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Space v face in an online social race

2007-06-26T11:04:00.000+02:00

In a throwaway line in an interview the other day, Rupert Murdoch let slip a worry about MySpace, the online social networking site owned by his News Corp. Aren’t newspaper readers drifting off to MySpace? He was asked by the Wall Street Journal. “I wish they were. They ‘re all going to Facebook at the moment,” he replied.

Mr Murdoch was reflecting a common feeling in the febrile world of online social networking. Even a year ago, MySpace’s dizzying growth and popularity among young people had turned it into a social phenomenon. Business Week talked of the MySpace Generation – youngsters who exchanged messages, share photos and lived virtual lives on the site.

Now there is a new kid in town: Mark Zuckerberg, the 23-year-old founder of Facebook. Some wrote him off as an arrogant, hubristic youth last year when he turned down Yahoo’s $1.6bn offer for his business. As Facebook has spread from college kids to adults and draws in media industry admirers, he now seems a very smart young man.

It is a mug’s game predicting which social networking service will endure and which will fade. For a time, Friendster was favourite, before it had technology problems and was overtaken by MySpace; Orkut, Google’s highly-rated venture, became a hit only in Brazil; social networking sites for people at work, such as LinkedIn and ZoomInfo, started slowly but are growing rapidly.

But the fight between MySpace and Facebook is intriguing because they are not only rivals but opposites. MySpace is messy and Facebook is clean; MySpace is a Los Angeles media company and Facebook is a Silicon Valley technology outfit; MySpace aims to entertain while Facebook dubs itself a “social utility”. This is a contest of philosophy as much as number of users.

So here is this mug’s prediction. Although MySpace has four times as many users as Facebook at the moment, I think Mr Murdoch is right to worry. As Google showed by beating Yahoo and others with a different kind of search engine, elegant technology that gives people something they need is a very powerful thing.

MySpace is a free-for-all. You can adopt whatever identity you want and be friends with anyone from people who you know to pop starts and even corporate brands. You can decorate your page in bright colours, flirt with and swear at people and generally mix it up. “We look upon MySpace as the Wild West,” says Travis Katz, head of its international business.

That appeals to many and particularly, I guess, to teenagers. Looking at the multi-coloured and flashing pages that many users build on MySpace gives me a headache, as does perusing some of their messages to each other. Nor, however, would I like to live I a purple-painted room and plenty of teenagers choose to do so when their parents allow them.

MySpace increasingly operates like a traditional media company, albeit a youth-oriented one. It tries to offer its 105m users as much entertainment as possible – including a lot of professional content. Users can post their own songs and watch their friends’ videos but they are also offered film clips from Hollywood and songs from well-know bands.

Facebook, by contrast, is a much quieter and more private affair. Launched at the same time as MySpace in 2004, it had different origins: it was built to allow students at Harvard University to interact with others. The site design is simple and restrained and it feels less like entering a big club than a room with only familiar faces in it.

On most social networking sites, users can see the majority of other peoples’ profiles but on Facebook that figure is under 1 per cent. It is less a community than a set of small communities that hardly overlap. “Facebook is a representation of people’s lives. This is your real name and these are your real friends,” says Matt Cohler, its head of strategy.

The other distinctive thing about Facebook is the degree to which it is technologically driven. An algorithm sifts through all the information about things that a user’s friends are doing – whether linking with others or adding applications to their pages – and serves up a sample of their going-on. It is subtly done, as if little social announcements are chattering over the wires.

Perhaps MySpace will evolve into a place for teenagers seeking entertainment while Facebook appeals to adults who have less time to mess about. The latter may well prefer a service that links them to friends and contacts with the minimum of fuss. One-quarter of Facebook users are already aged 24 or over and they also represent the fastest growing segment.

The sites could complement each other, with people turning from MySpace to Facebook as they grow older. Or they could coexist, being used at different times by the same people, depending on what they want.

But I wonder if that is how people will behave. In practice, it requires a big investment of time and effort to keep up with such sites and people will probably choose one over another in the end. Given that, Facebook’s emphasis on utility rather than entertainment is smarter in the long term. It is nice to be entertained but it is more of a wrench to abandon something useful.

Social networking sites flourish when users have a good reason to stick around – and wither when their attention wanes. So Mr Murdoch should worry about loss of momentum at MySpace. Silicon Valley is full of young men who believe they know better than others. Mr Zuckerberg, however, could be right.

Written by John Gapper, john.gapper@ft.com, for the Financial Times, published on Monday June 18, 2007.

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Africa rising. No more the 'hopeless continent'

2007-06-22T06:11:00.000+02:00

Two years ago, in the run-up to the Group of 8 summit meeting in Gleneagles, Scotland, the Commission for Africa advocated increased aid as a silver bullet for Africa’s development. According to the host of the summit, Africa was still the “hopeless continent”, a “scar on the conscience of the world.”

Since Gleneagles, economic growth in Africa has averaged over 5 percent annually – a step up from the dismal 1980’s and 1990’s when it managed little over two percent. And the number of conflicts in an exact corollary of the continent’s better economics – down by two-thirds from a peak of 12 in the late 1990’s.

But this improvement is not the result of aid. Much of the extra aid flowing to Africa is not new money; it is money saved on debt relief, and it has been slower in coming and with more strings than expected.

The international agenda has moved on, too. Interest in Africa has cooled as Iraq, Afghanistan and global warming have heated up.

Yet Africa is succeeding – not in spite of the international community’s apathy or unreliability, but because of it. It has forced African countries to become more self-reliant and to take responsibility. It has marked out the reformers from the laggards and the performers from the spectators.

Simple solutions, like more aid, will never work in Africa.

The continent is infinitely complex and increasingly diverse. You will find both homespun successes and entrenched failures.

Africa remains one of the most food-insecure parts of world. Two hundred fifty million Africans live in urban slums today, a figure expected to double by 2020. The continent accounts for nearly two-thirds of global HIV-AIDS cases. Less than one-quarter of those living in sub-Saharan Africa have access to electricity. Agricultural production is now just one-third of Asia’s level, after parity 50 years ago.

The figures are depressing. Yet what is remarkable – and largely ignored – is how Africa is moving forward despite these endemic problems.

I would cite five main reasons for this.

First, there have been two momentous governance shifts in Africa over the past 15 years – democracy and liberal economic reform. Twenty-five years ago, there were just three African democracies: Botswana, Senegal and Mauritius. Today more than 40 African countries hold regular multi-party elections. Some are far from perfect, but in the fight against political complacency and despotism, the right side is winning.

A second reason concerns the emergency of China and other new players, including India, Russia and Brazil, as forces for economic change on the continent.

China’s rising profile in Africa is perhaps the most significant development for the continent since the end of the Cold War. China’s (and Asia’s) industrial pre-eminence means that African development is unlikely to come from high-volume manufacturing. A combination of natural resource exploitation, agricultural self-sufficiency and high-value agro-exports, and the expansion of its unique range of service industries, including tourism, would therefore seem and to be the most likely and rewarding growth path for many African states.

To get there Africans must know what they want - and from beneficiation deals to technology and skills transfer – and can realistically achieve when they enter into foreign investor partnerships.

The arrival of China as a major African player also challenges the supremacy of the Western aid-development model. In 2005, China committed more than $8 billion in lending to Nigeria, Angola and Mozambique – a year when the World Bank spent $2.3 billion in all of Sub-Saharan Africa. Today Chinese companies are winning about half of all state-funded public works contracts in Africa. No wonder China’s trade with Africa has increased in just six years from $10 billion to $55.6 billion last year. All this highlights the importance for Africa of looking for development to where the money is – private capital.

A third reason relates to the end of the apartheid. South Africa’s democracy liberated its citizens and businesses alike. Since 1994, South African annual trade with Africa has increased fivefold to over R7 billion, while the investment stake of South African firms in Africa has increased by an estimated $1 billion per year.

A fourth success factor is that no longer does Africa wait on external sponsors to mediate an end to conflicts. This mold was broken during South Africa’s own transition 15 years ago, and the insistence of all protagonists on local brokerage. Regionally sponsored peace agreements are today the African norm, supported by African peacekeeping and peace-building mechanisms.

Finally, Africa is catching up on globalization. The continent’s share of global capital flows declined fivefold during the post-independence years to a level of just one percent at the start of this decade. But there is positive change. Foreign investment flows to Africa have recently doubled to $19 billion in 2006. Remittances from Africa’s disapora have increased to $8 billion annually, up from around $1 billion 15 years ago.

Fifty years ago, at independence, Ghana was richer than South Korea. At the time, the Asian country was depicted as a hopeless mess. Korea’s record – and Ghana’s recovery from no fewer than five military coups – shows that a good education and work ethic and a sound business environment can dramatically alter a country’s fortunes for the better.

Today, for every African failure there is a steady stream of successes, and for every autocrat, many more democrats. Sound domestic policy always counts more than external assistance in creating the conditions for growth, stability and prosperity.

More and more, that is the African norm. Failure is the deviation.

Nicky Oppenheimer is the chairman of De Beers.

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London's residential property is the most expensive in the world

2007-06-21T01:06:00.000+02:00

"Over the next five years, we believe the trend of growing wealth and greater wealth concentration will continue" - Liam Bailey

In a survey of prime property across the globe London topped the list leaving jet-setter's favourites like Tokyo, Cannes and St Tropez in the shade with luxury pads in the English capital costing an average £2,300 per square foot.

In the poll of similar properties at the top end of the market in over 70 cities world-wide Monaco was ranked second - fat cats pay an average £2,190 per square foot in the wealthy principality.

New York was placed third, with prime property fetching an average price of £1,600 pounds per square foot, and Hong Kong was fourth, commanding £1,230.

The research unveiled in estate agent Knight Frank and Citi Private Bank's "Wealth Report 2007" points to the growing influence of high net worth individuals - defined as those with more than £5 million in inevitable assets - on the property market across the globe.

Elsewhere in Great Britain and Ireland, Dublin, Birmingham, Edinburgh and Manchester were identified as prime property locations.

They ranked 17, 19, 21 and 22 respectively, with values ranging from £320 to £470 per square foot.

Rapid economic development, together with the creation of new wealthy sections of society, had led to intense competition for the best apartments and villas in secure prime neighbourhoods - and boosted prices, according to the report.

Looking ahead, Liam Bailey, head of residential research at Knight Frank, said prime property would continue to outperform mainstream markets.

"Over the next five years, we believe the trend of growing wealth and greater wealth concentration will continue," he said.

He said up-and-coming key prime property locations included St Petersburg and Moscow in Russia, Delhi and Mumbai in India, as well as Guangzhou and Beijing in China.

Property in Observatory, Cape Town, South Africa on http://www.hotpropertyincapetown.com

Deconstructing Growth in South Africa - 30 May 2007

2007-06-21T00:50:00.000+02:00

THE most striking feature of the gross domestic product (GDP) figures released on Tuesday was the growth notched up by the construction industry. The sector's output surged by a stellar 21.3% in real terms, far outcliping all the others.

The figure is quarter-on-quarter, seasonally adjusted and annualised - in other words, it reflects what the construction sector's growth would be for a full year if the first quarter's performance was sustained. (All figures are reflected on that basis, unless otherwise stated.)

The huge construction number came after an already high 16.5% growth rate in the fourth quarter of last year.

Because the construction industry has such a low weighting in GDP - only about 3% - its massive growth added "only" 0.7 percentage points to the 4.7% overall economic growth rate in the first quarter. But that was a welcome addition during a period when many other sectors showed a slowdown in growth.

The impressive growth in construction is proof that the public sector's huge infrastructure spending programme is getting off the ground in a big way. It includes Eskom's investment in new power generating capacity, the Gautrain and other similar projects.

Bottlenecks

It's important to note that the public sector's infrastructure programme has taken up the slack when other sectors such as manufacturing and retail have slowed down. That was intended to be the case.

But the question is whether the public sector hasn't bunched too many projects together, which will result in bottlenecks and unsustainability of growth in the construction sector. The current account deficit will also take strain, as these projects are import intensive.

For years, government spoke about and planned infrastructure spending. But nothing happened and no-one believed that it was going to happen. Eskom, which years ago should have been investing in new generating capacity, is only now coming to the party.

It's a similar situation at Transnet, which for years promised to improve infrastructure without any real action.

Is the 21% real growth rate in construction sustainable? Probably not.

Lack of skills

Shortages of skills as well as materials will lead to bottlenecks in construction. A huge portion of Eskom and Transnet's spending will be on imports, which have to be sourced in markets where there already are shortages. The reason for the shortages of capital goods in foreign markets is because SA isn't the only emerging market embarking on a huge infrastructure spending programme.

But the spending on construction is vital to lift SA's economic growth potential. Without investment in ports, rail, roads and electricity, the economy won't be able to grow at the targeted 6% rate.

However, that doesn't mean there won't be some white elephants constructed, which add to the numbers now but will turn out to have been useless later. All the spending on soccer World Cup stadiums comes to mind; it's doubtful that all of these stadiums will be self-sustaining after the big event.

Another striking aspect of the sectoral breakdown in GDP is the contraction in the mining industry. Perceptions that SA's growth is benefiting from a commodities boom are entirely misplaced, as mining output contracted 7.8% in the first quarter.

What commodities boom?

It's difficult to explain the weak performance of the mining sector. One analyst says the first quarter figures compared with the fourth quarter figures usually dip, because of some leave schedules that should have gone through in December going through in January. This isn't taken into account in the seasonal adjustment. He says it's better to look at the year-on-year rate of change, rather than the quarterly figure.

But the year-on-year rate of growth in mining was a paltry 1.2%, which also flies in the face of the so-called commodities boom. Yet analysts expect a better performance in the quarters ahead, as new mining projects come on stream. Mining has a weighting of less than 6% of GDP.

The most important sector in the economy - finance, real estate and business services - put in a good performance with growth of 5.7%. This is down on the previous quarter, as was expected, given interest rate hikes. But the sector, with a share of almost 20% in the economy, contributed 1.1 percentage points to overall GDP growth.

The trouble with this sector playing such a big role in the economy is that it's highly skills intensive. Its capacity to absorb SA's massive pool of unskilled labour is limited yet it makes a very important contribution to overall economic growth.

SA like developed countries

In this shift away from sectors like manufacturing towards services, SA is a bit like the developed countries in the world. They underwent a process of deindustrialisation, where manufacturing increasingly shifted to the economies offering cheap labour.

One policy response to the shift would be for government to try to boost manufacturing and labour-absorbing sectors. It's hoped that government's long-awaited industrial policy - due for release this week - will do just that.

It must also be said that growth generated by the financial services sector isn't to be sniffed at, because it provides government with some of the revenue from which to pay social grants. In that way, the sector contributes to alleviating poverty.

These are a just few quick observations on the sectoral breakdown of the latest GDP figures.

This article appeared on www.fin24.co.za on 30.05.2007, written by Greta Steyn

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The price of art

2007-05-09T03:43:00.000+02:00

The new boom has made art a more secure investment than property or shares, and collectors also get the chance to make history

Ben Lewis

Ben Lewis presented the Channel 4 documentary, "Why Do People Buy Art?" and the BBC4 series "Art Safari"

There is an enormous, unprecedented, apparently unstoppable but little-reported boom taking place in the art market. In March, at the Armory show, New York's trendsetting contemporary art fair, dealers sold virtually twice as much as they had in 2003 - $43m of art in four days. It is the same story in the auction rooms: contemporary art values rose 20 per cent last year, and the auction houses now make more money from contemporary work than they do from artworks of the mid-20th century or earlier. There are two ways of looking at this. You may conclude that there is now a lot more wonderful art about - and that we are living in a 21st-century version of quattrocento Florence - or you might see this as the art world's own version of the dotcom bubble.

The art market divides into various sectors, defined by the auction houses. In western fine art, the categories are "old masters," which means art of the 19th century and before; "modern," which is 20th-century art until roughly the late 1960s; and "contemporary," which is art made between last week and 40 years ago. Damien Hirst is a contemporary artist, but so are the great German painter Gerhard Richter, English master Francis Bacon and even Andy Warhol. It is a catch-all term which marks a dividing line between the established reputations of the modernists - Cézanne, Picasso, Matisse and so on - and the uncertain values of pop and conceptual art. It is not surprising that as time wears on, the great names of 1960s and 1970s art should leap in value. What is surprising are the vast sums being paid for recently made art.

The contemporary market further subdivides into two sectors - established talents and emerging artists. The entry-level rate nowadays for an oil painting by an emerging artist is £5,000-£15,000. Nevertheless, collectors are buying both emerging and established work by the shedload. In 1999, the work of the German photographer Andreas Gursky, famed for his large-scale vistas of globalisation, rose in value 3,000 per cent. In February 2002, Gursky's image of multiple rows of trainers sold in London for £432,750, making it the most expensive photograph ever taken. In May, a sculpture of a stuffed horse hanging from a ceiling, Ballad of Trotsky (1996), by the fashionable and witty Italian artist Maurizio Cattelan, sold for $2m at auction. It had increased in value tenfold in two years. Gerhard Richter's paintings have quadrupled in value this century alone. His Wolkenstudie, Grün-Blau, which was estimated to be worth between £300,000 and £500,000, sold in 2002 for £1,986,650 ($3,029,820). Richter is particularly interesting as an example of the way work can sell far above estimate, proving, if it were necessary, that a work of art is worth whatever someone is prepared to pay for it. (The sale at a London auction this year of Tracey Emin's My Coffin for £80,000 seems like small fry by comparison, even though that was double its estimated value.)

Overall, the art business is estimated to have a value of around $22bn a year. Collectors buy their art from three sources. There are twice-yearly auctions of contemporary art held by Sotheby's, Christie's and several other auction houses. Here the auctioneer gets a commission worth 20 per cent of the price of the work sold. Then there are the many small private galleries in most major cities. They mark up the works they sell by 50 per cent. But the favourite places to buy art at the moment are the art fairs, notably the Armory show in New York, Art Basel in Switzerland, another Art Basel in Miami, and the new entrant in the field - the Frieze art fair in London, which takes place for the second time in October.

Until recently, Britain was considered a backwater in the world of contemporary art - a nation famed for its parsimony and old-fashioned taste. Now we can boast an art movement, Britart, which - with Damien Hirst, Tracey Emin and the Chapmans as its figureheads - is collected all over the world. In a survey in the French Beaux Art magazine, Hirst was voted the most important living artist by a group of market experts, art valuers and fair directors. For 20 years, Charles Saatchi has been setting trends for contemporary-art buying, and now other British dealers have joined the party. Last year, Frieze became our first major art fair dedicated to contemporary work and so immediate was its impact that this year it will be joined by two newcomers - the Zoo fair and scopeLondon. Superbly organised, Frieze drew galleries and buyers from all over the world. Meanwhile, at the last round of auctions in London, Christie's and Sotheby's broke their record for sales of contemporary art with receipts of £28m.

Once upon a time, art was cheap. In the first decade of the 20th century, dealers like the former boxer Soulier, Clovis Sagot and Berthe Weill bought oils by Picasso, Utrillo and Dufy for 30 francs each. But two decades later the great names of modernism had grown rich through their art, and prices for their work have risen ever since. The current boom in modern art is by no means the first. The last big one took place in the late 1980s. It was based around impressionists and modernists, but was driven by property prices. The taxes on high-value property sales in Japan led to tax-dodging deals in which undervalued property was bundled with expensive art. In America, businesses took advantage of the tax-deductible status of art purchases and formed their own collections or opened their own galleries. Then the stock market crashed, property prices fell, and so did the value of art.

This new boom is different from that of the 1980s. First, it is driven by private collectors, not corporations. Second, its focus is contemporary, not modernist, art. Third, it was precisely when share prices dipped and the dotcom bubble burst that the current art boom took off. The contemporary art market had been expanding in the early 1990s on the back of the dotcom bubble and everyone assumed it would burst with it. Instead, something odd happened: prices for art went up. As art consultant Robin Duthy explains, "The rich were shifting their money out of the stock market and into contemporary art." Today, while stock markets remain uncertain, contemporary art has become, perversely, a reliable investment.

New technology has made it as easy to invest in art as one would in stocks and shares. A number of art market entrepreneurs have developed websites that allow dealers to follow the ups and downs of the market. Sign up for a membership, type in the name of an artist or market sector, and you can see the latest auction prices. David Hoyland, a twentysomething from working-class Bradford who wears sharp Savile Row-ish suits, uses these websites to trade contemporary art like a broker buys and sells commodities. "Take Warhol," he told me. "If you have some money I would say to you, 'I'll buy a Warhol print for you, and I will guarantee to buy it off you in a year for 10 per cent more than you paid for it.'"

"Like the stock market, only prettier," I said. "Yes, but you're more likely to make money," he replied.

The first important British auction of contemporary art was held at Sotheby's in May 1997. The collection of Bernardo Nadal-Ginard was on the block. Nadal-Ginard, a Boston cardiologist, had been buying works considered to be the most "cutting-edge" items in galleries from the mid-1980s to the early 1990s. Such pieces rarely got tested at auction, and it is unlikely that they would have been consigned to such a public marketplace had this not been a forced sale (Nadal-Ginard had been convicted of embezzlement). About 100 works were auctioned, including pieces by Robert Gober, Matthew Barney, Kiki Smith and Jeff Koons. Subsequently Christie's and Sotheby's began holding regular contemporary art auctions - once a year in New York and once a year in London.

You do not have to be an expert to join in. Recently, I came across a trial issue of a magazine called Art Investor, aimed at art market novices. On page 62, there was an article which opened with this declaration: "For love or money - does it always have to be the former? Can't the material aspect play a role too? Yes it can, say the experts. An investment in art does not require a love and passion for the work of art. Art can indeed be a genuine alternative to capital and real estate… art is no longer only related to aesthetics and decoration."

The market has several features which reinforce the upward trend in prices and allow for trading practices that would long ago have been outlawed if they weren't operating under the flag of convenience known as "art" - that uplifting thing to look at that says something about the age in which we live and about the human condition itself.

It is a sellers' market. There are waiting lists not just for established talent but even for emerging artists. Demand far outstrips supply. The seller - the gallery-owner or dealer - is all-powerful. Gallerists don't have to sell the art, they have to decide who not to sell it to. Not any old flash Harry with a cheque-book can saunter in and buy a major work of art from a gallery, whether it is a Damien Hirst, a Takashi Murakami, a Matthew Barney or a Richard Serra. The gallery-owner seeks to place the work of art, which means deciding who is permitted to buy it. The rule is to make sure the work goes to the home of a respected collector or - better - a museum.

If a work of art goes into a good collection, its value and the value of the artist increases. The reverse is equally true, and what the gallerists want to avoid at all costs is someone buying the piece and putting it up for auction to make a profit (known as "flipping"). When this happens on a large scale, it can be a scandal. For example, Hans Grothe, a German property developer, had amassed a large number of photographs by the Düsseldorf school of photographers, which includes Andreas Gursky and Thomas Struth. Grothe had made a verbal agreement with the galleries representing these artists not to sell the work, except to an institution. Two years ago, he broke the promise, the market was flooded with Gurskys and Struths, and the value of their work dipped.

I recently asked the eccentric French gallerist Emmanuel Perrotin (who represents Maurizio Cattelan, Takashi Murakami and others) how I might persuade him to sell me a work by an artist currently in demand. The answer appears to be that, even if I were shockingly rich, I couldn't. "Sometimes it is embarrassing for us when we have 40 collectors waiting on work by an artist," Perrotin said. But if you are a multimillionaire art collector, if you are already a very good client of mine and you have bought many pieces over the years and not just from the artist that everyone wants, if you are a serious collector and if I can use your name to promote the artist again, you will be top of the list. It's not democratic at all. I'm sorry."

