Estate has just purchased a library on H5N1 "Novel" virus pandemics, there are dozens of PDF and Exel documents we feel will assist you in saving lives following intentional releases of the H5N1 and now MERS viruses; we will begin by printing those that appear to be extremely relevant here: H5N1 Kobe-Kawaoka-Ernala series continues soon with more "Smoking Gun" e-mails from Teridah Ernala to The 5th Estate . . .

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By Robert S. Finnegan

On October 12, 2002 the Indonesian island of Bali experienced a terrorist attack that rocked the world. It was unquestionably well-coordinated and executed, the largest in the country's history.

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