An interesting diversified global financial services company

 

UBS AG

 

UBS AG (NYSE: UBS; SWX: UBSN; TYO: 8657) is a diversified global financial services company, with its main headquarters in Basel & Zürich, Switzerland. It is the world's largest manager of private wealth assets, "the world's biggest manager of other people's money"^[1] and is also the second-largest bank in Europe, by both market capitalisation and profitability. UBS has a major presence in the U.S., with its American headquarters located in New York City's Manhattan borough, (Investment Banking); Weehawken, New Jersey (Private Wealth); and Stamford, Connecticut (Capital Markets). UBS's retail offices are located throughout the United States, and in over 50 other countries. UBS is an abbreviation, which originated from a predecessor firm, the Union Bank of Switzerland, however UBS ceased to be considered a representational abbreviation after its 1998 merger with Swiss Bank Corporation.^[2]

UBS's global business groups are Private Banking, Investment Banking, and Asset Management. Additionally, UBS is one of the leading providers of retail banking and commercial banking services in Switzerland. Overall invested assets are 3.265 trillion Swiss francs (CHF), shareholders' equity is 47.850 billion CHF and market capitalization is 151.203 billion CHF by end of 2Q 2007.

The AG in the company's name means Aktiengesellschaft, which is the equivalent to a shareholder-based corporation in the USA.

In some ways, UBS has evolved on a similar path to its cross-town rival Credit Suisse. Both are Swiss commercial and retail banks which bought major US investment banks (and in the case of UBS, a leading retail stock broker, PaineWebber).

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Controversies

• In January 1997, Christoph Meili, a night watchman at the Union Bank of Switzerland (as UBS was then known), found the bank historian destroying archives compiled by a subsidiary that had extensive dealings with Nazi Germany, in direct violation of a recent Swiss law (adopted on December 13, 1996) protecting such material. UBS acknowledged that it had "made a deplorable mistake", but maintained that the destroyed archives were unrelated to the Holocaust. Meili was suspended from his job at the security company that served UBS, following a criminal investigation into whether his whistleblowing had violated bank secrecy laws.^[7]

• In 2001, UBS was blamed for refusing to extend Swissair's line of credit, forcing a grounding of Swissair's planes on October 2, 2001. UBS Chairman Marcel Ospel was blamed by many for ostensibly evading the request for an extension of Swissair's line of credit, and the day after the grounding, thousands of demonstrators marching in front of the Swissair headquarters carried a banner reading "Bin Ospel" (comparing him to Osama bin Laden because of the effect of his actions on airlines' business).^[8]

• In April 2002, Bank of America sued five people who left its asset- and mortgage-backed securities groups for UBS, alleging that the five conspired to steal trade secrets, proprietary software and clients from Bank of America. Bank of America filed a lawsuit for US$ 20 million against Shahid Quraishi, Peter Faigl, Paul Scialabba, Reggie DeVilliers and Daniel Huang, who had previously worked for their asset-backed group based in Charlotte.^[9]

• On March 20, 2003 UBS client, HealthSouth and its founder/CEO Richard M. Scrushy were accused by the U.S. Securities and Exchange Commission (SEC) of an accounting scandal where the company's earnings were falsely inflated by $1.4 billion. In 1996, Scrushy allegedly instructed the company's senior officers and accountants to falsify company earnings reports in order to meet investor expectations and control the price of the company's stock. In certain fiscal years, the company's income was overstated by as much as 4700 percent. The $1.4 billion represents more than 10 percent of the company's total assets. Three senior bankers at UBS Howard Capek, Benjamin Lorello and William McGahan, all whom had extremely close relationships with HealthSouth's management, all testified for congressional hearings, but none was convicted of any wrongdoing. McGahan, who was in jeopardy of losing his employment with the firm at the height of the scandal ^[10], later resigned on April 10, 2004 for personal reasons not related to the scandal. ^[11]

• On May 10, 2004 UBS was fined $100 million by the U.S.Federal Reserve for illegally transferring funds from an account set up by the Federal Reserve at UBS to Iran, Cuba and other countries presently under a U.S. trade embargo. ^[12]

• In April 2005, UBS lost the high profile case Zubulake v. UBS Warburg, a discrimination and retaliation suit. The plaintiff Laura Zubulake, a former institutional equities saleswoman at the company's Stamford office, alleged her manager, Matthew Chapin, had undermined and removed her from professional responsibilities, excluded her from business outings, belittled her to colleagues and generally treated her different from the men on her desk. Also, she alleged that there were several sexist policies in place, such as entertaining clients at strip clubs, that made it difficult for women to foster business contacts with clients.^[13] An important event in the case was that UBS had not preserved relevant e-mails after the litigation hold had been in place. Because of this, federal judge Shira Scheindlin gave the jury a final "adverse inference" instruction, in part stating, "The fact that some UBS employees failed to preserve their e-mails after being instructed to do so, and that such e-mails cannot now be produced, is sufficient circumstantial evidence from which you are permitted, but not required, to conclude that the missing evidence was unfavorable to UBS.". The jury found in favor of Zubulake on both claims and awarded $9.1 million in compensatory damages (including back pay and professional damage), and $20.2 million in punitive damages. The case was seen as a landmark in the realms of e-discovery, document retention, computer forensics, and human resources.^{[14] [15]}

• The Securities and Exchange Board of India (SEBI) alleged that UBS had played a role in the 2004 Black Monday stock market crash which followed the National Democratic Alliance government’s defeat in the general elections. SEBI's ruling of May 17, 2005 barred UBS from issuing or renewing participatory notes for a period of one year.The ban was later lifted on appeal, as a result of a government tribunal ruling on September 9, 2005.

• On October 18, 2005, three African-American employees filed a class action lawsuit against the company in the United States District Court for the Southern District of New York alleging racial discrimination in hiring, promotion and other employment practices. The three plaintiffs in Freddie H. Cook, Sylvester L. Flaming Jr. and Timothy J. Gandy v. UBS Financial Services, Inc., claim that segregation and discrimination in job assignments and compensation were widespread and the firm had done nothing to diversify its workforce. The lawsuit also claims offices operating in Largo, Maryland and Flushing, New York were illegally created to serve African-Americans and Asian-Americans respectively, and that the firm’s management frequently ridiculed the Largo branch office and its staff, referring to it as a “diversity” office. On April 23, 2007, U.S. District Judge, Peter J. Messitte, granted plaintiff's request to dismiss the class allegations without prejudice. As a result of this dismissal, the case now comprises the individual claims of three plaintiffs. ^[16][17]

• In an article published by Reuters on Feb 23, 2008, Brazilian public prosecutor Karen Kahn announced that several employees of UBS as well as others from Credit Suisse, Clariden Leu and AIG were under investigation by federal authorities.^[18] In 2007, police arrested 20 people, including bankers at UBS, Credit Suisse unit Clariden and AIG Private Bank after the discovery of illegal activities including money laundering, tax evasion, fraudulent banking and operating without a banking license.^[19]

• In an article published in BusinessWeek on February 26, 2007, it was announced that the firm was under investigation by federal prosecutors in the United States after it was discovered that traders working for at least two unidentified hedge funds were paying a UBS employee for information on impending ratings changes on stocks.[3] It was later announced on March 1st, that Mitchel S.Guttenberg, an executive director in the firm's equity research department, was being charged along with 13 other individuals from various firms with insider-trading fraud of more than $15 million. ^[20]

• During the third quarter of 2007. Peter Wuffli stepped down as CEO of the firm amid significant writedowns related to subprime banking exposure (CDO's/derivatives) in the United States. More than US$13 billion in mezzanine debt and more than US$20 billion in total subprime exposure were written off, forcing UBS to cut its dividend or increase capital in order to protect UBS's traditionally high tier 1 capital ratio, seen by investors as a key to its credibility as the world's largest wealth management company.

• On April 1st, 2008 UBS announced—and it was writing down a further $19 billion on its investments in American subprime and other mortgages, as part of an unexpected SFr12 billion projected loss in the first quarter. The Swiss bank also said it would call on its shareholders to supply SFr15 billion in additional funds to shore up its depleted reserves of capital. That means shareholders face dilution, and UBS's sovereign-wealth backers may add to the potential losses (albeit paper ones) they have suffered since December. In penance, Marcel Ospel, architect of the merger that created UBS in 1998, said he would step down as chairman, to be replaced by Peter Kurer, the bank’s general counsel. With only 86% approval this appointment was controversial at the shareholders meeting. As reported by the Wall Street Journal, there were many "boos and hisses" upon the announcement of Kurer's appointment

• On May 6th, 2008 UBS announced plans to cut 5,500 jobs by the middle of the next year.^[21]

• It was reported on June 22, 2008 that the US Federal Bureau of Investigation had made a formal request to travel to Switzerland to probe a multi-million-dollar tax evasion case involving UBS.^[22] The New York Times reported that the case could involve some 20,000 US citizens. This is reported to be a consequence of information revealed in 2006 by a UBS client at risk of prosecution for US tax evasion^[23].

• On July 17, 2008 the US Senate disclosed that the U.S. loses around $100 billion annually due to offshore tax evasion.^[24] The Senate report accused Swiss bank UBS AG and Liechtenstein's LGT Group for allegedly marketing tax-evasion strategies to wealthy Americans.^[25] U.S. clients hold about 19,000 accounts at UBS, with an estimated $18 billion to $20 billion in assets, in Switzerland, according to the findings from the Senate probe and Justice Department prosecutors.^[26]

Source: Wikipedia

Katanga Mining Limited

Company profile

Katanga Mining Limited operates a large-scale copper-cobalt project with substantial high-grade mineral reserves and integrated metallurgical operations in the Democratic Republic of Congo (DRC).

