Asian, European stocks plunge

By HANS GREIMEL, Associated Press Writer 1 hour, 1 minute ago

Asian stocks plunged Wednesday and European shares opened sharply lower after Wall Street chalked its second-biggest point drop in four years and rattled already nervous markets worldwide.

The tumble came just as international markets were recovering in recent days from sharp declines in early March amid concerns about overvalued stock prices and slower U.S. economic growth.

But those worries resurfaced as troubles at U.S. sub-prime lenders and lackluster retail sales pushed the Dow Jones industrials down nearly 2 percent Tuesday, sparking selloffs across Asia.

Stocks in Japan, Hong Kong, Malaysia, India and Australia all fell more than 2 percent, while shares in Singapore and the Philippines tumbled at least 3 percent.

In Europe, London's FTSE 100 dropped 1.7 percent shortly after the open, while Germany's DAX lost 1.8 percent. France's CAC 40 was also 1.7 percent lower.

On the Tokyo Stock Exchange, Asia's biggest bourse, the benchmark Nikkei 225 index sank 501.95 points, or 2.92 percent, to finish at 16,676.89 points. Foreign investors who bought up stocks during the recent rally led the selling, traders said.

Hong Kong's Hang Seng index fell 2.6 percent, Indian stocks dropped 3.1 percent, while Philippine stocks plunged 3.4 percent.

Overnight, the Dow fell 242.66, or 1.97 percent, to 12,075.96 amid concerns about problems at U.S. sub-prime lenders, who provide mortgages to people with poor credit. The U.S. Commerce Department also said sales at retailers rose a less-than-expected 0.1 percent in February, suggesting consumer spending might be waning.

"The U.S. sub-prime concern has cast a great shadow on Asia. The worry is that it could spill over and cause the U.S. economy to slow down, and this will cause a domino effect on the world economy," said Lee Cheng Hooi, technical analysis manager at EON Capital in Kuala Lumpur. "There could be more bloodbath to come."

Still, other analysts maintained that Asia's economic fundamentals remain strong and that the recent round of declines in stock prices were more likely a correction to cool markets that had risen too far too fast over recent months.

"The sell-off is in sympathy with the sharp sell-off we saw overnight on Wall Street, and it highlights the continued nervousness out there," said David Cohen, chief of Asian economic forecasting at Action Economics in Singapore.

"In perspective you could still say that this is a correction after the strong rally that was experienced for the previous several months around the world," he said.

While the U.S. retail sales data and mortgage news that prompted the sell-off on Wall Street "are a little concerning," fundamentals such as strong U.S. jobs data released Friday were still supportive of global equities.

"The world economy seems to be remaining on an upward trajectory," Cohen said.

The slump reversed a modest recovery in global markets from even bigger losses that started late last month with a sharp sell-off in Chinese stocks Feb. 27, which contributed to a 416-point drop in the Dow later that day.

The Shanghai Composite index fell 2 percent to 2,906.33 Wednesday. After gaining for six straight sessions the market was primed for a retreat, analysts said.

"This is the market's own adjustment after gaining for six days," said Zhu Haibin, an analyst at Everbright Securities in Shanghai.

In India, jittery investors sold off almost every blue chip stock, dragging the 30-share Sensitive Index, or Sensex, the benchmark index of the Bombay Stock Exchange, down more than 3 percent.

Indian shares have seen wild swings each time the global markets have turned weak. The Sensex fell 43 percent in May-June last year — only to bounce back to hit record highs. The Sensex reached an all-time high of 14,643 on Feb. 7, before losing about 2,000 points, or 14 percent, in the latest round of global declines.

Elsewhere Wednesday, Sydney's S&P/ASX 200 fell 2.1 percent, Singapore's Straits Times benchmark sank 3.35 percent, and South Korea's Kospi closed 2.0 percent lower.

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Associated Press Writers Gillian Wong in Singapore, Eileen Ng in Kuala Lumpur and Toby Anderson in London contributed to this report.

'Anti-Palestinian' song faces ban from Eurovision

'Anti-Palestinian' song faces ban from Eurovision

Doesn't Israel take the cake? Entering a hate Palestinians, Iranians, etc., song in this Europe wide competition.

BTW, last time I checked a map of Europe, I could not find the "NUKE EM!" state.
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Song of terror picked by Israel for Eurovision
Israel settles for a number called Push the Button about the threat of terrorism and Armageddon.

Global Markets Fall Again on Fears About U.S. Economy; Manufacturing Recession

Global Markets Fall Again on Fears About U.S. Economy

By KEITH BRADSHER and MARTIN FACKLER 16 minutes ago

Stock markets fell sharply across most of Asia again today and continued declining in Europe, as investors worried about the drop on Tuesday in American stock indices.

