Fighting costs

Posted on by

President Obama has proposed to slow Lockheed Martin Corp’s F-35 Joint Strike Fighter programme, the Pentagon’s costliest purchase at about $300bn over the next 25 years.

The Defense Department wants $10.7bn to continue F-35 development and to buy 43 of the radar-evading fighters in fiscal 2011, down from $10.8bn this fiscal year, according a Pentagon budget overview.

The following is a list of how Obama would fund other major weapons programs:

* The Navy would spend $1.9bn to buy 22 Boeing Co F/A-18E/F Super Hornet fighter jets, up from $1.7bn for 18 in the fiscal 2010 budget enacted by Congress.

* The Navy would spend $1.1bn to buy 12 Boeing E/A-18G carrier-based electronic attack aircraft, down from $1.7bn for 22 this year.

* The Pentagon would spend $1.86bn for new unmanned Predator and Reaper planes built by privately held General Atomics, up from $1.18bn.

* The Army would spend $1.25bn on Boeing CH-47 helicopters, and $587m on AH-64 Apache Longbow helicopters, also built by Boeing.

* The Air Force budget includes $864m to begin replacing its aging KC-135 refueling planes, a competition that pits Boeing against Northrop Grumman Corp and its European partner EADS.

* The Pentagon would spend $3.4bn to sustain the Mine Resistant Ambush Protected Vehicle program in fiscal 2011 after adding $1bn to complete the programme this year.

* The Pentagon also would spend $9.9bn on ballistic missile defense programmes, up from $9.2bn. The funding includes $1.56bn for Lockheed’s Aegis missile defense system, $1.3bn for the company’s Terminal High Altitude Area Defense missile system and $1.3bn on a ground-based midcourse defense programme run by Boeing.

* The budget would spend $12.9bn for munitions and missiles, including $1.2bn for Trident II ballistic missiles built by Lockheed, more than $700m for Standard and Tomahawk missiles made by Raytheon Co and $253m for precision-targeted Joint Direct Attack Munitions made by Boeing.

* The budget includes over $25bn in procurement and research funding for Navy shipbuilding programmes. These include $2.73bn for a new carrier built by Northrop, $2.97bn for DDG-51 Aegis destroyers built by Northrop and General Dynamics Corp and $5.4 billion for Virginia-class attack submarines, also built by GD and Northrop.

* Spending on space programmes totals $9.9bn in the fiscal 2011 base budget and war supplemental budget, a decline of just under one percent from a year earlier. The request includes $911m for a next-generation communications satellite built by Lockheed, $598m for an additional Advanced Extremely High Frequency Satellite, also built by Lockheed and $1.2bn for launch vehicles built by a Lockheed-Boeing joint venture.

Too big to fail

Posted on by

White House adviser Paul Volcker will urge Congress to curb the risks
taken by large banks to help prevent them from being treated as “too
big to fail,” according to a testimony.

Detailing a recent
proposal known as “the Volcker rule,” the former Federal Reserve
Chairman will tell lawmakers that commercial banks’ proprietary and
speculative activities should not be protected by the government.

He will also urge international consensus on “appropriate” actions to restrict commercial banks’ activities.

Volcker
– an adviser to President Obama whose star has risen in recent weeks –
will appear before the Senate Banking Committee to defend the
administration’s latest proposal to rein in the banks.

In
January, Obama proposed limiting commercial banks’ ability to engage in
proprietary trading, to end their ties to hedge funds and private
equity funds and to restrict the future growth of large banks beyond a
new market share cap.

In his testimony, Volcker will say there
are strong conflicts of interest inherent in participation by
commercial banks in proprietary or private investment activity.

“I
am not so naive as to think that all potential conflicts can or should
be expunged from banking or other businesses,” Volcker said in his
prepared remarks.

“But neither am I so naive as to think that,
even with the best efforts of boards and management, so-called Chinese
walls can remain impermeable against the pressures to seek maximum
profit and personal remuneration,” he said.

Taken on board as
an adviser early on by Obama, Volcker initially seemed to have not much
of an impact in the administration. But that has changed since the
Democrats lost a special Senate election in Massachusetts and Obama
moved to a more populist stance, proposing new bank restrictions.

Gene technique zooms in on superbug

Posted on by

An international team lead by researchers from Britain’s Wellcome Trust Sanger Institute used very high-throughput gene sequencing machines to compare individual MRSA bugs from patients and show precisely how they were genetically related.

Methicillin-resistant staphylococcus aureus (MRSA) causes infections such as blood poisoning and pneumonia and can kill. It is one of a group of drug resistant bacteria, or “superbugs” that are major problems in hospitals around the world.

Stephen Bentley, who led the study published by the Science journal, said the new technology had allowed scientists for the first time to find precise differences in strains of the bug – a “fundamentally important” step to tackling infection.

“It allows researchers and public health officials to see how infections are spread, from person to person, from hospital to hospital, from country to country,” he said.

Until now, even the best methods for identifying genetic differences between bacteria have been unable to pick up tiny differences – leaving uncertainty about how infections spread.

The success of the new method relies on comparing whole genetic codes, the scientists said. The ability to track strains in this way will help researchers understand how strains can spread so rapidly, and should lead to new control strategies, not only for MRSA but also for other emerging superbugs.

