-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- ------------------------------------------------------------------------ Today's Lesson From Skunk Works by Ben R. Rich & Leo Janos But that was inconsequential compared to another blue-suiter U-2 pilot, Major Chuck Maultsby, who was flying out of Alaska on a routine sampling mission right at the height of the 1962 Cuban missile crisis. His mission took him over the North Pole in the middle of the night, and when he turned to return to Alaska, he took the wrong south heading and wound up flying deep into Soviet territory. The Russians picked him up right away and thought SAC was coming in the back way to nuke them and start World War III. We monitored them scrambling jets against Chuck. He could see the contrails of dozens of fighters trying to reach his altitude and shoot him down. Finally, President Kennedy got on the hot line with Krushchev and told him we have a lost U-2 pilot over your country on a weather mission, and he is not--repeat, not--a hostile aircraft. Maulsby had no direct radio communication, only a passive HF receiver that allowed him to listen. Someone on the tanker that had refueled him got on the horn and informed Chuck that it was sunrise over Alaska and suggested he turn his airplane 90 degrees until he saw light, and then fly in that direction. Chuck obeyed and headed for the western tip of Alaska, where he was met by a couple of our F-106s that escorted him to base. He had made the longest U-2 flight ever--about fifteen straight hours and ran his fuel down to zero, flamed out, had to deadstick in with his face mask all frosted over. ===== Chinese Spying Chung was Told to Protect Loral and Hughes The best way to survive A California businessman suspected by the FBI of trying to coerce Democratic fund-raiser Johnny Chung's cooperation in a probe of campaign finance abuses warned Chung against pulling two U.S. aerospace firms helpful to China's missile program into the scandal. Robert Luu, who met Chung 20 times during a four-month period in 1998, told Chung that Chinese intelligence officers in Beijing regarded Loral Space & Communications Ltd. and Hughes Electronics as "untouchables," and strongly suggested he not give up any information that would be "disadvantageous" to the two firms. Mr. Luu, under investigation on charges of witness tampering and making false statements, told Chung that Chinese agents had been in contact with the two firms and that any accusations of wrongdoing would not be helpful. "They are making contacts with these two major companies," Mr. Luu said during a June 24, 1998, meeting with Chung at his Torrance, Calif., office. "They are working, helping you. They don't want to have any conflicts with the other side. . . . They are talking long-term business relations." Loral and Hughes were named in a House report in May as having given key missile-related expertise to China that proved damaging to U.S. national security interests. Chung also was warned not to discuss any possible connection between the two companies and Liu Chao-ying, a lieutenant colonel in the People's Liberation Army and a Chinese aerospace company executive with whom Chung had a business relationship. Federal authorities and House investigators have identified Miss Liu as a key player in illegal campaign activities in the United States. "Don't mention about these two companies and their relationship with her," Mr. Luu said, using Miss Liu's nickname, "Guniang." "Don't do something disadvantageous to Guniang, it wouldn't be good for you either. As long as it would be helpful for getting you out of it, then it is helpful. Then you protect Guniang. Isn't that the best way to survive?" Miss Liu's company, China Resources, has been described by U.S. authorities as a front for top PLA officers who assumed key positions with the firm to continue their efforts to influence U.S. policy. Of particular concern is a connection between China Resources and Gen. Ji Shengde, the PLA's chief military intelligence officer, who -- according to Chung -- ordered that $300,000 be transferred to Chung for donations to the Democratic Party. The cash eventually was telegraphed to Chung's account at the Overseas Trust Bank in Hong Kong, then transferred to a California bank. Miss Liu, whose father is Gen. Liu Huaqing, a member of the Communist Party leadership, had her picture taken with President Clinton at a fund-raiser she attended with Chung. Mr. Luu, when he first approached Chung, told him he had been in contact with Gen. Ji and Miss Liu. Chung and Mr. Luu spoke on 11 occasions by telephone and met nine other times, all of which were secretly recorded or videotaped by the FBI. Copies of transcripts of those sessions were obtained by The Washington Times. Mr. Luu is suspected of warning Chung against cooperating in the FBI's campaign finance probe and of promising him "hush money" for his legal defense in return. The transcripts detail a suspected scheme by Chinese intelligence officers to influence Chung's testimony, using Mr. Luu as their messenger. Chung, who admitted last year to making illegal donations to the Democratic Party, has since agreed to cooperate in the FBI's campaign finance probe. Loral and Hughes