Op-Ed Columnist
From WikiChina
By THOMAS L. FRIEDMAN
Published: November 30, 2010
While secrets from WikiLeaks were splashed all over the American newspapers, I couldn’t help but wonder: What if China had a WikiLeaker and we could see what its embassy in Washington was reporting about America? I suspect the cable would read like this:
Josh Haner/The New York Times
Thomas L. Friedman
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Washington Embassy, People’s Republic of China, to Ministry of Foreign Affairs Beijing, TOP SECRET/Subject: America today.
Things are going well here for China. America remains a deeply politically polarized country, which is certainly helpful for our goal of overtaking the U.S. as the world’s most powerful economy and nation. But we’re particularly optimistic because the Americans are polarized over all the wrong things.
There is a willful self-destructiveness in the air here as if America has all the time and money in the world for petty politics. They fight over things like — we are not making this up — how and where an airport security officer can touch them. They are fighting — we are happy to report — over the latest nuclear arms reduction treaty with Russia. It seems as if the Republicans are so interested in weakening President Obama that they are going to scuttle a treaty that would have fostered closer U.S.-Russian cooperation on issues like Iran. And since anything that brings Russia and America closer could end up isolating us, we are grateful to Senator Jon Kyl of Arizona for putting our interests ahead of America’s and blocking Senate ratification of the treaty. The ambassador has invited Senator Kyl and his wife for dinner at Mr. Kao’s Chinese restaurant to praise him for his steadfastness in protecting America’s (read: our) interests.
Americans just had what they call an “election.” Best we could tell it involved one congressman trying to raise more money than the other (all from businesses they are supposed to be regulating) so he could tell bigger lies on TV more often about the other guy before the other guy could do it to him. This leaves us relieved. It means America will do nothing serious to fix its structural problems: a ballooning deficit, declining educational performance, crumbling infrastructure and diminished immigration of new talent.
The ambassador recently took what the Americans call a fast train — the Acela — from Washington to New York City. Our bullet train from Beijing to Tianjin would have made the trip in 90 minutes. His took three hours — and it was on time! Along the way the ambassador used his cellphone to call his embassy office, and in one hour he experienced 12 dropped calls — again, we are not making this up. We have a joke in the embassy: “When someone calls you from China today it sounds like they are next door. And when someone calls you from next door in America, it sounds like they are calling from China!” Those of us who worked in China’s embassy in Zambia often note that Africa’s cellphone service was better than America’s.
But the Americans are oblivious. They travel abroad so rarely that they don’t see how far they are falling behind. Which is why we at the embassy find it funny that Americans are now fighting over how “exceptional” they are. Once again, we are not making this up. On the front page of The Washington Post on Monday there was an article noting that Republicans Sarah Palin and Mike Huckabee are denouncing Obama for denying “American exceptionalism.” The Americans have replaced working to be exceptional with talking about how exceptional they still are. They don’t seem to understand that you can’t declare yourself “exceptional,” only others can bestow that adjective upon you.
In foreign policy, we see no chance of Obama extricating U.S. forces from Afghanistan. He knows the Republicans will call him a wimp if he does, so America will keep hemorrhaging $190 million a day there. Therefore, America will lack the military means to challenge us anywhere else, particularly on North Korea, where our lunatic friends continue to yank America’s chain every six months so that the Americans have to come and beg us to calm things down. By the time the Americans do get out of Afghanistan, the Afghans will surely hate them so much that China’s mining companies already operating there should be able to buy up the rest of Afghanistan’s rare minerals.
Most of the Republicans just elected to Congress do not believe what their scientists tell them about man-made climate change. America’s politicians are mostly lawyers — not engineers or scientists like ours — so they’ll just say crazy things about science and nobody calls them on it. It’s good. It means they will not support any bill to spur clean energy innovation, which is central to our next five-year plan. And this ensures that our efforts to dominate the wind, solar, nuclear and electric car industries will not be challenged by America.
Finally, record numbers of U.S. high school students are now studying Chinese, which should guarantee us a steady supply of cheap labor that speaks our language here, as we use our $2.3 trillion in reserves to quietly buy up U.S. factories. In sum, things are going well for China in America.
Thank goodness the Americans can’t read our diplomatic cables.
Embassy Washington.
Maureen Dowd is off today.
A version of this op-ed appeared in print on December 1, 2010, on page A33 of the New York edition.
A Selection From the Cache of Diplomatic Dispatches
A Selection From the Cache of Diplomatic Dispatches
Below are a selection of the documents from a cache of a quarter-million confidential American diplomatic cables that WikiLeaks intends to make public starting on Nov. 28. A small number of names and passages in some of the cables have been removed by The New York Times to protect diplomats’ confidential sources, to keep from compromising American intelligence efforts or to protect the privacy of ordinary citizens.
Date 2009-09-29 17:21:00
Source Embassy Tripoli
Classification SECRET//NOFORN
S E C R E T SECTION 01 OF 02 TRIPOLI 000771
NOFORNSIPDIS
STATE FOR NEA/MAG AND INR.
E.O. 12958: DECL: 9/29/2019TAGS: PREL, PGOV, LY, PINRSUBJECT: A GLIMPSE INTO LIBYAN LEADER QADHAFI'S ECCENTRICITIES
CLASSIFIED BY: Gene A. Cretz, Ambassador, U.S. Embassy Tripoli,Department of State.REASON: 1.4 (b), (d)
1. (S/NF) Summary: Recent first-hand experiences with LibyanLeader Muammar al-Qadhafi and his staff, primarily inpreparation for his UNGA trip, provided rare insights intoQadhafi's inner circle and personal proclivities. Qadhafiappears to rely heavily –––– –––– –––– –––– ––––, andreportedly cannot travel with his senior Ukrainian nurse, GalynaKolotnytska. He also appears to have an intense dislike or fearof staying on upper floors, reportedly prefers not to fly overwater, and seems to enjoy horse racing and flamenco dancing.His recent travel may also suggest a diminished dependence onhis legendary female guard force, as only one woman bodyguardaccompanied him to New York. End Summary.
QADHAFI'S PERSONALITY REFLECTED IN HIS PHOBIAS
2. (S/NF) Muammar al-Qadhafi has been described as bothmercurial and eccentric, and our recent first-hand experienceswith him and his office, primarily in preparation for his UNGAtrip, demonstrated the truth of both characterizations. Fromthe moment Qadhafi's staff began to prepare for his travel tothe United States, –––– –––– –––– –––– –––– –––– ––––, –––– ––––, –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– ofhis 40-year rule, various proclivities and phobias began toreveal themselves in every logistical detail. When applying forQadhafi's visa, –––– –––– asked whether it was necessaryfor the Leader to submit a portrait of himself that fit consularapplication regulations, noting that his photo was displayedthroughout the city and that anyone of hundreds of billboardscould be photographed and shrunken to fit the application'scriteria. When the rule was enforced, –––– ––––reluctantly conceded to take a portrait of the Leaderspecifically for the visa application.
3. (S/NF) When –––– began to search for properaccommodations for Qadhafi, –––– informed us that the Leadermust stay on the first floor of any facility that was rented forhim. (–––– separately told U.S. officials in Washington thatQadhafi could not climb more than 35 steps.) –––– cited thisrequirement as the primary reason that the Libyan residence inNew Jersey was selected as the preferred accommodation siterather than the Libyan PermRep's residence in New York City.–––– also sought to find accommodations with room to pitchQadhafi's Bedouin tent, Qadhafi's traditional site for receivingvisitors and conducting meetings, as it offers him a non-verbalway of communicating that he is a man close to his culturalroots.
4. (S/NF) Qadhafi's dislike of long flights and apparent fear offlying over water also caused logistical headaches for hisstaff. When discussing flight clearances with Emboffs, ––––explained that the Libyan delegation would arrive from Portugal,as Qadhafi "cannot fly more than eight hours" and would need toovernight in Europe prior to continuing his journey to New York.–––– also revealed in the same conversation that Qadhafidoes not like to fly over water. Presumably for similarreasons, Qadhafi's staff also requested a stop in Newfoundlandto break his travel from Venezuela to Libya on September 29.[Note: The Government of Canada recently confirmed that theLibyan delegation canceled plans to stop in Newfoundland. EndNote.]
