Richard Branson sits on the top-ten list of the United Kingdom's richest citizens, with an estimated wealth of roughly eight billion dollars. As the company he founded -- Virgin Group -- tries to expand its airline operations into the United States, Branson is committing billions of dollars of the company's future profits to developing renewable energy. VOA's Kane Farabaugh recently spoke to the British entrepreneur at the United Nations in New York about his commitments to helping the environment, and about his plans for the final frontier in tourism -- space.
Richard Branson
He set a record for crossing both the Atlantic Ocean and the English Channel.
An attempt to travel non-stop around the world in a hot air balloon fell short of his dreams in 1999, but his Virgin Global Flyer aircraft, piloted by Steve Fossett, succeeded in 2005.
Richard Branson said before the success, “It is perhaps the last great aviation record left here on Earth."
But when Richard Branson is not flying above the clouds, he is right down to earth in the effort to go green. "There is a danger that mankind could actually be destroyed if we carry on putting too much methane and carbon into the Earth's atmosphere."
At former President Bill Clinton's Global Initiative conference in New York in September, Branson emphasized the need to develop renewable energy. "We have to wean ourselves off our dependence on coal and fossil fuels."
Branson committed the profits over the next 10 years from Virgin Atlantic Airline and other transportation companies in the Virgin Group to the effort. That is an estimated cost of three billion dollars.
And in February, Branson announced the Virgin Earth Challenge, a $25 million prize for the person who develops a working solution to remove greenhouse gases from the Earth's atmosphere. "To devise a way of removing greenhouse gases, at least the equivalent of one billion tons of carbon per year -- hopefully much more, and you will have the satisfaction of saving thousands of species and possibly even mankind itself."
Since the announcement, Branson has received a flood of entries for the competition that is open to the world. "We've had 15,000 people who have sent in their application forms. It only launched a month ago so it's early days to see if anybody's come up with any great ideas, but at least we're getting people thinking. And you know, it would be wonderful if someone had a breakthrough."
Aside from his efforts to promote a cleaner environment, Branson continues to be a man on the move, expanding his business empire.
Almost 35 years after he started his fledgling record company in London, the Virgin name is on everything from music to mobile phones, comics to drinks, trains to planes, and now, the first spacecraft built for tourists.
Called Virgin Galactic, it is scheduled to blast off in 2009. Branson adds, "Myself and my family are fortunate enough, because we own a space company, to be able to take the first flight up there. So 24 months from now my parents and my children and myself shall be popping into space.”
Branson says he is not concerned. “I'm not nervous. I mean, these spaceships will be well tested before we go up. But it's a responsibility. It's a responsibility to take my children up and my parents, and it's going to be a responsibility taking hopefully thousands of people up in the years to come."
Branson is sometimes called the "Rebel Billionaire", a title he has earned partly for the risks he has taken in many of his business ventures.
While the world waits for Virgin Galactic to launch from the Mojave desert in California, Branson is also trying to position Virgin into the U.S. domestic air travel market. Virgin America, based in San Francisco, is trying to win approval from the U.S. Department of Transportation (DOT). The DOT initially opposed the start-up because of regulations preventing foreign citizens from controlling a U.S.-based airline.
In Britain in 2003, Branson also led an unsuccessful effort to keep the supersonic passenger jet Concorde flying. The owner, British Airways, refused to sell the aircraft and forced the fleet into retirement. That put an end to supersonic passenger travel.
But when Richard Branson looks back on a life less ordinary than most, it is not his airlines, his record stores, his space franchise, or his travel speed records he wants people to remember most. He hopes the world will remember the Virgin Earth Challenge. "If somebody could answer this prize, I would be very happy to be known for coming up with a prize that saved the world."
2007年9月19日星期三
Insurance Company Using Technology to Reduce Teen Accidents
A major U.S. insurance company is offering new technology to its customers, which could significantly reduce accidents. The program targets risky teenage drivers by giving parents the ability to view and track their children's driving habits. American Family Insurance Company says its “drive cam” technology could save lives and lower insurance costs. VOA's Mil Arcega reports.
The National Highway Traffic Safety Administration says crashes are the number one killer of U.S. teens.
In fact, new data shows the fatality rate for teenage drivers is four times higher than for drivers 25 years or older. American Family Insurance believes one way to reduce the high rate is to eliminate risky driving behavior among teens.
To do that, they mount a small camera on a rear view mirror -- so parents, such as Dave Hackworthy, can monitor their child's driving habits. "It's held him accountable for driving. It's put him in a position where he knows he's being watched," says the dad.
Rusty Weiss
Rusty Weiss, a director at Drivecam, which developed the technology for consumer use, says the camera only records abrupt maneuvers -- then emails it to parents. "It lets parents set a clear expectation, to drive in a manner that doesn't cause the camera to trigger. Pretty simple message."
Gary Fox, one of 30 teens who took part in a pilot project at Edgewood High School in Madison, Wisconsin, is convinced it works. "It will actually make me a better driver. When you do something wrong, make a sharp turn really fast, stop really fast - then it goes off."
Critics of the program have raised concerns about privacy. But American Family Insurance spokesman Steve Witmer says only parents will have access to the video. "It's sent directly to the parents. Edgewood High School doesn't see the information, American Family Insurance doesn't see the information, but people who need to see the information are the parents and the students."
American Family Insurance is now offering the program free for one year to 30,000 families in selected states. If the system proves effective in preventing accidents, the company says volunteers who use it could see their insurance rates drop.
The National Highway Traffic Safety Administration says crashes are the number one killer of U.S. teens.
In fact, new data shows the fatality rate for teenage drivers is four times higher than for drivers 25 years or older. American Family Insurance believes one way to reduce the high rate is to eliminate risky driving behavior among teens.
To do that, they mount a small camera on a rear view mirror -- so parents, such as Dave Hackworthy, can monitor their child's driving habits. "It's held him accountable for driving. It's put him in a position where he knows he's being watched," says the dad.
Rusty Weiss
Rusty Weiss, a director at Drivecam, which developed the technology for consumer use, says the camera only records abrupt maneuvers -- then emails it to parents. "It lets parents set a clear expectation, to drive in a manner that doesn't cause the camera to trigger. Pretty simple message."
Gary Fox, one of 30 teens who took part in a pilot project at Edgewood High School in Madison, Wisconsin, is convinced it works. "It will actually make me a better driver. When you do something wrong, make a sharp turn really fast, stop really fast - then it goes off."
Critics of the program have raised concerns about privacy. But American Family Insurance spokesman Steve Witmer says only parents will have access to the video. "It's sent directly to the parents. Edgewood High School doesn't see the information, American Family Insurance doesn't see the information, but people who need to see the information are the parents and the students."
American Family Insurance is now offering the program free for one year to 30,000 families in selected states. If the system proves effective in preventing accidents, the company says volunteers who use it could see their insurance rates drop.
Rising Oil Prices Fuel Corn Tortilla Price Hike
Rising world oil prices have sparked interest in alternative fuels, such as ethanol, which can be produced from corn. This has raised demand for the grain, which, in turn, has increased its price as food. VOA's Peter Fedynsky reports that higher prices may not be the only cost associated with corn-based ethanol.
People march in Mexico City to protest recent tortilla price increases, 31 Jan 2007
In January, demonstrators in Mexico converged on the capital to protest the spiraling cost of tortillas, a Mexican national staple made from corn. In response, the country's president, Felipe Calderon, signed an agreement to stabilize tortilla prices.
President Calderon says the 13-point agreement is aimed at protecting Mexican families and the economy from further price hikes on corn.
Mexican tortilla prices have skyrocketed more than 700 percent since 1994. Experts say this is due in part to increased demand for corn to produce ethanol.
Speaking at a recent Capitol Hill news conference in Washington Daniel De La Torre Ugarte, from the Agricultural Policy Analysis Center at the University of Tennessee, warned that price hikes are but one effect of rising demand for corn. He says it can have consequences for agriculture as well.
"Not only because it jeopardizes food security in many countries, but because, at the same time, it also creates a new incentive to expand production to areas that may not be suitable for the crop," said Daniel De La Torre Ugarte. "So, we are going to put undue pressure on natural resources to try to respond with a larger production for corn."
Ugarte is not opposed to bio-fuels as such. Nor is Alexandra Spieldoch, from the Institute for Agriculture and Trade Policy in Minneapolis, Minnesota. But Spieldoch warns of the consequences of over-reliance on a single crop.
"Corn mono-cropping is already eroding U.S. farmland," said Alexandra Spieldoch. "It's water intensive. It increases the amounts of herbicides. It's not considered viable in the long term."
Spieldoch adds, corn prices are not driven by ethanol alone. She says the North American Free Trade Agreement, or NAFTA, as well as U.S. farm subsidies have forced Mexico - a traditional corn exporter - to import the commodity from the United States.
Former Mexican congressman Victor Quintana says NAFTA has favored corporate agribusiness at the expense of poor Mexican farmers, who then seek a better living across the border.
Quintana says that, for each 30-ton container of corn exported to Mexico, the United States receives two undocumented migrants from the Mexican countryside.
Philip Levy, a former member of President Bush's Council of Economic Advisers and currently a scholar at the American Enterprise Institute in Washington, acknowledges the displacement of many Mexican farmers. But he says free trade has helped Mexico as a whole.
"When you're talking about what's good or bad for a country in trade, you have to be careful, and we're seeing this in Mexico right now," he said. "If you are a producer of corn, no matter what the cause, high corn prices are welcome. You want it. If you are a consumer of corn, high corn prices are bad. And you don't want it."
Levy says the demand for ethanol could become so high that no American corn will be exported. This, he says, will encourage Mexican corn production to meet the demand for tortillas, so that, in the end, free trade will provide consumers with food and fuel. And Philip Levy agrees with critics who caution that the rush toward ethanol must not come at the expense of the environment.
People march in Mexico City to protest recent tortilla price increases, 31 Jan 2007
In January, demonstrators in Mexico converged on the capital to protest the spiraling cost of tortillas, a Mexican national staple made from corn. In response, the country's president, Felipe Calderon, signed an agreement to stabilize tortilla prices.
President Calderon says the 13-point agreement is aimed at protecting Mexican families and the economy from further price hikes on corn.
Mexican tortilla prices have skyrocketed more than 700 percent since 1994. Experts say this is due in part to increased demand for corn to produce ethanol.
Speaking at a recent Capitol Hill news conference in Washington Daniel De La Torre Ugarte, from the Agricultural Policy Analysis Center at the University of Tennessee, warned that price hikes are but one effect of rising demand for corn. He says it can have consequences for agriculture as well.
"Not only because it jeopardizes food security in many countries, but because, at the same time, it also creates a new incentive to expand production to areas that may not be suitable for the crop," said Daniel De La Torre Ugarte. "So, we are going to put undue pressure on natural resources to try to respond with a larger production for corn."
Ugarte is not opposed to bio-fuels as such. Nor is Alexandra Spieldoch, from the Institute for Agriculture and Trade Policy in Minneapolis, Minnesota. But Spieldoch warns of the consequences of over-reliance on a single crop.
"Corn mono-cropping is already eroding U.S. farmland," said Alexandra Spieldoch. "It's water intensive. It increases the amounts of herbicides. It's not considered viable in the long term."
Spieldoch adds, corn prices are not driven by ethanol alone. She says the North American Free Trade Agreement, or NAFTA, as well as U.S. farm subsidies have forced Mexico - a traditional corn exporter - to import the commodity from the United States.
Former Mexican congressman Victor Quintana says NAFTA has favored corporate agribusiness at the expense of poor Mexican farmers, who then seek a better living across the border.
Quintana says that, for each 30-ton container of corn exported to Mexico, the United States receives two undocumented migrants from the Mexican countryside.
Philip Levy, a former member of President Bush's Council of Economic Advisers and currently a scholar at the American Enterprise Institute in Washington, acknowledges the displacement of many Mexican farmers. But he says free trade has helped Mexico as a whole.
"When you're talking about what's good or bad for a country in trade, you have to be careful, and we're seeing this in Mexico right now," he said. "If you are a producer of corn, no matter what the cause, high corn prices are welcome. You want it. If you are a consumer of corn, high corn prices are bad. And you don't want it."
Levy says the demand for ethanol could become so high that no American corn will be exported. This, he says, will encourage Mexican corn production to meet the demand for tortillas, so that, in the end, free trade will provide consumers with food and fuel. And Philip Levy agrees with critics who caution that the rush toward ethanol must not come at the expense of the environment.
World's Largest Passenger Aircraft Makes First Landing in US
It is the largest passenger aircraft ever built. With a capacity to hold up to 550 passengers, and with better fuel efficiency than other airliners, the Airbus A380 made a historic first stop in New York on Monday. It is the first of several visits planned throughout the United States this week. VOA's Kane Farabaugh was on the runway as the aircraft touched down at John F. Kennedy (JFK) International Airport on Long Island and files this report.
Airbus A380 in New York
In a weather condition airline pilots call "severe clear," you could see it coming almost ten miles away.
Under heavy security and before hundreds of cameras, the Airbus A380, the world's largest passenger aircraft, made a relatively quiet landing on the runway at JFK International Airport in New York.
The man behind the controls of Lufthansa Flight 8940, Chief Pilot Juergen Raps, compares piloting the aircraft to driving an Italian sports car.
Lufthansa Pilot Juergen Raps
"If you imagine a plane of this size and this weight, you imagine it would move like a bus or like a truck,” Raps says. “But as I said, if you compare it, it would handle like a Ferrari – it's very responsive at the controls, and it reacts very fast. So you can fly very precisely and at the same time it's very stable. Very nice to fly."
The Airbus's arrival at JFK, complete with passengers and a full crew, marks the first visit by the new so-called megaliner to U.S. soil.
Port Authority Executive Director Anthony Shorris says the historic occasion also marks a new beginning in air travel to and from New York. The city hopes to reap an economic benefit after investing tens of millions of dollars in upgrading the airport to accommodate the new aircraft.
"In the first full year of operations for the A380 we hope it will generate as much as $80 million in economic activity, $30 million or more in payroll and perhaps 1,000 jobs," Shorris says.
Airbus is also hoping to reap an economic benefit from a project already plagued with difficulties. Two years behind schedule, Airbus has lost more than an estimated $6 billion in forecasted profits that the A380 was supposed to generate.
Airbus A380
The company is hoping today's successful landing in New York and the subsequent arrival of another A380 at Los Angeles International Airport will help reverse some of the negative publicity generated by the production delays.
Not only is the A380 one of the quieter long-haul planes in the skies, it is also one of the most fuel efficient, consuming about 80 miles [130 kilometers] per gallon per passenger seat.
Singapore Airlines takes delivery of the first A380 in October. Lufthansa will begin regular service with the A380 from Frankfurt to JFK in the summer of 2009.
Airbus A380 in New York
In a weather condition airline pilots call "severe clear," you could see it coming almost ten miles away.
Under heavy security and before hundreds of cameras, the Airbus A380, the world's largest passenger aircraft, made a relatively quiet landing on the runway at JFK International Airport in New York.
The man behind the controls of Lufthansa Flight 8940, Chief Pilot Juergen Raps, compares piloting the aircraft to driving an Italian sports car.
Lufthansa Pilot Juergen Raps
"If you imagine a plane of this size and this weight, you imagine it would move like a bus or like a truck,” Raps says. “But as I said, if you compare it, it would handle like a Ferrari – it's very responsive at the controls, and it reacts very fast. So you can fly very precisely and at the same time it's very stable. Very nice to fly."
The Airbus's arrival at JFK, complete with passengers and a full crew, marks the first visit by the new so-called megaliner to U.S. soil.
Port Authority Executive Director Anthony Shorris says the historic occasion also marks a new beginning in air travel to and from New York. The city hopes to reap an economic benefit after investing tens of millions of dollars in upgrading the airport to accommodate the new aircraft.
"In the first full year of operations for the A380 we hope it will generate as much as $80 million in economic activity, $30 million or more in payroll and perhaps 1,000 jobs," Shorris says.
Airbus is also hoping to reap an economic benefit from a project already plagued with difficulties. Two years behind schedule, Airbus has lost more than an estimated $6 billion in forecasted profits that the A380 was supposed to generate.
Airbus A380
The company is hoping today's successful landing in New York and the subsequent arrival of another A380 at Los Angeles International Airport will help reverse some of the negative publicity generated by the production delays.
Not only is the A380 one of the quieter long-haul planes in the skies, it is also one of the most fuel efficient, consuming about 80 miles [130 kilometers] per gallon per passenger seat.
Singapore Airlines takes delivery of the first A380 in October. Lufthansa will begin regular service with the A380 from Frankfurt to JFK in the summer of 2009.
UN Says Asian Economic Growth Hinges on Investment in
A regional United Nations agency says Asia needs to step up investment in infrastructure to maintain the region's high growth momentum. Anjana Pasricha reports from New Delhi, where the U.N.'s Economic and Social Commission for Asia and the Pacific (ESCAP) recently held a meeting on infrastructure development in Asia.
The U.N. Economic and Social Commission for Asia and the Pacific says a shortage of roads, rail networks, ports and energy projects in rapidly-growing Asia threatens to hold back the region's economies.
At a two-day meeting in New Delhi, the U.N. agency called on Asia to invest more heavily in cross-border infrastructure projects to spur trade and investment in the region.
Representatives of 20 countries attended the meeting, where a new study by Research and Information Systems, a New Delhi-based research institute, highlighted the infrastructure deficit in Asia.