We are refurbishing and redeveloping the site through an aggressive four-year phased ramp-up plan. Production began in late 2007, and by 2011 we aim to produce over 300,000 tonnes of refined copper and over 30,000 tonnes of refined cobalt per year. This will give us the potential to be the largest copper producer in Africa and the largest cobalt producer in the world.

Our single-site operation, which comprises brownfield assets and new facilities under construction, will have one of the lowest unit production costs in the world, net of by-product credits.

The January 2008 merger with Nikanor PLC, whose adjacent concessions had previously been part of the same mine complex, has consolidated our leadership position in the region and is expected to generate significant operating and financial synergies.

Katanga holds a 75% stake in two joint ventures with Gécamines, a state-owned mining company in the DRC. See our corporate structure for additional information on how the company is structured.

We are committed to the socio-economic development of the DRC and the communities surrounding our operations, and place sustainable development as integral to the way we do business.

Katanga is listed on the Toronto Stock Exchange under the symbol KAT.

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A Canadian Company

PETER HITCHENS: How China has created a new slave empire in Africa

By PETER HITCHENS

 

Narrow escape: Peter Hitchens

I think I am probably going to die any minute now. An inflamed, deceived mob of about 50 desperate men are crowding round the car, some trying to turn it over, others beating at it with large rocks, all yelling insults and curses.

They have just started to smash the windows. Next, they will pull us out and, well, let's not think about that ...

I am trying not to meet their eyes, but they are staring at me and my companions with rage and hatred such as I haven't seen in a human face before. Those companions, Barbara Jones and Richard van Ryneveld, are - like me - quite helpless in the back seats.

If we get out, we will certainly be beaten to death. If we stay where we are, we will probably be beaten to death.

Our two African companions have - crazily in our view - got out of the car to try to reason with the crowd. It is clear to us that you might as well preach non-violence to a tornado.

At last, after what must have been about 40 seconds but that felt like half an hour, one of the pair saw sense, leapt back into the car and reversed wildly down the rocky, dusty path - leaving his friend behind.

By the grace of God we did not slither into the ditch, roll over or burst a tyre. Through the dust we churned up as we fled, we could see our would-be killers running with appalling speed to catch up. There was just time to make a crazy two-point turn which allowed us to go forwards and so out-distance them.

We had pretty much abandoned our other guide to whatever his fate might be (this was surprisingly easy to justify to myself at the time) when we saw that he had broken free and was running with Olympic swiftness, just ahead of pursuers half hidden by the dust.

We flung open a rear door so he could scramble in and, engine grinding, we veered off, bouncing painfully over the ruts and rocks.

We feared there would be another barricade to stop our escape, and it would all begin again. But there wasn't, and we eventually realised we had got away, even the man whose idiocy nearly got us killed.

He told us it was us they wanted, not him, or he would never have escaped. We ought to be dead. We are not. It is an interesting feeling, not wholly unpleasant.

Why did they want to kill us? What was the reason for their fury? They thought that if I reported on their way of life they might lose their livings.

Livings? Dyings, more likely.

Peking power: A Chinese supervisor cajoles local workers as they dig a trench in Kabwe, Zambia

These poor, hopeless, angry people exist by grubbing for scraps of cobalt and copper ore in the filth and dust of abandoned copper mines in Congo, sinking perilous 80ft shafts by hand, washing their finds in cholera-infected streams full of human filth, then pushing enormous two-hundredweight loads uphill on ancient bicycles to the nearby town of Likasi where middlemen buy them to sell on, mainly to Chinese businessmen hungry for these vital metals.

To see them, as they plod miserably past, is to be reminded of pictures of unemployed miners in Thirties Britain, stumbling home in the drizzle with sacks of coal scraps gleaned from spoil heaps.

Except that here the unsparing heat makes the labour five times as hard, and the conditions of work and life are worse by far than any known in England since the 18th Century.

Many perish as their primitive mines collapse on them, or are horribly injured without hope of medical treatment. Many are little more than children. On a good day they may earn $3, which just supports a meagre existence in diseased, malarial slums.

We had been earlier to this awful pit, which looked like a penal colony in an ancient slave empire.

Defeated, bowed figures toiled endlessly in dozens of hand-dug pits. Their faces, when visible, were blank and without hope.

We had been turned away by a fat, corrupt policeman who pretended our papers weren't in order, but who was really taking instructions from a dead-eyed, one-eared gangmaster who sat next to him.

By the time we returned with more official permits, the gangmasters had readied the ambush.

The diggers feared - and their evil, sinister bosses had worked hard on that fear - that if people like me publicised their filthy way of life, then the mine might be closed and the $3 a day might be taken away.

I can give you no better explanation in miniature of the wicked thing that I believe is now happening in Africa.

Out of desperation, much of the continent is selling itself into a new era of corruption and virtual slavery as China seeks to buy up all the metals, minerals and oil she can lay her hands on: copper for electric and telephone cables, cobalt for mobile phones and jet engines - the basic raw materials of modern life.

It is crude rapacity, but to Africans and many of their leaders it is better than the alternative, which is slow starvation.

The Congolese risk their lives digging through mountains of mining waste looking for scraps of metal ore

It is my view - and not just because I was so nearly killed - that China's cynical new version of imperialism in Africa is a wicked enterprise.

China offers both rulers and the ruled in Africa the simple, squalid advantages of shameless exploitation.

For the governments, there are gargantuan loans, promises of new roads, railways, hospitals and schools - in return for giving Peking a free and tax-free run at Africa's rich resources of oil, minerals and metals.

For the people, there are these wretched leavings, which, miserable as they are, must be better than the near-starvation they otherwise face.

Persuasive academics advised me before I set off on this journey that China's scramble for Africa had much to be said for it. They pointed out China needs African markets for its goods, and has an interest in real economic advance in that broken continent.

For once, they argued, a foreign intervention in Africa might work precisely because it is so cynical and self-interested. They said Western aid, with all its conditions, did little to create real advances in Africa, laughing as they declared: 'The only country that ever got rich through donations is the Vatican.'

Why get so het up about African corruption anyway? Is it really so much worse than corruption in Russia or India?

Is it really our business to try to act as missionaries of purity? Isn't what we call 'corruption' another name for what Africans view as looking after their families?

And what about China herself? Despite the country's convulsive growth and new wealth, it still suffers gravely from poverty and backwardness, as I have seen for myself in its dingy sweatshops, the primitive electricity-free villages of Canton, the dark and squalid mining city of Datong and the cave-dwelling settlements that still rely on wells for their water.

After the murderous disaster of Mao, and the long chaos that went before, China longs above all for stable prosperity. And, as one genial and open-minded Chinese businessman said to me in Congo as we sat over a beer in the decayed colonial majesty of Lubumbashi's Belgian-built Park Hotel: 'Africa is China's last hope.'

I find this argument quite appealing, in theory. Britain's own adventures in Africa were not specially benevolent, although many decent men did what they could to enforce fairness and justice amid the bigotry and exploitation.

Taking over: Chinese building workers in Zambia

It is noticeable that in much former British territory we have left behind plenty of good things and habits that are absent in the lands once ruled by rival empires.

Even so, with Zimbabwe, Nigeria and Uganda on our conscience, who are we to lecture others?

I chose to look at China's intervention in two countries, Zambia and the 'Democratic Republic of the Congo', because they lie side by side; because one was once British and the other Belgian.

Also, in Zambia's imperfect but functioning democracy, there is actual opposition to the Chinese presence, while in the despotic Congo, opposition to President Joseph Kabila is unwise, to put it mildly.

Congo is barely a state at all, and still hosts plenty of fighting not all that far from here.

Statues and images of Joseph's murdered father Laurent are everywhere in an obvious attempt to create a cult of personality on which stability may one day be based. Portraits of Joseph himself scowl from every wall.

I have decided not to name most of the people who spoke to me, even though some of them gave me permission to do so, because I am not sure they know just how much of a risk they may be running by criticising the Chinese in Africa.

I know from personal experience with Chinese authority that Peking regards anything short of deep respect as insulting, and it does not forget a slight.

I also know that this over-sensitive vigilance is present in Africa.

The Mail on Sunday team was reported to the authorities in Zambia's Copper Belt by Chinese managers who had seen us taking photographs of a graveyard at Chambishi where 54 victims of a disaster in a Chinese-run explosives factory are buried. Within an hour, local 'security' officials were buzzing round us trying to find out what we were up to.

This is why I have some time for the Zambian opposition politician Michael Sata, known as 'King Cobra' because of his fearless combative nature (but also, say his opponents, because he is so slippery).

Sata has challenged China's plans to invest in Zambia, and is publicly suspicious of them. At elections two years ago, the Chinese were widely believed to have privately threatened to pull out of the country if he won, and to have helped the government parties win.

Peking regards Zambia as a great prize, alongside its other favoured nations of Sudan (oil), Angola (oil) and Congo (metals).