The researchers looked at 62 MRSA samples. One set of 42 was taken from hospitals in North and South America, Europe, Australia and Asia from patients who became infected with MRSA between 1982 and 2003, and 20 were from a hospital in Thailand, from patients who developed MRSA within seven months of each other.

“We wanted to test whether our method could successfully zoom in and out to allow us to track infection on a global scale – from continent-to-continent, and also on the smallest scale – from person-to-person,” Simon Harris of the Sanger Institute told reporters at a briefing.

The team sequenced the whole genomes of all the samples and were able to spot single-letter changes in the genetic code and identify differences between even the most closely related bugs.

From the results they created an “evolutionary tree” which showed that MRSA infections are often clustered in locations, but can be spread across borders by patients travelling between one place and another and visiting different hospitals.

Drug-resistant bacteria kill about 25,000 people a year in Europe and about 19,000 in the US. The European Centre for Disease Prevention and Control says superbug infections cost 900 million euros ($1.31 bln) a year in extra hospital time and 600 million euros a year in lost productivity.

Sharon Peacock of Britain’s Cambridge University who also worked on the study, told reporters the work could “flag up hotspots for MRSA transmission … and these could then be examined to improve infection control strategies.”

Dutch researchers said that all hospital patients should be screened for MRSA to try to halt its spread.

EU sticks with low climate offer

Posted on by

The 27-nation bloc has committed to unilaterally cut carbon dioxide to 20 percent below 1990 levels over the next decade.

Ahead of the UN climate talks in Copenhagen in December it offered to deepen those cuts to 30 percent if other rich countries made similar efforts.

That offer still stands, according to the draft letter to top UN climate official Yvo de Boer. But it is unlikely to be carried out because the Copenhagen talks ended with a weak deal.

Experts say the total cuts offered there by rich countries amount to no more than 18 percent and fall far short of the 25-40 percent that UN scientists outline as necessary to avert dangerous climate change.

The world is currently on track for temperatures to rise to 3.5 degrees Celsius above pre-industrial levels by the end of this century, which would bring catastrophic melting of ice sheets and rising seas, some scientists say.

But many EU countries and industries are wary of increasing cuts to 30 percent alone, because the cost of cutting emissions might put factories at a disadvantage to rivals in less regulated countries.

Leverage
“After the Copenhagen failure, the EU would be foolish to again unilaterally increase its greenhouse gas objective,” Gordon Moffat, the head of steel industry group Eurofer, said in a statement on Thursday. “Another 10 percent would be fatal.”

But environmentalists say the EU is naive to think its conditional 30 percent offer creates any negotiating leverage and the bloc should move there anyway to set a moral example.

“Tackling climate negotiations with the same strategy as trade negotiations will simply get them bogged down like the current Doha round of trade talks,” Greenpeace campaigner Joris den Blanken said.

Spain, which holds the EU’s rotating presidency until July, drafted the letter, and will wait for feedback from all 27 EU nations before signing and sending it.

While participants in the EU’s Emissions Trading Scheme, the bloc’s main weapon against climate change, were worried that a 30 percent goal would raise the cost of carbon permits, analysts said the 20 percent target was largely priced into the market.

“Thirty percent is out of the picture for now,” said Emmanuel Fages of Societe Generale. “Nobody was seriously attaching any probability to it post-Copenhagen.”

At a meeting of EU ambassadors in Brussels on Thursday, a group of eastern European countries led by Poland joined Italy, Cyprus and Malta to call for the deletion of any reference to the 30 percent, even as a conditional offer, diplomats said.

Britain, Denmark, France and the Netherlands wanted the 30 percent offer to be prominent but to remain conditional.

American nightmare

Posted on by

That notion clashes with the widely-held belief that Muslims in the US are not nearly as prone to being seduced by Al Qaeda propaganda as their co-religionists in Europe. But a series of recent terrorism cases involving American citizens have challenged old assumptions and thrown question marks over a host of surveys meant to show the American Muslim communities’ resistance to radicalisation.

Incidents spiked in 2009 and included the arrest of five US citizens in Pakistan, where they allegedly tried to link up with extremists, and the arrest of Daniel Boyd, a white convert to Islam who was accused of plotting to attack soldiers at the US Marine Corps base in Quantico, Virginia. Early in the year, Bryant Vinas, a Hispanic American convert, pleaded guilty to having trained with al Qaeda in Pakistan.

Now, the lure of al Qaeda’s murderous ideas is seen as a real threat. “The group seeks to recruit American citizens to carry out terrorist attacks in the US,” according to John Kerry, the chairman of the Senate Foreign Relations Committee. “These Americans are not necessarily of Arab and South Asian descent,” he wrote in the preface of a January 20 report from his committee on al Qaeda in Yemen and Somalia. “They include individuals who converted to Islam in (an American) prison or elsewhere and were radicalised.”

“The prospect that US citizens are being trained at al Qaeda camps in both countries deepens our concern…” not least, apparently, because an American official in Yemen told committee investigators that American converts living in Yemen included “blond-haired blue-eyed types.” That echoes then CIA chief Michael Hayden’s 2008 warning that al Qaeda was training “operatives that wouldn’t attract attention if they were going through the customs line at (Washington) Dulles airport.”

How many have done so is anyone’s guess. A January study by researchers from Duke University found that in the eight years following the September attacks, 139 Muslim-Americans had committed acts of terrorism-related violence or were prosecuted for terrorism-related offenses involving violence.

