The Dollar's Full System Meltdown

By Mike Whitney

The U.S. Dollar is kaput. Confidence in the currency is eroding by the day.

A report in The Sydney Morning Herald stated, "Australia's Treasurer Peter Costello has called on East Asia's central bankers to 'telegraph' their intentions to diversify out of American investments and ensure an 'orderly adjustment'....Central banks in China, Japan, Taiwan, South Korea, and Hong Kong have channeled immense foreign reserves into American government bonds, helping to prop up the US dollar and hold down interest rates,' said Costello, but 'the strategy has changed.'"

Indeed, the strategy has changed. The world has come to its senses and is moving away from the green slip of paper that is currently mired in 8.3 trillion US dollars of debt.

The central banks now want to reduce their USD reserves while trying to do as little damage to their own economies as possible. That'll be difficult. If a sell-off ensues, it will start a stampede for the exits.

There's little hope of an "orderly adjustment" as Costello opines; that's just false optimism. When the greenback begins listing; things will turn helter-skelter quickly.

In September, we saw early signs that the dollar was in trouble. The trade deficit registered at $70 billion but the Net Foreign Security Purchases (NFSP) came in at a paltry $33 billion. That means that our main trading partners are no longer buying back our debt which puts downward pressure on the greenback.

The Fed had two choices; either raise interest rates substantially or let the currency fall. Given the tenuous condition of the housing bubble and the proximity of the midterm elections, the Fed did neither.

A month later, in October, the trade deficit hit $69.9 billion but, then, without warning, a miracle occurred. The Net Foreign Security Purchases skyrocketed to a "historic high" of $116.8 billion; covering both months' shortfalls almost to the penny.

Coincidence?

Not likely. Either the skittish central banks decided to "stock up" on their dollar-denominated investments or the Federal Reserve (and their banking-buddies) is buying back its own debt to float us through the elections.

This is exactly the kind of hanky-panky that people expected when Greenspan stopped publishing the M-3 last March keeping the rest of us in the dark about what was really going on with the money supply.

Are we supposed to believe that the skeptical central banks suddenly doubled up on their T-Bills while they're (publicly) moaning about the dollar's weakness and threatening to diversify?

That's a stretch.

According to the Wall Street Journal the Chinese Central-bank governor Zhou Xiaochuan stated unequivocally that "We think we've got enough." The Chinese presently have nearly $1 trillion in USD and US Treasuries.

"Enough"?

The United States runs a $200 billion per year trade deficit with China. If they've "got enough" we're dead-ducks. After all, it doesn't take a sell-off to kill the dollar, just unwillingness on the part of the main players to stop purchasing at the same rate.

Of course, everyone in Washington already knew that doomsday was approaching. That's the way the system was designed from the very beginning. It's all part of the madcap scheme to "starve the beast" and transfer the nation's wealth to a handful of western plutocrats.

That explains why the Fed and the White House whirred along like two spokes on the same wheel; every policy calculated to thrust the country headlong toward disaster.

The administration never created a funding mechanism for the $400 million tax cuts or for the 35% expansion of the Federal government.

Defense spending increased by leaps and bounds as did the "no-bid" contracts for friends of the Bush clan. At the same time, interest rates were lowered to rock-bottom to put as much money as possible into the hands of people who couldn't meet the traditional criteria for a mortgage.

And, if gluttonous waste, reckless overspending and "MickeyMouse" loans were not enough; the Fed capped it off by doubling the money supply in 7 years; a surefire prescription for hyper-inflation.

So, which one of these policies was not deliberate?

The financial crisis that we now face was created by design. It is intended to destroy the labor movement, crush the middle class, quash Medicare, Medicaid and Social Security, reduce our foreign debt by 50 or 60 per cent, force a restructuring of America's debt, privatize all public assets and resources, and create a new regime of austerity measures which will divert more wealth to the banking and corporate establishments.

The avatars of neoliberalism invariably use crooked politicians to spawn enormous "unsustainable" debt so that the nations' riches can be transferred to ruling elites. It works the same everywhere. It's a form of corporate colonization, only this time the victim is the good old USA.

"The Phase of Impact"

According to Richard Daughty in his prescient article "The Phase of Impact" the Federal Reserve and the Treasury Dept have already manned the battle-stations.