For example, lack of sufficient cross-border surface transportation among Central, South and East Asia forces Asian countries to rely heavily on shipping by sea, pushing up the cost of moving goods.
The study says Asian countries should cooperate to develop a dense network of roads and rails, in the same way European countries have.
Similarly, countries should share energy resources, because several resource-rich countries have low demand, while their neighbors have high demand.
Nagesh Kumar heads Research and Information Systems. He uses South Asia as an example to show how cross-border initiatives could bring vast benefits to the region.
"We could build a connecting road, say, from Afghanistan to Pakistan to India to Bangladesh to Myanmar [Burma], which would link up all these countries. It would become a Silk Road, for instance, providing the connectivity to the people, promoting businesses and livelihoods. In energy, for instance, you could be developing hydro power in Nepal and bringing it to India, which is perennially short of energy," said Kumar.
International agencies have estimated that the region could use approximately $200 billion for infrastructure investment every year over the next five years in addition to what countries are already spending.
ESCAP head Kim Hak Su suggests that the region could use a part of its huge foreign exchange reserves to fund infrastructure projects.
"The crucial thing is Asia has net saving. Net saving as of 2005 is three $350 billion. This will grow more as the economies grow," he said. "So how to tap this net Asian saving?"
ESCAP has suggested the establishment of an Asian infrastructure investment bank to help finance major trans-Asian road and rail links and other projects in the region.
The U.N. Economic and Social Commission for Asia and the Pacific says a shortage of roads, rail networks, ports and energy projects in rapidly-growing Asia threatens to hold back the region's economies.
At a two-day meeting in New Delhi, the U.N. agency called on Asia to invest more heavily in cross-border infrastructure projects to spur trade and investment in the region.
Representatives of 20 countries attended the meeting, where a new study by Research and Information Systems, a New Delhi-based research institute, highlighted the infrastructure deficit in Asia.
For example, lack of sufficient cross-border surface transportation among Central, South and East Asia forces Asian countries to rely heavily on shipping by sea, pushing up the cost of moving goods.
The study says Asian countries should cooperate to develop a dense network of roads and rails, in the same way European countries have.
Similarly, countries should share energy resources, because several resource-rich countries have low demand, while their neighbors have high demand.
Nagesh Kumar heads Research and Information Systems. He uses South Asia as an example to show how cross-border initiatives could bring vast benefits to the region.
"We could build a connecting road, say, from Afghanistan to Pakistan to India to Bangladesh to Myanmar [Burma], which would link up all these countries. It would become a Silk Road, for instance, providing the connectivity to the people, promoting businesses and livelihoods. In energy, for instance, you could be developing hydro power in Nepal and bringing it to India, which is perennially short of energy," said Kumar.
International agencies have estimated that the region could use approximately $200 billion for infrastructure investment every year over the next five years in addition to what countries are already spending.
ESCAP head Kim Hak Su suggests that the region could use a part of its huge foreign exchange reserves to fund infrastructure projects.
"The crucial thing is Asia has net saving. Net saving as of 2005 is three $350 billion. This will grow more as the economies grow," he said. "So how to tap this net Asian saving?"
ESCAP has suggested the establishment of an Asian infrastructure investment bank to help finance major trans-Asian road and rail links and other projects in the region.
Mexico's State Oil Company in Financial Trouble
Mexico's state-owned oil company, Petroleos Mexicanos, better known as Pemex, celebrated its 69th birthday on March 18, amid concerns that it is on the brink of insolvency and its production is falling. As VOA's Greg Flakus reports from Houston, Mexico, still has plenty of oil, but internal politics prevent the investment needed to develop the resources.
Petroleos Mexicanos, PEMEX, oil rig
At the close of President Bush's visit to Mexico two weeks ago, a Mexican reporter asked if the two men had discussed the issue of oil. President Bush, for his part, said oil had not been a topic of discussion since energy is a Mexican domestic issue, not a bilateral issue. President Calderon repeated his oft-stated position on energy reform.
He said he does not have any plan to privatize Pemex, but he said Mexico will have to address the problem of falling production at some point and that this will be a matter of discussion between the president and the Congress.
Mr. Calderon has made clear that he, like Presidents Vicente Fox and Ernesto Zedillo before him, sees a need for energy reform. When Mexico expropriated the oil industry in 1938, the idea was to keep the resources in Mexican hands and enrich the nation with oil profits. In recent years, however, it has become clear that Pemex is not up to the task of finding and developing all the resources under the ground, or more to the point, under the waters of the Gulf of Mexico, where its largest producing field, known as Cantarell, is now in sharp decline.
But nationalist politicians have blocked reform, claiming any change in the constitution that would even allow a slight opening to private investment would eventually lead to full privatization of the state-owned energy sector.
George Baker, an oil analyst who publishes the Mexico Energy Intelligence newsletter in Houston, says Mr. Calderon's razor-thin victory in last year's election and subsequent charges of fraud from the opposition have put him in a tough spot.
"There is still a very strong shadow from the 2006 elections and that means that it would be politically delicate for the government, at this point, so early in its career, to push forward a radical change, which this would be, in petroleum policy," Baker said.
In Mexico, many citizens still respond to the old slogan that "the oil is ours," even though they see no direct benefits. Oil revenue accounts for about a third of the government's receipts, but Mexicans generally pay more for gasoline than people in neighboring countries and there is no dividend payment distributed to the citizens from oil revenue.
Some Mexican politicians have argued that all Pemex needs is internal reform, but George Baker says that won't work.
"To improve Pemex, you need to have a view that is not Pemex-centric," he said. "You need to have a view that looks beyond Pemex and that any particular effort to reform Pemex, as an effort in itself, will not succeed."
Pemex owes creditors $107 billion, equal to almost all its assets. Petroleum reserves are the state's, not Pemex's, property. Since the government takes most of its revenue, Pemex does not have the money to pay its debts, let alone develop the technology it would need to find and produce more petroleum.
Baker says Mexico's hand may soon be forced by private development on the border between the United States-controlled area of the Gulf and Mexican waters. The Shell Oil company has a well on the US side of the boundary that could go into operation as early as 2010. Although no one can know for sure, it is possible that such a well would also draw some oil from deep rock on the Mexican side.
In a conference call this week, Pemex officials said they have identified 230 prospects for drilling in Mexico's Gulf waters, but the company only drilled four wells last year. At that rate, George Baker says, it would take 58 years to exploit those resources. The Houston analyst says Mexico needs to allow outside oil companies to operate there.
"In the Mexican side of the Gulf of Mexico, there is room for 20 or 30 companies to be actively drilling," Baker said. "Pemex, by its own, cannot drill 230 deepwater prospects. Pemex is not prepared to deal with deepwater exploration on a major scale and it is certainly not prepared to deal with deepwater production because it has never done that before and it does not have the experience or the resources to make that happen."
Baker says one proposal that might find support in Mexico would involve opening 20 percent of the energy sector to private companies, with Pemex maintaining 80 percent control. He says private companies, from the United States and elsewhere, have the technology and expertise necessary to develop the resources in Mexico, thereby boosting the country's overall production. He says other countries with state-owned oil companies that have tried this formula, like Norway, found that it not only improved production, but reduced corruption and brought greater efficiency to their operations.
Petroleos Mexicanos, PEMEX, oil rig
At the close of President Bush's visit to Mexico two weeks ago, a Mexican reporter asked if the two men had discussed the issue of oil. President Bush, for his part, said oil had not been a topic of discussion since energy is a Mexican domestic issue, not a bilateral issue. President Calderon repeated his oft-stated position on energy reform.
He said he does not have any plan to privatize Pemex, but he said Mexico will have to address the problem of falling production at some point and that this will be a matter of discussion between the president and the Congress.
Mr. Calderon has made clear that he, like Presidents Vicente Fox and Ernesto Zedillo before him, sees a need for energy reform. When Mexico expropriated the oil industry in 1938, the idea was to keep the resources in Mexican hands and enrich the nation with oil profits. In recent years, however, it has become clear that Pemex is not up to the task of finding and developing all the resources under the ground, or more to the point, under the waters of the Gulf of Mexico, where its largest producing field, known as Cantarell, is now in sharp decline.
But nationalist politicians have blocked reform, claiming any change in the constitution that would even allow a slight opening to private investment would eventually lead to full privatization of the state-owned energy sector.
George Baker, an oil analyst who publishes the Mexico Energy Intelligence newsletter in Houston, says Mr. Calderon's razor-thin victory in last year's election and subsequent charges of fraud from the opposition have put him in a tough spot.
"There is still a very strong shadow from the 2006 elections and that means that it would be politically delicate for the government, at this point, so early in its career, to push forward a radical change, which this would be, in petroleum policy," Baker said.
In Mexico, many citizens still respond to the old slogan that "the oil is ours," even though they see no direct benefits. Oil revenue accounts for about a third of the government's receipts, but Mexicans generally pay more for gasoline than people in neighboring countries and there is no dividend payment distributed to the citizens from oil revenue.
Some Mexican politicians have argued that all Pemex needs is internal reform, but George Baker says that won't work.
"To improve Pemex, you need to have a view that is not Pemex-centric," he said. "You need to have a view that looks beyond Pemex and that any particular effort to reform Pemex, as an effort in itself, will not succeed."
Pemex owes creditors $107 billion, equal to almost all its assets. Petroleum reserves are the state's, not Pemex's, property. Since the government takes most of its revenue, Pemex does not have the money to pay its debts, let alone develop the technology it would need to find and produce more petroleum.
Baker says Mexico's hand may soon be forced by private development on the border between the United States-controlled area of the Gulf and Mexican waters. The Shell Oil company has a well on the US side of the boundary that could go into operation as early as 2010. Although no one can know for sure, it is possible that such a well would also draw some oil from deep rock on the Mexican side.
In a conference call this week, Pemex officials said they have identified 230 prospects for drilling in Mexico's Gulf waters, but the company only drilled four wells last year. At that rate, George Baker says, it would take 58 years to exploit those resources. The Houston analyst says Mexico needs to allow outside oil companies to operate there.
"In the Mexican side of the Gulf of Mexico, there is room for 20 or 30 companies to be actively drilling," Baker said. "Pemex, by its own, cannot drill 230 deepwater prospects. Pemex is not prepared to deal with deepwater exploration on a major scale and it is certainly not prepared to deal with deepwater production because it has never done that before and it does not have the experience or the resources to make that happen."
Baker says one proposal that might find support in Mexico would involve opening 20 percent of the energy sector to private companies, with Pemex maintaining 80 percent control. He says private companies, from the United States and elsewhere, have the technology and expertise necessary to develop the resources in Mexico, thereby boosting the country's overall production. He says other countries with state-owned oil companies that have tried this formula, like Norway, found that it not only improved production, but reduced corruption and brought greater efficiency to their operations.
US Efforts to Isolate Iran Economically Gaining Momentum
At least five states in the U.S. are following Missouri's lead with proposals to divest public pension funds of shares in companies that do business with Iran. On Capitol Hill, proposed amendments to the Iran Sanctions Act could make it harder for foreign-owned companies to invest in countries that the U.S. State Department considers "sponsors of terror." VOA's Mil Arcega reports.
Mahmoud Ahmadinejad (20 Feb 2007)
Iran's defiance of international demands to suspend its uranium enrichment program is creating momentum in the United States for initiatives aimed at further isolating the oil-rich country.
At a recent Congressional hearing on foreign affairs, committee chairman Tom Lantos outlined new initiatives to limit U.S. investments in companies that do business with Iran. "A variety of means will be used for this purpose from ‘name and shame’ for private funds to mandating divestment of public funds," he said.
Although U.S. companies are already restricted from trading or investing in Iran, Lantos' amendments to the Iran Sanctions Act would eliminate U.S. waivers given to foreign companies that pour money into Iran's energy sector.
Tom Lantos
"If Dutch Shell moves forward with its proposed $10 billion deal with Iran, it will be sanctioned,” said Lantos. “If Malaysia moves forward with a similar deal, it too will be sanctioned. The same treatment will be accorded to China and India should they finalize deals with Iran."
Congresswoman Ileana Ros-Lehtinen of Florida says the aim is to undermine Iran's primary source of income. "Iran's oil sector, which provides for about 85 percent of export revenues, is projected to shrink without huge injections of foreign investment, technology and expertise," the Republican congresswoman says.
"We call it, in my business, chicken soup diplomacy. It sounds good, it makes you feel better but doesn't really cure anything," says Bill Reinsch, the president of the National Foreign Trade Council. He says although the proposals are well intentioned, mixing politics with business could lead to bigger problems.
National Foreign Trade Council President Bill Reinsch
"If you're going to inject political criteria into the investment process, it's not very long before you're going to have people saying we should be divesting from China, we should be divesting from Russia,” says Reinsch. “Any country that has a problematic human rights record is going to be fair game for divestment. Pretty soon there won't be any countries left to invest in.”
Reinsch adds that similar divestment proposals for so-called "terror-free public pension funds" from at least five states will also hurt retirees who can expect to see smaller returns on their investments.
A recent market report shows more than 400 publicly traded companies have financial dealings with countries on the State Department's terror list. They include Iran, North Korea, Sudan and Syria.
Mahmoud Ahmadinejad (20 Feb 2007)
Iran's defiance of international demands to suspend its uranium enrichment program is creating momentum in the United States for initiatives aimed at further isolating the oil-rich country.
At a recent Congressional hearing on foreign affairs, committee chairman Tom Lantos outlined new initiatives to limit U.S. investments in companies that do business with Iran. "A variety of means will be used for this purpose from ‘name and shame’ for private funds to mandating divestment of public funds," he said.
Although U.S. companies are already restricted from trading or investing in Iran, Lantos' amendments to the Iran Sanctions Act would eliminate U.S. waivers given to foreign companies that pour money into Iran's energy sector.
Tom Lantos
"If Dutch Shell moves forward with its proposed $10 billion deal with Iran, it will be sanctioned,” said Lantos. “If Malaysia moves forward with a similar deal, it too will be sanctioned. The same treatment will be accorded to China and India should they finalize deals with Iran."
Congresswoman Ileana Ros-Lehtinen of Florida says the aim is to undermine Iran's primary source of income. "Iran's oil sector, which provides for about 85 percent of export revenues, is projected to shrink without huge injections of foreign investment, technology and expertise," the Republican congresswoman says.
"We call it, in my business, chicken soup diplomacy. It sounds good, it makes you feel better but doesn't really cure anything," says Bill Reinsch, the president of the National Foreign Trade Council. He says although the proposals are well intentioned, mixing politics with business could lead to bigger problems.
National Foreign Trade Council President Bill Reinsch
"If you're going to inject political criteria into the investment process, it's not very long before you're going to have people saying we should be divesting from China, we should be divesting from Russia,” says Reinsch. “Any country that has a problematic human rights record is going to be fair game for divestment. Pretty soon there won't be any countries left to invest in.”
Reinsch adds that similar divestment proposals for so-called "terror-free public pension funds" from at least five states will also hurt retirees who can expect to see smaller returns on their investments.
A recent market report shows more than 400 publicly traded companies have financial dealings with countries on the State Department's terror list. They include Iran, North Korea, Sudan and Syria.
US Housing Market Continues To Slide
Stocks fell after the release of a Standard & Poor's report on Tuesday showing the worst decline in prices for single family homes in the US in more than 13 years. The drop in housing values worries investors who fear falling prices could seep into the broader US economy and crimp consumer spending. VOA's Mil Arcega reports.
U.S. stock markets tumbled Tuesday over worries that the drop in housing prices could hurt consumer confidence. Consumer spending accounts for two-thirds of all U.S. economic activity, and with house prices showing the worst depreciation in 13 years, many homeowners are feeling insecure about the future.
One couple Chris and Amy Wood says it hasn’t gone well. "We call it the American nightmare, that's what we call it."
Chris Amy Wood
Instead of earning equity on their investment, Chris and Amy Wood say they now owe more than their home is worth. "My negative equity is between $15,000 - $20,000. Negative, not positive. I can't do anything with this house unless I can spend between 15 and 20 grand, cash, to sell it."
Mark and Lisa Tingley are in similar straits. They purchased their dream home six years ago but rising interest rates have raised their monthly payments by more than 20 percent. "We've lived off of peanut butter and jelly just to try and make the mortgage payment. Luckily we have managed to hang on as a lot of our neighbors have not been able to do that."
Binya Applebaum
Of the 406 families who live in this North Carolina community, 77 have already lost their homes. Reporter Binya Applebaum with the Charlotte Observer says many homeowners were talked into taking out subprime loans, offered by some lenders to people with poor credit or very little cash. "These were homes you could buy for one dollar down. You could take a dollar bill out of your pocket and become a home owner."
The Conference Board, which rates the consumer confidence index, says the recent turmoil in financial markets, coupled with higher gasoline prices may be contributing to consumer's heightened sense of uncertainty. The one bright note is the job market, which has grown steadily despite slower growth in February.
U.S. stock markets tumbled Tuesday over worries that the drop in housing prices could hurt consumer confidence. Consumer spending accounts for two-thirds of all U.S. economic activity, and with house prices showing the worst depreciation in 13 years, many homeowners are feeling insecure about the future.
One couple Chris and Amy Wood says it hasn’t gone well. "We call it the American nightmare, that's what we call it."
Chris Amy Wood
Instead of earning equity on their investment, Chris and Amy Wood say they now owe more than their home is worth. "My negative equity is between $15,000 - $20,000. Negative, not positive. I can't do anything with this house unless I can spend between 15 and 20 grand, cash, to sell it."