Fighting back: Peter Hitchens with Michael Sata, the opposition politician nicknamed 'King Cobra'

It has cancelled Zambia's debts, eased Zambian exports to China, established a 'special economic zone' in the Copper Belt, offered to build a sports stadium, schools, a hospital and an anti-malaria centre as well as providing scholarships and dispatching experts to help with agriculture. Zambia-China trade is growing rapidly, mainly in the form of copper.

All this has aroused the suspicions of Mr Sata, a populist politician famous for his blunt, combative manner and his harsh, biting attacks on opponents, and who was once a porter who swept the platforms at Victoria Station in London.

Now the leader of the Patriotic Front, with a respectable chance of winning a presidential election set for the end of October, Sata says: 'The Chinese are not here as investors, they are here as invaders.

'They bring Chinese to come and push wheelbarrows, they bring Chinese bricklayers, they bring Chinese carpenters, Chinese plumbers. We have plenty of those in Zambia.'

This is true. In Lusaka and in the Copper Belt, poor and lowly Chinese workers, in broad-brimmed straw hats from another era, are a common sight at mines and on building sites, as are better-dressed Chinese supervisors and technicians.

There are Chinese restaurants and Chinese clinics and Chinese housing compounds - and a growing number of Chinese flags flapping over factories and smelters.

'We don't need to import labourers from China,' Sata says. 'We need to import people with skills we don't have in Zambia. The Chinese are not going to train our people in how to push wheelbarrows.'

He meets me in the garden of his not specially grand house in the old-established and verdant Rhodes Park section of Lusaka. It is guarded by uniformed security men, its walls protected by barbed wire and broken glass.

'Wherever our Chinese "brothers" are they don't care about the local workers,' he complains, alleging that Chinese companies have lax safety procedures and treat their African workers like dirt.

In language which seems exaggerated, but which will later turn out to be at least partly true, he claims: 'They employ people in slave conditions.'

He also accuses Chinese overseers of frequently beating up Zambians. His claim is given force by a story in that morning's Lusaka newspapers about how a Zambian building worker in Ndola, in the Copper Belt, was allegedly beaten unconscious by four Chinese co-workers angry that he had gone to sleep on the job.

I later checked this account with the victim's relatives in an Ndola shanty town and found it to be true.

Evidence of China is never very far away

Recently, a government minister, Alice Simago, was shown weeping on TV after she saw at first hand the working conditions at a Chinese-owned coal mine in the Southern Province.

When I contacted her, she declined to speak to me about this - possibly because criticism of the Chinese is not welcome among most of the Zambian elite.

Denis Lukwesa, deputy general secretary of the Zambian Mineworkers' Union, also backed up Sata's view, saying: 'They just don't understand about safety. They are more interested in profit.'

As for their general treatment of African workers, Lukwesa says he knows of cases where Chinese supervisors have kicked Zambians. He summed up their attitude like this: 'They are harsh to Zambians, and they don't get on well with them.'

Sata warns against the enormous loans and offers of help with transport, schools and health care with which Peking now sweetens its attempts to buy up Africa's mineral reserves.

'China's deal with the Democratic Republic of the Congo is, in my opinion, corruption,' he says, comparing this with Western loans which require strong measures against corruption.

Everyone in Africa knows China's Congo deal - worth almost £5billion in loans, roads, railways, hospitals and schools - was offered after Western experts demanded tougher anti-corruption measures in return for more aid.

Sata knows the Chinese are unpopular in his country. Zambians use a mocking word - 'choncholi' - to describe the way the Chinese speak. Zambian businessmen gossip about the way the Chinese live in separate compounds, where - they claim - dogs are kept for food.

There are persistent rumours, which cropped up in almost every conversation I had in Zambia, that many of the imported Chinese workforce are convicted criminals whom China wants to offload in Africa. I was unable to confirm this but, given China's enormous gulag and the harshness of life for many migrant workers, it is certainly not impossible.

Sata warns that 'sticks and stones' may one day fly if China does not treat Zambians better. He now promises a completely new approach: 'I used to sweep up at your Victoria Station, and I never got any complaints about my work. I want to sweep my country even cleaner than I swept your stations.'

Some Africa experts tend to portray Sata as a troublemaker. His detractors whisper that he is a mouthpiece for Taiwan, which used to be recognised by many African states but which faces almost total isolation thanks to Peking's new Africa policy.

But his claims were confirmed by a senior worker in Chambishi, scene of the 2005 explosion. This man, whom I will call Thomas, is serious, experienced and responsible. His verdict on the Chinese is devastating.

He recalls the aftermath of the blast, when he had the ghastly task of collecting together what remained of the men who died: 'Zambia, a country of 11million people, went into official mourning for this disaster.

'A Chinese supervisor said to me in broken English, "In China, 5,000 people die, and there is nothing. In Zambia, 50 people die and everyone is weeping." To them, 50 people are nothing.'

This sort of thing creates resentment. Earlier this year African workers at the new Chinese smelter at Chambishi rioted over low wages and what they thought were unsafe working conditions.

When Chinese President Hu Jintao came to Zambia in 2006, he had to cancel a visit to the Copper Belt for fear of hostile demonstrations. Thomas says: 'The people who advised Hu Jintao not to come were right.'

He suspects Chinese arrogance and brutality towards Africans is not racial bigotry, but a fear of being seen to be weak. 'They are trying to prove they are not inferior to the West. They are trying too hard.

'If they ask you to do something and you don't do it, they think you're not doing it because they aren't white. People put up with the kicks and blows because they need work to survive.'

Many in Africa also accuse the Chinese of unconcealed corruption. This is specially obvious in the 'Democratic Republic of the Congo', currently listed as the most corrupt nation on Earth.

A North-American businessman who runs a copper smelting business in Katanga Province told me how his firm tried to obey safety laws.

They are constantly targeted by official safety inspectors because they refuse to bribe them. Meanwhile, Chinese enterprises nearby get away with huge breaches of the law - because they paid bribes.

'We never pay,' he said, 'because once you pay you become their bitch; you will pay for ever and ever.'

Another businessman shrugged over the way he is forced to wait weeks to get his products out of the country, while the Chinese have no such problems.

'I'm not sure the Chinese even know there are customs regulations,' he said. 'They don't fill in the forms, they just pay. I try to be philosophical about it, but it is not easy.'

Unlike orderly Zambia, Congo is a place of chaos, obvious privation, tyranny dressed up as democracy for public-relations purposes, and fear.

This is Katanga, the mineral-rich slice of land fought over furiously in the early Sixties in post-colonial Africa's first civil war. Brooding over its capital, Lubumbashi, is a 400ft black hill: the accumulated slag and waste of 80 years of copper mining and smelting.

Now, thanks to a crazy rise in the price of copper and cobalt, the looming, sinister mound is being quarried - by Western business, by the Chinese and by bands of Congolese who grub and scramble around it searching for scraps of copper or traces of cobalt, smashing lumps of slag with great hammers as they hunt for any way of paying for that night's supper.

As dusk falls and the shadows lengthen, the scene looks like the blasted land of Mordor in Tolkien's Lord Of The Rings: a pre-medieval prospect of hopeless, condemned toil in pits surrounded by stony desolation.

Behind them tower the leaning ruins of colossal abandoned factories: monuments to the wars and chaos that have repeatedly passed this way.

There is something strange and unsettling about industrial scenes in Africa, pithead winding gear and gaunt chimneys rising out of tawny grasslands dotted with anthills and banana palms. It looks as if someone has made a grave mistake.

And there is a lesson for colonial pride and ambition in the streets of Lubumbashi - 80 years ago an orderly Art Deco city full of French influence and supervised by crisply starched gendarmes, now a genial but volatile chaos of scruffy, bribe-hunting traffic cops where it is not wise to venture out at night.

The once-graceful Belgian buildings, gradually crumbling under thick layers of paint, long ago lost their original purpose.

Outsiders come and go in Africa, some greedy, some idealistic, some halfway between. Time after time, they fail or are defeated, leaving behind scars, slag-heaps, ruins and graveyards, disillusion and disappointment.

We have come a long way from Cecil Rhodes to Bob Geldof, but we still have not brought much happiness with us, and even Nelson Mandela's vaunted 'Rainbow Nation' in South Africa is careering rapidly towards banana republic status.

Now a new great power, China, is scrambling for wealth, power and influence in this sad continent, without a single illusion or pretence.

Perhaps, after two centuries of humbug, this method will work where all other interventions have failed.

But after seeing the bitter, violent desperation unleashed in the mines of Likasi, I find it hard to believe any good will come of it.

Chavez says crisis-hit U.S. needs new constitution

LISBON, Sept 27 - Venezuela's leftist President Hugo Chavez said on Saturday it was the capitalist system that had caused the financial crisis in the United States and the country should come up with a new constitution.

Speaking to reporters in Lisbon on the last leg of a tour that included visits to China and Russia, he said: "I think the United States should start a constituent process to create a constituent assembly, a new truly democratic model."

A constituent assembly is a body elected to draft and sometimes adopt a new constitution.

"It was capitalism that caused the ruin" in the United States, said Chavez, who is one of Washington's fiercest critics, calling the financial crunch "the worst financial crisis in history".

"Let the U.S. empire end and let a great nation and great republic rise from the ruin ... It's time to shout 'Liberty!' again in the United States," Chavez said, calling for a new government to be free of the "dictatorship of the elite" such as big banks and corporations.

Critics accuse Chavez of running an authoritarian, Cuban-style regime in oil-rich Venezuela.