That’s a small number – 17 per year on average – in a country that recorded 136,000 murders from September 11 to the end of last year. It is also a small number compared with an estimated 2.35 million Muslim-Americans. But then, how many people are needed to bring down an airliner or trigger a suicide bomb killing dozens?

In mid-December, after a Muslim-American army officer, Major Nidal Malik Hasan, killed 13 people in a shooting spree at the Fort Hood military base, the Pew Research Center drew attention to its wide-ranging 2007 survey of the Muslim-American population that found that the vast majority rejected extremism.

The Pew survey, like a global Gallup poll in the same year flagged as the largest study of its kind, can be read two ways. Pew found that 78 percent of Muslim-Americans thought suicide bombings or other forms of violence against civilians could never be justified. But eight per cent thought it was (sometimes or often) justified. In terms of absolute numbers, that translates into more than 100,000 people – a sizeable pool of potential recruits for al Qaeda. Five percent of those questioned had a favourable view of the organization.

More strikingly, in the face of overwhelming evidence to the contrary, 28 percent flatly disbelieve that Arabs carried out the September 11 attacks.

Alienation from the mainstream
Polls such as those by Pew and Gallup paint only part of the picture, according to Geneive Abdo, author of Mecca and Main Street: Muslim Life in America After 9/11. “The real story of American Muslims is one of accelerating alienation from the mainstream of US life, with Muslims in this country choosing their Islamic identity over their American one,” she says. “This is particularly true of the younger generation, those under 30.”

Growing up in America does not provide immunity to the influence of radical preachers on the Internet and of chat rooms which provide ideological justification for what al Qaeda calls the war against Jews and Crusaders. Videos glorifying violence against them serve as recruitment tools, and by many expert accounts, al Qaeda is using them more nimbly than the US and its Western allies.

Undermining al Qaeda’s ability to recruit clearly is as important as the military pressure that has killed many of its leaders, diminished the organisations presence along the Afghan-Pakistani border and driven extremists to new havens in Yemen and Somalia.

The problem with undermining al Qaeda’s credibility, and thus its recruitment, is not that the West lacks ideological ammunition; it’s how effectively it is using it. One recent study from the Combating Terrorism Centre at West Point, the US military academy, for example, is a powerful counter-argument to al Qaeda’s portrayal of itself as the vanguard of the global Muslim community, committed to defending Muslims against Western forces waging war against Islam.

Drawing exclusively from Arab newspapers to avoid the standard extremist accusation of bias from Western news outlets, portrayed as no more than propaganda tools, the West Point researchers documented that al Qaeda attacks from 2004 to 2008 killed 3,010 people.

Just 15 percent of them were Westerners, the rest were Muslims. How widely is that known?

China fights tuberculosis

Posted on by

Drug-resistant
tuberculosis, far more expensive to treat, emerges when patients fail to follow
treatment regimes and take substandard drugs or stop treatment too early.

Liu
Zhongwu, a stonecutter working in southern China, for example, stopped taking
his TB medication midway through a standard six-month course in 2007 because it
was too costly.

“Even
though one or two drugs were free, I had to pay 500 yuan ($73) a month for
other drugs (to reduce side effects) and the side effects were bad, I suffered
terrible gastric pain and had to stop work, I didn’t even have energy to
walk,” said Liu.

It
is precisely this sort of behaviour that health experts are trying to stop
because if the TB bacteria is not fully eliminated, it can mutate, resurge
later and become resistant to the small arsenal of drugs that can fight the
disease.

China
has 4.5 million TB cases currently; and each year 1.4 million people fall ill
with the disease. TB killed 160,000 people in China in 2008, according to the
World Health Organisation.

TB
killed 1.8 million people across the world in 2008, or a person every 20
seconds. It is not only a scourge in poor countries but also in the west, where
it has flared anew in the last 20 years because of AIDS, which weakens the
immune system.

Drug-resistant strain

TB
is also a big drain on China’s health budget because of a high incidence of
people with a drug-resistant strain of the disease, which is a lot harder and
more expensive to treat.

In
such cases, patients need to take drugs for up to two years and the worst type
of TB, for which there is no cure, kills one out of every two patients.

“If
there are more drug-resistant cases, the cost of TB treatment will rise by a
lot, that’s for sure. With drug resistance, we can’t use first-line drugs and
other drugs cost a lot more,” said Lin Yan, director of the China office
of the non-profit International Union Against TB and Lung Disease.

“When
these patients infect others, the others will get drug-resistant TB. That
increases the cost of treating that person and increases the chances of him not
recovering.”

Regular
TB costs 1,000 yuan to treat in China but drug-resistant TB ranges from 100,000
to 300,000 yuan per person, said Zhong Qiu of China’s TB Expert Consultative
Committee.

China
ranks second in the world with 112,000 drug-resistant TB cases in 2007, after
India with 131,000. Russia has 43,000 cases, while South Africa has 16,000 and
Bangladesh 15,000.

China
spent $225m on tackling TB in 2008, up from $98m in 2002, according to WHO.
These figures do not take into account what patients pay out of their pockets,
typically between 47 and 62 percent of their hospital bills.

Drug-resistant
TB made up 27.8 percent of all TB cases in China in 2000 versus five percent in
advanced countries.

