Global News Blog
Not for nearly 25 years has Aung San Suu Kyi dared step outside her homeland. Not even to see her husband as he lay dying in Britain. If she ever left, she feared, Myanmar’s military government would never let her return home.
Determined never to give up, the woman who has become an icon not only for her own people but for democracy activists worldwide refused to give the generals an opportunity to sideline her. She put up with 15 years of house arrest rather than risk becoming an exiled irrelevance.
Now she is on her first international trip since 1988, visiting neighboring Thailand to attend a World Economic Forum summit on Friday, in a sign of her confidence in recent reforms in Myanmar (also known as Burma).
Today, though, her first full day abroad, she must have felt right at home.
Ms. Aung San Suu Kyi spent the morning in the town of Mahachai, home to Thailand’s largest community of Burmese migrant workers. Thousands mobbed her before she addressed the crowd from the balcony of a community center.
Around 2.5 million impoverished Burmese have fled their country in search of jobs in Thailand – an illustration of how badly Myanmar’s economy suffered under nearly half a century of military rule.
Sorting out that mess is one of the prime tasks facing Myanmar’s nominally civilian government. The political reforms the government has pushed through over the past 12 months – including partial parliamentary elections in April that Aung San Suu Kyi’s party won by a landslide – are generally seen as a first step toward economic recovery since they have prompted Western nations to suspend damaging economic sanctions.
On Friday, at the World Economic Forum, Aung San Suu Kyi will be addressing the sorts of Asian movers and shakers whom Myanmar is counting on to invest in the country’s economic revival. Businessmen from around the world have recently been pouring into Yangon, the country’s commercial capital, seeking opportunities as Myanmar opens up to the rest of the world.
Aung San Suu Kyi’s trip to Thailand is a sort of test run, though nobody seriously expects the Myanmar government to turn her back when she flies home to Yangon this weekend.
Next month she sets off on a more ambitious journey, and one freighted with sentiment as much as with politics, to Europe.
Besides visiting Switzerland and Ireland, Aung San Suu Kyi will go to Britain, where she was living before she returned to Myanmar in 1988 to care for her ailing mother, and where her British husband died in her absence. She will also go to Oslo, to formally accept the Nobel Peace Prize that she could not collect in person in 1991, for fear of getting stuck outside her homeland.
Zimbabwe’s President Robert Mugabe has just been named the UN’s international envoy for tourism. It’s a special recognition for Mr. Mugabe’s agreement to co-host, with Zambia, a United Nations World Tourism Organization general assembly next August.
At a ceremony in Victoria Falls, Mugabe said the agreement between Zimbabwe, Zambia, and the United Nations is of “historical importance.”
“For our people, the signing of the agreement attests to our commitment, our readiness to welcome the entire tourism fraternity to our countries,” Mugabe was quoted by the independent Zimbabwe newspaper NewsDay as saying. “For the UN World Tourism Organisation, on the other hand, the signatures testify to the confidence and trust that was bestowed upon us.”
That Mugabe, a man who faces a European Union travel ban and economic sanctions because of his repression and torture of opposition activists, would be named a UN envoy for tourism has drawn a certain amount of criticism.
Mr. Mugabe’s ruling party is accused of arresting, detaining, and in some cases killing members of the opposition Movement for Democratic Change during the 2008 national elections. He later formed a coalition government with the MDC, after an 11-month stalemate in which the national currency became worthless and inflation soared to more than 1 million percent.
Mugabe is also blamed for a violent land-reclamation campaign, in which armed thugs stormed and took over the property of white commercial farmers, as well as the Gukurahundi counterinsurgency campaign in the early 1980s against the rival ZAPO militant group in the Matabeleland region, which killed as many as 20,000 people.
So Mugabe’s selection as UN tourism envoy is not an obvious choice.
At the Victoria Falls ceremony, where Mugabe and Zambian President Michael Sata signed an agreement to hold the UNWTO assembly, the UN’s Taleb Rifai told a gathering, “By coming here, it is recognition, an endorsement on the country that it is a safe destination."
