From Volume 38, Issue 7 of EIR Online, Published Feb. 18, 2011
Asia News Digest

President Karzai Wants To Shut Down Parallel Government

Feb. 9 (EIRNS)—Afghan President Hamid Karzai on Feb. 8 called for closing down the bases of the provincial reconstruction teams, or PRTs, to eliminate "parallel" government structures. He was addressing a press conference in Kabul, following his trip to New Delhi and Munich.

"The Afghans want to have a government of their own. The Afghans don't want a government from abroad," he said. "The transition means giving the whole thing to Afghan ownership and leadership. Naturally, then, the PRTs will have no place." Karzai has repeatedly criticized the PRTs for undermining the Afghan central government, by offering alternative sources of funding and public works.

Karzai also said that the United States has requested him to allow it to set up permanent military bases in Afghanistan. Although he did not say how many the United States is seeking, in 2005 a media report said the United States was beefing up its military presence in Afghanistan, at the same time encircling Iran, and that Washington would set up nine new bases in Afghanistan in the provinces of Helmand, Herat, Nimrouz, Balkh, Khost, and Paktia.

Last month, U.S. Sen. Lindsey Graham (R-S.C.), in an interview with NBC news, said he wanted the Obama's Administration to consider permanent bases after NATO-led troops hand over security responsibility to Afghan forces in 2014. Concerns are rising that Afghanistan will not be ready to handle its own security against the militants by the handover date, Graham said, pointing out that the bases would be a signal to Pakistan that the Taliban are never going to come back in Afghanistan, which could change their behavior.

Iran and China To Build New Rail Lines

Feb. 8 (EIRNS)—Iran's state-run Construction and Development of Transportation Infrastructure Company today announced that it has signed a contract with China to build 5,300 km of new rail lines. The contract is worth about $13 billion. China is Iran's largest trading partner, with direct bilateral trade currently at $30 billion, up more than 30% from $21.2 billion in 2009.

On Jan. 25, Iranian Roads and Transportation Minister Hamid Behbahani announced the rail expansion plan. "All government efforts are aimed at the immediate completion of the country's highway and railway projects," he said. China will participate in building eight projects, including the 900-km Tehran-Mashhad line, the 410-km Tehran-Qom-Esfahan line, and the 370-km Qazvin-Rasht-Anzali-Astara line, all vital Eurasian Land-Bridge routes which will modernize Iran's links to Turkmenistan and Central Asia, Pakistan, and the Indian Subcontinent, and along the west coast of the Caspian Sea, eventually to Russia.

Korean Talks Fail

Feb. 9 (EIRNS)—The preliminary military talks between North and South Korea—the first since the sinking of the South Korean naval vessel Cheonan and the North's shelling of Yeonpyeong Island last year—ended without an agreement to move to higher-level talks. The South refused to move forward without the North admitting to sinking the Cheonan—which the North denies having done. China and Russia also doubt that it was a North Korean action. According to the South's Defense Ministry release, the North said: "The Cheonan incident is completely unrelated to us, and it is a humongous fabrication designed to justify the South's confrontational policy against the North, which was maneuvered by the U.S."

The North insists that their shelling of Yeonpyeong Island was "retaliation" for live-shell exercises in Northern waters, but this could likely be resolved if the U.S. and Seoul would stop insisting on blaming the North for the Cheonan incident. The "international investigation" into the incident by the U.S., Britain, Australia, and South Korea (but without China and Russia) concluded that the North did it, based on weak circumstantial evidence.

China Blasts 'Quantitative Easing' as the Heroin of the Western Economies

Feb. 9 (EIRNS)—The online People's Daily rips into the world-wide inflation driven by the U.S. Federal Reserve's money-pumping policy, known as "quantitative easing."

The problem for China, columnist Li Hong explains, is that "a seemingly sizzling economy, relying on high-flying housing and stock prices, is not healthy and mostly perilous, just like a car steered by a man on alcohol, driving on the fast lane. Equity bubbles are [like] heroin-taking that has seen the big ups and downs of some Western economies."

The impact on China is severe, Li Hing says. With "overseas hot money ... thronging to China, at a pace of more than $30 billion per month, ... to prevent property and stock market bubbles in China, or in a sense, to prevent hot money from hoarding and speculating [on] Chinese equities, effective government oversight and adequate capital control are suggested.... The People's Bank of China should be prepared to resort to an equally unprecedented 'quantitative tightening' in order to attain a balance or equilibrium." The tightening is to be accomplished by raising interest rates, which the People's Bank has now done for the third time since October, and by raising bank reserve requirements to reduce the ability of banks to lend, which the Bank has also done multiple times in the recent period.

Thailand Blames Others To Justify a War on Cambodia

Feb. 9 (EIRNS)—Thailand's Foreign Minister, Kasit Piromya, infamous for his role in a terrorist occupation of Bangkok's airport as part of the overthrow of a previous Thai government, has blamed Russia, India, and China for Thailand's border clashes with Cambodia. He provided no evidence.

"Cambodia has only a single objective—to have the Preah Vihear [temple] and claim the 4.6 square kilometers of disputed area," Kasit said at a seminar held by a Thai Senate committee. "Russia, India and China might have backed Cambodia's aggression against Thailand on February 4, and now Cambodia is taking the issue to the UN Security Council. Although Cambodia is creating the perception that it is being harassed by Thailand and trying to win sympathy from the international community, Thailand will not allow [Cambodian leader] Hun Sen, a bully boy, to bully Thailand," Kasit said.

This government statement is potentially economically suicidal, for it endangers major development deals that are in the works. Thailand is in negotiation with China on a $15 billion project to develop three main north-south high-speed rail routes, plus another (or two) east-west routes. These routes are absolutely required for Thailand's further development, and would link Thailand both to neighboring Southeast Asian nations and to southern China. Cambodia and the other mainland Southeast countries are included in the development scheme, which parallels the Eurasian Land-Bridge maps.

To date, the United States has called for restraint and has not openly chosen sides.

Thailand Backs Away From Bio-Fuel Scam

Feb. 12 (EIRNS)—Thailand is being forced to lower the bio-diesel content of its diesel fuel, by the realities of the deepening worldwide economic crisis. The country is straining to maintain the price of diesel fuel at 30 baht ($0.97) per liter, a psychologically important price. Almost all goods within Thailand are transported via diesel-powered vehicles.

Besides extending subsidies to cover the difference between the world market price and the Thai domestic prices, the government finds that it must lower the bio-diesel content from 3% to 2%. Not only is the bio-diesel component of the fuel significantly more expensive than normally manufactured diesel, but the bio-diesel fuel is made from palm oil, which is already in critically short supply and at record prices.

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