Greece: Merkel and Sarkozy urge bail-out

The leaders of Germany and France have said that they want a new rescue package for debt-laden Greece to be agreed as soon as possible.

Angela Merkel and Nicolas Sarkozy were speaking after Greece's Prime Minister George Papandreou announced a cabinet reshuffle.

The changes include a new finance minister, Evangelos Venizelos.

Mr Papandreou wants to impose political stability as Greece awaits approval for the next tranche of bail-out money.

Mrs Merkel and Mr Sarkozy met in Berlin after a public disagreement between their governments over whether private investors should be forced to assume a greater burden to resolve Greece's debt crisis.

There had been calls in Germany that investors should allow Greece extra time to pay off debts and should be made to participate in future fundraising by the Athens government.

After the meeting, the two leaders said they agreed that any private sector involvement should be "voluntary" not compulsory.

It was unclear under what terms private investors might voluntarily take part in a Greek bail-out.

But the comments by Mrs Merkel and Mr Sarkozy were seen as a signal to banks and bondholders that they will not be made to incur losses on Greek debt.Mrs Merkel is facing a backlash domestically over Germany's huge financial contribution to European bail-outs.

France's big three banks - Credit Agricole, BNP Paribas and Societe Generale - are heavily exposed to the Greek economy.

This week, ratings agency Moody's warned it may downgrade the three French banks because of their exposure to Greece.
No 'credit event'

Mrs Merkel and Mr Sarkozy stressed that a "voluntary" extension of maturities of Greek government bonds held by private investors should be part of that solution in order to ensure market stability."There are worries that we want to cause a credit event," Mrs Merkel said. "We do not want that. This is about a voluntary participation."

Rating agencies and the European Central Bank had warned that imposing a rescheduling of Greek debt on bondholders would count as a "credit event" - a partial default by Greece - sending panic through financial markets and intensifying problems in Portugal, the Irish Republic and Spain.

The announcement from France and Germany eased tensions in financial markets.

After initially extending their week-long falls, Europe's main bourses recovered on Friday, with France's Cac 40 index up 0.6% and Germany's Dax index up 0.8% by mid-afternoon trading.In New York, the Dow Jones index climbed 0.6% in early trading.

A Spanish bond auction underlined the fears of contagion from the Greek crisis, with investors demanding a higher rate of return.

Although appetite for the issue was strong, the average rate demanded for the 15-year bonds was a euro-era high for Spain of just over 6%.

The yield on Spanish 10-year bonds is near an 11-year high, trading on the secondary market on Friday at 5.64%, just off the rate's peak of 5.70% on Thursday.
Financial lifeline

The new Greek finance minister, Evangelos Venizelos, will take over from George Papaconstantinou, and the move sparked a jump in Greek bank shares.

However, analysts were divided over whether the cabinet reshuffle would restore confidence.

The European Union's top financial official, Olli Rehn, has indicated that Greece is likely to get its next round of funds in July if Mr Papandreou's government can pass new budget cuts and privatisations before the end of the month.

Greece needs a 12bn-euro loan to avoid defaulting on its debts due for repayment over the next few months.

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Prayuth gives nod to target Pheu Thai [-Thai army is neutral???]

Army chief Prayuth Chan-ocha has given the green light to army officials to launch a war of words with the Pheu Thai Party's politicians who criticise the army's role.

At the same time, he has told high-ranking army officers he is ready to quit if the political pressure upon him becomes too great.

"Don't be worried. If they lambast me too much, pressure me too much, I'll just quit. I've already tried my best to do my job," an army source quoted Gen Prayuth as saying during the army's morning briefing session yesterday.

Gen Prayuth did not elaborate on which particular scenario he was talking about but army officials understood he was referring to the situation after the general election if Pheu Thai wins and becomes the ruling party.

Gen Prayuth fumed on Thursday over an alleged attempt by a Pheu Thai election candidate to obstruct the 315 anti-drugs task force's work in Bangkok, saying he would flood the area with soldiers to assist the government in its drug crackdown.