Zimbabwe once had a thriving tourism industry, both before and after the fall of the racist white Rhodesian government to Mugabe’s ZANU-PF majority government in 1980. Then, tourists flocked to see the gorgeous Victoria Falls or trundled around game parks to see lions, elephants, and rhinos in their native environment. Economic collapse and political instability changed all that, and Mugabe’s hanging on to power for 32 years has given the local tourism industry little incentive to grow. A UN conference will certainly add a little jingle in a few pockets, but once the suited diplomats leave, there is little indication that Zimbabwe’s tourism industry is heading toward a revival.
Members of the MDC, an opposition party that now shares power with Mugabe’s ZANU-PF, condemned the UN’s honoring of Mugabe.
"I can't see any justification for the man being an 'ambassador,' " Kumbi Muchemwa, an MDC spokesman told the Guardian newspaper. "An ambassador for what? The man has blood on his hands. Do they want tourists to see those bloody hands?”
Mugabe's spokesman Rugare Gumbo told the Telegraph that the "situation on the ground in Zimbabwe is not as bad as portrayed."
There have been rumors for years that Mugabe would like to step down from power, and pave the way for a peaceful succession for his ZANU-PF to remain in power, so the seeming rehabilitation of Mugabe by various UN agencies could be seen as a gentle nudge toward honorable retirement.
Navi Pillay, the UN’s High Commissioner for Human Rights, urged Europe and the US to lift economic sanctions and travel bans against Mugabe and his inner circle of supporters because all three of the major parties in Zimbabwe now oppose them. Lifting sanctions would allow Zimbabwe to hold a fresh round of elections, perhaps by early next year, Ms. Pillay said.
"I would urge those countries that are currently applying sanctions on Zimbabwe to suspend them, at least until the conduct and outcome of the elections and related reforms are clear," Pillay told journalists on May 25, following a five day trip to Harare, Zimbabwe’s capital.
Could a few honorary degrees, an honorary ambassadorship, and a few thousand tourists persuade Mugabe to step down from power? Perhaps. It’s certainly a cheaper alternative to war.
A computer virus designed to scoop up secret information like an "industrial vacuum cleaner" is infecting computers in Iran and elsewhere in the Middle East, according to the Russian Internet security firm Kaspersky Labs.
The new supervirus, which Kaspersky discovered and named "Flame," is one of the most complex items of malicious software ever conceived – many times more sophisticated than the notorious Stuxnet worm – and could well be a purposeful "cyberweapon" directed against Iran, the firm said in a statement late yesterday.
Flame is "actively being used as a cyberweapon attacking entities in several countries," Kaspersky said in a statement. It is "one of the most advanced and complete attack-toolkits ever discovered.… The complexity and functionality of the newly discovered malicious program exceed those of all other cyber menaces known to date."
According to Kaspersky, the majority of infected computers are in Iran, followed by the Palestinian territories, Lebanon, Saudi Arabia, and Egypt. It said the virus has probably been active for at least two years, but has not been detected until now due to its "extreme complexity."
"Over recent years the danger of military operations in Cyberspace has been one of the most serious issues of information safety," Yevgeny Kaspersky, the firm's director, is quoted as saying in the statement. "Stuxnet and Duqu were parts of one circuit of cyber attacks; their application raised concerns of a potential unleashing of global cyber war. Harmful Flame, most likely, is next stage of that war. It is important to understand, that this cyberweapon can be easily turned against any state."
The firm said it found the virus accidentally, after it was hired by the United Nations International Telecommunications Agency to trace the source of unexplained glitches and deletions of sensitive information in the agency's Middle East operations. A spokesman for Kaspersky told journalists yesterday that the virus's creator "remains unknown"; but it is probably a government, not only because of its huge size and complexity, but also because it does not appear to be designed to steal bank account information or perform the sorts of tasks usually set by private criminal hackers.
Stuxnet, which reportedly wreaked havoc on Iran's nuclear program, was designed to disrupt and destroy sensitive industrial systems. The new virus, which Kaspersky admits it does not yet fully understand, appears to evade detection, bury itself deeply, and continue siphoning off vital data for years.