“There
are many reasons for China’s drug-resistant TB problem. Patients stop taking
drugs when they feel better, maybe after a month. Some have no money for drugs
if the treatment is not free and they don’t even know this is a serious
disease,” said Lin.

“Some
are so afraid of stigma they don’t see a doctor, they just buy drugs over the
counter.”

Ignorance, poverty, stigma

TB
affects mostly poor people, who typically live in places where healthcare is
not easily accessible. Many patients pay not only for treatment but also
transportation, and any chronic, long-term disease can bankrupt entire
families.

Li
Jiachuen, 45, quickly ran out of money and had to borrow from relatives and
friends after he was diagnosed with TB.

“I
don’t take drugs now. I don’t even have money to pay off my 20,000 yuan debt. I
spent thousands of yuan on diagnosis and treatment and even more on
transportation,” Li said.

WHO
recommends all TB treatment be free because the disease is a public health
threat.

But
in China, diagnosis and treatment is only free in specialist TB outpatient
clinics. General hospitals, which have been self-financing since the 1990s,
impose charges.

“TB
is a political problem because it is infectious. It has societal impact, it is
a threat to public health … free treatment is very important,” said
Zhong, who also heads the Anti-TB Research Institute in China’s southern
Guangdong province.

The
world’s only TB vaccine is 100 years old and there has been no new TB drug for
more than 40 years. But the resurgence of TB due to AIDS has forced the West
back into TB research in the last 20 years and a string of experimental drugs
and vaccines are now in the pipeline.

Chinese
scientists are working on a new class of TB drugs based on an old drug called
clofazimine, used in the past to treat leprosy, said Ann Ginsberg, chief
medical officer of the TB Alliance, a US-based non-profit scientific group that
pulls together partners to develop new TB drugs.

“They
(scientists) found a very promising lead compound and we hope within the next
six months … it will come into formal pre-clinical development and get the
formal animal and non human studies that are required to convince the regulators
it can go onto people,” said Ginsberg.

Decrepit landmark shows pain

Posted on by

A couple of tourists who have ventured off the beaten track around Buckingham Palace stand on tiptoe as they strain to photograph the gargantuan structure over a high screen. As debt-laden developers face the ruins of recent extravagance, Batttersea Power Station Europe’s largest brick building – is a decrepit symbol of the past profligacy and present pain in Britain’s real estate market.

In World War Two the central bank turned to Battersea to burn £120m of notes it had not had time to cancel as it introduced a new design against feared enemy forgeries.

Now Battersea must consume much larger sums if it is to remain standing.

The art-deco icon, which won global recognition through appearances in movies such as Stanley Kubrick’s “Full Metal Jacket” and on the cover of Pink Floyd’s 1977 album “Animals”, has been derelict for over a quarter of a century.

It has already passed through numerous developers’ hands since stopping power production in 1983 as Britain shifted to oil, gas and nuclear.

Developers now are courting investors for a £5.5bn ($8.9bn) redevelopment just as banks remain focused on unscrambling exposure to commercial real estate. The market has shown signs of recovery recently but is still treacherous.

“The building is likely to suffer major structural damage in five years if full repairs don’t start before then,” said Jeremy Castle, chief planning director at Treasury Holdings UK, the power station’s current developers, referring to damage sustained after the roof was removed 20 years ago.

“We need to move fast to redevelop the site because the building is deteriorating quickly,” he said.

The two-year downturn in Britain sliced almost 45 percent off average commercial property values. The Power Station’s owners, who bought it for £400m in 2006, say its value fell by 15 percent in the six months to end-June 2009, causing the company to breach terms on some of its loans.

Battersea’s imposing white brick chimneys have been a popular feature of London’s skyline for almost 80 years, but its brickwork is held together by metal straps. Many bankers and financiers say plans to redevelop it are a commercial anachronism in a city obsessed with skyscrapers.

Years of deleveraging

For Nick Collins, English Heritage’s team leader for the east and south London, the listed Power Station is “one of the most important buildings at risk in the country.

“It stands in splendid isolation, it’s seen and known and recognised so easily,” he said.

Castle’s employer Treasury Holdings is an Irish property firm that controls the Battersea site through a 67 percent share in debt-laden Real Estate Opportunities.

REO says the debt taken out to buy the station is still performing, but part of it, along with the majority of its loan book, will be transferred to Ireland’s bad bank, or the National Asset Management Agency (NAMA) next year.

The Irish government is paying 54bn euros ($78bn) to buy risky commercial property loans with a combined book value of 77 billion from banks to clean up the legacy of excessive lending.

Of an estimated £280bn worth of unpaid commercial property loans in the UK, more than a quarter are tied to poorer-quality assets, a problem also faced by other European countries, according to CB Richard Ellis, the world’s largest real estate consultancy.

Sector experts say until banks have unwound their exposure to commercial real estate – particularly smaller loans taken out by amateur investors which may have gone unnoticed in 2009 – their ability to resume anything close to pre-crisis lending to property investors will be limited.

The process may take five years or longer, they add.

Ambition and controversy

The power station is no stranger to controversy. When construction began in 1929 it sparked protest from people who thought it would be an eyesore and damage local buildings, parks and even paintings in the nearby Tate Gallery.