The new wealth of gallery-owners and contemporary artists has reinforced their hold on the market. Last November, following the public row between Charles Saatchi and Damien Hirst, Saatchi sold off a large part of his collection of Hirsts. They were bought by Jay Joplin, director of London's White Cube gallery and Damien Hirst's own dealer, for a reported £10m. The logic of the art market means that the collector had a vested interest in selling back to the gallery. Saatchi still owns Hirsts, and even if he didn't, why should he want to flood the market and allow prices to go through the floor? It would make it look like he had made a big mistake. Of course, it is not unusual in the art world for an artist and his gallery to attempt to buy back early work, or indeed to buy works back off a collector. The difference now is the scale. What the boom is doing is empowering a tiny elite of top artists and their galleries to control the sale of their work in an unprecedented way.

An American tax law allows you to donate a work of art to a museum in America and get the full market value of the work back as a tax deduction, up to the value of 30 per cent of your tax bill. This doesn't seem likely to accelerate a boom in contemporary art, because you only get the kickback if you donate. But the attorney Ralph Lerner, author of Art Law: the guide for collectors, investors, dealers and artists, explained to me the benefits of donating: "You buy a work of art for $1,000. Ten years later it is worth $10,000. You donate it to a museum and you get a tax rebate for the full market value of the work of art. That means the government has paid for your work of art, handed you some profit and paid for you to get a new work." But surely, I suggested, this is not as profitable as selling it on the open market. "Yes," Lerner concurred, "but sometimes the full market value is not what you are going to get on the open market. Often, the gallery who sold it to you doesn't want you to put it up for sale at auction. In addition, donations are the route to getting on to the boards of American museums and public art galleries. And getting a seat on one of those boards is the ultimate sign of social standing in America. Many collectors don't need the money, but do want invites to the parties."

The law offers other handy options too. If your work of art is worth much more than 30 per cent of your annual tax bill, you can donate percentages of it each year, up to a maximum of five years. This means that if you have a $15m Picasso, you just give away 20 per cent a year to a museum. The museum exhibits it for 20 per cent of the year, and you get to have it the rest. In addition, exhibiting it in a museum increases its value. If you have a number of works by one young artist, as many collectors do, then it pays to try to place one of those works in a museum, because it increases the value of your other pieces. Depending on how you look at it, this has either turned American museums into the best endowed art institutions in the world, or flooded them with second-rate work that they will ultimately only store in their basements. The British government is now considering introducing the same incentives to donate works of art over here. The director of the Tate, Nicholas Serota, is said to be a key advocate.

Such are the rarified mechanisms of the current market. Yet while they explain how art has become a highly lucrative and specialised investment commodity, they do not explain why. Why this commodity and not another? And why, especially, contemporary work? The art world likes to explain the boom in simple terms. There is less old art around and it is much more expensive. Even among the rich, few can now afford the impressionists. Yet there are many more affluent people who want to buy art of some kind. Contemporary art is available and, as art, it is rewarding

This is the standard line, and it is tosh. Although old masters and impressionists are rare, there is nothing to stop collectors collecting something else - pre-Columbian vases, classic cars, silverware and so on. And while the modernists are expensive, collectors might still prefer to buy their cheaper sketches and prints. But they don't. They do not want old art. They do not necessarily even want great art. They want new art. But why should the idea of the contemporary have become more valuable now, as it were, than it used to be? The answer is that by writing cheques, collectors have acquired a new sense of writing history.

In the old days, gallery-owners marketed their works of art with the claim that they possessed spiritual power. The artist was an impoverished holy man offering deep spiritual truths to all who gazed upon his work. Collectors of contemporary art saw themselves as charitable benefactors looking after poor struggling artists and gaining spiritual sustenance in the process. This old-school approach still motivates a handful of super-rich collectors, such as the Miami Beach entrepreneur Don Rubell and his wife Mera. They own around 5,000 works of contemporary art, the meaning of which they explained to me in almost religious terms: "The art affects one's life to such a degree that it develops a purity inside anyone who stays with it - it's not just decoration. The collectors become purified by the act of collecting art."

Yet, in today's art world, the work is no longer seriously presented as having spiritual power. Rather, it is sold as a piece of cultural history in the process of being made. New York art consultant Thea Westreich put it to me like this: "It's about an intuitive, intellectual, conceptual investigation into what it means to live in a particular time. And our time is enormously complex. Artists are thinking: what does this mean? And how do I express something of the moment?"

New Yorker Adam Lindemann is more typical of the new generation of collectors. He made his fortune with a string of Spanish-language radio stations and now applies the same principle to collecting. I visited him at home, where the walls are crammed with works by the artists that any top collector must have. There were photographs from Matthew Barney's Cremaster cycle, Takashi Murakami's zen manga-cartoons, a bust by Jeff Koons, and Sue Webster's Forever sign, made out of flashing lightbulbs. "They're the greatest hits, you know, like top 20 on the radio station," Lindemann said. "But what's most interesting to me is not so much the work of art as the theories, the personal reactions, and also the market reactions to the artist and to the work. Each object is a piece of contemporary culture; a piece of what's going on."

Collectors Raymond Learsy and Melva Bucksbaum have taken this fascination with the contemporary a step further by making explicit their own participation in it. I visited their stunning Tribeca loft, where they have themed works of art around the subject of 9/11. There was a larger than life bronze of a tumbling woman by Eric Fischl, and a large oil by Jennifer Bartlett of the towers disintegrating in a colourful abstract geometry. "You asked us why we collect contemporary art, and the answer is that it is a reflection of our lives," they told me. "The World Trade Centre is only eight blocks away, and we were here on that day; we saw the towers collapse and collecting contemporary art is our way of dealing with the events of that day."

Learsy and Bucksbaum had responded to catastrophe with connoisseurship. Yet their aim is not just to buy into history, but to anticipate it, collecting artists early in their career. Learsy said: "The exciting thing about collecting contemporary art is that there is no real body of validation. You can become part of the process of validation."

Thus an artist only becomes recognised as important once his or her work becomes seriously collected. By buying a work of art, and raising its price, the collector exerts an influence on history. Books and CDs are also part of cultural history, but anyone can buy the book or the CD. Works of art, on the other hand, are unique or published in very small editions, and collecting contemporary art gives the rich a power that no other purchase confers.

The French sociologist Pierre Bourdieu argued that in western society people trade in cultural capital in a manner analogous to the trade in goods. He meant that we acquire cultural items - a trendy wardrobe, a collection of great CDs - to make ourselves more valuable. Similarly, collectors like Learsy and Bucksbaum are analysing the cultural scene just as financiers analyse the market. They invest in pieces of cultural capital. If their predictions are correct, the works of art become historically significant and go up in value.

What we are experiencing now is a huge growth in the number of wealthy people who want to intervene in cultural history in this way. It is a new world, and one whose lifespan only a fool would dare to predict.

Will the work last and retain its value? Is the art worth the huge sums that are paid for it - between $1m and $3m for a work by Hirst, Warhol, Basquiat, Koons, Cattelan? Are the collectors buying things which will later be regarded as part of our history? Any cultural product is, of course, part of our cultural history. The question is: how significant a part?

On a purely quantifiable basis, we would have to conclude that contemporary art is not as significant as it once was, simply because there are more visual media around to pick from - photography, films, television, video games. These media play a bigger part in our culture than works of art. The art world would counter this by saying that artists are making far more intelligent, even philosophical comments on the world than console designers and television directors. But artists are, on the whole, not particularly well educated, nor is visual art a medium well suited to the examination of complex philosophical or moral problems, which usually require the precision of language. The art world also points to the rising number of people who go to art galleries. But having spent a lot of time in these places listening to other people's conversations, I have the impression that most of them are there out of curiosity rather than intellectual devotion. The contemporary art gallery is the modern version of the freak show, somewhere people go on a rainy afternoon to laugh and gawp. "Oh, is that art now?" they mutter, "I could do that."

The mistaken perception the art world has about the way everyone else perceives their art was exemplified by the fallout from the Momart warehouse fire in May, which destroyed around 100 artworks, many owned by Charles Saatchi, including pieces by Damien Hirst, Sarah Lucas, Tracey Emin and the Chapmans. The press chortled. At last Saatchi's art had got what it deserved. The art world seems to have been taken by surprise by the media's reaction to this disaster. They thought the media were on their side. They thought we liked Britart - after all, we had been reporting on it for more than ten years. The endless column inches devoted to Damien's formaldehyde, Marc Quinn's blood and Tracey Emin's bed allowed the dealers to point to the work's cultural and historical significance, and undoubtedly helped the huge international sales of these artists. But the media followed Britart because it was a good story, not because it was good. The story was about the mysterious art Svengali, Charles Saatchi; it was about foul-mouthed feminists and art that showed children with penises for noses. There was the British success story angle, and then the conflagration in which it all went up in smoke - what a great ending (at least in purely formal narrative terms)! The journalists put no special value on the works of art.

The way the Saatchi fire was talked about shows that the art world's theory of historical significance is wrong, and that soon many collectors will be getting their fingers burnt. If I gaze 30 years into the future I cannot imagine finding Damien Hirst's spin paintings anywhere but car boot sales.

But I may be proved wrong. The contemporary art market is only a market. We live in a world in which the rich have more leisure time and devote more of it to creative tasks. There would probably have to be another major world recession to force collectors to sell their vast collections for less than they paid for them, and that doesn't seem to be imminent. At the moment, the contemporary art market is a self-fulfilling prophecy in which market value and cultural value have dissolved into each other.

Published in the October 2004 edition of Prospect Magazine.

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Investment Guru finds value in South Africa

2007-04-02T03:57:00.000+02:00

9 February 2007

I realized about halfway through my recent trip that it had been some time since I was in an emerging-market country. I have been to over 50 countries over the past 20 years, but recently most of my travels have been to Europe and Canada, with the occasional vacation trip to Mexico.

As I observed South Africa, it was forcefully brought home to me that there is more to the emerging-market story than China, India and Brazil. There are any number of countries that are seeing robust growth and contributing to the world economy. It was reported at Davos this year that for the first time the developing world has a larger share of world GDP than the developed world.

Here we focus on an emerging-market country that does not make as much news as it should.

The mood among those I talked with in South Africa in the early 1990s, when I was traveling often to South Africa, was quite pessimistic. The economy was not good, due to international economic sanctions stemming from worldwide protests over the policy of apartheid. Changes and elections were coming, and it was not clear what would happen.

The contrast today is amazing.

World-class cities; cranes everywhere
There are construction cranes everywhere in the four cities I visited: Johannesburg, Pretoria, Durban and Cape Town. Twelve years ago the 30 miles from Johannesburg to Pretoria was mostly agricultural land. Today it is one big city, with offices, malls and homes lining the freeway.

Johannesburg is a world-class city, on a par with New York or London or any major city in terms of facilities, shops, infrastructure ... and traffic. There are new shopping malls all over, and the stores are busy. The restaurants are excellent. The hotels I stayed in and spoke at were excellent and modern. The Sandton area is particularly pleasant.

Durban is a tropical jewel on the Indian Ocean. Again, there was construction everywhere - a green, verdant city of a million people, with modern roads and great weather.

I have been to Sydney, Vancouver and San Francisco. I love all of them. But for my money, Cape Town is the most beautiful city I have been to. Amazing mountains, blue water harbors, white sand beaches, with wineries nestled in among the mountains and valleys. The Waterfront area, where I stayed, is fun and vibrant.

Again, an amazing amount of construction everywhere, especially in the Waterfront area, as investors from Dubai are pouring huge sums of money into creating a massive residential/business/ retail/restaurant development. There are several similar, quite large developments going up in different parts of Cape Town.

Value for money
I ate dinner one Friday night at a restaurant called Baia at the Waterfront. I find I really love the better South African chardonnays. My friends know I am something of a chardonnay snob. I like the better California wineries.

I was pleasantly surprised to find more than a few South African chards the equal of their US counterparts, but at a third to half the price for the same level of quality. (I should note that a decent chardonnay in London or Europe is twice the US price.)

Two of us had the best chardonnay in the restaurant and one of the better meals I have had in a long time, and the bill was less than $100. The next day my partner, Prieur du Plessis, informed me that Baia was one of the most expensive restaurants in town.

By way of comparison, you can easily spend two to three times that at a comparable restaurant in Dallas, and four to five times that in New York. Forget London.

I began to ask about the bills for food, drinks and such for the rest of the trip. The country was uniformly about half what I would pay in Texas for the same quality.

I stayed in a very nice five-star hotel (The Commodore) for six nights for less than $1 000, including several meals, laundry and my bar tab. Their walk-up price was much higher, but clearly you can get deals, and it was tourist season at that. The service was terrific and uniformly delivered with smiles.

The exceptionally nice private game reserve (Itaga) we stayed at when I first arrived, trying to get over jet lag, was only a few hundred a night, including meals, wine and game runs. In short, after having been to London and Europe for my last few overseas trips, South Africa seemed like a bargain.

Optimism fuelled by growth
And it was not just the people I spoke to that were optimistic. Grant Thornton (a large international accounting firm) did a survey in the 30 countries in which they do business. The four countries with the most optimism and confidence were India, Ireland, South Africa and mainland China.

Why such confidence? I think there are several reasons. The economy has been growing at a reported almost 5% a year for the past several years, which is quite strong. They have had 32 consecutive quarters of positive growth.

But the official figures may understate the reality by a significant amount. If you look at the VAT (value-added tax) receipts, as well as other tax figures, some economists estimate the economy may be growing by 7% or more. Why the difference?

There is a large "informal" economy in South Africa. While much of the income may not be reported, when something is bought and sold in the retail sectors, taxes are collected.

The stock market has grown by over 25%, 47% and 41% for the last three years. Such a bull run is always a boost to confidence. But there are also some real fundamentals underlying the emerging-market bull markets.

South Africa has a strong commodity sector, with numerous commodities and not just gold. JP Morgan thinks that earnings growth for South African companies, even adjusting for some anomalies, will be 20% this year, which should mean another good year for their local markets.

This link between commodities and stock market prices is reflected not just in their stock market, but in emerging markets worldwide. Look at the close correlation for the last 10 years between the prices of commodities and the emerging-market equity index. I think this rather clearly shows the link between the recent rise in commodity prices and emerging markets. It is more than just a China story.

Football as an economic driver
The attention paid to football (or soccer in the United States) is rising to fever pitch in South Africa. And for good reason: they will host the World Cup in 2010. They expect some 3 000 000 fans to show up.

The government is using the occasion to spend some R400-billion (a little over US$50-billion) on all sorts of infrastructure projects. They are doubling the size of the major airports, which had already been significantly improved. Walking past the construction at the Johannesburg airport, you have to be impressed with the size of it.

New roads and other forms of infrastructure are being added to prepare for the influx, but it will have the added effect of making the country more competitive, just as infrastructure in China has been a boost to that country, and a lack of infrastructure has limited India.

The World Cup will also be a boost to tourism, already one of the most important sectors of the economy. Cape Town is becoming an international destination for vacations and conferences. The growth in tourism has been strong, showing 20% growth last year from 2005. 2006 was a record year.

A deal-doing financial centre
Interestingly, 75% of the traffic reported in the tourism growth is from Africa and the Middle East. While a lot of the people are vacationers, I think a goodly portion are businessmen and women from all over sub-Saharan Africa who look to South Africa as a deal-doing financial centre.

South Africa has a quite strong, very competent and growing financial services sector that is a magnet for entrepreneurs from all over Africa seeking to find capital. South Africa also has a strong entrepreneurial class which is the base for much of the new business and development, not just in South Africa but in all of Africa.

The rest of the world rightly sees South Africa as the place to launch into the rest of Africa.

Problems common to emerging markets
Are there problems in South Africa? Of course, and some of them are quite serious. But that is the case in nearly all (I cannot think of an exception) emerging-market economies.

While the overall crime rate is dropping, it is still far too high. Some rather high-profile crimes of late have resulted in a strong outcry for serious change.

Corruption is an issue, but that is the case in almost every emerging-market country. The high levels of poverty are evident. Although employment is growing and more and more of the poor are being brought into the economy, there is still a lot of room for progress.

The telecommunications infrastructure is hampered by a lack of serious competition. Access to the internet is limited in many areas, and it is really slow where it does exist. This will improve in the coming years, but it is a serious handicap to business. There are power shortages and the need for more power-generation plants to keep up with the growth.

But all these areas are (mostly) going to improve.

Potential in African farmland
I see a lot of opportunity in South Africa in particular and Africa in general. Let's look at one area where there may be more than a little potential in the future.

I think there is deep long-term value in African (not just South African) farmland. Right now, given the nature of US and European subsidies to agriculture, it is hard for developing-world farmers to compete. But that will change in the next decade.

As I have written before, "Old Europe" and the US are going to come under intense government budgetary pressure due to the high levels of pension and medical costs they have promised their retiring boomers. Europe is particularly vulnerable.

Quite simply, Europe cannot afford to keep the pension promises they have made and pay for any other normal government expenses without raising taxes. Except that they already have economy-stifling high taxes.

Budgets are going to have to be cut in other areas. At some point, sooner rather than later, agricultural subsidies are going to come under pressure, as politicians must decide where to find the money to pay for the promised pensions and health care. There are more voters who are older and on pensions than there are farmers.

I can count votes, and it is not hard to predict the result. It will be with a lot of fighting, but in the medium run the agricultural subsidies in Europe are going to have to go.

When the writing is clearly on the wall, Europe will start to negotiate on those subsidies, trying to get something for what they will have no choice but to give. Part of that will be to reduce US subsidies as well.

Africa will become a breadbasket for much of Asia. With China pressed for water and much of its agricultural land being used for development, China will need to import more food. And as the rest of the world becomes more developed, there will be an increased demand for meat, which means an even bigger demand for feed grains for livestock. The growing use of ethanol is increasing demand for corn, absorbing more of the world's land use for energy corn rather than for food.

The simple fact is that as the world grows more prosperous we are going to need more grain and other foods. Where is the land we are going to need to feed the world? There is an abundance in Africa, along with the needed water and labor.

And as African countries upgrade their infrastructure, it will improve the ability of farmers to get their grains to market at profitable levels.

There is much to like about emerging markets. That is where a great deal of the real potential growth in the coming decades will be. And South Africa will be one of the better stories. If you are not doing business there already, you should ask yourself, why not?

This is an edited version of an article published in the 9 February 2007 issue of John Mauldin's free weekly investment e-letter, Thoughts from the Frontline.

Mauldin is president of Millennium Wave Investments. A recognized expert on investment issues, he is a frequent contributor to financial publications such as the Financial Times, and a frequent guest on CNBC and Bloomberg TV. His book "Bull's Eye Investing" made it onto the New York times best seller list. In his latest book, Just One Thing, "twelve of the world's best investors reveal the one strategy you can't overlook".

Property in Observatory, Cape Town, South Africa on http://www.hotpropertyincapetown.com

South Africa creates more jobs, better jobs

2007-04-02T03:54:00.000+02:00

South Africa's economy is creating more jobs, and jobs of higher quality, than ever before, according to Statistics SA's latest labour force survey.

The survey, released on Thursday, shows both a modest decline in unemployment between September 2005 and September 2006 as well as - as Business Report puts it - "a number of encouraging longer-term trends".

South Africa's official unemployment rate decreased to 25.5% in September 2006, down from 26.7% a year previously, with 500 000 new jobs being created.

And according to Stats SA's deputy director-general for population and social statistics, Kefiloe Masiteng, South Africa's formal sector (excluding agriculture) was the main driver, accounting for 1.4-million of the 1.6-million new jobs created in the five years to last September.

There was also a drop in the number of unemployed South Africans in the year to September, from 4.4-million to 4.3-million, as well as a decline of almost 100 000 in the number of discouraged work-seekers.

This saw the percentage of working-age South Africans with jobs improve from 41.1% to 42.7% - despite the increase in the number of people in the market for jobs.

South Africa's labour force grew from 16.7-million to 17.1-million in September 2006 as the working age population (15- to 65-year-olds) rose from 29.6-million to 30-million.

In all, the number of South Africans with jobs rose from 12.3-million to 12.8-million. Of this number, 8.4-million were in the formal sector (excluding agriculture), 2.4-million in the informal sector, about 1-million in agriculture and about 886 000 in domestic work.

T-Sec economist Mike Schussler told Business Report that the jobs total was the highest in the country's history.

"The strongest growth was in the formal sector, which is encouraging because formally employed workers are more likely to have a constant salary and a pension or provident fund," Schussler added.

Lagging economic growth
Nonetheless, Business Report states, the growth in jobs still laggs behind the country's economic growth rate.

South Africa's gross domestic product (GDP) increased by a higher than expected 5.6% in the fourth quarter of 2006 as the economy notched up its 33rd quarter of uninterrupted growth since 1998 - the longest upswing in the country's history.

Real annual gross domestic product increased by 5% in 2006, following growth of 5.1% in 2005.

The government is busy fine-tuning and implementing a strategy - known as the Accelerated and Shared Growth Initiative for South Africa (Asgi-SA) - to accelerate the country's growth rate and make sure that this growth is accompanied by job creation.

According to Masiteng, the country's trade industry (including the wholesale and retail sectors) accounted for 23.9% of the total increase in employment, the single largest contribution by any industry. The industry currently employs more than 3-million people.

The community and social services industry, which employs 2.3-million people, was the second largest contributor to total employment at 18.1%. Manufacturing, which employs 1.7-million workers, accounted for the third largest share at 13.6%.

Stats SA's labour force survey is based on the responses of approximately 67 000 working age adults in over 30 000 households across the country.

SouthAfrica.info reporter – 30 March 2007

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Spain, Ireland and threats to the property boom

2007-04-02T03:41:00.000+02:00

There are two phases in an asset price bubble that repeat themselves with clockwork regularity. The first is the phase of the bogus economic theory. I am sure you heard the one about the paradigm shift due to the more widespread sharing of credit risk; or the one about the profits/wages ratio rising indefinitely.
The second phase is a prolonged state of denial.
In the US subprime mortgage bubble, we are now in phase two. It is difficult to explain rationally why anyone would want to give out large mortgages to people with no credit rating, or why a bank would want to give out interest-only mortgages at more than 100 per cent of a property’s value to anybody. Most of those products are based on irrational expectations by lenders and borrowers.
The European Union is a little behind the US when it comes to such crazy financial innovation, but only a little. There is a subprime mortgage industry in some markets, such as the UK and Spain. You can also find interest-only mortgages.
Unsurprisingly, these are also the markets that have seen the strongest increases in property prices over the past 10 years. The Europeans are still in phase one of the bubble. The bogus economic theory from Spain is that large immigration can maintain a construction boom indefinitely.
Let us just look at some statistics. In Spain, the construction and housing sector accounts for 18.5 per cent of gross domestic product, about twice as high as the eurozone average, according to the latest data from the EU’s Ameco database. The comparable figure for Germany is 8.7 per cent. The justification given for this increase are: a net inflow of immigrants, many from Latin America, who find it easier to purchase, rather than rent Spanish property; changes in the Spanish way of life, as young people leave homes earlier than they used to; and Spain’s continued popularity amongst sun-loving northern Europeans. In other words, the Spain-is-special-crowd argues this is a structural boom, not a bubble. They claim that Spain’s property market can grow at faster rates for longer than most other European markets.
I do not want to dismiss all of these points. The trouble is that these merely tell us why the bubble happened in the first place, not why the path should be sustainable. In Spain, the average price of a square meter of residential property went up from about under €700 in 1997 to just under €2,000 at the end of last year – up threefold. House price growth has moderated more recently – from year-on-year growth of more than 15 per cent two years ago to more than 10 per cent now. It is true that Spain still has an extremely low level of mortgage defaults compared with the US. It is also true that Spanish mortgage banks are relatively flexible in terms of their willingness to refinance loans. Then again, Spain is in a different phase in the housing boom-bust cycle. Spain is today where the US was approximately a year ago.
In Spain, most mortgages are variable-rate, so the rise in short-term market interest rates to more than 4 per cent is beginning to have an effect on the Spanish housing sector. Monetary statistics tell us that the boom in European mortgage lending is slowly receding but this process still has some way to go. If, as a likely consequence of the subprime mortgage crises in the US, there is a global reappraisal of the price of risk, Spain would be hit by a double whammy – higher rates and higher spreads.
Now since 18.5 per cent of the Spanish economy is housing-related, a gradual convergence towards the eurozone average would seriously weigh on economic performance for a long period. Post-unification Germany experienced flat house prices for 15 years and a depression in the construction industry.
Spain has one of the lowest rates of productivity growth in the EU. The rest of the economy may not be strong enough to fill the gap left open by construction. It does not take much imagination to see that a perfect storm is building up. The idea that Latin American immigrants will continue to jump on the property ladder under these circumstances and rescue the housing market is a little optimistic. While it is true that there has been a structural shift from a conservative to a more liberal society, such shifts end at some point. And Germany and British homebuyers may eventually find alternative and better priced homes in other parts of the Mediterranean. The explanations of the past cannot be extrapolated.
Another example is Ireland. In Ireland, the GDP share of construction and housing is even higher, at 20.7 per cent. While the performance of the Irish economy during the past few decades was remarkable, there are some deep underlying structural problems that are now surfacing. In particular, Ireland has been fast losing competitiveness within the eurozone – not a subject that has been talked about much outside Ireland recently. With interest rates rising and a slow return to sanity in the financial sector Ireland is going down the same route as Spain, perhaps only faster.
The US housing recession is not over yet. In the past the correlation between US and European property price movements has been extremely high. If the transatlantic tsunami comes, it is perhaps best to avoid some of Europe’s western coastline states for a while.