Iran's official Maher Labs, a division of Iran's telecommunications ministry, said on its website today that "tools to recognize and clean this malware have been developed and, as of today, they will be available for those [Iranian] organizations and companies who want it."
Among the key characteristics of the virus, Maher said, are "distribution via removable medias and local networks, network sniffing, detecting network resources and collecting lists of vulnerable passwords, scanning the disk of infected system looking for specific extensions and contents, creating series of user’s screen captures when some specific processes or windows are active, transferring saved data to control servers, and bypassing tens of known antiviruses, anti malware and other security software."
The virus can infect computers running any Windows-based operating system, it said.
"We can clean this virus now, but we are still analyzing and discovering what it's capable of," says Vitaly Kamluk, chief malware expert at Kaspersky. "It took years to detect and understand Duqu and Stuxnet. These were highly profesional tools that evaded us for a long time. Flame is the newest, but there's no doubt that worse things may be out there. You can count on it."
Living as a foreigner in China, where none of my local friends has ever had a chance to cast a free vote, I make a special point of always voting when I get the opportunity in my own elections.
Yesterday, France (of which I am a citoyen) made it a whole lot easier for me to do so. I cast my ballot online in parliamentary elections – the first time this has been allowed.
In fact, France is only the second country in the world to allow Internet voting in a national election, (Estonia has been doing it since 2007), offering an online ballot to citizens living abroad. Not only that, we were voting for one of 11 seats in parliament specifically reserved (for the first time) for deputies representing expatriates.
I say the system made it “a whole lot easier.”
But, not exactly. In fact, all in all, it probably took me longer than it would have done to nip over to the French embassy to vote in person at the polling station there next Sunday. But that was because of security concerns, and it took a phone call to a helpline agent in France to sort out various problems with Java script before I could cast my virtual vote.
Security concerns, of course, are what stop Americans from being able to vote online. The Pentagon tried a system in 2000 for its personnel deployed overseas, but decided it was too vulnerable to hackers and abandoned it.
The French are pretty cautious too. Only people registered at a French consulate could vote online, and each voter needed a 10 character personal code sent (once only) by SMS to a mobile phone and another 10 character password sent to a verified e-mail address.
I am no computer geek, but if complexity is any indication of security I am comfortable with the procedures in place. After I had voted I was sent a “control code” that I can use to ensure that my vote is counted: that code comprised 337 digits, symbols, and letters in upper and lower case, more than four lines.
If my math is right, that means there are 65 to the power of 337 possible combinations of the components of my code. Pretty personalized.
In fact the technical aspects of voting were only the half of it. The real challenge was political: My constituency covers 41 countries, from Vanuatu to Ukraine, and I had to choose among 21 candidates, only one of whom I had heard of before the elections.
He was a minister in recently-defeated President Nicolas Sarkozy’s last government and is the only candidate presenting himself in my constituency who has never lived abroad. As far as I’m concerned, that rules him out from the start.
So I read a whole lot of online manifestos, and made my choice, and moved my cursor to the appropriate button and clicked my left mouse-key.
Democracy in action, in the heart of Beijing. A shame you have to be a citoyen francais to enjoy it...
Though the Japanese refer to island group as Takeshima and remain in a bitter dispute over the issue, Koreans are adamant that Dokdo is Korean sovereign territory – and they are very committed to letting the rest of the world know.
The latest ploy: a Napa Valley wine produced by Korean-American dentist Ahn Jae-hyun at his Dokdo Winery that uses the island post code as its moniker.
Illustrating the fervor with which such attempts to garner attention for Korea’s sovereign claims over the outcrop, when the wine debuted on the Korean market the local distributor pledged to donate all proceeds to nonprofit groups promoting Korean sovereign claims in other countries.
While both Korea and Japan point to historical documents to back up their respective claims, South Korea has occupied Dokdo/Takeshima for more than half a century. And it remains a key rallying symbol for lingering resentment over Japan's colonial occupation of the then unified Korean Peninsula in the first half of the 20th century.
