Pick of the Day: Springtime for Kim Jong Il

China Loses Face and Sun Still Shines for S. Korea

The Financial Times scores big today with its detailed coverage in print of US and Japanese efforts to come up with a unified response to N. Korea’s missile launches on Wednesday. Bush and Koizumi want a UN resolution to slap financial and military-related sanctions on N. Korea, but China, Russia and S. Korea don’t have the appetite. See http://www.ft.com/cms/s/ 0affd6aa-0d7b-11db-a385-0000779e2340.html.

Kim Jong Il threatened more launches if N. Korea was put under pressure, and S. Korea reported signs of activity around launch sites, suggesting more testing was possible, according to FT, but WSJ online said technical glitches made this unlikely. FT and NYTimes report John Bolton (US ambassador to the UN, who once described the UN as “irrelevant”) claimed to have 13 of 15 Security Council members backing a resolution—the stickler is that the two recalcitrants are China & Russia, which want only a non-binding presidential message by the UN, the equivalent to a concerted yawn.

Wall Street Journal online this morning had an AP report saying Japan had backed off including the threat of sanctions against N. Korea in a draft Security Council resolution circulated today, in a desperate attempt to win Chinese and Russian backing. The new draft condemns North Korea’s actions but deletes parts that would have banned countries from sending missile-related technology to the North. See http://online.wsj.com/article/SB115226283197800527. html?mod=home_whats_news_us

Kudos to FT for pointing out that no Security Council member signaled a veto; NYTimes and WSJ, at least online, miss this. Not that it matters much—the whole thrust of Bush’s strategy, as he reiterated at his press conference in Chicago this morning, is for the world to speak with one voice. In the words of the Great Decider himself: “one thing I won’t do is get caught in the trap of sitting at the table alone with N. Korea.” Right, but what do you do when the other dinner guests aren't keen on being at the table in the first place?

Finally, WSJ had the best graphic online today showing N. Korea’s top five trading partners. Who tops the list? China, of course, with 38.9% of N. Korea’s $4.06bn dollars worth of trade last year. S. Korea was second at around 25% and Russia fourth, accounting for about 5%. Clearly, for this bunch, business comes before security. But that is a calculation they are making at their own peril.

China Loses Face On China-N. Korea relations, FT quotes an unnamed mainland commentator who says China “has already lost face,” since one week before the launch, Wen Jiabao, China’s premier, had publicly urged N. Korea not to go forward with the tests. According to the commentator (who assuredly is nameless for fear of reprisal from the Chinese government) to complain any more about N. Korea’s actions will mean breaking completely with its ally and losing all leverage. FT says for all of China’s economic influence on its N. Korean ally—it supplies most of N. Korea’s oil and much of its food aid—it seems that it has little political clout.

Moreover, FT says that although peeved by its ally’s rude behavior, China has consistently argued the US is to blame for Pyongyang’s aggressive nuclear ambitions, because of the US’s hostile policy toward Kim Jong Il. Now that's simply blockheaded. Are we to believe that N. Korea had no nuclear ambitions before the US started talking tough, as in Bush’s unfortunate “axis of evil” speech of 2002? Surely the Chinese recall when N. Korea announced it was abandoning the nuclear nonproliferation treaty—in 1993.

Sun Still Shines for S. Korea Despite the missile launches from its friendly northern neighbor, S. Korea will continue its “sunshine policy” of engaging N. Korea economically but will suspend all humanitarian aid indefinitely, reports FT today. S. Korea has a tough road to hoe: it is trying simultaneously to show solidarity with the US and keep up the reconciliation process, says the FT. Probably unknown to many casual observers, S. Korean aid to the North has essentially replaced multilateral aid. And, in a rude welcome to food-aid politics, a S. Korean official says that the less fertilizer they send now, the more rice they’ll have to send later. NYTimes online today just glazes the surface of this story, mentioning that S. Korea is cutting off food aid.

But here’s the real kicker, highlighted by FT: Seoul will keep supporting the Kaesong industrial park—the one free enterprise zone inside N. Korea where 15 S. Korean companies employ 6,000 N. Korean workers. Seoul pays Pyongyang directly for each worker. Not surprisingly, each worker earns under $2/day, (which is 50% cheaper than similar Chinese wages) but Seoul admits it has no idea how much of its payments to the N. Korean government actually go to the workers. So, missiles fly, food aid is cut off and S. Korea continues to pay the N. Korean government directly for its workers at slave wages.

For more insight into N. Korea’s experiment with capitalism, See http://www.nytimes.com/2006/02/28/business/worldbusiness/ 28park.html?pagewanted=1&ei=5090&en=5e4d9026cd25d596&ex= 1298782800&partner=rssuserland&emc=rss

News Shark Bottom Line:

The Bush administration is doing its darndest to label the N. Korean “crisis” a regional problem and to downplay the security threat. The problem with this strategy is that all the players in the region—with the exception of Japan—really view the crisis as between the US and N. Korea. At his press conference today Bush admitted why he’s worried: he needs China and S. Korea on board because he knows that with bilateral negotiations “you run out of options quickly.”