were singled out in the report by a select House committee that concluded China had stolen secrets on every deployed U.S. nuclear missile warhead and had 20 long-range missiles aimed at the United States. The report said the two companies supplied key missile-related expertise that damaged U.S. national security, including rocket-guidance technology and nose cones that could be used on a future Chinese multiple-warhead missile. The report said Loral and Hughes, in the aftermath of three failed satellite launches by Chinese rockets, conducted launch-failure reviews in which they offered recommendations that enabled China to improve the reliability of its rockets. The report said the advice was not only illegal but deliberate. "Loral and Hughes deliberately acted without the legally required license, and violated U.S. export laws," the report concludes in one of many references to illegal actions. Moreover, the report said, Loral and Hughes disclosed their unlicensed activities to export-control officers only after they were contacted by U.S. government licensing officials who demanded an explanation for their conduct. Officials at Loral and Hughes have denied any wrongdoing. Bernard L. Schwartz, chief executive officer at Loral, was the Democratic Party's largest single donor in the 1996 election cycle. He personally persuaded Mr. Clinton to relax export controls on goods likely to advance China's nuclear missile force. Chung, who visited the White House 50 times, gave $366,000 to the Democratic Party between 1994 and 1996. He told the House Government Reform Committee in May that Mr. Luu said he was in contact with "some people from Beijing." He said Mr. Luu told him he had received money from Chinese officials "to take care" of Chung's legal expenses. He told the committee he "never acted as an agent for the Chinese government" and believed he was free to do with Gen. Ji's money anything he wanted. He said he gave $35,000 to the Democratic Party, using much of the rest for business purposes and to take care of Gen. Ji's son, who worked for Chung in California. The Washington Times, July 9, 1999 Russian Follies Russia Back in Favor with Investors Short memories, long odds The day after Russia rocked the world's financial markets last August by defaulting on its domestic debt, one foreign banker fumed that he would rather eat nuclear waste than buy Russian paper again. Less than a year later, foreign investors appear to have developed a taste for the radioactive. The prices of Russia's publicly traded post-Soviet foreign debt are rising. The equity market, which slumped by more than 90 per cent last year, is up 145 per cent in 1999, making it the best performing stock market in the world. Astonishingly, the finance ministry said yesterday it was even considering issuing new bonds - while investors are still trying to recoup a fraction of their money on the ministry's defaulted bonds, known as GKOs. Boris Berezovsky, one of Russia's most notorious oligarchs, has been able to offload 1 per cent of his shares in the Sibneft oil group this week to blue-chip European investors. Close your eyes and you could be back in those heady pre-crash days of 1997. Even some stockbrokers who are publicly plugging Russia's revival story are privately bewildered. "This is scary," says one foreign banker in Moscow. "The country has had a shot of adrenaline thanks to higher oil prices and the liquidity in global markets. But everything on the structural side is still a disaster." Markets, though, are often swayed as much by perceptions as realities. When the cataclysmic does not happen, the plain terrible can still hold some appeal. "The lack of bad news is in itself good news and a major positive for the market," explains Maxim Shashenkov, managing director of Alfa Bank. Many economists feared an explosion of inflation and a further rouble collapse were inevitable after Yevgeny Primakov took over as prime minister last September and brought several Soviet-era apparatchiks into government. Contrary to almost all expectations, the economic outcome proved far less malign. Instead of a sharp contraction of gross domestic product this year, Russia may even register some marginal growth. Investors certainly expected the worst from Victor Gerashchenko when he was reappointed head of the central bank in September 1998. But Mr Gerashchenko, once labelled the worst central banker in the world by Jeffrey Sachs, the Harvard economist, appears to have learned that excessive money printing is not a good idea. He has kept a relatively tight rein on monetary policy and preserved the rouble within a stable trading range. Yuri Maslyukov, the Communist MP and former head of Gosplan, the Soviet state planning agency, who was put in charge of the economy, soon dropped most of his early notions of pumping government money into industrial projects. By the time he was dismissed in May along with Mr Primakov, Mr Maslyukov was chiding the International Monetary Fund for its "socialist" recommendations. The IMF was urging the government to raise additional tax revenues from the oil companies to increase pensions and wages to the poor. Much of the credit for this turnaround in the cabinet's thinking lies with