Mark and Lisa Tingley are in similar straits. They purchased their dream home six years ago but rising interest rates have raised their monthly payments by more than 20 percent. "We've lived off of peanut butter and jelly just to try and make the mortgage payment. Luckily we have managed to hang on as a lot of our neighbors have not been able to do that."
Binya Applebaum
Of the 406 families who live in this North Carolina community, 77 have already lost their homes. Reporter Binya Applebaum with the Charlotte Observer says many homeowners were talked into taking out subprime loans, offered by some lenders to people with poor credit or very little cash. "These were homes you could buy for one dollar down. You could take a dollar bill out of your pocket and become a home owner."
The Conference Board, which rates the consumer confidence index, says the recent turmoil in financial markets, coupled with higher gasoline prices may be contributing to consumer's heightened sense of uncertainty. The one bright note is the job market, which has grown steadily despite slower growth in February.
US Federal Reserve Chief Paints Mixed Economic Picture
The United States' top monetary official says the country's economy continues to grow and create jobs, but is hindered by several factors, including negative developments in the housing industry. VOA's Michael Bowman reports from Washington, where Federal Reserve Chairman Ben Bernanke spoke at a hearing of Congress' Joint Economic Committee.
Ben Bernanke testifies on Capitol Hill, 28 Mar 2007
If legislators were looking for a clear-cut, decisive prediction on the future of the U.S. economy, they did not get it from Ben Bernanke. The U.S. central bank chief noted several positive trends that suggest further economic expansion, including rising exports and continued job creation.
"The continuing increases in employment, together with some pick-up in real wages, have helped sustain consumer spending, which increased at a brisk pace in the second half of last year, and has continued to be well maintained so far this year," he said.
"Growth in consumer spending should continue to support the economic expansion in coming quarters," he continued.
But Bernanke was quick to add that all is not well. In particular, he pointed to a dramatic slowdown in America's once-booming housing market, regarded as a primary engine of U.S. economic growth in recent years.
"To the downside, the correction in the housing market could turn out to be more severe than we currently expect, perhaps exacerbated by problems in the sub-prime sector," the Federal Reserve chairman said.
"Moreover, we could see yet greater spillover from the weakness in housing to employment and consumer spending than has occurred thus far," he added.
The "sub-prime sector" refers to mortgages held by roughly 10 percent of U.S. homeowners that often feature higher interest rates and sometimes allow a homeowner to pay only the interest on their loan, thereby accruing no equity. Such plans are generally offered to people with poor credit or low income levels.
Foreclosures in the sub-prime sector have skyrocketed in recent months, leading U.S. officials and legislators to question the lending practices of some financial institutions.
The Federal Reserve Board decides when and whether to raise or lower interest rates, based on its reading of current economic conditions and its projections of future ones. Many look to the Federal Reserve chairman as America's top economic prognosticator.
Earlier this month, Bernanke's predecessor, Alan Greenspan, said there is a one in three chance that the United States will slide into a recession by year's end.
Speaking on Capitol Hill, Bernanke said there is insufficient evidence to conclude that America's five-year economic expansion will "die of old age."
Ben Bernanke testifies on Capitol Hill, 28 Mar 2007
If legislators were looking for a clear-cut, decisive prediction on the future of the U.S. economy, they did not get it from Ben Bernanke. The U.S. central bank chief noted several positive trends that suggest further economic expansion, including rising exports and continued job creation.
"The continuing increases in employment, together with some pick-up in real wages, have helped sustain consumer spending, which increased at a brisk pace in the second half of last year, and has continued to be well maintained so far this year," he said.
"Growth in consumer spending should continue to support the economic expansion in coming quarters," he continued.
But Bernanke was quick to add that all is not well. In particular, he pointed to a dramatic slowdown in America's once-booming housing market, regarded as a primary engine of U.S. economic growth in recent years.
"To the downside, the correction in the housing market could turn out to be more severe than we currently expect, perhaps exacerbated by problems in the sub-prime sector," the Federal Reserve chairman said.
"Moreover, we could see yet greater spillover from the weakness in housing to employment and consumer spending than has occurred thus far," he added.
The "sub-prime sector" refers to mortgages held by roughly 10 percent of U.S. homeowners that often feature higher interest rates and sometimes allow a homeowner to pay only the interest on their loan, thereby accruing no equity. Such plans are generally offered to people with poor credit or low income levels.
Foreclosures in the sub-prime sector have skyrocketed in recent months, leading U.S. officials and legislators to question the lending practices of some financial institutions.
The Federal Reserve Board decides when and whether to raise or lower interest rates, based on its reading of current economic conditions and its projections of future ones. Many look to the Federal Reserve chairman as America's top economic prognosticator.
Earlier this month, Bernanke's predecessor, Alan Greenspan, said there is a one in three chance that the United States will slide into a recession by year's end.
Speaking on Capitol Hill, Bernanke said there is insufficient evidence to conclude that America's five-year economic expansion will "die of old age."
Ethanol Production Poised to Surge in US
President Bush has set ambitious goals to reduce the country's dependence on oil, and increase the use of alternative fuels like ethanol. VOA's Brian Wagner reports from Miami that experts are now at work to ensure there will be enough new supplies of ethanol to meet the demand.
A recent deal between the United States and Brazil to share ethanol technology marked a key step to expand the American market for alternative fuels. Brazil has built a strong local market for ethanol based on local sugar production, and U.S. officials are hoping to learn some lessons from its success.
U.S. ethanol is made from corn
Most U.S. ethanol is made from corn. And expanding ethanol production is crucial to President Bush's goal of reducing gasoline consumption in the country by 20 percent over the next 10 years.
"The president's goal has begun to shake up the energy sector," says Brian Dean, head of the Interamerican Ethanol Commission. "That's not just ambitious, it's audacious. We're going to start seeing policy initiatives immediately, I think. And with those policies, consideration needs to be given to our ability to create enough products to meet these very ambitious objectives of 35 billion (gallons). The United States only produced a little over five billion gallons last year, it consumed close to six billion. We're talking about a five-fold increase."
The United States is already looking for additional partners in Latin America to expand the ethanol sector. However, current U.S. policies restrict imports of ethanol and crops from the region, mainly because of pressure by U.S. farmers concerned about losing market share.
Brian Dean
Dean says the supply of ethanol from corn and other domestic farm crops will not be enough to meet the Mr. Bush's goals. "But clearly, corn alone, sugar cane alone, or any single feedstock that is agricultural is not going to be able to satisfy the market," he notes. "Clearly the future of ethanol lies in a holistic approach that contemplates agricultural sources, but also the cellulosic technologies. There needs to be an expansive view of ethanol."
Cellulosic ethanol is derived from biomass or plant waste, such as bagasse from sugar cane. Experts are still working to improve the process. But within a few years, it could expand the market place for fuels, says George Philippidis, associate director of the Applied Resarch Center at Florida International University.
"Where depending on what kind of raw material you have in each part of the country or the world, the [processing] plant will feed on that," he explains. " For instance, south Florida is very rich in bagasse [sugarcane waste]. Central Florida has a lot of citrus peel."
Philippidis says the technology to make ethanol from such waste products is still a few years away. But he says it will be needed to reduce demand for corn, sugar, and other farm products. Already, the rising interest in ethanol has been blamed for a jump in prices for corn tortillas in Mexico.
Philippidis says we can expect to see more market fluctuations.
"The free market operates that way. We're going to see the ups and downs until we have a demand and supply that are in sync. But that doesn't scare me, it doesn't concern me. That's a natural cycle that the market is going to go through," he says.
Experts say the move away from an oil-based energy market will help reduce pollution and increase energy security. But, as long as demand for ethanol remains high, consumers should expect not to see much savings at the gas pump.
A recent deal between the United States and Brazil to share ethanol technology marked a key step to expand the American market for alternative fuels. Brazil has built a strong local market for ethanol based on local sugar production, and U.S. officials are hoping to learn some lessons from its success.
U.S. ethanol is made from corn
Most U.S. ethanol is made from corn. And expanding ethanol production is crucial to President Bush's goal of reducing gasoline consumption in the country by 20 percent over the next 10 years.
"The president's goal has begun to shake up the energy sector," says Brian Dean, head of the Interamerican Ethanol Commission. "That's not just ambitious, it's audacious. We're going to start seeing policy initiatives immediately, I think. And with those policies, consideration needs to be given to our ability to create enough products to meet these very ambitious objectives of 35 billion (gallons). The United States only produced a little over five billion gallons last year, it consumed close to six billion. We're talking about a five-fold increase."
The United States is already looking for additional partners in Latin America to expand the ethanol sector. However, current U.S. policies restrict imports of ethanol and crops from the region, mainly because of pressure by U.S. farmers concerned about losing market share.
Brian Dean
Dean says the supply of ethanol from corn and other domestic farm crops will not be enough to meet the Mr. Bush's goals. "But clearly, corn alone, sugar cane alone, or any single feedstock that is agricultural is not going to be able to satisfy the market," he notes. "Clearly the future of ethanol lies in a holistic approach that contemplates agricultural sources, but also the cellulosic technologies. There needs to be an expansive view of ethanol."
Cellulosic ethanol is derived from biomass or plant waste, such as bagasse from sugar cane. Experts are still working to improve the process. But within a few years, it could expand the market place for fuels, says George Philippidis, associate director of the Applied Resarch Center at Florida International University.
"Where depending on what kind of raw material you have in each part of the country or the world, the [processing] plant will feed on that," he explains. " For instance, south Florida is very rich in bagasse [sugarcane waste]. Central Florida has a lot of citrus peel."
Philippidis says the technology to make ethanol from such waste products is still a few years away. But he says it will be needed to reduce demand for corn, sugar, and other farm products. Already, the rising interest in ethanol has been blamed for a jump in prices for corn tortillas in Mexico.
Philippidis says we can expect to see more market fluctuations.
"The free market operates that way. We're going to see the ups and downs until we have a demand and supply that are in sync. But that doesn't scare me, it doesn't concern me. That's a natural cycle that the market is going to go through," he says.
Experts say the move away from an oil-based energy market will help reduce pollution and increase energy security. But, as long as demand for ethanol remains high, consumers should expect not to see much savings at the gas pump.
US, South Korea Agree on Trade Liberalization Deal
U.S. and South Korean negotiators have sealed one of the world's largest two-nation free trade agreements. If the deal can overcome hurdles on the legislative front, it may dramatically increase trade between the two economies. VOA Seoul Correspondent Kurt Achin has more.
South Korean President Roh Moo-hyun struck a supportive, but apologetic tone in justifying his nation's free trade agreement with the United States.
In a nationwide television address, Mr. Roh said he knew some people would be hurt by the agreement. But he pledged government support in making South Korea's adjustment to further market opening less painful.
The announcement of the trade opening deal follows 10 months of negotiations, capped off by three days of around-the-clock talks on the most sensitive issues.
Wendy Cutler, left, Ambassador Kim Jong-hoon during a joint news conference in Seoul, 2 Apr 2007
U.S. senior negotiator Wendy Cutler says the resulting deal has been worth the effort.
"I give it an 'A' plus," she said. "I think it is a high quality agreement, yet it is extremely balanced."
Negotiators have not yet revealed full details of the agreement, but say it reduces or removes tariffs on products ranging from food to automobiles and financial services.
But South Korean Trade Minister Kim Hyun-jung told reporters Seoul insisted on keeping certain trade protections in place.
Kim says because the concerns of the South Korean people are so strong, Seoul's negotiators kept their promise to exclude the country's rice market from the agreement.
Rice production is viewed as a traditional part of Korean culture, and is a strong rallying point for frequent demonstrations against the agreement.
In one unusually dramatic illustration of that opposition, a South Korean man set himself on fire Saturday in protest of the trade talks. He is being treated for third degree burns.
Negotiators say the deal makes progress in offering U.S. companies the kind of access they have wanted to the South Korean automobile and financial services markets. U.S. automakers have accused Seoul of using arbitrary rules as a means of suppressing imports.
George W. Bush
President Bush announced Monday's deal to Congress just hours before a deadline that would have kept him from asking for a simple yes-or-no vote from lawmakers. Past that deadline, members of Congress could have demanded dozens of amendments, hurting the chances the deal would be ratified quickly.
The president of South Korea's American Chamber of Commerce, Tami Overby, says the deal has a good chance of political survival.
"It has got to pass [South Korea's] National Assembly and it has got to pass Congress, and from everything we have seen - it is still early days and we have not seen all the details - but it looks good," he said.
Experts say the legislative process could take months, but will probably be completed during the Bush Administration.
South Korean President Roh Moo-hyun struck a supportive, but apologetic tone in justifying his nation's free trade agreement with the United States.
In a nationwide television address, Mr. Roh said he knew some people would be hurt by the agreement. But he pledged government support in making South Korea's adjustment to further market opening less painful.
The announcement of the trade opening deal follows 10 months of negotiations, capped off by three days of around-the-clock talks on the most sensitive issues.
Wendy Cutler, left, Ambassador Kim Jong-hoon during a joint news conference in Seoul, 2 Apr 2007
U.S. senior negotiator Wendy Cutler says the resulting deal has been worth the effort.
"I give it an 'A' plus," she said. "I think it is a high quality agreement, yet it is extremely balanced."
Negotiators have not yet revealed full details of the agreement, but say it reduces or removes tariffs on products ranging from food to automobiles and financial services.
But South Korean Trade Minister Kim Hyun-jung told reporters Seoul insisted on keeping certain trade protections in place.
Kim says because the concerns of the South Korean people are so strong, Seoul's negotiators kept their promise to exclude the country's rice market from the agreement.
Rice production is viewed as a traditional part of Korean culture, and is a strong rallying point for frequent demonstrations against the agreement.
In one unusually dramatic illustration of that opposition, a South Korean man set himself on fire Saturday in protest of the trade talks. He is being treated for third degree burns.
Negotiators say the deal makes progress in offering U.S. companies the kind of access they have wanted to the South Korean automobile and financial services markets. U.S. automakers have accused Seoul of using arbitrary rules as a means of suppressing imports.
George W. Bush
President Bush announced Monday's deal to Congress just hours before a deadline that would have kept him from asking for a simple yes-or-no vote from lawmakers. Past that deadline, members of Congress could have demanded dozens of amendments, hurting the chances the deal would be ratified quickly.
The president of South Korea's American Chamber of Commerce, Tami Overby, says the deal has a good chance of political survival.
"It has got to pass [South Korea's] National Assembly and it has got to pass Congress, and from everything we have seen - it is still early days and we have not seen all the details - but it looks good," he said.
Experts say the legislative process could take months, but will probably be completed during the Bush Administration.
Financial Experts Debate Pros and Cons of Hedge Funds
Some of the financial world's largest investment funds are getting bigger, more numerous and more likely to hurt the economy if they collapse. Hedge funds, which are investment vehicles made up of lightly-regulated pools of money, grew by nearly one-third over the past year. Critics say these funds are so big that they can unfairly manipulate markets and want government to regulate them more closely. Supporters say hedge funds improve markets and warn that more regulation could hurt investors and slow innovation. VOA's Jim Randle reports.
There are at least 8,000 hedge funds and they control a gigantic $1.4 trillion dollars of investments.
That makes the fast-growing hedge fund industry slightly larger than the economy of Canada, and somewhat smaller than the gross domestic product of Brazil. Some hedge funds make huge profits, but others go broke and cause serious problems.
University of Maryland professor Michael Greenberger
University of Maryland Law professor and former financial regulator Michael Greenberger says regulators, members of Congress and others have been taking a close look at hedge funds
"There is beginning to be a concern about the impact of hedge funds on the economy and a movement toward doing something about that," Greenberger says.
A hedge fund is a pool of investment money collected from individual investors or institutions by a fund manager and invested on their behalf. The aim is to make money by finding stocks, companies or other things that are undervalued and buying them. Or fund managers may find other assets that are overpriced and make an investment bet that the price will go down.
Only a limited number of large, wealthy and presumably sophisticated investors are permitted to join hedge funds. So these investment vehicles face less regulation and have to disclose less information than other investments, such as mutual funds.
And hedge funds are allowed to use much more aggressive – and risky – strategies than mutual funds. For example, hedge funds can borrow stock or money to increase their investments. That makes greater profits possible, but also exposes the fund to greater losses.
If the investments go bad, then the fund might not be able to repay the loan, which could put the lender out of business.
Professor Greenberger warns that if a number of large hedge funds collapse at once, both the investors as well as the institutions that loaned money to the fund are hurt – and this could create a ripple effect throughout the financial system. He says this nearly happened in the late 1990's.
"The granddaddy of calamities of hedge funds was the 1998 near-collapse of Long Term Capital Management,” he says. “It was at the time, the world's largest hedge fund. The conventional wisdom of that time was that if it failed in the long term, it would have caused terrific systemic collapse in the American economy. It was not too far-fetched for people at that time to be talking about depression, economic depression."
Investment adviser Bill Mann of The Motley Fool company says the funds can sometimes use their huge pool of investment money to unfairly manipulate the market price of commodities, stocks, or other investments.
For instance, things like crude oil, Asian currencies, or some stocks.
Investment adviser Bill Mann
"They absolutely could manipulate the market and I think it is important to note that in all likelihood, they do manipulate the market," he says.
Mann says an unscrupulous hedge fund manager could drive down the stock price of a company he wants to buy by spreading false reports that the company has problems. Or a fund could sell large quantities of a particular stock, flooding the market and driving down the price, and then quickly buying up every available share at a lower price.
Some legislators and experts say governments should regulate hedge funds more closely and require them to disclose more about their actions to discourage improper behavior.
