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  • Closing the Gulags

    Newsweek | Feb 9, 2010 12:03 PM

    By Anna Nemtsova

    Change is finally coming to Russia's notoriously harsh jails. Last month President Dmitry Medvedev announced a major prison overhaul after public outrage erupted over a young lawyer's death from lack of medical treatment while he awaited trial. Russia's system is plagued with the world's second-highest incarceration rate (some 900,000 people at present), and conditions have changed little since Stalin's time. Among the reforms, Medvedev plans to punish minor crimes with house arrest or bail, to soften sentences for first-time offenders and house them separately from career criminals, and to close 755 of the country's most decrepit prison colonies.

    For almost half of Russia's incarcerated, though, the reforms will make life much harder. Closing rural camps will concentrate 400,000 repeat offenders into overcrowded central prisons. Their living quarters will change from large barracks to cramped four-person cells. Most of them will lose their rights to work, study, and conjugal visits. One prisoner's "reform" is about to become another's gulag nightmare.


  • Voices of Reason Grow Louder In Iran

    Maziar Bahari | Feb 9, 2010 09:02 AM
    This week, many Iranians will mark the 31st anniversary of the overthrow of the shah with street demonstrations against a regime seen by some as illegitimate. While the Revolutionary Guards have vowed to deal harshly with protesters, the unrest has grown so bad that fractures are now present within the security establishment itself, and some of the Islamic Republic's most ardent defenders are now pushing the regime to moderate its position. According to multiple high-level sources, some former senior Guards commanders who still maintain ties to the organization have begun quietly urging Supreme Leader Ayatollah Ali Khamenei to change his ways. The group includes several powerful sitting officials, such as the mayor of Tehran and the speaker of Parliament. These men, no moderates, are reported to be politely pressing Khamenei to restrain his security forces and muzzle his fiery acolyte, President Mahmoud Ahmadinejad. The ex-Guards are also meeting with opposition leaders to search for a compromise and urge them to find ways to speak out without threatening the regime. So far, there's been no clear sign that Khamenei is willing to listen. But when the shah started ignoring his advisers, the result was revolution.
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  • Venezuela's Oil Problem

    Daniel Stone | Feb 9, 2010 06:40 AM

    Hugo Chávez had a crummy January. Hammered by a slugging economy and 24 percent a year inflation, the Venezuelan president prepared for his 11th anniversary in office with 61 percent of his countrymen believing they’re on the wrong path. But there ought to be at least one opportunity for Chávez’s salvation: his country’s plentiful oil reserves. A study by the U.S. Geological Survey last week found the Orinoco oil belt to have almost twice as much black gold—513 billion barrels in full—than previously thought.

    What would be a boon to most other countries has become a shame for Chávez, who seems to have shot himself in the foot.

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  • Japan Doesn't Get it

    Katie Baker | Feb 8, 2010 09:01 AM

    One of the most striking turns in the fall of Toyota is how the recall scandal is playing with much of the Japanese public: as a bewildering American frenzy. Yes, they are concerned about the recall, but many assume Americans must have some malign reason for kicking up a fuss, when in fact recalls happen all the time. Some read the recommendation from U.S. Transportation Secretary Ray LaHood to Toyota drivers--"stop driving them"--as proof of a Japan-bashing Washington conspiracy. They are quick to point out that the faulty brake pedals were actually made in Indiana, not Japan. And until very recently, at least, they seemed convinced that the frenzy would fade away without lasting damage to Japan. Look at BMW: its 2008 recall of 200,000 cars for possible airbag failure left no marks on Germany's engineering reputation.

    Note to Japan: you don't get it. Recalls for minor technical problems are common, but recalls of millions of vehicles for problems that can produce nightmarish, fatal crashes are not. Toyota's recall of 6.6 million cars is the sixth largest in U.S. history so far, and one of the scariest. Most automakers have learned to handle these PR disasters forthrightly, but Toyota CEO Akio Toyoda performed a duck-and-denial routine not seen since Ford tried to evade responsibility for exploding Pintos in the 1970s before he belatedly apologized last week. Americans have also long since given up on Japan bashing, have lionized Toyota as the ultimate in manufacturing quality, and have welcomed Japanese plants, even in the Deep South. Toyota would never have conceded, before the recall, that its vaunted quality controls did not cover its U.S. operations, so it's a bit disingenuous to blame "American made" parts now.