Written by Wolfgang Munchau for the Financial Times, published on Monday March 19, 2007.

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New reactors across the globe: A nuclear power Renaissance

2007-03-03T07:12:00.000+02:00

With concerns about global warming and energy security on the rise, countries the world over are taking a new look at nuclear energy. Some are building new reactors as fast as they can.

They are coming from everywhere in Australia; shirt-sleeved workers from every corner of the continent heading to a remote stretch of the South Australian desert. There is no water, and not much of anything else either. But the Olympic Dam mine is located here. And the mine is hiring.

The company currently employs about 700 miners, who have already dug several kilometers of tunnels under the desert. The area is so bone dry that drinking water must be pumped through a system of pipes from a distant spring. Recently, there has even been talk of building a desalination plant. After all, uranium mining requires water -- lots of it -- and Australia wants to remain the world's second largest supplier after Canada.

The explanation for the government's enthusiasm for nuclear power can be found in a report by nuclear physicist and former IT manger Ziggy Switkowski. As if on cue, he enthuses about the need for more nuclear power plants: Australia must start building reactors so that the first one can be completed in 2020. If a concerted effort is made, another 25 could be online by mid-century. On the one hand, this would help the country improve its poor record of carbon dioxide emissions. On the other, it would allow Australia to tap an almost inexhaustible source of energy; the country possesses more than 38 percent of the world's accessible uranium reserves.

The international atomic energy lobby loves such talk. Almost 21 years after the Chernobyl disaster, and just a couple months after the most recent breakdown at Sweden's Forsmark reactor last July, the risks associated with nuclear power are largely fading into the background. So too are questions about the disposal of spent nuclear fuel and atomic weapons. The industry, in short, is preparing for a new boom.

Plans for more nuclear plants

Currently there are 435 atomic reactors generating electricity in 31 countries across the globe. They fill 6.5 percent of the world's total energy demand and use close to 70,000 tons of enriched uranium per year. Atomic plants produce one-sixth of the total electricity supply -- roughly on par with hydropower.

That number may soon rocket upwards. At present, 29 nuclear power plants are under construction and there are concrete plans to build another 64. Another 158 are under consideration. On the other end of the equation, only six are slowly being shut down in preparation for decommissioning. In response to the growing demand, the price for uranium has increased seven-fold since 2002 and now sells for $72 per pound (454 grams). The fact that no final storage place exists for highly radioactive waste is considered to be but a secondary problem. Indeed, the only terminal repository apparently free from political opposition is that in Finland's Eurajoki where such a site is now under construction. There, nuclear waste will be stored at a maximum depth of 520 meters in shafts bored deep into the granite bedrock.

The main obstacle to the construction of nuclear power plants is no longer the anti-nuclear power lobby, but the huge costs of building them. Whereas in 1970 a brand new reactor cost $400 million, a plant now runs as much as 10 times higher. In the last three decades the nuclear power industry has received subsidies of about $1 billion -- the electricity generated may be clean from a global warming point of view, but it's not cheap.

Nonetheless, power plant construction companies are hoping for a renaissance. E.on has applied to build a new plant in Romania's Cernavoda and Siemens expects orders to triple in the next five years. General Electric too expects a number of new reactors to be built within the next decade, says Ferdinando Beccalli-Falco, a GE manager.

Indeed, a lots of companies stand to benefit. The industry is celebrating the "strategic shift" and preparing for a boom with mergers en vogue. Japan's Toshiba has acquired US-based Westinghouse, General Electric is working together with Hitachi and Mitsubishi Heavy is flirting with the Franco-German global market leader Areva NP, in which Siemens holds a stake.

Admiration of France

Until now, France has been virtually alone in its reliance on nuclear technology: Eighty percent of its domestically produced power comes from nuclear plants. The 59 plants allow the country to be mostly self-sufficient, and now this strategy is once again being held up as an example.

Lithuania, for example, urgently wants to replace its aging Ignalina nuclear reactor. Doing so would allow the country to decrease its dependence on Russia, but the price tag is some 3 billion. Ukraine also wants to build more nuclear power plants in order to increase its self-sufficiency, despite the trauma of Chernobyl. Bulgaria and the Czech Republic are both discussing building two new nuclear reactors each.

Poland is considering building a nuclear plant after 2020 since its domestic coal-fired power plants could soon run afoul of EU regulations. Next year the EU wants to tighten the emissions requirements for such polluters. Sites under consideration include Gryfino and Klempicz near Posnan, both of which are close to the German border.

Britain's Labour government wants to prepare the way for new atomic power plants by easing the approval process; many of its aging coal-fired power plants will have to close as a result of new EU standards. Gas-fired plants could help to close the gap, but Europe's two most important suppliers, Russia's Gazprom and Algeria's state-owned Sonatrach, in August signed an agreement that has aroused suspicions in London and Brussels that they will create a cartel similar to OPEC.

EU Commission President Jose Manuel Barroso adroitly side-stepped the issue last Wednesday when announcing the EU's new energy strategy. Germany is joined by a number of other EU countries in their skepticism toward nuclear power. But he did not conceal his committee's sympathy for atomic power, citing both environmental reasons and issues related to securing Europe's energy supply. Canada and Australia, the two most significant uranium suppliers, are reliable partners. Other suppliers include Kazakhstan, Russia, Uzbekistan, Namibia and Niger. Kazakhstan wants to surpass Canada as the world's leading uranium supplier by 2010, which explains why French, Chinese and Japanese companies are racing to invest there.

India is considering building 19 new reactors, while China wants to construct at least 63 facilities that will be able to supply 50 giga-watts of power. In emerging market Indonesia a single, very modest, nuclear reactor will go online in 2011. In contrast the US is talking about building more than 20 new plants after a 20-year construction moratorium. Washington is providing tax incentives for power plant operators and it also wants to ease the process of obtaining the required permits.

But who is going to pay?

President George W. Bush already enthuses about a "Global Nuclear Energy Partnership" to foster the use of nuclear power while also monitoring to ensure that the technology is not misused by North Korea, Iran or al-Qaida. The US has budgeted $250 million to support the partnership, and the Hill & Knowlton public relations company, which worked for the government during the first Gulf war, has already launched a PR campaign to promote nuclear power.

The need for advertising seems unavoidable, since even the most enthusiastic supporters of the new atomic era cannot deny that it brings with it the same old risks. No one can rule out a meltdown. And no one can guarantee that civilian nuclear research won't be misused. Furthermore, no one knows who is going to pay for all the new facilities.

Moscow wants to build about 30 new reactors, in part because Gazprom doesn't want to sell natural gas on the domestic market at low prices. The Kremlin speculates that it will be able to obtain $30 billion from foreign investors to fund their construction, but this money is not likely to appear soon.

President Putin has called for the former superpower to take a "giant leap" by expanding its nuclear energy sector, but at present it only has one factory capable of manufacturing turbines and reactors. Consequently, Russia can only build one new nuclear power plant every three years. On the other hand, Russia also wants to sell nuclear technology abroad at discount prices, charging roughly 30 percent less than France for its reactors.

Despite the lofty ambitions and impressive figures, the fact remains that 1.6 billion people still do not have access to electricity, while 2.4 billion are forced to meet their energy needs with wood, straw or manure. In this respect, Steve Kidd, the director of strategy and research at London's World Nuclear Association, could be correct. In the nuclear industry, Kidd says, many such grandiose plans often turn out to be delusional.

Written by Rudiger Falksohn for Der Spiegel, published January 16, 2007

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Google vs. Microsoft

2007-01-26T13:19:00.000+02:00

THE Information Technology industry is all about wars between companies and individuals. These tech wars have become boring to some people and just the mention of a tech war will cause others to take up arms.

Mentioning Google vs Microsoft is one of those topics that make some people think of withdrawing their savings and sticking under the mattress. But hang-on; don't withdraw your precious savings just yet; even though Google and Microsoft are at war, it is more of a "Cold War", and this type of war is not necessarily bad.

If not for the Cold War between the USA and USSR, Yuri Gagarin wouldn't have been the first human in space, and Neil Armstrong would never have walked on the moon.

The future of computer software

Google has broadened its focus. It is not just an internet search engine anymore, the company now provide users with free e-mail, desktop applications and online text and spreadsheet editing.

The text and spreadsheet editing is probably one of Google's boldest moves to date. They have wandered into the domain that Microsoft controlled for the best part of the last 10 years and what promises to be the future of computing.

As Internet accessibility increased so did the amount of applications available. Software companies have shifted their focus to provide more applications and services on the internet.

To draft a letter a decade ago we were forced to buy software like Word (or even WordPerfect at that time). This is no longer the case, with faster broadband speeds making it possible for Google to provide applications like online text editors, and other online services.

How does it affect Microsoft?

Microsoft is being driven to move away from their main business and provide consumers with online tools and services. As with everything from Microsoft they are doing it with a bang.

Bill Gates announced in the end of 2005 that Microsoft is undertaking a major strategic shift towards providing more internet-based services.

Microsoft moved away from their MSN network across to Windows Live! And with the launch of Windows Vista they are increasing the support for Windows Live. Every online tool and service within Vista is closely linked to Windows Live and Office Live.

Microsoft didn't stand a chance competing against Google when it came to search engines, but when it comes to online services it has the advantage. We have to remember that Microsoft has Windows, and with Vista closely integrated with Windows Live, Google is bound to suffer some casualties and stands to lose a large share of the market.

There are tech wars that are worth looking into, and as with the Cold War where two nations pushed one another to become more advanced, the same will happen between Google and Microsoft.

We will have a loser in the end, but we can always remember that the one that did win the war would not have been pushed to the top, if it was not for the other.

Written by Johan Brink and published on www.fin24.co.za on 26.01.2007

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World's 20 richest people

2007-01-15T19:40:00.000+02:00

New York - The world's 20 richest people, according to the annual Forbes magazine ranking (tabulate under ranking, name, age, nationality, net worth in billions of dollars, business and change from 2005 position):

Bill Gates, 50, US, 50.0 (Microsoft), (-)
Warren Buffett, 75, US, 42.0 (investments), (-)
Carlos Slim, 66, Mexico, 30.0 (telecom), (+1)
Ingvar Kamprad, 79, Sweden, 28.0 (Ikea), (+2)
Lakshmi Mittal, 55, India, 23.5 (steel), (-2)
Paul Allen, 53, US, 22.0 (Microsoft), (+1)
Bernard Arnault, 57, France, 21.5 (LVMH), (+10)
Prince Alwaleed Bin Talal, 49, Saudi Arabia, 20.0 (investments), (-3)
Kenneth Thomson and family, 82, Canada, 19.6 (publishing), (+6)
Li Ka-Shing, 77, Hong Kong, 18.8 (diversified), (+12)
Roman Abramovich, 39, Russia, 18.2 (oil), (+10)
Michael Dell, 41, US, 17.1 (Dell), (+6)
Karl Albrecht, 86, Germany, 17.0 (supermarkets), (-5)
Sheldon Adelson, 72, US, 16.1 (hotels), (+5)
Liliane Bettencourt, 83, France, 16.0 (L'Oreal), (+1)
Larry Ellison, 61, US, 16.0 (Oracle), (-6)
Christy Walton, 51, US, 15.9 (Wal-Mart), (new)
Jim Walton, 58, US, 15.9 (Wal-Mart), (-6)
S. Robson Walton, 62, US, 15.8 (Wal-Mart), (-9)
Alice Walton, 56, US, 15.7 (Wal-Mart), (-7)

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'Haves' have most of it

2007-01-15T19:23:00.000+02:00

'Haves' have most of it

05/12/2006 19:10

London - The richest 2% of adults still own more than half of the world's household wealth, perpetuating a yawning global gap between rich and poor, according to research published on Tuesday.

The report from the Helsinki-based World Institute for Development Economics Research shows that in 2000 the richest 1% of adults - most of whom live in Europe and the US - owned 40% of global assets.

The richest 10% of adults accounted for 85% of assets, the report said.

By contrast, the bottom 50% of the world's adult population owned barely 1% of the world's wealth.

"Income inequality has been rising for the past 20-25 years and we think that is true for inequality in the distribution of wealth," said James Davies, a professor of economics at the University of Western Ontario, one of the report's authors.

"There is a whole group of problems in developing countries that make it difficult for people to build up assets, which are important, since life is so precarious."

Politicians 'very concerned'

The gulf between rich and poor nations has long concerned politicians and economists, who say it is one of the biggest obstacles to development.

But Davies said there are some hopeful signs: China and India, which are developing rapidly, are gaining wealth and in countries like Bangladesh, the spread of micro-credit institutions is helping people to increase their personal wealth, he said.

In other countries, land registration programs allow the poor to own land for the first time, he said.

According to the report, individual assets of US$2 200 (R15 680.87) placed an adult in the top half of the world's wealth distribution in 2000.

Those in the richest 10% of adults had assets of US$61 000 or more while those in the top 1% - who now number 37 million - had at least US$500 000.

Researchers defined wealth as the value of physical and financial assets minus debts.

Household wealth in 2000 was valued at US$125trillion, equivalent to roughly three times the value of total global production, or to US$20 500 per person, the report said.

What's the difference?

Average wealth in the US amounted to US$144 000 per person in the year 2000, and US$181 000 in Japan, it said.

In India, the figure was just US$1 100 and in Indonesia, per capita wealth was US$1 400.

Even among high-income nations, the amounts vary, from US$37 000 per person for New Zealand and US$70 000 for Denmark to US$127 000 for Britain.

The world's wealth is heavily concentrated in North America, Europe and the high-income Asia-Pacific countries, which hold nearly 90% of the total world wealth, and where almost all the world's richest individuals live, the report said.

Although North America has only 6% of the world's adult population, it accounts for 34% of household wealth.

China occupies much of the middle third of global wealth distribution, while India, Africa and the low-income Asian companies dominate the bottom third.

Anthony Shorrocks, another of the report's authors, said despite its rapid growth, China does not yet feature among the super-rich because average wealth is modest and evenly spread by international standards.

"However, China is already likely to have more wealthy residents than our data reveals for the year 2000, and membership of the super-rich seems set to rise fast in the next decade," he said.

This article was published by fin24.co.za on 5 December 2006

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The world after Bush

2006-11-29T18:51:00.000+02:00

On 20th January 2009, George W Bush, barring his death, resignation or impeachment, will be succeeded by the 44th US president. Whether Republican or Democrat, the next president will not only inherit a number of crises, but will be in a considerably weaker position to deal with them.

Much of America's weakness will be the result of self-inflicted wounds: the unnecessary invasion of Iraq, along with the Bush administration's gratuitous insults to allies, its arrogant unilateralism and its hostility to international law. But as tempting as it may be to put all of the blame on the Bush administration, the truth is that most of the trends that will limit American power and influence in the next decade are long-term phenomena produced by economic, demographic and ideological developments beyond the power of the US or any government to influence. The rise of China, the shift in the centre of the world economy to Asia, the growth of neo- mercantilist petro-politics, the spread of Islamism in both militant and moderate forms—these trends are reshaping the world order in ways that neither the US nor any of its allies can do much to control.

In retrospect, we can view the period in US and world history that has just ended as "the long 1990s." Those years began in euphoria with the fall of the Berlin wall in 1989 and expired in frustration in late 2003, when the swift victory of the US and its allies over Iraq's armed forces was succeeded by an insurgency that exposed the limits of US power. But even if 9/11 and the Iraq invasion had never occurred, the conventional wisdom of the long 1990s would have crumbled at some point after colliding with reality.

Take the central assumption that at the end of the cold war a bipolar world was replaced by a unipolar one. This was true only in the military dimension—and even there American power was exaggerated. The US has no peers when the task is breaking the conventional armed forces of second and third-tier states like Iraq and Serbia. But when it comes to asymmetric warfare, in the form of campaigns against insurgents like those in Iraq and Afghanistan, the US military, like all conventional militaries, finds itself in the position of a clumsy Goliath trying to quash a nimble and determined David. Stealth bombers and world-class fleets are no help in house-to-house fighting, and missile defences are no good against improvised explosive devices. As the wars in Vietnam and Iraq tragically demonstrate, the US military is not very good at "military operations other than war"—and America's enemies know it.

If dimensions of power other than military hardware are included, then it is clear that bipolarity gave way not to unipolarity but to multipolarity—and did so as early as the 1970s, after Europe and Japan had recovered from the devastation of the second world war and China began its rise. In 1971, President Nixon famously announced the emergence of a world with five power centres: the US, the Soviet Union, Europe, Japan and China. The world was already multipolar a decade before the cold war ended, and the fact that the other great powers have been content to let the US battle various minor states from the Balkans to Afghanistan no more makes the world unipolar than Britain's 19th-century naval hegemony made Britain the hegemon of Europe, rather than one of several European great powers.

Consider another piece of 1990s conventional wisdom—the global human rights revolution. The winner of the ideological wars of the 20th century, we were told, was libertarian, capitalist democracy. The enthusiastic embrace of western European norms by former communist eastern European nations seemed to provide evidence for this. But even in eastern Europe, nationalism has been the most powerful movement—witness the bloody breakup of Yugoslavia and the bloodless partition of Czechoslovakia, not to mention the disintegration of the Soviet Union along ethnonational lines.

The fact is that most of the people engaged in political violence today—from the Basque country to the Philippines—are not fighting for individual rights, nor for that matter are they fighting to establish an Islamist caliphate. Most are fighting for a national homeland for the ethnic nation to which they belong. For most human beings other than deracinated north Atlantic elites, the question of the unit of government is more important than the form of government, which can be settled later, after a stateless nation has obtained its own state. And as the hostility towards Israel of democratically elected governments in Palestine, Iraq and Lebanon shows, democracy can express, even inflame, pre-existing national hatreds and rivalries; it is not a cure for them.

Then there is economics. The conventional wisdom of the long 1990s was correct that capitalism had defeated socialism, but mistaken to assume that the libertarian capitalism fashionable in the US in the late 20th century was the winner. The Japanese never adopted laissez-faire capitalism and China and Russia in recent years have devised their own mixes of state capitalism and free markets.

The growth of China and India, which was supposed to herald a global free market, may instead inaugurate a new age of mercantilism, as Asian industrial powers like China, unwilling to rely on free markets for energy sources and commodities, engage in negotiations with supplier countries. Already bilateral contracts are displacing free markets in oil and gas, and regional trade pacts are proliferating even as global trade talks are stalled. The competition between the rising industrial nations of Asia and the older industrial democracies enhances the leverage of authoritarian and nationalist states endowed with critical resources, particularly oil-producing countries like Iran, Russia, Venezuela and Saudi Arabia. These countries view China not only as a customer but also as a counterweight to the US.

In the US press, China is often portrayed as an aggressive, threatening power. China may indeed become a dangerous revisionist state in the future. In the past two decades, however, China has been a conservative, status quo power, seeking to defend the state-centred international system that many in the US and Europe have sought to transcend. It was the US that designed the state-based UN system in the 1940s, and in rejecting its norms, the US under both Clinton and Bush in the long 1990s repudiated its own earlier foreign policy tradition.

The conventional wisdom of the long 1990s, then, was mistaken in every respect. The world did not become unipolar in the 1990s; it has been effectively multipolar since the 1970s. Ethnic nationalism, not liberalism or democracy, is the most powerful force in the world today. And the competition of the industrial nations for sources of supply and markets is bolstering mercantilism and economic regionalism, incompatible with the laissez-faire utopia touted by panegyrists of globalisation in the long 1990s.

All of these trends would constrain US foreign policy, even if Al Gore had been inaugurated in 2001 rather than George W Bush. It will now be additionally constrained by the legacy of the eight-year Bush administration. When the next president is inaugurated, the US will almost certainly still be in Iraq. Rather than have the world witness the inglorious departure of US forces from a chaotic Iraq in the final years of his presidency, Bush is likely to cede the problem to his successor.

Like Nixon between 1969 and 1973, the next president may be forced to cut America's losses in a failed war while trying to preserve as much of US military credibility as possible. The American right can be counted on to accuse even a Republican president of being weaker than Bush, whose record neoconservatives in the media will idealise in retrospect. So the need to ward off domestic political attack and to demonstrate US power to the world even after failure in Iraq, make it likely that the next president will only pull out of Iraq after a show of strength against enemies in Iraq itself or some other target.

The eventual withdrawal of most US forces from Iraq is not likely to be as complete as the abandonment of South Vietnam in 1975. The US probably will not occupy bases for decades, as it has done in South Korea. But it may well continue to provide military support in some form, either to an embattled Iraqi government or to favoured clients in an Iraqi civil war.

The middle east outside of Iraq may look much as it does today, barring unforeseen events like coups, revolutions or major wars. If Bush in his final years in office were to wage war against Iran to degrade its nuclear capability, all bets would be off. But it seems unlikely that he would choose to wage war on three fronts simultaneously, across an area from the Mediterranean to Pakistan, against three foes who have little in common—Sunni nationalists in Iraq, the Taliban in Afghanistan and Shia Iran. More likely than direct Iranian-American conflict would be a proxy war fought out in the shattered states of Iraq and Lebanon.

Assuming that the US does not attack Iran and that the Iranian theocracy does not give way to some other regime, the next president may be forced to deal with a nuclear Iran. Despite claims that Iran's leaders are "insane," the fact that nuclear states as unstable as Mao's China and Musharraf's Pakistan have been deterred from using nuclear weapons suggests that Iran, too, could be deterred.

But if Iran breaks Israel's monopoly of nuclear weapons in the middle east, one result might be further nuclear proliferation. In Egypt, Hosni Mubarak's son and likely successor Gamal has speculated that Egypt needs its own nuclear energy programme, and Saudi Arabia and Turkey and even post-Saddam Iraq, or its successor states, might follow suit. Fear of North Korea's new nuclear status might, similarly, prompt Japan and even South Korea to develop a deterrent. And if several new nuclear states emerge south and east of Europe, it is possible that even Germany might be tempted to develop its own nuclear force de frappe.