Here's an excerpt:

"Mr. Paulson, the Secretary of the Treasury, is, by virtue of his ascension to the throne, now the head of the shadowy President's Working Group of Financial Markets (which was created by Presidential Order 12631) and he is insisting that they meet more often, namely every 6 weeks!

This whole Working Group thing was originally set up as a fallback, ad-hoc, if-then defense to deal with possible economic emergencies, but now they are routinely meeting every 6 weeks. He has even ordered Jim Wilkinson, his chief of staff, to 'oversee the creation of a Treasury Command Center to track markets world-wide and serve as an operations base in a crisis"! (Wall Street Journal) World-wide!!

The American government is moving to take control of the world-wide economy as the result of an anticipated crisis? Yikes!"Daughty goes on to say: "So a lot of the hubbub is obviously being caused by some approaching upheaval, perhaps reflected in something sent to me by Phil S., which is the Global Europe Anticipation Bulletin No8 which reminded us that last May they predicted that the economy would have a 'phase of acceleration' that would begin in June, and it "would be spread out over a period of a maximum of 6 months', which it subsequently did.

They said then, and are saying again now, that a 'phase of impact will begin in November 2006', and that this impact phase would be the 'explosive phase of the crisis'.This 'phase of impact' that is due to begin momentarily is, they explain, 'a period when a series of brutal crises starts affecting by contamination the total system.

This explosive phase of the crisis, which will last 6 months to one year, will affect directly and very strongly financial players and markets, the owners of investment schemes with fixed incomes in dollars, pension funds and the strategic relations between the United States on the one side, and Europe and Asia on the other." (Richard Daughty; "The Phase of Impact" Kitco.com)

Predictions, of course, are rarely reliable and Daughty's scenario may be a bit too apocalyptic for many. But if we accept the premise that the tax cuts, the expansion of the federal government, the doubling of the money supply, and the 10 trillion US dollars that was sluiced into the housing bubble were not merely "honest mistakes" made by "supply side" enthusiasts; then we must assume that this is all part of a loony plan to demolish the economic foundation-blocks of the current system and remake society from the ground up.

Domestically, that plan appears to involve the activation of the police state.

In the last few weeks the Bush administration has passed the Military Commissions Act of 2006 which allows the president to arrest and torture whomever he chooses without charging him with a crime.

Also, unbeknownst to most Americans, Bush signed into law a provision which, according to Senator Patrick Leahy, will allow the president to unilaterally declare martial law. By changing The Insurrection Act, Bush has essentially overturned the Posse Comitatus Act which bars the president from deploying troops with the United States.

The John Warner Defense Authorization Act of 2007 (as it is called) also allows Bush to take control of the National Guard which has always been under the purview of the state governors. Bush now has absolute power over all armed troops within the country, a state of affairs which the constitution purposely tried to prevent.

The administration's dream of militarizing the country under the sole authority of the executive has now been achieved although the public still has no idea that a coup that has taken place.Internationally, the falling dollar means that America's debt will be reduced proportionate to the percentage-loss of the dollar in relation to other currencies.

This is a great deal for the U.S. First the Fed prints fiat money to buy valuable resources and manufactured goods and then it nabs a discount by depreciating its currency. It's a "win-win" situation for Washington, although it will undoubtedlycheat unwitting foreign-creditors out of their hard-earned profits.

It's doubtful that their interests will weigh very heavily on the money-lenders at the US Treasury or the Federal Reserve.The dollar faces a second crisis at home which is bound to play out throughout 2007.

The 10 trillion dollar housing bubble is quickly losing air causing a precipitous drop in GDP. The housing industry is seeing its steepest decline in 30 years and home equity is beginning to shrivel. Housing has been the one bright spot in an otherwise bleak economic landscape.

With the housing market slowing down and prices decreasing, the $600 billion of consumer spending which was extracted in 2005 from home equity will quickly evaporate triggering an overall slowdown in the economy. (Consumer spending is 70% of GDP)

By the Fed's own calculations; "The total amount of residential housing wealth in the US just about doubled between 1999 and 2006 up from $10.4 trillion to $20.4 trillion. ("Times Online")

If these figures are accurate than we can assume that much of America's "perceived" growth has been nothing more than the expansion of debt.

In fact, that seems to be the case.

