UPI's The Year Ahead: Parts 6-10

By United Press International  |  Jan. 6, 2002 at 2:05 PM
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The Year Ahead: Mideast on the brink (PART 7)

By CLAUDE SALHANI, UPI Life and Mind Editor

WASHINGTON, Dec. 30 (UPI) -- To properly predict where the muddled Middle East peace process might go in the next year, one would need to have the combined knowledge of Aladdin's genie, as well as the wisdom of the Three Wise Men.

With its intricacies and deep-rooted hatred, the political climate of the Middle East has always been almost impossible to forecast. Wars appear to erupt when least expected and peace deals are brokered when everything seems to indicate otherwise.

Since the start of the second Palestinian intifada, or uprising, in September 2000 following President Clinton's failed Camp David (Two) peace initiative, the region has gone back to the brink of all-out war.

As America's war on terrorism began, Palestinian leader Yasser Arafat missed, yet again, an opportunity to show the United States that he and his Palestinian Authority remain solid friends of the U.S., without whom his dreams of an independent Palestine can never be achieved.

Arafat missed the boat a first time during the 1990-91 Gulf War when he sided with Saddam Hussein by supporting Iraq's invasion and brutal occupation of Kuwait. Needless to say, this did not win him any friends in Washington, and only helped delay the peace process.

Today, as the U.S. is engaged in a war against fanatical terrorism, Arafat has once more shown his inability to assume his responsibilities as a leader. The recent spate of terror attacks in Israel has pushed Israel to declare him "irrelevant," and consign him to the sidelines.

But Israel, too, is not without blame.

Continued settlements in the West Bank and Gaza do nothing to improve relations with the Palestinians, nor does the continued encirclement of dozens of Palestinian towns and villages, many of which remain under 24-hour dusk-to-dawn curfew.

While nothing justifies blind terrorism such as the suicide bombings that took place in Israeli discotheques, restaurants and bus stops, the Palestinians today find themselves in a blind alley with no obvious end to their predicament. Many feel they have no choice but to fight.

For peace to become a reality in the Middle East, two things must occur. First, both sides need to develop more love for their children than the hate they currently harbor for their enemy. Only then can they seriously sit down and discuss their joint future--a future they are destined to share.

Secondly, the Palestinians need to admit once and for all that Israel is a reality and is here to stay. They must fight their own demons--the extremists, radicals and Islamists. The leadership must prove to the street that they stand to profit far more from a lasting peace than from continuing conflict.

At the same time, Israel, too, must own up to Palestine's right to exist as a sovereign and independent state. It too, must deal with its own fundamentalists, such as the West Bank settlers, for example, who could be confronted in the most obvious way, as happened in the Sinai following the Camp David (One) accords in 1979. The Israeli extremists can be as harmful to the peace process as the Islamic Jihad groups in Gaza and the West Bank.

Looking into the Middle East's crystal ball, one can seriously wonder if in fact this generation--the Arafats and the Sharons--will ever be able to sit face-to-face across the negotiating table and extend their hands to one another--hands that on both sides of the political divide are soaked with each other's blood.

Maybe the future will yield a more realistic crop of leaders who will finally understand that the alternative to peace is self-destruction.

(Claude Salhani is UPI's Life and Mind editor. A veteran foreign correspondent and photographer, he is the author of Black September to Desert Storm: A Journalist in the Middle East.)

Year Ahead: Japan's health hinges on U.S. (PART 8)

By SHIHOKO GOTO, UPI Senior Business Correspondent

TOKYO, Dec. 30 (UPI) -- When Japanese Prime Minister Junichiro Koizumi took the helm this April, the sense of relief rippling across the nation seemed almost palpable. Having suffered a decade of little or no growth, it was clear even to the most conservative of Japanese that the conventional means of spurring the economy would no longer work.

The clean-cut 59-year-old with a cascade of gray hair, dressed in designer suits, certainly provided a breath of fresh air after years of political leaders who looked more comfortable in smoky backrooms sealing deals rather than campaigning for public support. But it was the voters' attraction to his actual proposals that showed just how tired they had become of over 10 years of steady decline, and how much they were prepared to bite the bullet for longer-term gains to avert an irreversible decline.

But the timing of his vows to reform the country's economic structural fundamentally--without which Japan can no longer hope for sustainable growth--could not have come at a worse time, with all major industrialized nations suffering a downturn in growth at the same time, a situation that has not been seen for nearly four decades.

Upon assuming leadership, Koizumi warned voters that corporate bankruptcies would be inevitable adding that the government would no longer pump public money into salvaging weakened companies, regardless of their size or prestige.

He also cautioned that unemployment would rise as a result, but declared that the government would focus more energy on developing new industries that would create more jobs and make the country more competitive in the global economy.

But while Koizumi's prophecies of rising joblessness and bankruptcies have in fact come true, the outlook for the Japanese economy has become gloomier than ever, at least at first blush.

Mired in its fourth recession in a decade, the country's unemployment rate currently stands at its highest level since World War II, with jobs for those straight out of college and at higher-paid managerial level becoming particularly scarce. At the same time, personal and corporate bankruptcies have reached record levels.

Since the U.S. economy started to sag from December last year, Japan's prospects turned for the worse, and the events since Sept. 11 have only aggravated the situation still further. With both Japan and the United States in recession, while leading European nations remain less than robust, the ability for one country to pull the weaker ones through by absorbing their exports has faded. In fact, semiconductor prices have plunged by nearly 90 percent from a year ago since the terrorist attacks. That has hit high-tech manufacturing nations like Japan and other Asian nations particularly hard.