In any event, the Atlantic is likely to grow even wider after Bush leaves office in 2009. Those who hope for a resumption of warm transatlantic ties will probably be disappointed. The old Atlanticist northeastern foreign policy establishment has gone the way of the dodo. Its place has been taken chiefly by career military officers, who are mainly moderate conservative nationalists from the American south, and by a bewildering variety of civilian ideological, ethnic and economic pressure groups that contribute political appointees to the executive branch. The political centre of gravity in the US will continue to shift south and west. Even if blue-state liberalism wins power, it will do so on the basis of largely foreign-born Latino immigrants in the sunbelt, who are not a likely constituency for a new Atlanticism.

Some hope that one result of the Iraq debacle will be a new US commitment to a lasting settlement of the Palestinian question. The opposite is more likely to be the case. As long as it is occupying an Arab country, the US must seek to appeal to Arab public opinion. Even Bush has offered rhetorical support for a Palestinian state. But if the US extricates itself from Iraq and Afghanistan and stays out of other Muslim countries, then the already feeble incentive for American politicians to try to balance support for Israel with appeals to Arab and Muslim public opinion will be even weaker. The abandonment of the US attempt to be the hegemon of the middle east, and US withdrawal from Iraq, might actually empower those in the US who make the simple claim that the US and Israel are allies in world war four (Norman Podhoretz's term; he considers the cold war to be world war three) against the hydra-headed menace of "Islamofascism."

The strengthening of the anti-Arab, anti-Muslim right in the US following an inglorious retreat from Iraq would strain US-European ties even further. In the second decade of the 21st century, Europeans may be surprised to find themselves denounced by some liberal Democrats as well as by conservative Republicans as "Eurabian" appeasers.

In US domestic politics, the long-term beneficiaries of the Iraq war may be the Republicans who waged and lost it, rather than the Democrats who (mostly) opposed it. This is less paradoxical than it seems. Countries that win wars are relaxed about their security and more open to parties of the left—think of Clinton's two terms after the cold war and before 9/11, or Britain's rejection of Churchill after the second world war. Defeated countries tend to seek strong men on the right, as France did after Algeria and the US did after Vietnam, which was followed by a series of Republican presidencies.

American history teaches that opposition even to failed or unpopular wars can be fatal to a political party. The Federalist party ceased to exist following the war of 1812, which most of its members had opposed, and the Whig party, which was highly critical of the Mexican war of 1846-48, collapsed following that war's conclusion. The fact that both those parties, like today's anti-war Democrats, were based in New England does not bode well for American liberals. Already the right is dusting off the "stab in the back" legend used after Vietnam in order to blame the failure in Iraq on liberals in the media and the Democratic minority in congress. This is absurd, of course, but the equally absurd effort to shift blame for the US failure in Vietnam to reporters and the anti-war movement was a political success in the 1970s and 1980s.

Retrospective glorification of the failed Iraq war, however, may be accompanied by a much more cautious military policy on the part of the next few presidents. There is likely to be a revival of the Powell doctrine: the US should send troops only as a last resort, only where military action is appropriate, and only with overwhelming amounts of force. Almost certainly, public rejection of further large-scale military adventures will produce an "Iraq syndrome."

The next president or two is likely to emulate Ronald Reagan in combining rhetorical toughness with operational caution. Reagan was decried as a warmonger for his rhetoric—such as his description of the Soviet Union as an "evil empire." In practice, however, Reagan avoided costly military engagements. He pulled US troops out of Lebanon in 1983, following the Hizbullah attack on the US marine barracks, and his one conquest was the comic-opera invasion of tiny Grenada. The rest of the time Reagan preferred to rely on proxies armed, subsidised and trained by the US, like the Contras who fought Soviet proxies in Nicaragua and the mujahedin who battled the Soviets in Afghanistan. As those cases attest, reliance on proxies who may not share American values can cause moral and political dilemmas. Equally troubling, sometimes, are long-range bombing and missile attacks designed to spare the lives of US soldiers, like Clinton's air war on Serbia and the use of missiles by the US and Israel in attempts to assassinate enemies at a distance. Nevertheless, it seems likely that if the alternative is a high American body count, Bush's successors are likely to prefer sending CIA advisers or missiles to deploying the marines.

The collapse of the neoconservative strategy of US hegemony in the middle east and the world does not mean success for the major alternative. In the Democratic party's complacent foreign policy establishment—although not among its restive voters—neoliberalism continues to be the preferred alternative to the strategy of the Bush administration. Neoliberals agree with neoconservatives about the goal of US foreign policy—a global free market in a world policed by a benevolent, hegemonic US. Their differences are in the details. Although they are as opposed in practice to a multipolar world order as neoconservatives, neoliberals argue that the US should make its global hegemony more palatable to other countries by endorsing international law and working through international institutions like the UN and Nato. And while many neoliberals like Kenneth Pollack, Ivo Daalder and Peter Beinart joined with neoconservatives to endorse "regime change" by war in Iraq, neoliberals are more sympathetic to the idea of "humanitarian intervention" in countries like Kosovo and Sudan to end ethnic massacres.

Following Tony Blair's election in 1997, Clinton and Blair promoted the neoliberal agenda in the name of the third way. At home, this meant embracing free markets while also relegitimising and modernising the welfare state. In foreign policy, neoliberals envisioned a Euro-American partnership that would send troops on missions of mercy around the world. Neoliberalism rested on a utopian vision of history as progress from the modern world of sovereign nation states to a postmodern world order, in which individual human rights replaced state sovereignty as the organising principle of global politics.

The idea of a Euro-American entente intervening in the name of human rights in former western colonies in Africa, the middle east and elsewhere always looked very much like colonialism by another name. In any event, the grandiose ambitions of neoliberal "humanitarian hawks" and "liberal imperialists" never had a chance of being realised because of the unwillingness of western publics to support such a costly policy in the absence of other strategic concerns.

The Gulf war in 1991 and the war against the Taliban in Afghanistan involved classic threats to security, and even the Iraq war was justified on the grounds of the alleged nexus of weapons of mass destruction and Iraqi links to al Qaeda, not on humanitarian grounds. The only humanitarian war to date has been the Nato attack on Serbia in 1999. It was so unpopular in the US that Clinton waged it unconstitutionally without a declaration of war from the US congress, and without UN security council authorisation because of the opposition of China and Russia. It seems unlikely that the US and its European allies would have sent tens or hundreds of thousands of troops to Darfur, even without the Iraq war, whose costs now make it all but certain that no such large-scale western intervention will take place. If it did, then the US and perhaps some European allies like Britain would find themselves fighting and killing Muslims on three fronts—Afghanistan, Iraq and Sudan—while being blamed for Israel's actions in Palestine and Lebanon.

Even if there were political support in the US for an ambitious neoliberal policy of humanitarian intervention, the instruments for it simply do not exist. The US military has been strained to the point of shattering by the Iraq debacle, ruling out significant interventions in the name of nation-building, peace-making or peacekeeping elsewhere. To meet manpower goals, the military has been forced to cancel leave for many units, and to meet recruitment goals, the military has been forced to induct 40 year olds and to lower educational and IQ requirements. As was the case after Vietnam, it will take a decade or longer to rebuild the demoralised US military.

To make matters worse for would-be liberal imperialists in the Democratic party, the failure of the US military in Iraq, as in Vietnam, shows that US military culture remains deeply hostile to pacification and nation-building efforts of the kind that would dominate a foreign policy devised by humanitarian hawks. Policy wonks in Washington may fantasise about creating US "constabulary forces" to engage in small-scale interventions, but that idea will not be supported by congress, the public or the military itself after Iraq.

Bush's economic policy, like his foreign policy, dooms any attempt by his successors to implement the foreign policy vision of Clinton-Blair neoliberalism. Some neoliberals call for a vast programme of investment in developing countries and the middle east in particular. Whether the problems of these countries can be ameliorated by a new Marshall plan is questionable. The original plan merely restarted factories and markets in West Germany and western Europe, which were already industrialised nation states, and did not attempt to modernise primitive territories contested by rival ethnic nations.

In any event, the experiment will never be put to the test, because the money is not there. Bush and the Republican congress have spent it on the Iraq war and tax cuts for the wealthy few, creating the biggest deficits since the Reagan years. In the second decade of the 21st century, reducing the federal budget deficit at a time when the retirement of the baby boomers is driving up government costs is likely to be the priority in Washington. US foreign aid is unlikely to increase, and may well be slashed, even as China and petropowers like Iran and Russia extend their influence by means of subsidies and arms sales.

Whatever happens, it is clear that the long 1990s are finally over, their utopian hopes beyond realisation. The neoconservative vision of one big global market policed by the hegemonic US in a unipolar world now looks quaint. So does the related neoliberal vision of an alliance of north Atlantic democracies repudiating post-1945 notions of state sovereignty in order to dispatch soldiers and democratic missionaries to end ethnic conflicts, enforce human rights and bring democracy and liberty to the middle east and Africa. The multipolar and mercantilist world coalescing around us looks very different from the unipolar free-market order described by Clinton, Blair and Bush, even though it would have seemed familiar to Richard Nixon and Charles de Gaulle.

The neoconservative fantasy of unilateral global hegemony has been discredited, and the neoliberal dream of a UN-led international order is an illusion as well. A concert of great powers, organised and led by the US, offers the best hope for reconciling international peace with liberal order, in a world in which the perfect remains the enemy of the good.

This article was written by Michael Lind - Whitehead senior fellow at the New America Foundation and author of "The American Way of Strategy: US Foreign Policy and the American Way of Life," published by Oxford University Press in October 2006

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SA Property Barons on the rise 13.10.2006

2006-10-19T18:24:00.000+02:00

Johannesburg - It's no secret that South Africa's five-year housing boom has seen a significant increase in property ownership, particularly among first-time buyers. But the rate at which South Africans have been accumulating second, third and fourth properties has also accelerated markedly.
Latest Standard Bank figures show that close to 12% (nearly one in every eight) of all residential property sales recorded at the Deeds Office are going to buyers who already own at least one property.
That ratio has tripled over the past five years, up from 4% in 2000, and would typically include buy-to-let properties or holiday homes.
Standard Bank senior economist Elna Moolman says that investor participation in the housing market could be even higher if one strips out properties bought by the same people but registered in the name of different entities, such as companies or trusts.

Borrow against first property.

She says there's no doubt that the residential property market has lured large numbers of new investment buyers over the past two to three years on the back of significantly lower interest rates and healthy capital gains prospects.
Increased home values have allowed even middle-income earners to invest in more than one property by borrowing against the rising value of their existing primary homes.
Says Moolman: "The fact that SA's household debt repayment to income ratio is still not punishingly high, suggests that households have scope to further increase their exposure to residential property.
"The market also continues to offer double-digit price growth - albeit at a much slower rate than the 30%/year plus fetched in 2004 - which should encourage further money flow to investment properties."

Not only the wealthy.

The scrapping of transfer duties from March 1 on properties costing less than R500 000 could also see a new spate of investment buying over the coming months in lower- and middle-price brackets.
But property ownership hasn't only increased among wealthier South Africans who would typically be able to afford more than one property.
Standard Bank research shows that home ownership has risen quite sharply among most of SA's income groups.
Moolman says SA added about 3.3 million new home owners (older than 16 years) to its ranks between 2000 and 2005. That brought the total number of formal and informal home owners in SA to 24 million.

Mortgage debt balloons.

Some 74% of that figure - or 17.7 million - represents ownership of formal brick and mortar houses, with the remainder mostly squatter or traditional huts.
Moolman says that it's encouraging to note that the benefits of SA's growing economy and a buoyant housing market have been shared throughout the population and not solely by upper income groups.
Rising home ownership figures - particularly in the formal sector, where properties are financed through bank mortgages - are confirmed by latest mortgage advance statistics from FNB property strategist John Loos.
These show that the total value of outstanding mortgages ballooned by 130% over the past five years: from R232bn in January 2001 to R534bn in January this year.

By: Joan Muller for FIN24.co.za

Property in Observatory, Cape Town, South Africa on http://www.hotpropertyincapetown.com

Breeding for God

2006-10-19T15:46:00.000+02:00

In Europe, the fertility advantage of the religious over non-believers has historically been counterbalanced by the march of secularisation. Not any more. Secularisation in Europe is now in decline, and Islam continues to grow. Europe will start to adopt a more American model of modernity.

The modern western world is inseparable from the idea of secularisation. From Socrates's refusal to acknowledge the Greek gods to Copernicus's heretical idea that the earth revolved around the sun to the French revolution's overthrow of religious authority, the path of modernity seemed to lead away from the claims of religion. In our own time, the decline in church attendance in Europe is seen as evidence that secular modernity has entered the lives of ordinary people. Some optimistic secularists even see signs that the US, noted as a religious exception among western nations, is finally showing evidence of declining church attendance. But amid the apparent dusk of faith in Europe, one can already spot the religious owl of Minerva taking flight. This religious revival may be as profound as that which changed the course of the Roman empire in the 4th century.

In his remarkable book The Rise of Christianity, the American sociologist of religion Rodney Stark explains how an obscure sect with just 40 converts in the year 30AD became the official religion of the Roman empire by 300. The standard answer to this question is that the emperor Constantine had a vision which led to his conversion and an embrace of Christianity. Stark demonstrates the flaws in this "great man" portrait of history. Christianity, he says, expanded at the dramatic rate of 40 percent a decade for over two centuries, and this upsurge was only partly the result of its appeal to the wider population of Hellenistic pagans. Christian demography was just as important. Unlike the pagans, Christians cared for their sick during plagues rather than abandoning them, which sharply lowered mortality. In contrast to the "macho" ethos of pagans, Christians emphasised male fidelity and marriage, which attracted a higher percentage of female converts, who in turn raised more Christian children. Moreover, adds Stark, Christians had a higher fertility rate than pagans, yielding even greater demographic advantage.

Some of the sources which Stark draws upon are open to question. What is not contestable is that many latter-day religious groups have thrived thanks to high fertility. The Mormons, for example, like Stark's early Christians, have maintained a 40 percent per decade population growth rate for 100 years. They remain 70 per cent of Utah's population in the teeth of substantial non-Mormon immigration, and have even expanded into neighbouring states. In the 1980s, the Mormon fertility rate was around three times that of American Jews. Today the Mormons, once a fringe sect, outnumber Jews among Americans underthe age of 45.

Demography is also critical to explaining the rise of the religious right in America. An important recent article in the American Journal of Sociology by Michael Hout, Andrew Greeley and Melissa Wilde examines trends in American religious denominational growth in the 20th century. The authors find that conservative Protestant denominations increased their share of all white Protestants from one third among those born in 1900 to two thirds for those born in 1975. Three quarters of the growth of white conservative Protestant denominations is demographic, since they have maintained a fertility advantage overmore liberal denominations for many decades. As with the rise of Christianity itself, slow-moving sociological pressures created the conditions for a political "tipping point" to occur. This time, Republican strategists played the role of Constantine's advisers, who saw which way the wind was blowing and moved to exploit the new social trends.

Outside the US, there is further evidence for this thesis. In Israel, the growth of the ultra-Orthodox proportion of the Jewish population is all but assured because of their threefold fertility advantage over secular Jews. Elsewhere in the middle east, the relative decline of Arab Christians--especially in their Lebanese heartland--has nothing to do with conversion and everything to do with demography.

The share of the world's population that is religious is growing, after nearly a century of modest decline. This effect has been produced by the younger generations in the developing world rejecting secularisation, combined with higher religious fertility levels. Throughout the world, the religious tend to have more children, irrespective of age, education or wealth. "Secular"Europe is no exception. In an analysis of European data from ten west European countries in the period 1981-2004 I found that next to age and marital status, a woman's religiosity was the strongest predictor of her number of offspring. Many other studies have found a similar relationship, and a whole school of thought in demography--"second demographic transition theory"--suggests that fertility differences in developed countries are underpinned by value differences, with secular men and women unwilling to sacrifice career and lifestyle aspirations to have children and have them early.

In a series of controversial articles, Phillip Longman of the New America Foundation has drawn attention to the political ramifications of religious demography in the US, pointing to the sizeable fertility advantage enjoyed by more religious "red"states over the Democratic "blue" states. As Arthur Brooks of Syracuse University recently wrote in the Wall Street Journal,"if you picked 100 unrelated politically liberal adults at random, you would find that they had, between them, 147 children. If you picked 100 conservatives, you would find 208 kids. That's a 'fertility gap' of 41 per cent. Given that about 80 per cent of people with an identifiable party preference grow up to vote the same way as their parents, this gap translates into lots more little Republicans than little Democrats to vote in future elections." Many liberals challenge this logic. Surely many of the children of the religious in the US will become secular, as they have in western Europe for generations. In Europe, religion counts for less in elections than it ever has, and Catholic Europeans from Dublin to Barcelona are still embracing secularism with gusto. Even in the US, there has been an appreciable growth in the "no religion" population over the past decade to 14 per cent. Seizing upon this evidence, Pippa Norris and Ronald Inglehart, two leading political scientists, advance the argument that the world is still heading in a more secular direction. They accept that the reverse is occurring in the short term, but claim that modernisation will result in increased wealth and security in the developing world, lowering religiosity and fertility. Secularism will eventually trump religious fertility.

They have a point. Phillip Longman is correct to identify religious fertility as important, but has neglected the "apostasy"side of the equation. If fertility is always the main mechanism of social change, we would expect much higher populations of Amish, Seventh-Day Adventists, Jehovah's Witnesses and other sects with very high fertility. Yet we know that these sects suffer high "defection" rates--even the Mormons lose a higher percentage of their children than most American denominations. A religious population is more porous than an ethnic population, because conversion or abandonment of the faith can take place rapidly and easily. And as long as the rate of abandonment is high enough to compensate for the religious fertility advantage, there is no threat to secularism. European data show that the religious have had a demographic advantage over their secular counterparts for several generations, but also that this advantage has been balanced out by the secularisation of many of the children of Europe's faithful. Bearing this in mind, I developed a more nuanced model of religious change that accounts for both religious fertility and abandonment of faith in Europe.

I found that the classical secularisation trend does not work as it used to. The case of the US sheds some light on this. Much of the 20th-century growth of conservative Protestant denominations could have been lost to secularism or to more liberal, higher status sects like the Episcopalians, as conservative Protestants became better educated, wealthier and more urban. What impeded such an "assimilation" of conservative Protestants into more liberal theologies was a disruption of the pattern linking social and religious mobility. Conservative Protestants, once content to be led by an urbane liberal-Protestant elite, became increasingly conscious of their group identity. They began to reject the leadership of liberal Protestants, starting in the 1920s with their secession from the Federal Council of Churches. This intensified after 1970 with the so-called "culture wars."Liberal theologies and secularism came to be typecast as the malign "other" against which true Christians should mobilise. As evangelicals gained in self-consciousness, they increasingly erected communal boundaries--such as their own media--which could bind the generations regardless of education or wealth.

The value changes of 1960s America proved a high-water mark of cultural mobility that has been replaced by a cold war of value stasis. The pool of unselfconscious or moderately religious people is on the wane as the "extremes" of fundamental religiosity and secularism grow. When battle lines become firmly drawn, potential converts, like floating voters, dry up. A similar process seems to be occurring in Europe--as the religious become increasingly self-conscious of their unusual identity in a secular society, they become more resistant to secularisation.

Europe--especially western Europe--is seen as the world leader in secular modernisation, and is used as the model by Norris and Inglehart for their theory of secularisation. But if western Europe really is the trend-setter for secularism, there is a problem: secularisation appears to be losing force in its own backyard. Western Europe can broadly be divided in two. On the one hand are Catholic countries like Spain or Ireland, where religiosity is still high--around 60 per cent of the Irish population regularly attend church--and secularisation arrived only in the second half of the 20th century. On the other are the largelyProtestant nations (including Britain) and Catholic France, which secularised earlier. But survey data from 1981-2004 show that in these latter nations, on average, postwar generations are no longer becoming more secular. It seems as though western Europe, with the possible exception of Italy, will converge towards a church attendance rate of little more than 5 per cent. However this will mask a much larger proportion--around half--who continue to describe themselves as religious and affiliate with a religious denomination.

These people, described by Grace Davie as "believing without belonging," are seen by some as carriers of a flimsy faith which will soon disappear, and which doesn't affect behaviour or attitudes. But if this is the case, how do we explain the fact that the fertility of these non-attending believers is much closer to church attenders than to non-believers? The non-attending religious are also significantly more likely than non-believers to identify themselves as ideologically conservative, even when controlling for education, wealth, age and generation. And the religious population has two demographic advantages over its non-believing counterpart. First, it maintains a 15-20 per cent fertility lead over the non-religious. Second, religious people in the childbearing 18-45 age range are disproportionately female. Offset against this is the much younger age structure of secularists.

The pivotal question is where the balance lies between religious fertility and religious abandonment in the secular cutting-edge societies of France and Protestant Europe. The population balance in these countries stands at roughly 53 percent non-religious to 47 per cent religious. My projections, based on demographic differences between the populations and current patterns of religious abandonment, suggest that the secular population will continue to grow at a decelerating rate for three or four more decades, to peak at around 55 per cent. The proportion of secular people will then begin to decline between 2035 and 2045. The momentum behind secularisation in the most secular countries is a reflection of the religious abandonment of the pre-1945 generations, which overwhelmed the fertility advantage of the faithful. The end of apostasy in more recent generations means a population more religious at the end of the 21st century than at its beginning. As in the case of the Mormons or early Christians, demography rather than mass conversion will be the main agent of change.

This slow shift against secularisation would have only a gradual impact on the spirit of European society were it not for immigration. Immigration from Latin America has enabled American Catholics to grow despite losing far more believers to other denominations than they get in return. In Europe, immigration will similarly drive the rise of the religious population,especially its Islamic part.

In the US, we know that the population will be less than 50 per cent non-Hispanic white by 2050, but it is difficult to predict what proportion of Europe's population will be of non-European descent in the future because few European countries collect census data on ethnicity and religion. The occasionally cited figure of 30 per cent ethnic minorities in western Europe by 2050 is little more than an educated guess. One of the few countries to collect ethnoreligious census information is Austria, where a recent projection--based on a conservative estimate of 20,000 immigrants a year and various assumptions about religious abandonment and fertility--predicted that Muslims would make up between 14 and 26 per cent of the population in 2050, upfrom 4 per cent today.

Muslim secularisation would certainly alter this picture and forms a cornerstone of the Norris-Inglehart thesis. But a glance at the surveys of ethnic minorities in Europe reveals little evidence of this. In Britain, second-generation Afro-Caribbeans and eastern European Christians tend to be less religious than their parents but more so than the wider population. Yet there is virtually no change at all in the religiosity of Bangladeshi and Pakistani Muslims between the first and second generations. A recent study of Dutch ethnic minorities paints a similar picture of religious retention among Muslim groups.

The future response of Europe's lapsed Christian population to the growth of European Islam is difficult to gauge. Muslim growth may prompt a more strident secular nationalist response, as it seems to have done in France and Holland, or it may lead to a renewed emphasis on Christian identity (see the recent speeches of Pope Benedict). David Voas and Steve Bruce have found evidence for the latter in the 2001 British census, where the proportion of white British respondents describing themselves as Christian (rather than "no religion") was higher in districts with large Muslim populations. Christian identity does not equate to growing religious belief, but it eventually might. In ethnically divided Northern Ireland, sectarian conflict fuels far higher religiosity than in other parts of Britain. In either case, the combination of a fast-growing Muslim community and a stable or slowly growing Christian population will squeeze the non-religious, causing a major reversal of the secularising trends of the past 50 to 100 years.