Wages have been stagnant since the 1970s, 3 million manufacturing jobs have been outsourced, savings have shrunk to below 0 per cent, and personal debt is soaring. We have become an "asset-based" society and when the principle asset begins to loose its value, we are in deep trouble.

As housing prices continue to decline through 2007 we can expect a full-blown recession. If energy prices rear their ugly head again, (were they lowered for the elections?) it will just be that much worse.

So, how will recession affect the dollar?

Capital has no loyalties. It follows the markets. When America's bustling consumer market stalls, we'll undergo capital flight just like everywhere else. The 3 million lost manufacturing jobs, the 200,000 lost high-paying high-tech jobs, the tax incentives for major corporations doing business outside the country; all signal that corporate America has already loaded the boats and is headed for more promising markets in Asia and Europe.

A sluggish consumer market could further weaken the dollar and force Americans to begin saving again but, (and here's the surprising part) the decision-makers at the Federal Reserve and the Treasury Dept don't really care if the face-value of the greenback goes down anyway.

What really matters is that the dollar retains its position as the world's reserve currency. That allows the Federal Reserve to continue to print the money, set the interest rates, and control the global economic system.

The dollar presently accounts for 66 per cent of foreign currency reserves in central banks across the globe, an increase of nearly 10 per cent in one decade alone. The dollar has become the international currency, a de-facto monopoly.

This is thegoal of the globalists and the American ruling elite who dream of one system, the dollar-system;with usrunning it.

So, how will this cadre of plutocrats coerce the other nations to continue to use the dollar while it plummets from its perch?

Oil.

As long as oil is denominated in dollars, the central banks will be forced to stockpile American scrip regardless of its value. It's no different than holding a gun to someone's head. They will use our debt-plagued greenbacks or their cars and trucks will sputter, their tractors and factories will wheeze, and their economies will grind to a halt.

It's just that simple.America cannot maintain its superpower status unless it continues to control the global economic system. That means the linkage between the dollar and oil must be preserved.

The Bush troupe sees this as an existential issue upon which the future of America's ruling class depends. By 2020, 60 per cent of the world's oil will come from the Middle East. Bush will do everything in his power to control the resources of the Caspian Basin, thereby expanding US dollar-hegemony and paving the way for a new American century.

Mike is a freelance writer living in Washington state

Web Inventor Fears for the Future

Pallab Ghosh, BBC

The British developer of the world wide web says he is worried about the way it could be used to spread misinformation and "undemocratic forces".

The web has transformed the way many people work, play and do business.

But Sir Tim Berners-Lee told BBC News he feared that, if the way the internet is used is left to develop unchecked, "bad things" could happen.

He wants to set up a web science research project to study the social implications of the web's development.

The changes experienced to date because of the web are just the start of a more radical transformation of society, he said.

But Sir Tim is concerned about the way it could end up being used.

He told the BBC: "If we don't have the ability to understand the web as it's now emerging, we will end up with things that are very bad.

"Certain undemocratic things could emerge and misinformation will start spreading over the web.

"Studying these forces and the way they're affected by the underlying technology is one of the things that we think is really important," he said.

Social phenomenon

He insisted his new web science research initiative would be more than just computer science.
He said he wanted to attract researchers from a range of disciplines to study it as a social as well as technological phenomenon.

Sir Tim added that he hoped it would create a new science for studying the web, which he believes would lead to newer and more exciting systems.

"All kinds of disciplines are going to have to converge. People with all kinds of skills are going to have to work together to build a new web which is going to be even better," he said.

He also said employers were now beginning to complain that there were not enough people who fully understood the web.

"There aren't any courses at the moment and it hasn't really been brought together.

"We're hearing complaints from companies when they need people that really understand the medium from both the technological and social side.

"When you look at university courses, web science isn't there - it seems to fall through the cracks.

"So we'd like to put it on the curriculum so that there are a lot more people who understand this."

Social challenges

The US-based Massachusetts Institute of Technology and the University of Southampton, UK, will launch the long-term research collaboration that will have a direct influence on the future development of the world wide web.

The Web Science Research Initiative will chart out a research agenda aimed at understanding the scientific, technical and social challenges underlying the growth of the web.

Of particular interest is the growing volume of information on the web that documents more and more aspects of human activity and knowledge.

