DPP’s Liu wins by landslide in Yunlin
　

‘FOR A BETTER DEMOCRACY’: Liu Chien-kuo’s victory provided a much-needed boost to the DPP, which now has a quarter of the 113 seats in the legislature
　

By Ko Shu-ling
STAFF REPORTER
Sunday, Sep 27, 2009, Page 1
　

Democratic Progressive Party (DPP) candidate Liu Chien-kuo (劉建國) secured a landslide victory in yesterday’s Yunlin legislative by-election, giving the party a boost as corruption charges against former president Chen Shui-bian (陳水扁) continue to dog the opposition party.

Liu garnered 74,272 votes, beating his Chinese Nationalist Party (KMT) rival Chang Ken-hui (張艮輝) by nearly 45,000 votes. Voter turnout was 45.55 percent.

The DPP had previously said that former Department of Health minister Yeh Ching-chuan’s (葉金川) defeat in the KMT primary for the Hualien County commissioner election in December was a reflection of growing discontent with the government and a mark of no­­-­confidence in President Ma Ying-jeou (馬英九).

It had also said that the KMT would suffer a setback in the Yunlin County legislative by-election.

Liu’s victory was significant to the DPP, which prior to the vote held 27 legislative seats, one shy of a quarter of the 113-seat legislature.
　

With a quarter of legislative seats, the DPP will be eligible to propose a recall of the president or vice president, as well as constitutional amendments.

Bowing to his supporters, Liu said his victory was not his alone but that of the residents of Yunlin and the people of Taiwan.

“Today marks a very touching day in the history of Taiwan’s democracy,” he said at his campaign office.

“Yunlin residents’ hope for a better democracy and cleaner politics has finally come true. We oppose vote-buying and we utterly detest smear campaigns. That is the key to my victory,” he said.

Liu said his win showed that democratic politics trounced factional politics. It also showed that even a poor kid like him had the opportunity to serve the people and the country.

“The people used their ballots to prove that I am not a gangster,” he said.

In a statement, the DPP thanked voters for giving the party another chance to serve the public.

The by-election campaign saw the three contenders attack and sue each other. Independent candidate Chang Hui-yuan (張輝元) branded Liu a “gangster” and accused KMT candidate Chang Ken-hui of buying votes. Liu sued Chang Hui-yuan for slander.

The by-election was necessary to fill the seat left vacant by Chang Hui-yuan’s son, Chang Sho-wen (張碩文), who won the seat in January last year, but lost it this year after the High Court found him guilty of taking part in a vote-buying scheme organized by his father.

Chang Hui-yuan — who was found guilty of vote buying in the first trial — wanted to run as the KMT candidate in the election, but the party rejected his registration because its “black-gold exclusion clause” prevents party members found guilty of corruption in their first trial from standing for public office.

Chang Sho-wen filed a defamation lawsuit against Chang Ken-hui at the Yunlin Prosecutors’ Office on Monday, accusing him of making groundless vote-buying allegations.

Chang Ken-hui yesterday attributed his defeat to time constraints, saying he only had 48 days to campaign and that most voters were not familiar with him.

Conceding defeat, he gave Liu his blessing and said he would respect the people’s decision.

He said he did not work hard enough and that he would examine himself honestly.

He declined to comment on factionalism or a split within the KMT, but said that “somebody used despicable means during the campaign.”

“All I wanted was a fair election,” he said.

There were signs that KMT heavyweights were cool to Chang Ken-hui standing as the party’s candidate. During a campaign rally last Saturday, former KMT chairman Wu Poh-hsiung (吳伯雄) said it was Premier Wu Den-yi who had recommended that Chang Ken-hui stand in the by-election during his stint as KMT secretary-general.

Analysts saw Wu Poh-hsiung’s remarks as a means to distance himself from Chang Ken-hui if he failed.

Neither Ma nor Legislative Speaker Wang Jin-pyng (王金平) stumped for Chang Keng-hui.