Western Europe will initially emerge as a more religious society, but not a fundamentalist one. Even so, religiosity--as belief rather than attendance--significantly predicts a more conservative ideological orientation. Though we are unlikely to see the rise of evangelical Christian politics in Europe, we may find a long-term drift towards more conservative social values. Europeans will become more "traditional" on moral issues like abortion, family values, religious education and gay marriage. Inter-faith co-operation between Christians and Muslims on these issues is quite possible since ecumenical structures are already in place in most countries to facilitate it. The ease with which conservative Protestants and traditionalist Catholics and Jews have co-operated in the US may be taken as evidence. Much will depend on how these ideological synergies are channelled by parties and electoral systems in different countries, but by the mid-21st century, the peak of secular European politics will be long past. As in America, politicians will need to stay on the right side of religious sentiment to ensure they are not outflanked by their opponents.

Over the longue durée, the fundamentalist component of Europe's population may begin to increase for the same demographic reasons as in America. The diversity of religious groups in Europe will guarantee a separation of religion and state, but this cannot protect secular public policies from being eroded by a coalition of religious groups who have agreed to submerge their differences. Religious lobbyists, couching their claims in the rhetoric of relativism and diversity, will ask why the secular point of view on issues like abortion, blasphemy, pornography and evolution is the only one taught, aired or"respected."

Much will depend on whether conservative political parties opt for a multi-ethnic religious platform or instead mobilise a white nationalist majority across the secular/religious divide. The religious path is currently viewed as the more acceptableone. For the past 20 years, the Republicans have tried to unite whites and non-whites under the banner of religious conservatism and traditional values. Notwithstanding the current illegal immigration furore in the US, the party elite will almost certainly continue with this agenda. Many European conservatives will advocate a similar strategy as the only acceptable face of cultural conservatism in an increasingly multicultural society.

Demographic currents are carrying Europe towards a more American model of modernity. They also signal that current theories of secularisation need revision. Fertility in the developing world is falling rapidly due to urbanisation, but the World Values Survey finds that religiosity in these countries shows no sign of declining. The religious continue to have higher fertility than their secular brethren in the developing world, regardless of income or education. Though China will probably remain more secular than western Europe, this is unlikely to be true of Latin America, south Asia or the middle east. For them, modernisation is more likely to result in a US-style religious society.

Taking a step back from the figures reveals how the revival of religiosity in the west in the 21st century may reconfigure the Enlightenment belief in rational individualism. Thus far, liberal optimism has soundly defeated the naysayers. Marx's warning of cataclysmic economic contradictions between capital and labour proved as wide of the mark as Daniel Bell's fears a century later of the cultural contradiction between workplace discipline and consumer hedonism. Even rising crime rates and the breakdown of the traditional family do not threaten the liberal order. Francis Fukuyama's "end of history," in which liberal democracy and capitalism prevail, is premised on the superiority of western military technology, which enables individualistic societies to inoculate themselves against the challenge from more cohesive "barbarian" ones. Fukuyama is right. We may suffer terrorism, but terrorists cannot destroy our complex societies. Yet all this assumes the demographic sustainability of liberal capitalism. If Fukuyama's "last men" cannot replace themselves, they will be succeeded by those with a more traditional outlook.

The liberal-capitalist idea spread widely in the 19th and 20th centuries in part because it reduced mortality and freed the minds and resources of societies, allowing them to develop the advanced technology with which to defeat their religious and socialist rivals. It also enabled the demographic expansion of the west as infant mortality fell, prosperity resulted in earlier marriage and family formation, and new lands were settled. A recent study by Vegard Skirbekk shows that wealthier(presumably more "modern") individuals had higher fertility than the poor in Europe until the late 19th century. But starting in the late 19th century, the authors demonstrate that the European poor began to have larger families than the wealthy. Today, many of the demographic advantages that once accrued to liberalism have fallen away. Infant mortality is largely conquered, technology is globally diffused and the secular west is losing its demographic weight.

Perhaps we are entering a new stage in history in which the demographic flaws in liberalism will become more apparent, paving the way for the return of a communitarian social model. This may still leave democracy, liberalism and mixed capitalism intact. But it will challenge modernism, that great secular movement of cultural individualism which swept high art and culture after 1880 and percolated down the social scale to liberalise attitudes in the 1960s. Cultural modernism has accompanied technological modernisation in the west, while the non-western world has usually modernised its technology rather than its values. Daniel Bell prophesied that modernism's antinomian cultural outlook would prompt a "great instauration" of religion as people sought spiritual solace from the alienation of modern life. Bell has so far been proved wrong, but history may yet vindicate him as we bear witness not to spiritual revival, but to a religious reconquista based, ironically, on the nakedly this-worldly force of demography.

Written by by Eric Kaufmann and published by Prospect Magazine, November 2006 http://www.prospect-magazine.co.uk

Eric Kaufmann is a senior lecturer in politics at Birkbeck and the author of "The Rise and Fall of Anglo-America".

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Imaginative people - not geeks - will lead the way

2006-08-28T20:43:00.000+02:00

We are now in the early stages of a third Industrial Revolution – the information age. The cheap and easy flow of information around the globe has vastly expanded the scope of tradable services, and there is much more to come.

The old assumption that if you cannot put it in a box, you cannot trade it is hopelessly obsolete. Because packets of digital information play the role that boxes used to play, many more services are now tradable and many more will surely become so.

In the future, and to a great extent already, the key distinction will no longer be between things that can be put in a box and things that cannot. Rather, it will be between services that can be delivered electronically and those that cannot.

Many people blithely assume that the critical labor-market distinction is, and will remain, between highly educated (or highly skilled) people and less-educated (or less skilled) people – doctors versus call-center operators, for example.

The supposed remedy for the rich countries, accordingly, is more education and a general “upskilling” of the workforce. But this view may be mistaken.

The critical divide in the future may instead be between those types of work that are easily deliverable through a wire (or via wireless connections) with little or no diminution in quality and those that are not.

Adam Smith wrote “The Wealth of Nations” in 1776, at the beginning of the first Industrial Revolution. Although Smith’s vision was extraordinary, even he did not imagine what was to come.

It has been estimated that in 1810, 84 percent of the U.S. workforce was engaged in agriculture, compared to a paltry 3 percent in manufacturing.

By 1960, manufacturing’s share had risen to almost 25 percent and agriculture’s had dwindled to just 8 percent. (Today, agriculture’s share is under 2 percent.)

How and where people lived, how they educate their children, the organizations of business, the forms and practices of government, all changed dramatically in order to accommodate this new reality.

Then came the second Industrial Revolution, and jobs shifted once again – this time away from manufacturing and towards services.

This trend is worldwide and continuing.

Between 1967 and 2003, according to the Organization for Economic Cooperation and Development, the service sector’s share of total jobs increased by about 19 percentage points in the United States, 21 percentage points in Japan, and roughly 25 percentage points in France, Italy, and the United Kingdom.

Industrial Revolutions are big deals. And just like the previous two, the third Industrial Revolution will require vast and unsettling adjustments in the way Americans and residents of other developed countries work, live, and educate their children.

The United States and other rich nations will have to transform their educational systems so as to prepare workers for the jobs that will actually exist in their societies. Basically, that requires training more workers for personal services and fewer for many impersonal services and manufacturing.

But what does that mean, concretely, for how children should be educated? Simply providing more education is probably a good thing on balance, especially if a more educated labor force is a more flexible labor force, one that can cope more readily with nonroutine tasks and occupational change.

However, education is far from a panacea, and the examples given earlier show that the rich countries will retain many jobs that require little education. In the future, how children are educated may prove to be more important than how much.

Contrary to what many have come to believe in recent years, people skills may become more valuable than computer skills. The geeks may not inherit the earth after all – at least not the highly paid geeks in the rich countries.

Creativity will be prized. Thomas Friedman has rightly emphasized that it is necessary to steer youth away from tasks that are routine or prone to routinization into work that requires real imagination.

Unfortunately, creativity and imagination are notoriously difficult to teach in schools – although, in this respect, the United States seems to have a leg up on countries such as Germany or Japan. Moreover, it is hard to imagine that truly creative positions will ever constitute anything close to the majority of jobs. What will everyone else do?

The future retains its mystery. But in any case, offshoring will likely prove to be much more that just business as usual.

Written by Alan S. Blinder, a Gordon S. Rentschler Memorial Professor of Economics at Princeton University. He served on the White House Council of Economic Advisers from 1993 to 1994 and as vice chairman of the Board of Governors of the Federal Reserve from 1994 to 1996.

This article appeared in The Ashahi Shimbun, an English Japanese paper on Tuesday, March 28, 2006.

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INVESTING - The cost of bad news.

2006-08-09T12:52:00.000+02:00

The business section of the newspaper has made for pleasant reading the past few years, thanks to consistently growing, well-managed economies and stock markets that keep going up.

The front page is a different matter, and some investment advisers are worried that the bad news will spill over and spoil the good thing.

We are living in a world with “low macroeconomic volatility but high geopolitical volatility,” said David Rosenberg, a Merrill Lynch economist. “Over the past decade core inflation volatility and real rates have returned to levels last seen in the 1950”, he said in a note to the bank’s clients. Profit margins expand in such a climate, and stock prices rise as investors bet that the placid conditions will persist.

But Rosenberg suggested that the environment of “low volatility, low risk premia” is threatened in a way that it was not, half a century ago. He rattled off headlines from one edition of The New York Times: the conflict in Iraq, bird flu in Turkey, Iran’s nuclear program, attacks on oil facilities in Nigeria and Saudi Arabia and on and on. “What do investors pay for in terms of a much more uncertain geopolitical backdrop?” he asked.

In the note, Rosenberg offered no answer to his own question, but in an e-mail exchange later he suggested that whatever investors are paying to take account of political risk, it is not enough.

People focus on “where the second decimal place is going to be on first-quarter GDP growth and whether the Fed is done at 5 percent or 5.25 percent,” he said.

It is “very rare,” he said, “to see investors turn a blind eye when faced with so much uncertainty. But if they start to price political risk, which markets will feel it first and most?”
Global investment managers say that emerging markets actually may be least affected. The long history of strife in those markets, they say, compels investors to ignore the progress and depress valuations in anticipation of further difficulties, which acts as a shock absorber.

“You’re talking to someone who has gone through the Mexico crises, the Brazil crises and the Turley crises,” said Francis Claro, the world-weary co-manager of the Evergreen Global Opportunities Fund. “Politics has always been an investment consideration within emerging markets.”

One reason that emerging markets have done so well and attracted so much foreign investment is that the political instability priced in in many countries, including Brazil, Mexico, Russia and much of Asia, has not materialized.

These arguments do not persuade Rosenberg that emerging markets are immune; the crises that Claro mentioned were, after all, crises. But Claro and others nevertheless make a persuasive case that investors may face greater risk in the developed world because stability is supposed to be the norm and any threat to it is less likely to be factored into stock prices.

The consolidation of European economic and monetary union is driving some politically inspired economic imprudence in Europe, Claro said: “You have the many governments that have in a sense surrendered monetary policies” to the European Central Bank, he said, “but they are still very active on the fiscal front.”

Hyperactive in the case of Italy, one of the markets where Jerome Booth, research director at Ashmore Group, believes political tribulation is not priced in. The country’s finances have worsened in recent years and appear particularly fragile in advance of the election next month in which Prime Minister Silvio Berlusconi is hoping to keep Romano Prodi from taking his job.
“Should Berlusconi win, or should Prodi win and then see his government fall apart six months later when he fails to address the fiscal crises, the country is likely to be downgraded,” Booth said. Italy may suffer the supreme embarrassment of being judged less creditworthy than some emerging markets. “ The possibility of Mexico and maybe Russia trading through Italy is very real,” he said.

Booth also finds danger in Japan, where he thinks the political will to execute economic reforms has long been lacking. With national debt equal to 150 percent of annual output, “what happens if interest rates go to 4 percent?” he asked.

“The reality is that there’s risk everywhere, in every country,” Booth said. “We’re now in a world where you’ve got two types of countries: emerging markets, where political risk is priced in, and a whole bunch where it isn’t priced in at all.”

This article was written by Conrad de Aenlle and published in the Saturday-Sunday, March 25-26, 2006 addition of International Herald Tribune.

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China's taste for high-end property forces a rethink on house-builders.

2006-08-09T12:48:00.000+02:00

When the Millionaire Fair, an exhibition of luxurious products, came to Shanghai last month, one local property developer put the city’s most expensive house up for sale – a $31.2m (€24.7m, ₤16.9m) mansion by a lake with a private island in the south-west suburbs.

In the construction boom that has been electrifying many of China’s cities, developers have given priority to luxury housing over the rest. Of the Rmb189bn ($24bn, €19bn, ₤13bn) that was invested in residential housing, only Rmb6.2bn went to low-income housing.

Combined with the mass relocations of residents to make way for new buildings and dramatic rises in prices in a handful of cities, housing has become one of the most sensitive manifestations of growing inequality in incomes in China.

The top leaders in Beijing claim to be more aware of the fate of ordinary citizens than its predecessors and earlier this month decided to take action. As well as reissuing a ban on the construction of new “villas” – large, detached houses – the government introduced tough measures to force the construction of more low-cost houses.

In what has been nicknamed the “double 70 per cent rule”, local governments were ordered to allocate 70 per cent of new residential land to low and middle-income housing, while developers were told that 70 per cent of all new residential construction projects had to consist of apartments of 90 square metres of less.

But since the new rules were announced they have come in for unusually public criticism from developers and other property professionals, who argue that the government is using heavy-handed planning edicts to try solve a complex problem in need of public money. According to Ren Zhiqiang, president to Beijing Hua Yuan, a property developer: “The Chinese government is trying to put social responsibilities on the head of domestic property developers.”

Mr Ren believes that the new policy is impractical. Take the case of families relocated to make way for new construction, he says. Some Chinese cities have promised about 35 sq m or above to each reallocated resident, so, for a typical family with four members, government would need to provide apartments of about 150 sq m. “ Under the new policy, they would have to put one family into two apartments.” Architects warn that they will be forced to design apartments with peculiar and impractical shapes just to fit within the new guideline.

The complaints by developers should come as no surprise, since they make substantially more profit on luxury housing, which has roughly the same land and construction costs a low priced housing. But if developers begin to shift away from residential property the new rules could become counterproductive. Mr Ren says the guidelines have forced some developers to try to return land they had bought and to get out of paying architects for work already done.

Fan Wei, the chief executive of Shanghai Forte Land, one of China’s largest residential real estate developers, said the group had already been looking at moving into other types of property before the new policy was announced.
Whether the authorities can implement such rules has also been questioned. The ministry of land and resources conceded last week that 60 per cent of land acquisitions for construction in China were illegal because they had not gone through the formal planning approval process. In some cities the figure was as high as 90 per cent.

The figures are the latest indicating that local planning officials often collude with property developers to ignore rules about land use, especially in the construction of luxury housing and showcase projects such as convention centres.

The government has suffered the same experience with efforts to slow down the building of “villas”. It issued a ban on using land for villa construction three years ago, but developers got round the rules by calling the houses by other names, while officials turned a blind eye.

If Beijing really wants to encourage a new round of low-cost housing, economists say, it will have to pay in one way or the other. “Either government-owned developers build cheap housing on the basis of a clear policy mandate, or a subsidy is needed for private developers,” says Stephen Green, an economist at Standard Chartered in Shanghai.

This article, written by Geoff Dyer, was published in the Financial Times of Wednesday June 14, 2006.

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Terror TV

2006-08-09T12:46:00.000+02:00

On any given night of the week, between 10 and 15 million Arabic speakers in Europe, North Africa and the Middle East tune into Al-Manar (the Beacon), the television channel produced in Beirut by the terrorist group Hezbollah.

The station’s purpose, an Al-Manar official told researcher Avi Jorisch of the Washington Institute for Near East Policy, is to “help people on the way to committing what you call in the West a suicide mission.”

Watch some of its programming (revealing clips can be seen at www.stopterroristmedia.org), and you’ll understand how well-suited the medium is to the message.

That’s why it’s good news that last month the U.S Treasury Department named Al-Mamar as a Special Designated Global Terrorist entity. The designation prohibits financial transactions with Al-Manar and its parent company, the Lebanese Media Group, and enables the government to level penalties against U.S. financial institutions (or foreign institutions that transact business in the U.S.) doing business with them.

This is no trivial blow: Hezbollah has used Al-Manar for fund-raising by televising bank account numbers to which viewers can wire contributions for jihad. Al-Manar has also sold several million dollars worth of advertising to Western companies. This, too, is now at an end.

Today, only Saudi Arabia’s Arabsat and Egypt’s Nilesat carry the station, and both governments have rebuffed U.S. entreaties to take it off the air. That may change if either company turns out to be liable to designated-terror penalties. The Bush Administration might also consider a wider range of sanctions, such as barring Arabsat and Nilesat executives from entering the U.S. until Al-Manar is taken off the air.

Al-Manar is hardly the only Arab channel that routinely broadcast murderous anti-Semitic or anti-American shows. Nor is it likely that simply putting Al-Manar out of business will end terrorist media: The Iranian chapter of Hezbollah has announced its intention to set up a new channel, Khaiber TV. But by taking action against Al-Manar, the Bush Administration has set the right precedent against the worst offender. Let’s hope it can enforce it.

This article appeared in the Friday – Sunday, April 7 – 9, 2006 addition of The Wall Street Journal – Asia, in the Editorial & Opinion column.

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Coke hopes its new ads conjure up the old magic

2006-06-07T18:59:00.000+02:00

ALWAYS EVOLUTION
Highlights from Coca-Cola’s advertising over time:

1886 : Drink Coca-Cola

1929: The Pause That Refreshes

1963: Things Go Better With Coke

1969: It’s the Real Thing

1971: I’d Like to Buy the World a Coke

1979: Have a Coke and a Smile

1982: Coke Is It

1990: You Can’t Beat the Real Thing

1993: Always Coca-Cola

2000: Coca-cola. Enjoy

2001: Life Tastes Good

2003: Coca-Cola … Real

2005: Make it Real

2006: The Coke Side of Life

Source: the company

Marketing swagger fades with U.S. sales; last hit slogan in ’93

Advertising owes many of its landmarks to Coca-Cola Co.: There was the 1969 slogan “It’s the Real Thing,” widely considered one of the most effective ever written. And Coca-Cola’s 1971 “Hilltop” commercial turned a jingle, “I’d Like to Teach the World to Sing,” into a peace anthem.

And then there is the recent Coke advertising. Remember the commercial where actress Penelope Cruz guzzled a Coke and belched? How about the sweaty basketball player who stuck a cold can of Coke in his armpit before offering it to his buddy?

“It was painful to watch,” says Kevin Keller, a marketing professor at Dartmouth College, of Hanover, New Hampshire, and a former advertiser to Coke.

Those spots, hallmarks of the doomed “Real” campaign created by maverick ad agency Berlin Cameron & Partners, a unit of WPP Group, were just the latest in a series of advertising mishaps at Coke.

The last time Coke had a hit ad campaign was “Always Coca-Cola,” which it introduced in 1993 and discarded in 1999. Last year, an effort to update the “Hilltop” commercial for Coke Zero was a resounding flop.

Now Coke is trying once again to recapture its marketing swagger with a new global slogan: “The Coke Side of Life.” The first spots in the campaign, created by Portland, Oregon, agency Widen+ Kennedy, are set to air this weekend. Coke plans to deploy the ads in other countries by midyear.

Rarely has Coke had so much riding on an ad campaign. Sales of Coca-Cola classic in the U.S. fell 2% by volume last year, contributing to a 10% decline over the past five years.

But it’s far from clear that a new ad slogan alone can reverse Coca-Cola’s decline in the U.S., as more consumers swear off sugary sodas and turn to bottled water and energy drinks. Coca-Cola’s rival, PepsiCo’s Pepsi-Cola, has reacted to declining demand for sugary soda by emphasizing Diet Pepsi. Coke has had mixed results introducing lower-calorie alternatives.

Coke hasn’t disclosed spending for the new effort, including outdoor ads and online promotions as well as television. Last year, the company boosted its $2 billion global marketing budget by $400 million. Ad spending on Coca-Cola Classic in the U.S., the world’s largest soft-drink market, fell to $124 million last year from $210 million in 2000, according to TNS Media Intelligence.

Behind the scenes, Coke marketers in recent years have been locked in an internal tug-of-war over their 120-year-old brand’s image. Traditionalist executives were determined to preserve the icon, steeped in Americana. New marketers at Coke, including Coke’s former president, Steven J. Heyer, were pressing for a hipper identity.

Mr. Heyer, a Madison Avenue veteran, hired edgy ad shops, including Berlin Cameron, whose sweaty-armpit ad aired for a short time in 2004. The spot brought the behind-the-scenes struggle briefly to light, after veteran Coke executives had it yanked from the air.

Mr. Heyer left Coke in 2004 soon after Neville Isdell was named chief executive and chairman. Mr.Isdell has vowed to return Coca-Cola to its former marketing glory. Last year, the company stabilized its global market share, with fast growth in emerging markets such as Russia and China helping to offset sluggish sales in the U.S.

The marketing ranks at Coke had been thinned considerably by cuts in the work force at headquarters starting in 2000. Mr.Isdell has criticized previous management for cutting ad spending to meet short-term profit goals.

Mary Minnick, president of global marketing, strategy and innovation, is Coke’s fourth marketing chief since 2003. She awarded the plum Coca-Cola account to Wieden + Kennedy following a creative shootout that included Berlin Cameron. The new campaign will be supplemented by ads created in local markets around the world.

Coke announced the new campaign Thursday. Rooted in youthful optimism and the brand’s core values of refreshment and comfort, it seems to signal the pendulum has swung back toward the traditionalist view. A central image of the new ads will be the contoured Coca-Cola bottle. Some commercials close with the fizzing sound of a freshly poured Coke.

The new work “understands that Coke trade dress – the red colour, the ribbon, the contour glass, the logos - are magical icons with immeasurable power,” wrote Advertising Age’s Bob Garfield. “It understands that the fizzing, bubbling sound of a soft-drink pour is one of the most fetching, evocative and appetizing sounds on earth.”

Ms. Minnick told analysts and investors at a December meeting, “We have one objective and that’s to make choosing Coke a purposeful act.” Still, she has cautioned that Coke can’t “go back to yesterday” by recycling old slogans.

But Jack Trout, a marketing strategist based in Greenwich, Connecticut, recommends that Coke literally feature some creative device in commercials to take young consumers back in time to 1886, when an Atlanta druggist concocted the secret Coke formula. ‘“They should go back to ‘the Real Thing,’ ” he says.

Even that couldn’t work in the modern media environment, argues Tom Pirko, of consulting firm Bevmark, of Santa Ynez, California. Coke’s best-loved ads aired when consumers had far fewer beverage choices and were much easier to reach through mass-market TV commercials. He doubts the “Coke Side of Life” will register. “Marketing magic cannot be recreated,” he says.
“It has to be created with an original thought that is breakthrough.”The data at the top comes from the Coca-Cola Co.

This article was written by Chad Terhune in Corporate News for THE WALL STREET JOURNAL – Asia, published Friday – Sunday, March 31 – April 2, 2006.

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China projects gradual slowdown

2006-06-07T18:57:00.000+02:00

Central bank expects 8.9% growth for ’06 after 9.9% last year.

CHINA’S ECONOMIC growth is expected to slow to 8.9% this year while consumer prices will rise about 2%, the central bank’s research department said in a report published in March.