DEPENDENCIES: RELIANCE ON A SELECTIVE GROUP OF INDIVIDUALS
5. (S/NF) Qadhafi appears to be almost obsessively dependent ona small core of trusted personnel. This group includes–––– –––– ––––, –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– coordinate the logistics of Qadhafi'svisit. –––– balanced the UNGA preparations between equallyfrenetic preparations for the August 31 African Union (AU)Summit and September 1 celebration of Qadhafi's coup. ––––'–––– –––– –––– –––– –––– –––– –––– –––– –––– ––––––––. At large events such as the August 31 AU Summit andSeptember 1 celebrations, –––– –––– –––– every lastdetail of these complex gatherings, ranging from the overallprogram to the position of the press pool. At UNGA, –––– –––– –––– Qadhafi to the podium at the UNGA and–––– –––– his papers and props upon the conclusion ofthe Leader's remarks. Long-time Qadhafi Chief of Staff BashirSalah appears to play an equally important role in Qadhafi'spersonal retinue, and –––– –––– –––– –––– via anold-fashioned green phone –––– ––––'–––– ––––. It is next to ared phone, which presumably connects to Qadhafi himself. Weconstantly hear that National Security Adviser and son,Muatassim, also plays a key role as his father's confidante andhandler during travel abroad. Muatassim also seems to have beentasked with insuring that the Leader's image is well-preservedthrough the full array of carefully-planned media events.
6. (S/NF) Finally, Qadhafi relies heavily on his long-timeUkrainian nurse, Galyna Kolotnytska, who has been described as a"voluptuous blonde." Of the rumored staff of four Ukrainiannurses that cater to the Leader's health and well-being, –––– –––– –––– emphasized to multiple Emboffs that Qadhaficannot travel without Kolotnytska, as she alone "knows hisroutine." When Kolotnytska's late visa application resulted inher Security Advisory Opinion being received on the dayQadhafi's party planned to travel to the U.S., the LibyanGovernment sent a private jet to ferry her from Libya toPortugal to meet up with the Leader during his rest-stop. Someembassy contacts have claimed that Qadhafi and the 38 year-oldKolotnytska have a romantic relationship. While he did notcomment on such rumors, a Ukrainian political officer recentlyconfirmed that the Ukrainian nurses "travel everywhere with theLeader."
PREFERENCES - FROM DANCING TO HORSEMAN
7. (S/NF) In addition to the personality quirks revealed throughQadhafi's travel to New York, the Qadhafi's preferences fordancing and cultural performances were displayed over the lastmonth. The three-day spectacle of his 40th anniversary in powerincluded performances by dance troupes from Ukraine, Tunisia,Algeria, Egypt, and Morocco, as well as musical performances bybands from Mexico, Russia, New Zealand, and a number of othernations. Qadhafi appeared particularly enthralled by Tuareghorse racing during two of the events, clapping and smilingthroughout the races. The flamenco dancers that participated inhis celebratory events appeared to spark a similar interest, asQadhafi decided to stop in Seville (for a "personal trip"according to the Spanish Ambassador here) on his way back toLibya from Venezuela specifically to attend a flamenco danceperformance. [Note: That stop has reportedly been scrapped forunknown reasons. End note.]
NO NEW YORK PHOTO OPS - QADHAFI LEAVES FEMALE GUARDS AT HOME
8. (S/NF) While Qadhafi's reported female guard force has becomelegendary, it played no role in his travels to New York. Onlyone female guard was included among the approximately 350-personstrong Libyan delegation to New York. This is the same femalebodyguard who sticks close to Qadhafi in his domestic andinternational public appearances and may, in fact, play somesort of formal security role. Observers in Tripoli speculatethat the female guard force is beginning to play a diminishedrole among the Leader's personal security staff.
9. (S/NF) Comment: Qadhafi's state visits and appearances atvarious conferences and summits, both at home and abroad, haverevealed greater details about his personality and character.While it is tempting to dismiss his many eccentricities as signsof instability, Qadhafi is a complicated individual who hasmanaged to stay in power for forty years through a skillfulbalancing of interests and realpolitik methods. Continuedengagement with Qadhafi and his inner circle is important notonly to learn the motives and interests that drive the world'slongest serving dictator, but also to help overcome themisperceptions that inevitably accumulated during Qadhafi'sdecades of isolation. As –––– told us, pointing to alarger-than-life portrait of Qadhafi, "When you have beenisolated for so long, it is important to communicate." Endcomment.
CRETZ
Destination
VZCZCXRO7114OO RUEHBC RUEHDBU RUEHDE RUEHDH RUEHFL RUEHKUK RUEHKW RUEHLA RUEHNPRUEHROV RUEHSLDE RUEHTRO #0771/01 2721721ZNY SSSSS ZZHO P 291721Z SEP 09FM AMEMBASSY TRIPOLITO RUEHC/SECSTATE WASHDC IMMEDIATE 5305INFO RUEHEE/ARAB LEAGUE COLLECTIVERUEHZL/EUROPEAN POLITICAL COLLECTIVERUCNDT/USMISSION USUN NEW YORK PRIORITY 0239RHEHAAA/NSC WASHINGTON DCRUEAIIA/CIA WASHDCRHMFISS/CDR USAFRICOM STUTTGART GERUEHTRO/AMEMBASSY TRIPOLI 5851
Below are a selection of the documents from a cache of a quarter-million confidential American diplomatic cables that WikiLeaks intends to make public starting on Nov. 28. A small number of names and passages in some of the cables have been removed by The New York Times to protect diplomats’ confidential sources, to keep from compromising American intelligence efforts or to protect the privacy of ordinary citizens.
Date 2009-09-29 17:21:00
Source Embassy Tripoli
Classification SECRET//NOFORN
S E C R E T SECTION 01 OF 02 TRIPOLI 000771
NOFORNSIPDIS
STATE FOR NEA/MAG AND INR.
E.O. 12958: DECL: 9/29/2019TAGS: PREL, PGOV, LY, PINRSUBJECT: A GLIMPSE INTO LIBYAN LEADER QADHAFI'S ECCENTRICITIES
CLASSIFIED BY: Gene A. Cretz, Ambassador, U.S. Embassy Tripoli,Department of State.REASON: 1.4 (b), (d)
1. (S/NF) Summary: Recent first-hand experiences with LibyanLeader Muammar al-Qadhafi and his staff, primarily inpreparation for his UNGA trip, provided rare insights intoQadhafi's inner circle and personal proclivities. Qadhafiappears to rely heavily –––– –––– –––– –––– ––––, andreportedly cannot travel with his senior Ukrainian nurse, GalynaKolotnytska. He also appears to have an intense dislike or fearof staying on upper floors, reportedly prefers not to fly overwater, and seems to enjoy horse racing and flamenco dancing.His recent travel may also suggest a diminished dependence onhis legendary female guard force, as only one woman bodyguardaccompanied him to New York. End Summary.
QADHAFI'S PERSONALITY REFLECTED IN HIS PHOBIAS
2. (S/NF) Muammar al-Qadhafi has been described as bothmercurial and eccentric, and our recent first-hand experienceswith him and his office, primarily in preparation for his UNGAtrip, demonstrated the truth of both characterizations. Fromthe moment Qadhafi's staff began to prepare for his travel tothe United States, –––– –––– –––– –––– –––– –––– ––––, –––– ––––, –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– ofhis 40-year rule, various proclivities and phobias began toreveal themselves in every logistical detail. When applying forQadhafi's visa, –––– –––– asked whether it was necessaryfor the Leader to submit a portrait of himself that fit consularapplication regulations, noting that his photo was displayedthroughout the city and that anyone of hundreds of billboardscould be photographed and shrunken to fit the application'scriteria. When the rule was enforced, –––– ––––reluctantly conceded to take a portrait of the Leaderspecifically for the visa application.
3. (S/NF) When –––– began to search for properaccommodations for Qadhafi, –––– informed us that the Leadermust stay on the first floor of any facility that was rented forhim. (–––– separately told U.S. officials in Washington thatQadhafi could not climb more than 35 steps.) –––– cited thisrequirement as the primary reason that the Libyan residence inNew Jersey was selected as the preferred accommodation siterather than the Libyan PermRep's residence in New York City.–––– also sought to find accommodations with room to pitchQadhafi's Bedouin tent, Qadhafi's traditional site for receivingvisitors and conducting meetings, as it offers him a non-verbalway of communicating that he is a man close to his culturalroots.
4. (S/NF) Qadhafi's dislike of long flights and apparent fear offlying over water also caused logistical headaches for hisstaff. When discussing flight clearances with Emboffs, ––––explained that the Libyan delegation would arrive from Portugal,as Qadhafi "cannot fly more than eight hours" and would need toovernight in Europe prior to continuing his journey to New York.–––– also revealed in the same conversation that Qadhafidoes not like to fly over water. Presumably for similarreasons, Qadhafi's staff also requested a stop in Newfoundlandto break his travel from Venezuela to Libya on September 29.[Note: The Government of Canada recently confirmed that theLibyan delegation canceled plans to stop in Newfoundland. EndNote.]