• Chinese Investors Shrug, and Shanghai Rallies 6:55 AM ET
• Slide Adds to Concerns About Economies | Leonhardt: Manufacturing Recession

Official politics in the west ignores public opinion at will

The government crisis in Italy over US bases and Afghanistan reflects the increasing gap in Europe between rulers and ruled

Tariq Ali
Tuesday February 27, 2007
The Guardian

The states of western Europe continue to resist harmonisation. On the same day last week that the chicaneries of every antiquated careerist vying for the New Labour deputy leadership were made public, each justifying his or her grotesque decision to support the war and occupation of Iraq, the centre-left Italian government - not yet a year old - fell after a debate on foreign policy in the upper chamber.

It was not Iraq that was at issue here. Unlike New Labour (protected by undemocratic electoral laws and MPs unmoved by the suffering in Iraq), all of the Italian left and 80% of the population opposed that war. The dispute concerned two issues: Operation Enduring Freedom - the satirical self-description of the Nato occupation of Afghanistan - and the expansion of the US military base in Vicenza in northern Italy.

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Two leftwing senators voted against the government in the Italian senate after the prime minister, Romano Prodi, and his foreign minister, Massimo D'Alema, had made the vote an issue of confidence, arguing that Afghanistan was a legal war because it was supported by the UN. Prodi's arguments failed to sway the two dissenting senators. He might still have won, but three of the seven octogenarian life senators abandoned him as well. One was in bed with flu. Giulio Andreotti (a former prime minister and one of the most corrupt) abstained because he was unhappy about gay marriages, and Ferrari designer Sergio Pininfarina, transported to the senate from the airport in a government limo, also abstained, possibly by mistake since he is a rare visitor to the senate.

As a result, a weakened Prodi, prudent spokesman of an immoderate bourgeoisie, resigned. His popularity was already on the wane, as was that of his neoliberal finance minister, Tommaso Padoa-Schioppa, whose attempts to increase short-term contracts for workers have also divided the government - indeed, many of its supporters and a few ministers participated in the protests of last November in defence of universal, publicly financed social services.

Could it be that they wanted to be defeated so as to rejig the coalition by attracting a moderate centre-right party to join their ranks and dumping the Refounded Communists? It's a risky operation, especially as the RC leader, Fausto Bertinotti (drunk with happiness at becoming a dignitary of the state) has kept his principles under heavy wraps.

When Prodi was asked to form a new government last Friday, he insisted all the constituent parties of the centre-left Union should sign up to 12 points, which included neoliberal "reforms" and unconditional support for his foreign policy, but, mysteriously, not gay partnerships. Bertinotti signed without hesitation and instructed his enforcer inside the Refounded Communist party to remove the dissenting senator Franco Turigliatto from the party without further ado (ironically, the same enforcer, Guido Cappelloni, expelled the dissident "Manifesto group" from the old Communist party in 1969).

And all this in the face of endless intrigue against the ruling coalition's policies by elements from Prodi's own centrist political base. Only a week before the crisis erupted, Prodi had explicitly forbidden any member of the cabinet from participation in the mass protest at the extension of the Vicenza base. Now the crisis within the left is out in the open. Sixty-two per cent of Italians and 73% of the government's supporters want to withdraw all Italian troops from Afghanistan. Like centrist politicians elsewhere, Silvio Berlusconi, Prodi and D'Alema are united in ignoring public opinion. Were it not for factional divisions on other issues (especially patronage and corrupt commissions) the opposition would have voted with Prodi.

It would be mistaken to imagine that hostility to US imperial adventures comes only from the left. The positive response to the European parliament's report denouncing 1,245 CIA flights from Europe included figures from the centre-right. Gijs de Vries, the EU's anti-terrorism tsar and, till recently, staunchly pro-Washington, will resign in March because he has "lost faith" in his US partners. Sergio Romano, a leading centre-right figure, publicly declared he was opposed to all US bases on Italian soil. Why? "We know very well that the Americans used their bases in Djibouti to attack al-Qaida in Ethiopia this year ... If they decide to attack Hizbullah, God forbid, they'll be using Italian bases to do it. And we won't be told beforehand. We'll learn the next day. And you become complicit in such things."

Prodi's 12 points notwithstanding, Italian politics remains volatile: Prodi faces a new knife-edge confidence vote tomorrow and another vote on Afghanistan next month if he survives that. Grandees of the centre-left and centre-right exude the stench of putrefaction.

Nor is this just an Italian disease. The fact that the leaders of the Refounded Communist party cave in to the Washington consensus in return for government posts reflects a far wider problem. Increasingly, official politics in the west ignores public opinion at will. Britain is a striking example. Mass hostility to Blair's wars and the replacement of Trident barely finds an echo in parliament. The BBC had to be neutered and only 12 Labour MPs managed to vote for an inquiry into British involvement in Iraq. It is the increasing distance between rulers and ruled that threatens the functioning of democracy and leads to desperation.