Mikhail Zadornov, Mr Primakov's finance minister and now first deputy prime minister. He persuaded his colleagues that the inflationary route out of Russia's problems was a cul-de-sac. His other achievement was to bring a semblance of stability to Russia's rickety budget through a mixture of hard work, luck, brutality, and some sleight of hand. As a result of its default on its $40bn domestic bond market and its $100bn of Soviet-era debts, Russia drastically reduced its debt servicing costs this year. Moreover, the surge in international oil prices has had a startling impact on the country's trade balance and tax revenues. Troika Dialog, a Moscow-based investment bank, estimates that Russia was earning $21.5m a day in oil revenues while the price for Brent crude languished below $10. As a result of the rise in the oil price to $18.61, and a switch from domestic to foreign sales, Russia is currently earning more than $40m a day. The government has also kept the spending side of its budget under control by allowing wages and pensions to lag behind inflation. That has made poverty worse - more than a third of the population is trying to live on less than $38 a month - but it has also helped the government reduce its payment arrears. It appears that workers and pensioners are happier to be paid on time - even in devalued paper - than to wait weeks to receive a higher real sum. These policies have allowed inflation to remain relatively low, the rouble steady, and the budget more or less balanced. As one western finance official says, Russia may have stumbled upon a viable - if massively sub-optimal - "solution" to the country's most glaring macro-economic woes. The irony is that all this has happened in the absence of a formal IMF programme, giving additional ammunition to those who argue that foreign financial support has only frustrated the adoption of sound economic policies in Russia. In the run-up to parliamentary elections in December, politicians are already scrambling to take the credit for this "success". Earlier this week, Anatoly Chubais, the liberal former first deputy prime minister, trumpeted the arrival of economic growth in Russia but claimed that the left-leaning government of Mr Primakov deserved no praise. "The thanks for this, without doubt, should go to the previous government of [Sergei] Kiriyenko," said Mr Chubais. "Economic growth is the direct consequence of the rouble's devaluation of August 17." Infuriated opponents asked why Mr Kiriyenko's government had blown billions of dollars in a failed defence of the rouble if the benefits of devaluation had been so obvious. But there is little dispute that the devaluation has transformed the competitive position of a large part of Russian industry. A recent survey of business managers found that 75 per cent believed the current economic conditions were favourable. Russia's inefficient producers may still make basic, unattractive goods, but everything sells at a price. Given the scale of the devaluation, which has made many imports unaffordable, it is surprising that they are not doing even better. Exports of many raw materials, such as oil, timber, metals, and chemicals have climbed strongly, providing a cash and profit boost to many of Russia's biggest industrial groups. At the same time, domestically produced goods have begun to replace more expensive foreign imports on shop shelves. The proportion of imports in retail sales has fallen from 49 to 30 per cent. The big question is whether this flickering economic activity amounts to the beginning of a long-term recovery. There are those who suspect that the jump in share prices is nothing more than what market traders call a dead cat bounce. Already, there are signs that the benefits of devaluation are weakening and industrial output is tapering off. The government faces a dilemma in deciding how to manage the exchange rate. Some economic advisers are urging the government to allow the rouble to depreciate further in line with inflation - the policy successfully pursued by Poland in its early reform years. A stronger rouble may help the government bear down on inflation, they argue, but it would also kill off the fragile recovery in industrial output. The markets are assuming there will be a real appreciation of the rouble later this year, which will make debt servicing easier and increase the purchasing power of the electorate just ahead of the elections. At present, the government is paying its foreign debts out of central bank reserves. It is therefore desperate to conclude a deal with the IMF this month enabling it to roll-over maturing loans. Even though Russia has defaulted on a large portion of its debt, it is committed to paying $10bn next year, equivalent to about 40 per cent of projected budget revenues. The second problem is whether the budget stabilisation is sustainable as the political temperature rises in the electoral season. Many economists warn that such a fierce compression of social spending - with pensions and salaries lagging inflation - might backfire against the government later this year. The real determinant of Russia's longer-term economic future is likely to be how quickly the government can complete the desperately needed