Yet, China is not prepared to apply the economic leverage it has: if it really wanted to it could cut off electricity and fuel to N. Korea and bring Kim Jong Il to his knees. China doesn’t want to disturb its trade ties with N. Korea just so that America and Japan can rest easier at night.

As for S. Korea, at least according to a report in the FT today, most S. Koreans don’t believe N. Korea will attack S. Korea, after all, there are families split on both sides of the border. Unfortunately, this is dangerous thinking, given Kim Jong Il's propensity for irrationality. So where does that leave the US? Pyongang has missiles that are designed to hit Alaska and California and we’re not exactly confident that we could intercept them. Bush, ever the optimist about our military capabilities, said today: “I think we had a reasonable chance of shooting it down.” That sounds like 50/50 odds to me, and maybe even that’s being generous. And this is on top of the ever-present threat that N. Korea will sell part of its nuclear arsenal to terrorists.

Observers should keep their eyes on Japan, however, because, they are the most jittery and most likely to escalate the confrontation, besides N. Korea themselves. The problem is that Japan cannot defend itself against a N. Korean missile attack. US forces can, and are obligated to protect it, via the 1954 Mutual Defense Assistance Agreement.

What to do? While it pains me to say it, the Bush team is doing all there is to do now. China and S. Korea will only wake up if there is a true crisis and N. Korea is bombed or it starts a war. That’s the only time their economic interests will be in danger. In the meantime, the US should do all it can at the UN to impose financial sanctions on N. Korea and try to ratchet up the pressure on China and others for military sanctions. It's absolutely crazy that the Security Council cannot agree to stop the flow of missile-materials into N. Korea.

New Ad Campaign for GM: Buy One Suburban, Get a Free Renault in the Trunk

Well, perhaps that’s being a bit hasty. The Wall Street Journal, NYTimes (biz section) and Financial Times all led online Tuesday with the proposed 3-way alliance between the sputtering giant GM and Carlos Ghosn-led Nissan and Renault. On Monday, Nissan and Renault’s boards voted to begin exploratory discussions, if GM “makes the proposal,” forcing GM’s CEO Rick Wagoner to make the next move. The plan floated by billionaire investor Kirk Kerkorian, who owns 9.9% of GM, would see Renault and Nissan each purchasing 10% stakes in GM. It is seen by analysts as a direct threat to Wagoner’s control of GM’s turnaround, which Kerkorian sees as proceeding at a painfully soporific pace. See http://www.nytimes.com/ 2006/07/04/business/04gm.html?_r=1&oref=slogin.

The NYTimes has extensive coverage here and it lays out the besieged Wagoner’s options: (1) Refuse to talk to the two suitors and risk damage of publicly refusing to consider Carlos Ghosn’s ideas—who sports an impressive history in turning Nissan around; or, (2) Negotiate in order to stall for time and let Kerkorian move next.

In the latter case, Kerkorian could, (a) increase his GM holdings, which he’s unlikely to do, due to added regulatory burdens, (b) convince GM shareholders to tender their stock to Renault or Nissan, but the two companies might not want to buy without GM’s backing the plan, (c) look for bigger partners, such as Toyota or Honda, or (d) challenge the current GM board with his own list of directors, but such a massive change would most likely have to wait until GM’s annual shareholders meeting next year. See http://www.nytimes.com/2006/07/04/business/ 04gm.html?_r=1&oref=slogin.

Instead of focusing so much on the personal contest between Kerkorian and Wagoner, the WSJ looks at the implications a potential alliance could mean for the auto industry as a whole. As the paper points out, the scale of the three companies, if borne out in purchasing savings and shared costs of new model and technology development, would ramp up pressure on other major auto manufactures to consolidate—not through mergers, but by partnerships, such as this, since they are seen as less risky. Surprisingly, the NYTimes is essentially AWOL on the industry-wide impact. See http://online.wsj.com/article/SB115192738712996959-search.html? KEYWORDS=Kerkorian&COLLECTION=wsjie/6month.

Although its coverage so far on this story lacks depth compared to the US papers, the Financial Times delivers the missing European political angle: Watch the French, the pink paper seems to say—15% of Renault is still owned by the French government, after it privatized the corporation in 1996, and the French industry minister told French TV on Tuesday that the deal “‘…has to be approached with enormous caution. The United States is an immense market, a complicated market and General Motors is in a difficult situation because of problems that have nothing to do with cars.’” How right he is. See http://www.ft.com/cms/s/522d8150-0b8a-11db-b97f-0000779e2340.html.