In a statement yesterday, the KMT said it respected the choice of Yunlin residents, adding it was aware of the difficult situation in the run-up to the election, but had insisted on nominating a young, professional academic with a clean image.

The party is determined to reform because only reform will bring hope, the statement said. It also called for unity among party members.

Kadeer ‘very disappointed’ by Taipei
　

By William Lowther and Shih Hsiu-chuan
STAFF REPORTERS , WASHINGTON AND TAIPEI
Sunday, Sep 27, 2009, Page 1
　

Exiled Uighur leader Rebiya Kadeer on Friday accused Taipei of bowing to Beijing’s pressure in refusing to allow her to visit Taiwan and demanded an apology from the President Ma Ying-jeou (馬英九) administration for linking her and the World Uyghur Congress (WUC) to “terrorists.”

“I am filled with regret, I am very disappointed,” she said during an emotional press conference in her Washington office.

On Wednesday, Kadeer accepted an invitation from black metal band Chthonic (閃靈樂團) frontman and Guts United Taiwan president Freddy Lim (林昶佐) to visit Taiwan in December.

On Friday, however, Premier Wu Den-yih (吳敦義) supported Minister of the Interior Jiang Yi-huah’s (江宜樺) recommendation that the government not permit Kadeer to visit as the WUC, of which Kadeer is president, “is closely associated with an East Turkestan terrorist organization … and it would be in the best interests of Taiwan and its people to prohibit her from visiting the country.”

Jiang said that WUC secretary-general Dolkun Isa is also among the names of “important international terrorist organizations/individuals promulgated by the Interpol.”

Kadeer said it was the first time a country refused to grant her a visa, adding that over the last few years she had visited 28 countries.

“They all treated me with the greatest respect,” she said.

Beijing accuses Kadeer of inciting ethic violence and of encouraging China’s Uighur population to stage illegal protests.

Guts United Taiwan and the Taiwan Youth Anti-Communist Corps invited Kadeer to visit Taiwan after The 10 Conditions of Love, a documentary about her, became the center of controversy at the Kaohsiung Film Festival and China warned against the film being shown.

“I am very surprised at how quickly Taipei made its decision. I have not yet even lodged my application for a visa. They have turned me down before I had a chance to apply,” Kadeer said at the press conference.

“I have no links to any kind of terrorism,” she said. “My organization is against all violence.”

Her voice rising as she gesticulated for emphasis, Kadeer said: “The Taiwanese government is making false accusations. It is repeating exactly the same words China used against me. They are saying what the Chinese have told them to say.”

“Sure, I have fought for the freedom of my people. For this, the Chinese have called me a separatist and a terrorist. But all that I do is to defend the human rights of my people. I undertake my protests peacefully,” she said.

Kadeer said that despite the announcement, she would still make a formal application for a visa.

“The people of Taiwan want me to visit and I want to make that visit. I want to tell the people of Taiwan how my people have been treated by China,” she said.

“The world knows I am not a terrorist,” she said. “Taiwan is a democratic country. It is so sad that Taiwan has accepted China’s authority. It is sad for the Taiwanese people and it is sad for the world. I request that Taiwan should retract their false accusation of terrorism and apologize.”

Kadeer said she was confident that one day she would be able to visit Taiwan.

“The accusations that Taiwan have made come from the Chinese authorities. Whatever China says, Taiwan says the same thing,” she said.

Concerning the secretary-­general of the WUC, Kadeer said he lived openly in Germany and had taken German citizenship. She said he traveled freely around the world and that Interpol had no interest in arresting him.

“We are not terrorists. But the Uighur people are the victims of terrorism — Chinese terrorism,” Kadeer said. “The Chinese government thinks it is enormously powerful now because it has so much money. It thinks it can do anything and no one dares say anything about it. The only thing the Chinese government fears is the truth.”