DEPENDENCIES: RELIANCE ON A SELECTIVE GROUP OF INDIVIDUALS
5. (S/NF) Qadhafi appears to be almost obsessively dependent ona small core of trusted personnel. This group includes–––– –––– ––––, –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– coordinate the logistics of Qadhafi'svisit. –––– balanced the UNGA preparations between equallyfrenetic preparations for the August 31 African Union (AU)Summit and September 1 celebration of Qadhafi's coup. ––––'–––– –––– –––– –––– –––– –––– –––– –––– –––– ––––––––. At large events such as the August 31 AU Summit andSeptember 1 celebrations, –––– –––– –––– every lastdetail of these complex gatherings, ranging from the overallprogram to the position of the press pool. At UNGA, –––– –––– –––– Qadhafi to the podium at the UNGA and–––– –––– his papers and props upon the conclusion ofthe Leader's remarks. Long-time Qadhafi Chief of Staff BashirSalah appears to play an equally important role in Qadhafi'spersonal retinue, and –––– –––– –––– –––– via anold-fashioned green phone –––– ––––'–––– ––––. It is next to ared phone, which presumably connects to Qadhafi himself. Weconstantly hear that National Security Adviser and son,Muatassim, also plays a key role as his father's confidante andhandler during travel abroad. Muatassim also seems to have beentasked with insuring that the Leader's image is well-preservedthrough the full array of carefully-planned media events.
6. (S/NF) Finally, Qadhafi relies heavily on his long-timeUkrainian nurse, Galyna Kolotnytska, who has been described as a"voluptuous blonde." Of the rumored staff of four Ukrainiannurses that cater to the Leader's health and well-being, –––– –––– –––– emphasized to multiple Emboffs that Qadhaficannot travel without Kolotnytska, as she alone "knows hisroutine." When Kolotnytska's late visa application resulted inher Security Advisory Opinion being received on the dayQadhafi's party planned to travel to the U.S., the LibyanGovernment sent a private jet to ferry her from Libya toPortugal to meet up with the Leader during his rest-stop. Someembassy contacts have claimed that Qadhafi and the 38 year-oldKolotnytska have a romantic relationship. While he did notcomment on such rumors, a Ukrainian political officer recentlyconfirmed that the Ukrainian nurses "travel everywhere with theLeader."
PREFERENCES - FROM DANCING TO HORSEMAN
7. (S/NF) In addition to the personality quirks revealed throughQadhafi's travel to New York, the Qadhafi's preferences fordancing and cultural performances were displayed over the lastmonth. The three-day spectacle of his 40th anniversary in powerincluded performances by dance troupes from Ukraine, Tunisia,Algeria, Egypt, and Morocco, as well as musical performances bybands from Mexico, Russia, New Zealand, and a number of othernations. Qadhafi appeared particularly enthralled by Tuareghorse racing during two of the events, clapping and smilingthroughout the races. The flamenco dancers that participated inhis celebratory events appeared to spark a similar interest, asQadhafi decided to stop in Seville (for a "personal trip"according to the Spanish Ambassador here) on his way back toLibya from Venezuela specifically to attend a flamenco danceperformance. [Note: That stop has reportedly been scrapped forunknown reasons. End note.]
NO NEW YORK PHOTO OPS - QADHAFI LEAVES FEMALE GUARDS AT HOME
8. (S/NF) While Qadhafi's reported female guard force has becomelegendary, it played no role in his travels to New York. Onlyone female guard was included among the approximately 350-personstrong Libyan delegation to New York. This is the same femalebodyguard who sticks close to Qadhafi in his domestic andinternational public appearances and may, in fact, play somesort of formal security role. Observers in Tripoli speculatethat the female guard force is beginning to play a diminishedrole among the Leader's personal security staff.
9. (S/NF) Comment: Qadhafi's state visits and appearances atvarious conferences and summits, both at home and abroad, haverevealed greater details about his personality and character.While it is tempting to dismiss his many eccentricities as signsof instability, Qadhafi is a complicated individual who hasmanaged to stay in power for forty years through a skillfulbalancing of interests and realpolitik methods. Continuedengagement with Qadhafi and his inner circle is important notonly to learn the motives and interests that drive the world'slongest serving dictator, but also to help overcome themisperceptions that inevitably accumulated during Qadhafi'sdecades of isolation. As –––– told us, pointing to alarger-than-life portrait of Qadhafi, "When you have beenisolated for so long, it is important to communicate." Endcomment.
CRETZ
Destination
VZCZCXRO7114OO RUEHBC RUEHDBU RUEHDE RUEHDH RUEHFL RUEHKUK RUEHKW RUEHLA RUEHNPRUEHROV RUEHSLDE RUEHTRO #0771/01 2721721ZNY SSSSS ZZHO P 291721Z SEP 09FM AMEMBASSY TRIPOLITO RUEHC/SECSTATE WASHDC IMMEDIATE 5305INFO RUEHEE/ARAB LEAGUE COLLECTIVERUEHZL/EUROPEAN POLITICAL COLLECTIVERUCNDT/USMISSION USUN NEW YORK PRIORITY 0239RHEHAAA/NSC WASHINGTON DCRUEAIIA/CIA WASHDCRHMFISS/CDR USAFRICOM STUTTGART GERUEHTRO/AMEMBASSY TRIPOLI 5851
02/12 Swedish Court Confirms Warrant for WikiLeaks Chief
Swedish Court Confirms Arrest Warrant for WikiLeaks Founder
By JOHN F. BURNS and ALAN COWELL
Published: December 2, 2010
LONDON — Sweden’s highest court refused on Thursday to allow Julian Assange, the founder of the WikiLeaks whistle-blowing organization, to appeal a court order seeking his arrest to face questioning over alleged sex crimes, his lawyer and said.
In a telephone interview, Mark Stephens, Mr. Assange’s lawyer in Britain, said the ruling by the Stockholm court exhausted his client’s legal options in trying to overturn the arrest order in Sweden, where the offenses are alleged to have taken place. Thursday’s ruling came a day after Interpol, the global police body, said it had been circulating a so-called Red Notice seeking Mr. Assange’s arrest for almost two weeks. Reuters quoted Kerstin Norman, a Swedish High Court official, as saying the ruling meant that earlier warrants for Mr. Assange’s arrest were still in force.
In a statement issued from its headquarters in the French city of Lyon, Interpol said on Wednesday that it had issued its call on Nov. 20, two days after Swedish prosecutors won court approval for a warrant that Interpol could circulate, and that it had only now received Sweden’s authorization to make its action public.
Also on Wednesday, WikiLeaks accused Amazon.com of ending an agreement to host its Web site. Amazon hosts the sites of many companies and organizations as part of its Amazon Web Services program.
The whereabouts of Mr. Assange, 39, is unknown, but the sequence of recent events suggests that if he had wanted to flee Britain, his last known location, without being arrested, he might have had to do so within 48 hours of the Nov. 18 Swedish court ruling.
A report in the British newspaper, The Independent, on Thursday suggested that Scotland Yard’s Serious Organized Crime Agency knew the whereabouts of Mr. Assange. He is said to be in the south of England and Scotland Yard even has a telephone number for him, but they have declined to arrest him until they clarify technical difficulties with paperwork filed by the Swedish prosecutors, the report said.
Mr. Stephens, Mr. Assange’s lawyer, said his client’s arrest and extradition might not be imminent. “Given the procedural defects we’ve seen so far,” he said, “I’d be absolutely astonished if the Swedes were able to present a warrant valid in this country.”
The developments came as several newspapers, including The New York Times, published confidential documents obtained by WikiLeaks and made available from a mass of some 250,000 diplomatic cables from the State Department, including communications concerning American policy toward Iran, Pakistan, North Korea, Russia and many other countries.
In a message posted on Twitter, WikiLeaks said its servers at Amazon had been “ousted,” adding that its money would now be spent “to employ people in Europe.”
An hour and a half later, WikiLeaks continued the attack, saying, “If Amazon are so uncomfortable with the first amendment, they should get out of the business of selling books.” WikiLeaks then posted a link to its donations page, with an appeal to “Keep WikiLeaks strong.”
Amazon did not immediately respond to requests for comment about any business relationship with WikiLeaks.
The WikiLeaks site was inaccessible for several hours before it switched to servers owned by its previous Swedish host, Bahnhof, The Associated Press said.
Senator Joseph I. Lieberman, independent of Connecticut, said Amazon had stopped hosting the WikiLeaks site on Wednesday after being contacted by the staff of the Homeland Security and Governmental Affairs Committee. Staff members had asked Amazon to explain its business relationship with WikiLeaks, which Mr. Lieberman, the committee’s chairman, had criticized for publishing sensitive government documents.
“I wish that Amazon had taken this action earlier, based on WikiLeaks’s previous publication of classified material,” the senator said in a statement. “The company’s decision to cut off WikiLeaks now is the right decision and should set the standard for other companies WikiLeaks is using to distribute its illegally seized material.”
Mr. Lieberman called on any other company that is hosting WikiLeaks’s Web site to stop immediately, saying that its “illegal, outrageous, and reckless acts have compromised our national security and put lives at risk around the world.”