The report, carried in the China Securities Journal, predicted gross domestic product would grow 9.2% in the first quarter from the same period a year earlier, 9% during the second quarter, 8.9% in the third and 8.7% during the fourth. It expects consumer prices to rise 1.5%, 2.1%, 2.1% and 2% for each quarter, compared with the comparable quarters a year earlier.

China’s GDP grew 9.9% last year, while consumer prices rose 1.8%.

The forecasts assume the global economy will grow 4.3% this year, China’s fiscal expenditure will rise 12% and China’s interest rates will remain at current levels, the report said.

“Generally speaking, China’s GDP growth will slow down gradually in the future, but will remain at a relatively high level,” it said. “There won’t be major fluctuations in consumer prices in the future, and the growth will be relatively stable.”

China’s fixed-asset investment will continue to grow at a relatively rapid pace, which may put upward pressure on the prices of producer goods and raw materials, it said.

However, overcapacity in various sectors, such s steel, cement, coke and automotive, will exert some downward pressure on consumer prices, it said. The government should take measures to expand domestic demand and set a high entry level for certain sectors, it said, adding that commercial banks should strictly control lending to sectors with overcapacity to minimize financial risks.

Meanwhile, China’s National Development and Reform Commission said in a statement on its Web site yesterday that value-added industrial output in February rose 20.1% from the same month last year to 547.3 billion yuan ($68.16 billion).

China’s industrial output for the first two months this year rose 16.2% to 1.111 trillion yuan, the National Bureau of Statistics said earlier this month. The country’s export-delivery value rose 29% in February to 370.4 billion yuan, and was up 24.2% at 745.4 billion yaun in the first two months, it said.

Output of coal, electricity and petroleum rose steadily in the first two months, while steel, construction materials and nonferrous metals’ output growth also rose, the bureau said.

Chinese coal output in January and February was 266 million metric tons, up 9.6% from the year-earlier period, it said. China’s electricity output for the two months rose 11.2% to 402.5 billion kilowatt-hours.

Contributions by Zheng Jin and Zheng Xiaolu for WALL STREET JOURNAL – Asia, Tuesday, March 28, 2006.

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On cavemen crooners, survival

2006-06-07T18:55:00.000+02:00

In STEVEN MITHEN’S imagination, the small band of Neanderthals gathered around the caves of Le Moustier, in what is now the Dordogne region of France, 50,000 years ago were butchering carcasses, scraping skins, shaping ax heads - and singing.

One of the fur-clad men started it, a rhythmic sound with rising and falling pitch, and others picked it up, indicating their willingness to cooperate both in the moment and in the future, when the group would have to hunt or fend off predators. The music promoted “a sense of we-ness, of being together in the same situation facing the same problems,” suggests Prof. Mithen, an archaeologist at England’s Reading University. Music, he says, creates “a social rather than a merely individual identity.” And that may solve a longstanding mystery.

Music gives biologists fits. Its ubiquity in human cultures, and strong evidence that the brain comes preloaded with musical circuits, suggest music is as much a product of human evolution as, say, thumbs. That raises the question of what music is for. Back in 1871, Darwin speculated that human music, like bird songs, attracts mates. Or, as he put it, pre-linguistic human ancestors tried “to charm each other with musical notes and rhythm.”

Some scientists today share that view. “Music was shaped by sexual selection to function mostly as a courtship display,” Geoffrey Miller of the University of New Mexico argued in a 2001 paper. Like Darwin, he bases that conclusion on the belief that music has “no identifiable survival benefits.” If a trait doesn’t help creatures survive, then it can persist generation after generation only if it helps them reproduce.

STUDIES IN NEUROSCIENCE and anthropology, however, suggest music did help human ancestors survive, particularly before language. In “the Singing Neanderthals”, which Harvard University press is publishing, Prof. Mithen weaves those studies into an intriguing argument that “language may have been built on the neural underpinnings of music.”

He starts with evidence that music isn’t merely a side effect of intelligence and language, as some argue. Instead, recent discoveries suggest music lays sole claim to specific neural real estate. Consider musical savants. Although learning-disabled or retarded, they have astounding musical abilities. One savant could hardly speak or understand words, yet he played flawlessly a simple piano melody from memory despite hearing it only once. In an encore, he added left-hand chords and transposed it into a minor key.

“Music,” Prof. Mithen says, “can exist within the brain in the absence of language,” a sign that the two evolved independently. Since language impairment doesn’t wipe out musical ability, the latter “must have a longer evolutionary history”.

In the opposite of musical savantism, people with “amusia” cannot perceive changes in rhythm, identify melodies they have heard before or recognize changes in pitch. Since they have normal hearing and language, the problem must lie in brain circuits that are music-specific.

More evidence that the brain has dedicated, inborn musical circuits is that even babies have musical preferences, finds Sandra Trehub of the University of Toronto. They listen longer to perfect fifths and perfect fourths and look pained by minor thirds.

If music is indeed an innate, stand-alone adaptation, then evolution could have nursed it along the eons only if it helped early humans survive. It did so, Prof. Mithen suggests, because “if music is about anything, it is about expressing and inducing emotion.”

PARTICULAR NOTES elicit the same emotions from most people, regardless of culture, studies suggest. A major third (prominent in Beethoven’s “Ode to Joy”) sounds happy; a minor third (as in the gloomy first movements of Mahler’s Fifth) provokes feelings of sadness and even doom. A major seventh expresses aspiration. The absence of a third seems unresolved, loose, as if hanging, notes jazz guitarist Michael Rod, 17 years old.

The fact that listeners hear the same emotion in a given musical score is something a Neanderthal crooner might have exploited. Music can manipulate people’s emotional states (think of liturgical music, martial music or workplace music). Happy people are more cooperative and creative. By fostering cooperation and creativity among bands of early, pre-language human ancestors, music would have given them a survival edge.
“If you can manipulate other people’s emotions,” Prof. Mithen says, “you have an advantage.”

Music also promotes social bonding, which was crucial when humans were more hunted than hunter and finding food was no walk on the savannah. Proto-music “became a communication system” for “the expression of emotion and the forging of group identities,” Prof. Mithen argues.
Because music has grammar-like qualities such as recursion, it might have served an even greater function. With music in the brain, early humans had the neural foundation for the development of what most distinguishes us from other animals: symbolic thought and language.

This article was published in the Friday –Sunday, March 31 – April 2, 2006 addition of Science Journal of THE WALL STREET JOURNAL – Asia. This article was written by Sharon Begley. You can e-mail her at sciencejournal@wsj.com.

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Ask.com's new look scores points against search rivals

2006-06-07T18:47:00.000+02:00

Every so often in sports, an underestimated contender rises up to compete with a champion play for play, or even to beat the champ. Something like that is happening in the search business.

Ask Jeeves, a largely failed search service, has been overhauled and renamed Ask.com. I have been testing the new Ask.com against the search champ, Google. I have found that in terms of relevant results and ease of use, Ask holds its own with Google, and even beats the champ on some searches. It has some features Google lacks, including previews of sites it finds, an easy way to narrow or broaden results, and frequent top-of-the-screen answers that lead you to core information.

Ask.com is starting from a low ranking. According to a recent study, Ask.com has about 6% of the search market, compared with 41% for Google and 29% for Yahoo. Yet, Ask.com is improving fast and is capable of playing above its ranking.

In its old incarnation, Ask Jeeves, I never could recommend the service. It was cluttered with ads that too easily confused with real search results and that made the real results hard to find. And it was based on a questionable promise – that it could answer queries stated as English-language questions. While it did that in some cases, it failed in many others.

This year, the name has been changed and the logo has been axed. The whole question-answering approach is de-emphasized. But the overhaul has been far more than just marketing. Ads have been cut back to just three at the top and five at the bottom of each page, and they run on a colored background so you know they aren’t real search results.

In general, Ask’s search-results pages are richer and better organized than typical Google results, and they give greater priority to content over ads.

I did many searches, with roughly similar results. Google usually did a good job, but Ask usually did just as well, and it’s added features made the results more valuable. In a search for a particular digital camera, Ask’s page was topped by a picture of the camera, with links to reviews and price comparisons. Google’s page was topped by ads, followed by links to specific shopping web sites.

In a search on the word Providence, Google offered a map link at the top, then a link the Providence College. Ask featured a Smart Answer box with the start of an encyclopedia article on the Rhode Island capital, and a drop-down list of links to other cities and to the TV show of that name.

Ask also allows you to save any entry in its search results.

Google is still great, and I am not suggesting everyone abandon it. But Ask.com is well worth a try if you want to benefit from some features that go beyond Google.

This article was written by Walter S. Mossberg and published in the Friday – Sunday, March 31 – April 2, 2006 addition of THE WALL STREET JOURNAL - Asia. You can e-mail him at mossberg@wsj.com.

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In Tokyo and Berlin, opposite views on U.S.

2006-05-01T16:54:00.000+02:00

The Cold War is Over, Right? Yes, it is in Europe but not quite as completely in Asia.

To grasp the truth, it is intriguing to trace the divergent attitude of Germany and Japan to the United States. Two defeated nations in World War II, they both adhered in the post war years to a line broadly set by America, the power that had vanquished them and then been midwife and custodian to their democracies.

The era ended in 1989 with the fall of the Berlin Wall and the dissolution two years later of the Soviet Union. Europe was whole, the German question that had haunted the Continent resolved at last. With Soviet tanks gone from its doorstep, Germany turned its mind to being “normal”, that is a country freed from American tutelage.

The capital returned to Berlin, many US soldiers left, and over time a deep sense of German gratitude to America for defeating Hitler, birthing the post-war Republic and backing unification gave way to a different emotion: a sense of moral superiority over a country bellicose enough to embark on a war in Iraq that Germany rejected.

In Asia, the story has been rather different. The Cold War thawed but Communism didn’t disappear. North Korea, armed with ballistic missiles that can hit Japan, persisted in its totalitarian folly. China, adopting the market–Leninism of a one party capitalist state, embarked on the steady accumulation of economic and military power.

Instability remained intrinsic in the Asian equation.

Japan responded by deciding to be the un-Germany: the close American ally that would react to the disappearance of the Soviet threat by intensifying its relations with Washington rather than the contrary.

It has hewn so closely to an American line that President George W. Bush scarcely gives a speech these days without mentioning his “buddy” Prime Minister Junichiro Koizumi.

Once again this month, Bush told the story of how “my dad fought the Japanese as an 18-year-old kid” but “my friend in keeping the peace is the prime minister of Japan.” It’s his standard yarn about how enemies – read Iraq – can become allies through the creation of democracies. “I say this all the time,” Bush conceded.

But behind the stock line lies a rapprochement that is anything but ordinary. Japan spoke out early in support of the war in Iraq and opted to send about 1000 troops there to illustrate that backing. It has intensified the core of its defense, the Japan-U.S. Security Treaty, through cooperation of missile defense and the adoption of a common line on China, North Korea and Chinese-Taiwanese tensions.

Last year, Japan and the United States called together for China “to improve transparency of its military affairs” and “play a responsible and constructive role regionally as well as globally.” They also insisted on a “peaceful resolution of issues concerning the Taiwan Straight through dialogue.” None of this went down well in Beijing. That does not appear to bother Koizumi’s Japan, whose choice is clear: a reinforced American alliance as the main response to China’s rise, whatever the regional cost of that decision.

“We have stepped towards the United States because together Japan and America must encourage China towards greater democratization and engagement in the world order of which the United States is the leader,” said Jiro Okuyama, the spokesman for the Japanese Consulate in New York.

He continued: “ We are against a shared hegemony of the United States and China. We cannot accept seeing part of the order of East Asia being taken over or taken away by China. Rather China should integrate itself into the existing order.”

Here, the Japanese-German divergence is manifest. Since the end of the Cold War there have been two essential views of how governance of the world should be anchored: in the exercise of American power or in more multilateral system where the laws, norms and moral suasion of institutions like the United Nations or the recently established Criminal Court in The Hague would gain prominence.

Japan, inhabiting a dangerous corner of the world with a Cold War hangover, has opted for American power as the organizing principle and enduring cornerstone of global security. Germany, however, has been ambivalent, adhering formally to its U.S. alliance, but breaking with America over Iraq.

Listen to Germans today on Bush’s America and what you often hear is a withering smugness as they dissect the shortcomings of a bullying, death-penalty-loving, environment-trampling, war-mongering, unilateralist power that has lost its away. This German righteousness, for it often sounds like that, with respect to America amounts to one of the more intriguing moral inversions of the post-Cold War era.

Of course, Germans take this line because they can: no existential threat looms any longer. Germany also benefits from an institution that has no real equivalent in Asia: the European Union. The EU has many reasons for being, but at some level it is a counter weight to the United States.

“Germany is embedded in Europe through the EU, but Japan has never had that relationship with Asia,” said Ian Buruma, an author whose book “The Wages of Guilt” explores postwar Japan and German. “In fact it has gone in the opposite direction. Koizumi really is a nationalist.”

Certainly, through his visit to the Yasukuni Shrine, the memorial to Japan’s war dead which includes a handful of prominent war criminals, Koizumi has made any strengthening of his county’s relations with its Asian neighbors more difficult. But he appears to have read his country’s nationalist mood well. Koizumi knows that not bending to China is popular. Like Bush he has a defiant streak.

The two men’s personalities mesh well. But it is also strategic reality that binds Japan and the United States. Japan, which still has a pacifist Constitution strictly limiting its military operations, wants to maintain and reinforce the strategic architecture drawn by American since 1945. Many Germans think that architecture is obsolete. They see no compelling reason to think otherwise.

Roger Cohen is the globalist for International Herald Tribune, writing from New York in the Saturday-Sunday, April 8-9, 2006 Asia addition of this newspaper. You can contact him at rocohen@nytimes.com

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Clean Streets in Observatory

2006-04-18T16:15:00.000+02:00

A community service initiative, by Werner.

After my recent visit to Tokyo and Kyoto, I had a brainwave that might benefit us all. This came to me after reflecting on the visit and how I could use my experience to contribute to our society back home.
In Japan there seems to be no stealing. Laptop computers are everywhere, even standing unattended on the pavements or at the stations where you can use them. Bicycles are mostly unlocked, everywhere. About the thieves around here…I don’t have the answer yet.
Another experience I had, and this one I feel can work here, is clean streets. There’s really nothing lying around on the streets of those big cities with its millions of people. There are no rubbish bins either - can you believe it - and the older people in that society are employed to clean the recycling bins that do exist.

HERE IS MY GOAL: A phone-call can get you a person within 24hours to clean up the street in front of your house. Your black bin provides the storage for the rubbish. When you notice other streets or corners that can do with some cleaning (excluding the central business district), let us know and we can work together to change the dirty side of Obs. To ensure a smooth start to the service we will allow not more that one call per week.

WE NEED: A retired, strong and fit person, living in Observatory. You can supplement your pension by an extra R1000 per month for working 2 hours a day. I will provide the equipment to ensure a professional service.

ARE YOU THE RIGHT PERSON FOR THIS JOB, OR DO YOU KNOW SOMEBODY THAT WOULD LOVE TO DO IT?
DO YOU FEEL WE CAN ALL BENEFIT?
Please contact Werner at +2782 458 3184 or e-mail iwerner@mweb.co.za.I look forward to hearing from you.Property in Observatory, Cape Town, South Africa on http://www.hotpropertyincapetown.com

The Democracy Game

2006-03-25T23:44:00.000+02:00

By David Remnick

Every Friday, just before midday prayers, thousands of men and women in the West Bank town of Dura stop to gossip and shop in the market stalls that lead to the steps of the grand Mosque. I visited Dura on the first Friday after Hamas had swept the Palestinian elections. And yet that morning all the talk was of cartoons: a dozen caricatures of the Prophet Muhammad had been published in the Danish daily Jyllands-Posten, igniting a worldwide paroxysm of apocalyptic hysteria that brought into use, once more, that “Star Wars”- like phrase “a clash of civilizations.”
The imam at the Dura Grand Mosque is a man in his late forties named Nayef Rajoub. Although Sheikh Nayef is a leader of Hamas and the top vote-getter in the entire West Bank, his supporters told me that he, too, was focussed on the cartoons. He would be speaking that day on the Danish caricatures as a “weapon of the Western Crusaders.”
Outside the mosque, I met a group of people standing around a fruit-and-vegetable store run by a man called Eichmann Abu Atwan. I thought I’d misheard his name, but he smiled, showed his identity card and said, “Eichmann. Like the Nazi.” His father had named him during the trial of Adolf Eichmann, in Jerusalem in 1961. “He was an early fighter, killing Israelis in the seventies,” Eichmann said proudly. “And my brother was such a fierce fighter that a Syrian paper compared him to Abdel-Aziz al-Rantisi” – one of the founders of Hamas. Eichmann was a supporter of Fatah, the Palestinian nationalist group that Ysir Arafat founded some fifty years ago, and, like everyone else I’d been talking to in the occupied territories, he said that Hamas had won for a variety of reasons: the financial corruption of Fatah and its leadership; the utter failure of the Oslo process; a marked increase in Islamic practice throughout Gaza and the West Bank; Hamas’s dual mastery in providing social services for Palestinians and launching armed assaults on the Israelis. “Time has run out for Fatah,” Eichmann said.
As the muezzin summoned the people of Dura to the mosque, Nayef’s fraternal twin, Yasir, stopped by the store. “Are you all coming to hear the Sheikh?” he said. Like Nayef, Yasir had been affiliated with Hamas from the start, but their older brother, Jibril Rajoub, was on of Arafat’s most powerful aides and a Fatah lord. Jibril had run the Preventive Security Service in the West Bank, and he was one of the losers in the elections.
Prayers began at eleven-thirty, and we filed into the mosque and knelt down. The walls were whitewashed. A dozen fluorescent tubes dangled low from the ceiling, giving off a vague yellow light. The room was filled entirely with men, but I was hardly inconspicuous. My translator, an aspiring young journalist from the West Bank named Khaldoun, quickly came to realize that his principal talk, after rendering the Sheikh’s sermon into English, was to explain to all who inquired (and many did) that the foreign visitor was “not Danish.” Al Jazeera and the other Arab-language television stations had broadcast fiery protests throughout Europe, Asia, and the Middle East.
“Danish?” a man asked me.
Khaldoun responded with a prolonged explanation featuring the word”Am-rika,” which has not been something to brag about in recent years, but this time it did the trick.
Sheikh Nayef has a graying beard, close-cropped hair, and a tranquil, strangely distant gaze. His posture was as straight as the microphone stand before him. I was told that outside the mosque his personality was shy, even remote – a marked contrast to his worldly and fierce-looking brother Fibril – but he soon rose to a register of high dudgeon in his sermon. The Danish cartoons, the Sheikh said, were reminiscent of the calumnies hurled at the Prophet fourteen hundred years ago. Muhammad “was accused of being a magician, of being insane. The same thing is happening now in Denmark, in France, although many mosques in Europe are spreading his message… What happened in Denmark is an offense against Muhammad and his followers. It is an act of aggression against us and against our feelings.”
The Sheikh was not about to get into the origins of the demonstrations, how they had been fanned not only by an imam in Copenhagen and various jihadi groups but also by regimes, like the Saudis’, that make a show of their piety in order to placate their Islamist subjects. “That’s not my topic today,” he said. His theme was power and humiliation, Western offense and Islamic will. The cartoon affair, he said, was yet another episode in the Crusaders’ assault on the faith, and the reason for “the Prophet’s humiliation is the weakness of our nation.” The demonstrations proved that Hamas and the Islamic movement around the world were unimpressed by such “excuses” as freedom of speech, and were absolutely determined to reject the pieties of “the heathen.”
The Sheikh continued, “The people who bow down to the White House and to the Western way of life must all wake up and realize that this life is not suitable for us. Today we are told to accept our enemies, to give up our principles, to give up resistance, and do the same as the previous government” – the Palestinian Authority under Fatah. “But that is not our model. Our model is the Prophet Muhammad. What did the previous government get from compromise? It got failure, the denial of our rights, a blockade – Arafat was caught in a blockade. We have no partner in Israel. A people with principles will not repeat this failure. If our people repeat this, the next thing will be the Israelis telling us to stop praying, to stop fasting, to change our names, to take off the Hijab. We will not repeat these mistakes. Palestine is for the Muslims, and no one can give it up… Those who injure God and his Prophet will suffer now and after death.”

Dura is a town in the region of Hebron, and Hebron is the largest city in the West Bank. It is also one of the most purely Islamic cities in the occupied territories, and a center of terror. One reason for the extraordinary tension in Hebron, beyond the general privations of the nearly four-decades-long occupation, is the presence, amid a hundred and fifty thousand Palestinians, of five hundred Jewish settlers protected by more than two thousand Israeli troops. On the Jewish holiday of Purim in 1994, a doctor and settler from Brooklyn, Baruch Goldstein, opened fire with an assault rifle on Arabs praying at the Tomb of the Patriarchs, killing twenty-nine and setting off riots and reprisals all over the region. A few years ago, at the height of the Al Aqsa intifada, Jihad, a soccer team sponsored by a local mosque, instituted a rigorous training schedule: the players fasted on Mondays and Thursdays, pledged daily allegiance to Hamas, and practiced nearly every afternoon wearing jerseys bearing a hand brandishing an axe and the inscription “Al Jihad: Prepare for Them.” The team’s fame relied only secondarily on an impressive record on the field. Eight team members, including the player-coach, carried out suicide bombing operations, one after the other, killing more than twenty people and wounding dozens more. The city exhausted its sense of hope years ago. What now greets every visitor on the road running south from Jerusalem into Hebron is a huge green banner reading, “Welcome to Hamas City!”
Hamas, which was founded in 1987, during the first intifada, and is considered a terrorist organization by Israel, the United States, and the European Union, won seventy-four of the hundred and thirty-two seats in the Palestinian Legislative Council. Fatah won only forty-three. Hamas swept the slate in the Hebron region, taking nine of nine seats. Ever since Arafat signed the Oslo accords, in 1993, and the Palestinian leadership ended its long exile in Tunis to establish the Palestinian Authority in the West Bank and the Gaza Strip, he had used the leaders of Fatah, men like Jibril Rajoub, to make sure that Islamists like Nayef Rajoub did not extend their influence beyond the mosque. Jibril made his bones as a resistance fighter by spending seventeen years of his youth in Israeli prisons – much of that time for throwing a dud grenade at a convoy of Israeli soldiers – but his political prospects in middle age have been dashed. As Preventive Security chief, he jailed members of Hamas and other Islamist groups. Soon it is likely that Hamas will control Preventive Security – its five thousand troops and its arms.
Th Rajoub family was conservative and provincial, but not especially religious. Nayef became devout when he studied Islamic law in Jordan. Yasir, who is a director of an Islamic charity that looks after orphans, has been arrested nine times and spent a total of eleven years in Israeli jails. In 1992, he and Nayef, along with more than four hundred other member of Hamas and Islamic Jihad, were forcibly deported by Israel to the mountain village of Marjal-Zahour, in southern Lebanon, where they lived in tents for a year until the government let them go home. The meetings and discussions conducted among the deportees helped form the core of the Islamist leadership that is now coming to power; the Islamists called their Lebanese exile “Ibn Taymiyya University,” referring to a medieval Islamic Thinker. Seven of the nine Hamas candidates in Hebron had been among the deportees. When I asked Yasir Rajoub about his brother Jibril, he smiled magnanimously and said that the family was close and the brothers’ disagreements were “nothing personal.”
Jibril even arrested me and detained me for a month,” he said. “I was taken to Jericho,” where Preventive Security had its offices and jail cells. “Others were tortured in that jail, but not me – maybe because Jibril is my brother. When the Israelis arrested us, Jibril tried to look after us. He sent money to my family.”
After the midday prayers, Sheikh Nayef accepted congratulations for his sermon on the steps of the mosque and in the market stalls. He shook hands, blessed children, and then, because he does not own a car, started looking for a ride home. He invited me along for lunch.
“Jibril is rich, but the Sheikh is poor, a simple man,” one of his admirers told me. “He had to seek a loan just to pay the fee to get his name on the election ballot.” The Fatah chieftains are known in the territories for skimming aid money and for taking kickbacks on businesses like oil, gas, and concrete. Their opulent houses, on the beach in Gaza, in the hills of the West Bank, mock the crumbling apartment blocks of their subjects.
The Sheikh’s modest house squats at the end of a pitted dirt road on the outskirts of Dura. A group of women, including the Sheikh’s wife, daughters, and nieces, were in the garage tending a gas stove and stacking loaves of pita; in a cauldron they were boiling hunks of mutton and rice. With some of his children trailing behind him, the Sheikh led his guests – family members, aides, and friends from the mosque – into the house, to a room furnished only with carpets and a floor lamp. A teen-aged son spread several oilcloths over the floor and another laid out plates and platters of food.
“Go ahead,” the Sheikh said. “It’s not easy preaching for so long. Let’s eat for a while and then we’ll talk.”