“They have put pressure on Taiwan to keep me out because they fear that I will tell the Taiwanese people the truth about China. But I am more sad than I am angry,” she said.

At a separate setting at a ­Washington symposium on Taiwan on Friday, New York University law professor Jerome Cohen — who taught Ma at Harvard University — asked: “Why shouldn’t the people of Kaohsiung be free to see whatever film they want?”

“Why shouldn’t they be free to invite any visitor they want so long as that visitor is not a terrorist? Rebiya Kadeer lives in Washington … She doesn’t seem to affect the security of the city. This is nonsense. Anyone who disagrees with them [Beijing] is [branded] a terrorist,” he said.

In a separate interview, Cohen said: “I hope Mrs Kadeer will be given the chance to visit Taiwan. I don’t want to provoke the mainland, but Taiwan is a free society. I don’t like it when any free society refuses to allow someone who is an honest person and not a terrorist to come and talk.”

In Taipei yesterday, Wu said the government did not need to apologize as it has done nothing wrong.

“For the national interest and security as well as public interest, I do not welcome a person who would harm my country’s security and interest by entering the country. There is nothing wrong with this, so there is no need to apologize,” Wu said.

Wu said that as Kadeer is a ­politician, she would engage in political activity if she came to Taiwan, adding that the WUC is related to the Eastern Turkistan organization, which has terrorism connections.

“Xinjiang independence is not permitted by the [Republic of China] Constitution,” Wu said.

Earlier yesterday, Wu said: “The national security agencies rejected the entry of [people of] Eastern Turkistan in July when the World Games were held [in Kaohsiung] and during the Deaflympics in Taipei [earlier this month]. On the grounds of national security, the national interest and public safety, the Ministry of the Interior [MOI] will not issue a visa [to Kadeer]. I respect and support the decision.”

Asked if the government considered Kadeer a terrorist, Wu said: “Not to that extent, but she has ties to [terrorist organizations] to some degree.”

Asked if he believed that Kadeer, a nominee for the 2006 Nobel Peace Prize, would launch terrorist attacks, Wu said: “Neither you nor I can fully understand all the details, but the MOI, the National Immigration Agency and other [government] units understand what the situation is in the international community.”

On Japan issuing Kadeer a visa, Wu said: “There are great differences between the situation of Japan and that of our country. [The decision was made] on the grounds of comprehensive consideration.”

Wu did not specify what the differences were.

At a separate setting yesterday, Kaohsiung Mayor Chen Chu (陳菊) called on the central government to cautiously handle its decision to deny Kadeer entry to Taiwan, saying that “the denial of entry is a human rights issue.”

“Generally speaking, it’s a travesty of human rights to reject entry [to specific people]. In a democratic country, [the government] should adopt a more tolerant and open attitude in dealing with such problems,” Chen said.

DPP Chairperson Tsai Ing-wen (蔡英文) yesterday said the government should be honest about why it rejected Kadeer’s visit if the decision was made under pressure from China.

“Otherwise it is disrespectful to the Uighur people as well as to Taiwanese people’s judgement by branding Kadeer a terrorist,” Tsai said yesterday.

China indicts 21 over Urumqi violence
　

‘CAUSED GREAT LOSSES’: Chinese authorities hope that the prosecutions will help calm fear and anger among Han Chinese who have demanded swift punishment

AP, BEIJING
Sunday, Sep 27, 2009, Page 5

China issued its first indictments on Friday in connection with July’s bloody rioting between minority Muslim Uighurs and majority Han Chinese, the country’s worst outbreak of ethnic violence in decades.

Twenty-one people — mostly Uighurs — face charges including murder and arson, Xinhua news agency reported. Most of those identified in the report were Uighurs, although two Han men were also named as murder suspects.

Nearly 200 people were killed and 1,700 injured in the ethnic violence in the city of Urumqi, capital of the far western region of Xinjiang. Most of the victims were believed to be Han, millions of whom have migrated to Xinjiang since the imposition of communist rule in 1949.