· Tariq Ali's latest book is Pirates of the Caribbean: Axis of Hope. tariq.ali3@btinternet.com

Europeans' chill deepens on US policy

from the February 23, 2007 edition

European capitals are wavering over how to approach the final two years of a US administration saddled with inconclusive wars.

The Christian Science Monitor

PARIS

The resignation of Italian Prime Minister Romano Prodi underscores the difficulty in Europe of governments trying to support US foreign policy on terror while at the same time pleasing their own publics.

Mr. Prodi, who has been in office less than a year, stepped down Wednesday after he was unable to convince his parliament of the "profound difference" between sending Italian troops to Afghanistan and sending them to Iraq. Italy currently deploys 1,950 troops in Afghanistan as part of a NATO mission of some 30,000 soldiers from European states.

The Prodi drama came hours after Britain and Denmark announced the start of troop withdrawals from Iraq – a blow to the White House as it deploys an additional 21,000 soldiers to stabilize Baghdad. In a further departure from perfect alignment with US policy in the Middle East, British prime minister Tony Blair also said this week that he will consider dealing with the Palestinian group Hamas as part of a new "national unity" government in the occupied territories.

European capitals are wavering over how to deal with a US administration in its final two years, one saddled with multiple inconclusive wars and battles against terror.

Yet despite the crisis in Italy, and general dislike in Europe for US tactics in fighting terrorism, a fairly clear distinction continues to exist in elite circles between US-led Iraq and Afghan ventures.

Those distinctions have both practical and legal foundations: While a defeat of the US in Iraq might be troubling for the West, an accompanying defeat in Afghanistan would be "catastrophic," says a Brussels-based European diplomat.

"The war in Afghanistan is seen by Europeans as having a real basis in the events of 9/11, under UN rulings of the right of self-defense," says Adam Roberts, a professor at Oxford University, "and this is seen as different from the war in Iraq.

"In Afghanistan, efforts at transformation are multilateral, as distinct from Iraq," he adds. "In Afghanistan, 2 million refugees have returned, whereas in Iraq, 2 million refugees have left. There is still a strong tendency to draw these distinctions, despite European concern over US policy, which is very widespread."

The center-left Prodi government in Rome was always fragile, a nine-party coalition whose main agreement was its dislike of the previous center-right government of Silvio Berlusconi. Prodi decided to resign, it appears, after he was unable to achieve supporting votes from within his coalition for Italy's troops in Afghanistan or to follow through on a two-year-old deal with Washington to expand a military base in Vicenza.

Still, growing negative perceptions in Italy over the US enterprise in the Middle East has been eroding many distinctions in the public mind between the Afghanistan and Iraq wars, according to French analyst Bernard Getta. Such perceptions deepened last week when a judge ordered that 25 suspected CIA operatives stand trial in Milan for kidnapping an Islamist cleric in 2003 and sending him to Egypt. On Feb. 18, tens of thousands of Italians marched in Vicenza.

In Britain, Mr. Blair's announcement Wednesday that he would forces in Basra by 1,600 as part of what may be a complete drawdown by the end of 2008 reflects a broad consensus about Iraq.

Blair emphasized the difference between relatively safer conditions in Basra and those in Baghdad, suggesting that British forces had played their part, and that "the next chapter ... will be written by Iraqis." But the Iraq deployment is increasingly less popular. Blair spoke with his heir apparent, Chancellor of the Exchequer Gordon Brown, sitting to his left; Mr. Brown is regarded as willing to take a more independent position vis-à-vis the White House.

In the case of the Palestinian territories, the US has said it won't deal with a unity government unless it abides by conditions set last year by the Quartet mediating group – Russia, the US, the EU, and the UN – that Hamas renounce violence and recognize Israel.

In Denmark, which will bring home all 460 ground troops from Iraq by summer, public opinion generally distinguishes between Iraq and Afghanistan, says Mogens Jakobsen, who runs Epinion, a polling firm in Copenhagen.

As in Britain, the Iraq war is losing traction among Danes.

"The British withdrawal gave the Danish government a window of opportunity to get out," Mr. Jakobsen says. "Popular support ... is dropping, and it is more difficult for the government to explain to the people why they are there. So the British action was a kind of fig leaf for the Danes."

In the past year, some Danes have become skeptical of their Afghan role. Mostly, this is over tensions with the US created by a Danish policy not to turn over Afghan prisoners to US forces. A perception exists that US troops have sometimes tortured prisoners in Afghanistan. But "the Afghan war is not ... high on the agenda of opposition," Jakobsen says.

Europe's pushback stems partly from frustration that until recently the US had not worked closely with its allies on the Continent. Yet most European foreign ministries, from Britain to Germany to France, are working closely with US allies on Afghanistan, the Iranian nuclear question, and the Middle East, and are now considering a controversial US missile-shield for central Europe.

