Wednesday, November 5, 2008

Taiwan, China make economic history with new pact

TAIPEI, Taiwan – China and Taiwan made economic history Tuesday with a bold agreement that allows planes and ships to travel directly across the Taiwan Strait — the place where many have feared they would fight their next battle.

Still the Asian rivals appear far from resolving the root causes of nearly six decades of hostilities and distrust. The pact was possible because negotiators set aside thorny political disputes and only focused on trade and economics.

The new deal allows passenger flights directly across the 100-mile-wide Taiwan Strait that separates Taiwan from mainland China. In the past, planes had to fly into Hong Kong airspace while traveling between the two sides. Cargo ships, which used to have to stop at the Japanese island of Okinawa northeast of Taiwan, will be allowed to sail directly to the other side and cut hundreds of miles out of each trip.

The deal is significant for businesses and drew applause from three chambers of commerce representing Japan, the U.S. and Europe. The groups said in a joint statement the restrictions on flights and shipping have kept Taiwan from fully participating in the global and Asian economies.

"Taiwan can only benefit from having greater interaction with one of the world's fastest growing markets," it said.

In the eyes of China's leaders, Taiwan is a Chinese province that must eventually unite with the mainland or be invaded by the mainland's massive military.

A conflict could quickly draw in the U.S., which has long warned China's government it may defend Taiwan — a major buyer of American weapons. Even as they talk to China, the Taiwanese have been loading up on more U.S. arms, including Apache helicopters and Patriot missiles.

China-Taiwan relations are so awkward and strained that Chinese envoy Chen Yunlin, who signed the deal Tuesday, has yet to call Taiwanese leader Ma Ying-jeou by his proper title: president. When they meet Thursday, Chen will likely just address him as "Mr. Ma."

Chen — the highest-ranking Chinese official to visit Taiwan — is sticking to Beijing's policy of not formally recognizing the island's government.

Taiwan's top official for China policy, Lai Shin-yuan, urged critics to embrace the deal and stop obsessing about sensitive political issues.

"This is something people should support, instead of making an issue of how I am addressed by the Chinese side," Lai told reporters. "Our sovereignty has not been harmed during the meeting this time."

Most Taiwanese are not ready to unify with China and do not want Beijing meddling in their political affairs. Many favor independence, and China's refusal to recognize their government infuriates them. About 200 protesters scuffled with police Tuesday night outside a hotel where the Chinese envoy attended a banquet.

The Taiwanese president, who took office in May, has promised not to begin unification negotiations during his four-year term.

Some fear that closer ties with China — even if they only involve trade and economics — will sacrifice Taiwan's sovereignty by making it overly dependent on the mainland.

That's the view of Taiwan's previous president, Chen Shui-bian, who was vilified by Beijing because he favored independence. Chen on Tuesday accused the new government of being too friendly with China.

"We have strived to be the masters of Taiwan," he said. "But now we are becoming slaves to China."

But Alexander Huang, a political science professor at Taipei's Tamkang University, doubted the economic agreements will lead to Taiwan being absorbed by its massive neighbor.

"Taiwanese have enjoyed their democracy and don't want to have officials appointed by the mainland," said Huang, who also thought the pact would help decrease the threat of a war.

Huang added the agreement shows China is eager to win the hearts and minds of Taiwanese. Beijing, which refused to talk to Chen's government for eight years, also doesn't want Taiwan to drift further toward permanent independence.

Asians uneasy over Obama trade stance

BEIJING – Indian outsourcing companies, Cambodian textile workers and Korean automakers took a close look Wednesday at Barack Obama's trade stance, wondering what Democratic victories in the White House and Congress would spell for free trade.

Obama has said he is in favor of free trade agreements if they benefit the United States. He has criticized the one with South Korea, saying it does not adequately address an imbalance in auto trade. South Korean automakers sold 772,482 vehicles in the United States in 2007, while the U.S. sold 6,235 in South Korea, according to industry statistics.

"He appears to be a protectionist," said Chea Mony, president of the Free Trade Union of Workers in Cambodia, which has an export-driven textile industry. "I am quite concerned about that because most of our clothing products are exported to America."

In an Oct. 24 letter to the U.S. National Council of Textile Organizations, Obama pledged "strong enforcement" of trade remedy laws, which can include added tariffs on imports that are deemed to hurt American businesses. Obama said he would include labor and environmental standards in free trade agreements — a measure that many in Asia view as a possible pretext to shield U.S. companies from foreign competition.