The prosecutions have the potential of calming fear and anger among Han, tens of thousands of whom marched in street protests earlier this month to demand swift punishment of the riot’s perpetrators and an end to a string of deeply unsettling needle attacks.

The protests, in which five people were killed, resulted in the firing of Urumqi’s Chinese Communist Party (CCP) secretary — the city’s top official — as well as Xinjiang’s police chief.

Xinhua said that in handing down the indictments, Urumqi’s prosecutor declared the facts in the cases clear and the evidence sufficient.

The crimes had “caused great losses to people’s lives and property, seriously damaged social order, and the guilty must be prosecuted to the full extent of the law,” Xinhua said, adding that more indictments were expected soon.

Hundreds of people were detained following the riots and officials said earlier that 83 people had been formally arrested.

The fate of the other detainees remains unclear.

Xinhua did not say what penalty those charged faced if convicted, although shortly after the riot, officials said the death penalty would be sought in serious cases.

A woman from the political department of the Urumqi Intermediate Court confirmed the Xinhua report, but would not give her name or any other details.

The violence in Urumqi underscored simmering resentment among many Uighurs over what they consider Chinese occupation of their land and heavy-handed CCP controls over religion and cultural activities. Uighur extremists have long waged a low-intensity insurgency against Chinese rule, although they are believed to be few in number and poorly organized.

China has accused exiled Uighur leader Rebiya Kadeer of fomenting the July violence, but has provided no direct evidence. Kadeer and other overseas Uighur activists have denied the claims and accused police of carrying out mass detentions.

The violence broke out on July 5 after police attacked Uighurs demanding a probe into the deaths of at least two Uighurs in a mass brawl at a factory in the country’s southeast that started after Han workers accused Uighurs of molesting a Han woman.

Uighurs then rampaged through Han neighborhoods in the overwhelmingly Han city, attacking passers-by, smashing and looting property, and burning cars and buses. Police were slow to respond and two days later, Han vigilantes armed with knives and clubs roamed city streets carrying out revenge attacks on Uighurs.

Massive numbers of paramilitary police have since been deployed to guard government buildings and Uighur areas and the city remains tense. The needle attacks that authorities have blamed on Islamic separatists then began in last month, further unnerving the Han population.

Police quickly arrested a number of suspects in the attacks and an Urumqi court has sentenced seven to prison terms of up to 15 years.

Qaddafi meets relatives of two Lockerbie victims

AP, NEW YORK
Sunday, Sep 27, 2009, Page 7

A woman whose brother died in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, says she and another victim’s relative met in New York City with Libyan leader Muammar Qaddafi, whose country has been blamed for the attack.

Colorado Springs, Colorado, attorney Lisa Gibson said the meeting with Qaddafi at the Libyan Mission to the UN on Wednesday was arranged through a Libyan ambassador.

“He generally said he was sorry for the loss, but we didn’t go into any details about the bombing,” Gibson said of the 10-minute meeting with Qaddafi, who was making his first visit to the US to attend the UN General Assembly.

Gibson’s brother was stationed in the Army in Berlin and was going home for Christmas when the plane blew up, killing 270 people.

Last month, a Scottish magistrate ordered the release of convicted Lockerbie bomber Abdel Baset al-Megrahi after he was diagnosed with fatal prostate cancer. He was greeted by thousands of cheering Libyans upon his arrival, infuriating the victims’ families.

Gibson said she gave the Libyan leader a pen and a card, in which she told him she had been praying for him.

“He was very friendly and cordial to us,” Gibson said. “Honestly, I think he was touched by us being there.”

Gibson said she’s been to Libya three times, and through her humanitarian organization, Peace and Prosperity Alliance, she’s helped to raise money for Libyan children with AIDS and other humanitarian projects.

The Libyan leader has been trying to restore his country’s standing in the world and transform it from a pariah state to an accepted member of the international community.