Chavez, who has signed various deals from weapons to energy this week in China and Russia also signed an agreement with Portugal's Socialist government on Saturday to buy 1 million ultra-cheap laptops for schools and 50,000 pre-fabricated houses in deals worth $3 billion.

They also signed a draft deal between Energias do Portugal <EDP.LS> and Venezuelan state oil company PDVSA for the development of a liquefied natural gas project from the Blanquilla Este reserve in northern Venezuela.

The computers, which the government started distributing in Portuguese primary schools this week at a subsidised price of 50 euros , will be delivered to Venezuela from December. They cost 285 euros in stores in Portugal.

The laptop is based on Intel Corp's <INTC.O> Classmate PC, a cheap computer that has been adopted in various formats in countries such as Brazil and Indonesia.

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I agree 100%

Gas Shortage In the South Creates Panic, Long Lines

If Drivers Can Fill Up, They Get Sticker Shock

By Steven Mufson
Washington Post Staff Writer

 

Gasoline shortages hit towns across the southeastern United States this week, sparking panic buying, long lines and high prices at stations from the small towns of northeast Alabama to Charlotte in the wake of Hurricanes Gustav and Ike.

In Atlanta, half of the gasoline stations were closed, according to AAA, which said the supply disruptions had taken place along two major petroleum product pipelines that have operated well below capacity since the hurricanes knocked offshore oil production and several refineries out of service along the Gulf of Mexico.

Drivers in Charlotte reported lines with as many as 60 cars waiting to fill up late Wednesday night, and a community college in Asheville, N.C., where most of the 25,000 students commute, canceled classes and closed down Wednesday afternoon for the rest of the week. Shortages also hit Nashville, Knoxville and Spartanburg, S.C., AAA said.

Terrance Bragg, a chef in Charlotte, made it to work only because his grandfather drove from a town an hour away with a 5-gallon plastic container of fuel for him. Three of his co-workers called and said they couldn't make it.

"I drove past nine or ten gasoline stations that were out of gas," Bragg said. "I had my GPS up looking for any gas in the area, from the mom-and-pop places to the corporate gas stations. Nothing. They were all taped off."

Liz Clasen-Kelly, associate director of a homeless assistance center in Charlotte, took the bus to work yesterday. On Wednesday night, she and her husband checked five stations that had no gas, passed a long line backed up onto the interstate highway and chose not to wait at an open gas station with 50 to 60 cars still lined up after 11 p.m.

"If we had waited in that line, our car wouldn't have made it," she said, adding that the gauge was pointing to empty. The bus yesterday took her 45 minutes longer than usual. "It makes you realize how addicted you are to convenience," she said.

In Atlanta, Jonathan Tyson, a Douglasville, Ga., resident who works for a company that does training for auto and RV franchise dealerships, ran out of fuel while waiting an hour in a line about 60 cars long to fill up his Land Rover. A man from the car behind helped push Tyson's vehicle down the road.

"It was crazy," Tyson said. "People were standing on side of road with gas cans saying they'd pay the person to run a [credit] card through just to get gas so they didn't run out before they got up to the pump themselves."

The city government, which uses 10,000 gallons a day, barred the public from two stations to make sure it could keep municipal vehicles running. On Wednesday night with his fuel gauge at empty, Al T. Nottage, a senior communications specialist in the Atlanta mayor's office, looked for fuel at six stations, all closed, then called AAA and said he had run out of gasoline. It brought him two gallons, enough to get to work yesterday.

AAA spokesman John Townsend said that Colonial Pipeline, a leading supplier in the region, and the smaller Plantation Pipeline, which belongs to Kinder Morgan, were functioning below capacity because of lingering refinery problems along the Gulf coast. A spokesman for Colonial, whose Web site displays a news release from Sept. 10 before Hurricane Ike hit, did not return calls for comment.

The Energy Department said that as of Wednesday 63 percent, or 800,000 barrels a day, of production in the Gulf of Mexico was still shut down as were five refineries with a combined capacity of 1.2 million barrels a day. The refineries produce a half-million barrels of gasoline a day, or about 5 percent of the nation's total supplies. Other refineries are still working at less than full capacity. Hurricane Gustav landed Sept. 1, and Ike hit Sept. 13.

"The production loss is similar to what was lost after Hurricanes Rita and Katrina," said Anne Peebles, a Shell Oil spokeswoman. "This time the physical damage [to oil facilities] was not as great, but the down time with the storms hitting back to back is similar." She said that "more fuel is coming" as facilities gradually ramp up again, but "we do think that production availability will normalize in the next several weeks."

Townsend said that the Colonial pipeline normally carries 100 million gallons a day, traveling about 2,500 miles from Texas, Louisiana and Alabama to 267 marketing terminals across the East and Southeast. Although nearly 15 percent of the gas stations in Virginia were reporting outages last week, the Washington region has been able to tap into supplies from areas such as New Jersey and Pennsylvania, which can more readily obtain supplies from tanker and other pipelines. Earlier supply problems in Chattanooga, Tenn., and Tallahassee also had eased, he said.

Other areas of the country were not so fortunate. An Atlanta Exxon dealer said that his station's allocation was only 40 percent of normal.

Mike Thornburgh, a spokesperson at QuikTrip, said that half of the gasoline retailer's 111 Atlanta area stations were open, up from a quarter last weekend. He said that QuikTrip was trying to keep stores open near commuters and schools. He said he didn't know when things would return to normal.

"I can't give a concrete answer because I don't believe anybody knows," he said.

Public officials appealed for calm as it appeared that panic buying might exacerbate supply problems if motorists try to keep more fuel than usual in their tanks. The Environmental Protection Agency suspended regulations for antipollution additives to help ease the supply situation.

Georgia Gov. Sonny Perdue provoked some angry comments on the Atlanta Journal Constitution Web site, which quoted him as saying that "there is ample fuel in the city" and that some of the panic was "self-induced."

"Perdue says we got ample gas supplies," wrote one reader. "Then why is it that every gas station in my area is out of gas. Some have been out for over 4 days."

Prices were high in cities hurt by shortages, though not as high as they were immediately after the hurricanes. In Charlotte, price ranged from $3.84 to a high of $4.31 a gallon for regular gasoline. AAA's Townsend said that travelers to the affected areas should "be prepared for sticker shock, Southern style."

Staff writer Binyamin Appelbaum and special correspondent Melanie Lasoff Levs in Atlanta contributed to this article.

New York City agrees to pay protesters $2 million

An injured and bleeding anti-war protester is arrested on 56th street in New York on April 7, 2003.

(Chip East/Reuters)

 

 

NEW YORK (Reuters) - New York City has agreed to pay a $2 million settlement to protesters arrested during a 2003 rally against the Iraq war who said their civil rights had been violated, lawyers for both sides said on Tuesday.

The 52 plaintiffs in the lawsuit were among 94 protesters arrested on April 7, 2003, during a demonstration at the midtown Manhattan offices of the Carlyle Group, a private equity firm with holdings in the defense sector.

"The New York Police Department violated core constitutional rights when it arrested a group of peaceful demonstrators who were lawfully protesting against the commencement of the Iraq war and those who stood to profit from it," said Sarah Netburn, a lawyer for the protesters.

In a statement, a lawyer for New York City confirmed the size of the settlement.

"This settlement was reached without any admission of liability on behalf of the city and the individual defendants," said Susan Halatyn, senior counsel in the Special Federal Litigation Division for New York City.

"Although defendants believe that they would ultimately have prevailed at a trial, the costs of going forward weighed in favor of a settlement at this time."

Two of the protesters, Eva Hageman and Sarah Kunstler, went to trial on charges of disorderly conduct and were acquitted by a jury, said a lawyer for the New York-based Center for Constitutional Rights, which brought the case.

Charges against the remaining protesters were dismissed without a trial, CCR said.

The settlement, which includes attorney's fees, will be divided evenly among the plaintiffs, lawyers said.

(Reporting by Edith Honan, editing by Michelle Nichols and Cynthia Osterman)

New Guidelines Would Give F.B.I. Broader Powers

By ERIC LICHTBLAU

WASHINGTON — A Justice Department plan would loosen restrictions on the Federal Bureau of Investigation to allow agents to open a national security or criminal investigation against someone without any clear basis for suspicion, Democratic lawmakers briefed on the details said Wednesday.

The plan, which could be made public next month, has already generated intense interest and speculation. Little is known about its precise language, but civil liberties advocates say they fear it could give the government even broader license to open terrorism investigations.

Congressional staff members got a glimpse of some of the details in closed briefings this month, and four Democratic senators told Attorney General Michael B. Mukasey in a letter on Wednesday that they were troubled by what they heard.

The senators said the new guidelines would allow the F.B.I. to open an investigation of an American, conduct surveillance, pry into private records and take other investigative steps “without any basis for suspicion.” The plan “might permit an innocent American to be subjected to such intrusive surveillance based in part on race, ethnicity, national origin, religion, or on protected First Amendment activities,” the letter said. It was signed by Russ Feingold of Wisconsin, Richard J. Durbin of Illinois, Edward M. Kennedy of Massachusetts and Sheldon Whitehouse of Rhode Island.

As the end of the Bush administration nears, the White House has been seeking to formalize in law and regulation some of the aggressive counterterrorism steps it has already taken in practice since the Sept. 11 attacks.

Congress overhauled the federal wiretapping law in July, for instance, and President Bush issued an executive order this month ratifying new roles for intelligence agencies. Other pending changes would also authorize greater sharing of intelligence information with the local police, a major push in the last seven years.