Sir Giles Gilbert Scott, the architect behind the red telephone box and the Bankside power station – now the Tate Modern – was drafted in to boost its appeal for local residents.

The “upside-down table” of four white chimneys, each a third of the height of the Eiffel Tower, was built over a 20-year period to form two separate power stations in one building.

Situated a stone’s throw from a famous home for unwanted pets, the site passed into the hands of private developer John Broome for £1.5m in 1987 but costs escalated and it was later sold to Hong Kong-based development company Parkview International.

A one-table restaurant atop a 100 metre-high chimney was just one idea put forward by previous developers: an indoor theme park and high-class shopping mall have been others that generated little more than critical headlines for the site.

REO’s plans – central London’s largest ever planning application – were submitted in October 2009. At more than double the cost of a previous developer, they include an emphasis on residential and commercial office space including 3,700 new homes and 1.6 million square feet (149,000 square metres) of office space.

The financial crisis had put paid to earlier, more extravagant ideas including an “eco dome” and 300-metre (1,000 ft) tower.

Adventurous schemes have long been derided in Britain.

“Faneuil Hall in Boston city centre was an example of how our American cousins can redevelop a historic building and turn it into a great marketplace,” said Chris Johnson, managing partner at architects firm Gensler, and the creator of the Gate in Dubai which houses the Dubai stock exchange.

“You can look at the Piers in San Francisco and see how they have been transformed into a great attraction.”

Hard to reach

Part of the problem is that while the Power Station may be very easy to see, it is poorly served by public transport.

“You can build great things but no-one will go to them if it’s too hard to get there,” said Johnson, whose company is not involved with Battersea. “You will constantly keep increasing the cost of the overall project.”

Developers are promising that a surrounding industrial area, one of few pockets of undeveloped land in central London, will by 2020 be transformed into a new business hub similar to Canary Wharf in London’s east, with the extension of the Underground network. The area will also house the US embassy.

“Previous projects for the Power Station site failed because they underestimated the costs of repairing the existing building, the transport links didn’t deliver the capacity required and they failed to encompass the entire area,” said Treasury’s Castle.

Fuelled by recession

Local resident Brian Barnes says the economic downturn has, ironically, contributed to the enlarged scale of the latest plans.

“They bought it for £400m, that was the high end before the recession, they’ve had to revalue it downwards so its not worth what they paid for it, now they’ve got to do this over-the-top scheme to realise any profit,” he said.

Johnson, the architect, said the difficulty with sites needing infrastructure is that commercial projects must help fund them, but prospective commercial tenants demand residential development to create a market for their goods and services.

“It’s a spiralling problem which eventually gets so monumental that nothing gets built,” he said. “We can make any building work in this city, we’re a nation of inventors.

“But someone has to help, someone has to help Battersea to get it moving. Whether it is the mayor (of London) or the government. It is that important.”

Japan says US ties firm

Posted on by

US-Japan ties have been frayed by the dispute over the US Marines’
Futenma airbase on the southern island of Okinawa since Prime Minister
Yukio Hatoyama took office in September pledging to steer a diplomatic
course less dependent on Washington and to improve ties with China.

Concerns that Hatoyama is mismanaging the US alliance have also eroded
the government’s popularity ratings, which have sunk to around 50
percent ahead of a mid-year election that his Democratic Party needs to
win to pass bills smoothly and avoid policy paralysis.

“From the United States, there is a view that Japan is cosying up to
China and distancing itself from the United States. It’s as if three
people were competing over which two are lovers,” said Foreign Minister
Katsuya Okada.

“I think that is an unproductive way of looking at it. It’s not a
question of choosing one over the other,” he told reporters in an
interview.

“China, especially its economy, is very important for both Japan and
the United States, but it has a different political system, so
fundamentally it is not an ally,” he said.

Okada said Japan was committed to resolving the Futenma dispute by May
– when Hatoyama might visit the US – and denied that a delay in
deciding had undermined Japanese voter support for the Hatoyama
government.

“I do not think that because of the Futenma issue we have lost the
people’s confidence. We have to reach a conclusion and that conclusion
must be one that is persuasive to the public. That is why we are taking
time,” said Okada, a former leader of Hatoyama’s Democratic Party.

“All we can do is stick to our stance of deciding by May.”

Alliance without US troops unthinkable
Washington wants Tokyo to stick to a 2006 deal to relocate Futenma’s
facilities to a less crowded part of Okinawa as a prerequisite for
shifting up to 8,000 Marines to the US territory of Guam, part of a
broader realignment of US forces.

But Hatoyama said ahead of the August election that swept his party to
power that it would be better if the base were moved off Okinawa. His
tiny coalition partner, the Social Democratic Party, is insisting he
stick to that stance.

The ruling Democratic Party has a huge majority in parliament’s lower
house, but needs the backing of the Social Democrats and another small
coalition partner to get bills through the upper house, which can delay
legislation.

US Secretary of State Hillary Clinton urged Japan at talks with Okada
in Hawaii to implement the 2006 plan, but the two vowed not to let the
row derail the security alliance in the face of growing Chinese power.

They also kicked off discussions about the future of the alliance, long
seen by many as vital to security in a region home to an unpredictable
North Korea and a rising China.

Okada said arriving at a common understanding of China’s role in the
region would be one key task for those talks, which could be wrapped up
when President Obama visits Japan for an Asia-Pacific summit in
November.

