From Volume 4, Issue Number 22 of EIR Online, Published May 31, 2005
Asia News Digest

Source: Iran Asks Indian Aid, if Attacked by U.S.

Iran reportedly has sought assurances from India that, should Iran be attacked by the U.S., India would provide adequate assistance, according to one Indian source, who reported the exchange during Indian External Affairs Minister K. Natwar Singh's recent meeting with Iran's Foreign Minister Kamal Kharazzi. When Natwar Singh asked, "Where is the war?," Kharazzi reportedly answered it was coming within weeks, not months.

India is now evaluating this, along with what Secretary of State Condoleezza Rice told the Indians during her March visit to New Delhi—i.e., that "instability is coming to Asia, but which would lead to stability." New Delhi thinks she was referring to Iran, where New Delhi believes the hardliners will come to power soon.

The other indicator, this source reported, is the Iranian decision to convert a third of its $40 billion holdings into euros. This could be to avoid American sanctions.

U.S. military sources have similarly reported that senior Bush Administration officials are saying that one reason they felt confident, as of several weeks ago, that there could be a large troop withdrawal from Iraq beginning at the end of the year, is that they expect a democratic revolt to overthrow the mullahs in Tehran, and install a pro-Western regime in its place. Deputy Secretary of State Robert Zoellick, in his recent visit to Southwest Asia, where he attended the World Economic Forum regional meeting in Jordan, also announced a fundamental change in U.S. foreign policy, to go beyond diplomacy and actively intervene to promote democracy.

Indian, Russian Presidents Discuss Economic Ties

Reporting on his recent visit to Russia, Indian President A.P.J. Abdul Kalam told reporters that during his talks with President Vladimir Putin May 24, they decided on enhancing space research, civilian nuclear research, joint production of armaments, and other high-tech areas.

It was also announced that Russia will collaborate with India's Chandrayan (Moon flight) program scheduled for 2010. A 30-member delegation of Indian scientists will be in Russia in June, to be followed by the visit of a Russian team, to evaluate India's space-research infrastructure.

Russian Foreign Ministry spokesman Aleksandr Yakovenko told reporters that during talks between Kalam and Putin, special emphasis was paid to working together on economic matters.

Zionist To Replace Neo-Con as U.S. Ambassador to Afghanistan

A crestfallen Afghan President Hamid Karzai headed home last week after being ruthlessly Bush-whacked in Washington; President Bush told him to his face, during a joint press conference May 23, that notwithstanding the sanctity of Afghanistan's sovereignty, U.S. troops in that country will remain under U.S. command. The Afghan government will have no jurisdiction over the U.S. troops' actions.

No sooner had Karzai departed Washington for other U.S. locations, than Bush named Ronald Neumann, a pro-Israel acolyte and career bureaucrat, to replace neo-con Zalmay Khalilzad as the Ambassador to Afghanistan. Neumann, who earned praise from the Israelis as U.S. Ambassador to Bahrain, and is close to Madeleine Albright, is also quoted in at least one article by Daniel Pipes as one of two U.S. Ambassadors based in Arabia who has the guts to stand up for Israel.

China and India To Hold Joint Army Exercises

Indian Army Chief General Joginder Jaswant Singh told newsmen that following his discussions with visiting Chinese Chief of General Staff Gen. Liang Guanglie, who began a six-day tour of India on May 23, the armies of India and China plan to hold unprecedented joint counterterrorism and peacekeeping training programs, the Daily Times of New Delhi reported May 27.

The two armies fought a brief war in 1962, but their military ties have vastly improved since then, and their soldiers have gone on joint mountaineering expeditions in the Himalayas. "The momentum given by the leaders of our two countries is being enhanced further by the two militaries," Gen. Singh said.

"On the roadmap of military-to-military cooperation in the future are exercises where both countries could carry out counterterrorism or UN missions," he added.

Malaysia Prime Minister Says Dollar Peg Stays

In the course of his just-concluded state visit to Germany and the Netherlands, Malaysian Prime Minister Abdullah Ahmad Badawi declared that his country's currency, the ringgit, would remain at its current peg of 3.80 to the dollar, which was set on Sept. 1, 1998, against the strong objections of then-Finance Minister Anwar Ibrahim, who was overridden by then-Prime Minister Dr. Mahathir bin Mohamad.