The project will examine how we access this information and assess its reliability.

International Press Freedom Index 2006

RSF

New countries have moved ahead of some Western democracies in the fifth annual Reporters Without Borders Worldwide Press Freedom Index, while the most repressive countries are still the same ones.

"Unfortunately nothing has changed in the countries that are the worst predators of press freedom," the organisation declared.

"Journalists in North Korea, Eritrea, Turkmenistan, Cuba, Burma and China are still risking their life or imprisonment for trying to keep us informed. These situations are extremely serious and it is urgent that leaders of these countries accept criticism and stop cracking down on the media.

"Each year new countries in less-developed parts of the world move above some European countries or the United States. This is good news. It shows once again that even very poor countries can be very observant of freedom of expression. Meanwhile, the steady erosion of press freedom in the United States, France and Japan is extremely alarming," Reporters Without Borders stated.

The three worst violators of free expression - North Korea, bottom of the Index at 168th place, Turkmenistan (167th) and Eritrea (166th) - have clamped down further. The torture death of Turkmenistan journalist Ogulsapar Muradova shows that the country's leader, "President-for-Life" Separmurad Nyazov, is willing to use extreme violence against those who dare to criticise him.

Reporters Without Borders is also extremely concerned about a number of Eritrean journalists who have been imprisoned in secret for more than five years. The all-powerful North Korean leader, Kim Jong-li, also continues to totally control the media.

Press freedom is genuine is Benin (23rd), Namibia (26th), Mauritius (32nd), Ghana (34th), Mali (35th), South Africa (44th) and Cape Verde (45th) and comparable to that in Western democracies.

It does not exist or is constantly under attack in Eritrea (166th), Gambia (149th), Somalia (144th), Democratic Republic of Congo (142nd), Zimbabwe (140th) and Equatorial Guinea (137th). The same African countries have featured at the top and bottom of the Index for several years.

Northern European countries once again come at the top of the Index, with no recorded censorship, threats, intimidation or physical reprisals recorded in Finland, Ireland, Iceland and the Netherlands, which all share first place.

Deterioration in the United States, Japan and France

The United States (53rd) has fallen nine places since last year, after being in the 17th position in 2002.

Relations between the media and the Bush administration sharply deteriorated after the president used the pretext of "national security" to regard as suspicious any journalist who questioned his "war on terrorism."

The zeal of federal courts, which, unlike those in 33 states, refuse to recognise the media's right not to reveal its sources, threatens even journalists whose investigations have no connection at all with terrorism.

Freelance journalist and blogger Josh Wolf was imprisoned when he refused to hand over his video archives. Sudanese cameraman Sami al-Haj, who works for the pan-Arab broadcaster Al-Jazeera, has been held without trial since June 2002 at the US military base at Guantanamo, and Associated Press photographer Bilal Hussein has been held by US authorities in Iraq since April this year.

France (35th) slipped five places during the past year, losing 24 places overall in five years. The increase in searches of media offices and journalists' homes is very worrying for media organisations and trade unions.

Autumn 2005 was an especially bad time for French journalists, several of whom were physically attacked or threatened during a trade union dispute involving privatisation of the Corsican firm SNCM and during violent demonstrations in French city suburbs in November.

Rising nationalism and the system of exclusive press clubs (kishas) threatened democratic gains in Japan, which fell 14 places to 51st. The newspaper Nihon Keizai was firebombed and several journalists physically attacked by far-right activists (uyoku).

Fallout from the row over the "Mohammad cartoons"

Denmark (19th) dropped from joint first place because of serious threats against the authors of the Mohammed cartoons published there in autumn 2005. For the first time in recent years in a country that is very observant of civil liberties, journalists had to have police protection due to threats against them because of their work.

Yemen (149th) slipped four places, mainly because of the arrest of several journalists and closure of newspapers that reprinted the cartoons. Journalists were harassed for the same reason in Algeria (126th), Jordan (109th), Indonesia (103rd) and India (105th).

Except for Yemen and Saudi Arabia (161st), all the Arab peninsula countries considerably improved their rank. Kuwait (73rd) kept its place at the top of the group, just ahead of the United Arab Emirates (77th) and Qatar (80th).

