-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Chinese Politics Dissidents Openly Defy Beijing Central control continues to disintegrate BEIJING - A group of 18 dissidents on Thursday openly challenged China's ruling Communist Party by forming five new branches of the banned China Democracy Party despite a crackdown on organized dissent. The move came on the same day as a court in the city of Hangzhou sentenced an American-educated and Spain-based dissident to a four-year prison term for sneaking back into China and giving $1,000 to a local dissident who had earlier launched the public campaign to form the China Democracy Party. The developments Thursday are an indication of both the tenacity of government opponents and of the government's determination to stop them. While the dissidents said that the coordinated effort by opposition campaigners in five provinces marked the beginning of the ''second leg'' of their effort to found the first Chinese opposition political party, the sentencing announcement is another sign that Beijing's senior leaders will brook no challenge to their monopoly on political power. In December, the government effort to crush the nascent opposition party resulted in show trials and long prison terms for three of the party's most aggressive founders, and a ''reform through labor'' sentence for another activist. At least three others remain in detention. ''The people's hearts of fear are slowly disappearing,'' said Wang Zechen, a dissident in the northeastern Liaoning Province who identified himself as the chairman of the opposition party's provincial branch. ''This shows that the China Democracy Party has already grown deep roots on the Chinese mainland. There is no power at all which can wipe it out,'' he said in an interview. He has already been imprisoned twice, in the 1960s and 1970s, for his political activism. Among the other 17 activists who identified themselves Thursday despite the potential for government retribution were Wang Wenjiang, a lawyer whom the police prevented from defending prominent dissidents in their trials in December. Before the move to take a position as the ''first vice chairman'' of the Liaoning branch of the opposition party, Mr. Wang publicly renounced his Communist Party membership. Hu Shen, an activist who was briefly detained in China's ancient capital of Xi'an in June when President Bill Clinton visited, was also among those going public. Dissidents say 27 party branches in provinces and cities nationwide have been launched since June. Wang Ce, a Chinese citizen and longtime resident of the United States and Spain, was sentenced to a four-year jail-term in Hangzhou for illegally sneaking back into China in October and giving Wang Youcai $1,000 International Herald Tribune, Feb. 5, 1999 Impeached POTUS Clinton Psalms Off Republican Over Brunch With God by Mark Steyn "I want you to know that I care for you and I love you," Oklahoma Republican Steve Largent told the President, "and that's one of the mysteries of Jesus." I'll say. They were both at the Hilton for the annual National Prayer Breakfast, one of those opportunities to flaunt his faith that Bill Clinton never passes up. The President's religion is yet another mystery: in one of the most striking examples of his ability to "compartmentalise", he strolled out of his church after an Easter service, waved his trusty Bible to the crowds, and then went back to the Oval Office to observe the resurrection with Monica in a more personal sense. Mr Clinton is always talking about "my God", and you can't help feeling his God is a kind of Vegas version of those Graeco-Roman types: a celestial lounge act with cigar and martini, unwinding in the hot tub with the angelic hostesses, the sorta God who knows that what counts is not how much you forgive but how much you've got to be forgiven for. At yesterday's ecumenical breakfast, Bill Clinton's God took His place with more traditional Judaeo-Christian-Islamic models. The President was joined by the nation's highest-rated radio scold, Dr Laura, author of a new book on the Ten Commandments and hence reluctant to concede the Clinton position that at least three of them don't "rise to the level" of impeachment. Dr Laura's catchphrase is: "I am my kid's mom" (if you want to learn more about her, there are some nude photos on the Internet). The event was chaired by Congressman Largent, a rising Republican star who was chosen to give the official response to Mr Clinton's State of the Union address and laid out a compelling GOP platform - he talked about country singer Vince Gill's Christmas album and revealed that he'd been raised in a single-parent household. Mr Largent's catchphrase is: "I am my mom's kid." Other speakers included the President ("I am my intern's mentor") and the Vice-President ("I am my President's Vice-President"). Also present were both the man Mr Clinton kept waiting in the outer office while he finished up with Monica, Yasser Arafat ("I am your President's 10 o'clock appointment"), and the first Democratic Senator to criticise his leader, Joe Lieberman ("I am my party's only supporter to date of a bipartisan Finding of Fact resolution"). "Lord, hear