RELATED: 5 top East Asian island disputes
Previous efforts to highlight Korea’s territorial claims to Dokdo/Takeshima range from what some observers view as the practical to the more extreme.
In 2010, the Korean singer Kim Jang-hoon was behind a months-long video advertisement in New York's Times Square that not only specifically proclaimed Dokdo as Korean territory but also made sure to refer to the sea in which they are located the East Sea, as opposed to the Sea of Japan.
In recent years, a series of ads taken out in major American newspapers announced a near identical message. The latest, placed as a full-page ad in The New York Times in March by Dokdo campaigner Seo Kyoung-duk and South Korean e-commerce firm Gmarket displayed the national flags of four countries – including the South Korean Taegukgi – alongside the names of four islands related to each.
In the case of the other three countries, a line connects each island with the relevant national flag – except that of South Korea and Dokdo. Readers were encouraged to connect the two, the implication being that Dokdo is Korean territory. Japan protested the ad.
In 2008, the president of the Korean Dry Cleaners Association in the US produced plastic bags emblazoned with a picture and a map of the disputed island along with the English slogans “Dokdo Island is Korean territory” and “The Japanese government must acknowledge this fact,” which were taken up by about 100 Korean dry cleaners in New York.
And the Korea Times, a leading South Korean English-language newspaper, has for several years run an international Dokdo-themed essay competition in conjunction with the Seoul-based Northeast Asian History Foundation that invariably challenges entrants to tip their hat toward Korea’s claims to the outcrop. The winner receives a $1,270 cash prize.
Still, despite the stated intentions of Dokdo wine producer Ahn and others like him, his website gently hints at what could be seen as the futility of the territorial dispute.
Without any apparent irony, it states: “For as long as we can remember, there has been much controversy over the island and the ownership of it. Instead of appreciating the beauty of Dokdo, the world has been too busy fighting over it.”
Russia's military intelligence agency, the GRU, suspects that US-inspired industrial espionage may have caused the May 9 crash in Indonesia of a Sukhoi Superjet 100 – Russia's only hopeful entry in the civilian aviation market – according to Moscow's leading tabloid newspaper, the usually reliable and officially connected Komsomolskaya Pravda.
While most Russian aviation experts contacted today dismissed the sabotage theory, they say there is a deepening mystery about how Russia's most modern civil aircraft, with all its systems apparently functioning perfectly, came to slam into the side of a mile-high volcano during a routine demonstration flight.
"All the theories put forward so far are badly flawed, there is a shortage of hard information and there are a lot of irresponsible rumors," says Roman Gusarov, editor of Avia.ru, an online aviation journal. "I am afraid that Russia is not going to emerge from this story without taking a black eye."
RELATED – Think you know Russia? Take our quiz.
Citing an unnamed GRU general, Komsomolskaya Pravda claimed that electronic jamming of the plane's on board equipment is the most plausible explanation for how the jet, which was making a demonstration flight out of Jakarta airport with 45 people aboard, smashed into a mountainside even though an initial investigation has found that its terrain and collision avoidance systems were all functioning properly.
"We are investigating the theory that it was industrial sabotage," the GRU officer is quoted as saying. He said that Russian intelligence has long monitored the activities of US military electronic specialists at the Jakarta airport.
"We know that they have special equipment that can cut communications between an aircraft and the ground or interfere with the parameters on board," he said. "For example, the plane is flying at one altitude, but after interference from the ground onboard equipment shows another."
The investigation has so far turned up the plane's "black box" cockpit voice recorder, which shows that no system-failure alarms went off during the plane's final minutes, nor did the crew take any audible emergency action. But the aircraft's digital flight recorder, which monitors flight systems and engine performance, remains missing in the rough jungle terrain around Mount Salak, where at least seven other deadly air disasters have occurred.
The biggest question about the crash is why the SuperJet's pilot, Alexander Yablontsev, one of Russia's most experienced test pilots, requested permission to descend amid a rainstorm in a notoriously mountainous area – and why a ground controller in Jakarta granted that permission.