This drew fierce criticism from Pheu Thai Party politicians and supporters.

His angry outburst followed an incident in which Pheu Thai candidate and former MP Pairoj Isarasereepong and his aides allegedly intimidated three military members of the task force who were conducting a search for drugs at Sap Charoen estate in Nong Chok district on May 23.

The source added the army chief had also encouraged all army officers to counter allegations and criticism of the military by the Pheu Thai Party.

Nevertheless, he told the officers not to name anyone but only refer to them as "good guys" and "thugs".

Chaturon Chaisaeng, a banned politician from the dissolved Thai Rak Thai Party, criticised Gen Prayuth on his Twitter page yesterday, saying the army chief's remarks on Thursday about the 315 task force were inappropriate.

"He seems to have forgotten that he is the army chief, not a gang leader who will not let anyone offend," wrote Mr Chaturon.

Mr Chaturon also asked whether Gen Prayuth and the army were intent on cracking down on drug traffickers as they claimed, or actually trying to harass certain election candidates.

"His acts were seen as intimidating candidates and damaging the election atmosphere and this could lead people to view him as not neutral," Mr Chaturon said.

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China holds 3-day military exercises near Spratlys

Saturday, June 18th, 2011
Philippine Daily Inquirer

BEIJING—In moves likely to raise tensions with its neighbors, China staged three days and nights of military exercises in the South China Sea and, state media said, planned to boost its offshore maritime patrol force in one of Asia’s most politically sensitive regions.

The drills involved a total of 14 Navy patrol boats, landing craft and submarine hunting boats, along with two military aircraft, the official People’s Daily newspaper said.

It said the exercises were aimed at refining antisubmarine, replenishment and island defense capabilities in order to better respond to any future sudden crisis.

The vast South China Sea—called West Philippine Sea by Manila—and its island groups have been described as a potential flashpoint, with China, Vietnam and the Philippines trading diplomatic barbs recently over overlapping territorial claims.

Taiwan, Malaysia and Brunei have also laid claims on islands in the disputed waters, believed to hold vast reserves of oil and gas.

Taiwan’s Navy said this week it would proceed with scheduled patrol missions in the South China Sea, sending a naval fleet to Taiwan-controlled Taiping, the biggest island in the Spratlys, one of the disputed island chains.

Beijing has pledged it will not resort to force to resolve the territorial disputes, after the Philippines this week sought help from the United States.

Near the Spratlys

The expansion of the China Maritime Surveillance Forces, a paramilitary law enforcement agency that patrols China’s territorial waters, was unveiled two days after the country sent its largest civilian maritime patrol ship to the South China Sea.

Vietnam’s Navy conducted live-firing exercises on Monday after accusing Chinese boats of disrupting oil and gas exploration in its waters.

The People’s Daily said naval forces participated alongside units from nominally civilian agencies that are tasked with overseeing China’s interests at sea.

The paper did not say exactly when or where the exercises took place, although a graphic accompanying the story implied they were held near the Spratly Islands, where China, Taiwan, the Philippines and Vietnam maintain garrisons.

Haixun-31

In addition, the military’s official Liberation Army Daily newspaper reported that an exercise was held on June 6 in which amphibious vehicles—most likely tanks—were successfully off-loaded from ships onto a South China Sea island.

No other details were given and it was unclear whether the June 6 exercise was among those the People’s Daily reported.

China claims the entire South China Sea and all its island groups, but maintains garrisons on only a few atolls, islets and partially submerged coral reefs.

The report of the exercises follows the dispatch on Wednesday of one of China’s largest maritime patrol ships on a first-ever visit to Singapore, a voyage in which it will transit the South China Sea.

The Haixun-31 was due to stay in Singapore for two weeks of exchanges on search and rescue, antipiracy and port management operations.