his prayers," beseeched Senator Lieberman. "Help him with the work he's doing with his family and his spiritual advisers." Mr Clinton's certainly been doing a lot of work with his spiritual advisers. In December, they issued a press statement about which particular Psalm he'd be reading in private during the final House impeachment vote. The President's work with his family is less obvious. At the prayer breakfast, he didn't so much as brush the sleeve of the First Lady, to his right. On the other hand, he couldn't keep his paws off Mr Largent, to his left. He patted his shoulder, rubbed his back, nudged his elbow, so relentlessly tactile that you wonder why Dr Laura didn't remind him of one of the few Commandments he hasn't yet broken ("Thou shalt not covet thy neighbour's ass"). On Capitol Hill, received wisdom was that Republican prosecutors, reduced to begging for just one witness, didn't have a prayer. Asked a routine question, Representative George Gekas, previously one of the meekest of House impeachment managers, burst into song: "I know nothing!" he trilled, to the tune of West Side Story's I Feel Pretty. "I know nothing! I know nothing and nothing and . . ." As the Congressman's arm sliced the air with the bravura of Shirley Bassey, a passing staffer muttered, "You really need to get out of here." Poor Mr Gekas and his House colleagues. There's a place for them, somewhere a place for them, but it isn't in the Senate. Meanwhile, the endless search for novelty acquittals continues. Utah Republican Orrin Hatch is touting a new bipartisan compromise proposal called Adjournment Plus where the Senate would move a motion to adjourn the trial indefinitely plus they'd . . . well, that bit still has to be worked out. Still, it does have a certain symmetry: the trial, like the President with Monica, would stop before reaching "completion". Perhaps for that reason, Adjournment Plus is thought to have more chance than rival proposals like Censure Super-Size, Conviction Lite or Finding Of Fact Early-Bird Special. All of which boil down to: "If the polls don't fit, you must acquit." Like some terrible cable TV subscription, no matter how many Premium Options you select, they're all showing the same programme: you can zap ever more furiously from the Adjournment Channel to the Censure Network to the Finding Of Fact Superstation, but you still wind up with another lame episode of The Comeback Kid Rides Again. The London Telegraph, Feb. 5, 1999 Crisis in Brazil Brazil Close to Financial Meltdown Another IMF success story Brazil is showing the early signs of financial meltdown. What began as an attempt at a controlled devaluation is turning into a panic. Last Friday, Brazilians queued outside banks to withdraw their savings amid rumours that the government was about to freeze bank accounts. Interest rates have been raised to 39 per cent to steady the Real, which has lost almost 50 per cent of its value since the currency was allowed to float on January 13. In the past few days, Pedro Malan, finance minister, has offered to resign, while the central bank has been given its third president in less than a month. An International Monetary Fund mission is in Bras�lia this week, renegotiating the terms of last year's $41.5bn emergency support package. But Stanley Fischer, the IMF's first deputy managing director, was returning to Washington last night without any sign that Brazil and the Fund were close to an agreement. There is growing scepticism that Brazil can deliver on fiscal reforms agreed with the IMF last October. With confidence slipping fast, even George Soros, the international speculator, felt he had to lend a helping hand to Arm�nio Fraga, Brazil's new central bank chief and the former managing director at Soros Fund Management. Mr Soros told the world economic summit at Davos in Switzerland that the Real was "clearly undervalued". "Brazil is in a very acute situation because on Friday you effectively had the beginning of a run on the banks and a run on the currency," Mr Soros said. He did not think the Brazilian government had much time to sort things out. How did Brazil begin to unravel? The government is finding it much harder to service its $94.7bn gross external debt at a time when it is all but cut off from international capital markets. Private sector companies are in much better shape, but their external debt has more than doubled in the last two years to $119bn at the end of 1998. More worrying is the government's R$320bn domestic debt, owed mainly to Brazilian banks and other financial institutions. The recent currency depreciation has increased the stock of the debt, because about R$60bn is linked to the value of the dollar. About half of this debt falls due this year. Already there are doubts about whether investors will agree to roll it over. The increase in interest rates - from 29 per cent to 39 per cent - will also increase the cost of debt servicing. One UK economist estimates each percentage point increase in interestrates increases debt service payments by R$2.5bn a year. When Brazil was negotiating its emergency aid package with the IMF, the government's interest bill this year was estimated at 7 per