But some hedge fund managers say there are plenty of laws that already ban activities such as fraud and insider trading. George Mason University researcher Houman Shadab says it would be unwise to force hedge funds to disclose secret trading strategies.
"It would be like forcing a cook or chef to reveal his secret recipes, the things that give him a competitive advantage over other hedge fund managers," he says.
Shadab says hedge funds make markets more liquid by increasing the number of investors bidding on stocks and other assets.
Top U.S. Bush administration economic officials recently examined the issues surrounding hedge funds and decided against major changes in regulations that govern them. European officials are said to still be considering stronger regulations for hedge funds.
There are at least 8,000 hedge funds and they control a gigantic $1.4 trillion dollars of investments.
That makes the fast-growing hedge fund industry slightly larger than the economy of Canada, and somewhat smaller than the gross domestic product of Brazil. Some hedge funds make huge profits, but others go broke and cause serious problems.
University of Maryland professor Michael Greenberger
University of Maryland Law professor and former financial regulator Michael Greenberger says regulators, members of Congress and others have been taking a close look at hedge funds
"There is beginning to be a concern about the impact of hedge funds on the economy and a movement toward doing something about that," Greenberger says.
A hedge fund is a pool of investment money collected from individual investors or institutions by a fund manager and invested on their behalf. The aim is to make money by finding stocks, companies or other things that are undervalued and buying them. Or fund managers may find other assets that are overpriced and make an investment bet that the price will go down.
Only a limited number of large, wealthy and presumably sophisticated investors are permitted to join hedge funds. So these investment vehicles face less regulation and have to disclose less information than other investments, such as mutual funds.
And hedge funds are allowed to use much more aggressive – and risky – strategies than mutual funds. For example, hedge funds can borrow stock or money to increase their investments. That makes greater profits possible, but also exposes the fund to greater losses.
If the investments go bad, then the fund might not be able to repay the loan, which could put the lender out of business.
Professor Greenberger warns that if a number of large hedge funds collapse at once, both the investors as well as the institutions that loaned money to the fund are hurt – and this could create a ripple effect throughout the financial system. He says this nearly happened in the late 1990's.
"The granddaddy of calamities of hedge funds was the 1998 near-collapse of Long Term Capital Management,” he says. “It was at the time, the world's largest hedge fund. The conventional wisdom of that time was that if it failed in the long term, it would have caused terrific systemic collapse in the American economy. It was not too far-fetched for people at that time to be talking about depression, economic depression."
Investment adviser Bill Mann of The Motley Fool company says the funds can sometimes use their huge pool of investment money to unfairly manipulate the market price of commodities, stocks, or other investments.
For instance, things like crude oil, Asian currencies, or some stocks.
Investment adviser Bill Mann
"They absolutely could manipulate the market and I think it is important to note that in all likelihood, they do manipulate the market," he says.
Mann says an unscrupulous hedge fund manager could drive down the stock price of a company he wants to buy by spreading false reports that the company has problems. Or a fund could sell large quantities of a particular stock, flooding the market and driving down the price, and then quickly buying up every available share at a lower price.
Some legislators and experts say governments should regulate hedge funds more closely and require them to disclose more about their actions to discourage improper behavior.
But some hedge fund managers say there are plenty of laws that already ban activities such as fraud and insider trading. George Mason University researcher Houman Shadab says it would be unwise to force hedge funds to disclose secret trading strategies.
"It would be like forcing a cook or chef to reveal his secret recipes, the things that give him a competitive advantage over other hedge fund managers," he says.
Shadab says hedge funds make markets more liquid by increasing the number of investors bidding on stocks and other assets.
Top U.S. Bush administration economic officials recently examined the issues surrounding hedge funds and decided against major changes in regulations that govern them. European officials are said to still be considering stronger regulations for hedge funds.
US Invests Massively in Biofuel, but Benefits Uncertain
The quest for a fuel that will both reduce air pollution and U.S. dependence on imported energy has led to massive investments in ethanol and other fuels produced from plants. Backers of programs to develop such energy resources include farmers and agricultural enterprises that see bigger profits as demand for corn, soybeans and other crops increases. But, as VOA's Greg Flakus reports from Houston, critics say the promise of biofuels is mostly hype.
U.S. ethanol is made from corn
Depending on who is speaking, ethanol and other biofuels are either the future of energy and the answer to air pollution or a false promise that diverts attention from finding real solutions to both our energy and environmental problems.
The biggest biofuel industry is that of ethanol, an alcohol additive that is produced from fermenting plant material. In the United States, most ethanol is produced from corn and, not surprisingly, corn farmers and politicians who represent corn-growing states are big backers of ethanol.
It is generally agreed that ethanol would be too costly for consumers if it were not heavily subsidized. But Kristin Brekke of the Sioux Falls, South Dakota-based American Coalition for Ethanol argues that the government should support alternative energy producers.
"The petroleum industry is certainly subsidized 10 times as much as the ethanol industry is," said Kristin Brekke. "Ethanol is really proving to be a promising alternative and, given the question of how long oil supplies will be around and environmental impacts being on people's minds as well, I think it is right that we are investing in the future, which is renewable fuels."
Ethanol plant
The US government gave ethanol a further boost last year when a commonly used oil additive was banned for environmental reasons and oil companies expanded the availability of a blend of ethanol and gasoline.
In response to increased ethanol production, there has been a 15 percent increase in corn production nationwide and even farmers in parts of the country where corn has not been a traditional crop are now starting to grow it.
But Kristin Brekke says this is a momentary situation that will be eased as soon as ethanol producers are able to produce fuel from other organic material, including waste products containing cellulose. That, she says, is when the true potential of this renewable energy source will be realized.
"The corn that could be used for ethanol here in the United States, without displacing those other needs as well, if you add to that, too, the potential of cellulosic ethanol, over the long term, those two things together could displace about half of the gasoline we currently use," she said.
One of the chief critics of this rosy scenario is Cornell University ecologist David Pimentel, whose studies of ethanol and other biofuels call into question their efficacy.
"Even using the Department of Energy's optimistic numbers, they claim we used 20 percent of the corn last year to produce five billion gallons of ethanol," said David Pimentel. "What does five billion gallons mean to petroleum use in the United States? It is less than one percent. If we use 100 percent of the corn, which would be an impossibility, to produce ethanol, it would produce seven percent."
Professor Pimentel also rejects the benefit to the environment that ethanol supporters often cite because the fuel produces far less harmful emissions than do fossil fuels. He says it is important to look at the effects of a massive increase in corn production as well.
"Corn production, for example, causes more erosion than any other single crop grown in the nation," he said. "It uses more nitrogen fertilizer than any other crop and that nitrogen fertilizer gets washed down the Mississippi. The National Academy of Sciences reports that corn production is the prime cause of that dead zone down in the Gulf of Mexico."
Pimentel and his research partner Tad Patzek have also done studies showing that, when all production efforts are factored in, it takes 29 percent more fossil fuel energy to produce a quantity of ethanol than the energy it provides. The study shows there is a similar ratio for producing bio-diesel from soybeans and other agricultural products.
But other recent studies have contradicted those findings. Douglas Tiffany, an economist at the University of Minnesota, worked on one such study.
"We were very thorough and looked at all the energy inputs," said Douglas Tiffany. "Our results conformed to the results of Argonne National Lab and some others that show a positive energy balance from the production of both ethanol and biodiesel."
But the University of Minnesota study also showed that some plant material may be better suited than corn for fuel production and that biodiesel may hold more promise than ethanol. The Minnesota researchers coincided with the Cornell study in saying that bio-fuels are not likely to reduce oil consumption to any significant degree. Still, Tiffany says, the rising cost of petroleum on the world market will keep interest alive in bio-fuel programs.
"There is strong incentive to do these bio-fuels when we have high crude oil prices," he said. "So, in some ways, it is the price of crude oil that is pushing a lot of this development. The question is should it be under control or should governments apply judicious targets?"
Critics like Cornell's David Pimentel, however, argue that the proper response to higher crude oil prices should be increased conservation and the development of other forms of energy that show more promise of being cost effective.
U.S. ethanol is made from corn
Depending on who is speaking, ethanol and other biofuels are either the future of energy and the answer to air pollution or a false promise that diverts attention from finding real solutions to both our energy and environmental problems.
The biggest biofuel industry is that of ethanol, an alcohol additive that is produced from fermenting plant material. In the United States, most ethanol is produced from corn and, not surprisingly, corn farmers and politicians who represent corn-growing states are big backers of ethanol.
It is generally agreed that ethanol would be too costly for consumers if it were not heavily subsidized. But Kristin Brekke of the Sioux Falls, South Dakota-based American Coalition for Ethanol argues that the government should support alternative energy producers.
"The petroleum industry is certainly subsidized 10 times as much as the ethanol industry is," said Kristin Brekke. "Ethanol is really proving to be a promising alternative and, given the question of how long oil supplies will be around and environmental impacts being on people's minds as well, I think it is right that we are investing in the future, which is renewable fuels."
Ethanol plant
The US government gave ethanol a further boost last year when a commonly used oil additive was banned for environmental reasons and oil companies expanded the availability of a blend of ethanol and gasoline.
In response to increased ethanol production, there has been a 15 percent increase in corn production nationwide and even farmers in parts of the country where corn has not been a traditional crop are now starting to grow it.
But Kristin Brekke says this is a momentary situation that will be eased as soon as ethanol producers are able to produce fuel from other organic material, including waste products containing cellulose. That, she says, is when the true potential of this renewable energy source will be realized.
"The corn that could be used for ethanol here in the United States, without displacing those other needs as well, if you add to that, too, the potential of cellulosic ethanol, over the long term, those two things together could displace about half of the gasoline we currently use," she said.
One of the chief critics of this rosy scenario is Cornell University ecologist David Pimentel, whose studies of ethanol and other biofuels call into question their efficacy.
"Even using the Department of Energy's optimistic numbers, they claim we used 20 percent of the corn last year to produce five billion gallons of ethanol," said David Pimentel. "What does five billion gallons mean to petroleum use in the United States? It is less than one percent. If we use 100 percent of the corn, which would be an impossibility, to produce ethanol, it would produce seven percent."
Professor Pimentel also rejects the benefit to the environment that ethanol supporters often cite because the fuel produces far less harmful emissions than do fossil fuels. He says it is important to look at the effects of a massive increase in corn production as well.
"Corn production, for example, causes more erosion than any other single crop grown in the nation," he said. "It uses more nitrogen fertilizer than any other crop and that nitrogen fertilizer gets washed down the Mississippi. The National Academy of Sciences reports that corn production is the prime cause of that dead zone down in the Gulf of Mexico."
Pimentel and his research partner Tad Patzek have also done studies showing that, when all production efforts are factored in, it takes 29 percent more fossil fuel energy to produce a quantity of ethanol than the energy it provides. The study shows there is a similar ratio for producing bio-diesel from soybeans and other agricultural products.
But other recent studies have contradicted those findings. Douglas Tiffany, an economist at the University of Minnesota, worked on one such study.
"We were very thorough and looked at all the energy inputs," said Douglas Tiffany. "Our results conformed to the results of Argonne National Lab and some others that show a positive energy balance from the production of both ethanol and biodiesel."
But the University of Minnesota study also showed that some plant material may be better suited than corn for fuel production and that biodiesel may hold more promise than ethanol. The Minnesota researchers coincided with the Cornell study in saying that bio-fuels are not likely to reduce oil consumption to any significant degree. Still, Tiffany says, the rising cost of petroleum on the world market will keep interest alive in bio-fuel programs.
"There is strong incentive to do these bio-fuels when we have high crude oil prices," he said. "So, in some ways, it is the price of crude oil that is pushing a lot of this development. The question is should it be under control or should governments apply judicious targets?"
Critics like Cornell's David Pimentel, however, argue that the proper response to higher crude oil prices should be increased conservation and the development of other forms of energy that show more promise of being cost effective.
Biofuels Boom Raises Concerns about Global Farming
The leaders of Cuba and Venezuela, are criticizing President Bush's recent call to increase biofuel production, because of what they say is the potential impact on food supplies beyond U.S. borders. VOA's Brian Wagner in Miami looks at how the drive for biofuels is changing agriculture in several countries that have embraced the trend, sometimes for the better, sometimes not.
U.S. ethanol is made from corn
In a pair of editorials in the Cuban state-run newspaper, ailing Cuban leader Fidel Castro lashed out at the United States for threatening global food supplies. The writings were his first since he withdrew from his leadership duties in July, as he underwent surgery, and they suggest he may be returning to his political duties. In the editorial, Mr. Castro complained that U.S. policies are driving up the price of food staples like corn.
Venezuela's president, Hugo Chavez, also has criticized U.S. plans to increase ethanol production, saying it will take away food from the poor to, in his words, fuel "rich people's cars."
U.S. officials have not responded to the claims from Mr. Chavez or Mr. Castro, who are frequent critics of U.S. policy.
But Jorge Pinon, the former president of Amoco Oil's Latin American operations, says the attacks are entirely political.
"I think people are just making more of this issue than there really is," he explained. "It's politically motivated, because in no way is it going to take food out of the mouths of the world's poor."
Instead, Pinon says sugar-producing countries like Cuba should embrace the trend, and begin producing more sugar for the regional ethanol market. In Brazil, ethanol made from sugar cane is now widely available for automobiles, while corn is the basis of the U.S. program.
Around the region, farmers are hoping to take advantage of the increasing demand for crops used to make ethanol, and they are starting to see higher prices for their goods, says Sarah Ladislaw, a fellow in the energy program at the Center for Strategic and International Studies in Washington.
"Is ethanol demand in the United States right now putting an upward pressure on corn prices? I think it is," he said. "But what you're seeing in turn, is that corn farmers are planning on producing a lot more corn in the next few years to keep up with that demand."
This year, U.S. farmers are expected to increase land used to raise corn by 15 percent, says Ford Runge, director of the Center for International Food and Agricultural Policy at the University of Minnesota. The result is that vegetable sellers are beginning to have trouble finding farmers to grow sweet corn, beans and other foods.
"They can't get anybody to grow those things this year, because everyone wants to grow corn for ethanol," he noted. "So, that's going to drive the prices of those products up, as well."
Runge says the rising prices of corn and other foods will hurt American consumers, but the impact on global prices will be even more serious for people in poor nations. Already, higher prices of corn for the corn-based staple, tortillas, have sparked protests in Mexico.
U.S. officials say crop-based ethanol is only one part of the current plan to expand alternative energy sources aimed at lowering the nation's dependence on imported oil. President Bush has also called for more research into producing cellulosic ethanol from switchgrass and other products that are not part of the food supply.
Ford Runge says the technology behind cellulosic ethanol is still a few years away.
"Although cellulosic alternatives are important, and potentially feasible in the next five, or more likely 10 years, they really don't respond to the immediate crisis being created by the corn and soybean-based craze," he explained.
Runge and other experts say one important way to reduce pressure on crop prices is to cut government subsidies to millions of U.S. farmers. The Bush administration is backing a current bill in Congress that would end payments to some farmers. But lawmakers are expected to resist any efforts to make broad cuts to farm subsidy programs. The issue has been a major sticking point in World Trade Organization negotiations.
U.S. ethanol is made from corn
In a pair of editorials in the Cuban state-run newspaper, ailing Cuban leader Fidel Castro lashed out at the United States for threatening global food supplies. The writings were his first since he withdrew from his leadership duties in July, as he underwent surgery, and they suggest he may be returning to his political duties. In the editorial, Mr. Castro complained that U.S. policies are driving up the price of food staples like corn.
Venezuela's president, Hugo Chavez, also has criticized U.S. plans to increase ethanol production, saying it will take away food from the poor to, in his words, fuel "rich people's cars."
U.S. officials have not responded to the claims from Mr. Chavez or Mr. Castro, who are frequent critics of U.S. policy.
But Jorge Pinon, the former president of Amoco Oil's Latin American operations, says the attacks are entirely political.
"I think people are just making more of this issue than there really is," he explained. "It's politically motivated, because in no way is it going to take food out of the mouths of the world's poor."
Instead, Pinon says sugar-producing countries like Cuba should embrace the trend, and begin producing more sugar for the regional ethanol market. In Brazil, ethanol made from sugar cane is now widely available for automobiles, while corn is the basis of the U.S. program.
Around the region, farmers are hoping to take advantage of the increasing demand for crops used to make ethanol, and they are starting to see higher prices for their goods, says Sarah Ladislaw, a fellow in the energy program at the Center for Strategic and International Studies in Washington.
"Is ethanol demand in the United States right now putting an upward pressure on corn prices? I think it is," he said. "But what you're seeing in turn, is that corn farmers are planning on producing a lot more corn in the next few years to keep up with that demand."
This year, U.S. farmers are expected to increase land used to raise corn by 15 percent, says Ford Runge, director of the Center for International Food and Agricultural Policy at the University of Minnesota. The result is that vegetable sellers are beginning to have trouble finding farmers to grow sweet corn, beans and other foods.
"They can't get anybody to grow those things this year, because everyone wants to grow corn for ethanol," he noted. "So, that's going to drive the prices of those products up, as well."
Runge says the rising prices of corn and other foods will hurt American consumers, but the impact on global prices will be even more serious for people in poor nations. Already, higher prices of corn for the corn-based staple, tortillas, have sparked protests in Mexico.
U.S. officials say crop-based ethanol is only one part of the current plan to expand alternative energy sources aimed at lowering the nation's dependence on imported oil. President Bush has also called for more research into producing cellulosic ethanol from switchgrass and other products that are not part of the food supply.