It is an irony of history that the first Islamist party in the Arab world to come to power in democratic elections is based not in Cairo or Amman but, rather, in the territories occupied by the Jewish state. President Hosni Mubarak of Egypt and King Abdullah of Jordan have kept Islamists in their countries at bay by alternating repression, co-option, and limited access to meaningless ballots; Mubarak and Abdullah were just as dismayed as the Israelis to see the rise of Hamas on their borders.
Israel and the United States are already discussing schemes to isolate and destabilize the Palestinian Authority if Hamas refuses to recognize Israel and renounce violence. According to a report by Steven Erlanger in the Times, the Israelis could cause a financial crisis in the Palestinian territories by refusing to hand over the more than fifty million dollars a month in taxes and customs duties that they collect on behalf of the Palestinian Authority. They could make economic life even more arduous by tightening control on the movement of goods and worker between Israel and the territories. Western governments have said that they, too, could discontinue financial aid. These moves might result in a billion-dollar annual deficit leaving the Palestinian Authority unable to pay its hundred and forty thousand employees, who support more than a third of the Palestinian population. If Hamas decides to rebel rather than yield to outside pressure, that could lead to yet another armed conflict with Israel – a third intifada. The Israelis are gambling that Hamas – which won the elections without a majority of the votes and gained more support for its promises of reform than for its extremist views on Israel – would rather compromise than be forced to choose between poverty and war.
Islamist resistance movements appeared in Palestine well before the creation of Israel. The military battalions of Hamas are named for Izz al-Din al-Qassam, a Syrian-born sheikh who, during the Mandate period, carried out numerous attacks on British and Jewish officials. (He was killed by the British in 1935.) In one sermon he said, “Nothing will save us but our arms.”
The Muslim Brotherhood, the root organization of Hamas and of nearly every contemporary Islamist group in the Arab world, was founded in 1928 by a schoolteacher named Hassan al-Banna, who decried both English colonial rule and secular Arab nationalism. For Banna and the Muslim Brothers, the Koran was both spiritual guide and worldly constitution. In the nineteen-sixties, as the Brotherhood gained popularity, the Egyptian ruler Gamal Abdel Nasser cracked down, trying and executing the group’s most influential and radical thinker, Sayyid Qutb.
In the same series of arrests, the Egyptian police briefly imprisoned a young Gazan sheikh named Ahmed Yassin. When, following the 1967 Sixty-Day War, Gaza became Israeli-occupied territory, Sheikh Yassin set up a range of charities and social-service organizations, and took over professional associations and the Islamic University of Gaza, all of which were linked to the authority of the mosques. Because thousands of Palestinians worked each day in Israeli cities like Tel Aviv, Yassin was obsessed with the whore-of-Babylon influence that such places might have on his people. In 1973, he started the Islamic Center, the Al-Mujamma al-Islami, whose aim was to strengthen the authority of Islam over the population.
“In those days, Yassin’s concern was men and women swimming together,” Emmanuel Sivan, one of Israel’s leading scholars of modern Islam, told me.
Yassin’s emphasis was on da’wa – social work and preaching – and he skillfully attracted aid from local donors, the Palestinian diaspora, and other Islamists abroad. The Israeli government, which was pouring its resources into combating Arafat, determined that the Islamists were more of a threat to the P.L.O. than to Israel, and so did little to get in Yassin’s way. “Israel operated on the simple Western logic of supporting the rival of your enemy,” said Shaul Mishal, a professor at Tel Aviv University and the co-author of a scholarly history, “Th e Palestinian Hamas.” “That strategy did not last long.”
By the early eighties, many disaffected young men among the Palestinian Islamists were getting involved in the violent resistance to Israel, which was dominated by P.L.O. fighters. To keep them within the authority of the mosques, Yassin and his associates began importing arms and organizing militias of their own. When, in December, 1987, the intifada began – first in the Jabalia refugee camp, in Gaza, then throughout the occupied territories – the Islamists joined the rebellion full force, and Hamas, an acronym for Harakat al-Muqawama al-Islamiyya, the Islamic Resistance Movement, was born. (“Hamas” means “zeal.”)

The Hamas charter, a nine-thousand-word document adopted by the leadership in August, 1988, remains the group’s ideological foundation, melding Islamic fundamentalism with a national movement. From the start, the P.L.O. had included a range of ideologies and tendencies, among them Arab nationalism and Marxism, but Hamas rejected such “foreign” influence. In its charter, historical Palestine – the territory min al-nahr ila al-bahr, from the River Jordan to the Mediterranean – is declared part of the Islamic waqf (“endowment”), consecrated for future Muslim generations until Judgement Day,” and indivisible. To relinquish any part of the land – in other words, to permit the presence of an alien Jewish state – is forbidden. Hamas “strives to raise the banner of Allah over every inch of Palestine,” the charter reads, for, under the Jews, “the state of truth has disappeared and been replaced by the state of evil.”
The Hamas charter also reflects an unabashedly anti-Semitic, conspiracy-based view of regional and world history. Article 22 asserts that the Jewish people have “ignited revolutions” throughout the world from 1789 to 1917. Jews triggered the First World War in order to destroy the Islamic caliphate and the Second World War in order to make “huge profits from trading war material.” In short, “No war broke out anywhere without their fingerprints on it.” The Jews also have formed “secret organizations” and “destructive spying” agencies – Freemasons, Rotary Clubs, Lions Clubs, and others – to promote the Zionist project, which “has no limits…. After Palestine it will strive to expand from the Nile to the Euphrates.” This plan is “outlined in ‘The Protocols of the Elders of Zion,’” the tsarist-era forgery of a Jewish plan for world domination.
The charter’s view of negotiations and “the so-called peaceful solutions” is unambiguous. “There is no solution to the Palestinian problem except by Jihad. The initiatives, proposals, and international conferences are but a waste of time and sheer futility.”
After the first intifada and the advent of the Oslo process, in 1993, Arafat became wary of Hamas and its refusal to accept the peace process, Israel’s right to exist, or, above all, his authority in Gaza and the West Bank. According to Mishal’s book, Arafat once referred to Hamas as a “Zulu tribe,” an allusion to the Inkatha movement, which refused to come under the command of Nelson Mandela and the African National Congress. Arafat also found himself competing with Hamas for money; when he supported Iraq in the Gulf War in 1991, Saudi Arabia, Kuwait, and other states on the Arabian Peninsula began diverting to Hamas funds that had once gone to the P.L.O. In the early nineteen-nineties, according to Gilles Kepel, the author of “Jihad: The Trail of Political Islam,” Hamas gained adherents from three social classes: impoverished young men, who took part in the armed resistance; the devout middle classes; and Islamist intellectuals in the region and in the West.
Israel and United States, in the meantime, grew deeply frustrated with Arafat’s inability, or unwillingness, to confront Hamas, which had become a pioneer in the art of terror. The first modern suicide bombing was carried out in 1981 against the Iraqi Embassy in Beirut; in 1983, Hezbollah, the Iranian-funded Shiite militia in southern Lebanon, used suicide bombers to attack American and French barracks in Beirut. In 1993, Hamas took it up with terrifying frequency.
After the assassination of Yitzhak Rabin, in 1995, Hamas became perhaps the most important factor in the search for a successor: a series of bombings that it carried out in Israel during the campaign turned Israeli voters toward the right-wing Likud Party and brought Benjamin Netanyahu, who promised no concessions to the Palestinians, to power. Netanyahu declared himself determined to destroy Hamas, but he managed instead to return the favour, ordering an operation that helped its leadership immeasurably.
In 1997, Netanyahu dispatched a team of Mossad agents to Amman to assassinate Khaled Meshal, the chief Hamas leader abroad. Two agents approached Meshal on the street from behind and one pricked his ear with a needle loaded with a deadly nerve toxin. Meshal’s bodyguard, however, turned out to be a spectacular athlete and ran down the Israeli agents, first by car and then on foot, beat them, and brought them to a local prison. Once the Israeli agents confessed to the poisoning on videotape, King Hussein, furious that the Mossad had carried out the mission on Jordanian territory long after he had made peace with Israel, called Netanyahu and demanded the antidote to the poison. Netanyahu refused. Only after Hussein appealed to Bill Clinton and the Israeli press began criticizing Netanyahu for ordering such a spectacularly stupid operation did he relent. Meshal survived. Hussein, who had his own Palestinian majority to placate, extracted another concession from Netanyahu: rather than lose the peace with Jordan, the Israeli Prime Minister agreed to release Sheikh Yassin from prison.
For several years, Yassin served as the strategic and spiritual guide for Hamas. Israel maintained that he gave the final assent to terrorist operations.
In 2004, during the Al Aqsa intifada and the Israeli attempt to wipe out the Hamas leadership, Yassin was killed in a missile attack. Since then, when I have visited Hamas leaders in Gaza and the Muslim Brotherhood’s headquarters in Cairo, I’ve seen portraits of Yassin in every office. “He is our holy man,” Mahmoud al-Zahar, the Hamas leader in Gaza told me. “He is our greatest martyr.”

The prinicpal Hamas leaders - Zahar and Ismail Haniyeh in Gaza, and Musa Abu-Marzuq and Khaled Mashel in Damascus – have never feigned innocence of the attacks committed in their name, but they are fairly schooled in the arts of diplomatic wrangling and media manipulation. Their public language attempts to yoke contradictory goals. Like the leaders of the I.R.A. decades ago, they are trying to enter the realm of politics without relinquishing the prerequisites of armed resistance and the purity of ideological rejectionism. They want to maintain the support of their most radical fighters without losing the funding of the European Union. They hint at the possibility of a hudna – a prolonged truce – if Israel retreats to the borders that existed before the Six-Day War, but they also reserve the “historical” goal of absolute dominion made plain in their charter.
Sheikh Hayef Rajoub is more typical of the men and women of Hamas who will make up the majority of the next Palestinian legislature. Unlike the Fatah politicians, who have traveled the world, navigated diplomatic receptions, and dealt closely with the Israelis for may years, they are provincial, inexperienced, and leery of the task of governing even a proto-state. Few polls showed that Hamas would win the election, and its leaders were as surprised as Fatah or Israeli intelligence. But now Sheikh Nayef was prepared to be magnanimous toward his more famous brother.
“In the past, my brother and I had reasons for tension,” he said as we ate the last of the mutton. “These days, our relationship is better than ever. We are civilized people, and everyone has his choice, including religion. My choice is Islam and Jibril’s choice is something else. I think Jibril did pray for a little while and then stopped. It’s sad for me.”
The Sheikh felt that he was part of a “worldwide historical wave.” He said that Hamas, after years of keeping its distance from official politics, had decided to “accept the democracy game,” and he was sure that if the same opportunity were available elsewhere in the Arab world Islamist parties would prevail. “The failure of all other ideologies is sending Mulims toward Islam, and this is the case in Palestine,” he said. “Twenty years ago when I was working in the mosque, around a hundred and fifty, two hundred people came on Friday. Now it’s a few thousand. At that time, there was only one mosque in Dura. Now there are twelve.” Hamas even won a considerable crossover vote, polling well in cities with sizable Christian populations, such as Ramallah and Bethlehem.
The Sheikh said he knew that, despite the heavy vote for Hamas, the majority of Palestinians tell pollsters that they favor an end to the occupation and a two-state solution. But Hamas, he added, would “never” bow to Israeli, American, European, and even Egyptian demands that it acknowledge the existence of Israel and disarm.
“How can the world want us to recognize the state of Israel when Israel will not give us the right to exist, when it took our land and imposed occupation and does not recognize our rights?” he said. “Resistance for us is a legitimate action. Divine and human laws give us the right to resist.”
Hamas has not executed any suicide bombings in the past few months, but the Israelis do not take the lull to reflect a nascent desire for compromise. “The conflict with Israel is not a matter of land,” Sheikh Nayef said. “It’s a matter of ideology. All the Israeli slogans – the ‘chosen people,” the “promised land’ – the basis of their state is religious. But these are religious legends, false stories. God did not give them this land as if Israelis, Jews, are preferred above all other peoples on earth and all other peoples were meant to serve them.” The Sheikh went on, “Two hundred years ago in Europe, they were conservative people, but now the fashion world, the media – it’s controlled by the Jews. And their people are sexually open. Freud, a Jew, was the one who destroyed morals, and Marx destroyed divine ideologies. If it is not all Jews, well, they were a big part of this. And now it is the Jewish lobby in the United States that is setting policy in the world and causing the United States to wage war all over the world.”

One of the biggest financial supporters of Hamas has been the fundamentalist Shiite regime in Tehran, according to Israeli and U.S. intelligence agencies. At a conference in Tehran last October call “A World Without Zionism,” Iran’s current President, Mahmoud Ahmadinejad, urged the Palestinians to maintain a maximalist position toward Israel. Quoting Ayatollah Khomeini’s statement that Israel “must be eliminated from the pages of history,” Ahmadinejad instructed the Palestinians never to bow to the demands of diplomacy. They must not recognize Israel – and anyone who does, he declared, “should know that he will burn in the fire of the Ummah,” the Islamic nation.
I asked the Sheikh if he agreed with Ahmadinejad’s argument, much publicized in recent months, that the Holocaust was a myth, and a pretext for the creation of Israel.
The question, the Sheikh said, had direct bearing on his morning homily about the Danish cartoons and the will of the Muslims to resist humiliation: “When Ahmadinejad spoke, everyone in the West condemned him, but why didn’t the West say that Ahmadinejad had his right of freedom of speech?” The Sheikh smiled like one who has scored an irrefutable point. “If the issue concerns Jews, it’s always anti-Semitism, anti-Semitism, but when it concerns other religions it’s a matter of freedom of speech.”
But did he agree with the Iranian leader? I asked.
The Sheikh smiled again, this time indulgently.
“If I answer, you’ll provide me with a real headache, won’t you?” he said. “I don’t want to tell you my opinion on this. No doubt, it’s too controversial. If I say I agree with Ahmadinejad, Hamas will be added to the list of those who deny the Holocaust. If I don’t agree with him, it will provide the Jews with the excuse that, since they suffered a lot in the Second World War, it justifies what they are doing now. What I do know about for sure is the crimes of the Jews in Lebanon and the West Bank and Gaza.”
Word came that the Sheikh’s brother Jibril was going to visit. Through the window we could see a convoy led by an armored Land Cruise and a BMW sedan – the rewards of Fatah power – pulling up in front of the house. The Sheikh sighed. He did not seem entirely ready to greet his big brother. To cheer him up I asked him what else he did besides preach and teach the Koran.
“I am also the head of the Hebron Beekeepers Union,” he said.
I asked him if he got stung a lot.
The Sheikh rolled his eyes. “Don’t ask,” he said.

In the mid-nineteen-nineties, Jibril Rajoub, Marwan Barghouti, who led the Fatah militia, and Muhammad Dahlan, the head of security for the Palestinian Authority in the Gaza Strip, were considered potential successors to “the Old Man” – Arafat. Unlike Jibril, his colleagues won seats in the new parliament, despite certain disadvantages: Barghouti is in jail serving five life sentences (plus forty years) for helping to kill four Israelis and a Greek monk; Dahlan is thought to have enriched himself and his extended family outrageously and illegally. Jibri, however, could not overcome the complexities of his history and his personality.
During the campaign, his reputation suffered not only because of his arrogance – the swaggering demeanor, the wealth he has allegedly acquired – but also because he had lost touch with his potential voters. Since returning to the West Bank from the P.L.O.’s exile in Tunis, he has lived and worked almost entirely in Jericho and Ramallah.
Khalid Amayreh, a journalist in Dura who writes for the Al Jazeera Web sit, told me, “Jibril is flamboyant, ostentatious, a self-inflated egomaniac with a sense of megalomania. His tongue often functions much more quickly than his mind. He is no intellectual. As they say, ‘Manchester born, Manchester bred, / Strong in the arm, weak in the head.” In his speeches he attacked his opponents hysterically and frantically, calling them all kinds of names. He said, ‘I was shooting Israelis when Sheikh Nayef was still playing with little kids.’ And he mocked Hamas. It was all a public-relations disaster.”
Mocking Hamas when Hamas has been able to build a reputation among Palestinians for grass-roots charity and incorruptibility was a dubious strategy for any Fatah candidate. In Palestinian eyes, Hamas had created a kind of shadow civil society long before it won a reputation for suicide bombings.
One morning, I visited the Islamic Charitable Society, in Hebron, a sprawling facility for several thousand children that includes schools, a medical clinic, and an orphanage. The director, a former marketing manager named Khalil Herbawi, said that the society was funded by various Western non-governmental organization, by Arab groups, and by private donors. Herbawi’s predecessor was in Hamas and had been arrested in 2002 for helping to finance and plan an attack on the nearby settlement of Adora. Herbawi said that he had voted for Hamas in the elections but added, “I am not in Hamas myself.” Last September, Israeli troops took over the society’s administrative building, confiscating documents, fax machines, printers, and computers and then sealing the doors as if it were a crime scene, an action that outraged Herbawi.
“The Israelis say that we take care of children whose parents martyred themselves,” Herbawi said. “But we take all the orphans, the ones whose parents are suicide bombers or who died of cancer or heart attacks… Of the thousand orphans here, only twenty or twenty-one are orphans because of suicide bombing. Another twenty or so are children of collaborators who were killed. So it even out.”
As we looked in on classrooms full of children learning math and science and then looked out from a balcony onto a playground filled with girls, all of them wearing the hijab, Herbawi said, “Is this terrorism? Maybe they will arrest me, too.”
Such institutions understandably helped make Hamas popular. Gaza and the West Bank are poor, and although in the past decade Western and Arab governments have poured billions of dollars into the accounts of the Palestinian Authority, most Palestinians believe that, thanks to the corruption of Fatah, they have been systematically robbed of much of that aid money. Western intelligence agencies believe that Hamas has used its social institutions for armed operations, indoctrinating children in schools, inciting violence and recruiting cells in mosques, establishing safe houses, and providing funds for weapons and for the families of fighters who have blown themselves up for the cause.
In 1998, Sheikh Yassin said that the political and social branches of Hamas could not be distinguished from the military. “We cannot separate the wing from the body,” he said, according to a report by Reuters. “If we do so, the body will not be able to fly. Hamas is one body.”

In most Palestinian cities and towns, the elections were so consuming that for weeks campaign placards replaced the usual posters of young men and women hoisting AK-47 rifles in their last moments alive. Democracy obscured the cult of martyrdom. Fatah outspent Hamas and the smaller parties, and the Bush Administration funnelled nearly two million dollars through U.S.A.I.D. funding projects in the occupied territories that it hoped would help Fatah’s election chances.
Hamas did manage to hire Nashat Aqtash, a professor of media studies at Bir Zeit University, to advise them on public relations. Aqtash told me when I visited him in Ramallah that his job was not as difficult as it seemed to outsiders. “For you, Hamas is suicide bombing and that’s it,” he said. “But suicide bombing is only a small fraction of what Hamas is for the Palestinian people.” Hamas, he insisted, was “all pluses, no minuses.” Its image of distributing charity and having borne the brunt of the Al Aqsa intifada and, by contrast, Fatah’s almost surreal disorganization was just part of the story. The American contributions backfired. “The Palestinians are stubborn and don't want to be told what to do, least of all by the United States of America,” he said.
Hamas ran three television commercials in the last week of the campaign, and none of them called on the familiar imagery of teen-age martyrs and declarations of jihad. Aqtash showed me the ads on his computer screen. One ad alternated images of Palestinian children suffering at the hands of Israeli soldiers and the words “Our blood” – in red – “is a fence to protect our holy places.” Very soft-soap by Hamas standards. Another featured Ismail Haniyeh, Hamas’s lead candidate on the national slate, who is expected to be named Prime Minister. “We will protect the resistance movement until we gain back all the occupied territories,” Haniyeh said, speaking almost in a whisper.
Aqtash had counselled Hamas candidates not to talk about killing Israelis and to limit their speeches about taking back all of historical Palestine. “You see,” he said proudly, “it is clear that he means the territories occupied in 1967, only crazy people talk about going beyond the 1967 borders.”
If a Hamas-led government was going to attract funds from abroad for the Palestinians, I asked, what was its next public-relations strategy?
Aqtash smiled and reminded me that his contract had run out on Election Day; nevertheless, he offered some final words of advice. “Our rhetoric was ineffective because we used Islamic rhetoric that is understandable to us but incomprehensible, and scary, to you,” he said. “At funerals, you would see masked people carrying rifles. In Gaza, this is a cultural thing, trying to show our grief and support to the families. But these images in the West mean ‘We will kill you.’ We need to organize the Palestinian message to the West and put it in a context that the West can understand. Israelis kill Palestinians, but they also have the talent to explain themselves.”