cent of gross domestic product. But following the devaluation, and with interest rates at 39 per cent, the interest bill is likely to be closer to 17 per cent of GDP. Felipe Garcia, an analyst with Idea, a New York-based consultancy, says that some government creditors could eventually conclude that the interest rates or yield - no matter how high - would not compensate the risk of holding government paper. "We have already reached the stage where it has become more difficult to place government debt. The fear is that at a further stage these investors will start dumping paper," he said. "Even if only 10 per cent of creditors were to sell, it could trigger a rescheduling." So what are the government's options? Broadly, it has three: default, followed by renegotiation of debt; to slash public spending to compensate for higher interest payments; and to reduce the real value of domestic debt by inflation. All are unenviable, to put it mildly. Duff & Phelps, an international credit rating agency, believes that the country has a one in three chance of defaulting on its domestic debt. But default, as Russia is finding out, has consequences so devastating that the government will try hard to avoid it. For one thing, a domestic debt default would be a severe blow to Brazil's banking system. Holdings of government paper account for between 20 and 30 per cent of the banking system's assets. Even a 10 per cent fall in the value of this paper would be enough to wipe out the entire sector's profits last year. Worse still, at time when high interest rates and economic contraction are increasing the number of bad loans, default could force some smaller banks into insolvency. "There would definitely be a banking crisis," predicts Lacey Gallagher, director of Latin America sovereign ratings at Standard & Poor's, the credit rating agency. "The only way to prevent banks becoming insolvent would be to freeze their liabilities (such as bank deposits) as well." Default, however, is not inevitable. The government could try further budget stringency. There is a chance that the government could stabilise its currency, halt the steady outflow of dollars and reduce interest rates. Indeed, last week's panic began to ease when Fernando Henrique Cardoso, president, made it clear he had no intention of hijacking the savings of his compatriots. The Real has appreciated by about 10 per cent against the dollar since Friday. For stability to be restored the government would need to convince investors, banks and the IMF that it is making serious progress in reducing its fiscal deficit, now equal to 9 per cent of gross domestic product. Making cuts of this magnitude is politically controversial. Congress has already approved new taxes and bigger pension fund contributions from civil servants that are expected to produce R$28bn in savings. But with interest rates so high, the government is running to stay in the same place. The fiscal savings have already been eroded by its increased debt servicing costs. That leaves option three: risking a bout of inflation to reduce the real value of domestic debt. In Brazil it is heretical to admit that there can be any positive impact. Mr Fraga, the new central bank governor, says that for a country like Brazil, a little bit of inflation is like giving a drink to a recovering alcoholic. Paulo Paiva, budget minister, adds: "We would far prefer to cut costs than rely on the help of inflation to create fiscal equilibrium." The harsh reality, however, is that inflation could help. Brazil's history of high inflation, and the failure of the authorities to manage inflationary expectations in the past, means that many businesses are already beginning to prepare for a new wave of price rises. Private sector forecasters are already expecting price rises of at least 10 per cent and many acknowledge that the rate could be much higher. Inflation could ease Brazil's debt problems. Even if nominal interest rates remain at current levels, price increases of even 10 per cent a year would reduce real rates and the burden of both existing debt and interest payments. In additional, while inflation will increase government revenues, many of its expenses are fixed in nominal terms, which should help in further reducing the fiscal deficit and reduce financing requirements. However, a rise in inflation would hit Brazil's wage earners and make the government unpopular. But even modest levels of inflation would be hugely controversial in Brazil. Furthermore, price increases would bring back to spectre of indexation. President Cardoso scrapped the system five years ago, but if prices were to rise again, the government would come under enormous pressure from the trades unions to reintroduce it. "A moderate level of inflation would help them address the domestic debt problem with much less political fall-out than an outright default," says Ms Gallagher. "But a return to indexation would be extremely damaging. Given Brazil's history with inflation it is a delicate balance. They are facing some really tough choices." The Financial Times, Feb. 5, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. 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