Obama also has said he would pressure China to end what he calls the manipulation of its exchange-rate system. Washington and other trading partners say Beijing's currency, the yuan, is kept undervalued, giving its exporters an unfair price advantage and adding to China's multibillion-dollar trade surplus.

Indian outsourcing companies — accused by critics of stealing U.S. jobs — have also expressed some apprehensions about an Obama victory.

The potential for a protectionist backlash is "something we have to factor in," S. Ramadorai, chief executive of Tata Consultancy Services, India's largest software services provider, said shortly before the election.

Other analysts said that despite Obama's pre-election comments, he was likely to follow the example of previous U.S. presidents and take a moderate line in office to preserve important trade relations with Asia.

"He may have talked tough, but based on past experience, that's just a tool to win over voters," said Qiang Yongchang, a professor at the Economy Institute at Shanghai's Fudan University.

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AP Business Writers Tomoko Hosaka and Yuri Kageyama in Tokyo, Elaine Kurtenbach in Shanghai, Jeremiah Marquez in Hong Kong and Kelly Olsen in Seoul, Associated Press Writer Ker Munthit in Phnom Penh and AP researcher Bonnie Cao in Beijing contributed to this report.

Plane crash leaves Mexico interior secretary dead

MEXICO CITY – One of Mexico's top pointmen in the war against drug trafficking died when a government jet crashed into a Mexico City street, setting fire to dozens of vehicles and dealing crusading President Felipe Calderon a serious blow.

Officials said the Tuesday crash appeared to be an accident but the loss of Interior Secretary Juan Camilo Mourino, former anti-drug prosecutor Jose Luis Santiago Vasconcelos and six others thinned the ranks of Mexico's already embattled leadership.

U.S. Ambassador Antonio Garza praised the two officials and suggested them as models for the fight against organized crime.

"Their dedication and commitment to accomplishing their work, especially that which strengthened our bilateral fight against those who attack the security of our two countries, certainly will be a model for all of us in a common effort that will continue to strengthen," Garza said in a statement.

Mourino, 37, was one of President Felipe Calderon's closest advisers but has been embroiled in scandal since taking office in the midst of Mexico's violent fight against drug cartels. He was in charge of the country's security.

"With his death, Mexico has lost a great Mexican, intelligent, loyal and committed to his ideals and his country," Calderon told a news conference. "I ask all Mexicans that they don't allow any event, no matter how difficult or painful, to weaken them in the pursuit of a better Mexico."

Calderon has sent tens of thousands of federal police and army troops throughout Mexico to fight drug cartels that are fighting increasingly bloody turf battles and killing police officials.

Presidential spokesman Max Cortazar said Mourino and a group of advisers had attended the launching of a program to welcome returning migrants in the city of San Luis Potosi on Tuesday, and were headed back to Mexico City's international airport when the plane went down.

Officials said no distress call had been received and the crash appeared to be an accident, but Calderon said his administration "will carry out all the necessary investigations to find out the causes of this tragedy."

U.S. experts from the Federal Aviation Administration and the National Transportation Safety Board will arrive on Wednesday to assist in the investigation, officials said.

Mexico's fleet of government aircraft have suffered accidents in the past and the country has long said it needs new helicopters and planes to fight drug cartels. Mexico is slated to receive more helicopters and planes as part of a $400 million U.S. aid package known as the Merida Initiative approved in June, but which has not been yet released.

In 2005, a helicopter crash blamed on poor weather conditions killed Mexico's top police official, public safety secretary Ramon Martin Huerta, the head of federal police and seven other people.

The Learjet carrying Mourino crashed on a street in the posh Lomas de Chapultepec neighborhood, an area filled with tall office buildings. Officials evacuated about 1,800 people from area offices.

Mayor Marcelo Ebrard said all those aboard the plane were killed and that more people may have died on the ground. "It's likely that we will find other bodies in the vehicles," Ebrard told the Televisa news network.

Hundreds of police, firefighters and soldiers swarmed the scene, which was littered with the burned-out hulks of vehicles and pieces of what appeared to be bodies.

Eight bodies were recovered and at least 40 people were injured, seven of them seriously. The jet seats eight and Calderon listed eight people — including assistants and spokespeople for Mourino — but it was unclear whether all the bodies recovered were from the plane. The bodies were too badly burned to be immediately identified.

Santiago Vasconcelos, who was previously in charge of pursuing extraditions against drug traffickers, had been the target of at least one planned assassination attempt in the past.