Newcomers to the top ranks

Two countries moved into the Index's top 20 for the first time. Bolivia (16th) was best-placed among less-developed countries and during the year its journalists enjoyed the same level of freedom as colleagues in Canada or Austria. But the growing polarisation between state-run and privately-owned media and between supporters and opponents of President Evo Morales could complicate the situation.

Bosnia-Herzegovina (19th) continued its gradual rise up the Index since the end of the war in ex-Yugoslavia and is now placed above its European Union member-state neighbours Greece (32nd) and Italy (40th).

Ghana (34th) rose 32 places to become fourth in Africa behind the continent's three traditional leaders - Benin (23rd), Namibia (26th) and Mauritius (32nd). Economic conditions are still difficult for the Ghanaian media but it is no longer threatened by the authorities.

Panama (39th) is enjoying political peace which has helped the growth of a free and vigorous media and the country moved up 27 places over the year.



Click here for the full report

MiddleEast Journalists Face Schengen Hurdles

IFEX

The International Federation of Journalists and the Federation of Arab Journalists have condemned the increasing bureaucratic hurdles being placed in the way of entry by Middle Eastern journalists and media staff into countries of the European Union.

At a meeting in Brussels last week the two groups agreed that delays in granting visas restrict freedom of movement, was creating frustration in media and may contribute to a growing misunderstanding between communities.

"It is more difficult than ever for journalists to cross borders to do their job or to meet with European colleagues," said Aidan White, IFJ General Secretary. "This leads to increased frustration and misunderstanding and a strong feeling that Middle Eastern journalists are not welcome in Europe."

The two groups called for new procedures regarding visas, especially for journalists. "What is needed is a fast-track procedure that will respond to the journalists? need to be on the spot as quickly as possible if they are going to be able to do their work effectively," said White.

The IFJ is writing to Franco Frattini, the European Commissioner for Justice and Home Affairs, and to the UNESCO Director General, calling for international organisations to press European governments to relax "inappropriate restrictions" and to recommend to member states of the European Union that they consider introducing procedures for journalists to speed up visa processing.

"There is a growing impression that parts of Europe are becoming no-go areas for journalists from the Middle East," said White. "Getting into Europe is as difficult for Middle Eastern journalists today as it was in years past for Western reporters to set foot in the Soviet Union."

During the 1970s and the 1980s, the IFJ and other press freedom groups campaigned for an open-door policy that would allow journalists to travel freely to do their work, now they are being forced to do the same in countries that 30 years ago were vociferous critics of closed societies.

"Travelling reporters are a threat to no-one," said White, "but they do provide an opportunity for more informed and better quality journalism in an age when prejudice, stereotype and ignorance tend to dominate the headlines."

France to declassify Rwanda files

BBC

France says it will release classified documents on the Rwandan genocide, after claims that French troops were complicit in the 1994 massacre.

Some 105 documents will be given to a magistrate investigating the claims by four genocide survivors.

Defence Minister Michele Alliot-Marie took the decision on the recommendation of France's defence secrets commission.

The plaintiffs accuse soldiers of rape, murder and complicity "in genocide and/or crimes against humanity".

The Rwandan Tutsis, aged between 25 and 39, have brought their case against the French military in the French courts.

During the genocide some 800,000 Tutsis and moderate Hutus were killed by Hutu extremists. French troops were sent to Rwanda as part of a United Nations force.

Rwanda has repeatedly accused Paris of complicity in the genocide. France has denied any role. The four survivors say French troops committed crimes themselves, and also let Hutu killers enter refugee camps under their protection.

An inquiry began last month in Rwanda into alleged French complicity in training and arming the Hutu extremists.

After hearing testimony from witnesses, the Rwandan panel will rule on whether to file a suit at the International Court of Justice.

China Courts Africa, Angling for Strategic Gains

By Joseph Kahn, NYTimes

Billboards here show elephants and giraffes roaming the savanna. Traffic has been curtailed, construction sites shut down and even the sky has been tantalizingly, if temporarily, blue.

Beijing has put on its best face to court Africa, “the land of myth and miracles,” as official posters call it. Political leaders of 48 of the 53 African countries, including 40 heads of state, are to arrive this weekend for a huge diplomatic event, the China-Africa forum.

The official purposes of the three-day event are to expand trade, to allow China to secure the oil and ore it needs for its booming economy and to offer aid to help African nations improve roads, railways and schools.