“No responsible company — whether American or foreign — should assist WikiLeaks in its efforts to disseminate these stolen materials,” he said. “I will be asking Amazon about the extent of its relationship with WikiLeaks and what it and other Web service providers will do in the future to ensure that their services are not used to distribute stolen, classified information.”
The Swedish prosecutor’s office said almost two weeks ago that a court in Stockholm had approved its request for the arrest of Mr. Assange to face questioning on suspicion of “rape, sexual molestation and unlawful coercion” — charges that he has strongly denied and that WikiLeaks has dismissed as “dirty tricks” meant to punish him for his organization’s work.
The accusations were first made against Mr. Assange after he traveled to Sweden in mid-August and had brief relationships with two Swedish women.
At that time, he said he intended to establish a more secure base for himself and WikiLeaks under the wide protections afforded to whistle-blowers by Swedish law. The organization already had strong support there, and used Sweden as a base for some of the multiple Web servers that stored and disseminated its caches of secret documents.
According to accounts the two Swedish women gave to the police and friends, each had consensual sexual encounters with Mr. Assange that became nonconsensual. Mr. Assange has portrayed the relationships as consensual and questioned the veracity of the women’s accounts.
A spokesman for Scotland Yard said the force had received “no intelligence” that Mr. Assange, an Australian, was still in London, and that while the Interpol alert did not compel the British police to hunt for him, “if that intelligence comes in, or we have reason to believe that a person who has a Red Notice out on them is in a certain location, we will find them and extradite them as per the international rules.”
Swedish Court Confirms Arrest Warrant for WikiLeaks Founder
Mr. Lieberman called on any other company that is hosting WikiLeaks’s Web site to stop immediately, saying that its “illegal, outrageous, and reckless acts have compromised our national security and put lives at risk around the world.”
“No responsible company — whether American or foreign — should assist WikiLeaks in its efforts to disseminate these stolen materials,” he said. “I will be asking Amazon about the extent of its relationship with WikiLeaks and what it and other Web service providers will do in the future to ensure that their services are not used to distribute stolen, classified information.”
The Swedish prosecutor’s office said almost two weeks ago that a court in Stockholm had approved its request for the arrest of Mr. Assange to face questioning on suspicion of “rape, sexual molestation and unlawful coercion” — charges that he has strongly denied and that WikiLeaks has dismissed as “dirty tricks” meant to punish him for his organization’s work.
The accusations were first made against Mr. Assange after he traveled to Sweden in mid-August and had brief relationships with two Swedish women.
At that time, he said he intended to establish a more secure base for himself and WikiLeaks under the wide protections afforded to whistle-blowers by Swedish law. The organization already had strong support there, and used Sweden as a base for some of the multiple Web servers that stored and disseminated its caches of secret documents.
According to accounts the two Swedish women gave to the police and friends, each had consensual sexual encounters with Mr. Assange that became nonconsensual. Mr. Assange has portrayed the relationships as consensual and questioned the veracity of the women’s accounts.
A spokesman for Scotland Yard said the force had received “no intelligence” that Mr. Assange, an Australian, was still in London, and that while the Interpol alert did not compel the British police to hunt for him, “if that intelligence comes in, or we have reason to believe that a person who has a Red Notice out on them is in a certain location, we will find them and extradite them as per the international rules.”
John F. Burns reported from London, and Alan Cowell from Paris. Ravi Somaiya contributed reporting from London, and Verne G. Kopytoff from San Francisco.
By JOHN F. BURNS and ALAN COWELL
Published: December 2, 2010
LONDON — Sweden’s highest court refused on Thursday to allow Julian Assange, the founder of the WikiLeaks whistle-blowing organization, to appeal a court order seeking his arrest to face questioning over alleged sex crimes, his lawyer and said.
State’s Secrets
Articles in this series examine American diplomatic relations as a window on relations with the rest of the world in an age of war and
terrorism.
Documents: Selected Dispatches
The Lede
Updates on the reaction to the leak of diplomatic cables.
Related
U.S. Weighs Prosecution of WikiLeaks Founder, but Legal Scholars Warn of Steep
Hurdles (December 2, 2010)
Interpol Called for Arrest of WikiLeaks Founder (December 2, 2010)
In a telephone interview, Mark Stephens, Mr. Assange’s lawyer in Britain, said the ruling by the Stockholm court exhausted his client’s legal options in trying to overturn the arrest order in Sweden, where the offenses are alleged to have taken place. Thursday’s ruling came a day after Interpol, the global police body, said it had been circulating a so-called Red Notice seeking Mr. Assange’s arrest for almost two weeks. Reuters quoted Kerstin Norman, a Swedish High Court official, as saying the ruling meant that earlier warrants for Mr. Assange’s arrest were still in force.
In a statement issued from its headquarters in the French city of Lyon, Interpol said on Wednesday that it had issued its call on Nov. 20, two days after Swedish prosecutors won court approval for a warrant that Interpol could circulate, and that it had only now received Sweden’s authorization to make its action public.
Also on Wednesday, WikiLeaks accused Amazon.com of ending an agreement to host its Web site. Amazon hosts the sites of many companies and organizations as part of its Amazon Web Services program.
The whereabouts of Mr. Assange, 39, is unknown, but the sequence of recent events suggests that if he had wanted to flee Britain, his last known location, without being arrested, he might have had to do so within 48 hours of the Nov. 18 Swedish court ruling.
A report in the British newspaper, The Independent, on Thursday suggested that Scotland Yard’s Serious Organized Crime Agency knew the whereabouts of Mr. Assange. He is said to be in the south of England and Scotland Yard even has a telephone number for him, but they have declined to arrest him until they clarify technical difficulties with paperwork filed by the Swedish prosecutors, the report said.
Mr. Stephens, Mr. Assange’s lawyer, said his client’s arrest and extradition might not be imminent. “Given the procedural defects we’ve seen so far,” he said, “I’d be absolutely astonished if the Swedes were able to present a warrant valid in this country.”
The developments came as several newspapers, including The New York Times, published confidential documents obtained by WikiLeaks and made available from a mass of some 250,000 diplomatic cables from the State Department, including communications concerning American policy toward Iran, Pakistan, North Korea, Russia and many other countries.
In a message posted on Twitter, WikiLeaks said its servers at Amazon had been “ousted,” adding that its money would now be spent “to employ people in Europe.”
An hour and a half later, WikiLeaks continued the attack, saying, “If Amazon are so uncomfortable with the first amendment, they should get out of the business of selling books.” WikiLeaks then posted a link to its donations page, with an appeal to “Keep WikiLeaks strong.”
Amazon did not immediately respond to requests for comment about any business relationship with WikiLeaks.
The WikiLeaks site was inaccessible for several hours before it switched to servers owned by its previous Swedish host, Bahnhof, The Associated Press said.
Senator Joseph I. Lieberman, independent of Connecticut, said Amazon had stopped hosting the WikiLeaks site on Wednesday after being contacted by the staff of the Homeland Security and Governmental Affairs Committee. Staff members had asked Amazon to explain its business relationship with WikiLeaks, which Mr. Lieberman, the committee’s chairman, had criticized for publishing sensitive government documents.
“I wish that Amazon had taken this action earlier, based on WikiLeaks’s previous publication of classified material,” the senator said in a statement. “The company’s decision to cut off WikiLeaks now is the right decision and should set the standard for other companies WikiLeaks is using to distribute its illegally seized material.”
Mr. Lieberman called on any other company that is hosting WikiLeaks’s Web site to stop immediately, saying that its “illegal, outrageous, and reckless acts have compromised our national security and put lives at risk around the world.”
“No responsible company — whether American or foreign — should assist WikiLeaks in its efforts to disseminate these stolen materials,” he said. “I will be asking Amazon about the extent of its relationship with WikiLeaks and what it and other Web service providers will do in the future to ensure that their services are not used to distribute stolen, classified information.”
The Swedish prosecutor’s office said almost two weeks ago that a court in Stockholm had approved its request for the arrest of Mr. Assange to face questioning on suspicion of “rape, sexual molestation and unlawful coercion” — charges that he has strongly denied and that WikiLeaks has dismissed as “dirty tricks” meant to punish him for his organization’s work.
The accusations were first made against Mr. Assange after he traveled to Sweden in mid-August and had brief relationships with two Swedish women.
At that time, he said he intended to establish a more secure base for himself and WikiLeaks under the wide protections afforded to whistle-blowers by Swedish law. The organization already had strong support there, and used Sweden as a base for some of the multiple Web servers that stored and disseminated its caches of secret documents.
According to accounts the two Swedish women gave to the police and friends, each had consensual sexual encounters with Mr. Assange that became nonconsensual. Mr. Assange has portrayed the relationships as consensual and questioned the veracity of the women’s accounts.
A spokesman for Scotland Yard said the force had received “no intelligence” that Mr. Assange, an Australian, was still in London, and that while the Interpol alert did not compel the British police to hunt for him, “if that intelligence comes in, or we have reason to believe that a person who has a Red Notice out on them is in a certain location, we will find them and extradite them as per the international rules.”