The plane's wreckage came to rest just yards from tall office buildings and Ebrard said many more people would almost certainly have died had the plane hit one of the towers.

Civil aviation officials were investigating the cause of the crash.

Mourino was one of the most controversial officials when he joined Calderon's Cabinet in January because of his family's involvement with private contracts to Mexico's state-owned oil company, precisely at a time when Calderon sought to open up the legal framework for more such contracts.

The Mourino family's dealing in contracts for the transport of fuel angered many here, who view the state oil company as a point of national pride and oppose any openings to private involvement in the industry.

Born in Spain and educated at the University of Tampa in Florida, some also criticized the fact that he was foreign-born, arguing he shouldn't be able to hold one of the top Cabinet security posts.

He became a Mexican citizen about two decades ago, served as a federal legislator and went on to become Calderon's closest adviser as head of the Office of the Presidency. He was one of the youngest men to have held the politically sensitive post of interior secretary.

Spanish firms have recently made major inroads in Mexico's telecommunications and banking sector, drawing criticism from some Mexicans who resent the influence of the country's former colonial master.

Russia to station missiles near Poland

MOSCOW (Reuters) – Russian President Dmitry Medvedev pledged on Wednesday to station new missiles near Poland's border in response to U.S. plans for an anti-missile system and proposed extending the presidential term to six years from four.

In an assertive first annual address to the nation, he defended Russia's war with Georgia, appealed to nationalism and attacked Washington's "selfish" foreign policy and "economic blunders" which he said caused the global financial crisis.

The harsh tone and repeated attacks on the United States the day after Democrat Barack Obama's electoral victory surprised some observers who had expected a more liberal style and more detail on how Russia would tackle a financial crisis.

"To neutralize -- if necessary -- the (U.S.) anti-missile system, an Iskander missile system will be deployed in the Kaliningrad region," Medvedev said, referring to a Russian enclave bordering European Union members Poland and Lithuania.

Russia would electronically jam the U.S. system, parts of which are due to be deployed in Poland and the Czech Republic, and Moscow would scrap plans to stand down three Cold War-era nuclear missile regiments, the president said.

"Medvedev was very assertive in his delivery," said Ronald Smith, chief strategist at Alfa Bank in Moscow. "(He) appeared to be staking out strong positions on various issues ahead of the entry of the new American presidential administration."

Medvedev's 85-minute address also included surprise proposals to extend the presidential term from four to six years, a move that may benefit his predecessor Vladimir Putin.

Putin, now a highly influential prime minister, listened attentively from the front row of the audience in the grand, marble-clad St George Hall of the Kremlin and nodded at times as Medvedev spoke.

Still Russia's most popular politician, Putin stepped down in May after serving the maximum two consecutive terms allowed, but is free to return for another two terms when Medvedev's four years in power end in 2012.

Medvedev also announced plans to lengthen legislators' terms by a year and make it easier for small parties to win parliamentary representation. He did not say when the changes might take effect.

Small parties are among the most critical of the government and they were eliminated from the federal legislature under Putin's eight-year rule.

CRITICISM OF UNITED STATES

One day after Barack Obama won the U.S. presidential election, Medvedev reserved his harshest criticism for the United States, blaming its "selfish" foreign policy for Russia's brief war in August with Georgia, a U.S. ally.

"The conflict in the Caucasus was used as a pretext for sending NATO warships to the Black Sea and then for the forceful foisting on Europe of America's anti-missile systems," Medvedev said in his speech, broadcast live on television and radio.

The war with Georgia over the rebel region of South Ossetia was "among other things, the result of the arrogant course of the U.S. administration which hates criticism and prefers unilateral decisions," he added.

Speaking to around 1,000 parliamentarians, top government officials, religious leaders and journalists, Medvedev linked the war in Georgia to the global financial crisis, saying they both began as localized events but took on broader significance.

"We will overcome the consequences of the world economic crisis and will come out of it even stronger than we were," Medvedev, who took office in May, said to applause.

But the financial and Georgia crises also showed the need for fundamental reform of global institutions, he added.

"The lessons of the mistakes and crises of 2008 have proved to all responsible nations that the time has come to act, and it is necessary to radically reform the (international) political and economic system," the president said.

Russia's war with Georgia handed Moscow a quick military victory but serious defeat with international investors, who dumped Russian assets in a selling spree that made the stock market one of the world's worst performing this year.

Medvedev's inaugural speech coincided with Russian stock markets giving up most of the day's big gains, though it was not immediately clear how much was due to international factors.