News Shark’s Verdict: No one paper covered all the big angles on this story. Clearly, Wagoner does not want to respond to Kerkorian’s challenge, but Ghosn is too powerful to ignore. Sooner or later Wagoner will feel pressure from shareholders wondering, rightly, why their CEO is ignoring a man who has proven he can return a struggling global automaker to profitability.

On the other hand, is Ghosn really up to the job? He certainly has his hands full running two major automakers at the same time, and Renault is definitely still in the process of turning around, maybe even stuck, as some analysts say. Finally, are there really synergies between these three companies? Can they really share platforms, and does Renault have any chance in hell of gaining a foothold in the US market? How many Americans these days would buy a French car? Peut-être s'ils étaient libres avec chaque Suburban.

Underreported Story: French Jews Under Attack

Lyon, France, March 6, 2006: a Jewish student was attacked and kicked in the face by four youths. Paris, March 12: vandals broke into a synagogue and threw religious objects on the ground. Sarcelles, March 4: youths beat a 28-year-old Jewish man, and made anti-Semitic remarks while they were assaulting him. He suffered a dislocated shoulder. March 3: a 17-year-old, the son of a local rabbi, was attacked by two men near the Sarcelles synagogue. The teenager suffered a broken nose. March 3: also in Sarcelles, an 18-year-old Jewish teenager was attacked by five men who threw him to the ground and shouted insults and anti-Semitic threats. You get the idea. See http://www.adl.org/Anti_semitism/

anti-semitism_global_incidents_2006.asp

Most alarmingly, almost all of these attacks came after a 23-year-old French Jew, Ilan Halimi, was held captive and tortured this January before his kidnappers dumped him in a vacant lot to die. See: http://www.boston.com/news/world/articles/2006/03/13/ anti_semitism_seen_rising_among_frances_muslims/.

You would think that there might be sympathy for the Jewish community in France after a young Jew was captured, tortured and killed. While there were large demonstrations in Paris and elsewhere in France on February 26, Halimi’s murder was followed by an outbreak of more violence against French Jews. Reportedly, there has also been a campaign to raise money to pay for defense of the gang that kidnapped and murdered Halimi. See Elias Levy, “France’s Jewish community fighting anti-Semitism,” Canadian Jewish News, Vol. 36, Issue 16, April 12, 2006.

It is doubtful most Americans know about Ilan Halimi and the rise of anti-Semitism in France’s Muslim communities. Halimi, the son of Moroccan-born Jews of moderate means, worked at a cell phone shop in Paris, according to The Boston Globe. He was abducted allegedly by a majority-Muslim youth gang. According to French police the gang wanted a ransom of over $500,000 because they thought all Jews were rich. When Halimi’s family could not cough up the money the gang killed him.

Before anyone doubts that Halimi was targeted because he was Jewish, note that the gang called Halimi’s family repeatedly, using anti-Semitic slurs and telling them to get cash from their synagogue. They even called a French rabbi and boasted that they had captured a Jew. See: http://www.boston.com/news/world/articles/2006/03/13/anti_semitism_seen_rising_among_frances_muslims/. Sadly, while investigators believe many residents in the community knew the gang had abducted a Jew and where holding him captive, no one called the police or intervened.

According to The Boston Globe, Halimi was kept in a basement of a housing project, held naked, and bound with tape and cloth. His face was slashed with a knife, pictures of which were emailed to his family, and a burning cigarette was extinguished on his forehead. His eyes and mouth were covered with tape, leaving only a hole to slurp from a straw. Before he was dumped in an empty lot, he was drenched in acid and stabbed four times in the throat. After he was dumped in the lot, somehow he crawled toward a train station and was found, albeit too late. He died in the ambulance.

The Boston Globe points out that the immigrant underclass in France, made up largely of Arabs, Africans and Eastern Europeans, are increasingly blaming Jews for their poverty. France currently has the largest Muslim population in Europe at around 6 million, and also Europe’s largest Jewish population at 600,000. Shockingly, anti-Semitism in France has become cool. It’s featured in rap music, violent jihadist videos and extremist Islamic rhetoric—though always one to be politically correct, the Globe notes that all this bears little or no resemblance to Islamic religious practice.

In defense of France, the French Ambassador to the US, Jean-David Levitte (yes, he’s Jewish) wrote in the Washington Times recently that anti-Semitic attacks in France were actually down by 48 percent last year, compared to the prior year, and that 82 percent of French people like Jews. Moreover, French President Jacques Chirac declared in 2003 that "when a Jew is attacked in France, it is an attack against the whole of France." See Jean-David Levitte, “Don’t insult the French,” Washington Times, April 7, 2006.

But it appears that a sizable chunk of the French population does not share Chirac’s sentiment. It is wonderful that 82 percent of French people like Jews; the problem is that among the remaining 18 percent there are some who have no qualms torturing and killing a Jew simply because he’s a Jew.