Italy has had 61 governments in 62 years; its parliamentary system is rife with squabbling parties that often take uncompromising positions. It remains unclear whether the government will disband, leading to new elections. That would pave the way for another run by Mr. Berlusconi.

Thursday, however, President Giorgio Napolitano began polling parties to determine whether a new government can be formed in the immediate future.

By Robert Marquand | Staff writer

US military planes criss-cross Europe using bogus call sign

February 19, 2006

Jon Swain and Brian Johnson-Thomas in Rome

THE American military have been operating flights across Europe using a call sign assigned to a civilian airline that they have no legal right to use.

Not only is the call sign bogus — according to the International Civil Aviation Organisation (ICAO) — so, it appears, are some of the aircraft details the Americans have filed with the air traffic control authorities.

In at least one case, a plane identified with the CIA practice of “extraordinary rendition” — transporting terrorist suspects — left a US air base just after the arrival of an aircraft using the bogus call sign.

The call sign Juliet Golf Oscar (JGO) followed by a flight number belongs, says the ICAO, to a now bankrupt Canadian low-cost airline called Jetsgo of Montreal.

But for several years and as recently as last December it has been used selectively by both the American air force and army to cover the flights of aircraft to and from the Balkans.

These range from Learjet 35 executive jets to C-130 transport planes and MC-130P Combat Shadows, which are specially adapted for clandestine missions in politically sensitive or hostile territory.

A Sunday Times analysis of flight plans and radio logs has placed these aircraft at locations including Tuzla in Bosnia, Pristina in Kosovo, Aviano, the site of a large joint US-Italian military air base in northern Italy, and Ramstein in Germany, the headquarters of the US Air Forces in Europe (USAFE).

On December 11, 2004, USAFE in Ramstein filed a flight plan for a Learjet 35 to fly from Tuzla to Aviano. The flight plan was copied to 15 addressees including Tuzla airport, Aviano airport and a mysterious recipient labelled “xxxxxxxx”.

The aircraft’s identity was given as JGO 80, the flight was a Learjet 35 operated by the Department of Defence and the registration was 99999E.

The status of the flight was given as “humanitarian”. But it was also given as “state”, which means government, and as “protected”, which means diplomatic.

During the time the plane was in the air, USAFE changed some of the flight plan timings and at the same time the registration changed. The aircraft metamorphosed into 40112E but continued to be a Learjet 35 and was still JGO 80 and a humanitarian, government and diplomatic flight.

While the Learjet was on the ground at Tuzla, an Ilyushin 76 was loading a cargo of 45 tons of surplus weapons and ammunition sold off by the Bosnian military and destined for Rwanda in defiance of a UN embargo.

The Ilyushin left Tuzla, flew over Italy and headed south in the direction of Africa. The American Learjet took off 55 minutes later.

In a report exposing arms trafficking to war-torn central Africa, Amnesty International has suggested that “US security authorities were engaged in a covert operation to ferry arms to Rwanda in the face of political opposition from the European Union”.

Another interesting convergence of flights occurred in February 2004. On February 24, an MC-130P Combat Shadow using the call sign JGO 50 took off from Aviano for an unknown destination.

Two days later, on February 26, the aircraft left Pristina for Tuzla. A short while after that, a Gulfstream 5 executive jet, call sign JGO 47, flew from Tuzla to Aviano, arriving at 23.11 GMT. The next day, a Learjet 35 using the call sign SPAR 92 left Aviano for an unknown destination.

SPAR is short for Special Air Resources, an American military airlift service that transports senior military officers and civilian VIPs.

However, SPAR 92 has been identified as the aircraft which was used by the CIA secretly to transport a Muslim preacher who was kidnapped by CIA agents in Milan in 2003.

A USAFE spokesman last week said American aircraft using the JGO call sign were performing “Joint Guard Operations” for the Nato/European peacekeeping mission in the Balkans.

However, inquiries have shown that the military operation called “Joint Guard” ended in 1998. They also show that none of the US aircraft deployed in it match ones using the JGO call sign.

A spokesman for the ICAO said: “Our records indicate that the designator JGO is still assigned to Jetsgo and the ICAO does not assign the same code to two operators.”

Additional reporting: Peter Danssaert

The US will have to accept a multipolar world

Like it or not, the US will have to accept a multipolar world

Around the three poles of Europe, India and South America, we could create a more balanced and democratic world order

David Clark
Friday February 16, 2007
The Guardian

One of the many casualties of 9/11 and its aftermath has been the idea, fashionable in the 1990s, that a world with only one superpower would be a more comfortable place to live. This hinged on the argument that in a unipolar world order the dominant state, in pursuit of its global interests and responsibilities, acts as a producer of global public goods from which everyone benefits, such as security, stability and free trade.