"Maybe he didn't see that the plane was heading straight at the mountain. On the other hand, we don't rule out the possibility that this was deliberate industrial sabotage to drive our aircraft from the market," an unnamed official at Sukhoi, the plane's manufacturer, told Komsomolskaya Pravda. "Fortunately, we don't foresee any loss of orders [for the SuperJet]."
The SuperJet is a medium-range 100-seat airliner whose $35 million price tag makes it the ideal replacement for hundreds of aging Soviet-era planes on Russia's myriad of far-flung regional routes. It is also greatly hoped that the new plane will pull Russia's depressed and scandal-ridden aviation industry into the 21st century by succeeding on international markets against competitors like the Canadian Bombardier Inc. and the Brazilian Embraer SA.
It's not the first time Russian officials have blamed a technological disaster on foreign meddling. Earlier this year the head of the space agency Roskosmos, Vladimir Popovkin, hinted that the failure of the ambitious Phobos-Grunt probe to the moons of Mars might have been caused by US electronic jamming of the vehicle in the Earth's "radar shadow" where Russian controllers couldn't see it happening.
(Such speculations are not always necessarily wrong. In 2004 a former secretary of the Air Force and special adviser to President Ronald revealed in his book "At the Abyss: An Insider's History of the Cold War" that in the 1980s the CIA used cyber warfare to sabotage the USSR's trans-Siberian pipeline for delivering Soviet gas to Western Europe, which caused a massive "3-kiloton" blast that destroyed a huge section of the line. Some critics have labeled that account "rubbish").
Mr. Gusarov says that Sukhoi has handled the information side of the SuperJet disaster very badly.
"From the very beginning they developed this plane as if it were a secret combat jet rather than a civil airliner," he says. "Now they're putting out contradictory statements, and making all sorts of premature declarations. For instance, how can they assert that there were no system failures based on an examination of the cockpit voice recorder alone?
"Of course, all possible theories are bad. Either we have a fault with our newest and most hopeful plane, or with one of Russia's finest aircrews. So, finding a scapegoat, putting out a story about some malicious external force bent on wrecking the SuperJet is just the thing they needed."
Oleg Pantaleyev, an expert with Aviaport.ru, an online aviation news service, points out that the US does not produce this particular class of aircraft, and several foreign firms, including Boeing, have been involved in the SuperJet's development and have big stakes in its success.
"This is a difficult investigation because part of the black box is missing, and the terrain makes it very hard to retrieve all the plane's fragments," he says. "It takes time to complete a probe of this complexity, and we can't expect any hard conclusions soon.
"It's this very lack of objective information plus low professional ethics that gives rise to all these rumors. They should be ignored."
Within days of NATO's announcement that its European antimissile shield is now "provisionally operational," Russia has claimed to have tested a new type of intercontinental missile that can outwit the new missile defenses.
The new missile, which some Russian media said is named the "Avante-garde," was successfully fired on Wednesday from Plesetsk cosmodrome in northwestern Russia, and reportedly hit its target on the Kamchatka Peninsula, several thousand miles away, a few minutes later. The Russian Defense Ministry says the new weapon has a maximum range of about 10,000 miles and can carry a bigger payload than any previous Russian missile.
"This new intercontinental ballistic missile is intended to strengthen the capabilities of Russia's Strategic Missile Forces, including its capabilities for overcoming antimissile defenses," Defense Ministry spokesman Vadim Koval told journalists.
"The missile was built with maximum use of existing components with new elements and technologies developed during the production of fifth-generation missile systems, in order to shorten its development time," he added.
Analysts say the new missile is probably a modification of the Topol-M, a modern, mobile ICBM that is well known in the West and is accounted for under the terms of the new START accord signed by US and Russian leaders two years ago. That treaty stipulates that both sides have the right to modernize their missile delivery systems as long as they remain under a ceiling of 1,550 deployed strategic warheads.
The new missile reportedly can boost into space faster than previous models thanks to a powerful new fuel, which would presumably enable it to outrun any ground-launched interceptors from NATO's European antimissile system.