He added the alliance was unthinkable without stationing US troops in
Japan, despite suggestions by some Japanese experts that the US
military presence is outdated.

“The framework of the security treaty is that the United States has the
responsibility to protect Japan while Japan hosts the [US] bases,
including for the sake of the Asia-Pacific region, and without the
permanent stationing of US troops, it would be truly one-sided … so
that is unthinkable,” Okada said.

“But efforts to reduce the volume of the bases or rectify the concentration in Okinawa will be sought in future,” he said.

Okinawa, some 1,600 km south of Tokyo, is reluctant host to about half
the 47,000 US military personnel in Japan and many residents resent
what they see as an unfair burden for maintaining the US-Japan security
alliance.

Gene may pinpoint most aggressive prostate cancer

Posted on by

Men with the genetic change had a 26 percent higher risk of having
aggressive prostate cancer, the researchers reported in the Proceedings
of the National Academy of Sciences.

“A single variant with a moderate effect such as this is unlikely to be
sufficient on its own at predicting risk,” said Jianfeng Xu of Wake
Forest University School of Medicine in North Carolina, who led the
study.

“But its identification is significant because it indicates that
variants predisposing men to aggressive disease exist in the genome.”

Prostate cancer is the second-leading cancer killer of US men, after
lung cancer, with more than 192,000 cases diagnosed in 2009 and 27,000
deaths, according to the American Cancer Society.

Most cases are very slow-growing and would never kill the patient or
even cause symptoms, but it is very difficult to predict whose tumors
are likely to spread.

A report in the Journal of the American Medical Association in
September said that 85 percent of cases will never spread, and another
study published in August found that one million US men had been
diagnosed with and treated for prostate tumors that would never have
harmed them.

“We speculate that a panel of variants could be an important part of
developing a screening strategy that could reduce the number of men
requiring screening, thereby reducing over-diagnosis, while also
identifying men at risk for developing aggressive disease at a stage
when the disease is potentially curable,” Xu said.

The international team of researchers studied 4,849 men with aggressive
prostate cancer that had spread and 12,205 men with slow-growing
disease, looking at 27,000 different genetic mutations called single
nucleotide polymorphisms or SNPs.

They found one that was 26 percent more common in the men with
aggressive disease. It was found in 32 percent of 4,829 men with
aggressive disease and 28 percent of 12,205 men who had slow-growing
cancers.

This could be more useful than some of the other SNPs that have been
linked with prostate cancer, they said, but will not, on its own, be
good for predicting who needs surgery or radiation to treat early stage
prostate cancer.

Icelandic freeze and Greek saga show risks of snapping

Posted on by

Iceland is balking at crushing terms demanded as part of its making whole overseas depositors in its ruined banking system, while Greece is involved in a game of chicken with the Eurozone authorities over how, when and with whose assistance it heals its fiscal difficulties.

Like so many of us paying bills in January we ran up last year, they face a depressing prospect and no easy way out.

First, Iceland, whose president vetoed an agreement with Britain and the Netherlands to pay about $5bn towards the costs of reimbursing depositors in its failed Icesave bank, saying he would put the bill to a referendum. While British and Dutch officials have mustered up a good show of outrage, President Grimsson’s move should not surprise; he was petitioned by a fifth of the population, each of whom can look forward to helping to pay back their individual $17,000 share of the costs.

Iceland is not refusing to repay the debt, which it acknowledges, but wants repayments tied to gross domestic product through 2024 with the possibility of a renegotiation if the full amount is not repaid by then. It is a brave move, and maybe a foolhardy one, given that the rejection puts in doubt an aid package from the IMF and Scandinavia, as well as potentially hurting its bid to join the European Union. Iceland’s debt has already been downgraded to junk status by Fitch Ratings, with similar moves likely.

No one looks good in this saga, certainly not Iceland, which was effectively a hedge fund with a small fishing fleet attached and, you have to say, vastly better controls on overfishing then overlending. The Netherlands and Britain also look silly and incompetent; neither took effective steps to protect their citizens from the menace of Vikings offering higher rates of interest. Last but not least is the credulousness and cupidity of the British and Dutch depositors, including some local governments which not only chased the highest rates of interest but sometimes concentrated the vast majority of their funds with one bank.

A pox on everyone’s house then, but someone has got to pay. The point here is that public opinion in Iceland does not necessarily subscribe to the rules of the game as played in Washington and Frankfurt. If a sensible compromise is not reached, it is not inconceivable that Iceland’s negotiating position hardens. It is far from clear, for example, that Argentina is worse off for having thumbed its nose at the IMF and global financial community in 2001, nor is it apparent that Turkey, for example, has done well out of compliance.

Financial Balkanisation
The central case is a compromise, but the disagreement itself is instructive. Iceland, like Ireland but suffering from not being inside the European and euro zone tent, shows in an extreme way that governments pledging to make good debts is entirely different from them in the end making them good. The US borrows on equal terms from the bond market and Iceland as a supplicant from the international community, but the principal is the same. Sovereign risk and brinkmanship go hand in hand.

An Icelandic blowup would also give impetus to moves by countries to contain the risks they face in their banking system to more easily controlled onshore players and activity. There has been good work on the international level to avert this, but it is also clear that politicians and regulators have reasons to make local rather than international lending a priority, both to control risks and to benefit their own banking systems. This, which could amount to financial Balkanisation, would retard growth and cause international friction. Just wait until the effects of the stimulus begin to ebb in the second half for this to gain traction.

