From Volume 6, Issue 47 of EIR Online, Published Nov. 20, 2007
Asia News Digest

Stung by High Oil Prices, ASEAN Ready To Go Nuclear

Nov. 14 (EIRNS)—According to a draft of a Declaration on Environmental Sustainability, issued by the Association of Southeast Asian Nations (ASEAN) and obtained by AFP, Southeast Asian leaders will promote the use of civilian nuclear power, along with other alternative energy sources, when they meet in Singapore next week.

Heads of state and government from ASEAN's member states Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam are to sign the document on Nov. 20, during their annual summit.

While, according to the draft, the leaders will agree "to take concrete measures to promote the use of renewable and alternative energy sources," more importantly, they will support "civilian nuclear power" for interested countries. The draft says ASEAN will ensure "safety and safeguards that are of current international standards and environmental sustainability." They will also set in motion a plan to establish a "regional nuclear safety regime" to ensure that plutonium, a key ingredient for making atomic weapons, does not fall into the wrong hands.

Indonesia, Thailand, and Vietnam have announced plans to build nuclear power plants by 2020, in a bid to cut their dependence on crude oil and natural gas.

British, Neocons Openly Promote Chaos in Pakistan

Nov. 16 (EIRNS)—Having succeeded in reactivating the neocons in Washington on the Pakistan issue, London is now demanding unrest and chaos as a necessary weapon to dethrone President Pervez Musharraf and weaken the Pakistani Army. On Nov. 15, Jemima Khan, former wife of fringe Pakistani politician Imran Khan, who has been detained following the declaration of state of emergency on Nov. 3, has launched what is styled as the Free Pakistan Movement (FPM), with the support of journalists, students, lawyers, doctors, other professionals, and prominent political persons of Pakistani origin living in the UK.

Jemima Khan is the daughter of the late Anglo-French businessman and British establishment figure, Sir James Goldsmith. It is evident that the FPM, which has attracted many big names in Britain, will provide British intelligence (MI6) a clear path to intervene in Pakistan's internal situation.

In addition to the Free Pakistan Movement, Prime Minister Gordon Brown said on Nov. 14 that the British government would promote a propaganda campaign, to promote "democracy" in Pakistan. Announcing an allocation of £400 million to fund the program, Brown said: "Building on initial road shows of mainstream Islamic scholarship around the country, which have attracted over 70,000 young people, and an internet site which has reached far more, we will sponsor at home and abroad, including for the first time in Pakistan, a series of national and local events to counter extremist propaganda."

Indian Government Scored on Electric Power Deficit

Nov. 16 (EIRNS)—The Indian daily Business Standard today cited the failure of Prime Minister Manmohan Singh's coalition government, the United Progressive Alliance (UPA), to provide the country with adequate electric power. Power-starved India's peak deficit touched a ten-year high of 14.6% between April and October 2007. This shortfall was not simply due to added demand, but worse-than-usual capacity addition.

The addition of 3,765 megawatts capacity in the first seven months of the financial year to March 2008, was just 32% of the target, Business Standard reported, citing official figures. Worst hit are industrialized states like Maharashtra and Gujarat in western India, where the region posted a peak shortage of 26.6% in October, the paper said.

India, under the present administration, is being inundated with foreign money, most of which is simply parked in Indian financial markets for making quick profits. India boasts of more than $250 billion of foreign exchange reserves and a GDP growth rate close to 8.5%. And, yet, when it comes to using the money to build such vital sectors of physical infrastructure as the power sector, the government chooses not to do so.

Business Standard pointed out that the government chose to scale down its expected power capacity addition in the current year to 12,000 megawatts from 17,000 megawatts. "We may actually add no more than 10,000 megawatts this year," the newspaper quoted an unnamed power ministry official as saying.

China Hit by Subprime Crash

Nov. 16 (EIRNS)—China could be hit harder than predicted by the effects of the subprime crisis on world finance, and the impact of the crash on Chinese finance needs to be revalued, the influential China Securities News warned today. Even more important, China's huge foreign reserves of $1.43 trillion are in danger, with the dollar weakening as the Federal Reserve lowers interest rates. Already the dollar has fallen more than 5% against China's international currency, the renminbi, to now about 7.45 RMB to the dollar.

So far, the China Investment Corporation, the newly created fund whose source is Chinese foreign exchange reserves, lost some $741 million on the books on Nov. 14, right after buying a $3 billion, four-year stake in the notorious U.S. private equity operation, Blackstone Group.

Other Chinese investors are losing money fast on their international investments. Of the $10.9 billion invested overseas under the Qualified Domestic Institutional Investors (QDII) program, launched in April 2006, four QDII funds alone have lost some $847 million. Bank-linked QDIIs have been hit just as hard, the Securities News reported. These two problems alone could cost China billions of dollars. The crash in yields on U.S. treasury bonds will also hit China's financial earnings.

No exact figures of the losses Chinese banks have suffered have been published, the Securities News reported, but it is known that, as of the end of August, China's three listed State-owned commercial banks,– the Industrial and Commercial Bank of China, the Bank of China, and the China Construction Bank, had also registered a loss of 10 billion yuan.

Inflationary Pressures in China

Nov. 12 (EIRNS)—The People's Bank of China has raised the reserve ratio requirements for banks for the ninth time this year alone, to 13.5%, in an effort to curb the excessive liquidity in the economy. The Chinese currency, the yuan, has been rising at an accelerating rate against the collapsing U.S. dollar in recent weeks. There is heavy pressure on the Chinese government to up-value the yuan, and "hot money," speculating on a yuan revaluation, continues to flow into China. This external pressure, including China's continuous trade surpluses, are exacerbating internal inflation.

The liquidity excess is worse than the PBOC had expected in October, and therefore the central bank raised the reserve requirement ratio for commercial banks to a ten-year high, Peng Xingyun, a senior researcher at the Chinese Academy of Social Sciences Institute of Finance and Banking, told Xinhua yesterday. Analysts at the Industrial and Commercial Bank of China, the biggest bank, are warning that the liquidity will flow into the existing real estate and stock market bubbles, and predict that the reserve rate will be up to 15% by next year. Peng said that the "PBOC raised the reserve requirement ratio before it released October's money supply and other financial statistics next week, as it is concerned about the excessive liquidity and credit increase." By end September, PBOC figures showed an 18.5% increase in M2—cash in circulation and all deposits, year on year, up to 39.3 trillion yuan ($5.2 trillion).

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