The independent Interfax agency quoted a retired Russian missile commander, Gen. Viktor Yesin, as saying the new weapon was specifically designed as part of Russia's efforts to counter NATO's antimissile system, which is slated to become fully operational by 2018, as well as other regional shields being contemplated by the Pentagon.
"This is one of the technical means Russia’s political and military leadership has developed in response to America’s global system of missile defense," Yesin was quoted as saying.
Another potential Russian reaction is to deploy short range Iskander-M ground-to-ground missiles in the Russian Baltic enclave of Kaliningrad and around Russia's periphery, in order to be able to strike quickly against US missile defense systems.
Earlier this month, Russia's top general, Nikolai Makarov, even threatened to launch a preemptive strike against NATO's antimissile shield if it appears to undermine Russia's strategic nuclear deterrent.
Russian press reports suggest that the new missile is not only faster in the boost-phase than all its predecessors, but that it may also be able to maneuver during its flight in order to baffle enemy radars and dodge interceptors.
Media reports also say that a previous attempt to test the new missile on Sept. 27 failed, when it suffered an undisclosed malfunction and crashed just 10 miles from its launch site.
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To Pakistan, Shakil Afridi is a traitor who helped a foreign power locate and kill an enemy on its territory. To the US, Dr. Afridi is a hero who will now, apparently, spend the next 33 years of his life in prison.
The US lobbied hard with the Pakistani government to gain Afridi’s release. US Secretary of Defense Leon Panetta, during a February 2012 visit to Islamabad, urged Pakistani authorities to release Afridi, but Pakistan declined. Given the substantial public anger in Pakistan over the bin Laden killing – more about the US’s violation of Pakistani sovereignty than for sympathy for the man – Pakistan sealed Afridi’s fate.
Now his sentencing marks another low-water mark for the US-Pakistani relationship, and highlights how little common ground the two countries share. But expectations for each side are now so low that it’s unlikely the US is going to adopt another full-court press as seen when another US spy – Raymond Davis – faced detention in Pakistan.
To be sure, Afridi’s Pakistani nationality also means the US isn’t going to view his detention in quite the same leave-no-man-behind terms. And the US does not have the same legal arguments of the Geneva Conventions as it did in the case of Mr. Davis.
But there’s also much less riding on the US-Pakistan relationship than even a year ago when the Davis affair erupted. NATO has managed to keep the Afghan war effort going, despite Pakistan cutting off supply lines through its territory. Then, too, trust has evaporated since the discovery of bin Laden in Pakistan and the unauthorized US raid to kill him.
Roller coaster ride
America has had a roller coaster relationship with Pakistan for years. In the 1980s and early 1990s, the US and Pakistan were as thick as thieves, funding, arming, and training Afghan and Pakistani fighters to take on the Soviet occupation of Afghanistan. After the Soviets withdrew, and after Pakistan successfully tested a nuclear device, the US imposed strict military sanctions against Pakistan, and left that country with tens of thousands of former militants, thousands of politically charged Islamic seminaries, and a Pakistani economy addicted to foreign aid.
Today, the US and Pakistan have spent a decade ostensibly fighting on the same side against Islamist extremist groups – some of whom use Pakistan’s less-well-controlled corners, such as Swat and Northern Waziristan, as their bases – and yet it is not clear how much these two countries share in common anymore.
That the US military ended up recruiting Afridi, a Pakistani doctor, to masquerade as a Save the Children doctor on a child-immunization campaign to help locate bin Laden, rather than trust the intelligence it was receiving from Pakistan’s own Inter Services Intelligence directorate (ISI) speaks volumes about how far the US-Pakistani relationship had fallen.
Pakistan consistently insisted that it had no idea where bin Laden was. US intelligence agents, cell phone intercepts, and Afridi succeeded where the ISI failed, all contributed to finding bin Laden in a large home just half a mile away from a major Pakistani military academy in the town of Abbottabad.
Far from feeling apologetic, Pakistan’s military establishment cried foul, and accused the US’s acknowledged agent of treason.
Eye to eye
There is no surprise, though, that these two nations don’t see eye to eye.