Swedish Court Confirms Arrest Warrant for WikiLeaks Founder
Mr. Lieberman called on any other company that is hosting WikiLeaks’s Web site to stop immediately, saying that its “illegal, outrageous, and reckless acts have compromised our national security and put lives at risk around the world.”
“No responsible company — whether American or foreign — should assist WikiLeaks in its efforts to disseminate these stolen materials,” he said. “I will be asking Amazon about the extent of its relationship with WikiLeaks and what it and other Web service providers will do in the future to ensure that their services are not used to distribute stolen, classified information.”
The Swedish prosecutor’s office said almost two weeks ago that a court in Stockholm had approved its request for the arrest of Mr. Assange to face questioning on suspicion of “rape, sexual molestation and unlawful coercion” — charges that he has strongly denied and that WikiLeaks has dismissed as “dirty tricks” meant to punish him for his organization’s work.
The accusations were first made against Mr. Assange after he traveled to Sweden in mid-August and had brief relationships with two Swedish women.
At that time, he said he intended to establish a more secure base for himself and WikiLeaks under the wide protections afforded to whistle-blowers by Swedish law. The organization already had strong support there, and used Sweden as a base for some of the multiple Web servers that stored and disseminated its caches of secret documents.
According to accounts the two Swedish women gave to the police and friends, each had consensual sexual encounters with Mr. Assange that became nonconsensual. Mr. Assange has portrayed the relationships as consensual and questioned the veracity of the women’s accounts.
A spokesman for Scotland Yard said the force had received “no intelligence” that Mr. Assange, an Australian, was still in London, and that while the Interpol alert did not compel the British police to hunt for him, “if that intelligence comes in, or we have reason to believe that a person who has a Red Notice out on them is in a certain location, we will find them and extradite them as per the international rules.”
John F. Burns reported from London, and Alan Cowell from Paris. Ravi Somaiya contributed reporting from London, and Verne G. Kopytoff from San Francisco.
30/11 How to Improve Your Financial Willpower
November 30, 2010, 12:03 pm — Updated: 12:11 pm -->
How to Improve Your Financial Willpower
By RAMIT SETHI
Ramit Sethi runs the Web site I Will Teach You to Be Rich.
One of my friends has been meaning to fax his health insurance company to stop an overcharge worth hundreds of dollars each month. When I asked him why it’s taking so long to fix it, he gave me an astonishing reason: He said he didn’t have a fax machine.
It’d be easy to point and laugh at him for being lazy. But he’s a successful entrepreneur. So why does he find it so hard to motivate himself?
Many of us think we make rational financial decisions. We believe we’re in control. “If I just try harder,” we say, “I could save $100 more each month.”
Yet time and time again, our willpower fails us, and we yo-yo back to our same spending patterns.
So here’s how to turn a few powerful psychological principles in your favor and save more, pay off debt and live a richer life.
Last year, ClimateWire wrote about a fascinating study in behavioral change. Researchers created a workshop on energy efficiency and invited 40 people to attend.
The results: Participants “significantly knew and cared more about the issues after the workshop than before.” But when the researchers looked at attendees’ actions afterward, the results said otherwise. Only eight people installed low-flow shower heads, even though all 40 participants had been given the shower heads at the workshop.
Behavioral change turns out to be extraordinarily hard — even when we believe it’s important and others try to make it easy for us. So we think that if we only try harder we can do anything.
But new psychological research finally acknowledges that willpower is a limited resource. As Stanford psychologist BJ Fogg says, “In the long term, willpower alone won’t work for difficult behaviors. You need to take a different approach, such as changing your environment, removing triggers and taking baby steps.”
This is why people who try to save on everything — coffee, clothes, going out, travel — often fail, while people who focus on one or two areas are able to save dramatically more.
So keeping all of this in mind, what simple psychological changes can you make to change your own behavior, starting immediately?
Start by changing your defaults.
Researchers found that when 401(k) accounts went from “opt-in,” which requires employees to fill out enrollment paperwork, to automatically enrolling employees and requiring them to “opt-out” if they didn’t want to participate, contribution rates soared from less than 40 percent to nearly 100 percent.
If you had asked these employees if their retirement was important to them, 100 percent of them would have said yes. But when you looked at their behavior, these employees were on track to lose tens of thousands of dollars over their lifetimes due to simple inaction. Research has found that educating them would have done very little. But a change in defaults accomplished a lot.
The same approach works for people who try over and over to save a few hundred dollars each month, but things “just keep coming up.” These people blame themselves for their lack of willpower, but never create systems to automate savings.
Defaults are boring. They’re not sexy. But they work.
Here are three other ways to use psychological principles to change your behavior:
1) Automate your personal finances
Most people complain about money for their entire lives, getting hit with late fees, never saving enough and dreading the task of budgeting. Yet it’s possible to spend less than one hour per month on money and still save for future purchases, pay bills automatically and invest every single month. I’ve outlined what you need to do to make it this happen in a 12-minute video.
And here’s a diagram from my book, “I Will Teach You To Be Rich” that shows my automation system:
Ramit Sethi
2. Use your behavior to change your attitude
Many people assume that our attitudes influence behavior, telling ourselves that “I’m frugal, so I don’t buy expensive jeans.” But in psychological research, behavioral change works in reverse, too. Your behaviors can actually affect your attitudes and emotions. For example, researchers have found that if you nod your head when listening to a persuasive message, you’re more likely to be persuaded.
How can we use this to our advantage?
Identify one thing you want to do more of (say, read a fiction book). Now, instead of waiting for some day when you’ll actually do it, add a calendar reminder every week for a month. After that, ask yourself if you still need that calendar reminder.
3. Stop trying to save on everything.
Every morning we wake up facing infinite financial possibilities. Should we pay down debt? Buy that latte? Eat out with friends?
Overwhelmed with choices, we do the same thing we always do: nothing.
Instead of trying to save a little bit on everything, focus on your two biggest discretionary expenses. For example, my two biggest discretionary expenses are eating out and drinking. Over the next six months, cut each down by 25 to 33 percent.
So willpower matters, but you can set up all sorts of systems to overcome its ill effects.
What psychological techniques have you deployed to change your own behavior?
How to Improve Your Financial Willpower
By RAMIT SETHI
Ramit Sethi runs the Web site I Will Teach You to Be Rich.
One of my friends has been meaning to fax his health insurance company to stop an overcharge worth hundreds of dollars each month. When I asked him why it’s taking so long to fix it, he gave me an astonishing reason: He said he didn’t have a fax machine.
It’d be easy to point and laugh at him for being lazy. But he’s a successful entrepreneur. So why does he find it so hard to motivate himself?
Many of us think we make rational financial decisions. We believe we’re in control. “If I just try harder,” we say, “I could save $100 more each month.”
Yet time and time again, our willpower fails us, and we yo-yo back to our same spending patterns.
So here’s how to turn a few powerful psychological principles in your favor and save more, pay off debt and live a richer life.
Last year, ClimateWire wrote about a fascinating study in behavioral change. Researchers created a workshop on energy efficiency and invited 40 people to attend.
The results: Participants “significantly knew and cared more about the issues after the workshop than before.” But when the researchers looked at attendees’ actions afterward, the results said otherwise. Only eight people installed low-flow shower heads, even though all 40 participants had been given the shower heads at the workshop.
Behavioral change turns out to be extraordinarily hard — even when we believe it’s important and others try to make it easy for us. So we think that if we only try harder we can do anything.
But new psychological research finally acknowledges that willpower is a limited resource. As Stanford psychologist BJ Fogg says, “In the long term, willpower alone won’t work for difficult behaviors. You need to take a different approach, such as changing your environment, removing triggers and taking baby steps.”
This is why people who try to save on everything — coffee, clothes, going out, travel — often fail, while people who focus on one or two areas are able to save dramatically more.
So keeping all of this in mind, what simple psychological changes can you make to change your own behavior, starting immediately?
Start by changing your defaults.
Researchers found that when 401(k) accounts went from “opt-in,” which requires employees to fill out enrollment paperwork, to automatically enrolling employees and requiring them to “opt-out” if they didn’t want to participate, contribution rates soared from less than 40 percent to nearly 100 percent.
If you had asked these employees if their retirement was important to them, 100 percent of them would have said yes. But when you looked at their behavior, these employees were on track to lose tens of thousands of dollars over their lifetimes due to simple inaction. Research has found that educating them would have done very little. But a change in defaults accomplished a lot.
The same approach works for people who try over and over to save a few hundred dollars each month, but things “just keep coming up.” These people blame themselves for their lack of willpower, but never create systems to automate savings.
Defaults are boring. They’re not sexy. But they work.