The unofficial purpose is to redraw the world’s strategic map by forming tighter political ties between China, which has the world’s fastest-growing major economy, and Africa, a continent whose leaders often complain about being neglected by the United States and Europe.

“African leaders see China as a new kind of global partner that has lots of money but treats them as equals,” said Wenran Jiang, a political scientist at the University of Alberta who has studied Chinese-African ties. “Chinese leaders see Africa, in a strategic sense, as up for grabs.”

China’s enthusiasm for Africa has raised concerns among many in the West while the United States is distracted by its efforts to curb terrorism, and France, Britain and other former colonial powers exert less influence in Africa than they once did.

China does not follow the international lending standards intended to fight corruption in the region. It has embraced the leaders of Sudan and Zimbabwe, two countries that are under heavy pressure to improve their poor human rights records. Major oil companies have complained that China uses its influence to secure business opportunities for its state-owned companies.

Chinese officials say those concerns are overblown or hypocritical, and they deny that they have a grand scheme to create an exclusive sphere of influence in Africa. But China has nearly one trillion US dollars in foreign currency reserves, boundless entrepreneurial energy and a strong drive to compete there on its own terms.

“The Western approach of imposing its values and political system on other countries is not acceptable to China,” said Wang Hongyi, a leading specialist on Africa at the China Institute of International Studies. “We focus on mutual development, not promoting one country at the expense of another.”

China’s economic goal is to secure Africa’s abundant supplies of oil, iron ore, copper and cotton at the lowest possible prices, analysts say. Chinese companies view Africa as an open market, neglected by Western multinationals, that they can cultivate with their trademark low-priced goods.

But if the goal is mostly mercenary, not unlike European objectives in Africa 150 years ago, the method is avowedly anti-imperialist.

The forum’s slogan — “Peace, Friendship, Cooperation, Development” — underscores China’s pledge not to discriminate or intervene. It even invited the five African countries — Burkina Faso, Malawi, Gambia, Swaziland and São Tomé and Príncipe — that still extend diplomatic recognition to its rival Taiwan, though none agreed to attend.

In the long term, Chinese officials say they hope not only that the overture will give their companies an edge in the competition for resources, but also that it will give their diplomats an advantage at the United Nations and other international organizations, where African countries can constitute a powerful voting bloc.

Unlike China’s initial push into Africa under Mao, which aimed to support the Socialist governments of postcolonial Africa, the focus is now on commerce.

“China has offered Africa a new model that focuses on straight commercial relations and fair market prices without the ideological agenda,” said Moeletsi Mbeki, a South African businessman and political analyst.

“They are not the first big foreign power to come to Africa, but they may be the first not to act as though they are some kind of patron or teacher or conqueror,” he added. “In that sense, there is a meeting of the minds.”

The event in Beijing, like most big political affairs in China, promises to be long on ceremony and propaganda and short on substance. President Hu Jintao is meeting a procession of heads of state.

The state media have promoted the “three 50s”: 50 years of Chinese-African cooperation, 53 African countries, 50 billion US dollars in two-way trade (a projected figure for 2006). China Central Television is conducting a nationwide survey to select 10 outstanding African icons. Contenders include Cleopatra, South African diamonds and the Sahara.

Chinese diplomats hint that by the end of the meeting they will unveil a variety of trade and aid concessions. These may include a list of African goods that can enter China tariff-free, increases in aid and technical cooperation and debt forgiveness.

China’s trade with Africa is growing faster than with any other region except the Middle East, increasing tenfold in the past decade, to just shy of 40 billion US dollars last year. China buys timber from the Congo Republic, iron ore from South Africa and cobalt and copper from Zambia. An estimated 80,000 Chinese expatriates live in Africa, selling shoes, televisions and everything else the world’s factory produces.

More vitally, Africa has helped quench China’s growing thirst for oil. Angola, which China cultivated assiduously in recent years, has edged out Saudi Arabia as China’s largest foreign source of oil.

Sudan, shunned by the West for its genocidal civil war in Darfur, was a net oil importer before China arrived there in 1995. China has since invested heavily in oil extraction, helping Sudan export about 2 billion US dollars worth of crude annually, half of that to China.