Stout, smiling through a scowl, and sitting in his chair with one arm slung over his seatback like a sultan, Jibril Rajoub instantly became the focal point of his younger brother’s living room. A boy appeared balancing a tray holding many glasses of tea. Jibril was served first. Sheikh Nayef began to work his worry beads at a fantastic clip while Jibril talked about devoting himself to the revival of Fatah and trying to coexist with Hamas as a matter of familial duty.
“Having a brother in Hamas is O.K., and I am proud of him,” he said. “Sheikh Nayef is a moderate, he’s realistic, a pragmatist. He was never an extremist. Politically, in the nineties, there were two different strategies. We in Fatah saw certain things as the rules of the game where negotiations were concerned. But in the past five years the Israelis stopped dealing with the Palestinian Authority as a partner, and the gap between the two Palestinian factions grew smaller… We’ll remain in the opposition as an honest partner, and we won’t try to undermine Hamas’s authority. We wish them success.”
Jibril had imprisoned many Hamas activists in his time, but now he acted the part of the defeated opponent graciously offering advice to his successors. “Most people in Hamas are realistic,” he said. “I don’t think anything will take place on a social level – like forcing women to wear the hijab. Hamas has to focus on international legitimacy and assure the international community that an Islamic leadership will contribute to regional stability.”
A couple of days later, I visited Jibril at his office in Ramallah. During the Al Aqsa intifada, the Israelis shelled the building, but now it was repaired and filled with aides gossiping about Jibril’s future and the coming of Hamas. Jibril gave me a copy of his “autobiography” – a book-length series of interviews about his years in Israeli prisons, his ascension to Arafat’s circle, and his contact with Israeli and American intelligence. The book featured photographs of him as a young man in Israeli custody and also ones of him- older, heavier – with George Tenet, Nelson Mandela, and Israeli officials. Jibril knew that such relationships, a remnant of the Oslo years, were part of what killed his election chances.
“There are all kinds of stories about how close I was to the Americans, the C.I.A., and all the rest,” Jibril said bitterly. “But how close? When I had cancer in 2002, after I left Preventive Security, I was treated first in Egypt, and they urged me to go to the Mayo Clinic, in Minnesota. But I was refused an American visa.” He went to England instead. “I never once talked with the Israelis without a green light from Abu Amar,” he went on, using Arafat’s nom de Guerre. “And after I met with the Israelis I always reported straight to him.”
Jibril had been at Arafat’s side, but it had always been a prickly relationship. In Tunis, according to Matt Rees’s book “Cain’s Field,” Rajoub once refused Arafat’s request to drive his future wife, Suha Tawil, to the airport on the ground that he would not “chauffeur a whore.” In May, 2002, Arafat fired Jibril as the head of Preventive Security after the Israelis demanded that the various Palestinian security agencies be put under Rajoub’s control. A month earlier, Israel had attacked Jibril’s compound. Jibril and his men had been allowed to escape, but only after giving up the Islamist prisoners in their custody. In 2003, Arafat brought Jibril back into Palestinian leadership, appointing him national-security adviser. “Our relationship had its ups and downs, which happens in any relationship that goes on for many years,” Jibril said. “At a certain point, Arafat felt that I was a threat to his regime, but I was always loyal to him. He was always the symbol of the Palestinian people and contributed to the cause more than anyone else.”
After Arafat died, in November, 2004, and his heir in Fatah, Mahmoud Abbas, won election as President of the Palestinian Authority, Hamas had an easier time portraying itself as the incorruptible champion of the resistance and Fatah as a spent force. Among his doubters, Abbas is considered timid, indecisive, and incapable of extracting anything from the Israelis. Jibril fought with Arafat over many issues, but he said, “If Arafat were still alive, Hamas would never have won. Arafat’s loss was a loss for everyone and in every way. He was the only Palestinian leader truly committed to the reconciliation of two peoples. He had the long view.”
If Arafat had such a long view, I asked, why did he turn down a deal at Camp David in 2000 that, for all its deficiencies, would have been a far better arrangement than anything contemplated by the Israelis today? Sheikh Nayef had told me that Camp David would have been an “unacceptable betrayal.” His brother did not answer directly, but it was clear that his opinion was not the same. “Excuse me! Why ask this question?” he said. “The Israelis talk of unilateralism now. Camp David is long over. There’s no use crying over spilled milk.”

The Israelis have begun an election campaign of their own, to choose a successor to Ariel Sharon, who has been in a coma since early January, when he suffered a stroke. And even though they are well aware that Sharon’s unilateral withdrawal from Gaza last year has been interpreted by Hamas as a credit to armed resistance, all polls show that the Kadima Party, led by Olmert, Sharon’s deputy prime minister, will win. Olmert gave an interview to Israel’s Channel 2 making it plain that, like Sharon, he planned to close dozens of smaller settlements on the West Bank but retain the main blocs of Ariel, Gush Etzion, and Ma’ale Adumim. He said that he would also retain “control” of the Jordan Valley and sovereignty over all of Jerusalem. This is less than what Ehud Barak and Bill Clinton proposed to Arafat five years ago, and it came as no surprise that the Hamas leadership dignified Omert’s offer only with mockery. In Cairo, Musa Abu-Marzuq, who once led the Hamas political bureau from northern Virginia, said, “When we restore historical Palestine, the Jews can come live with us. They will then acquire the Palestinian nationality.”
In early February, while the Hamas leadership made plans for a new government, the security situation deteriorated. Gaza was turning into a lawless state, with Palestinian militias launching Qassam rockets into Israeli territory and the Israeli Army killing militants, mainly from the air. In Hebron, local Islamists assaulted the headquarters of a European observer team; a dozen Danes on the team had to be escorted out of Hebron by the Israeli Army – precisely the soldiers they had been sent to observe. The same week, the Israelis arrested a group of religious militants who “identify with Hamas” and charged them with killing six Jews in the past year. In Israel, there was no sense that the rise of Hamas could be dismissed simply as a protest vote. Even a liberal scholar like Emmanuel Sivan, an expert in fundamentalism who has met Sheikh Yassin and other Hamas representatives over the years, told me, “If you are living in Israel it is always good to be anxious. We are a state living on edge.” He did say, however, that “the typical American-Jewish oy-vey reaction” was not warranted.
“An Arab friend told me, ‘Fatah is the crime and Hamas is the punishment,’” Sivan said. “Three-quarters of the Palestinians want a long-term arrangement with Israel and understand they have got only so far with violence, but they also want the rascals out.” The biggest danger facing Israel, he said, was that anarchy would begin to prevail, with uncontrolled militias and criminal gangs causing such a state of unrest that elements from Al Qaeda could exploit the situation and make their way to Gaza and the West Bank.
The Israeli security establishment is particularly worried about the relationship between Hamas and the Islamic regime in Tehran. “I am concerned about Iran’s efforts to engulf Israel with Islamist fundamentalist terror groups on the border: with Hezbollah in southern Lebanon, and with Hamas in Gaza and the West Bank,” Yuval Steinitz, the chairman of the Defense and Foreign Affairs committee in the Knesset, told me. “If Hamas takes control of the Palestinian armed forced and police, that means it will establish an armed threat right near Jerusalem, Tel Aviv, and Ben Gurion airport.” Avi Dichter, who recently stepped down as the head of Shin Bet, the Israeli F.B.I., and is now running for a seat in the Knesset, said that while the Israeli military had killed, arrested, or detained dozens of Hamas fighters and leaders during the Al Aqsa intifada, support from Iran, and the new ability to operate in Gaza with less Israeli interference, means that the militias remain a threat. In addition, Fatah’s own battalions, which adopted suicide bombing as a tactic in order to keep up with Hamas in the race for street credibility, have not disbanded, despite repeated statements from Abbas decrying violence.
For all the anxiety about Hamas, there remains in Israeli society a broad consensus for a two-state solution – a desire born less of an Oslo-era optimism about an integrated “new Middle East” and more of sheer weariness with occupation and an understanding that to retain the territories is to risk the Zionist idea of maintaining a Jewish majority in a democratic state.
“I don’t see any chance of reaching an agreement that you would call real peace between the Israelis and the Palestinians,” Shlomo Gazit, a retired, dovish Army general who used to command the West Bank and Gaza, told me. “This is not in the stars for the next hundred years. The Arab world does not accept a foreign people, a foreign religion, in the Middle East. All we can strive for is practical coexistence.”
“There is no resolution to this conflict,” Yehoshua Porath, a scholar of Middle Eastern history, says. “It is like a person living with a chronic disease for which there is no cure. You take palliatives and partial remedies. You know there is no final cure yet, but you keep investing in the search. Here the final cure is a peace settlement.”

In Gaza and the West Bank, the politicians, academics, and activists who were shocked by the Hamas victory have also searched for ways to soften the blow. The most common argument is that Hamas did not win many more votes than Fatah; it took fifty-six percent of the seats but with only forty-four percent of the vote. Part of the reason for the landslide is that Fatah ran an inept campaign, often putting forward more than one candidate against a single Hamas candidate, and splitting the vote. Hamas was also the beneficiary of a collective protest against the Palestinian Authority’s inability to cope with Sharon and Olmert, and the indignity of occupation. But the idea that Hamas will modify its ideology because it is now faced with the prospect of making good on its promises, of creating jobs and collecting the garbage, of day-to-day governing, does not impress many Palestinian analysts. In Iran, after all, Ahmadinejad came to power not because of his insistence on building a nuclear weapon or his anti-Semitic rhetoric; he, too, won popularity largely on social issues.
Ghassan Khatib, the Palestinian Authority’s minister of planning, told me that the Fatah hierarchy is worried that there is a direct relationship between poverty and radical fundamentalism, and if the situation in the territories worsens an even more radical Hamas will take hold.
“The Muslim Brotherhood believes that it is possible to reestablish the Islamic regimes in the Islamic world and reach the point of a single Islamic superpower, as in the old days,” Khatib said. “It wants to be a huge modern state and compete with the modern superpowers. But it’s a fantasy. You cannot govern by Islam. Islamic ideology is not suitable for that. It has fixed ideas on economics and government that are inflexible and irrelevant for modern time.
“Hamas can moderate in the tactical sense, but not fundamentally. It will play tactics on the question of violence and in its political slogans. What it wants is the freedom to maneuver, to build people into ‘real and proper Muslims,’ to keep building its base… This is very dangerous for the Palestinians, and they should think about ending this Hamas majority. The Israelis need to take the opportunity to negotiate with Abbas and the peace camp. There are three years until the next Presidential elections. This is the historical window of opportunity. If Hamas wins the Presidency, that will be the end of it.”
For the moment, Abbas does have greater power than the legislature. But Hamas has every intention of continuing to play what its leaders call “the democracy game” and winning it outright. One night in Hebron, I dropped by the Hamas headquarters to see Aziz al-Dweik, who will be joining the legislature next month as speaker of parliament.
When he was a young man, Dweik studied in Jordan and then earned a doctorate in urban and regional planning at the University of Pennsylvania. The geography of his life has been varied: he spent eight years in Philadelphia, one year in southern Lebanon with his fellow-Islamists in force exile, and four in an Israeli prison.
When Dweik returned to Hebron in 1988, he said, “I spoke my mind just as I did in the mosque at the University of Pennsylvania.” The Israelis did not appreciate it, jailing him several times for incitement and for membership in Hamas, which had been outlawed by Israel.
I mentioned that the Jerusalem Post had published a Hamas poster from the Al Aqsa intifada period that yoked together portraits of Sheikh Yassin, Shamil Basayev, a Chechen rebel leader, and Osama bin Laden. If Hamas was going to present itself as a rational political group, I said, why was it linking itself to Al Qaeda?
“Bin Laden is a fighter for the cause of Islam, and this man has his way of serving his God,” Dweik said. “He has offered the West a truce many time, saying that he will put down his arms if the West stops interfering in our affairs. We have no right to hate bin Laden. We respect him. Hiding this fact does not serve the truth.”
This was the most arresting aspect of the Hamas leaders; their thinking – their charter, their goals, short-range and long – was unconcealed and calmly provided. While diplomats and journalist sifted through the language looking for shades of meaning, Hamas was politely answering every question. Hamas is focussed primarily on the question of Palestine, of forming a government and resisting the Israeli occupation, but it also sees the election as part of a regional phenomenon, a historical tide, which, with time, not only would dislodge a few hundred settlers from Hebron but could cross borders into Egypt, Jordan, and beyond.
“Whenever and wherever people are given the choice, this is what happens,” Dweik said. “Secularism is an import. It’s not indigenous. Islam is a practical and idealistic way of life. Islam is the religion of God, which God has chosen for the guidance of mankind.
“Please stop asking us to recognize the occupier and not the needs of our own lives. This is slavery, slavery of a kind that did not even happen in Africa or in any other country! The Jews suffered the Holocaust, but it only happened for a short period of time. The Palestinians have been living a whole century in a holocaust… The truth is on our side. The Israelis have the illusion that truth is on their side, but the Koran is the last revelation. The Israelis in this city have to move somewhere else. They have to acknowledge the facts on the ground. The future is ours.“The situation with the Rajoub brother, well, you may call it the ongoing conflict between secularism and Islam. The big brother is a secularist and the younger is an Islamist. But the Islamist won in a democratic vote. The two brother gave you the shape of history – one has prevailed and the other will vanish.”
Property in Observatory, Cape Town, South Africa on http://www.hotpropertyincapetown.com

A continent's success stories go unreported.

2005-12-28T13:20:00.000+02:00

Africa is not short of press interest, particularly this year. But amid the successes of debt relief, the hopes pinned on the Group of 8 leaders who met, and the intervention of Bob Geldof, there is another story to Africa, one that is not concerned with famine, war or disease. It tells of economic growth, stability and political reform. But it is a story that is going unreported.
The news media are missing this story of Africa’s development. Unaware of the trend, they are locked in a historical and generalized view of Africa.
Did anyone expect that war torn Mozambique would experience an economic growth rate of 10 percent on average in the last six or seven years? Or that we would see a similar turnaround in Tanzania? That both countries would quietly transition to new presidents through the ballot box? Yet if you look at the international news media, the focus is often on the negative. In the case of Tanzania you don’t read about elections, but about the purchase of a presidential jet. This is hardly balanced and informed coverage.
In Africa today, 800 million people, half of them under 20, are determined to find a better standard of life. This year economic growth will be 5 percent – twice the rate of the European Union. Democracy and its institutions are spreading, slowly but steadily. In the last five years, two thirds of the countries of Sub-Saharan Africa have had some form of multiparty elections, though clearly some are freer than others. African leaders have declared their intention to set the agenda for change and be judged on its success through the New Partnership for African Development. Africa is on the verge of a huge investment in transport, education and health, and will be a major beneficiary of a successful conclusion for the current round of international trade talks.
I am not suggesting that the news media should only cover positive stories. It’s about balanced context. Reporting exclusively on politics, conflict, famine and disease may be perpetuating an unbalanced picture of Africa and thereby obscuring the positive – and undermining investor confidence in the continent.
It is true that some of Africa’s leaders have inflicted upon their people a triple whammy of corruption, incompetence and conflict. The news media have a role to play in applying pressure to the international community to act where injustices are being unleashed, as they did last year in waking the world to the atrocities in Darfur, Sudan.
It is right, too, to tell the world that 11 million children under the age of 5 die each year in Africa, that 350 million Africans live on less that $1 a day. But this story must not eclipse the fact that vast areas of the continent have taken enormous steps forward. If we only cover Africa when disaster strikes, we perpetuate the image of a continent in constant crisis. And that image is out of step with reality.
As we consider the role of foreign journalists in shaping Africa’s image, for better or for worse, we should not forget about the continent’s own news media. If the international press is not telling the story of advancement, perhaps the rebirth of national news agencies across the continent could create the critical mass of positive stories needed to wake up the world. These agencies would also give the international news media access to independent and objective reporting from the front line.
There are plenty of examples of nations that have built or re-established independent news agencies as part of their regeneration. In Iraq, for instance, an independent news agency is being created with help from the Reuters Foundation and the United Nations Development Program that will provide reliable news information within Iraq and from Iraq to the wider world.
The news media have a responsibility to observe. They also have a responsibility to tell it like it is. Business already knows that things are changing It is no coincidence that Chinese companies are investing heavily in Nigerian telecommunications companies or Richard Branson in short-haul aviation.In the face of an opportunity to resolve Africa’s problems, we must show that Africa can rise to the challenge, confront the present and build a positive future. Much has already been achieved in some areas of the continent. That story must be told.

Property in Observatory, Cape Town, South Africa on http://www.hotpropertyincapetown.com

Is Wim Delvoye saying art is shit or that shit is art?

2005-12-28T13:02:00.000+02:00

In the past, artists created art from life; nowadays the most interesting ones create life from art. For centuries we have relied on the definition of art as a useless object, worth contemplating. Artists, we were told, stood aloof from society and the market – they could deal in ideas with no use-value. This idea of art reached its reductio ad absurdum with Duchamp’s readymades – useful objects transformed into useless vehicles for ideas by being presented in an art gallery. But sometime in the last 30 years, one artist (it is hard to say exactly who) had a further thought: why not exploit my independence from the market to make prototypes for a new and better world? I will make art that is useful.
And now they are all at it. There is Carsten Höller and Rosemary Trockel’s house for chickens and humans, in which people and animals would live together. There is Andrea Zitel and her mobile homes; desk and chickens as works of art. And there is Liam Gillick with his liberating architectural designs – most recently the canopy for the new home office building, which is chicken-free. These artist and their theorists call such works “parallel structures” – alternative ways of organising the world, developed free from the pressures of global capital. It is tosh, of course.
Today’s artists produce slavishly for the luxury market, and their entry into the worlds of design and architecture is just another shameless marketing strategy, devised to diversify their brand and maintain their position as the highest of cultural producers. Still, it has created some interesting, if queasy, art.
One of the artists involved in this new utopian activity is the Belgian Wim Delvoye. At first Delvoye’s work appears to be ironic. He has created realistic-looking palatial marble floors out of triangles of salami. And he has made a series of x-rays of people having sex. Bit his chef d’oeuvre is Cloaca, a machine which imitates the human digestive system. You put food in one end and it gets chewed up and piped through two gently rotating washing machines full of bacteria, then heated a little, and guess what comes out the pipe at the bottom? Yes. Shit. Real shit. I should know: I recently submitted a sample of my own and a sample from Delvoye’s machine for test at Reading University’s microbiology department. They were remarkably similar.
Cloaca has been exhibited in museums all over the world and was recently on show in Brussels in an exhibition implausibly titled “Visionary Belgium”. Delvoye freeze-dries the crap from the machine, packs it in a perspex box and sells it as a limited edition, signed and dated, at £2,000 a pop. He says that he is now building a factory of Cloacas, machines churning out shit 24 hours a day, and will be selling shares in his business enterprise which, thanks to the intellectual and economic trends in the contemporary art market, promises to be very profitable.
So Delvoye saying art is shit – or that shit is art? He is a trickster, a very 20th-century kind of arstist who knows the recipe for society and culture but puts the ingredients together in a different order – and so creates a different order. He understands that our economic systems and artistic tastes are full of contradictions. More than being what the art world calls a “critique of consumerism,” Delvoye’s machine is a real entrepreneurial device. But in his factory, machines take on human characteristics: they shit and create art. It is a utopian project – albeit at an early stage.
I have just visited a village in China, where the next stage of Devoye’s artistic ambition is taking shape. He and I drove to the outskirts of Beijing, past picturesque Chinese farmers on bicycles and through rusting ironwork gates in a village where Delvoye has established a small farm with 12 pigs. The pigs are reared not for meat –but for art. Every week they are put under a light anaesthetic and tattooed. Some have hell’s angles motifs on their flanks, others mermaids on their thighs, and others the Louis Vuitton logos on their backs.
One day the pigs will be slaughtered and their tattooed hides will be sold for tens of thousands of euros as works of art. A lot of different cultural meanings are being played with here. The status-enhancing aspects of owning works of art is being mocked; the tattoo, an originally criminal kind of artwork, is being elevated to high art; and the ghastly conditions of factory-farmed pigs in China is being replaced by an idealistic and beautiful “ art farm.”I wanted to join in. I asked Delvoye if I could be tattooed by his pig tattooist. He agreed, on the condition that a pig was given the same tattoo as me. I was taking a human form of decoration that had been applied to an animal and re-placing it on a human body. A Chinese curator from Beijing’s Millennium museum dropped by while the needle was being applied. She told me that I was adding a new layer: “It means we are all, humans and animals, tattooed. We are all tattooed, that is marked by our backgrounds, histories and societies.” But I knew there was even more meaning than that: the design, drawn beautifully by Delvoye on my right shoulder, was of Mickey Mouse crucified, with Minnie weeping at the base like the Virgin Mary. And I’m Jewish.

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Meet me in Eumerica for the best of 2 worlds.

2005-11-26T04:00:00.000+02:00

Perhaps I am not alone in having dreamed sometimes of an island in the Atlantic that would combine the disparate qualities of European and American life and so resolve the frequently sterile debate about which of these societies has it right.
These dreams have been particularly intense of late because a recent column of mine suggesting that Europe had become a sideshow to Americans has provoked dozens of letters, some hostile and some supportive.
“I’d much rather live in this sideshow”, wrote Gert Wiescher from Munich. “It’s much safer, more sophisticated and cultured. The average European is much better educated and the cities are nicer as well”.
But Eric Merson, an Australian living in Vienna, finds his new home gives him the feeling of “living virtually in a history book” in a “beautiful country that has little else to offer in the modern commercial world”. As for Rob Brike in Brussels, he sees Europe becoming “a giant elderly home, Florida multiplied by ten. Roads and dance floors will gradually turn empty as teenagers wander abroad searching for a date”.
As this haunting image suggests, views of Europe and America have hardened as the continents, no longer bound by the conviction of a shared threat, have drifted apart. The result is often an exchange of caricatures, with neither side ready to concede any virtue to the other. In this who-can-shout-the-loudest age, middle ground is hard to find.
So I have been dreaming of some middle ground, an island I call ”Eumerica”, where there would not be 44.9 million people without health insurance as there are in the United States. Nor would there be nightmarish American medical insurance forms designed to ensure that any claim is rejected because some detail has been overlooked.
No, there would be doctors unafraid of litigation who actually respond to your calls, as they do in France and Germany, and may even come to your house, including on weekends, and whose bills are covered by a national health insurance system that includes everybody.
In Eumerica, a land boasting the bracing wide-open beaches of North America but also sun-baked coves reminiscent of the Mediterranean, a place where taxi drivers do not grumble and waiters do not speechify, a country where the cocktails are as good as the wine, there would not be an unemployment rate of over 10 percent, as there is in France and Germany.
No, there would be full employment, or something close, because companies would be able to hire and fire as they do in the United States, and sophisticated capital markets would encourage innovation and risk, and nobody would be able to make more money from not working and getting b benefits than from working, and the French 35-hour week and other silly regulations would be bad memories.
Eumericans would send their children to public schools as good as those in France. But the kids’ imaginations would be encouraged as they are in the United States, rather than worn down by a premature onslaught of Gallic learning by rote.
A short and amendable constitution establishing the essential religious and other freedoms and the checks and balances of a modern democratic republic would provide the bedrock of Eumerican governance, a model of stability and of the separation of church and state.
The national flag – red, white and blue stars and stripes in its upper half, blue with a circle of god stars in its lower half –would rarely be seen in backyards, partly because of its singular ugliness and partly because the people of Eumerica would be wary of crossing the thin line between patriotism and nationalism.
In matters of leisure, Europe would inspire Eumerica. As realists, Eumericans would adopt the principle of a one-month annual vacation, rather than the American habit of using “ sick days” and “personal days” to supplement an allotted week or two of holiday. A work-hard-play-hard ethic would characteaize the island.
Realism would also lead Eumericans to accept that, in a dangerous world, a strong military is essential to maintain peace and the values of an open society for which they stand. As a last resort, and as far as possible in concert with their allies and international institutions, they would be ready to fight wars. They would scoff at notions of some postnationalist utopia spreading across the globe and rendering armies obsolete.
Immigrants would be seen as a source of vitality rather than a potential threat. In this openness, commentators would see a form of American optimism in contrast to the history-is-tragedy doubts of the European mind. Needless to say, the coffee in Eumerica would be Italian, the (absence of) speed limits and the cars German, the steaks and the refrigerators and the air-conditioning and the can-do outlook American, the fresh cream and the rock bands and the tolerance for eccentricity British, the herring Scandinavian, the climate Spanish, the college fees European, the duration of a college education (and most of the Professors) American, the vodka Polish, the roads (and landscaping) French, the beer Czech, the chocolates Belgian and the national sports soccer and baseball.
Of course, because Eumerica is not paradise even though it is unreal, there would be disputes about the right to carry guns and abortion and euthanasia and the death penalty, but these disputes would be characterized by civility and by people of different views really listening to each other. After long debate, Eumericans would ban the death penalty, give every woman the right to choose, allow euthanasia in strictly defined circumstances, and approve the limited right to carry a gun.
I can already hear the cries of “Dream on”. But I am not the only one dreaming. Brike in Brussels concluded his letter to me by saying: “Here in Europe we will watch a beautiful sunset. I will turn on the TV, read a book and drink a glass of red wine, dreaming of our lost empire, like the Greeks did when the Roman Legions were conquering the virgin woods”.