"This is speech designed very much for domestic audience... and the incoming U.S. administration. This was not a message aimed at investors or the business community," said Chris Weafer, chief strategist at Moscow bank Uralsib.

(Editing by Ralph Boulton)

Iraq: No hasty change in US policy with Obama win

BAGHDAD – Many in Iraq said Wednesday they don't expect an immediate shift in U.S. policy toward their country when Barack Obama takes over as the new U.S. president, despite his calls for a complete withdrawal of U.S. troops within 16 months.

But top Iraqi officials said they do recognize the new president-elect's perspective on the war in Iraq differs greatly from current U.S. President George W. Bush.

"We don't expect any change to happen overnight or any hasty change in U.S. policy and commitment toward Iraq," Iraqi Foreign Minister Hoshyar Zebari told Al-Arabiyah TV moments after Obama claimed victory over Republican John McCain.

But he acknowledged that Obama "will not have the same enthusiasm and momentum for this situation" in Iraq as Bush.

The foreign minister said Obama told Iraqi leaders earlier this year during meetings in Baghdad and Washington that "any decision that concerns Iraq would be taken after thorough discussions with the Iraqi government and field military leaders."

Salim Abdullah, spokesman for the largest Sunni parliamentary bloc, agreed.

"We are not concerned that he will take a unilateral decision to move troops quickly from Iraq," Abdullah told The Associated Press.

Some Iraqis, however, are eager to see an end to a U.S. military presence they consider foreign occupation. American officials insist the troops are here to defend the Iraqi people against terrorists.

Salah al-Obeidi, spokesman of anti-American Shiite cleric Muqtada al-Sadr, said Wednesday that with Obama's victory, "we expect that big changes will take place."

The Sadrists are among the most outspoken opponents of the U.S. military presence in Iraq.

Wali Mohammed, a 22-year-old college student in Baqouba, 35 miles northeast of Baghdad, said he wants Obama to stand pat on his campaign pledge to pull the 151,000 U.S. troops out of Iraq.

"We hope Obama will stick to his word," Mohammed said.

Other Iraqis fear their leaders and security forces are not ready to take over and don't want the Americans to leave too soon.

U.S. exit polls showed that only one in 10 American voters called the Iraq war their top concern when making their presidential choice, reflecting expectations Obama will focus more on domestic issues and the economy once he takes over.

Obama's election win comes as U.S. and Iraqi officials scramble to reach a deal on a new security agreement that would end the U.S. military presence in the country by 2012 and give Iraqis a greater role in managing combat operations.

Violence has dropped sharply in the country since Iraqi security forces and the U.S. military gained the upper hand against extremists this spring.

But a string of bombings in Baghdad this week have killed more than 30 people, underscoring that insurgents still pose a threat. And U.S. commanders warn the security gains are reversible.

It remains unclear what impact the Democrat's victory will have on negotiations over the security agreement, but Iyad Jamal-Aldin, a lawmaker from the Iraqiya List, said he doesn't expect it "will speed up the signing of the pact."

Opinions in the run-up to Tuesday's vote differed somewhat in Kurdistan, the generally peaceful three northern provinces where Kurds have enjoyed self-rule since 1991 and have used their ties to Washington to defend their autonomy.

Some Kurdish officials had expressed concern that Obama might not continue the close relationship.

Kurdish lawmaker Mahmoud Othman said Wednesday he thinks the Democrat's administration will usher in a fresh approach from Washington toward the Middle East.

"I think that it's a natural change to take place after a long period with the Republicans in office," said Othman, who praised the Democrat's idea of holding talks with Iraq's neighbor, Iran.

In Baghdad, government spokesman Ali al-Dabbagh said in a statement that Iraq hopes to cooperate with the president-elect to achieve "security and stability in Iraq, to preserve its sovereignty and protect its people's interests."

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Associated Press writers Sinan Salaheddin and Hamid Ahmed contributed to this report.

Hamas fires rockets at Israel after 6 killed

GAZA CITY, Gaza Strip – Hamas militants pounded southern Israel with a barrage of rockets Wednesday, hours after Israeli forces killed six gunmen in a fresh bout of violence that threatened to unravel a five-month-old truce that has brought relief to both Gaza and southern Israel.

The clashes began late Tuesday after the Israeli forces burst into Gaza to destroy what the army said was a tunnel being dug near the border to abduct Israeli troops.

Despite the outbreak of violence, both Israeli authorities and officials with Gaza's Hamas government said they wanted to restore the calm that has largely prevailed over the past five months.