Beach landing

According to the Global Times, 14 Chinese Navy vessels staged drills in waters near China’s southern tropical island of Hainan, including antisubmarine maneuvers and the beach landing of troops.

The exercises were aimed at “defending atolls and protecting sea lanes,” reports said.

The China Maritime Surveillance Forces, meanwhile, will be bolstered from the current staff of 9,000 to 15,000 personnel by 2020, the official China Daily reported.

The force falls under the State Oceanic Administration, an agency that supervises China’s coastline and territorial waters.

The patrol fleet will have 350 vessels by 2015 and 520 by 2020, the report said, citing an unnamed senior China Maritime Surveillance official. It will also have 16 planes by 2015.

Foreign intrusions

The moves show Beijing’s resolve to protect its “maritime rights and sovereignty” which it says have been increasingly violated amid a rising frequency of disputes.

“There have been an increasing number of intrusions by foreign vessels and planes into Chinese waters and airspace in recent years,” the China Daily said.

It said that the maritime surveillance forces had logged 1,303 foreign ships and 214 planes intruding in 2010, compared to a total of 110 cases in 2007.

Tensions in the South China Sea have risen in the past month on concerns China is becoming more assertive.

Drills in the Pacific

China’s territorial claim is by far the largest, forming a large U-shape over most of the sea’s 1.7 million square kilometers (648,000 square miles), including the Spratly and Paracel archipelagos.

This week, Beijing warned outside countries not to step into the dispute, after Vietnam said other countries, including the United States, could help defuse the tension.

China has accused Vietnam of violating its claim to the Spratlys and nearby seas. China calls the islands the Nansha group.

Beijing said last week it would hold naval drills in June in the western Pacific Ocean and the Navy has done little to disguise plans to launch its first aircraft carrier. AP, AFP, Reuters

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South China Sea: China shows more muscle in face-off with Vietnam

June 17, 2011
By Michael Martin
International Business Times

Although China has promised that it won't use force in the mounting face-off with Vietnam, the People's Republic is taking measures to show muscle in the disputed South China Sea.

First there was maritime patrol ship that Beijing sent to the South China Sea from the southern Chinese province of Guangzhou yesterday.

Where there's one, China plans to add hundreds more. China Daily is reporting that the China Maritime Surveillance force plans to beef up its serves with over 520 vessels by 2020.

Still, Chinese Foreign Ministry spokesperson Hong Lei maintains that China will "not use force" in the growing dispute with Vietnam and five other nations and territories for sovereignty for the valuable water space.

It is still unknown just how much natural gas and oil is beneath the South China Sea's seabed.

Some Chinese sources estimate it's over 200 billion barrels, roughly 80 percent of Saudi Arabia's oil reserves, but others say that's an extreme exaggeration.

The benefits may be unclear, but Beijing can calculate how much its mounting face-off with Vietnam over the sea space would cost the Chinese economy.

At face value, the price tag is US $12.7 billion-- the amount of Vietnam's trade deficit with China in 2010, according to Vietnam's General Statistics Office.

That's seven percent of China's trade surplus from last year, a small but significant chunk of the country's earnings.

Still, analysts say all-out war would mean a much more complicated calculation of losses.

Responding to the six-hour-long live-fire drills Vietnam conducted in the South China Sea-- one hour for each of the countries and territories laying claim on the waters, China's Foreign Ministry spokesperson Hong Lei announced that China "won't use force" to respond to what it sees as offensives in an area where the People's Republic claims to have "indisputable sovereignty."

"I think that economics definitely had something to do with the announcement," said Nariman Behravesh, chief economist at the IHS Global Insight, a leader in economic analysis, on call from London.

It has growing trade links with all Asian economies, especially the countries interested in Spratly," Behravesh said, referring to the disputed islands, located in the South China Sea, closer to the Philippines.

Analysts believe that despite the ongoing deluge of strongly worded condemnations, accusing Vietnam of threatening Chinese autonomy in the region, China is likely to stand by its promise of detente.