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That is the basis on which the advocates of US primacy have always defended its legitimacy. Paul Wolfowitz's famous Defence Planning Guidance paper of 1992 talked about the need for the US to "account sufficiently for the interests of the advanced industrial nations to discourage them from challenging our leadership or seeking to overturn the established economic and political order". Far from being the conceit of neoconservative intellectuals, faith in the benign effect of US power was shared by Republicans and Democrats alike.

Things look very different today. The intervention in Iraq has strengthened the very forces of extremism and violence it was meant to weaken, with the result that we are in much greater danger. The Bush administration continues to drag its heels on the environment and prevent the action needed to meet an even greater threat in the form of climate change. The US's unwillingness to address its $764bn trade deficit and its determination to continue consuming beyond its means is responsible for global economic imbalances that threaten meltdown and worldwide depression. Instead of acting as a provider of global public goods, the US looks more like a global free rider, using its power selfishly and irresponsibly to the detriment of the greater good.

A common mistake is to see this as a reflection of the American character, rather than as the inevitable consequence of unrestrained power. The truth is that any other nation in the US's position would do the same and probably much worse. Dominant powers are always prone to trampling on the interests and rights of others. The problem with US hegemony is that it's hegemonic, not that it's American. As Vladimir Putin pointed out in a speech at the weekend (an extract of which was published on these pages), the unipolar model is inherently flawed because it concentrates power in ways that are unhealthy and undemocratic.

Very true, but how strange to hear it from the lips of the Russian president. In each of the criticisms he levelled at the US, more or less the same could be said about the government he leads. Putin deplores America's conduct of the war on terror, but the brutality of his assault on Chechnya makes the abuses at Guantánamo look mild by comparison. The bullying of Russia's neighbours through energy cut-offs, trade embargoes and the sponsorship of local insurgencies shows scant regard for the high-minded diplomatic principles espoused in his speech.

And when it comes to ripping up treaties and ignoring international law, Putin has little to learn from Bush. He refuses to accept Russia's obligations as a signatory of the Energy Charter Treaty, for instance, and prefers the unilateral use of energy dominance for geopolitical and commercial advantage. Putin's only real objection to a unipolar world order is that Russia is not the unipole. In every other respect his foreign policy doctrine is similar to the neoconservative approach he purports to oppose. Anyone who takes his concern for democratic standards seriously hasn't been paying enough attention to the erosion of political and civil rights under his leadership.

Britain, along with the rest of Europe, certainly needs a strategy for creating a more balanced and legitimate distribution of global power, but it shouldn't be one that follows Jacques Chirac's efforts to offset US influence through big power summitry with an authoritarian Russia. It must be one that is true to Europe's democratic values. Of course, the concept of power balancing is in itself controversial. For some, such as Tony Blair, the suggestion that US power needs to be balanced is evidence of anti-Americanism. But his alternative of seeking influence in Washington has been given more than a fair wind, and he has precious little to show for it.

There is an alternative that allows Europe to pursue an effective power balancing strategy without resort to the cynical realpolitik of old, and it has been made possible by the remarkable political transformations of the last three decades. Almost two-thirds of the world's population, accounting for three-quarters of nation states, now live under democratic rule. It is those states collectively that form the body of legitimate world opinion and must be mobilised. US policymakers have marginalised the United Nations on the grounds that universal membership confers power and legitimacy on despots and tyrants. But what was striking about the debate on Iraq was the fact that most world democratic opinion was opposed to America's approach. The objective of power balancing must be to ensure it is brought to bear more effectively in future.

India will, on current trends, overtake China to become the world's most populous country by the middle of the century. Unlike China, it is an established democracy and ought to be a natural ally in any attempt to create a more balanced and democratic world order. Another priority should be South America, where the democratic gains of the last 20 years have been as great as those of eastern Europe. Its regional trade blocks, the Andean Community and Mercosur, are in the process of merging to form a South American Community of Nations modelled on the EU. With a population of 361 million, there are plans for a single market, a common currency and a common foreign policy.

Around these three poles - Europe, India and South America - it would be possible to galvanise a new global democratic sentiment that rejects unipolarist assumptions without being antagonistic towards the US. The end of American primacy is coming, whether Washington likes it or not. The choice is between a bipolar system in which it faces an authoritarian and increasingly confident China, or a multipolar order in which it can share the challenges of global leadership with other centres of democratic power. The shift from unipolarity to a democratic multipolarity should be our common project of the 21st century.

· David Clark is chairman of the Russia Foundation and was a special adviser at the Foreign Office from 1997 to 2001
Dkclark@aol.com

In Europe, pushback against US 'war on terror'

from the February 05, 2007 edition -

German solidarity with the indictment of 13 CIA operatives underscores a shifting tone across Europe.