The US restored ties with Libya in 2006, after Libya agreed to resolve the Lockerbie case in a deal that included paying compensation to the victims’ families.

Gibson said the other person who attended the meeting had lost his father in the bombing.

China’s success and Western woes
　

By Orville Schell
Sunday, Sep 27, 2009, Page 8

China’s government is making massive preparations for a grand National Day parade in Beijing’s Tiananmen Square to celebrate the 60th anniversary of the founding of the People’s Republic of China (PRC) and the 30th anniversary of Deng Xiaoping’s (鄧小平) program of “reform and opening up.” Walking through the square recently, I found myself thinking back to when I first began following China’s amazing odyssey. The iconic, Mona Lisa-like visage of Chinese leader Mao Zedong (毛澤東) still gazes out from the Gate of Heavenly Peace, but the activities taking place around me suggested how much things had changed.

When I began studying China at Harvard a half-century ago, China’s leaders trumpeted the superiority of their socialist command economy, which controlled every aspect of life. Hostility between the US and China prevented students like me from traveling there.

But in 1975, while Mao still lived, the Cultural Revolution still raged, class politics still held sway and there were no private cars, shops, advertisements or property, I arrived in Beijing. Even we visiting foreigners — all dutifully clad in blue Mao suits and caps — were expected to attend regular political “study sessions” to purify our bourgeois minds with proletarian tracts written by the Gang of Four.

That trip set an indelible baseline against which I have since been able to measure the changes China has undergone.

As Deng began to encourage individual incentives over the next decades — embodied in such slogans as “To Get Rich Is Glorious” — China’s private economy began to rise from the ashes of Mao’s revolution and I watched with amazement.

As this process unfolded, it became fashionable for market fundamentalists in the West to bask in a sense of vindication. After all, were the scales not falling away from the eyes of Chinese leaders, and were they not now turning for salvation toward the god of capitalism that they had once so militantly denounced?

This “end-of-history” interlude, when communism was either failing or recycling itself into its opposite, also encouraged many latter-day US political missionaries to proselytize for democracy and capitalism — to urge China’s leaders to abandon state controls not only over their economy, but over their political system as well.

Of course, China’s leaders vigorously resisted that evangelism — especially after the collapse of communism in Europe in 1989 — often berating the West for “intruding in the internal affairs of China” and clinging even more to their Leninist, one-party form of governance.

As the imbalance between China’s increasingly dynamic, modern and globalized economy and its opaque, single-party political rule deepened, many Western specialists predicted the contradiction would inevitably trip China up.

Instead, it was the US and the West that went into an economic tailspin.

When, after the eight catastrophic years of US president George W. Bush’s administration, his successor Barack Obama entered the White House, it seemed for a moment as if the US might be able to arrest its downward slide. But then Obama ran into a perfect storm of the worst aspects of US democracy: red-state provincialism and ignorance, fearful conservatism, Republican Party obstructionism and even some Democratic Party dissidence.

Congress became paralyzed by partisan politics. Seemingly lacking a central nervous system, it has become a dysfunctional creature with little capacity to recognize any common national, much less international, interest.

Under such circumstances, even a brilliant leader with an able staff and promising policies will be unable to pursue his agenda.

As governments across the West have become increasingly bogged down trying to fix their economies, China has been formulating a series of new, well-considered policies and forging ahead with bold decision-making to tackle one daunting problem after another.

Triumphant after last year’s Beijing Olympics, China has undertaken the most impressive infrastructure program in history, implemented a highly successful economic stimulus package and is now moving into the forefront of green technology, renewable energy and energy efficiency — the activities out of which the new global economy is certain to grow.

In short, China is humming with energy, money, plans, leadership and progress, while the West seems paralyzed.

As I strolled through Tiananmen Square, the paradox that struck me was that the very system of democratic capitalism that the West has so ardently advocated seems to be failing us. At the same time, the kind of authoritarianism and state-managed economics that we have impugned seems to be serving China well.