Chirac and Prime Minister de Villepin must walk a fine line these days between a massive Muslim immigrant population, including many unemployed youth not afraid to take to the streets and set fire to cars, and a native French population with ultranationalist and xenophobic tendencies. As has been true throughout history, Jews inexplicably find themselves caught in between and are blamed for everyone’s troubles.

On June 14 this year, de Villepin stood next to Israel’s Ehud Olmert and inaugurated the “Wall of the Righteous” at the Shoah Memorial in Paris in memory of the French men and women who risked their lives to save Jews in WWII. In de Villepin’s speech, he said that, “[t]he truth is that France was not able to protect her own from hatred and barbarity. The truth is that the Republic abandoned to persecution and violence citizens who had always defended its values with conviction and fervour.” See http://www.premier-ministre.gouv.fr/en/acteurs/speeches_45/ inauguration_of_the_wall_56299.html

The sad truth today is that France again is either unable or unwilling to protect her own from hatred and barbarity. Fittingly, the gang that abducted Halimi calls itself “the Barbarians.”

Armenian Quarter at Dusk, Jerusalem

Coverage of Israel’s Gaza Incursion to Free Kidnapped Soldier

The NYTimes’ news piece today, “Israel Squeezes, and Gaza Strip Adapts to a Vise,” is blatantly one-sided with no analysis. But if you’re looking for only a humanitarian story focused on the average Palestinian, it’s sufficient. See: http://www.nytimes.com/2006/07/02/world/middleeast/ 02gaza.html?hp&ex=1151812800&en=37f7bbf4cc629aea&ei= 5094&partner=homepage

Bottom line according to NYTimes: Israel’s incursion will only drive the divided Fatah and Hamas closer, and serve to strengthen the Palestinian population’s support for the Hamas-led government.

What the Times forgot to say, but other papers picked up: #1: that the kidnappers of the Israeli solder, Shalit, are demanding that Israel release 1,000 Palestinian prisoners from Israeli jails in exchange for information about Shalit’s condition (Jerusalem Post); and, 2#: that no civilians have been reported killed in the incursion and only one militant has died of wounds from an airstrike (LA Time).

Israel’s Haaretz, a left-leaning daily, wins kudos for its story on the US government footing the bill for damages to a Gaza power station hit on Tuesday by an Israeli airstrike. The Israeli paper credits The Boston Globe, though it looks like Reuters had the scoop on this one. Apparently, the power station is insured by the Overseas Private Investment Corporation (OPIC), a US government agency, for $48 million due to "political risks." See: http://www.haaretz.com/hasen/spages/733394.html

The power station, which provides electricity for approximately 860,000 Gazans, many of whom are now in the dark, was built by—surprise—Enron Corporation, along with Palestinian businessman Said Khoury in 1999. Khoury’s Morganti Group bought out Enron’s share in 2000. Hours after the strike, according to Reuters, White House Spokesman Tony Snow (former Fox anchor), “‘urged Israel to ‘avoid the unnecessary destruction of property and infrastructure.’" Yes, please, especially when American taxpayers will have to pay to repair the damage!

Editorial of the Day:

Haaretz’s Editorial was perhaps the most intelligent commentary today on the Israeli government’s tactics. Its editors question Israel’s contradictory policy of pressuring Hamas’ political leadership and the Palestinian public, in order to force the public to pressure Hamas, while simultaneously claiming that Khaled Mesha—political leader of Hamas and head of the group’s Syrian branch—holds ultimate sway over the kidnappers.

Haaretz acutely notes: “If so, what is the point of pressuring the local Palestinian leadership, which did not know of the planned attack and which, when it found out, demanded that the kidnappers take good care of their victim and return him?”

Of course, the paper rather naively calls for Israel to free the detained Hamas politicians and open negotiations for the release of Shalit. Haaretz’s heart is in the right place but it doesn’t seem to make sense to give up your bargaining chip before you negotiate. The editors recall that Israel was eventually forced to negotiate with Hezbollah and withdraw from Southern Lebanon. And, that back then, Israel also kidnapped people from Lebanon to strengthen Israel’s position in prisoner swaps.

Haaretz is worried that Olmert has not learned from history, since those kidnappings didn’t get Israel anywhere. But the analogy is false. The Israeli government is not currently worried about being forced to negotiate a withdrawal from the West Bank. It wants to withdraw. The problem is that it’s going back into Gaza now, which it only recently left unilaterally. Israel’s operations in Gaza will only stoke an already burning fire there and unite the Palestinian factions. Better to leave Gaza alone and instead put pressure on the Hamas powerbase in Syria. The trick is, that’s not so easy and no one is really sure who controls the kidnappers.

See: http://www.haaretz.com/hasen/spages/733036.html