    This is a global company. It needs to take global responsibility. The investigation has targeted not only those Indiana-built accelerator pedals, but floor mats and computer systems, too. The U.S. National Highway Traffic Safety Administration is still investigating. And now Japanese officials are beginning to investigate, and sentiment in Japan seems to be turning, perhaps a bit too late. Gene Grabowski of Levick Strategic Communications, which advises firms facing recalls, calls this "the worst-handled auto recall in history," and that's saying something. The exploding Pinto became a symbol of the U.S. quality problems that allowed Toyota to flourish in America, and the runaway Prius may mark another turning point, this one less auspicious for Japan.


  • Kashmir Is the Key to Peace in Afghanistan

    Newsweek | Feb 7, 2010 09:00 AM

    By Jonathan Tepperman

    Sometime in the past year, secret talks between India and Pakistan over Kashmir--which made great progress in 2008 before Pakistan's strongman, Pervez Musharraf, was ousted--were restarted, say U.S. and Indian sources. If successful, the negotiations would represent a huge breakthrough for the subcontinent. But the payoff would stretch even further. Solving Kashmir is looking increasingly essential to another conflict: Afghanistan. That makes the Obama administration's reluctance to engage with the issue hard to fathom.

    To understand the link between Kashmir and Kabul, remember that the U.S. can't defeat the Taliban without help from Pakistan, which continues to shelter (and, allegedly, support) the Afghan insurgents. But that won't change until Pakistan resolves its rivalry with India. It is fear of India that keeps Pakistan from pulling enough troops off its eastern border to police the Afghan frontier (which Taliban members cross at will), and that explains Islamabad's desire to turn Afghanistan into a vassal state (giving Pakistan "strategic depth" in case of an Indian invasion). Only taking Kashmir--the main bone of contention with India--off the table could change this.
    Given that fact, you'd expect the Obama team to be pushing the peace process forward. Instead, it has avoided the issue, largely because India erupts with rage whenever the U.S. tries to get involved. Thus Richard Holbrooke, Obama's AfPak envoy, says the U.S. won't consider stepping in.

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  • Unemployment Rate Drops Unexpectedly. Time to Celebrate? Nope.

    Newsweek | Feb 5, 2010 12:02 PM
    By Nancy Cook

    The national unemployment rate dropped this morning from 10 percent to 9.7 percent. That’s good news, right?

    Well, some aspects of the new data are cause for optimism. The federal government, health care, retail, and temporary services continued to add jobs in January. The average workweek for employees increased to 33.9 hours, and as David Leonhardt at The New York Times wisely points out, the economy lost an average of 35,000 jobs over the last three months—a decrease from the previous average of 700,000 job losses per month in the spring of 2009.

    So why aren’t we celebrating? The unemployment rate remains awful for men (10 percent), teenagers (26.4 percent), African-Americans (16.5 percent), and Hispanics (12.6 percent). The number of people who have been unemployed for 27 weeks or more has increased to 6.3 million, and in January, 1.1 million workers just stopped looking for work, compared with the 409,000 people who found themselves in this situation one year ago.

    The results are mixed, in part, because the unemployment data are confusing. The unemployment rate dropped to 9.7 percentbut, at the same time, the economy lost 20,000 jobs. What? This discrepancy happens because the BLS is based on the results from two different surveys: the Current Population Survey and the Current Employment Statistics, according to the blog Calculated Risk. NPR’s Planet Money has a good explainer of it here.

    It’s also hard to know how to feel about this slight drop in unemployment because, over time, the rate has remained so persistently high. Economists keep telling us the economy is rebounding and the big banks are busy handing out billions of dollars in bonuses, but most Americans in their day-to-day lives know friends and neighbors who are un- or underemployed, and even those lucky enough to find work still suffer from job insecurity and stagnant wages.

    There’s no guarantee that the unemployment rate will continue to drop. For this to happen, Leonhardt points out, the economy would have to add 150,000 jobs per month. That’s a tall order, even if the Senate manages to pass a jobs bill next week. More likely, economists predict the unemployment rate will rise again—most likely, as The Wall Street Journal points out, into the double digits.

  • In Iran, Inflation Could Threaten Regime

    Babak Dehghanpisheh | Feb 5, 2010 06:14 AM

    Iranian President Mahmoud Ahmadinejad continues to face protests at home and the possibility of international sanctions abroad, but the biggest threat to his rule is something more banal: inflation. Iran's official inflation rate has now reached 13.5 percent, but the actual rate could be twice as high. And it looks likely to get worse. Come spring, the government plans to stop subsidizing basic goods and will instead give cash directly to poor families. That plan, as well as Ahmadinejad's push to give out more loans, will expand the cash supply and likely drive inflation higher still. Efforts to combat rising prices have so far failed. Two weeks ago the Finance Ministry capped daily bank withdrawals at $15,000. According to reports on opposition Web sites, several banks in Tehran and Isfahan were subsequently swamped by desperate customers, and in at least one case police had to be called in. 