The Justice Department is already expecting criticism over the F.B.I. guidelines. In an effort to pre-empt critics, Mr. Mukasey gave a speech last week in Portland, Ore., describing the unfinished plan as an effort to “integrate more completely and harmonize the standards that apply to the F.B.I.’s activities.” Differing standards, he said, have caused confusion for field agents.

Mr. Mukasey emphasized that the F.B.I. would still need a “valid purpose” for an investigation, and that it could not be “simply based on somebody’s race, religion, or exercise of First Amendment rights.”

Rather than expanding government power, he said, “this document clarifies the rules by which the F.B.I. conducts its intelligence mission.”

In 2002, John Ashcroft, then the attorney general, allowed F.B.I. agents to visit public sites like mosques or monitor Web sites in the course of national security investigations. The next year, Mr. Bush issued guidelines allowing officials to use ethnicity or race in “narrow” circumstances to detect a terrorist threat.

The Democratic senators said the draft plan appeared to allow the F.B.I. to go even further in collecting information on Americans connected to “foreign intelligence” without any factual predicate. They also said there appeared to be few constraints on how the information would be shared with other agencies.

Michael German, a lawyer with the American Civil Liberties Union and a former F.B.I. agent, said the plan appeared to open the door still further to the use of data-mining profiles in tracking terrorism.

“This seems to be based on the idea that the government can take a bunch of data and create a profile that can be used to identify future bad guys,” he said. “But that has not been demonstrated to be true anywhere else.”

The Justice Department said Wednesday that in light of requests from members of Congress for more information, Mr. Mukasey would agree not to sign the new guidelines before a Sept. 17 Congressional hearing.

“The Connection Has Been Reset”

 

China’s Great Firewall is crude, slapdash, and surprisingly easy to breach. Here’s why it’s so effective anyway.

 by James Fallows

Many foreigners who come to China for the Olympics will use the Internet to tell people back home what they have seen and to check what else has happened in the world.

James Fallows explains how he was able to probe the taboo subject of Chinese Internet censorship.

The first thing they’ll probably notice is that China’s Internet seems slow. Partly this is because of congestion in China’s internal networks, which affects domestic and international transmissions alike. Partly it is because even electrons take a detectable period of time to travel beneath the Pacific Ocean to servers in America and back again; the trip to and from Europe is even longer, because that goes through America, too. And partly it is because of the delaying cycles imposed by China’s system that monitors what people are looking for on the Internet, especially when they’re looking overseas. That’s what foreigners have heard about.

They’ll likely be surprised, then, to notice that China’s Internet seems surprisingly free and uncontrolled. Can they search for information about “Tibet independence” or “Tiananmen shooting” or other terms they have heard are taboo? Probably—and they’ll be able to click right through to the controversial sites. Even if they enter the Chinese-language term for “democracy in China,” they’ll probably get results. What about Wikipedia, famously off-limits to users in China? They will probably be able to reach it. Naturally the visitors will wonder: What’s all this I’ve heard about the “Great Firewall” and China’s tight limits on the Internet?

In reality, what the Olympic-era visitors will be discovering is not the absence of China’s electronic control but its new refinement—and a special Potemkin-style unfettered access that will be set up just for them, and just for the length of their stay. According to engineers I have spoken with at two tech organizations in China, the government bodies in charge of censoring the Internet have told them to get ready to unblock access from a list of specific Internet Protocol (IP) addresses—certain Internet cafés, access jacks in hotel rooms and conference centers where foreigners are expected to work or stay during the Olympic Games. (I am not giving names or identifying details of any Chinese citizens with whom I have discussed this topic, because they risk financial or criminal punishment for criticizing the system or even disclosing how it works. Also, I have not gone to Chinese government agencies for their side of the story, because the very existence of Internet controls is almost never discussed in public here, apart from vague statements about the importance of keeping online information “wholesome.”)

Depending on how you look at it, the Chinese government’s attempt to rein in the Internet is crude and slapdash or ingenious and well crafted. When American technologists write about the control system, they tend to emphasize its limits. When Chinese citizens discuss it—at least with me—they tend to emphasize its strength. All of them are right, which makes the government’s approach to the Internet a nice proxy for its larger attempt to control people’s daily lives.

Disappointingly, “Great Firewall” is not really the right term for the Chinese government’s overall control strategy. China has indeed erected a firewall—a barrier to keep its Internet users from dealing easily with the outside world—but that is only one part of a larger, complex structure of monitoring and censorship. The official name for the entire approach, which is ostensibly a way to keep hackers and other rogue elements from harming Chinese Internet users, is the “Golden Shield Project.” Since that term is too creepy to bear repeating, I’ll use “the control system” for the overall strategy, which includes the “Great Firewall of China,” or GFW, as the means of screening contact with other countries.

In America, the Internet was originally designed to be free of choke points, so that each packet of information could be routed quickly around any temporary obstruction. In China, the Internet came with choke points built in. Even now, virtually all Internet contact between China and the rest of the world is routed through a very small number of fiber-optic cables that enter the country at one of three points: the Beijing-Qingdao-Tianjin area in the north, where cables come in from Japan; Shanghai on the central coast, where they also come from Japan; and Guangzhou in the south, where they come from Hong Kong. (A few places in China have Internet service via satellite, but that is both expensive and slow. Other lines run across Central Asia to Russia but carry little traffic.) In late 2006, Internet users in China were reminded just how important these choke points are when a seabed earthquake near Taiwan cut some major cables serving the country. It took months before international transmissions to and from most of China regained even their pre-quake speed, such as it was.

Thus Chinese authorities can easily do something that would be harder in most developed countries: physically monitor all traffic into or out of the country. They do so by installing at each of these few “international gateways” a device called a “tapper” or “network sniffer,” which can mirror every packet of data going in or out. This involves mirroring in both a figurative and a literal sense. “Mirroring” is the term for normal copying or backup operations, and in this case real though extremely small mirrors are employed. Information travels along fiber-optic cables as little pulses of light, and as these travel through the Chinese gateway routers, numerous tiny mirrors bounce reflections of them to a separate set of “Golden Shield” computers.Here the term’s creepiness is appropriate. As the other routers and servers (short for file servers, which are essentially very large-capacity computers) that make up the Internet do their best to get the packet where it’s supposed to go, China’s own surveillance computers are looking over the same information to see whether it should be stopped.

The mirroring routers were first designed and supplied to the Chinese authorities by the U.S. tech firm Cisco, which is why Cisco took such heat from human-rights organizations. Cisco has always denied that it tailored its equipment to the authorities’ surveillance needs, and said it merely sold them what it would sell anyone else. The issue is now moot, since similar routers are made by companies around the world, notably including China’s own electronics giant, Huawei. The ongoing refinements are mainly in surveillance software, which the Chinese are developing themselves. Many of the surveillance engineers are thought to come from the military’s own technology institutions. Their work is good and getting better, I was told by Chinese and foreign engineers who do “oppo research” on the evolving GFW so as to design better ways to get around it.

Andrew Lih, a former journalism professor and software engineer now based in Beijing (and author of the forthcoming book The Wikipedia Story), laid out for me the ways in which the GFW can keep a Chinese Internet user from finding desired material on a foreign site. In the few seconds after a user enters a request at the browser, and before something new shows up on the screen, at least four things can go wrong—or be made to go wrong.

The first and bluntest is the “DNS block.” The DNS, or Domain Name System, is in effect the telephone directory of Internet sites. Each time you enter a Web address, or URL—www.yahoo.com, let’s say—the DNS looks up the IP address where the site can be found. IP addresses are numbers separated by dots—for example, TheAtlantic.com’s is 38.118.42.200. If the DNS is instructed to give back no address, or a bad address, the user can’t reach the site in question—as a phone user could not make a call if given a bad number. Typing in the URL for the BBC’s main news site often gets the no-address treatment: if you try news.bbc.co.uk, you may get a “Site not found” message on the screen. For two months in 2002, Google’s Chinese site, Google.cn, got a different kind of bad-address treatment, which shunted users to its main competitor, the dominant Chinese search engine, Baidu. Chinese academics complained that this was hampering their work. The government, which does not have to stand for reelection but still tries not to antagonize important groups needlessly, let Google.cn back online. During politically sensitive times, like last fall’s 17th Communist Party Congress, many foreign sites have been temporarily shut down this way.

Next is the perilous “connect” phase. If the DNS has looked up and provided the right IP address, your computer sends a signal requesting a connection with that remote site. While your signal is going out, and as the other system is sending a reply, the surveillance computers within China are looking over your request, which has been mirrored to them. They quickly check a list of forbidden IP sites. If you’re trying to reach one on that blacklist, the Chinese international-gateway servers will interrupt the transmission by sending an Internet “Reset” command both to your computer and to the one you’re trying to reach. Reset is a perfectly routine Internet function, which is used to repair connections that have become unsynchronized. But in this case it’s equivalent to forcing the phones on each end of a conversation to hang up. Instead of the site you want, you usually see an onscreen message beginning “The connection has been reset”; sometimes instead you get “Site not found.” Annoyingly, blogs hosted by the popular system Blogspot are on this IP blacklist. For a typical Google-type search, many of the links shown on the results page are from Wikipedia or one of these main blog sites. You will see these links when you search from inside China, but if you click on them, you won’t get what you want.