ECB Executive Board member Juergen Stark delivered a sharp rebuke to Greece in Italy’s Il Sole 24 Ore newspaper, saying in essence that Greek competitive and fiscal problems are homemade and that investors expecting a euro zone bailout are “deluded.”

Given that the ECB is not the authority which would effect a bailout, if one were needed, this is probably best viewed as jawboning. If markets treat Greece like it is in receipt of a bailout it – like, say, Citigroup – will be less inclined to take painful steps.

Like Iceland however, the common themes are sovereign credit risk and situations where it is partly unclear who must pay and doubly unclear who will do best out of paying or balking.

There is lots of paying up by governments yet to be done, and doubtless there will be lots of balking too.

Qaeda survives pressure, salvages some credibility

Posted on by

Al Qaeda has stormed back to menacing prominence in the West with an attempted mass attack, shoring up tottering credibility among admirers impatient for another spectacular strike like Sept 11.

Almost five years after its last mass killing in the West, the failed Christmas Day downing of a US airliner over Detroit shows the group to be resilient, innovative and able to persuade young militants to kill themselves in an anti-Western campaign.

Hatched by al Qaeda followers in Yemen, the attack also demonstrates the threat to the West of the globally-scattered hubs Osama bin Laden has fostered as he has come under more pressure in his redoubts on the Afghanistan-Pakistan border.

Experts draw a similar conclusion from a January 1 attack in Denmark involving a Somali: armed with an axe and suspected of links with al Qaeda, the man broke into the home of a Danish cartoonist whose drawings of the Prophet Mohammad had caused Muslim outrage. The Somali was shot and wounded by police.

“Al Qaeda is back,” said Peter Neumann of London’s Centre for the Study of Radicalisation and Political Violence.

“It may look different from al Qaeda of 2001, and another 9/11 still seems far-fetched, but Detroit and now Denmark show the threat hasn’t gone … and is becoming more diverse.”

“It’s no longer just the tribal areas in Pakistan that cause concern, but a lot of locations across the world. There now seem to be regional hubs, which provide all the things – resources, training, direction – that used to be done in one place.”

Al Qaeda in the Arabian Peninsula was quick to claim the December 25 attack, in which a 24-year-old Nigerian tried but failed to properly detonate explosives on a Detroit-bound plane.

Some analysts saw the claim of a failed attack as stark evidence the group is so weakened by Western pressure that it self-servingly lowered the bar for its own success.

No room for complacency
Not so, say other analysts. They argue the recent attacks, and a string of arrests of suspected militants in the US in 2009, show there is no room for complacency, even if the network lacks the depth of talent it had in 2001.

“We have a very formidable and implacable enemy, even if it has been weakened,” said Bruce Hofffman, professor of security studies at Georgetown university in Washington.

“What’s worrisome is they are adapting and adjusting even to this immense pressure that we are putting them under.”

Jeremy Binnie of Jane’s Intelligence says some affiliate groups “may emerge in their own right as international threats.”

Big inroads were made into al Qaeda in 2009, in particular by aerial drones in Pakistan that killed a string of operatives including at least two top members of its external wing.

Fear of death from the air means top men like bin Laden and Egyptian number two Ayman al-Zawahri hide in remote locations and reportedly communicate only by courier, a method which limits their effectiveness either as organisers or ideologues.

“They are very, very wary indeed of meeting anybody that they don’t know…they will do almost anything to deal with people at two or three removes, rather than directly,” UN security official Richard Barrett told a Washington audience.

“This makes it very difficult for them to give out a coherent message, an accurate message, and also to use whatever charisma they may have to try and recruit and inspire people.”

The group continues to be irrelevant to the daily concerns of Muslims struggling variously with unemployment, war, famine or bad governance and this limits its following to a hardcore.

Al Qaeda is also under challenge intellectually, with prominent Libyan and Moroccan anti-Western activists in 2009 disowning its view of the world in online writings.

Finances, according to experts who follow the group’s murky money trail, are stretched, and al Qaeda has reminded followers that giving money is a suitable alternative to fighting.

But despite these setbacks the group is still adept at exploiting its regional hubs, its links to effective and deadly Pakistani allies and Western counter-terrorism failings exposed in the December 25 incident.

West’s reaction more damaging than the attack?
David Claridge of Janusian security consultants said the December 25 attempt was “fairly predictable and we may see it as a failure. But al Qaeda in the Arabian Peninsula will see it as its first major attack outside its normal operating area.”

Al Qaeda has reason to see potential for growth in 2010.

The US military build-up in Afghanistan and an increase in US security cooperation in Yemen give it plenty of material with which to argue the rulers of Muslim lands are US puppets.

There is potential too, argue some analysts, for the West to hand al Qaeda an easy victory by over-reacting with vastly heightened security steps that could render life intolerable.

Francois Heisbourg, of the Foundation for Strategic Research in Paris, said: “The response is more damaging than the attack. Anyone born in the wrong place or with the wrong skin colour is going to have a pretty bad time at an airport now.”

Some experts said the West had to avoid knee-jerk reactions to events, and adopt an approach carefully calibrated to the actual threat.