Ford Runge says the technology behind cellulosic ethanol is still a few years away.
"Although cellulosic alternatives are important, and potentially feasible in the next five, or more likely 10 years, they really don't respond to the immediate crisis being created by the corn and soybean-based craze," he explained.
Runge and other experts say one important way to reduce pressure on crop prices is to cut government subsidies to millions of U.S. farmers. The Bush administration is backing a current bill in Congress that would end payments to some farmers. But lawmakers are expected to resist any efforts to make broad cuts to farm subsidy programs. The issue has been a major sticking point in World Trade Organization negotiations.
India to Proceed With Controversial Economic Zones, but With New
The Indian government has lifted a temporary ban on establishment of special economic zones, but says farmers will not be forced to give up their land for the enclaves. As Anjana Pasricha reports from New Delhi, the economic zones had run into trouble after massive protests by farmers angry at having their land taken.
The government says that industries wanting to establish special economic zones can go ahead with their plans. But it has set new rules.
Kamal Nath
Industry and Commerce Minister Kamal Nath says developers will have to negotiate directly with landowners to acquire land for the industrial parks, also called SEZ's.
"In respect of pending applications, these may be processed, subject to the condition that state governments would not undertake any compulsory acquisition of land for such SEZ's," he said.
The government also slashed the maximum size of the zones by half to 5,000 hectares.
The new rules were announced weeks after violent clashes between police and farmers who had vowed not to give up their land earmarked for a petrochemical hub in West Bengal state. Fourteen people died in the protests.
The ruling Congress Party became uneasy after farmers in other parts of the country also expressed reservations about parting with their land for the zones. Many said they would be robbed of a livelihood and others complained they were not being given a fair price for their land.
The government drafted its SEZ policy last year to boost industrialization by providing domestic and foreign investors with tax-free havens. Supporters of the idea say factories in the zones would take India's economic boom and jobs to the countryside, where poverty is still widespread.
Critics describe them as a disaster, saying farmland should not be used for industry in a country where two-thirds of the population lives off agriculture.
D.H. Pai Panindiker heads an economic research center, the RPG Goenka Foundation. He says the new government standards will make it more difficult to develop special economic zones, because it is not easy to acquire large tracts of land without the government's involvement.
"The project itself will become unviable, because farmers will quote a very high price and once a part of the land is acquired, to get the remaining adjacent land will become a big problem. The same problem was seen in the case of highways, acquisition of land became a major problem, and it was the governments which had to acquire the land," said Panindiker.
Sixty-three special economic zones have been approved, more than 80 are expected to be cleared soon, and many others are in the planning stages. The government estimates these zones will generate more than one million jobs by 2009.
The government says that industries wanting to establish special economic zones can go ahead with their plans. But it has set new rules.
Kamal Nath
Industry and Commerce Minister Kamal Nath says developers will have to negotiate directly with landowners to acquire land for the industrial parks, also called SEZ's.
"In respect of pending applications, these may be processed, subject to the condition that state governments would not undertake any compulsory acquisition of land for such SEZ's," he said.
The government also slashed the maximum size of the zones by half to 5,000 hectares.
The new rules were announced weeks after violent clashes between police and farmers who had vowed not to give up their land earmarked for a petrochemical hub in West Bengal state. Fourteen people died in the protests.
The ruling Congress Party became uneasy after farmers in other parts of the country also expressed reservations about parting with their land for the zones. Many said they would be robbed of a livelihood and others complained they were not being given a fair price for their land.
The government drafted its SEZ policy last year to boost industrialization by providing domestic and foreign investors with tax-free havens. Supporters of the idea say factories in the zones would take India's economic boom and jobs to the countryside, where poverty is still widespread.
Critics describe them as a disaster, saying farmland should not be used for industry in a country where two-thirds of the population lives off agriculture.
D.H. Pai Panindiker heads an economic research center, the RPG Goenka Foundation. He says the new government standards will make it more difficult to develop special economic zones, because it is not easy to acquire large tracts of land without the government's involvement.
"The project itself will become unviable, because farmers will quote a very high price and once a part of the land is acquired, to get the remaining adjacent land will become a big problem. The same problem was seen in the case of highways, acquisition of land became a major problem, and it was the governments which had to acquire the land," said Panindiker.
Sixty-three special economic zones have been approved, more than 80 are expected to be cleared soon, and many others are in the planning stages. The government estimates these zones will generate more than one million jobs by 2009.
Boeing Orders Up on Commercial and Fuel Efficient Jets
After years of lagging behind European rival Airbus, Boeing says 2007 is shaping up to be a very good year. The Chicago based airplane manufacturer says it delivered more than 100 commercial airplanes in the first three months of the year. And this week, the company celebrated orders for its new line of fuel-efficient jets. VOA's Mil Arcega reports.
Thousands of Boeing employees gathered at a hangar in Everett, Washington to hear the big news: a record 500 orders for a new jet that has not even rolled off the production lines yet.
General manager, Mike Bair says it is unprecedented. "It's absolutely unprecedented. It's never happened in commercial aviation before."
Mike Bair, general manager of Boeing's 787 Dreamliner program
Mike Bair is the general manager of Boeing's 787 Dreamliner program. He says interest in the company's new line of fuel-efficient jets is extremely high. Brian King heads the company's airplane integration team. He says the plane appeals to energy conscious customers because the lighter planes burn 20 percent less fuel than comparably sized aircraft.
Brian King, Boeing Airplane Integration Team says, "Actually this is what airline customers are looking to do -- is try to cut down on their economy, get a fuel economical airplane and lightened load and this is actually going to do that."
But the success of the new plane brings new challenges for Boeing which is looking at ways to speed up production. Bair says the first planes will roll off the production line in July.
Bair believes the growth will continue, "We'll be building this plane for 20 or 30 years. It's not going to end at 500, so the orders will keep coming and this airplane will be in production for a long time,"
That is good news for assemblers such as Roger Cook. Every 787 that comes out of the production line is already sold until 2012. "I'm a contractor so it may mean a longer period of employment."
The orders cap a lucrative first quarter for Boeing, which announced delivery of 106 commercial airplanes in the first three months of 2007 -- its highest total in nearly five years. It also comes on the heels of rival Airbus's launch of its super-sized jumbo A380s, following costly production delays.
Thousands of Boeing employees gathered at a hangar in Everett, Washington to hear the big news: a record 500 orders for a new jet that has not even rolled off the production lines yet.
General manager, Mike Bair says it is unprecedented. "It's absolutely unprecedented. It's never happened in commercial aviation before."
Mike Bair, general manager of Boeing's 787 Dreamliner program
Mike Bair is the general manager of Boeing's 787 Dreamliner program. He says interest in the company's new line of fuel-efficient jets is extremely high. Brian King heads the company's airplane integration team. He says the plane appeals to energy conscious customers because the lighter planes burn 20 percent less fuel than comparably sized aircraft.
Brian King, Boeing Airplane Integration Team says, "Actually this is what airline customers are looking to do -- is try to cut down on their economy, get a fuel economical airplane and lightened load and this is actually going to do that."
But the success of the new plane brings new challenges for Boeing which is looking at ways to speed up production. Bair says the first planes will roll off the production line in July.
Bair believes the growth will continue, "We'll be building this plane for 20 or 30 years. It's not going to end at 500, so the orders will keep coming and this airplane will be in production for a long time,"
That is good news for assemblers such as Roger Cook. Every 787 that comes out of the production line is already sold until 2012. "I'm a contractor so it may mean a longer period of employment."
The orders cap a lucrative first quarter for Boeing, which announced delivery of 106 commercial airplanes in the first three months of 2007 -- its highest total in nearly five years. It also comes on the heels of rival Airbus's launch of its super-sized jumbo A380s, following costly production delays.
Investigators Probe What May Be US Largest Theft of Consumer
TJX, the parent company of a discount retail chain that includes TJ Maxx and Marshalls stores says it learned of a security breach involving the theft of 45 million credit and debit card numbers last December. But documents filed by Florida investigators claim the company was aware that its computer system had been compromised nearly nine months earlier. Security experts say the timing is important because an earlier warning would have given customers more time to protect themselves in what is now believed to be the largest theft of consumer data in U.S. history. VOA's Mil Arcega reports.
Fraudulent documents
The TJX Companies, which owns about 2,500 stores in the United States, says most of the stolen information was of no use to thieves. TJX says when the thefts were discovered – nearly three-quarters of the data had expired and some of the card numbers had been electronically masked.
But that was little comfort for some customers of the discount chain. "I don't feel secure shopping at T.J.Maxx with credit any more. Cash only, " says one shopper. Another says "It's not worth it. You save a little but the risk is way too high."
Officials say hackers broke into the company's computers at two sites: The TJX headquarters in Framingham, Massachusetts, and an office in Watford, England. For two years, the hackers downloaded personal information from millions of credit and debit cardholders. Former prosecutor Mark Rasch blames TJX.
Former prosecutor Mark Rasch
"The bad guys got in and owned them,” he says. “They had their encrypted data, they had their credit card data. And it is hard to believe they could have done that if somebody hadn't messed up at TJX."
The thefts came to light after the arrest of several people at a Florida Walmart. Investigators don't believe the group committed the thefts, but they say that they may have used stolen card numbers to buy $1 million worth of gift certificates.
Mike Vitas is the former head of the Federal Bureau of Investigation's Cyber Unit. He says the crooks are getting better.
"And the good guys are not doing a good enough job to bolster their defenses quickly enough to deal with the increasing attacks that they're seeing," he says.
The investigation is now looking at when the company knew about the security breach. Recent documents filed by Florida police suggest the company was aware that unauthorized software had been placed in its systems as early as March 2006. TJX officials say that information is incorrect.
Fraudulent documents
The TJX Companies, which owns about 2,500 stores in the United States, says most of the stolen information was of no use to thieves. TJX says when the thefts were discovered – nearly three-quarters of the data had expired and some of the card numbers had been electronically masked.
But that was little comfort for some customers of the discount chain. "I don't feel secure shopping at T.J.Maxx with credit any more. Cash only, " says one shopper. Another says "It's not worth it. You save a little but the risk is way too high."
Officials say hackers broke into the company's computers at two sites: The TJX headquarters in Framingham, Massachusetts, and an office in Watford, England. For two years, the hackers downloaded personal information from millions of credit and debit cardholders. Former prosecutor Mark Rasch blames TJX.
Former prosecutor Mark Rasch
"The bad guys got in and owned them,” he says. “They had their encrypted data, they had their credit card data. And it is hard to believe they could have done that if somebody hadn't messed up at TJX."
The thefts came to light after the arrest of several people at a Florida Walmart. Investigators don't believe the group committed the thefts, but they say that they may have used stolen card numbers to buy $1 million worth of gift certificates.
Mike Vitas is the former head of the Federal Bureau of Investigation's Cyber Unit. He says the crooks are getting better.
"And the good guys are not doing a good enough job to bolster their defenses quickly enough to deal with the increasing attacks that they're seeing," he says.
The investigation is now looking at when the company knew about the security breach. Recent documents filed by Florida police suggest the company was aware that unauthorized software had been placed in its systems as early as March 2006. TJX officials say that information is incorrect.
Disappearing Honeybees Concern Beekeepers and Farmers
Farmers in the United States say they are growing increasingly concerned about a mysterious shortage of honeybees. The U.S. government says it is investigating a dramatic decline in the bee population over recent months, and Congress has held a hearing on the issue. Bees are used not only to produce honey, but many crops depend on the tiny creatures for the pollination process. Steve Mort reports from a honey farm in the southern U.S. state of Florida.
Deep in the heart of rural America, farmers are talking about a crisis. At the root of the problem – a lack of honeybees.
Beekeeper David Hackenberg owns the Buffy Bee honey farm outside Tampa, Florida. He says he has lost as many as two-thirds of his beehives within a matter of weeks.
"It seems to be something brand new,” he says. “We've seen colonies disappear in the past, but the strange thing about this is the fact that we've got empty boxes that look just like somebody's swept the bees out of them."
The bees are vanishing due to something called Colony Collapse Disorder. Hackenberg's business, based in Florida and Pennsylvania, relies on making honey and renting bees to farmers to pollinate their crops.
Beekeeper David Hackenberg
"We're looking at a $350,000 loss,” Hackenberg says. “With what it's going to cost to replace the bees, lost pollination contracts, lost honey crops, you're talking a big, serious financial loss."
The exact cause of Colony Collapse Disorder is a mystery. But scientists at Pennsylvania State University are leading research into the phenomenon.
The university's Colony Collapse Disorder Working Group says poor nutrition, drought and pesticide use can cause extraordinary stress on bees.
That stress, the group believes, may damage the bees' immune systems – much like AIDS in humans.
Meanwhile, scientists with the U.S. Agriculture Department point to bugs called verroa mites. They kill bees by transmitting viruses.
Jerry Turner runs a honey farm near Orlando, Florida. He says the mites have become resistant to the insecticides used to kill them.
"You try to build your bees up to make honey and you put a lot of money and time and effort into them and then they start dying out,” he says. “These mites, they carry the viruses and such and the bees just start dying. And you try to make them up and increase your numbers again and you get kicked again."
But it is not just beekeepers who are suffering. A Cornell University study has found that bees pollinate $14 billion worth of seeds and crops in the United States.
Carl Grooms owns Fancy Farms in Plant City, Florida, where he grows a variety of fruits and vegetables.
Farmer Carl Grooms
"If I weren't able to lease hives of bees to put next to my squash crops, I wouldn't plant them because there's not enough natural bees to pollinate them,” he says. “Cantaloupes [are] raised quite extensively here – that and water melon. You've got to have bees for those, and obviously if you're a big grower of those items you would decide real quick if there [were] no bees to rent, you would not plant them – and we're facing that".
The U.S. Congress recently held a hearing on Colony Collapse Disorder, and lawmakers agreed to push for more government funding for research.
Pennsylvania State University experts told the hearing that a move last year to allow imported Australian bees to service California's almond crop may have introduced a new bee disease to the United States.
David Hackenberg attended the Washington hearing. He says millions of dollars is needed to fund research.
But in Florida, local lawmakers have given only around $300,000 over the last two years.
And Hackenberg says by the time enough money arrives, it may be too late to stop hundreds of beekeepers from closing their operations.
Deep in the heart of rural America, farmers are talking about a crisis. At the root of the problem – a lack of honeybees.
Beekeeper David Hackenberg owns the Buffy Bee honey farm outside Tampa, Florida. He says he has lost as many as two-thirds of his beehives within a matter of weeks.
"It seems to be something brand new,” he says. “We've seen colonies disappear in the past, but the strange thing about this is the fact that we've got empty boxes that look just like somebody's swept the bees out of them."
The bees are vanishing due to something called Colony Collapse Disorder. Hackenberg's business, based in Florida and Pennsylvania, relies on making honey and renting bees to farmers to pollinate their crops.
Beekeeper David Hackenberg
"We're looking at a $350,000 loss,” Hackenberg says. “With what it's going to cost to replace the bees, lost pollination contracts, lost honey crops, you're talking a big, serious financial loss."
The exact cause of Colony Collapse Disorder is a mystery. But scientists at Pennsylvania State University are leading research into the phenomenon.
The university's Colony Collapse Disorder Working Group says poor nutrition, drought and pesticide use can cause extraordinary stress on bees.
That stress, the group believes, may damage the bees' immune systems – much like AIDS in humans.
Meanwhile, scientists with the U.S. Agriculture Department point to bugs called verroa mites. They kill bees by transmitting viruses.
Jerry Turner runs a honey farm near Orlando, Florida. He says the mites have become resistant to the insecticides used to kill them.
"You try to build your bees up to make honey and you put a lot of money and time and effort into them and then they start dying out,” he says. “These mites, they carry the viruses and such and the bees just start dying. And you try to make them up and increase your numbers again and you get kicked again."
But it is not just beekeepers who are suffering. A Cornell University study has found that bees pollinate $14 billion worth of seeds and crops in the United States.
Carl Grooms owns Fancy Farms in Plant City, Florida, where he grows a variety of fruits and vegetables.
Farmer Carl Grooms
"If I weren't able to lease hives of bees to put next to my squash crops, I wouldn't plant them because there's not enough natural bees to pollinate them,” he says. “Cantaloupes [are] raised quite extensively here – that and water melon. You've got to have bees for those, and obviously if you're a big grower of those items you would decide real quick if there [were] no bees to rent, you would not plant them – and we're facing that".
The U.S. Congress recently held a hearing on Colony Collapse Disorder, and lawmakers agreed to push for more government funding for research.
Pennsylvania State University experts told the hearing that a move last year to allow imported Australian bees to service California's almond crop may have introduced a new bee disease to the United States.
David Hackenberg attended the Washington hearing. He says millions of dollars is needed to fund research.
But in Florida, local lawmakers have given only around $300,000 over the last two years.
And Hackenberg says by the time enough money arrives, it may be too late to stop hundreds of beekeepers from closing their operations.
Iraq's Northern Kurdish Area Offers Business Opportunities
Few foreign companies, aside from those dealing directly with the military, are contemplating business in Iraq until the security situation improves. Yet despite the violence, U.S. officials say opportunities do exist, primarily in the semi-autonomous northern Kurdish region where the economy is expanding rapidly. As VOA's Bill Rodgers reports, U.S. officials are touting the northern Kurdistan area as a gateway for eventually doing business in the rest of the country.