The third barrier comes with what Lih calls “URL keyword block.” The numerical Internet address you are trying to reach might not be on the blacklist. But if the words in its URL include forbidden terms, the connection will also be reset. (The Uniform Resource Locator is a site’s address in plain English—say, www.microsoft.com—rather than its all-numeric IP address.) The site FalunGong .com appears to have no active content, but even if it did, Internet users in China would not be able to see it. The forbidden list contains words in English, Chinese, and other languages, and is frequently revised—“like, with the name of the latest town with a coal mine disaster,” as Lih put it. Here the GFW’s programming technique is not a reset command but a “black-hole loop,” in which a request for a page is trapped in a sequence of delaying commands. These are the programming equivalent of the old saw about how to keep an idiot busy: you take a piece of paper and write “Please turn over” on each side. When the Firefox browser detects that it is in this kind of loop, it gives an error message saying: “The server is redirecting the request for this address in a way that will never complete.”

The final step involves the newest and most sophisticated part of the GFW: scanning the actual contents of each page—which stories The New York Times is featuring, what a China-related blog carries in its latest update—to judge its page-by-page acceptability. This again is done with mirrors. When you reach a favorite blog or news site and ask to see particular items, the requested pages come to you—and to the surveillance system at the same time. The GFW scanner checks the content of each item against its list of forbidden terms. If it finds something it doesn’t like, it breaks the connection to the offending site and won’t let you download anything further from it. The GFW then imposes a temporary blackout on further “IP1 to IP2” attempts—that is, efforts to establish communications between the user and the offending site. Usually the first time-out is for two minutes. If the user tries to reach the site during that time, a five-minute time-out might begin. On a third try, the time-out might be 30 minutes or an hour—and so on through an escalating sequence of punishments.

Users who try hard enough or often enough to reach the wrong sites might attract the attention of the authorities. At least in principle, Chinese Internet users must sign in with their real names whenever they go online, even in Internet cafés. When the surveillance system flags an IP address from which a lot of “bad” searches originate, the authorities have a good chance of knowing who is sitting at that machine.

All of this adds a note of unpredictability to each attempt to get news from outside China. One day you go to the NPR site and cruise around with no problem. The next time, NPR happens to have done a feature on Tibet. The GFW immobilizes the site. If you try to refresh the page or click through to a new story, you’ll get nothing—and the time-out clock will start.

This approach is considered a subtler and more refined form of censorship, since big foreign sites no longer need be blocked wholesale. In principle they’re in trouble only when they cover the wrong things. Xiao Qiang, an expert on Chinese media at the University of California at Berkeley journalism school, told me that the authorities have recently begun applying this kind of filtering in reverse. As Chinese-speaking people outside the country, perhaps academics or exiled dissidents, look for data on Chinese sites—say, public-health figures or news about a local protest—the GFW computers can monitor what they’re asking for and censor what they find.

Taken together, the components of the control system share several traits. They’re constantly evolving and changing in their emphasis, as new surveillance techniques become practical and as words go on and off the sensitive list. They leave the Chinese Internet public unsure about where the off-limits line will be drawn on any given day. Andrew Lih points out that other countries that also censor Internet content—Singapore, for instance, or the United Arab Emirates—provide explanations whenever they do so. Someone who clicks on a pornographic or “anti-Islamic” site in the U.A.E. gets the following message, in Arabic and English: “We apologize the site you are attempting to visit has been blocked due to its content being inconsistent with the religious, cultural, political, and moral values of the United Arab Emirates.” In China, the connection just times out. Is it your computer’s problem? The firewall? Or maybe your local Internet provider, which has decided to do some filtering on its own? You don’t know. “The unpredictability of the firewall actually makes it more effective,” another Chinese software engineer told me. “It becomes much harder to know what the system is looking for, and you always have to be on guard.”

There is one more similarity among the components of the firewall: they are all easy to thwart.

As a practical matter, anyone in China who wants to get around the firewall can choose between two well-known and dependable alternatives: the proxy server and the VPN. A proxy server is a way of connecting your computer inside China with another one somewhere else—or usually to a series of foreign computers, automatically passing signals along to conceal where they really came from. You initiate a Web request, and the proxy system takes over, sending it to a computer in America or Finland or Brazil. Eventually the system finds what you want and sends it back. The main drawback is that it makes Internet operations very, very slow. But because most proxies cost nothing to install and operate, this is the favorite of students and hackers in China.

A VPN, or virtual private network, is a faster, fancier, and more elegant way to achieve the same result. Essentially a VPN creates your own private, encrypted channel that runs alongside the normal Internet. From within China, a VPN connects you with an Internet server somewhere else. You pass your browsing and downloading requests to that American or Finnish or Japanese server, and it finds and sends back what you’re looking for. The GFW doesn’t stop you, because it can’t read the encrypted messages you’re sending. Every foreign business operating in China uses such a network. VPNs are freely advertised in China, so individuals can sign up, too. I use one that costs $40 per year. (An expat in China thinks: that’s a little over a dime a day. A Chinese factory worker thinks: it’s a week’s take-home pay. Even for a young academic, it’s a couple days’ work.)

As a technical matter, China could crack down on the proxies and VPNs whenever it pleased. Today the policy is: if a message comes through that the surveillance system cannot read because it’s encrypted, let’s wave it on through! Obviously the system’s behavior could be reversed. But everyone I spoke with said that China could simply not afford to crack down that way. “Every bank, every foreign manufacturing company, every retailer, every software vendor needs VPNs to exist,” a Chinese professor told me. “They would have to shut down the next day if asked to send their commercial information through the regular Chinese Internet and the Great Firewall.” Closing down the free, easy-to-use proxy servers would create a milder version of the same problem. Encrypted e-mail, too, passes through the GFW without scrutiny, and users of many Web-based mail systems can establish a secure session simply by typing “https:” rather than the usual “http:” in a site’s address—for instance, https://mail.yahoo.com. To keep China in business, then, the government has to allow some exceptions to its control efforts—even knowing that many Chinese citizens will exploit the resulting loopholes.

Because the Chinese government can’t plug every gap in the Great Firewall, many American observers have concluded that its larger efforts to control electronic discussion, and the democratization and grass-roots organizing it might nurture, are ultimately doomed. A recent item on an influential American tech Web site had the headline “Chinese National Firewall Isn’t All That Effective.” In October, Wired ran a story under the headline “The Great Firewall: China’s Misguided—and Futile—Attempt to Control What Happens Online.”

Let’s not stop to discuss why the vision of democracy-through-communications-technology is so convincing to so many Americans. (Samizdat, fax machines, and the Voice of America eventually helped bring down the Soviet system. Therefore proxy servers and online chat rooms must erode the power of the Chinese state. Right?) Instead, let me emphasize how unconvincing this vision is to most people who deal with China’s system of extensive, if imperfect, Internet controls.

Think again of the real importance of the Great Firewall. Does the Chinese government really care if a citizen can look up the Tiananmen Square entry on Wikipedia? Of course not. Anyone who wants that information will get it—by using a proxy server or VPN, by e-mailing to a friend overseas, even by looking at the surprisingly broad array of foreign magazines that arrive, uncensored, in Chinese public libraries.

What the government cares about is making the quest for information just enough of a nuisance that people generally won’t bother. Most Chinese people, like most Americans, are interested mainly in their own country. All around them is more information about China and things Chinese than they could possibly take in. The newsstands are bulging with papers and countless glossy magazines. The bookstores are big, well stocked, and full of patrons, and so are the public libraries. Video stores, with pirated versions of anything. Lots of TV channels. And of course the Internet, where sites in Chinese and about China constantly proliferate. When this much is available inside the Great Firewall, why go to the expense and bother, or incur the possible risk, of trying to look outside?

All the technology employed by the Golden Shield, all the marvelous mirrors that help build the Great Firewall—these and other modern achievements matter mainly for an old-fashioned and pre-technological reason. By making the search for external information a nuisance, they drive Chinese people back to an environment in which familiar tools of social control come into play.

Chinese bloggers have learned that if they want to be read in China, they must operate within China, on the same side of the firewall as their potential audience. Sure, they could put up exactly the same information outside the Chinese mainland. But according to Rebecca Mac­Kinnon, a former Beijing correspondent for CNN now at the Journalism and Media Studies Center of the University of Hong Kong, their readers won’t make the effort to cross the GFW and find them. “If you want to have traction in China, you have to be in China,” she told me. And being inside China means operating under the sweeping rules that govern all forms of media here: guidance from the authorities; the threat of financial ruin or time in jail; the unavoidable self-censorship as the cost of defiance sinks in.

Most blogs in China are hosted by big Internet companies. Those companies know that the government will hold them responsible if a blogger says something bad. Thus the companies, for their own survival, are dragooned into service as auxiliary censors.

Large teams of paid government censors delete offensive comments and warn errant bloggers. (No official figures are available, but the censor workforce is widely assumed to number in the tens of thousands.) Members of the public at large are encouraged to speak up when they see subversive material. The propaganda ministries send out frequent instructions about what can and cannot be discussed. In October, the group Reporters Without Borders, based in Paris, released an astonishing report by a Chinese Internet technician writing under the pseudonym “Mr. Tao.” He collected dozens of the messages he and other Internet operators had received from the central government. Here is just one, from the summer of 2006:

17 June 2006, 18:35
From: Chen Hua, deputy director of the Beijing Internet Information Administrative Bureau
Dear colleagues, the Internet has of late been full of articles and messages about the death of a Shenzhen engineer, Hu Xinyu, as a result of overwork. All sites must stop posting articles on this subject, those that have already been posted about it must be removed from the site and, finally, forums and blogs must withdraw all articles and messages about this case.