structural reforms - which it failed to pursue throughout the 1990s - to encourage investment. "Establishing the rule of law and good corporate governance, pressing ahead with bankruptcies, introducing a tax code and a proper banking system, and reducing kleptocracy - these are the real issues the government needs to address," says Charles Blitzer, a former World Bank economist in Moscow who is now chief international economist at Donaldson, Lufkin & Jenrette, the investment bank. "Russia may not have fallen into an inflationary and economic abyss last fall but I do not yet see any evidence of a strong, sustained recovery," he says. President Boris Yeltsin promised that his newly appointed prime minister, Sergei Stepashin, would vigorously pursue just these types of structural reforms. But it looks less likely by the day that the government will want to antagonise powerful corporate interests that will finance the forthcoming election campaigns. The lingering hope is that a newly elected president, with a fresh political mandate and international financial support, may begin to tackle these challenges next year. The danger is that in the absence of structural reforms, Russia may only recover to stagnate. The Financial Times, July 9, 1999 World Trade Order Japan Supports China in WTO Bid Now, about North Korea . . . BEIJING - Japan and China are set to announce a bilateral agreement on China's bid to join the World Trade Organization after Prime Minister Keizo Obuchi of Japan meets his counterpart Zhu Rongji here Friday, a Japanese official said Thursday. A Japanese diplomat who arrived in Beijing on Thursday with Mr. Obuchi said a formal agreement would be signed during the one-day summit. An official at China's Ministry of Foreign Trade said the two countries ''reached agreements in most fields, and both sides are satisfied with the results.'' Observers called the announcement of the largely ceremonial deal an effort to add shine to what promises to be a lackluster summit. Japan wants China to pressure North Korea to halt further missile tests, but China appears reluctant to discuss the matter, Asian diplomats said. China, on the other hand, is still smarting from Japan's unwillingness at their last summit, in November 1998, to issue a written apology to the Chinese people for its aggression during World War II. Recent reports in South Korea have said that North Korea was building an underground missile facility 19 kilometers (12 miles) from its border with China. U.S. officials have also said that Pyongyang was preparing to follow up on its missile test near Japan last August with another launch. A Japanese official said that Mr. Obuchi would raise both matters with China. Asked why China did not appear eager to discuss the Korean issues, he said: ''That's a good question.'' Sources familiar with the WTO deal said Japanese negotiators had backed away from many of their market-opening demands - especially in the key areas of telecommunications, marketing and transportation - in order to reach some type of agreement with China. ''Mr. Obuchi has to get some fruits from this visit to China,'' a Japanese analyst said. ''He ordered his staff to step down from the negotiations and make the agreement.'' Although Japan is one of China's most important trading partners, the expected bilateral agreement between Tokyo and Beijing is more symbolic than substantive. China still needs the blessings of the United States and the European Union to enter the WTO. Meanwhile, the European Commission set out its official position Thursday for a round of world trade talks beginning in Seattle in November. Officials of the European Union executive body said it made little sense to negotiate lower tariffs if hidden barriers such as cartels distorted markets and made it impossible to expand trade. The EU will seek to extend globally accepted rules to a host of new areas including investment, banking and other services, and antitrust regulations, officials said. China's WTO negotiations with the West have been stalled since NATO bombed the Chinese Embassy in Belgrade on May 7. China pulled out of the talks, and its trade minister, Shi Guangsheng, has repeatedly said discussions would not be resumed until the bombing issue was resolved. Beijing has publicly rejected the U.S. explanation that the bombing was an accident. Chinese negotiators have stepped back from some of the commitments to reduce trade barriers they made during Mr. Zhu's trip to Washington in April. Some Chinese critics have said Mr. Zhu offered too much. Japanese officials hoped the agreement during the summit would ''keep the momentum'' for China's entry, the Japanese analyst said. If China does not join the WTO this year, its entry may be delayed for several years until the trade body completes the round of negotiations that begins in November. International Herald Tribune, July 9, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End Kris DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance�not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRL gives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credeence to Holocaust denial and nazi's need not apply. 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