Here are three other ways to use psychological principles to change your behavior:
1) Automate your personal finances
Most people complain about money for their entire lives, getting hit with late fees, never saving enough and dreading the task of budgeting. Yet it’s possible to spend less than one hour per month on money and still save for future purchases, pay bills automatically and invest every single month. I’ve outlined what you need to do to make it this happen in a 12-minute video.
And here’s a diagram from my book, “I Will Teach You To Be Rich” that shows my automation system:
Ramit Sethi
2. Use your behavior to change your attitude
Many people assume that our attitudes influence behavior, telling ourselves that “I’m frugal, so I don’t buy expensive jeans.” But in psychological research, behavioral change works in reverse, too. Your behaviors can actually affect your attitudes and emotions. For example, researchers have found that if you nod your head when listening to a persuasive message, you’re more likely to be persuaded.
How can we use this to our advantage?
Identify one thing you want to do more of (say, read a fiction book). Now, instead of waiting for some day when you’ll actually do it, add a calendar reminder every week for a month. After that, ask yourself if you still need that calendar reminder.
3. Stop trying to save on everything.
Every morning we wake up facing infinite financial possibilities. Should we pay down debt? Buy that latte? Eat out with friends?
Overwhelmed with choices, we do the same thing we always do: nothing.
Instead of trying to save a little bit on everything, focus on your two biggest discretionary expenses. For example, my two biggest discretionary expenses are eating out and drinking. Over the next six months, cut each down by 25 to 33 percent.
Courtesy of Ramit Sethi
So willpower matters, but you can set up all sorts of systems to overcome its ill effects.
What psychological techniques have you deployed to change your own behavior?
01/12 Worries About Italy and Belgium in EuroZone
By LIZ ALDERMAN
Published: December 1, 2010
Throughout Europe’s financial crisis, Italy and Belgium have managed to avoid being one of the countries that keep people awake at night.
But even as concern mounts that Portugal and possibly Spain may seek financial aid after Greece and Ireland requested bailouts, investors have started asking whether those two economies may be the next weak links in Europe’s monetary union, the euro.
Italy and Belgium have a lot in common: both are less dependent on foreign creditors than Greece or Ireland. But each is plagued by severe political dysfunction, which has raised questions about whether they can ever repay a mountain of debt, respectively the second- and third-heaviest loads in the European monetary union after Greece.
Both countries have long histories of debt and political problems that contributed to economic downturns in the past. But no one seemed to pay attention during the current crisis until this week, when investors, transfixed by debt fears in other countries, drove borrowing costs in Italy and Belgium to near record highs.
Investors eased some of that pressure Wednesday after the European Central Bank signaled that it could take new steps to prevent the market contagion by buying more bonds of crisis-stricken countries. Stocks in Europe rose about 2 percent. And yields on government bonds fell after rising sharply in the past couple of weeks amid worries about the growing risk of repayment, although yields are still near their recent highs.
While few currently think these two countries have a high risk of defaulting, the spotlight could turn back to Belgium and glare harshest on Italy, the third-largest euro zone economy after Germany and France, if neither can muster the political cohesion needed to assure financial markets that they can reduce their debt.
“The simple lesson of the last few days is that if you have a very high level of debt, you are not safe if contagion spreads,” said Marco Annunziata, chief economist for Unicredit.
Italy has done a better job than Greece in keeping its fiscal house in order during the debt crisis. The Italian finance minister, Giulio Tremonti, prudently cut government spending and overhauled its expensive pensions system with the blessing of Prime Minister Silvio Berlusconi’s government.
The nation’s current-account balance is modest, and it enjoys high household and corporate savings. Government-issued debt is split almost evenly between foreign investors and Italians, who snap up the offerings to augment their savings. Italian banks, unlike Ireland’s, are relatively sound and did not need a bailout.
But Italy has traditionally depended on state borrowing, even as its efforts through the years to improve growth have stumbled. That raised new concerns after the global financial crisis hit industrial production, a pillar of the Italian economy, and employers failed to improve competitiveness by limiting wages or improving productivity. Having joined the euro zone, Italy, like Belgium, is no longer free to devalue its currency to revive growth.
While Italy’s debt did not balloon overnight, it stands at about 118 percent of economic output, second only to Greece in the euro zone. And despite modest growth during the crisis, the Italian economy is not expanding quickly enough to cover its costs, including those of caring for the pensions and health care of an aging population.
Investors jumped on that dynamic this week in a way they had not since the financial crisis began, driving Italy’s borrowing costs to near-record highs.
“Italy has become a concern because the economy is not growing fast enough to keep up with the public debt,” said Giacomo Vaciago, professor of political economy at the Catholic University of Milan. “With a deficit of 5 percent of G.D.P., and growth of 1 percent, the fear is that you will never reverse your budget balance, and therefore the common judgment is that sooner or later Italy could default.”
The worries are compounded by a continuing political crisis that will come to a head in a few weeks for Mr. Berlusconi, whose staying power may be tested following a series of sex scandals and as the economy ebbs. He faces a confidence vote this month that could lead to the collapse of his conservative government.
Fractured politics has also undermined the tiny nation of Belgium, where decades-long efforts to break the country into separate French and Flemish-speaking nations gained new vigor after elections this summer.
Nearly six months later, the country has not put together a federal government. While investors brushed off such problems in the past, as in Italy, they seized on the uncertainty this week and drove Belgium’s borrowing costs to a 10-year high.
“Politicians are playing with fire,” said Steven Vanneste, an economic adviser at BNP Paribas Fortis. “They can only blame themselves because they voiced the option of breaking up the country.”
Faced with the prospect of market contagion, however, politicians may quickly become pragmatic and form a new government within a month, he said.
A month might be rapid in political terms, but it can be an eternity for fast-moving financial markets. The lingering power vacuum increases uncertainty about how Belgium’s debt load — nearly 100 percent of gross domestic product — would be divided between the French and Flemish populations and repaid to investors. As long as the uncertainty persists, Belgium’s borrowing costs could rise again.
Panic about Belgium’s finances would seem illogical, since the country has the wherewithal to repay debt: It has kept a current-account surplus for the last 25 years and has a healthy private sector, a high savings rate and a wealthy population. It enjoys a close trade relationship with Germany, helping to fuel exports, and employment is rising. Growth is expected to be 2.1 percent this year before and 1.7 percent in 2011, above the euro zone average.
Belgium also has a large banking sector that was bailed out by the government in 2008 amid a crisis, and whose assets represent about 340 percent of G.D.P. Banks like Dexia and KBC are the biggest holders in the Benelux countries of debt in Portugal, Italy, Ireland, Greece and Spain, but they have taken steps to reduce their exposure.
Still, “the market is looking at every country, and the moment there is some weakness, they’re attacking it,” Mr. Vanneste said.
In the end, analysts said, Italy’s problems are probably bigger than Belgium’s — and so are the stakes should markets decide those problems are unsolvable.
“Italy cannot fail — that would be the end of the euro zone,” said Daniel Gros, the head of the Center for European Policy Studies in Brussels. “Everything and anything that would be needed to save Italy would be done.”
Published: December 1, 2010
Throughout Europe’s financial crisis, Italy and Belgium have managed to avoid being one of the countries that keep people awake at night.
But even as concern mounts that Portugal and possibly Spain may seek financial aid after Greece and Ireland requested bailouts, investors have started asking whether those two economies may be the next weak links in Europe’s monetary union, the euro.
Italy and Belgium have a lot in common: both are less dependent on foreign creditors than Greece or Ireland. But each is plagued by severe political dysfunction, which has raised questions about whether they can ever repay a mountain of debt, respectively the second- and third-heaviest loads in the European monetary union after Greece.
Both countries have long histories of debt and political problems that contributed to economic downturns in the past. But no one seemed to pay attention during the current crisis until this week, when investors, transfixed by debt fears in other countries, drove borrowing costs in Italy and Belgium to near record highs.
Investors eased some of that pressure Wednesday after the European Central Bank signaled that it could take new steps to prevent the market contagion by buying more bonds of crisis-stricken countries. Stocks in Europe rose about 2 percent. And yields on government bonds fell after rising sharply in the past couple of weeks amid worries about the growing risk of repayment, although yields are still near their recent highs.
While few currently think these two countries have a high risk of defaulting, the spotlight could turn back to Belgium and glare harshest on Italy, the third-largest euro zone economy after Germany and France, if neither can muster the political cohesion needed to assure financial markets that they can reduce their debt.
“The simple lesson of the last few days is that if you have a very high level of debt, you are not safe if contagion spreads,” said Marco Annunziata, chief economist for Unicredit.
Italy has done a better job than Greece in keeping its fiscal house in order during the debt crisis. The Italian finance minister, Giulio Tremonti, prudently cut government spending and overhauled its expensive pensions system with the blessing of Prime Minister Silvio Berlusconi’s government.
The nation’s current-account balance is modest, and it enjoys high household and corporate savings. Government-issued debt is split almost evenly between foreign investors and Italians, who snap up the offerings to augment their savings. Italian banks, unlike Ireland’s, are relatively sound and did not need a bailout.