After the Israeli incursion, Hamas gunmen battled Israeli forces and Gaza residents reported the sound of explosions, gunshots and helicopter fire. One Hamas fighter was killed, prompting a wave of mortar fire at nearby Israeli targets.

An Israeli airstrike then killed five Hamas militants preparing to fire mortar shells. Hamas responded with the barrage of rockets.

Hamas spokesman Fawzi Barhoum said the rockets were in "response to Israel's massive breach of the truce."

"The Israelis began this tension and they must pay an expensive price. They cannot leave us drowning in blood while they sleep soundly in their beds," Barhoum said.

The Israeli military said 35 rockets were fired, including one that reached the coastal city of Ashkelon, about 10 miles north of Gaza — underscoring the militants' growing ability to strike deeper into Israel.

Police said the rocket landed in an empty area and there were no reports of injuries or property damage. However, the army said four soldiers were wounded, two moderately, in the border fighting.

The violence was the worst since Israel and Hamas agreed to an Egyptian-mediated truce in June.

In scenes not seen for months, Gaza residents crowded into hospitals, as ambulances delivered the dead and injured. Grieving militants in military fatigues fired rounds of automatic weapon fire into the air to commemorate their fallen comrades. Over Gaza City, the thudding sound of rockets being fired into Israel was audible. Unmanned Israeli aircraft, often used to target militants, buzzed in the sky overhead.

Israeli rescue services said their teams in southern Israel had been placed on high alert with ambulances on standby.

While Israel and Hamas blamed each other for the violence, neither would say the truce was over.

"We want to see the quiet in the south continued," said Mark Regev, Israeli government spokesman. "This operation was in response to a Hamas intrusion of the quiet and we hope we won't see an escalation here."

Barhoum, the Hamas spokesman, said the militant group was in touch with Egypt to try to restore calm.

Each side has a strong interest in keeping things quiet. Israel has little appetite for a return to the rocket barrages that have made life in southern border towns unbearable in recent years, while Hamas is interested in strengthening its hold on power in Gaza. Hamas violently seized control of the coastal strip in June 2007.

Israeli defense officials said they had discovered a 300-yard tunnel days ago and concluded the passage was to be used for a kidnapping. Hamas already is holding an Israeli soldier that militants captured in a cross-border raid more than two years ago.

The officials, speaking on condition of anonymity because the information was classified, said Defense Minister Ehud Barak approved Tuesday's operation. Defense officials said they knew the raid could jeopardize the cease-fire, but concluded that Gaza's Hamas rulers would have an interest in restoring the calm.

The Israeli army said a special army unit moved about 300 yards into Gaza late Tuesday to destroy the tunnel. It said the unit completed its mission and returned to Israel early Wednesday.

The army called its incursion a "pinpoint operation" required because the tunnel posed an immediate kidnapping threat, but signaled it had no intention of intensifying the fighting.

Israel and Palestinian militant groups reached the Egyptian-mediated cease-fire in June after months of indirect negotiations. The deal halted a deadly cycle of Palestinian rocket attacks and Israeli reprisals.

Sporadic rocket attacks on southern Israel have persisted, but the attacks were carried out by smaller militant Gaza groups seeking to embarrass Hamas for preserving a truce with the Jewish state.

Apple hires IBM exec to head iPods; IBM objects

NEW YORK (Reuters) – Apple Inc has named a former IBM executive, Mark Papermaster, to head its iPod and iPhone development team, a hire that IBM has vowed to fight in court.

Apple on Tuesday said it hired Papermaster as senior vice president of Devices Hardware Engineering, replacing Tony Fadell, who will stay on as an adviser to Chief Executive Steve Jobs.

Papermaster was until late October vice president of International Business Machines Corp's Blade Development unit, which develops powerful computers for corporate data centers.

IBM last week filed a lawsuit to prevent the hiring, saying that as a top manager, Papermaster had access to IBM secrets and that he had agreed not to work for a competitor for a year.

IBM spokesman Doug Shelton said the case is proceeding.

"Mr. Papermaster's employment is a violation of his agreement with IBM against working for a competitor should he leave IBM," he said. "We will vigorously pursue this case in court.

Apple's statement made no mention of the court case. It said Tony Fadell and his wife Danielle Lambert, who is vice president of Human Resources at Apple, are "reducing their roles" to devote more time to their family.

(Reporting by Franklin Paul, additional reporting by Supantha Mukherjee in Bangalore; Editing by David Holmes and Brian Moss)