It is intellectually and politically unsettling to realize that if the West cannot quickly straighten out its systems of government, only politically un-reformed states like China will be able to make the decisions that a nation needs to survive in today’s high-speed, high-tech, increasingly globalized world.

Orville Schell is director of the Center on US-China Relations at the Asia Society.

What is the goal of a grassroots economy?
　

By Tsai Horng-ming 蔡宏明
Sunday, Sep 27, 2009, Page 8

A Cabinet proposal to release a cost of living index at regular intervals has become a subject of debate. Apart from the challenge of designing an index that reflects public opinion, it is necessary to clarify what the phrase “grassroots economy” means if the government hopes to alleviate economic hardship.

The first question is whether there is any need to promote a grassroots economy. Public dissatisfaction has built up after years of economic stagnation or even decline in living standards.

The government must therefore pay greater attention to creating jobs for the middle and lower classes and raising their incomes so a broader section of the populace can reap the benefits of economic growth.

Furthermore, the global economic crisis has dealt a heavy blow to consumption in Europe, the US and Japan, which has affected the nation’s exports. A grassroots economy implies developing the local economy, moving away from an export-based development model dependent largely on the electronics, information technology and telecommunications sectors. Instead, it requires focusing on local demand and locally driven growth.

This is in line with public opinion and would help transform and bolster the economy.

Understanding and monitoring the economic hardship faced by the public does not require compiling a cost of living index.

More important is formulating manufacturing and economic policies that can improve people’s lives.

The public’s desire for security is a key part of this. Public investment, community improvements, disaster reconstruction and water management — all of which are related to quality of life — must be discussed and planned with care.

Creating jobs and raising incomes are the most important aspects of a grassroots economy.

The government must pursue industrial development strategies that can improve the quality of living, including food, clothing, homes, transportation, education and entertainment.

Developing local services through public investment, promoting a manufacturing sector with local characteristics and establishing new manufacturing and service enterprises should all play important roles in economic policies.

With regard to spreading the benefits of economic growth, a grassroots economy must aim to achieve a high quality of life and high-quality products.

This includes making esthetic improvements to communities and providing public places that meet people’s needs.

Traditional markets should be renewed and communities should have sports and leisure centers.

If a grassroots economy is to help transform the economy, the government will need to sit down with enterprises and discuss how to develop technologies in all industries and apply them to new services and business models.

The goal should be to stimulate and respond to demand. For example, the government can encourage catering and service providers to adopt information technology and new forms of management.

A grassroots economy should be seen as a policy intended to meet the needs of the public and promote economic transformation.

The government should start by taking a critical look at its industrial and economic policies and then formulate a strategy that incorporates the idea of a grassroots economy.

Tsai Horng-ming is an associate professor in the Graduate Institute of International Affairs and Global Strategy at National Taiwan Normal University.

Could economic terrorism hurt Southeast Asia?
　

By Andrew Marshall
REUTERS, SINGAPORE
Sunday, Sep 27, 2009, Page 9

If the suicide bombers who targeted two luxury hotels in Jakarta this year hoped their attacks would strike a significant long-term blow against Indonesia’s economy, the reaction of financial markets suggests they were wrong.

Economic warfare is at the heart of the tactics of terrorism. A few militants with primitive and low-cost weaponry can cause economic destruction that reverberates far beyond the physical damage they inflict, impacting whole industries and countries.

TEMPORARY IMPACT

But the overwhelming evidence from militant attacks over recent decades is that the impact is almost always temporary. In the long run, economies and markets are remarkably resilient.

From the hijacked airliner attacks in the US on Sept. 11, 2001, to the suicide blasts at nightclubs in Bali in 2002 and the Madrid and London train bombings of 2004 and 2005, markets have reacted in a highly consistent pattern.

Domestic equities, bonds and the local currency suffer a knee-jerk sell-off. Risk appetite drops sharply and there is a swift flight to quality, with investors seeking the sanctuary of US treasuries and sometimes selected commodities and gold.