"There is a way to measure how likely things are to lead to military confrontation," said Dr. Donald K. Emmerson, Director of the Southeast Asia Forum at Stanford University.

Emmerson attended the 2011 Shangri-La dialogue in Singapore, after Chinese ships cut cords on PetroVietnam's survey ships late last month. Then, China's tone was conciliatory, until another subsequent attack on June 9, when another Chinese vessel cut cords on another PetroVietnam ship, in what Vietnamese Foreign Minister Nguyen Phuong Nga said was a "premeditated" offensive.

"China relies increasingly on the import of fuels from the Middle East. Those fuels come from the Malacca Strait into the South China Sea. If China were to wage a war in the primary transit area for fuels, that would be an unwise decision," Emmerson said,

That's one reason not to go to war over the South China Sea.

Another reason for the Southeast Asian nations and territories laying claim to the sea-- there are six in total, including Vietnam, the Philippines and Taiwan-- not to engage China militaristically would be to preserve geopolitical stability in the region.

"The border states realize that a full-scale war with tankers being blown up at sea would be so dangerous to the countries concerned," he said, explaining that the international economy would be greatly shaken by the disruption of the key shipping route.

Half of the world's merchant fleet by tonnage sails through South China Sea every year, Emmerson said.

"That's a huge artery of global trade. Although it's true that the South China sea is [the] main passage way, there are more costly alternatives, moving eastward through Philippines and Indonesia."

As far as solutions, both Emmerson and Global Insight's Behravesh see cooperation in China's future with its ASEAN business partners to the South.

And there's precedent.

Emmerson explained that in July 2005, a joint marine seismic undertaking was founded by China, the Philippines and Vietnam -- the signatories included companies like PetroVietnam -- not the foreign ministers or prime ministers. It was in the name of joint work between the companies -- to begin finding out how much oil was beneath the seabed.

"They at first wanted joint exploration and then joint exploitation.Then the project lapsed in 2008," he added.

Where China clearly stands to benefit from an increased oil supply in its endless drive to fuel its growing economy, Vietnam also stands to benefit.

"I certainly think Vietnam has the capability through joint ventures to exploit the reserves," said Behravesh, explaining that a win-win partnership on the oil could help cool geopolitical heat in the region and allow for the joint exploitation of the region's resources

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In Libya, Delusion Makes a Last Stand

FURY Despite the repressive regime, protesters in Benghazi, Libya, set a book with an image of Col. Muammar (Scott Nelson for the New York Times)

June 18, 2011
By JOHN F. BURNS
The New York Times

TRIPOLI, Libya — The chess match last week between Col. Muammar el-Qaddafi and a visitor from the remote steppe of southern Russia who had traveled to Tripoli to promote chess in Libyan schools was a case of the oddest of couples, at the oddest of times. With NATO bombs and missiles pounding the Libyan capital and Colonel Qaddafi venting on Libya’s airwaves only days before that he would choose “death before surrender, it captured something quintessential about the Libyan leader and the oddball qualities he has displayed in decades of repressive one-man rule.

With his days in power now surely numbered — by popular revolt, by the NATO attacks and by escalating defections from his elite — Colonel Qaddafi seems fated to end up as little more than a footnote among our age’s dictators. Libya is a country of only 6.5 million people, oil-rich but still in many ways dirt-poor. If it has punched above its weight in the 40 years of Qaddafi rule, it is largely because of his pattern, discarded only in recent years, of promoting terrorism abroad. The pattern included his early embrace of Carlos the Jackal, the Palestinian terrorist Abu Nidal and the I.R.A., as well as the bombing of Pan American Flight 103 over Lockerbie, Scotland.