“Domestic censorship is the real issue, and it is about social control, human surveillance, peer pressure, and self-censorship,” Xiao Qiang of Berkeley says. Last fall, a team of computer scientists from the University of California at Davis and the University of New Mexico published an exhaustive technical analysis of the GFW’s operation and of the ways it could be foiled. But they stressed a nontechnical factor: “The presence of censorship, even if easy to evade, promotes self-censorship.”

It would be wrong to portray China as a tightly buttoned mind-control state. It is too wide-open in too many ways for that. “Most people in China feel freer than any Chinese people have been in the country’s history, ever,” a Chinese software engineer who earned a doctorate in the United States told me. “There has never been a space for any kind of discussion before, and the government is clever about continuing to expand space for anything that doesn’t threaten its survival.” But it would also be wrong to ignore the cumulative effect of topics people are not allowed to discuss. “Whether or not Americans supported George W. Bush, they could not avoid learning about Abu Ghraib,” Rebecca Mac­Kinnon says. In China, “the controls mean that whole topics inconvenient for the regime simply don’t exist in public discussion.” Most Chinese people remain wholly unaware of internationally noticed issues like, for instance, the controversy over the Three Gorges Dam.

Countless questions about today’s China boil down to: How long can this go on? How long can the industrial growth continue before the natural environment is destroyed? How long can the super-rich get richer, without the poor getting mad? And so on through a familiar list. The Great Firewall poses the question in another form: How long can the regime control what people are allowed to know, without the people caring enough to object? On current evidence, for quite a while.

---------------------------------------------------------------------------------

James Fallows is an Atlantic national correspondent; his blog is at jamesfallows.theatlantic.com.

 

 

U.S. agents can seize travelers' laptops

WASHINGTON (Reuters) - U.S. federal agents have been given new powers to seize travelers' laptops and other electronic devices at the border and hold them for unspecified periods the Washington Post reported on Friday.

 

Under recently disclosed Department of Homeland Security policies, such seizures may be carried out without suspicion of wrongdoing, the newspaper said, quoting policies issued on July 16 by two DHS agencies.

Agents are empowered to share the contents of seized computers with other agencies and private entities for data decryption and other reasons, the newspaper said.

DHS officials said the policies applied to anyone entering the country, including U.S. citizens, and were needed to prevent terrorism.

The measures have long been in place but were only disclosed in July, under pressure from civil liberties and business travel groups acting on reports that increasing numbers of international travelers had had their laptops, cellphones and other digital devices removed and examined.

The policies cover hard drives, flash drives, cell phones, iPods, pagers, beepers, and video and audio tapes -- as well as books, pamphlets and other written materials, the report said.

The policies require federal agents to take measures to protect business information and attorney-client privileged material. They stipulate that any copies of the data must be destroyed when a review is completed and no probable cause exists to keep the information.

(Reporting by Paul Eckert, editing by Alan Elsner)

Wal-Mart Warns of Democratic Win

By ANN ZIMMERMAN and KRIS MAHER

 

Wal-Mart Stores Inc. is mobilizing its store managers and department supervisors around the country to warn that if Democrats win power in November, they'll likely change federal law to make it easier for workers to unionize companies -- including Wal-Mart.

In recent weeks, thousands of Wal-Mart store managers and department heads have been summoned to mandatory meetings at which the retailer stresses the downside for workers if stores were to be unionized.

According to about a dozen Wal-Mart employees who attended such meetings in seven states, Wal-Mart executives claim that employees at unionized stores would have to pay hefty union dues while getting nothing in return, and may have to go on strike without compensation. Also, unionization could mean fewer jobs as labor costs rise.

The actions by Wal-Mart -- the nation's largest private employer -- reflect a growing concern among big business that a reinvigorated labor movement could reverse years of declining union membership. That could lead to higher payroll and health costs for companies already being hurt by rising fuel and commodities costs and the tough economic climate.

The Wal-Mart human-resources managers who run the meetings don't specifically tell attendees how to vote in November's election, but make it clear that voting for Democratic presidential hopeful Sen. Barack Obama would be tantamount to inviting unions in, according to Wal-Mart employees who attended gatherings in Maryland, Missouri and other states.

"The meeting leader said, 'I am not telling you how to vote, but if the Democrats win, this bill will pass and you won't have a vote on whether you want a union,'" said a Wal-Mart customer-service supervisor from Missouri. "I am not a stupid person. They were telling me how to vote," she said.

"If anyone representing Wal-Mart gave the impression we were telling associates how to vote, they were wrong and acting without approval," said David Tovar, Wal-Mart spokesman. Mr. Tovar acknowledged that the meetings were taking place for store managers and supervisors nationwide.

Wal-Mart's worries center on a piece of legislation known as the Employee Free Choice Act, which companies say would enable unions to quickly add millions of new members. "We believe EFCA is a bad bill and we have been on record as opposing it for some time," Mr. Tovar said. "We feel educating our associates about the bill is the right thing to do."

Other companies and groups are also making a case against the legislation to workers. Laundry company Cintas Corp., which has been fighting a multiyear organizing campaign by Unite Here, relaunched a Web site July 14 called CintasVotes. The site instructs visitors to take action by telling members of Congress to oppose the legislation.

"We feel it's important that our employee partners fully understand the implications that the Employee Free Choice Act could have on their work environment and benefits," said Heather Trainer, a Cintas spokeswoman.

Business-backed organizations are also running ads aimed at building opposition to the bill, including the Coalition for a Democratic Workplace, which counts several hundred industry associations as members. Another group, the Employee Freedom Action Committee, is run by former tobacco lobbyist Rick Berman. The groups, which aren't affiliated with each other, say they have a total of $50 million in funding. Neither will disclose which companies or individuals have provided funding.

The U.S. Chamber of Commerce has made defeat of the legislation a top priority. In the past six months, it has flown state and local Chamber members to Washington to lobby members of Congress. On Thursday, the Chamber began airing a television ad in Minnesota and plans to run ads in other states as part of a broader campaign.

The bill was crafted by labor as a response to more aggressive opposition by companies to union-organizing activity. The AFL-CIO and individual unions such as the United Food and Commercial Workers have promised to make passage of the new labor law their No. 1 mission after the November election.

First introduced in 2003, the bill came to a vote last year and sailed through the Democratic-controlled House of Representatives, but was blocked by a filibuster in the Senate and faced a veto threat by the White House. The bill was taken off the floor, and its backers pledged to reintroduce it when they could get more support.

The November election could bring that extra support in Congress, as well as the White House if Sen. Obama is elected and Democrats extend their control in the Senate. Sen. Obama co-sponsored the legislation, which also is known as "card check," and has said several times he would sign it into law if elected president. Sen. John McCain, the likely Republican presidential nominee, opposes the Employee Free Choice Act and voted against it last year.

Wal-Mart's labor-relations meetings are led by human-resources managers who received training from Wal-Mart on the implications of the Employee Free Choice Act.

 

 

 

 

 

 

 

 

Fine Legal Line

Wal-Mart may be walking a fine legal line by holding meetings with its store department heads that link politics with a strong antiunion message. Federal election rules permit companies to advocate for specific political candidates to its executives, stockholders and salaried managers, but not to hourly employees. While store managers are on salary, department supervisors are hourly workers.

However, employers have fairly broad leeway to disseminate information about candidates' voting records and positions on issues, according to Jan Baran, a Washington attorney and expert on election law.

Both supporters and opponents of the Employee Free Choice Act believe it would simplify and speed labor's ability to unionize companies. Currently, companies can demand a secret-ballot election to determine union representation. Those elections often are preceded by months of strident employer and union campaigns.

Under the proposed legislation, companies could no longer have the right to insist on one secret ballot. Instead, the Free Choice, or "card check," legislation would let unions form if more than 50% of workers simply sign a card saying they want to join. It is far easier for unions to get workers to sign cards because the organizers can approach workers repeatedly, over a period of weeks or months, until the union garners enough support.

Employers argue that the card system could lead to workers being pressured to sign by pro-union colleagues and organizers. Unions counter that it shields workers from pressure from their employers.

On June 30 the National Labor Relations Board ruled that Wal-Mart illegally fired an employee in Kingman, Ariz., who supported the UFCW and illegally threatened to freeze merit-pay increases if employees voted for union representation. The decision came eight years after the organizing campaign failed, and four years after the case was originally heard.

"We've always maintained the termination was not related to the union and that there was nothing unlawful about an answer provided an associate about merit pay," said Mr. Tovar, the Wal-Mart spokesman. "Following the decision, we were considering offering reinstatement, but that is on hold, since the [union] appealed the decision."

Unions consider the Employee Free Choice Act as vital to the survival of the labor movement, which currently represents 7.5% of private-sector workers, half the percentage it did 25 years ago. The Service Employees International Union said the legislation would enable it to organize a million workers a year, up from its current pace of 100,000 workers a year.

The Underdogs

The business-backed lobbying groups are running ads in states where a win by a Democratic Senate candidate would boost support for the legislation in the Senate, saying the loss of secret ballots exposes workers to bullying labor bosses. In one, they use an actor from the "Sopranos" TV series about mob life to hammer home their point.