    Political protesters plan a large rally on Feb. 11, the anniversary of the 1979 revolution. If they're joined by ordinary Iranians fed up with the dismal economy, it may be a case of history repeating itself.

     


  • Seoul Kicks Off Its Year of Design

    Katie Baker | Feb 4, 2010 06:08 AM

    Seoul has long been known for its daring, innovative business culture, but the look of the place, which was drab and generic, never matched this ambition. Now 2010 may be the year that changes. In early February the city is set to unveil the first of three artificial floating islands on the Han River that will serve as host to the Seoul International Business Advisory Council and the G20 meetings this fall. The $83 million project is the latest step in Mayor Oh Se-hoon's initiative to reshape the city and turn it into a mecca for design talent, all in time for Seoul's tenure as World Design Capital. The city beat out notable rivals such as Singapore and Dubai for the biennial title--unanimously bestowed by a jury at the International Council of Societies of Industrial Design (ICSID)--and will celebrate the honor with a slate of competitions, and exhibitions culminating in a 21-day design Olympiad in September and October. 

    The city will also unveil its $98 million Dongdaemun Design Plaza this year, a futuristic wavelike edifice designed by British architect Zaha Hadid that will serve as a hub for visiting and local artists. This comes on the heels of recent adventurous renovations such as the Banpo Bridge's Moonlight Rainbow, a massive fountain that turns into an illuminated waterfall show after sunset, and the Hangang Renaissance, which is replacing the riverfront's concrete embankments with lush promenades.

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  • Venezuelans Turn Sour on Chavez

    Mac Margolis | Feb 2, 2010 04:20 PM

    Wednesday marks Venezuelan President Hugo Chávez’s 11th year in office. By rights, it ought to be a gala occasion, and no doubt, the red shirts and flags of Chavismo will be in evidence. After all, for most of this decade the man who launched a Bolivarian revolution, inspired by the 19th-century would-be Latin liberator Simon Bolívar, has been the people’s choice. Now the people are not sure.

    Lately, the Bolivarian Republic of Venezuela has distinctly soured on its showman president. A new survey by Hinterlaces, an important, independent pollster in Caracas, shows just how badly. The survey canvassed 903 people by landline and cell phone Jan. 25-28, just as the country was hit by rolling blackouts, a new wave of government takeovers of private businesses, and clashes between police and demonstrators following Chávez’s order to shut down the country’s popular cable station RCTV. It’s not pretty:

    • 61% of those surveyed believe the country is on the wrong path.
    • 78% disagree with the decision to take RCTV off the air.
    • 64% say that the government’s crackdown on Venezuelan media is a threat to freedom of expression.
    • 61% say they back the student-led demonstrations.
    • 75% disapprove of the official energy-rationing policy.
    • 61% condemn the recent expropriation of a supermarket chain.

    More than a setback, this is a reversal of fortune on a massive scale. Over the years, Chávez’s critics have tarred him with every brush: “demagogue,” “despot,” “bluff artist,” and “Midas in reverse” are just some of the names he’s been called. Yet even the fiercest challengers have had to bow to the polls. In test after test, including elections, recall votes, and referendums, never mind opinion surveys, Chávez has routinely come out on top while his foes and challengers have rarely been more than a noisy minority. It’s an enviable record for any leader and proof positive─claim the Chavistas─that the Bolivarian revolution is democracy at work, built on the ballot box, not the boot heel.

    Defiant, Chávez challenged his detractors to a political duel, daring them to try a recall vote. Over the last decade, he has survived them all. Would he now? According to the Hinterlaces poll, if the nationwide legislative elections scheduled for this September were to be held today, 34 percent of Venezuelans would vote for independent candidates, 26 percent would vote for the opposition, and only 28 percent would vote cast ballots for Chavistas (12 percent said they didn’t know).

    In the last couple of weeks, some of his closest aides have been fired or demoted, while others have simply quit, including the vice president and the head of the state-run Banco de Venezuela. Recently, a group of former high ranking Boligarchs declared that Chávez has no moral authority to remain in power and publicly called for him to step down. No doubt, he will plug his ears. But for the man who fancies himself as El Comandante, the current numbers don’t add up.