America has a much broader strategic partner in South Asia in India, with whom it shares a number of parallel goals of keeping the growing economic and political power of China somewhat contained, of promoting the expansion of democracy and free markets, and of fighting against militant extremist groups. The fact that Pakistan continues to see India as its chief existential threat, with whom it continues to spar over disputed territories in Kashmir, adds to Pakistan’s sense of betrayal by the US.
But Pakistan also feels anger that the US fails to look at matters from its perspective.
The US once understood Pakistan’s challenge of holding an unwieldy collection of language groups and religious groups together as a nation, Pakistani academics say. The US once understood Islamabad’s difficulty of maintaining even the most basic sort of control over the semi-autonomous regions along the Afghan border called the Federally Administered Tribal Areas. But after 9/11, the US has insisted that Pakistan launch military incursions into those FATA areas in pursuit of well-armed militant groups, and in recent years, has launched numerous drone attacks against these groups, without prior notification to Pakistan.
These drone attacks have created a tremendous blowback effect, even among liberal Pakistanis who once supported the war against radical Islamist militant groups. In the immediate aftermath of 9/11, liberal and moderate Pakistanis welcomed efforts to contain terror groups such as Lashkar-e-Taiba and Sipah-e-Sahaba. But after the US invaded Iraq, that support waned, and many Pakistanis adopted a Michael Moore view of the US as a superpower bent on crushing weaker Muslim states.
Today, it's hard to see how the relationship can be repaired. In the end, the US can console itself that if Afridi had been tried under Pakistani national law – not a tribal court – he could have faced the death penalty.
“That’s a very good result for us,” said a spokesman of Germany’s Federal Finance Agency in Frankfurt, which manages the sales. “It is an impressive illustration of investors’ search for quality.”
But the first time in history the German central bank sold two-year notes to yield zero percent is evidence of how much trouble the rest of Europe is in. The free money for Germany amount to a loss for investors after inflation. Why are bankers willing to lose money on a loan to Germany? Because it isn't Greece. Or Italy. Or Spain.
Germany is not only one of the few growing European economies but its domestic finances are rock solid, unlike its eurozone peers. Spain and Italy are paying more than six percent to borrow, because investors fear they'll default. European bankers, worried about ending up holding worthless paper, have few good options but the Bundesbank.
Seven percent is perceived as the threshold beyond which borrowing becomes unsustainable – Greece, Portugal and Ireland all asked the European Union and International Monetary Fund for financial aid after their borrowing costs breached that threshold.
The zero-interest sale reflects investors' interest in "a return of their money over a return on their money," Rabobank rate strategist Richard McGuire told Reuters.
High interest rates are exacerbating the economic problems in southern Europe. Greece, now in its fifth year of recession, seems more and more likely to leave the eurozone. Even after negotiating a far-reaching debt reduction with private investors earlier this year, the country won’t be able to service the remaining debt. Reuters quoted two Eurogroup officials today confirming that member states are being asked to prepare individual contingency plans for the eventuality of a Greek exit.
While Germany made its record-breaking bond sale, EU leaders prepared for yet another crisis summit. Tonight they are convening for an informal meeting in Brussels to discuss measures to stimulate economic growth in the eurozone. The meeting is seen as the first battle between German Chancellor Angela Merkel, who strictly objects to growth programs financed through additional borrowing, and the new French president, Francois Hollande, unofficial spokesman for the growing group of leaders who advocate credit-based stimulus plans.
Before the meeting, Germany’s deputy finance minister, Thomas Steffen, rejected renewed calls for the introduction of eurobonds – debt securities issued by the eurozone as a whole which in effect would mean that Greece could borrow at the same rate as Germany.
“We would sign up for 100 percent liability for new debt in the euro area,” Steffen said in Berlin today. “We can’t do this, we’re not strong enough economically.”
At its weekend summit in Chicago, NATO announced that the first phase of its controversial European missile defense shield has become "provisionally operational," news that will not be received well in Moscow.
If there is any issue that threatens to derail the fragile East-West détente that's held since President Obama set out to reverse the mini-cold war that prevailed under George W. Bush, it's the increasingly acrimonious dispute over missile defense.