Construction in Iraq's northern Kurdish region
Construction is one sign of the economic boom in Iraq's northern Kurdish region, where cranes tower over mosques in the region's capital city of Irbil.
Construction and other business activities are helping the economy there expand by an estimated 10 percent a year, according to Commerce Department Undersecretary Frank Lavin.
At a recent Washington seminar, Lavin urged American companies to consider operating from Iraq's northern Kurdistan area - a strategy he called the Northern Gateway Initiative.
"If you're a U.S. company and you are thinking about an Iraq strategy," said Lavin, "think about the Kurdistan region as a possible gateway for Iraq, because the security situation is in hand there. You do have broad latitude for business decision-making. It is easier to expand, build and hire and so forth, and it can be a reasonable platform for serving the rest of Iraq."
Frank Lavin
While no American manufacturers have established themselves in the Kurdish region, American products are available in markets, trucked in from Turkey. Lavin believes the region is ripe for foreign investment.
"What they need right away is oil refinery and power generation," noted Lavin. "But there's an enormous reconstruction and retail boom underway. Almost anything you could sell in Turkey or Kuwait, you could sell in the Kurdistan region."
Iraq's huge petroleum reserves accounted for much of the country's nearly $30 billion in export earnings last year, and oil will be the main attraction for potential foreign investors. The petrochemical sector especially offers promising business opportunities, but only if the violence that rocks parts of the country comes to an end.
Lavin acknowledges that foreign investment will remain non-existent until Iraqis stop the violence. "I think they've got to come to terms with it. I think they've got to get their arms around it because businesses will go elsewhere," he said. "Businesses need a secure operating environment, and if they don't have confidence that is the direction Iraq is headed, they're going to put their efforts elsewhere."
In the meantime, Lavin and other U.S. officials are urging the Iraqi government to enact an investment law to prepare for the day when American and other foreign companies may want to do business in Iraq.
Construction in Iraq's northern Kurdish region
Construction is one sign of the economic boom in Iraq's northern Kurdish region, where cranes tower over mosques in the region's capital city of Irbil.
Construction and other business activities are helping the economy there expand by an estimated 10 percent a year, according to Commerce Department Undersecretary Frank Lavin.
At a recent Washington seminar, Lavin urged American companies to consider operating from Iraq's northern Kurdistan area - a strategy he called the Northern Gateway Initiative.
"If you're a U.S. company and you are thinking about an Iraq strategy," said Lavin, "think about the Kurdistan region as a possible gateway for Iraq, because the security situation is in hand there. You do have broad latitude for business decision-making. It is easier to expand, build and hire and so forth, and it can be a reasonable platform for serving the rest of Iraq."
Frank Lavin
While no American manufacturers have established themselves in the Kurdish region, American products are available in markets, trucked in from Turkey. Lavin believes the region is ripe for foreign investment.
"What they need right away is oil refinery and power generation," noted Lavin. "But there's an enormous reconstruction and retail boom underway. Almost anything you could sell in Turkey or Kuwait, you could sell in the Kurdistan region."
Iraq's huge petroleum reserves accounted for much of the country's nearly $30 billion in export earnings last year, and oil will be the main attraction for potential foreign investors. The petrochemical sector especially offers promising business opportunities, but only if the violence that rocks parts of the country comes to an end.
Lavin acknowledges that foreign investment will remain non-existent until Iraqis stop the violence. "I think they've got to come to terms with it. I think they've got to get their arms around it because businesses will go elsewhere," he said. "Businesses need a secure operating environment, and if they don't have confidence that is the direction Iraq is headed, they're going to put their efforts elsewhere."
In the meantime, Lavin and other U.S. officials are urging the Iraqi government to enact an investment law to prepare for the day when American and other foreign companies may want to do business in Iraq.
Key Trade Ministers Fail to Achieve Breakthrough on Global Trade
Ministers from six key economies failed to clinch a world trade liberalization deal Thursday, but, after a meeting in New Delhi, have proposed a new deadline to complete the negotiations. VOA's Steve Herman reports from New Delhi.
With six trade ministers from major economic powers in one room there was anticipation of a breakthrough for stalled talks on liberalizing global commerce.
Celso Amorim
When they emerged late Thursday to face reporters in a New Delhi hotel, Brazil's foreign minister Celso Amorim announced no breakthrough, but some progress.
"No breakthrough reached in New Delhi - that's probably the headline tomorrow," he said. "[But] I do believe that we had, well, if not exactly a breakthrough, a big step ahead in terms of process."
The ministers from Australia, Brazil, the European Union, India, Japan and the United States announced that they agreed to try by the end of the year to conclude the so-called Doha round of 150-member World Trade Organization talks.
U.S. trade representative Susan Schwab
U.S. trade representative Susan Schwab says top trade officials now have a sense of urgency that hopefully can be translated into action.
"Unfortunately the history of the Doha Round up to this point has been the setting of artificial deadlines and the failure to meet those deadlines," she said.
The United States has resisted making deeper cuts to subsidies for American farmers. That has prompted the Europeans to hold firm on protecting their farmers.
On the other hand, the U.S. and European Union want countries such as Brazil and India to further open their booming domestic markets to manufactured goods and agricultural imports.
Australia's trade minister Warren Truss
Australia's trade minister, Warren Truss, says Washington and Brussels should not be expected to make all the concessions.
"We can't expect the Americans or the Europeans to do it all. India will have to do something. Australia will have to do something," said Truss. "The world will have to develop a spirit of compromise to achieve something that is very important."
In another sign of the distance still to be traveled, India's commerce and industries minister Kamal Nath told reporters his country will not compromise the interests of millions of its subsistence farmers.
U.S. President Bush has special powers to negotiate a trade deal. But those so-called "fast track" powers expire June 30 unless Congress extends them.
Some negotiators say an international agreement is needed before then in order to encourage U.S. lawmakers to extend the president's authority, which would allow him to present the Congress with a trade pact for a straight up or down vote.
With six trade ministers from major economic powers in one room there was anticipation of a breakthrough for stalled talks on liberalizing global commerce.
Celso Amorim
When they emerged late Thursday to face reporters in a New Delhi hotel, Brazil's foreign minister Celso Amorim announced no breakthrough, but some progress.
"No breakthrough reached in New Delhi - that's probably the headline tomorrow," he said. "[But] I do believe that we had, well, if not exactly a breakthrough, a big step ahead in terms of process."
The ministers from Australia, Brazil, the European Union, India, Japan and the United States announced that they agreed to try by the end of the year to conclude the so-called Doha round of 150-member World Trade Organization talks.
U.S. trade representative Susan Schwab
U.S. trade representative Susan Schwab says top trade officials now have a sense of urgency that hopefully can be translated into action.
"Unfortunately the history of the Doha Round up to this point has been the setting of artificial deadlines and the failure to meet those deadlines," she said.
The United States has resisted making deeper cuts to subsidies for American farmers. That has prompted the Europeans to hold firm on protecting their farmers.
On the other hand, the U.S. and European Union want countries such as Brazil and India to further open their booming domestic markets to manufactured goods and agricultural imports.
Australia's trade minister Warren Truss
Australia's trade minister, Warren Truss, says Washington and Brussels should not be expected to make all the concessions.
"We can't expect the Americans or the Europeans to do it all. India will have to do something. Australia will have to do something," said Truss. "The world will have to develop a spirit of compromise to achieve something that is very important."
In another sign of the distance still to be traveled, India's commerce and industries minister Kamal Nath told reporters his country will not compromise the interests of millions of its subsistence farmers.
U.S. President Bush has special powers to negotiate a trade deal. But those so-called "fast track" powers expire June 30 unless Congress extends them.
Some negotiators say an international agreement is needed before then in order to encourage U.S. lawmakers to extend the president's authority, which would allow him to present the Congress with a trade pact for a straight up or down vote.
First Somali Shopping Center in Minneapolis, Minnesota
Since 1991, thousands of people have fled war and anarchy in the East African country of Somalia, and many have settled in the United States. The largest group is in the Midwest state of Minnesota. Most live in the state's largest city, Minneapolis, where several Somali shopping centers have sprung up in recent years. VOA's Deborah Block visited one of them.
Shopping in Karmel Center
Karmel Center is the first Somali shopping mall in the United States. Six years ago the mall opened in a sprawling, two-story building in a Somali neighborhood in Minneapolis. Dozens of merchants in small shops sell everything from home decorations to beauty products to clothing from Somalia and goods from other countries. Many were merchants back home and started their own business here because they could not find work.
Businesswoman Busad Kheyre talks about female Somali clothing. "This one is [worn] underneath this one. We don't want to be naked," she explains.
Shop Owners Busad Kheyre and Asha Habad
Busad Kheyre sells traditional Somali clothing along with the latest American styles. She and her business partner Asha Habad only opened their shop six months ago. They say local Somalians are slowly hearing about their store.
"But we have our own friends and relatives and family - both sides - that is where we are getting all our customers."
Customer Deka Abdi, 22, came to the United States when she was seven years old. Although she considers herself a typical American, she values Somali culture and says she occasionally wears a traditional headscarf.
"Mostly when I'm having a bad hair day to be honest," she laughs, but adds, "I [also] wear it when I'm going to the mosque to make my prayers and when I'm going to visit my family members who like me to have my hair covered for respect."
The mall is also a place to relax, gossip and trade job tips. Some people reconnect with family and friends they may not have seen since they left Somalia. Others make their way to a Muslim prayer room. Nearby is a computer business that teaches computer skills and provides internet access.
Mohamood Isse
Owner Mohamood Isse says many Somalis want to know what is happening in Somalia. "They check all the Somali websites on the news from back home, and with e-mail they stay in touch with families and friends."
Local Somali groups estimate that at least 25,000 Somalis live in Minnesota. At this shop they can find Somali music and movies.
Customer Ahmed Khadiye says one DVD is a mystery thriller made in the United States has a deeper meaning about the changing role of many Somali women. "They are showing that they have power in the United States of America and that they can go ahead and boss around the men," he says.
People also come to Karmel Mall to find items like handcrafted traditional Somali furniture. Zeki Ismail says his benches are also popular with people who are not Somali, because they are beautiful and practical. "They're easy to move from house to house and easy to carry," he notes.
He says he has found a home in Minneapolis among members of the Somali community, a place where he feels comfortable and can make a modest living.
Shopping in Karmel Center
Karmel Center is the first Somali shopping mall in the United States. Six years ago the mall opened in a sprawling, two-story building in a Somali neighborhood in Minneapolis. Dozens of merchants in small shops sell everything from home decorations to beauty products to clothing from Somalia and goods from other countries. Many were merchants back home and started their own business here because they could not find work.
Businesswoman Busad Kheyre talks about female Somali clothing. "This one is [worn] underneath this one. We don't want to be naked," she explains.
Shop Owners Busad Kheyre and Asha Habad
Busad Kheyre sells traditional Somali clothing along with the latest American styles. She and her business partner Asha Habad only opened their shop six months ago. They say local Somalians are slowly hearing about their store.
"But we have our own friends and relatives and family - both sides - that is where we are getting all our customers."
Customer Deka Abdi, 22, came to the United States when she was seven years old. Although she considers herself a typical American, she values Somali culture and says she occasionally wears a traditional headscarf.
"Mostly when I'm having a bad hair day to be honest," she laughs, but adds, "I [also] wear it when I'm going to the mosque to make my prayers and when I'm going to visit my family members who like me to have my hair covered for respect."
The mall is also a place to relax, gossip and trade job tips. Some people reconnect with family and friends they may not have seen since they left Somalia. Others make their way to a Muslim prayer room. Nearby is a computer business that teaches computer skills and provides internet access.
Mohamood Isse
Owner Mohamood Isse says many Somalis want to know what is happening in Somalia. "They check all the Somali websites on the news from back home, and with e-mail they stay in touch with families and friends."
Local Somali groups estimate that at least 25,000 Somalis live in Minnesota. At this shop they can find Somali music and movies.
Customer Ahmed Khadiye says one DVD is a mystery thriller made in the United States has a deeper meaning about the changing role of many Somali women. "They are showing that they have power in the United States of America and that they can go ahead and boss around the men," he says.
People also come to Karmel Mall to find items like handcrafted traditional Somali furniture. Zeki Ismail says his benches are also popular with people who are not Somali, because they are beautiful and practical. "They're easy to move from house to house and easy to carry," he notes.
He says he has found a home in Minneapolis among members of the Somali community, a place where he feels comfortable and can make a modest living.
World Bank President Controversy Overshadows Mission
Embattled World Bank President Paul Wolfowitz is fighting to keep his job after disclosing his involvement in obtaining a substantial pay raise for a female friend. The controversy has provoked demands for Wolfowitz's resignation. He says that decision is up to the bank's board members. VOA's Mil Arcega reports.
Paul Wolfowitz, 15 Apr 2007
"I made a mistake for which I am sorry." Despite what some say was a "defiant apology," World Bank president Paul Wolfowitz says he has no intentions of stepping down.
But Jean-Louis Sarbib, a former World Bank Senior Vice president, says Wolfowitz's actions have damaged the bank's credibility. "I think it's extremely sad that the World Bank is in the news as a scandal institution at a time when poverty is a very big issue for the rest of the world and where the credibility of the institution and the credibility of its head is absolutely essential. So I think he should go."
At the center of the controversy is Wolfowitz's admitted involvement in procuring a promotion and a pay raise for his girlfriend, Shaha Riza, a former bank advisor. Documents show that after her transfer to the U.S. State Department, Riza's annual pay jumped from $133,000 to nearly $200,000.
Wolfowitz said, "I didn't hide anything that I did and, as I said, I am prepared to accept any remedies that the board wants to propose."
Wolfowitz is no stranger to controversy. President Bush appointed the former U.S. Deputy Defense Secretary two years ago amid protests over Wolfowitz's involvement in promoting the war in Iraq. Since then Wolfowitz has received praise from leaders of some of the world's poorest countries.
Liberian Finance Minister Antoinette Sayeh says Wolfowitz has been a strong advocate for African nations. "He has been absolutely supportive, responsive – there for us -- making advocacy that is absolutely essential to getting the international community to do the right thing by these countries and we're very, very grateful to his leadership in getting Liberia to where we are today."
Although few question Wolfowitz's priorities at the World Bank, some say his actions have damaged his own campaign to root out international corruption.
Dennis de Tray is vice president at the Center for Global Development, a Washington-based think-tank that looks at issues affecting developing countries. "I think it is clearly a problem for the World Bank that its leader, rightly or wrongly, is being accused of violating at least the intent of some of the rules that govern the bank's processes and procedures when he has made such an important pillar of his own administration issues of governance transparency and accountability," he says.
While the European Commission has expressed deep concerns, the United States – the bank's largest shareholder – is standing by Wolfowitz. White House spokeswoman Dana Perino recently said, "The president has full confidence in Paul Wolfowitz. He's done a remarkable job at the World Bank, where they are working to lift people up out of poverty from around the world. He's apologized for the matter, and his board is undergoing an internal review. And we expect him to remain as World Bank president."
Although analysts believe the scandal will not have a long-term impact on the World Bank, some say it could force the international community to revisit how the bank selects its leader.
De Tray says, right now, the U.S. government is the sole arbiter. "In this day and age that's not a very good system. It's neither transparent nor is it merit-based nor does it build the kind of international credibility that a multilateral institution like the World Bank needs. So it's a good time to step back and ask let's give the next president of the World Bank the kind of international base of credibility that he or she needs to lead a great multi-lateral institution."
World Bank board members say they are reviewing the Wolfowitz controversy but there is no timetable for a decision.
Paul Wolfowitz, 15 Apr 2007
"I made a mistake for which I am sorry." Despite what some say was a "defiant apology," World Bank president Paul Wolfowitz says he has no intentions of stepping down.
But Jean-Louis Sarbib, a former World Bank Senior Vice president, says Wolfowitz's actions have damaged the bank's credibility. "I think it's extremely sad that the World Bank is in the news as a scandal institution at a time when poverty is a very big issue for the rest of the world and where the credibility of the institution and the credibility of its head is absolutely essential. So I think he should go."
At the center of the controversy is Wolfowitz's admitted involvement in procuring a promotion and a pay raise for his girlfriend, Shaha Riza, a former bank advisor. Documents show that after her transfer to the U.S. State Department, Riza's annual pay jumped from $133,000 to nearly $200,000.
Wolfowitz said, "I didn't hide anything that I did and, as I said, I am prepared to accept any remedies that the board wants to propose."
Wolfowitz is no stranger to controversy. President Bush appointed the former U.S. Deputy Defense Secretary two years ago amid protests over Wolfowitz's involvement in promoting the war in Iraq. Since then Wolfowitz has received praise from leaders of some of the world's poorest countries.
Liberian Finance Minister Antoinette Sayeh says Wolfowitz has been a strong advocate for African nations. "He has been absolutely supportive, responsive – there for us -- making advocacy that is absolutely essential to getting the international community to do the right thing by these countries and we're very, very grateful to his leadership in getting Liberia to where we are today."
Although few question Wolfowitz's priorities at the World Bank, some say his actions have damaged his own campaign to root out international corruption.
Dennis de Tray is vice president at the Center for Global Development, a Washington-based think-tank that looks at issues affecting developing countries. "I think it is clearly a problem for the World Bank that its leader, rightly or wrongly, is being accused of violating at least the intent of some of the rules that govern the bank's processes and procedures when he has made such an important pillar of his own administration issues of governance transparency and accountability," he says.