That peg continues today. When asked, in talks with the Dutch and Germans, if the peg would continue, Badawi said: "Nothing is cast in stone and we are watching developments very closely."

He added that the government has prepared a number of scenarios on the movement of certain currencies, so that Malaysia will be able to adjust to any sudden development.

Making the point clear, Badawi said: "We don't want to be caught unprepared and we refuse to be caught unprepared."

Globalization Not Benefitting China

"Big U.S. multinationals that have factories in China actually oppose Washington's policy to upvalue the renminbi; they are making a lot of money on the re-export of their processed goods from China to the U.S., and want to keep things that way," a leading Chinese economist and advisor to the Peoples Bank of China emphasized to EIR.

"There is growing recognition among economic policymakers in China, that the whole globalization 'processing trade' is not benefitting the real Chinese economy," he said, citing the statements of Guo Shuqing, former head of China's State Administration of Foreign Exchange (SAFE), who warned in March that China "should gradually reduce the preferential treatment to exports and seriously review our foreign investment policy." Most Chinese exports are of low added-value, from foreign-owned and controlled firms, he said. Exports of relatively higher added value, and particularly of Chinese inventions, are a "persistently low" proportion of the total. "This kind of export growth is not sustainable," Guo had warned.

"China cannot just simply oppose the up-valuation of the RMB against the dollar, the situation is much more complicated than that. China needs a real reform of its current policy, because now, it is forced to accumulate huge amounts of dollar reserves, and this is not to China's benefit," the Beijing economist told EIR.

China: Savings Can Be Alternative to Foreign Investment

China's own huge savings deposits can be an alternative to dependence upon foreign investment, stated an article in the China Business newspaper, Xinhua reported May 25. Although foreign direct investment (FDI), has contributed a lot to China's rapid economic development, it also brings economic losses. At this time, about US$500 billion in FDI go into China, about 40% of GDP. Over-dependence upon FDI can lead to an "enormous cost" of opportunity to China.

The alternative is for China to use its own citizens' savings deposits. At end-of-year 2004, total savings—urban and rural—amounted to over 11.95 trillion yuan (about US$1.44 trillion). This was 1.59 trillion yuan (US$192.6 billion) more than 2003.

FDI profits end up in foreign countries. Currently, the annual profits of FDI in China are about US$50 billion—and this amount is not gained by the Chinese economy, China Business noted. Plus, the FDI flows can cause China deficits both in current and capital accounts, because these large profits are sent abroad. In addition, the focus of FDI into the coastal areas and industrial sectors, is exacerbating the imbalance of China's economic structure.

Stark Economic Divide Persists Between Rural/Urban India

India's rural-urban economic divide is still "as stark as ever," despite the "boom" in household spending in urban areas, according to a report by the National Sample Survey Organisation, based on a 2002 survey, The Hindu reported May 26.

There has been only "marginal" improvement in living conditions in rural India. This includes a "substantial increase in dependence on electricity" in the past decade, but it is still the case that just 53% of rural households have access to electricity, compared to 36% in 1993. In the cities, electricity is the main source of lighting for 92% of houses, up from 81% in 1993.

Taiwan President Chen Is in a Bind

President Chen Shui-bian has no words on the future of cross-strait relations, Taiwan News online reported May 22. Some regard opposition leaders Lien Chan's and Soong James' trips to Mainland China as treasonous, but a clear majority of the people in Taiwan want to maintain the status quo, which means neither independence nor reunification. The opposition party did President Chen a favor, when they showed that they are willing to put strengthening cross-strait relations at the center of politics in Taiwan, and President Chen is not in a position to do that. Chen finds himself having to take a more moderate stance and tone down his talk of independence from the Mainland, giving signals that he knows cross-strait ties must improve, but there is a problem.

Chen's chief of staff, Yu Shyi Kun, has been in Washington this past week. Yu has asked Washington to give Chen time to deal with the "pro-independence diehards."

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