The Christian Science Monitor

PARIS

Reaction in Germany was hardly neutral when a prosecutor in Munich indicted 13 CIA officials last week for kidnapping a German of Lebanese descent and interrogating him in Afghanistan before apparently realizing they had the wrong man. Germans solidly backed the prosecutor.

Since Christian Schmidt-Sommerfeld took the unprecedented step, both the right and left in Germany have supported the "rule of law" principles he articulated.

The media have been unified as well. Typical is the centrist Süddeutsche Zeitung: "The justice system has stood up for the rule of law. Whether the government will do so is a different matter. Berlin must push for the kidnappers to be extradited, or ... tried in the USA. But it is unlikely to have that much courage."

The solidarity underscores a shifting tone in Europe. As changes of leadership loom in Britain and France, and capitals contemplate relations with a post-Bush US, Uncle Sam may expect stronger "pushbacks" from Europe, experts here say. Public disapproval of the US-led "war on terror" is also growing, spurring the change.

"There is a deep gap between government policy and public opinion in Europe, and that opinion may be shaping the direction here right now," says Frederic Bozo, professor of European Studies at the Sorbonne in Paris. "Europe doesn't want to upset the careful balance with the US. I don't think there is a united opposition against the US at all. But Europe is setting the groundwork for its own identity."

Gordon Brown, who is shortly expected to take over as prime minister in Great Britain, opposed the Iraq war from the start, and has made no secret that he plans to carve out an independent line on the venerable "special relationship" with the US. Many anticipate that British troops will leave Iraq by the end of the year.

In France, even the avidly pro- American Nicolas Sarkozy, current front-runner in the French elections this spring, stated in an interview taped in New York last week that Americans need to "get interested in the world, and the world will learn to love you."

To be sure, European cooperation with the US on a wide range of areas, including counterterrorism, is extremely strong, even in France, where the Chirac government has steadily gone it alone in Europe in opposition to the Iraq campaign.Yet Europeans have steadily refused to accept the concept and phrase, "war on terror," a sentiment that extends to its application to Iraq.

Last week, European Union officials in Brussels sought to reduce the amount of information given to US agencies on air passengers leaving Europe. An official in charge of data protection for the European Central Bank similarly advised that millions of pieces of financial information being sent regularly to the US after Sept. 11 were in violation of EU privacy codes.

The "secret, routine, and massive access" by US agencies to banking SWIFT codes – needed to transfer in and out of European financial institutions – is "unacceptable," stated Peter Hustinx, the Brussels official responsible for EU data oversight.

Boosting this sentiment is Europeans' recognition that the US is also in flux with an election season starting up, and that President Bush's term appears to be winding down with the United States in a vulnerable position overseas.

The US legal basis for conducting interrogation centers at Guantánamo Bay, for example, has long rankled in Europe.

"Most of the French opinion, many of the German people, a large share of the Labor constituency in the UK, the Spanish, and now Italy, don't just oppose the policy, but the basis of US policy," says Georges Le Guelte, of the Institute for International and Strategic Relations in Paris. "You can't have renditions and Guantánamo and talk human rights at the same time. That is more clear to many of us."

In Italy, prosecutors put out warrants several months ago for 25 members of a CIA team that abducted a Muslim cleric in Milan.

Nor is Europe alone in its willingness to speak more pointedly to the White House about its foreign affairs. On page 1 of last Thursday's People's Daily, a newspaper of record in China, a Chinese official criticized Mr. Bush for inflammatory rhetoric that turned the war in Iraq into a "religious war."

The comment was unprecedented in a state where official decorum is rigidly maintained. (For nearly a decade, China has conducted a brutal campaign of summary executions of Muslims in its far-west Xinjiang region, as documented in human rights reports.)

In the case of the Munich renditions, announced Jan. 31, 13 American CIA operatives allegedly apprehended German citizen Khaled el-Masri in Macedonia in 2004 and whisked him to an Afghan prison called "the Salt Pit." Realizing he was the wrong man, they left him on a hillside in Albania five months later, warning him never to talk of his experience. Mr. el-Masri instead filed suit in a Virginia court. Masri's case was dropped in Virginia after arguments that a trial would jeopardize US security operations.

But with help from Spanish police, the Munich prosecutors discovered the identity of the operatives through flight and hotel records in Palma de Mallorca, where they stopped to relax.

On Friday, in Washington, German foreign minister Frank-Walter Steinmeier told US Secretary of State Condoleezza Rice that the Munich warrants were only valid in Germany at present, but that Berlin felt the local court might issue an international warrant, according to German papers.

Ms. Rice said the warrants would not harm US-German relations. Justice Department officials have not responded to approaches by the German prosecutors.