While the European Commission has expressed deep concerns, the United States – the bank's largest shareholder – is standing by Wolfowitz. White House spokeswoman Dana Perino recently said, "The president has full confidence in Paul Wolfowitz. He's done a remarkable job at the World Bank, where they are working to lift people up out of poverty from around the world. He's apologized for the matter, and his board is undergoing an internal review. And we expect him to remain as World Bank president."
Although analysts believe the scandal will not have a long-term impact on the World Bank, some say it could force the international community to revisit how the bank selects its leader.
De Tray says, right now, the U.S. government is the sole arbiter. "In this day and age that's not a very good system. It's neither transparent nor is it merit-based nor does it build the kind of international credibility that a multilateral institution like the World Bank needs. So it's a good time to step back and ask let's give the next president of the World Bank the kind of international base of credibility that he or she needs to lead a great multi-lateral institution."
World Bank board members say they are reviewing the Wolfowitz controversy but there is no timetable for a decision.
Russia Bans Foreigners From Working at Markets
A new law in Russia bans foreigners from working as clerks in retail stores and markets. Foreigners are able to work as loaders, cleaners, wholesalers or managers, but they are not allowed to sell directly to the public. Russian officials say the new legislation is aimed at combating a shadow economy, but human rights and migrant groups say the new law is unfair and unworkable. Anya Ardayeva reports from Moscow.
Russian immigration, fruit stand
Millions of migrant workers in Russia now find themselves out of a job.
For the past ten years, Khalimjon Akhmadaliyev, from Tajikistan, has worked 12 hours a day selling vegetables at various Moscow markets.
"It's unfair because so many people worked so hard to come here and earn bread to feed their families and their children,” he says. “My children study here, I need to bring them up. I don't know what to do next. I guess I will have to pull my kids out of school and return home."
In January, Russia passed a new law banning foreigners from selling alcohol and medicine throughout the country. It also, as of April 1st, banned foreigners from selling at markets. The ban followed a number of troubling incidents – the largest, a riot in the northern Russian town of Kondopoga. Two local men died in a fight with ethnic Chechens.
Now, human rights activists say the bill might create more racial tension in Russia. For months, anti-racism campaigners have warned of growing racist sentiment in the country, especially after thousands of people in Moscow and other Russian cities last November participated in a so-called "Russian March," organized by the ultra-nationalist "Movement Against Illegal Immigration"
Nikita Mkrtchyan
Nikita Mkrtchyan is the chief expert for immigration analysis at Moscow's Economic Forecast Institute. He says that by imposing the new law, government is simply trying to boost ratings in an election year.
"This law has been passed because of some ideas that have something to do with pre-election period, to show that the power is meeting the demands of the people,” he says. “If the people do not like seeing foreign people at markets, if they don't want to see foreign faces at the markets, then the power does everything it can to get rid of those people."
Mkrtchyan also says this policy can have damaging consequences for the country's economy. While there are a million legal migrants working in Russia, Russian media reports suggest that the number of illegals is estimated at up to 12 million. Many come from much poorer countries, and often take jobs that Russian nationals do not want.
"Due to our economic growth, we will soon face a lack of labor resources everywhere. Of course we can't solve this without immigrants," says Mkrtchyan.
In October, Russian President Vladimir Putin said that the markets were often run by criminals with "ethnic flavor." He called on the government to take measures to "protect Russian producers and the local population."
Mktrchyan also is concerned that the new ban will boost corruption among bureaucrats and police as desperate foreigners offer bribes to dodge the new rules. Corruption is already rampant in Russia. Last year, the anti-corruption organization Transparency International ranked Russia as one of the most corrupt countries in the world.
Russian immigration, fruit stand
Millions of migrant workers in Russia now find themselves out of a job.
For the past ten years, Khalimjon Akhmadaliyev, from Tajikistan, has worked 12 hours a day selling vegetables at various Moscow markets.
"It's unfair because so many people worked so hard to come here and earn bread to feed their families and their children,” he says. “My children study here, I need to bring them up. I don't know what to do next. I guess I will have to pull my kids out of school and return home."
In January, Russia passed a new law banning foreigners from selling alcohol and medicine throughout the country. It also, as of April 1st, banned foreigners from selling at markets. The ban followed a number of troubling incidents – the largest, a riot in the northern Russian town of Kondopoga. Two local men died in a fight with ethnic Chechens.
Now, human rights activists say the bill might create more racial tension in Russia. For months, anti-racism campaigners have warned of growing racist sentiment in the country, especially after thousands of people in Moscow and other Russian cities last November participated in a so-called "Russian March," organized by the ultra-nationalist "Movement Against Illegal Immigration"
Nikita Mkrtchyan
Nikita Mkrtchyan is the chief expert for immigration analysis at Moscow's Economic Forecast Institute. He says that by imposing the new law, government is simply trying to boost ratings in an election year.
"This law has been passed because of some ideas that have something to do with pre-election period, to show that the power is meeting the demands of the people,” he says. “If the people do not like seeing foreign people at markets, if they don't want to see foreign faces at the markets, then the power does everything it can to get rid of those people."
Mkrtchyan also says this policy can have damaging consequences for the country's economy. While there are a million legal migrants working in Russia, Russian media reports suggest that the number of illegals is estimated at up to 12 million. Many come from much poorer countries, and often take jobs that Russian nationals do not want.
"Due to our economic growth, we will soon face a lack of labor resources everywhere. Of course we can't solve this without immigrants," says Mkrtchyan.
In October, Russian President Vladimir Putin said that the markets were often run by criminals with "ethnic flavor." He called on the government to take measures to "protect Russian producers and the local population."
Mktrchyan also is concerned that the new ban will boost corruption among bureaucrats and police as desperate foreigners offer bribes to dodge the new rules. Corruption is already rampant in Russia. Last year, the anti-corruption organization Transparency International ranked Russia as one of the most corrupt countries in the world.
US Markets Open This Week Mixed Following Record Gains
U.S. stock market indexes opened with slight gains in early trading Monday after a week of record gains. The Dow Jones Industrial Average rose more than 150 points on Friday to post its third straight record close in one week. Although the index of 30 U.S. companies remains at historically high levels, investors started the week on a cautious note.
VOA's Mil Arcega reports.
Smiles and applause accompanied Friday's closing bell at the New York Stock Exchange as the Dow ended the week with another record close. The blue chip index came within 40 points of the 13,000 mark after investors reacted enthusiastically to a series of better than expected earnings reports.
Market strategist Alan Skrainka explains. "The good news is outweighing the bad news, and the market is moving higher because the good news is: earnings have been very solid.
Despite a slowing U.S. economy, positive first quarter results from Google, eBay and heavy equipment manufacturer Caterpillar helped ease investor concerns.
Skrainka says the market rally suggests things are not as bad as they seem. "The market was very fearful that the housing industry would send us into a recession. Many of those investors who were worried about a market decline, now are fearful of missing out on this big rally."
But the markets were a bit more cautious Monday. Some investors are skeptical the market will be able to extend last week's record streak.
Analysts say although the major U.S. stock indexes are at their highest levels in six years, many of the same concerns that sent the Dow tumbling two months ago remain: high inflation, a weak dollar and a sluggish housing market.
VOA's Mil Arcega reports.
Smiles and applause accompanied Friday's closing bell at the New York Stock Exchange as the Dow ended the week with another record close. The blue chip index came within 40 points of the 13,000 mark after investors reacted enthusiastically to a series of better than expected earnings reports.
Market strategist Alan Skrainka explains. "The good news is outweighing the bad news, and the market is moving higher because the good news is: earnings have been very solid.
Despite a slowing U.S. economy, positive first quarter results from Google, eBay and heavy equipment manufacturer Caterpillar helped ease investor concerns.
Skrainka says the market rally suggests things are not as bad as they seem. "The market was very fearful that the housing industry would send us into a recession. Many of those investors who were worried about a market decline, now are fearful of missing out on this big rally."
But the markets were a bit more cautious Monday. Some investors are skeptical the market will be able to extend last week's record streak.
Analysts say although the major U.S. stock indexes are at their highest levels in six years, many of the same concerns that sent the Dow tumbling two months ago remain: high inflation, a weak dollar and a sluggish housing market.
Global Trade Talks Stall as Free Trade Agreements Grow in Asia
As the latest World Trade Organization round of talks loses momentum, bilateral and regional free trade agreements are mushrooming in Asia. Claudia Blume reports from VOA's Asia News Center in Hong Kong.
US Trade Representative Wendy Cutler, left, and South Korean counterpart, Ambassador Kim Jong-hoon during a joint news conference in Seoul, 02 Apr 2007
After 10 months of tough negotiations, the United States sealed a free-trade pact with South Korea at the beginning of April. A few days later, Japan and Thailand signed a free-trade deal. The two pacts are but the latest of a rising number of bilateral trade agreements in the region.
According to the Asian Development Bank, 150 bilateral free trade agreements had either been signed or were under negotiation last year in Asia.
And more than 40 trade deals were either signed or negotiated by groupings of more than two countries. The Association of Southeast Asian Nations, for example, aims to abolish tariffs by 2015 under a regional trade deal, and is negotiating agreements with China, Japan, and South Korea.
The mushrooming of free trade pacts in the past few years is partly a defensive response to regional trading blocs elsewhere in the world, such as the European Union or the North American Free Trade Agreement. Jose Tongzon is an expert on international trade at the Australian Maritime College.
"The reaction on the part of the countries in Southeast Asia as well as in other parts of Asia was that they could be discriminated against in favor of the European Union members and in North America so in order to counteract that event, to maintain the leverage, their bargaining power, they started to deepen also their economic integration," Tongzon said.
Malcolm Cook, program director at the Lowy Institute for International Policy in Australia, says dissatisfaction with the slow pace of global trade talks also plays a large role in the push for regional or bilateral deals.
Cook says the export-dependent East Asian countries in particular are strong supporters of global approaches to trade policy. But they are disappointed by the failure of the Doha round, the latest round of talks in the World Trade Organization.
"East Asia was the last remaining region that was a strong supporter and put most of its trade policy eggs in the multilateral basket. But with the repeated deaths of the Doha round, without a doubt their trade experts have decided that the multilateral system is moving too slowly," Cook said.
He says trade pacts in the region are not only about commerce, investments and services but are also political agreements to strengthen relations between states. Cook says a growing strategic rivalry between China and Japan has made them sign trade agreements with other Asian countries - as a way to expand their influence in the region.
Most experts view free trade agreements, which lower trade barriers among participants but allow them to maintain barriers toward the rest of the world - as a second-best solution, compared with the ultimate goal of global trade liberalizations.
But Jose Tongzon says since multilateral trade talks have stalled, the proliferation of bilateral trade pacts has some advantages.
"The positive aspects of course would be that it is much quicker to achieve free trade because you are dealing with fewer countries and usually countries that are geographically close, and would probably have similar economic priorities and interests, so it's much easier to come to (a) consensus," Tongzon said.
One of the pitfalls of the growing number of bilateral agreements, however, is the so-called spaghetti bowl effect. This means that overlapping regulations of countries with different agreements can complicate trade.
Liqun Jin is vice president of the Asian Development Bank, a non-profit lending institution in Manila.
"This spaghetti-bowl effect is not something we think can work very well," Jin said. "As you know it's cumbersome, it's time-consuming and it's complicated."
Malcolm Cook says another problem of free trade agreements is that they allow governments to protect sacred sectors.
"Even in the example (of) the South Korea - U.S. FTA, the Koreans were able to keep rice out of the agreement and if you look at China's FTAs with Southeast Asia, both sides have left out quite a few sensitive sectors," Cook said.
Another difficulty, he says, is that most governments in the region only have a limited number of experienced trade negotiators, who now spend most of their time on bilateral pacts. This could take their focus away from the much larger task of reaching an agreement through the World Trade Organization.
Liqun Jin at the ADB is more optimistic.
"I think it's very likely certain bilateral agreements, and multilateral, sub-regional or regional free trade agreements can merge, can be consolidated once they have agreements - among two countries, three countries, a couple of countries, a group of countries," Jin said. "I don't think it will be terribly difficult to consolidate all these agreements."
The ADB says regional integration and cooperation are vital for prosperity in Asia and that consolidating the snowballing number of bilateral trade agreements would help achieve that goal.
US Trade Representative Wendy Cutler, left, and South Korean counterpart, Ambassador Kim Jong-hoon during a joint news conference in Seoul, 02 Apr 2007
After 10 months of tough negotiations, the United States sealed a free-trade pact with South Korea at the beginning of April. A few days later, Japan and Thailand signed a free-trade deal. The two pacts are but the latest of a rising number of bilateral trade agreements in the region.
According to the Asian Development Bank, 150 bilateral free trade agreements had either been signed or were under negotiation last year in Asia.
And more than 40 trade deals were either signed or negotiated by groupings of more than two countries. The Association of Southeast Asian Nations, for example, aims to abolish tariffs by 2015 under a regional trade deal, and is negotiating agreements with China, Japan, and South Korea.
The mushrooming of free trade pacts in the past few years is partly a defensive response to regional trading blocs elsewhere in the world, such as the European Union or the North American Free Trade Agreement. Jose Tongzon is an expert on international trade at the Australian Maritime College.
"The reaction on the part of the countries in Southeast Asia as well as in other parts of Asia was that they could be discriminated against in favor of the European Union members and in North America so in order to counteract that event, to maintain the leverage, their bargaining power, they started to deepen also their economic integration," Tongzon said.
Malcolm Cook, program director at the Lowy Institute for International Policy in Australia, says dissatisfaction with the slow pace of global trade talks also plays a large role in the push for regional or bilateral deals.
Cook says the export-dependent East Asian countries in particular are strong supporters of global approaches to trade policy. But they are disappointed by the failure of the Doha round, the latest round of talks in the World Trade Organization.
"East Asia was the last remaining region that was a strong supporter and put most of its trade policy eggs in the multilateral basket. But with the repeated deaths of the Doha round, without a doubt their trade experts have decided that the multilateral system is moving too slowly," Cook said.
He says trade pacts in the region are not only about commerce, investments and services but are also political agreements to strengthen relations between states. Cook says a growing strategic rivalry between China and Japan has made them sign trade agreements with other Asian countries - as a way to expand their influence in the region.
Most experts view free trade agreements, which lower trade barriers among participants but allow them to maintain barriers toward the rest of the world - as a second-best solution, compared with the ultimate goal of global trade liberalizations.
But Jose Tongzon says since multilateral trade talks have stalled, the proliferation of bilateral trade pacts has some advantages.
"The positive aspects of course would be that it is much quicker to achieve free trade because you are dealing with fewer countries and usually countries that are geographically close, and would probably have similar economic priorities and interests, so it's much easier to come to (a) consensus," Tongzon said.
One of the pitfalls of the growing number of bilateral agreements, however, is the so-called spaghetti bowl effect. This means that overlapping regulations of countries with different agreements can complicate trade.
Liqun Jin is vice president of the Asian Development Bank, a non-profit lending institution in Manila.
"This spaghetti-bowl effect is not something we think can work very well," Jin said. "As you know it's cumbersome, it's time-consuming and it's complicated."
Malcolm Cook says another problem of free trade agreements is that they allow governments to protect sacred sectors.
"Even in the example (of) the South Korea - U.S. FTA, the Koreans were able to keep rice out of the agreement and if you look at China's FTAs with Southeast Asia, both sides have left out quite a few sensitive sectors," Cook said.
Another difficulty, he says, is that most governments in the region only have a limited number of experienced trade negotiators, who now spend most of their time on bilateral pacts. This could take their focus away from the much larger task of reaching an agreement through the World Trade Organization.
Liqun Jin at the ADB is more optimistic.
"I think it's very likely certain bilateral agreements, and multilateral, sub-regional or regional free trade agreements can merge, can be consolidated once they have agreements - among two countries, three countries, a couple of countries, a group of countries," Jin said. "I don't think it will be terribly difficult to consolidate all these agreements."
The ADB says regional integration and cooperation are vital for prosperity in Asia and that consolidating the snowballing number of bilateral trade agreements would help achieve that goal.
Liberia to Resume Diamond Trade
Liberia has announced it will again export diamonds, using the profits to finance reconstruction, instead of conflict, as was the case in the past. But experts caution that transparency is still crucially important, and diamond profits may not be the panacea Liberia hopes. Naomi Schwarz has the story from our regional bureau in Dakar, with additional reporting by Prince Collins in Liberia.
The Hollywood film Blood Diamond brought the issue of conflict diamonds to the big screen and renewed international attention.
But, in the meantime, in West Africa, where much of the illicit trade and bloody conflicts took place, governments and international bodies are working to ensure that the problem is in the past.
The latest development comes from Liberia, which suffered from a decades-long civil war. In 2001, the United Nations placed an embargo on diamonds coming from Liberia, in a bid to stop the trade and cut off funding for warlords.
"Many people profited from the diamond wars, and I think that Liberia was primarily used as a conduit for diamonds coming from Sierra Leone," said Annie Dunnebacke, an expert on the African diamond trade from the UK-based watchdog Global Witness.
But the war in Liberia has ended, and the new president, Ellen Johnson Sirleaf, says she wants to use diamond profits to help repair the damage the warlords wrought.
President Johnson Sirleaf cuts the ribbon at a new diamond office
On Tuesday, Ms. Johnson Sirleaf announced the opening of 10 new diamond screening and evaluation offices across the country.
Liberian Minister of Land, Mines, and Energy, Eugene Shannon, was on hand to assure observers that the Liberian diamond trade is entering a new phase.