But within weeks — and usually days — asset prices recover. In the first trading session after the 2002 Bali bombings, the Jakarta stock market plunged more than 10 percent and the rupiah fell 3.7 percent. But within 24 days stocks were back at pre-attack levels and the rupiah recovered within five weeks.

Subsequent bombings in Indonesia had far less impact even in terms of short-run reaction. After the hotel blasts in July, stocks sank 2.7 percent but ended trade just 0.6 percent down.

LESSONS

So what are the lessons for investors and risk managers?

Firstly, the initial market impact from terror attacks is likely to be overdone and to unwind over subsequent days.

The reasons can be found in human nature — behavioral economists have shown that people tend to be naturally risk averse and prone to panic and a herd mentality in the face of uncertainty and danger. For bold investors, asset price weakness in the wake of militant attacks is a clear buying opportunity.

Second, once the initial panic eases, investors take a more rational look at the medium-term economic impact. The direct economic impact in terms of physical damage and loss of human capital is much less of an issue than the question of whether the attacks have spillover consequences that magnify their cost.

To give one extreme scenario, a militant attack that led to conflict between nuclear-armed India and Pakistan could have a devastating global effect far beyond the initial damage.

Thirdly, the micro impact of attacks can be more serious than the macro. While economies are resilient, sectors such as airlines, tourism and insurance are much more vulnerable.

Portfolio diversification can reduce this risk.

Finally, the extent to which attacks have a long-term market impact on industries and countries depends on whether they cause investors to re-evaluate their long-term risk assessments.

BALI BOMBINGS

The 2002 Bali bombings fundamentally changed perceptions of Indonesian risk for investors and tourists. Later attacks had less impact because the higher risk level was already priced in.

In the southeast Asian context, this means that even if militants in Indonesia or the Philippines are able to launch new attacks, the risk for portfolio investors is limited.

A much more significant issue would be if the risk profile of other countries in the region changed dramatically.

Thailand, Singapore and Malaysia are key flashpoints — the risks that militants launch damaging attacks on major economic or tourist targets is widely regarded as low, but the long-term economic impact would be disproportionately high because country risk estimates would be fundamentally re-rated.

For Indonesia and the Philippines, many of the risks are on the upside — if either country can demonstrate it is making sustained progress on reducing the threat from terrorism, country risk ratings will be revised in a favorable direction.

But this does not make Indonesian or Philippine markets immune from negative terrorism risk. The key issue is whether insurgents can launch attacks that would cause political turmoil.

HOPES AND RISKS

Indonesia has been a highly bullish story for investors this year because of improved economic and political stability and expectations that Indonesian President Susilo Bambang Yudhoyono, newly returned for a second term with a strong mandate, will pursue much needed market-friendly reforms and crack down on graft.

But risk analysts worry that Indonesia’s progress is highly dependent on Yudhoyono’s personal power and popular support.

He has no obvious successor who would have the power base and determination to maintain stability and continue reforms.

After the July bombings, Yudhoyono said militants were using his photograph for target practice. Police said they had foiled a plot by militants to launch a suicide mini-bus attack on the president near his residence. Were such an attack ever to succeed, it would profoundly impact Indonesia’s future.

General McChrystal’s report: a wake up call for the White House
　

Barack Obama is skeptical about sending more troops to Afghanistan before settling on a strategy, but saying no to the top commander there would be hard

By Eric Schmidt
NY TIMES NEWS SERVICE, WASHINGTON
Sunday, Sep 27, 2009, Page 9

US President Barack Obama could read the grim assessment of the war in Afghanistan from his top military commander there in two possible ways.

He could read General Stanley McChrystal’s report as a blunt and impassioned last-chance plea for a revamped counterinsurgency strategy bolstered by thousands more combat troops to rescue the beleaguered, eight-year mission.