  • Baidu Is No Match for Google

    Newsweek | Feb 2, 2010 12:05 PM

    By Isaac Stone Fish

    When Google threatened to pull out of China last month, many experts interpreted the move as a last-straw response to Beijing's aggressive policy of Internet protectionism. It was assumed that in the wake of Google's departure, the government would set up domestic rival Baidu to become the Google of China; indeed, the company's stock surged 16 percent on the day of Google's announcement. Baidu's ambitions may be even larger: on Jan. 16, Baidu CEO and founder Robin Li announced plans to expand the brand to reach half the global market within 10 years. But there are many reasons Baidu will make a weak global challenger to Google, even with strong backing from Beijing.

    In an industry that depends on trust between users and advertisers, Baidu's biggest enemy is itself. Rivals and customers have accused Baidu of tailoring its search results to favor companies that advertise most heavily on its site, of favoring domestic over foreign firms, and even of blackmailing small and medium enterprises into buying ads--using the threat that they will be removed from Baidu results if they do not comply. A Baidu spokesperson denies that the company manipulates or discriminates in its search results. Many analysts see the familiarly streamlined Baidu Web site as a direct copy of Google. Li has done nothing to quiet those critics by dismissing innovation, the bedrock of Google's global strategy, as oversold.  

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  • Kaddafi's Tenure at African Union Was a Disaster

    Newsweek | Feb 1, 2010 12:00 PM
    By Jason McLure The African Union has survived its year with Muammar Kaddafi as chairman--but just barely. Nobody ever expected the tenure of the Libyan dictator, which ends in February, to pass without fireworks. But Kaddafi's harm went far beyond rambling... More
  • Is Obama's Promise to Double Exports Feasible?

    Michael Freedman | Feb 1, 2010 05:48 AM
    Among the promises made by President Oba­ma in the State of the Union address was his eye-popping commitment to doubling U.S. exports in the next five years. Certainly, that would be good for the U.S. economy, and since 1960 the feat has been accomplished... More
  • Israeli Settlers' Land Grab Could Backfire

    Dan Ephron | Jan 31, 2010 07:03 AM

    Jewish settlers have long been adept at manipulating Israeli law to get what they want. Their latest target? Several homes in the Palestinian neighborhood of Sheikh Jarrah in East Jerusalem. In an ongoing series of court cases, they've argued that the homes had belonged to Jews before the establishment of Israel in 1948, and that the Palestinians who have lived there for more than 60 years are essentially squatters. So far, the settlers have won possession of three homes--but in doing so may have set a legal precedent that could backfire badly. That's because hundreds of homes in West Jerusalem, which is predominantly Jewish, were owned by Palestinians before 1948. The homeowners fled or were forced out during Israel's war of independence, and the homes were subsequently given to Jews. Now the East Jerusalem case may give those Palestinians legal grounds to demand their houses back.

    Muhammad Dahleh, an Arab Israeli lawyer, says he plans to petition Israel's High Court of Justice for exactly that. Dahleh doesn't expect to win; Israeli law weighs heavily against Palestinians in such cases. But a drawn-out proceeding might be an embarrassment for Israel, highlighting what critics describe as preferential legal treatment for Jews. That could mean more trouble for a country already blanketed by international criticism.


  • Leading Indicator

    Newsweek | Jan 29, 2010 08:27 PM
  • GDP Doesn't Solve Jobs Crisis

    Newsweek | Jan 29, 2010 11:36 AM

    By Nancy Cook

    The big economic headline from this morning is the unexpected increase in the gross domestic product, which rose to 5.7 percent in the fourth quarter from 2.2 percent in the third quarter of 2009. That’s a big jump in this sour economy, but it’s premature to start celebrating just yet.

    The national unemployment rate stubbornly remains at 10 percent, with states such as California, Rhode Island, Michigan and South Carolina suffering from even higher local unemployment rates. If people lose their jobs or feel insecure about their futures, they spend less money or opt to save more cash. Either way, they’re not buying as much stuff. Increased consumer spending is one roadmap economists see as a way to pull Americans out of this recession.

    Most of the celebrated GDP growth this quarter (3.4 percent) instead came from businesses increasing their inventories. That’s nothing to scoff at, but it’s hard to tell if this economic growth will continue. “Certainly it’s better to have strong growth rather than weak growth,” says Gus Faucher, Director of Macroeconomics at Moody’s Economy.com, “but the underlying demand is still pretty soft.” Faucher says the economy won’t really start to rebound until late 2010 when the labor market improves and people head back to work. That may explain why Americans feel so low, despite several economic indicators that say the economy is improving.

    Here are some other GDP readings I’d recommend:

    Economists React: Too Soon to Declare ‘Recovery Accomplished’

    GDP Up 5.7 Percent, Thanks To Improvements In Inventories

    Stocks rise after better-than-expected GDP report