By Robert Marquand | Staff writer

Watchdog attacks US swoop for bank secrets

Europe's main privacy watchdog says rights of millions of people and businesses are being abused.
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Ian Traynor in Brussels
Friday February 2, 2007
The Guardian

Europe's main privacy watchdog yesterday said that the banking secrets and rights of millions of people and businesses were being abused on a massive scale by a clandestine programme giving US agencies access to the information. It accused the EU's banks and financial authorities of doing nothing to stop the breaches.

In a damning report on the covert transfer to US agencies of the details of millions of financial transactions by EU citizens, Peter Hustinx, the European Data Protection supervisor, accused the European Central Bank of complicity in the system that has been used since 9/11 and which was deemed illegal by European data protection agencies two months ago.

Article continues
The Belgium-based company Swift (Society for Worldwide Interbank Financial Telecommunication) has been supplying the US Treasury and the CIA with details - such as names, account numbers and sums involved - allegedly as part of George Bush's "war on terror".

After 9/11, Swift agreed to cooperate with the US Treasury by creating a system where personal data is transferred to a "black box" owned by the US authorities, enabling "massive transfers of data" and the "focused searching" of the information by US agencies.

The Brussels-based company says it is obliged to cooperate with the US authorities because it is subject to US subpoenas and could be fined for ignoring the requests. The system, which is estimated to include the bank details of more than 4m Britons, was operated secretly for years until it was disclosed last summer.

A Belgian investigation into the scheme found that Swift was operating in uncertain legal territory. Privacy watchdogs across Europe concluded in November that the company was breaching data protection laws and privacy rights.

Mr Hustinx said yesterday that the Swift operation "has breached the trust and private lives of many millions of people". He accused the Frankfurt-based European Central Bank of failing to demand a halt to the operation and of keeping quiet for years on the controversy.

The ECB denied responsibility and called instead for the European and US governments to "clarify" the dilemmas thrown up by a clash between privacy rights and combating terrorism.

In the European parliament, MEPs demanded new rules to bring an end to the mass abuse of people's privacy and data protection rights. Mr Hustinx also warned that the US snooping on European bank transfers could expose European companies to economic espionage and jeopardise commercial transactions.

"What is at stake here is nothing less than the protection of fundamental rights of our citizens," said Jean-Marie Cavada, the French MEP heading the parliament's civil liberties committee.

Questions are also being asked as to whether the Swift case is the only instance of private data being trawled by the US agencies or if telephone, email and insurance data is also being made available.

ECB's Trichet to Examine M3 Data `Very Carefully'

(Update3)

By Andreas Scholz and John Fraher

Jan. 27 (Bloomberg) -- European Central Bank President Jean- Claude Trichet said he will ``very, very carefully examine'' figures that yesterday showed money-supply growth in the euro region accelerated to the fastest pace in 17 years.

``It confirms what we have already said and what I have already said in the name of the governing council,'' said Trichet in an interview in Davos, Switzerland, where he is attending the annual meeting of the World Economic Forum.

Trichet has signaled the ECB will raise the benchmark 3.5 percent interest rate in March, which would be the seventh increase since the end of 2005, partly to slow the flow of liquidity. The ECB yesterday said M3 growth, its preferred measure of money supply, surged 9.7 percent in December, more than double the rate it says risks fueling inflation.

ECB council member Lorenzo Bini Smaghi echoed Trichet's concern in a speech he delivered today in Milan. Growth probably exceeded 2.5 percent last year, he said, and would continue to be ``close to or even above its potential'' this year and next.

``The current level of interest rates definitely doesn't constitute a hindrance to growth,'' Bini Smaghi said. The ECB's strategy to increase rates before inflationary pressures mount ``has proven correct, and will continue in coming months.''

The Frankfurt-based central bank defines potential growth, the speed at which the 13-nation economy can grow without fueling inflation, at between 2 percent and 2.5 percent.

`Not Sustainable'

Trichet, elaborating on one of the most popular talking points at this year's meeting, said on a panel today that financial markets are vulnerable to any shock that could hurt the global economy and their risk appetite is ``not necessarily sustainable.''

Investors and policy makers ``have to be prepared for a reappreciation of risk'' which is ``likely,'' said Trichet, sitting next to Chinese deputy central bank governor Wu Xiaoling and Israel central bank governor Stanley Fischer. Such a move may be ``smooth'' or ``disorderly,'' he said.

Trichet cited oil prices, the unraveling of so-called global imbalances and geopolitical conflicts as potential risks to the global economy.

Several measures show perception of risk is near historic lows. The risk of owning European corporate bonds dropped to the lowest ever this week, according to credit-default swap traders. The amount of debt used to finance European buyouts reached a record high in the third quarter.

IMF View

John Lipsky, first deputy managing director at the International Monetary Fund, said the level of risk priced in financial markets is appropriate.