But Italy has traditionally depended on state borrowing, even as its efforts through the years to improve growth have stumbled. That raised new concerns after the global financial crisis hit industrial production, a pillar of the Italian economy, and employers failed to improve competitiveness by limiting wages or improving productivity. Having joined the euro zone, Italy, like Belgium, is no longer free to devalue its currency to revive growth.
While Italy’s debt did not balloon overnight, it stands at about 118 percent of economic output, second only to Greece in the euro zone. And despite modest growth during the crisis, the Italian economy is not expanding quickly enough to cover its costs, including those of caring for the pensions and health care of an aging population.
Investors jumped on that dynamic this week in a way they had not since the financial crisis began, driving Italy’s borrowing costs to near-record highs.
“Italy has become a concern because the economy is not growing fast enough to keep up with the public debt,” said Giacomo Vaciago, professor of political economy at the Catholic University of Milan. “With a deficit of 5 percent of G.D.P., and growth of 1 percent, the fear is that you will never reverse your budget balance, and therefore the common judgment is that sooner or later Italy could default.”
The worries are compounded by a continuing political crisis that will come to a head in a few weeks for Mr. Berlusconi, whose staying power may be tested following a series of sex scandals and as the economy ebbs. He faces a confidence vote this month that could lead to the collapse of his conservative government.
Fractured politics has also undermined the tiny nation of Belgium, where decades-long efforts to break the country into separate French and Flemish-speaking nations gained new vigor after elections this summer.
Nearly six months later, the country has not put together a federal government. While investors brushed off such problems in the past, as in Italy, they seized on the uncertainty this week and drove Belgium’s borrowing costs to a 10-year high.
“Politicians are playing with fire,” said Steven Vanneste, an economic adviser at BNP Paribas Fortis. “They can only blame themselves because they voiced the option of breaking up the country.”
Faced with the prospect of market contagion, however, politicians may quickly become pragmatic and form a new government within a month, he said.
A month might be rapid in political terms, but it can be an eternity for fast-moving financial markets. The lingering power vacuum increases uncertainty about how Belgium’s debt load — nearly 100 percent of gross domestic product — would be divided between the French and Flemish populations and repaid to investors. As long as the uncertainty persists, Belgium’s borrowing costs could rise again.
Panic about Belgium’s finances would seem illogical, since the country has the wherewithal to repay debt: It has kept a current-account surplus for the last 25 years and has a healthy private sector, a high savings rate and a wealthy population. It enjoys a close trade relationship with Germany, helping to fuel exports, and employment is rising. Growth is expected to be 2.1 percent this year before and 1.7 percent in 2011, above the euro zone average.
Belgium also has a large banking sector that was bailed out by the government in 2008 amid a crisis, and whose assets represent about 340 percent of G.D.P. Banks like Dexia and KBC are the biggest holders in the Benelux countries of debt in Portugal, Italy, Ireland, Greece and Spain, but they have taken steps to reduce their exposure.
Still, “the market is looking at every country, and the moment there is some weakness, they’re attacking it,” Mr. Vanneste said.
In the end, analysts said, Italy’s problems are probably bigger than Belgium’s — and so are the stakes should markets decide those problems are unsolvable.
“Italy cannot fail — that would be the end of the euro zone,” said Daniel Gros, the head of the Center for European Policy Studies in Brussels. “Everything and anything that would be needed to save Italy would be done.”
02/12 Central Bank in Europe Will Keep Up Its Crisis Lending
Europe Bank Extends Emergency Support
By JACK EWING and MATTHEW SALTMARSH
Published: December 2, 2010
FRANKFURT — The European Central Bank on Thursday continued its emergency support to weak countries within Europe but stopped short of more aggressive action to contain the debt crisis that has already engulfed Greece and Ireland.
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Arne Dedert/European Pressphoto Agency
Jean-Claude Trichet, the European Central Bank president, said emergency support did not mean an easing of monetary policy.
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Dominique Strauss-Kahn, left, managing director of the International Monetary Fund, with Mr. Trichet at a meeting in Brussels in March. Mr. Strauss-Kahn suggested Thursday in New Delhi that central banks could do more to support growth.
Just months after the central bank indicated that it would wind down its extraordinary loan program to banks, its officials conceded that the program was still needed. Traders said the central bank was also buying Irish and Portuguese debt on open markets on Thursday, continuing a program begun this year and pushing up bond prices and lowering the cost of borrowing for these countries.
Grappling with sharply divergent economic performance by euro area members, the central bank disappointed investors who had looked for more than just a continuation of existing programs and had awaited a signal of a bold expansion of monetary support.
Investors have criticized European governments for a lack of decisiveness during the crisis and had hoped the central bank might step in to fill the void, specifically by broadening its purchase of government bonds through quantitative easing, as the Federal Reserve has done to put cash into the United States economy.
The president of the European Central Bank, Jean-Claude Trichet, said an “overwhelming majority” of the bank’s governing council had agreed to continue the debt purchases begun in May — an admission that the decision was not unanimous. Instead of promising stronger measures, he emphasized that the central bank’s action was “not quantitative easing.”
Carl B. Weinberg, chief economist at High Frequency Economics in Valhalla, N.Y., wrote, “We are disappointed.”
He added, “We see no reason to think any risks — perceived or imagined — arising from the twin crises of Euroland’s sovereign debt and banking sector are reduced by today’s E.C.B. council meeting.”
Mr. Trichet must balance a number of opposing forces. Growth in Germany has been better than expected but contrasts ever more sharply with the results in weaker countries. Germany, Europe’s biggest economy, expanded 0.7 percent in the third quarter, the European statistics agency Eurostat said Thursday. That compared with 0.4 percent growth for the entire euro zone, and a 1.1 percent decline in Greece.
Inflation remains subdued, but the central bank could face a quandary if prices start to rise in faster-growing parts of the euro area. Sworn to keep prices in check, the central bank might have to raise interest rates even while weaker countries still struggle to grow.
The bank’s governing council left its benchmark interest rate unchanged at 1 percent on Thursday, as expected. The bank has stood pat on interest rates since May 2009. Most analysts do not expect an increase until well into 2011.
Asked Thursday at a news conference if diverging growth rates made it more difficult for the bank to develop a monetary policy that is right for all 16 euro area members, Mr. Trichet argued that growth in the strong countries would help the weak members.
“Those parts of the euro area economy that have real gains in competitiveness through hard work can now be a source of growth for the benefit of the euro area as a whole,” he said. The central bank on Thursday revised its forecast for the entire area slightly higher.
Mr. Trichet also faces a divide among bank policy makers much like the one among European governments.
Axel A. Weber, the president of the Bundesbank and a member of the governing council, has criticized the central bank’s bond purchases, and he said that investors should share the burden of future debt and bank crises — a position shared by Chancellor Angela Merkel of Germany but not Mr. Trichet.
On Thursday, Mr. Trichet seemed to reject the role that others often want to thrust on him as the euro’s last line of defense.
Speaking in New Delhi, the managing director of the International Monetary Fund, Dominique Strauss-Kahn, suggested that central banks could do more to support growth.
“Growth is the most important thing,” he said, according to Reuters. “But because of a very high level of public debt, the burden falls on monetary policy.”
Mr. Trichet, however, put the onus on governments rather than the central bank to respond more firmly.
“We need an improvement in the ‘E’ letter of E.M.U.,” he said, referring to European Monetary Union. He added, though, that “observers should never underestimate” European leaders. “When times are very demanding, the Europeans are making decisions,” Mr. Trichet said.
In Brussels, suggestions that the French president, Nicolas Sarkozy, was pushing for an emergency weekend summit meeting were played down. Diplomats said a meeting would be useful only if far-reaching plans were under way.
Financial markets reacted positively on Thursday, apparently cheered by the extended support for banks and reports that the central bank was buying bonds of weak countries.
“As Trichet was speaking, the E.C.B. moved in aggressively, buying Portuguese and Irish bonds,” said Charles Diebel, chief strategist at Lloyds TSB Bank in London. “The E.C.B. is saying, ‘We’re doing as much as we can within our remit. Now it’s over to the governments.’ ” But Mr. Diebel added: “This doesn’t sort out the real, underlying problems in the euro zone.”
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Prices on Italian, Portuguese, Belgian, Irish and Spanish 10-year bonds rose sharply, while the safer German 10-year benchmark issue slipped a touch. Earlier, an auction of Spanish government debt met with firm demand, which also helped improve sentiment.
The euro rose to $1.3210 in New York from $1.3139 on Wednesday.
European stocks rose after the central bank meeting, having slipped earlier in the day. The Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 2.2 percent. The FTSE 100 index in London was up by the same amount.