Or he could read it as a searing indictment of US-led NATO military operations and a corrupt Afghan civilian government, pitted against a surprisingly adaptive and increasingly dangerous insurgency.

Either way, McChrystal’s 66-page report with the deceptively bland title Commander’s Initial Assessment is serving to catalyze the thinking of a president — who is keenly aware of the historical perils of a protracted, faraway war — about what he can realistically accomplish in this conflict, and whether his vision for the war and a commitment of US troops is the same as his general’s.

Obama faces a deteriorating security situation in Afghanistan, growing opposition to the war at home from Democrats and a desire to put off any major troop decision while he still needs much political capital to pass major health care legislation in Congress.

But even as the president expresses skepticism about sending more US troops to Afghanistan until he has settled on the right strategy, he is also grappling with a stark reality: It will be very hard to say no to McChrystal.

Obama has called Afghanistan a “war of necessity,” and in the most basic terms he has the same goal as his predecessor president George W. Bush did after the Sept. 11 attacks: to prevent another major terrorist assault.

“Whatever decisions I make are going to be based first on a strategy to keep us safe, then we’ll figure out how to resource it,” Obama said last Sunday on CBS’s Face the Nation. “We’re not going to put the cart before the horse and just think by sending more troops we’re automatically going to make Americans safe.”

The White House expects McChrystal’s request to be not just for US troops but for NATO forces as well. This week, the White House is sending questions about his review back to the general in Kabul, Afghanistan, and expects to get responses by the end of next week.

Senator Carl Levin, a Michigan Democrat who heads the Armed Services Committee, said in an interview on Monday that he wants to know how the uncertainty surrounding the recent Afghan elections and a plan to reintegrate Taliban fighters into Afghan society could affect McChrystal’s troop request.

Obama has had only one meeting so far on the McChrystal review, but aides plan to schedule three or four more after he returns from the G20 summit meeting in Pittsburgh, Pennsylvania, at the end of this week.

Aides said it should take weeks, not months, to make a decision.

“The president’s been very clear in our discussion that he’s open minded and he’s not going to be swayed by political correctness one way or the other,” General James Jones, the national security adviser, said in an interview.

“Different people are going to have different opinions and he wants to hear them, but at the end of the day, he’s going to do what he thinks is the right thing for the United States and most especially for the men and women who have to respond to his orders,” he said.

Senior officers who work with McChrystal say he was surprised by the dire condition of the Afghan mission when he assumed command in June.

His concerns went beyond the strength and resilience of the insurgency. McChrystal was surprised by the lack of efficient military organization at the NATO headquarters and that a significant percentage of the troops were not positioned to carry out effective counterinsurgency operations.

There was a sense among McChrystal’s staff that the military effort in Afghanistan was disjointed and had not learned from the lessons of the past years of the war.

“We haven’t been fighting in Afghanistan for eight years,” said one officer. “We’ve been fighting in Afghanistan for one year, eight times in a row.”

In his assessment, McChrystal also portrayed a more sophisticated Taliban foe that uses propaganda effectively and taps into the Afghan prison system as a training ground.

Taliban leaders based in Pakistan appoint shadow governors for most provinces, install their own courts, levy taxes, conscript fighters and wield savvy propagandists. They stand in sharp contrast to a corrupt and inept government.

And Taliban fighters exert control not only through bombs and bullets.

“The insurgents wage a ‘silent war’ of fear, intimidation and persuasion throughout the year — not just during the warmer weather ‘fighting season’ — to gain control over the population,” McChrystal said in his report.

Administration officials said that McChrystal’s assessment, while very important, was just one component in the president’s thinking.

Asked on CNN last Sunday why after eight months in office he is still searching for a strategy, Obama responded: “We put a strategy in place, clarified our goals, but what the election has shown, as well as changing circumstances in Pakistan, is that this is going to be a very difficult operation.”

“We’ve got to make sure that we’re constantly refining it to keep our focus on what our primary goals are,” he said.