Earlier this month Russia's top general, Nikolai Makarov, went so far as to suggest that his forces might launch a preemptive strike against NATO missile defense emplacements in Central Europe if they were perceived to threaten Russia's strategic nuclear deterrent.
But NATO, which has made the issue a litmus test of alliance unity, has remained unmoved by Russian bombast on the subject and is clearly moving forward with the project, which is planned to reach full operational capability by 2020.
"This is the first step towards our long-term goal of providing full coverage and protection for all NATO European populations, territory, and forces. Our system will link together missile defense assets from different Allies – satellites, ships, radars, and interceptors – under NATO command and control," NATO Secretary General Anders Fogh Rasmussen told the summit on Sunday. "It will allow us to defend against threats from outside the Euro-Atlantic area," he added.
Buried deep inside NATO's Chicago Summit Declaration is the strongest political statement yet offered by the alliance in hopes of mollifying Russian worries: "NATO missile defense is not directed against Russia and will not undermine Russia’s strategic deterrence capabilities," it says. "While regretting recurrent Russian statements on possible measures directed against NATO’s missile defense system, we welcome Russia's willingness to continue dialogue with the purpose of finding an agreement on the future framework for missile defense cooperation."
While that statement may be perceived in Moscow as progress, it falls far short of the legally binding written pledge that the Kremlin has demanded.
"We've heard this before," says Fyodor Lukyanov, editor of Russia in Global Affairs, a leading Moscow-based foreign-policy journal. "The thing is, when the Americans say their missile defense plans are not directed against Russia, they're telling the truth. It's against everybody. Since Ronald Reagan first floated the idea, missile defense has been seen as a way to protect the US against any and every possible missile threat. But Russia is the main country whose national security is based on strategic nuclear deterrence, in a balance with US forces. It cannot help but concern us directly."
The dispute looks almost impossible to resolve, in part because both sides are talking at cross-purposes, and the threats each is concerned about remain theoretical future possibilities rather than immediate realities that might be negotiated over.
NATO claims it needs a shield to defend against hypothetical rogue missile strikes from Iran or North Korea – a threat that does not presently exist – while Moscow complains that the shield currently being installed in Europe might undercut Russia's strategic edge in its later stages, almost a decade hence.
"The paradox of this debate over missile defense is that it's completely disconnected from real issues on both sides," says Mr. Lukyanov. "The actual military issues they're both talking about are countering virtual threats, not real ones. But in political terms it's about the basis of trust, and it's causing trouble right now."
On the Russian side, the missile defense controversy helps gin up domestic support for newly inaugurated President Vladimir Putin's sweeping rearmament plans, which may be popular in Russia's conservative hinterland where nostalgia for USSR-era superpower status remains strong, but are not necessarily the wisest economic priority for Russia at this time.
"At this juncture of history, for the first time, Russia faces no significant threat whatsoever, from any direction. So there needs to be a threat of some sort to talk about," says Sergei Karaganov, head of the Council on Foreign and Defense Policies, a leading Moscow think tank.
But the fractious dialogue over missile defense has made a bad situation worse and, he adds, Western leaders are not addressing the legitimate concerns of Russian military leaders in a forthright manner.
"It's all explained as if it's a counter to this nonexistent Iranian threat," which may be addressed by other means in coming days and months, Mr. Karaganov says. "These are either lies, or they are cover for other goals. We are simply not talking openly or realistically about the missile defense issue, and this drags down the level of trust."
Pushing Russia toward China?
It could also be pushing Russia into what some observers are describing as a possible foreign-policy pivot toward China and the East under its newly returned Kremlin leader, Mr. Putin. Speculation on this theme has been spiking since Putin announced that he would skip last Friday's Group of Eight summit at Camp David and will instead make his first foreign visits to Belarus and China in the next couple of weeks.
Though it has been little remarked in coverage of the issue, Moscow and Beijing see eye to eye on missile defense, says Karaganov.
"We've been having constant conversations with our Chinese colleagues about this, and they have the same point of view as us," he says. "They haven't spoken up much about it, but they may start to do so."