“By far the biggest impact of al Qaeda’s operations is the reaction in the US and Europe. Even if the plane, heaven forbid, had gone down, that in no sense would have been an existential threat to the US,” said Paul Eedle, a British expert on militant propaganda and political Islam.

From catwalk to laptop

Posted on by

Photo blogger Tommy Ton used to wait outside exclusive venues for fashionistas to arrive and leave catwalk shows, but at the latest Dolce & Gabbana womenswear run, he proudly sat in the front row.

Sitting close to the creme de la creme of fashion editors – Vogue’s Anna Wintour and Glenda Bailey of Harper’s Bazaar – the Toronto fashionista excitedly blogged about his privileged treatment in Milan on his site www.jakandjil.com from his seat.

“I’ve been going (to fashion week) for two years and I was lucky if I even got a response,” he told Reuters. “But being embraced by Dolce & Gabbana, that was a defining moment.”

Soon after his success in Milan, French maisons sent him invitations to Paris fashion week, eager to have him at their shows.

Fashion brands, increasingly aware of the power of bloggers, are making room for them in their front-row seats to try to grab consumers before they visit their stores.

For years, traditional houses have shunned the internet, seeing it mostly as a place for those in search of bargains.

In the September fashion week run, such design houses as Louis Vuitton, Dolce & Gabbana and Alexander McQueen, streamed their catwalk shows on the internet.

Facebook is full of brands, including Vuitton, Gucci and Burberry with hundreds of thousands of fans, who also voice their passion for fashion on Twitter.

“The more you can open up your brand to the client, the better,” Gucci designer Frida Giannini told a luxury conference in Berlin in November.

Fashion dot com
Many fashion brands have opened online stores in the last year, including Salvatore Ferragamo and Roberto Cavalli. Hugo Boss, which sells on the Internet in Europe, plans for online stores in Asia and in the United States.

“We try to understand the online shopper in a deep way,” Chief Executive Claus-Dietrich Lahrs told the Berlin conference.

Giorgio Armani has a mobile phone platform for e-commerce, so users can shop for Emporio Armani items from their handsets.

Prada is looking at selling online products that have yet to make it into its stores.

“In five years, 30 percent of [fashion] goods will be sold on the Internet in America,” Prada Chief Executive Patrizio Bertelli was quoted in Italian newspapers as saying, without giving a comparative figure.

When Italian online fashion retailer Yoox launched in 2000, there was a lot of “scepticism about the Internet in general and online sales”, founder and Chief Executive Federico Marchetti told Reuters.

Now it also operates retail sites for brands like Valentino and Marni. Yoox is poised for an initial public offering in Milan.

“Increasingly fashion brands are shifting their communication budgets to the Web, and have a greater understanding of its potential and in particular they now are all requesting an online store,” he said in emailed comments.

Luxury groups are focusing on winning customers as they emerge from the worst economic crisis in decades. Bain & Co, a consultancy, expects luxury sales to fall eight percent this year to EUR153bn.

While online sales are unlikely to make up the difference soon, consumers’ growing confidence and comfort in using the Internet to shop provide positive signals.

Bain says “luxury shame” – the fear of being seen shopping for luxurious items in a recession – is also helping. It saw 2009 online luxury sales up 20 percent to 3.6 billion euros – representing 2.35 percent of total luxury sales last year.

Luxury goods companies “were very traditional in their advertising methods and tools and in what they thought of consumers”, Bain partner Claudia d’Arpizio said.

“Now they understand the consumer age is different and their values are changing so (they) need different tools to attract and interest them.”

In the United States, while most sectors of the economy experienced a downturn in the first quarter of 2009, online sales for 80 retailers rose by an average 11 percent, according to a report by the Organisation for Economic Cooperation and Development.

Ferragamo chief executive
Michele Norsa said he saw its online store becoming “a nice shop” next year with “several million euros” in sales.

Echoing Norsa, Valentino’s top executive, Stefano Sassi, said its store that sells accessories and its younger line was “in constant growth”.

Allure of the web
The web’s allure is easy to understand. Designers can present their creations directly to customers without relying on media reviews, which may not be favourable. Designers can also save on advertising, especially as they cut marketing budgets.

When it comes to global advertising, the Internet is the only medium expected to expand – with 9.2 percent growth for 2009 – while all other media are set to shrink, according to media agency ZenithOptimedia.

“[The web] is very important by the sheer fact people are spending more time online, on Facebook, Twittering,” Emanuel Ungaro Chief Executive Mounir Moufarrige said.

He said online and glossy magazine ads were complementary.

One challenge fashion houses will face will be how to deal with the lag between photos of new collections going online as they are presented and them hitting the stores six months later, when they could seem dated.

“If you’re an artist and the only one who can come up with those colour combinations and those prints … people will wait as long as they have to,” said Scott Schuman, a fashion industry veteran-turned-blogger through his The Sartorialist site.

“If you’re just an everyday designer and you’ve just come out with some thing and somebody else can do it better, cheaper or get it to [consumers] faster, they’ll buy that.”

With new web ventures like Dolce & Gabbana’s magazine Swide and Burberry’s social network site
www.artofthetrench.com, many maisons are constantly thinking of new online tools to woo fans.

“It’s marketing as usual, this just happens to be the new thing,” Schuman said.