Still, to see Colonel Qaddafi in his oversize sunglasses laboring clumsily over a chessboard with Kirsan N. Ilyinov, president of the World Chess Federation and a fervent believer in cosmic aliens, and then beaming as he was offered a diplomatic draw, was to be reminded of other moments of illusionist denial by autocratic rulers at moments of the most desperate chaos beyond their palace gates: Nero, fiddling in Rome; Stalin, reportedly locked in seclusion in the days after Hitler’s tanks invaded; Mao Zedong carousing with concubines as Red Guard zealots convulsed China with their puritanical brand of Maoist egalitarianism.

To sojourn in Tripoli is to travel deep into a world of illusionism and deceit. This is a world where much of the evidence available to an outsider suggests that Colonel Qaddafi, the “Brother Leader” and “Revolutionary Guide,” has led his followers into a narrowing cul-de-sac; where few if any with access to the colonel, by their own accounts, seem ready even to whisper that the game may be up; a world where a battalion of official spokesmen, inured to a lifetime of wrenching reality into the shapes commanded by propaganda, seem intent on turning truth on its head — a world, in short, where a leader beset by a murderous civil war thinks it normal to spend his Sunday afternoon playing chess.

For all that, the Qaddafi dictatorship is unusual for its lack of rigor and efficiency. In Libya, at least in the two-thirds of the country not yet lost to the rebels, a dictatorship that has all the standard instruments of suppression and fear seems in some measure to have lost the power to command the fealty of its citizens. This seems true not just in areas controlled by the rebels, and not alone in the areas of Tripoli like Tajura, Souk al-Juma and Feshloom that were fountainheads of the uprising’s early weeks and where an active underground survived the sustained use of live fire against protesters in February and early March. Now it seems broadly true among the population at large.

Over several weeks in Tripoli, it has been commonplace to encounter, at random, Libyans ready to speak openly of their contempt for Colonel Qaddafi, and enthusiastically about NATO’s ability to bomb targets associated with the most sensitive strongholds of the government. To be sure, there were others, in many places, who offered a ritual defense of him, and a loathing of the rebels. But the much more common response — in bookshops and cafes, in hospitals and hotels, and in the mosques and souks that crowd the winding alleyways of the old Ottoman heart of Tripoli down by the city’s ancient port — was to hail the day when the Libyan leader would be consigned to what Trotsky called the dustbin of history.

There was, for example, an educated, English-speaking young man, Muhammad (not his real name, for his own protection), who met this reporter as he sauntered along an alleyway in the Medina, not far from the hole-in-the-wall store where he sells vegetables while hoping for a better job. Smoking a cigarette, he reacted dismissively as a pickup truck packed with pro-Qaddafi demonstrators drove past on one of the few drivable passageways through the district, shouting the Libyan leader’s name, waving placards bearing his image and hoisting automatic rifles in the air. “They pay them 10 dinars a day to do that,” he said. “It means nothing.” Asked what outcome he would favor, he smiled. “Like Martin Luther King, I have a dream, a dream for Libya,” he said. “Victory is coming. With Qaddafi gone, everything will be O.K.”

On other days, in the atrium of an old Ottoman building, among caged songbirds, men pulling on shisha pipes and playing fast-paced games of baccarat spoke almost casually of their eagerness for change. Over cups of Turkish coffee and glasses of fresh-pressed lemonade, they voiced their anger for Colonel Qaddafi, and their bitterness over the fortune in oil money they said he had squandered while leaving many Libyans virtually destitute. They even spoke of their discomfort at having their country identified with a leader renowned for his earlier links to terrorism. “Before him, we were a proud people,” one man who has traveled to America said. “Now, when you show a Libyan passport at a foreign airport, people look at you with an air of concern. And all this because he bombed foreign airplanes, and killed many people overseas. He’s a destructive character.”

What was surprising in these encounters was that the Qaddafi government has shown from the start its readiness to deal violently with its opponents. Bookshelves of human rights reports, and testimonies from survivors, tell a story of Colonel Qaddafi as a man who might well have studied the grimmest practices of other dictators who built an elaborate machinery of fear to suppress dissent. For decades, Libya has had its ubiquitous secret police, its archipelago of Abu Ghraib-like prisons, and a chilling narrative of “disappearances,” extrajudicial murders and summary executions, often after torture. The victims number in the thousands.