``The global economy turned out much better than expected so it's not surprising that risk measure should be moving in a favorable direction,'' he said in an interview. ``Markets often overshoot and adjust back so that wouldn't be surprise. But the fact that there's something fundamentally wrong is not obvious.''

Trichet said central banks need to ``remain very, very alert'' to the risks of inflation and can't take anything for granted. In an interview yesterday, Bundesbank President Axel Weber said the ECB must continue raising rates to keep a lid on consumer prices.

``We have to take this process of withdrawing monetary stimulation further,'' according to Weber, who also heads Germany's Bundesbank.

Investors expect the ECB to raise its key rate twice more this year, futures markets suggest.

Rate Forecasts

The yield on the three-month Euribor futures contract for March closed at 3.92 percent yesterday. The December contract was at 4.17 percent. The contracts settle to the three-month inter- bank offered rate for the euro, which has averaged 16 basis points more than the ECB's benchmark rate since the currency's start in 1999.

Trichet said global growth this year will probably be close to its levels in recent years. The International Monetary Fund says the global economy expanded 5.1 percent in 2006 and 4.9 percent in 2005.

``We have a good probability to have a present year which could be in line with previous years,'' according to Trichet. Still, policy makers, investors and executives should guard against ``complacency'' given the risks facing the global economy, he said.

Growth in the euro region will probably be ``just above'' 2 percent this year, said Trichet, whose bank in December forecast the economy will expand around 2.2 percent this year.

When asked about global currencies, Trichet said he's sticking to the Group of Seven's agreed position and declined to comment further.

To contact the reporters on this story: John Fraher in Davos at jfraher@bloomberg.net

Last Updated: January 27, 2007 08:34 EST

Experts Warn About U.S. Plans For Missile Defense In Europe

US missile defence plan: a diplomatic shot in the foot?

by Pascal MalletWed Jan 24, 10:45 PM ET

The US risks unnecessarily inflaming Russia with its planned anti-missile defence system in eastern Europe, designed to intercept attacks from the Middle East and North Korea, experts warn.

"It is true that for intercontinental missiles fired from the Middle East -- from northern Iran for example -- the shortest way to reach Washington or New York passes over central Europe," said Bruno Gruselle, research specialist at the Paris-based Strategic Research Foundation.

But "the US military already has radar stations in Norway, in Greenland, and in Britain -- on top of its Defense Support System satellite alert system -- which permit the early detection of missiles, wherever they come from," he added.

Andrew Brookes, a space technology expert at London's International Institute for Strategic Studies, echoed that the plan for radar sites in the Czech Republic and Poland "does not add anything to the US radar missile system".

"The Russians say 'this is my backyard. You need our cooperation'. They are right. You cannot stop Iran or contain Iran without Russia. You need the Russians onboard".

He deplored the possibility of unilateral US decisions "ignoring Russian sensitivities".

China is saying the same thing with respect to North Korea, the other perceived threat the US seeking to cover with the system, he added.

The United States on Monday confirmed it would soon begin formal talks on deploying a missile defence system in eastern Europe, had contacted the Czech Republic and Poland and would begin negotiations.

"No final decision has been made and no timetable for negotiations has been established; however, the United States and the Czech Republic expect that these negotiations will begin soon," the US embassy in Prague said in a statement.

The Pentagon hopes to be able to deploy a radar system and 10 interceptor missiles in the two EU countries, and former Soviet bloc states, by 2011.

The Kremlin condemned the US scheme as a "clear threat" to Russia and called for talks with US and European leaders.

Czech and Polish leaders rejected Russia's fears as groundless.

According to Ruslan Pukhov, director of the private Muscovite Centre for Strategic and Technological Analysts, "the attitude of Warsaw and Prague proves again that they retain the reflexes associated with the Cold War," as regards Russia.

For Brookes, outside of the Cold War shadows the Russians are seeking more cooperation and less unilateralism from Washington.

"What the Russians are saying is; 'Don't go unilaterally for the Czech Republic or Poland. Cooperate with us, use our systems, don't bring your own system into Europe'".

Moscow's strong reaction came as no surprise either at NATO or EU headquarters.

"Russia has for years insisted on being involved in all decisions which other powers might take to defend themselves against ballistic missiles, whether it be the United States or NATO," said one Brussels diplomat.

NATO spokesman James Appathurai refused to comment on the US defence scheme, calling it "purely a bilateral question" between Washington and the two European countries involved, even if they are all members of the Alliance.

Concerning NATO's own anti-missile system project "a feasability study has been carried out, but the 26 member states have taken no decision yet," he said.

Western diplomats are waiting to see what Russian Defence Minister Sergei Ivanov has to say on the subject of missile defence when he meets up with his Alliance counterparts at the upcoming NATO-Russia meeting in Seville, Spain on February 9.