Beijing’s aggressive pursuit of commodities has often been accompanied by generous aid programs, low-interest loans and other gifts that some Western interests say undermine efforts to foster good governing in Africa. The World Bank and the International Monetary Fund have expressed their concerns that China’s unrestricted lending, including a 2 billion US dollars credit line for corruption-plagued Angola, has undermined years of painstaking efforts to arrange conditional debt relief.

Some African economists complain, too, that China wants to extract raw materials for industry and then sell manufactured goods back to Africa, a mercantilist pattern that failed to bring sustained growth in the past.

China has also prompted concerns among human rights groups by using the threat of its veto in theUnited Nations Security Council to protect Sudan and Zimbabwe against international sanctions. The rights groups say China’s arms exports to Sudan fuel the conflict in Darfur, which has claimed at least 200,000 lives and has forced more than two million people from their homes.

“China insists that it will not interfere in other countries’ domestic affairs, but it also claims to be a great friend of the African people,” said Sophie Richardson of Human Rights Watch. “But that doesn’t square with staying silent while mass killings go on in Darfur.”

For years, Chinese officials insisted that such concerns were the internal affairs of the countries involved, but they have recently changed their stance somewhat.

Zhai Jun, an assistant foreign minister responsible for African affairs, said last week that the Africa forum would address human rights and good government, and he specifically mentioned Sudan.

“The humanitarian situation in Darfur should be improved,” Mr. Zhai said. “We will adopt our own method and use the upcoming summit to do our part.”

Even if China does speak out on some rights issues, its basic strategy of engaging African countries on their own terms remains the core of its foreign policy.

Mr. Jiang, of the University of Alberta, said that unlike in the cold war, when China’s foreign involvement was motivated by ideology, Beijing now had a commercial strategy as the developing world’s biggest beneficiary of globalization to unite with the region most conspicuously left behind.

It will be up to each country’s leaders, and ultimately each country’s people, to decide how to use the wealth, he said. “From China’s perspective the Western powers and Western companies have had their chance in Africa and really nothing has happened,” he said. “China is trying a different approach,” he added. “It is saying, ‘Let us have a chance.’ ”

Bringing Light to the Poor

Salwa AbdulTawab

A plan to bring low cost lighting solutions to the poor in developing countries won a major prize in this year’s Business in Development (BiD) Challenge.

The project presented by Australia’s Barefoot Power Pty Ltd. gives villagers an access to renewable electricity. It uses an innovative business model to gradually build a power system, which would stagger investments in accordance with kerosene expenditure.

The idea sparked two years ago. Stewart Craine, a renewable energy engineer and entrepreneur, was a volunteer in Nepal, where 1 per cent of rural households have access to electricity. He suggested the idea to his employers, but they were not interested. Now he is starting in Papua New Guinea.

Rural families in the Pacific spend two to three Australian dollars every week on kerosene. The aim is to redirect this expenditure towards more sustainable energy sources and provide dramatic improvements in lighting services.

Traditional solar lighting systems cost 250 US dollars or more, which require loans to cover the three to five years payback periods. Offshore outsourcing to a low cost labour market like China helps offering products of appropriate quality and affordable cost.

The Barefoot business model splits the solar system in two. In the first year, a villager takes a lighting kit and battery charger for sixty US dollars cash, which can be paid back to the bank in one year. The solar panel is added later, with a one to two years loan, if required.

The target here is to support good payment habits, to start investing in micro hydro and gasifier mini grids, in three to five years.Barefoot Power is planning to provide services to one million people over the next five years.

The company started with Papua New Guinea and Fiji, and is developing a global network of interest. Testing covered 100 rural households and 200 more are expecting the services over the next two months.

“My plan contributes to two main Millennium Goals,” Stewart Craine says. “The first is developing global partnerships. At least 100 local distributors will be active and 3000 village energy enterprises will be created, through linking quality, low cost original equipment manufacturers directly with local NGOs.

“The second is improving environment and housing through the increase of families living in safer domestic conditions,” Craine adds. “We are providing a clean alternative to the usual diesel generators. Kerosene consumption will decrease by 10,000 tons a year, reducing CO2 emissions. Fire incidents will drop. Children will be able to study for more hours.”

The BiD Challenge is founded on promoting small business in developing countries as a direct way to improve living standards. Barefoot Power was selected from 1600 nominations. The prize amount will add to the total they need to start the project.