The practices were eased, or at least more carefully obscured, after the American-led invasion of Iraq in 2003, when Colonel Qaddafi apparently decided that the writing was on the wall. With the overthrow of Saddam Hussein sounding a tocsin in his ears, he set out to mend fences with the West. Libya abandoned its secret programs to develop nuclear and chemical weapons and accepted international supervision of their dismantling; Colonel Qaddafi earmarked up to $2.7 billion in compensation to families of the 270 victims of Lockerbie; de-nationalization and foreign investment became watchwords; and Libya’s vast oil reserves were reopened to a competitive scramble by Western oil companies.

But just how insubstantial these measures were, in terms of fundamental change in the regime’s rule, became evident from the moment that Libyans rose up in mid-February, triggering the civil war that continues now. A new report prepared by an international panel of legal experts for the United Nations Human Rights Council, obtained in draft form by The New York Times, chronicles in painful detail abuses committed by both sides in the civil war.

But for all that it condemns the rebels, the report deals far more harshly with the government, chronicling a pattern of “shoot to kill” attacks that left scores of corpses among protesters, secret police dragnets in which hundreds of people were detained or “disappeared,” and the mournful legacy of posters pasted by families on public buildings, courthouses and hospitals seeking any information on the fate of loved ones — posters that, in Tripoli, have been routinely removed or defaced by the government. The document cites a televised speech in late February in which Colonel Qaddafi described the protesters as “rats” who needed to be executed, and an address by Seif al-Islam, his son, vowing to “fight to the last man and woman and bullet.”

In the face of this brutality, what is puzzling is the persistence of open dissent on the streets of Tripoli. One theory is that the government’s agencies of repression have been forced to accept with smoldering frustration what they would previously have smothered, because they are strained to the limit by the revolt and by defections that have caused hundreds of thousands of Libyans to flee the country.

Another is that a government that set out in the past decade to cloak the old dictatorship with a new and more appealing facade has been hoist with its own petard, with Libyans in large numbers deciding for themselves that they will no longer accept the old repression, and that they no longer need even to pretend to swallow the half-baked political theories in Colonel Qaddafi’s Green Book, which sets out a “third way” approach to governance that does away with any pretense of Western-style democracy in favor of “popular rule” through grass-roots committees that turned out to be a formula for one-man rule.

If so, it is a far cry from the grim landscape of George Orwell’s “1984,” where the totalitarian state has so deeply repressed the human instinct for liberty that it has made impossible any wresting back of power. In Libya, as elsewhere in the dictatorships of the Arab world, just the opposite seems to have been proved true. But if so, it is a message that has yet to register with the officials who speak for the government, who brief foreign reporters every day with a through-the-looking-glass view of reality that has government forces on the brink of final victory over a few weak pockets of rebel resistance, NATO as terminally discredited and hated by Libyans for its targeting and killing of civilians, and Colonel Qaddafi as a leader beloved of the overwhelming majority of Libyans.

It is a gospel that finds perhaps its most passionate disciple in Moussa Ibrahim, the government’s chief spokesman, a British-educated, English-fluent loyalist who has ties to Colonel Qaddafi through their common membership in the small Qaddafa tribe. At his regular news conferences for foreign reporters, he routinely describes the colonel as Libya’s only hope of resolving the conflict, and of guiding it to the electoral democracy that he is said to have accepted now as the only way forward. “People are rallying behind the leader,” Mr. Ibrahim said at a news conference last week. In the new world of threat in which Libyan loyalists like Mr. Ibrahim live, it seems, there is still only one essential reality, the dictatorship of Colonel Qaddafi, and all other facts must be bent, at whatever cost to credibility, to keeping him in plac

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