In Madrid, the Spanish government sold 2.5 billion euros, or $3.3 billion, of three-year bonds at an average yield, or effective interest rate, of 3.7 percent. Though the yield was well above the 2.5 percent the state paid at a similar auction in October, the offering was oversubscribed, showing solid demand. A higher yield suggests that investors were demanding a premium to compensate for a higher perceived risk.
“Trichet tried to calm markets without giving them everything they wanted,” said Carsten Brzeski, an economist at ING in Brussels. “After today’s E.C.B. meeting, turbulence on bond markets is not likely to calm down quickly.”
As of Monday, the European Central Bank had spent 69 billion euros buying government bonds on open markets, a fraction of the Fed’s bond purchases. Unlike the Fed, the central bank “sterilizes” the purchases by taking in the same amount in bank deposits, avoiding perceptions it is printing money and fueling inflation. Mr. Trichet said Thursday that the central bank would continue doing so.
The bank has been trying to reduce the extraordinary support it began extending to the banking system at the height of the financial crisis. But it is clear that institutions in Ireland and some other countries would not be able to function without the unlimited loans that the central bank has been providing.
The bank said Thursday that it decided to continue providing unlimited three-month loans to banks at least through mid-April. Previously, it had committed to providing the low-cost liquidity only until mid-January, making loans to banks at 1 percent interest, provided the institutions could offer collateral.
The bank began buying bonds in May to halt a run on Greek debt. Purchases dwindled after July, but they have increased recently. The bank bought debt worth 1.35 billion euros last week, a level that was still much lower than in May and June, when it spent 59 billion euros buying debt on secondary markets.
The central bank does not disclose what European government bonds it has bought. It reports only once a week, on Monday, on the size of the purchases.
Matthew Saltmarsh reported from Paris. Stephen Castle contributed reporting from Brussels.
A version of this article appeared in print on December 3, 2010, on page B1 of the New York edition.
By JACK EWING and MATTHEW SALTMARSH
Published: December 2, 2010
FRANKFURT — The European Central Bank on Thursday continued its emergency support to weak countries within Europe but stopped short of more aggressive action to contain the debt crisis that has already engulfed Greece and Ireland.
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Arne Dedert/European Pressphoto Agency
Jean-Claude Trichet, the European Central Bank president, said emergency support did not mean an easing of monetary policy.
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Dominique Strauss-Kahn, left, managing director of the International Monetary Fund, with Mr. Trichet at a meeting in Brussels in March. Mr. Strauss-Kahn suggested Thursday in New Delhi that central banks could do more to support growth.
Just months after the central bank indicated that it would wind down its extraordinary loan program to banks, its officials conceded that the program was still needed. Traders said the central bank was also buying Irish and Portuguese debt on open markets on Thursday, continuing a program begun this year and pushing up bond prices and lowering the cost of borrowing for these countries.
Grappling with sharply divergent economic performance by euro area members, the central bank disappointed investors who had looked for more than just a continuation of existing programs and had awaited a signal of a bold expansion of monetary support.
Investors have criticized European governments for a lack of decisiveness during the crisis and had hoped the central bank might step in to fill the void, specifically by broadening its purchase of government bonds through quantitative easing, as the Federal Reserve has done to put cash into the United States economy.
The president of the European Central Bank, Jean-Claude Trichet, said an “overwhelming majority” of the bank’s governing council had agreed to continue the debt purchases begun in May — an admission that the decision was not unanimous. Instead of promising stronger measures, he emphasized that the central bank’s action was “not quantitative easing.”
Carl B. Weinberg, chief economist at High Frequency Economics in Valhalla, N.Y., wrote, “We are disappointed.”
He added, “We see no reason to think any risks — perceived or imagined — arising from the twin crises of Euroland’s sovereign debt and banking sector are reduced by today’s E.C.B. council meeting.”
Mr. Trichet must balance a number of opposing forces. Growth in Germany has been better than expected but contrasts ever more sharply with the results in weaker countries. Germany, Europe’s biggest economy, expanded 0.7 percent in the third quarter, the European statistics agency Eurostat said Thursday. That compared with 0.4 percent growth for the entire euro zone, and a 1.1 percent decline in Greece.
Inflation remains subdued, but the central bank could face a quandary if prices start to rise in faster-growing parts of the euro area. Sworn to keep prices in check, the central bank might have to raise interest rates even while weaker countries still struggle to grow.
The bank’s governing council left its benchmark interest rate unchanged at 1 percent on Thursday, as expected. The bank has stood pat on interest rates since May 2009. Most analysts do not expect an increase until well into 2011.
Asked Thursday at a news conference if diverging growth rates made it more difficult for the bank to develop a monetary policy that is right for all 16 euro area members, Mr. Trichet argued that growth in the strong countries would help the weak members.
“Those parts of the euro area economy that have real gains in competitiveness through hard work can now be a source of growth for the benefit of the euro area as a whole,” he said. The central bank on Thursday revised its forecast for the entire area slightly higher.
Mr. Trichet also faces a divide among bank policy makers much like the one among European governments.
Axel A. Weber, the president of the Bundesbank and a member of the governing council, has criticized the central bank’s bond purchases, and he said that investors should share the burden of future debt and bank crises — a position shared by Chancellor Angela Merkel of Germany but not Mr. Trichet.
On Thursday, Mr. Trichet seemed to reject the role that others often want to thrust on him as the euro’s last line of defense.
Speaking in New Delhi, the managing director of the International Monetary Fund, Dominique Strauss-Kahn, suggested that central banks could do more to support growth.
“Growth is the most important thing,” he said, according to Reuters. “But because of a very high level of public debt, the burden falls on monetary policy.”
Mr. Trichet, however, put the onus on governments rather than the central bank to respond more firmly.
“We need an improvement in the ‘E’ letter of E.M.U.,” he said, referring to European Monetary Union. He added, though, that “observers should never underestimate” European leaders. “When times are very demanding, the Europeans are making decisions,” Mr. Trichet said.
In Brussels, suggestions that the French president, Nicolas Sarkozy, was pushing for an emergency weekend summit meeting were played down. Diplomats said a meeting would be useful only if far-reaching plans were under way.
Financial markets reacted positively on Thursday, apparently cheered by the extended support for banks and reports that the central bank was buying bonds of weak countries.
“As Trichet was speaking, the E.C.B. moved in aggressively, buying Portuguese and Irish bonds,” said Charles Diebel, chief strategist at Lloyds TSB Bank in London. “The E.C.B. is saying, ‘We’re doing as much as we can within our remit. Now it’s over to the governments.’ ” But Mr. Diebel added: “This doesn’t sort out the real, underlying problems in the euro zone.”
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Prices on Italian, Portuguese, Belgian, Irish and Spanish 10-year bonds rose sharply, while the safer German 10-year benchmark issue slipped a touch. Earlier, an auction of Spanish government debt met with firm demand, which also helped improve sentiment.
The euro rose to $1.3210 in New York from $1.3139 on Wednesday.
European stocks rose after the central bank meeting, having slipped earlier in the day. The Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 2.2 percent. The FTSE 100 index in London was up by the same amount.
In Madrid, the Spanish government sold 2.5 billion euros, or $3.3 billion, of three-year bonds at an average yield, or effective interest rate, of 3.7 percent. Though the yield was well above the 2.5 percent the state paid at a similar auction in October, the offering was oversubscribed, showing solid demand. A higher yield suggests that investors were demanding a premium to compensate for a higher perceived risk.
“Trichet tried to calm markets without giving them everything they wanted,” said Carsten Brzeski, an economist at ING in Brussels. “After today’s E.C.B. meeting, turbulence on bond markets is not likely to calm down quickly.”
As of Monday, the European Central Bank had spent 69 billion euros buying government bonds on open markets, a fraction of the Fed’s bond purchases. Unlike the Fed, the central bank “sterilizes” the purchases by taking in the same amount in bank deposits, avoiding perceptions it is printing money and fueling inflation. Mr. Trichet said Thursday that the central bank would continue doing so.
The bank has been trying to reduce the extraordinary support it began extending to the banking system at the height of the financial crisis. But it is clear that institutions in Ireland and some other countries would not be able to function without the unlimited loans that the central bank has been providing.
The bank said Thursday that it decided to continue providing unlimited three-month loans to banks at least through mid-April. Previously, it had committed to providing the low-cost liquidity only until mid-January, making loans to banks at 1 percent interest, provided the institutions could offer collateral.
The bank began buying bonds in May to halt a run on Greek debt. Purchases dwindled after July, but they have increased recently. The bank bought debt worth 1.35 billion euros last week, a level that was still much lower than in May and June, when it spent 59 billion euros buying debt on secondary markets.
The central bank does not disclose what European government bonds it has bought. It reports only once a week, on Monday, on the size of the purchases.
Matthew Saltmarsh reported from Paris. Stephen Castle contributed reporting from Brussels.
A version of this article appeared in print on December 3, 2010, on page B1 of the New York edition.
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