"The government will do all in its power to stop diamonds from entering and leaving our borders illegally. We must combat smuggling because it robs every Liberian of a decent chance to share in our national wealth," said Shannon.
Four days earlier, the U.N. lifted its ban on Liberian diamonds, after a Security Council vote prompted by the United States.
Liberian officials have pledged to follow what is known as the Kimberley Process, which is meant to document every step of a diamond's journey from mine to consumer. The process was established several years ago, but has been difficult to implement because there are many players, and processing diamonds involves many steps.
Global Witness's Dunnebacke says international observers are cautiously optimistic for Liberia's prospects in the diamond trade.
"We are certainly hoping that there will be a positive impact from this and that certainly some revenues will be coming back to the government, but Liberian diamond production is not huge and there are quite a few costs associated with running the diamond exportation industry, so I am afraid that the windfalls might not materialize to the point the government is saying they will," said Dunnebacke.
She says she hopes the government is not raising expectations too high.
She also says it is very important to maintain a dedication to transparency so the Liberian public is aware of the revenues generated and knows where they are being spent.
The Hollywood film Blood Diamond brought the issue of conflict diamonds to the big screen and renewed international attention.
But, in the meantime, in West Africa, where much of the illicit trade and bloody conflicts took place, governments and international bodies are working to ensure that the problem is in the past.
The latest development comes from Liberia, which suffered from a decades-long civil war. In 2001, the United Nations placed an embargo on diamonds coming from Liberia, in a bid to stop the trade and cut off funding for warlords.
"Many people profited from the diamond wars, and I think that Liberia was primarily used as a conduit for diamonds coming from Sierra Leone," said Annie Dunnebacke, an expert on the African diamond trade from the UK-based watchdog Global Witness.
But the war in Liberia has ended, and the new president, Ellen Johnson Sirleaf, says she wants to use diamond profits to help repair the damage the warlords wrought.
President Johnson Sirleaf cuts the ribbon at a new diamond office
On Tuesday, Ms. Johnson Sirleaf announced the opening of 10 new diamond screening and evaluation offices across the country.
Liberian Minister of Land, Mines, and Energy, Eugene Shannon, was on hand to assure observers that the Liberian diamond trade is entering a new phase.
"The government will do all in its power to stop diamonds from entering and leaving our borders illegally. We must combat smuggling because it robs every Liberian of a decent chance to share in our national wealth," said Shannon.
Four days earlier, the U.N. lifted its ban on Liberian diamonds, after a Security Council vote prompted by the United States.
Liberian officials have pledged to follow what is known as the Kimberley Process, which is meant to document every step of a diamond's journey from mine to consumer. The process was established several years ago, but has been difficult to implement because there are many players, and processing diamonds involves many steps.
Global Witness's Dunnebacke says international observers are cautiously optimistic for Liberia's prospects in the diamond trade.
"We are certainly hoping that there will be a positive impact from this and that certainly some revenues will be coming back to the government, but Liberian diamond production is not huge and there are quite a few costs associated with running the diamond exportation industry, so I am afraid that the windfalls might not materialize to the point the government is saying they will," said Dunnebacke.
She says she hopes the government is not raising expectations too high.
She also says it is very important to maintain a dedication to transparency so the Liberian public is aware of the revenues generated and knows where they are being spent.
US Corporations Eye More Vietnam Investments
Executives from eighteen major U.S. corporations are in Vietnam, meeting with senior government officials at a conference sponsored by the US-ASEAN Business Council. As Matt Steinglass reports from Hanoi, they are looking for ways to take advantage of Vietnam's recent entry into the World Trade Organization.
Vietnamese farmers work field under giant billboards advertising for US shipping company, Federal Express and Boeing aircraft (file)
Attending the meetings are some of the biggest names in American business, including Ford, Boeing, General Electric, and Exxon. They met with Vietnam's minister of investment and trade and its information minister, among others.
The United States granted Vietnam permanent normal trade relations in October, and the country joined the World Trade Organization in January. Since then, it has seen $3.5 billion in new foreign investment pledges, an increase of more than 50 percent from last year.
IBM's vice president for governmental operations, Stephen Braim, said the company plans major expansions in software development and services in Vietnam.
"We're talking about managing major transformational projects that happen both in Vietnam and around the world," he said. "For a country like Vietnam, with the skills base they have and what we're trying to attract here, we are looking more at the high-value-added services: the applications maintenance services, the development services, building of web portals, building of back-office operations."
Braim said Vietnam's accession to the WTO was key to IBM's optimism. As one of the terms of its membership, the country removed almost all trade barriers for computers.
"For us, the big win was in computer and related services. And we got that, and we're very, very happy with it," he admitted.
Express mail company UPS said the WTO agreement will eventually allow it to operate directly in Vietnam, rather than through local partners, as under current law.
But UPS Vice President Steven Okun said Vietnam must still improve both its inadequate highways and sometimes outdated regulations.
"Every shipment that comes into Vietnam you have to pay duties and tariffs on. It slows down the process," he said.
The garment industry was not represented at the meeting. As part of last year's trade agreement the U.S. declared it would monitor for dumping of garments at below-cost prices, and might impose retroactive tariffs.
U.S. clothing retailers say the uncertainty is driving them to other countries. Virginia Foote is president of the US-Vietnam Trade Council.
"I think there is some concern that the garment industry has been hurt in Vietnam by the US government action," she said. "There was great hope for growth in the garment and apparel industry in Vietnam. Is that growth going to be realized, or is it going to be postponed?"
The garment industry was one shadow on an otherwise bright picture. With Vietnam's economy growing at over eight percent a year, U.S. businesses appear eager to join the action.
Vietnamese farmers work field under giant billboards advertising for US shipping company, Federal Express and Boeing aircraft (file)
Attending the meetings are some of the biggest names in American business, including Ford, Boeing, General Electric, and Exxon. They met with Vietnam's minister of investment and trade and its information minister, among others.
The United States granted Vietnam permanent normal trade relations in October, and the country joined the World Trade Organization in January. Since then, it has seen $3.5 billion in new foreign investment pledges, an increase of more than 50 percent from last year.
IBM's vice president for governmental operations, Stephen Braim, said the company plans major expansions in software development and services in Vietnam.
"We're talking about managing major transformational projects that happen both in Vietnam and around the world," he said. "For a country like Vietnam, with the skills base they have and what we're trying to attract here, we are looking more at the high-value-added services: the applications maintenance services, the development services, building of web portals, building of back-office operations."
Braim said Vietnam's accession to the WTO was key to IBM's optimism. As one of the terms of its membership, the country removed almost all trade barriers for computers.
"For us, the big win was in computer and related services. And we got that, and we're very, very happy with it," he admitted.
Express mail company UPS said the WTO agreement will eventually allow it to operate directly in Vietnam, rather than through local partners, as under current law.
But UPS Vice President Steven Okun said Vietnam must still improve both its inadequate highways and sometimes outdated regulations.
"Every shipment that comes into Vietnam you have to pay duties and tariffs on. It slows down the process," he said.
The garment industry was not represented at the meeting. As part of last year's trade agreement the U.S. declared it would monitor for dumping of garments at below-cost prices, and might impose retroactive tariffs.
U.S. clothing retailers say the uncertainty is driving them to other countries. Virginia Foote is president of the US-Vietnam Trade Council.
"I think there is some concern that the garment industry has been hurt in Vietnam by the US government action," she said. "There was great hope for growth in the garment and apparel industry in Vietnam. Is that growth going to be realized, or is it going to be postponed?"
The garment industry was one shadow on an otherwise bright picture. With Vietnam's economy growing at over eight percent a year, U.S. businesses appear eager to join the action.
Asia Threatened by Global Financial Imbalances, Contemplates
Asia's economic development is a success story that has been decades in the making. But in the past decade, the region has become a key factor in a global imbalance marked by too much reliance on exports by countries in one part of the world and excessive consumption by countries in another part, such as the United States. As senior officials from the Asian Development Bank gather in Kyoto, Japan, some say the way to end this imbalance is through regional economic integration. VOA's Kurt Achin is in Kyoto with more.
People walk pass a statue of traders from the olden days in Singapore, while the financial district is seen in the background (File)
Much of Asia is a reverse mirror image of what it was 10 years ago. When the financial crisis struck in 1997, Asian nations had overvalued currencies, low foreign reserves, and they imported more than they sold.
Friday, as delegates from the 67 member nations of the Asian Development bank gathered here in Kyoto, Japan, it was clear that picture has changed. Asian nations such as South Korea, Japan and China have trade surpluses, and the region holds a combined total of $3 trillion in foreign currency reserves.
More than a trillion dollars of that is held by China alone - a fact that worries Yu Yongding, president of the Chinese Academy of Social Sciences in Beijing.
"By far, it's too much," he said. "Actually, we are worried about how to deal with these huge foreign reserves."
These massive surpluses are the flip side of a massive trade deficit in the United States. Experts say the two regions are locked into an unattractive cycle of export-led development in Asia, fueled by U.S. imports, which in turn is underwritten by Asian lending.
Nouriel Roubini, finance professor at New York University, says Asia can no longer afford to rely so exclusively on the United States.
"There are now meaningful risks of a U.S. hard landing, and that can become problematic," he said. "If the U.S. hard landing were to occur, the effects on the [Asian] region will be severe."
Delegates are using the meeting here to discuss what they believe is a solution to the problem: weaning the region away from reliance on the U.S. through closer regional integration, similar to that in the European Union.
But that takes political will, and a willingness to give up some national sovereignty. Toyoo Gyohten, president of the Japan-based International Institute of Monetary Affairs, says the region is not ready.
"I'm afraid East Asia does not yet have a clear, strong, and unanimous view of the need and the cost of regional integration," he said.
Experts say that is partially because of the extreme diversity in this region. Countries like South Korea and Laos, for example, are at vastly different economic levels.
Mulyani Indrawati, Indonesia's minister of finance, says Asian leaders are not truly convinced that their actions toward integration will be matched by other countries.
"To become the first mover, you become a hero, but a victim at the same time, so… if there is no guarantee of regional coordinated and concerted effort, or even global coordinated and concerted effort, then each country moves toward safeguarding yourself," she said.
She says the best hope for the short term is for national governments to put their own economies in order, with good transparent business practices. If they do that, she says, integration will come more naturally
People walk pass a statue of traders from the olden days in Singapore, while the financial district is seen in the background (File)
Much of Asia is a reverse mirror image of what it was 10 years ago. When the financial crisis struck in 1997, Asian nations had overvalued currencies, low foreign reserves, and they imported more than they sold.
Friday, as delegates from the 67 member nations of the Asian Development bank gathered here in Kyoto, Japan, it was clear that picture has changed. Asian nations such as South Korea, Japan and China have trade surpluses, and the region holds a combined total of $3 trillion in foreign currency reserves.
More than a trillion dollars of that is held by China alone - a fact that worries Yu Yongding, president of the Chinese Academy of Social Sciences in Beijing.
"By far, it's too much," he said. "Actually, we are worried about how to deal with these huge foreign reserves."
These massive surpluses are the flip side of a massive trade deficit in the United States. Experts say the two regions are locked into an unattractive cycle of export-led development in Asia, fueled by U.S. imports, which in turn is underwritten by Asian lending.
Nouriel Roubini, finance professor at New York University, says Asia can no longer afford to rely so exclusively on the United States.
"There are now meaningful risks of a U.S. hard landing, and that can become problematic," he said. "If the U.S. hard landing were to occur, the effects on the [Asian] region will be severe."
Delegates are using the meeting here to discuss what they believe is a solution to the problem: weaning the region away from reliance on the U.S. through closer regional integration, similar to that in the European Union.
But that takes political will, and a willingness to give up some national sovereignty. Toyoo Gyohten, president of the Japan-based International Institute of Monetary Affairs, says the region is not ready.
"I'm afraid East Asia does not yet have a clear, strong, and unanimous view of the need and the cost of regional integration," he said.
Experts say that is partially because of the extreme diversity in this region. Countries like South Korea and Laos, for example, are at vastly different economic levels.
Mulyani Indrawati, Indonesia's minister of finance, says Asian leaders are not truly convinced that their actions toward integration will be matched by other countries.
"To become the first mover, you become a hero, but a victim at the same time, so… if there is no guarantee of regional coordinated and concerted effort, or even global coordinated and concerted effort, then each country moves toward safeguarding yourself," she said.
She says the best hope for the short term is for national governments to put their own economies in order, with good transparent business practices. If they do that, she says, integration will come more naturally
Asian Finance Chiefs Inch Toward Integration With 'Pooling'
Financial officials from the major East Asian countries say they will cooperate on a major new initiative to insure the region against financial crises. The countries have agreed to form a "pool" of foreign currency reserves, which members could potentially draw on in the event of future economic shocks. VOA's Kurt Achin has more from Kyoto, Japan, where the officials are attending the annual meeting of the Asian Development Bank.
Thailand's finance minister, Chalongphob Sussangkarn, center, reads a statement at the beginning of the joint press conference of ASEAN + 3 Finance Ministers Meeting in Kyoto, 5 May 2007
Finance ministers from the so-called "ASEAN plus three" nations announced they would increase the region's ability to help itself out of financial emergencies by pooling some of their vast foreign currency reserves.
The ten members of ASEAN - the Association of Southeast Asian Nations - will be joined in the pooling arrangement by South Korea, China and Japan. They announced the agreement on the sidelines of the Asian Development Bank's annual conference, here in Kyoto.
As a region, Asia boasts more than three trillion dollars in foreign currency holdings, mainly garnered during the last decade of intense growth, from exports to wealthy nations like the United States. China alone holds more than a trillion dollars of reserves.
Thai Finance Minister Chalongphob Sussangkarn says the nations agreed it is time to put those reserves to work.
"There was unanimous agreement on the appropriate form of the mechanism, which is that is be a self-managed reserve pooling arrangement, governed by a single contractual arrangement," he said.
The most likely use for the funds would be for a country in economic trouble to borrow enough for immediate needs.
Asian finance ministers say the arrangement is aimed at preventing the type of Asian financial crisis that began ten years ago, when the Thai baht collapsed, and other regional currencies followed. Thailand's finance minister says the risks today are different, but just as serious as they were ten years ago.
"The difference is that at that time, the risk… was on capital outflow, while the risk today is on rapid capital inflow," he said. "The volatility of capital flow, the size of capital flows, are even bigger than ten years ago."
The Asian Development Bank is expected to have a strong role in deciding how the currency pool is used. The ADB's director for regional integration, Lee Jong-wha, says the pooling announcement is a major step forward for finance ministers, who rarely are unanimous about anything.
"They made some political commitment... It's not a treaty, but it's a binding commitment," he said.
However, analysts like Gregory Fager, Asia/Pacific director for the Institute of International Finance, are not impressed.
"Who's going to need these reserves? What do they expect is going to happen? There's really no weak link anymore. They're all running current account surpluses," he said. "I don't see why all the attention is on pooling reserves. I'm not sure what they're pooling them for."
Fager says the ministers should concentrate on making Asia a more unified trading bloc - saying trade, not currency swaps, is what produces growth.
Details of the pooling arrangement announced have yet to be worked out, including how much each country will contribute to the pool and whether all of ASEAN's 10 member nations will participate.
Thailand's finance minister, Chalongphob Sussangkarn, center, reads a statement at the beginning of the joint press conference of ASEAN + 3 Finance Ministers Meeting in Kyoto, 5 May 2007
Finance ministers from the so-called "ASEAN plus three" nations announced they would increase the region's ability to help itself out of financial emergencies by pooling some of their vast foreign currency reserves.
The ten members of ASEAN - the Association of Southeast Asian Nations - will be joined in the pooling arrangement by South Korea, China and Japan. They announced the agreement on the sidelines of the Asian Development Bank's annual conference, here in Kyoto.
As a region, Asia boasts more than three trillion dollars in foreign currency holdings, mainly garnered during the last decade of intense growth, from exports to wealthy nations like the United States. China alone holds more than a trillion dollars of reserves.
Thai Finance Minister Chalongphob Sussangkarn says the nations agreed it is time to put those reserves to work.
"There was unanimous agreement on the appropriate form of the mechanism, which is that is be a self-managed reserve pooling arrangement, governed by a single contractual arrangement," he said.
The most likely use for the funds would be for a country in economic trouble to borrow enough for immediate needs.
Asian finance ministers say the arrangement is aimed at preventing the type of Asian financial crisis that began ten years ago, when the Thai baht collapsed, and other regional currencies followed. Thailand's finance minister says the risks today are different, but just as serious as they were ten years ago.
"The difference is that at that time, the risk… was on capital outflow, while the risk today is on rapid capital inflow," he said. "The volatility of capital flow, the size of capital flows, are even bigger than ten years ago."
The Asian Development Bank is expected to have a strong role in deciding how the currency pool is used. The ADB's director for regional integration, Lee Jong-wha, says the pooling announcement is a major step forward for finance ministers, who rarely are unanimous about anything.
"They made some political commitment... It's not a treaty, but it's a binding commitment," he said.
However, analysts like Gregory Fager, Asia/Pacific director for the Institute of International Finance, are not impressed.
"Who's going to need these reserves? What do they expect is going to happen? There's really no weak link anymore. They're all running current account surpluses," he said. "I don't see why all the attention is on pooling reserves. I'm not sure what they're pooling them for."
Fager says the ministers should concentrate on making Asia a more unified trading bloc - saying trade, not currency swaps, is what produces growth.
Details of the pooling arrangement announced have yet to be worked out, including how much each country will contribute to the pool and whether all of ASEAN's 10 member nations will participate.
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