Business groups say they're the underdogs since they will be outspent by unions by a wide margin. Labor has pledged to spend $300 million on the election and securing passage of the Employee Free Choice Act, compared with under $100 million by business groups, according to Steven Law, chief legal officer of the U.S. Chamber of Commerce. The Chamber's strategy is to focus on the Senate, where labor needs eight more supporters of the legislation to reach the 60 votes needed to overcome a filibuster.

"This is a David-and-Goliath confrontation, but we believe we'll have enough stones in the sling to knock this out," said Mr. Law.

Wal-Mart is a powerful ally. Through almost all of its 48-year history, Wal-Mart has fought hard to keep unions out of its stores, flying in labor-relations rapid-response teams from its Bentonville, Ark., headquarters to any location where union activity was building. The United Food and Commercial Workers was successful in organizing only one group of Wal-Mart workers -- a small number of butchers in East Texas in early 2000. Several weeks later, the company phased out butchers in all of its stores and began stocking prepackaged meat. When a store in Canada voted to unionize several years ago, the company closed the store, saying it had been unprofitable for years.

Labor has fought back with a campaign to portray Wal-Mart as treating its workers poorly. The UFCW helped employees file a series of complaints about the company's overtime, health-care and other policies with the National Labor Relations Board. Dozens of class-action lawsuits were filed on behalf of workers, many of which are still winding their way through the courts.

Wal-Mart has been trying to burnish its reputation by improving its worker benefits and touting its commitment to the environment. On the political front, it's hedging its bets, spreading its financial contributions on both sides of the political divide.

Twelve years ago, 98% of Wal-Mart's political donations went to Republicans. Now, as the Democrats seem poised to gain control in Washington, 48% of its $2.2 million in political contributions go to Democrats and 52% to Republicans, according to the Center for Responsive Politics, a nonpartisan organization that tracks political giving.

Blackwater plans shift from security business

By MATT APUZZO and MIKE BAKER, Associated Press Writers

MOYOCK, N.C. - Blackwater Worldwide said Monday that it planned a shift away from the security contracting business that earned it millions of dollars and made it a flash point in the debate over the use of security contractors in war zones.

 

"The experience we've had would certainly be a disincentive to any other companies that want to step in and put their entire business at risk," company founder and CEO Erik Prince told The Associated Press during a daylong visit to the company's North Carolina compound.

Blackwater executives say they have unfairly become a symbol for all contractors in Iraq and thus the company is a target for those opposed to the war. It will continue guarding U.S. officials in Iraq but its future will be focused on training, aviation and logistics.

"Security was not part of the master plan, ever," company president Gary Jackson said.

The company has made hundreds of millions of dollars defending U.S. diplomats in Iraq, one of several government contracts that earned Blackwater more than $1 billion since 2001.

The company has been under intense scrutiny since September when its security contractors opened fire in a crowded Baghdad intersection while responding to a car bombing. Seventeen Iraqis were killed, prompting congressional hearings and an FBI investigation.

In 2005 and 2006, security jobs, including protecting diplomats and helping secure New Orleans following Hurricane Katrina, represented more than 50 percent of the company's business.

In the past year, Jackson said, the name Blackwater has become synonymous with security contractors. "It's been like Coca-Cola," he said. "Blackwater: Security contractors."

The security business is down to about 30 percent of Blackwater revenue now and Jackson said it will go much lower.

"If I could get it down to 2 percent or 1 percent, I would go there," he said, adding that the media have falsely portrayed much about that aspect of the company. "If you could get it right, we might stay in the business."

The Justice Department is expected to decide soon whether to bring charges against a handful of contractors involved in the shooting in Baghdad's Nisoor Square. The company itself is not a target of the investigation and has pledged its cooperation with the probe.

Company executives would not say whether they expect their contractors to face charges but said an indictment likely wouldn't affect the core business model.

"Indictment of any of the folks who were in Nisoor Square wouldn't be grounds for disbarrment (from government contracts)," Andrew Howell, the company's general counsel, said.

Blackwater's 7,000-acre compound offers unparalleled training facilities that attract swarms of U.S. military, federal law enforcement and local officials each year.

The company also has expanded its aviation division, which provides airplane and helicopter maintenance and also drops supplies into hard-to-reach military bases. A 6,000-foot runway is under construction and a large map in the company's hanger shows units based across the world, from Africa to the Middle East to Australia.

"Our focus is away from security work. We're just not bidding on it," Jackson said.

The State Department extended Blackwater's contract to provide embassy security this year. Undersecretary of State Patrick Kennedy said Monday he has not been notified by Blackwater that it intends to reduce or eliminate security work.

"They have a contract with us through the next nine or ten months," Kennedy said. "They have not indicated to us that they are attempting to get out of our current contract."

That decision reflects not only the difficult year Blackwater has had but also the fact that there's likely not as much growth opportunity.

The growth in Blackwater's aviation and international training sectors could also buffer the company against other changes in military policy. Defense Secretary Robert Gates is looking into why the military uses private contractors for combat and security training.

"In my mind, the fundamental question that remains unanswered is this: Why have we come to rely on private contractors to provide combat or combat-related security training for our forces?" Gates wrote in a July 10 memo to the Pentagon's top military officer, Joint Chiefs of Staff Chairman Adm. Mike Mullen.

"Further, are we comfortable with this practice, and do we fully understand the implications in terms of quality, responsiveness and sustainability?"

The memo was released Monday to The Associated Press by the office of Sen. Jim Webb, D-Va. Webb raised concerns about the role of private contractors and specifically Blackwater, which opened a new counterterrorism training center in San Diego last month over the opposition of city officials.

Webb had been blocking Senate consideration of four civilian Defense Department nominees while waiting for answers. On Monday, Webb told Gates he was lifting his opposition to the nominees.

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On the Net:

Blackwater Worldwide: http://www.blackwaterusa.com/

Liar! Liar! Pants on fire!

President Bush regrets his legacy as man who wanted war

 

 

President Bush has admitted to The Times that his gun-slinging rhetoric made the world believe that he was a “guy really anxious for war” in Iraq. He said that his aim now was to leave his successor a legacy of international diplomacy for tackling Iran.

In an exclusive interview, he expressed regret at the bitter divisions over the war and said that he was troubled about how his country had been misunderstood. “I think that in retrospect I could have used a different tone, a different rhetoric.”

Phrases such as “bring them on” or “dead or alive”, he said, “indicated to people that I was, you know, not a man of peace”. He said that he found it very painful “to put youngsters in harm’s way”. He added: “I try to meet with as many of the families as I can. And I have an obligation to comfort and console as best as I possibly can. I also have an obligation to make sure that those lives were not lost in vain.”

The unilateralism that marked his first White House term has been replaced by an enthusiasm for tough multilateralism. He said that his focus for his final six months in office was to secure agreement on issues such as establishing a Palestinian state and to “leave behind a series of structures that makes it easier for the next president”.

Mr Bush is concerned that the Democratic nominee Barack Obama might open cracks in the West’s united front towards Tehran’s nuclear ambitions. At the EU-US summit in Slovenia, he pressed for tougher sanctions against Iran unless it agreed to suspend its uranium enrichment programme verifiably: “They can either face isolation, or they can have better relations with all of us.”

Mr Bush told The Times that when his successor arrived and assessed “what will work or what won’t work in dealing with Iran”, he would stick with the current policy.

Shaul Mofaz, a hardline Israeli minister, has suggested that a military strike on Iran is “unavoidable”. But Mr Bush said: “We ought to work together, keep focused. His comments really should be viewed as the need to continue to keep pressuring Iran.”

The President was keen to bind his successor into a continued military presence in Afghanistan and Iraq, but offered only cautious optimism about a recent decline in violence. Asked about corruption allegations dogging Hamid Karzai, the Afghan President, Mr Bush insisted: “I have found him to be an honest man.”

He also offered words of encouragement for another ally, Gordon Brown, whom he will meet on Sunday. He said that he needed no advice on coping with political adversity. He is “plenty confident and plenty smart, plenty capable — he can sort it out”.

But he delivered a thinly veiled warning to Mr Obama that his promises to renegotiate or block international trade deals were already causing alarm in Europe and beyond.

“There is concern about protectionism and economic nationalism,” he said. “Leaders recognise now is the time to get ahead of this issue before it becomes engrained in the political systems of our respective countries.”

Acknowledging that his refusal to ratify the Kyoto Protocol once created consternation in Europe, he said that there was now a recognition that that richer countries needed to “transfer out of the hydrocarbon economy”. He insisted, however, that any binding emission targets would have to include China and India to be workable.

The President knows that Republican nominee-in-waiting John McCain will have to distance himself from the current Administration. "He's an independent person who will make his decisions on what he thinks is best."

Asked if the US is ready for a black president, Mr Bush says: "I think the fact that the Democratic Party nominated Barack Obama is a statement about how far America has come.

"Having said all that, it's going to be important for the American people to figure out who can handle the task of the 21st Century. It's a challenging job."

Source: Tom Baldwin and Gerard Baker in Ljubljana

What the F$*Ck?!

You are sheep. Look into my eyes.

You are sheep. Look into my eyes.

Buy things you do not need.

Buy things you do not need.

Buy things on credit.

Buy things on credit.

Watch TV.

Watch TV.

I am your friend!

I am your only friend.

You are nothing but sheep.