U.S. economic recovery will be vital for Japan's rebound, especially as the central bank cannot ease monetary policy much further as interest rates now stand close to zero, and yet demand for money continues to linger.

Assuming then that the United States will indeed bounce back by mid-2002, the International Monetary Fund projects Japan's gross domestic product growth rate to fall to minus 1.0 percent in 2002, down from minus 0.4 this year. That would make Japan the weakest of the industrialized countries, as the IMF pegs the United States to expand by 0.7 percent and the European Union by 1.3 percent next year.

Precisely because times look so tough moving forward, some politicians, especially from the ruling Liberal Democratic Party, are calling for a return to the conventional way of stimulating the economy, namely by increasing public spending and keeping weaker companies afloat by funneling in taxpayers' money.

So far, however, the Koizumi government has resisted such calls, and it has in fact decided to cut back on the national budget for next year by 1.7 percent in spite of the recession.

Another bright spot for the Japanese economy is the weakening of the yen against the U.S. dollar. A weaker currency makes the country's exports less expensive and thus more competitive overseas, and many foreign exchange analysts expect the yen to fall further against the greenback in coming months.

Still, the biggest hurdle for Japan's economy remains the backlog of bad loans choking the financial system. Japanese banks had lent too aggressively during the height of the bubble economy until the early 1990s based on real estate as collateral, while land prices plunged by three-quarters over the past decade.

Since then, banks continue to cringe from lending to companies less than blue-chip, thus stifling the development of potential growth industries.

The biggest challenge for Koizumi is the problem that has plagued all prime ministers before him: to rid the banks of their irrecoverable loans once and for all, even if it means closing down a fair number of financial institutions and affiliated companies in the process.

Given the prime minister's hitherto unprecedented popularity, with public support still standing close to 80 percent, Koizumi may just be able to carry it off. But if the United States does not recover as expected and Japan's economy slides further, the call to meet immediate needs and put off longer-term gains may win in the end.

(Shihoko Goto is UPI's Senior Business Correspondent. She divides her time between Tokyo and Washington.)

Year Ahead: War will shift science focus (PART 9)

By DEE ANN DIVIS, UPI Science Editor

WASHINGTON, Dec. 30 (UPI) -- The path for science and technology for the rest of the decade will likely be set in the next 12 months as the intense focus on the war on terrorism and a faltering U.S. economy force a major shift of resources towards "terror-tech" and away from basic research.

In a sense, the importance of technology and its underlying science has never been clearer to U.S. citizens. The terror attacks, both by plane and envelope, have spotlighted the need for high-velocity research on how to protect facilities, treat victims of bio-attacks, and locate proto-terrorists before they have a chance to fulfill their mission.

With remote control planes that survey the battle zone and laser-guided bombs targeted by technology-laden special forces units, the war in Afghanistan has been a showcase for gee-wiz gadgetry. New ways to track people and communications are being deployed including sophisticated Internet eavesdropping systems and software to scan and match faces at a distance. There is even work reportedly under way to discern from someone's brain patterns whether they are lying.

But the science community is deeply concerned that the new enthusiasm for security will divert resources away from anything that is not war-related.

Their fears appear well founded.

The budget for fiscal year 2003 is in the works and will be submitted to Congress early next year. Policy experts on both sides of the political aisle have told United Press International that funding for basic science looks bleak. Not only is growth not on the table--a sharp change from only a year ago when surpluses were being touted--but a search is on for places to cut programs.

Almost sure to suffer from both financial and political pressures are environmentally related programs. The Environmental Protection Agency will likely face a fight for resources, though their role in cleanup after bio-terror attacks may provide some fiscal insulation. Environmentally oriented programs at the departments of Interior and Agriculture and other agencies such as NASA, which has environmental remote sensing missions, are likely to face the budgetary blade.

NASA in particular is going to have a tough year. The Administration has not placed a high priority on civil space, one of the reasons they had a difficult time attracting a new NASA administrator. The gentleman in the starting gate now for that job, Sean O'Keefe, is a budget expert from the Office of Management and Budget--not a naturally sympathetic tech-wiz from the aerospace industry. His task is to look at why NASA is around $5 billion dollars over budget on the International Space Station and apply a sharp pencil to programs to bring them in line.

NASA does have one set of strong champions behind it, though--the much-annoyed international station partners. They had been promised a certain level of research on the station and are not amused at the prospect of cutbacks. Pressure applied by them through the State Department.--replete with nasty notes about international obligations and cooperation among war allies--may help save some NASA hardware. What will likely happen to programs without such advocates, however, is not for the faint of heart.

Each cut will reverberate for years as researchers shift their work to follow the grant money and grad students leave backwater courses of study to go where the jobs are. Just as World War II drove many fields of research--often to the enormous benefit of the U.S. economy--this war effort will shape the map of research for years to come.

There are a few bright spots for basic research. The National Science Foundation, say insiders, will likely get a solid budget. NSF grants support a wide range of science including such cutting-edge areas as nanotechnology--the science of building materials and machines on the atomic level. Much of that increase, however, looks to be coming via the transfer of science programs from other agencies and is not new money.

Washington sources also tell UPI that it looks like campaign promises to further increase funding for the National Institutes of Health, which supports an equally wide range of health-related research, will be honored--though some have expressed doubts about sending such an abundance of money to a single organization during such lean times. In a related side note, rumors are floating through Washington of a compromise that would loosen a bit the restrictions on federally funded stem cell research--research largely funded by NIH.

Other health-care debates are most likely on the backburner for now. Proponents of costly proposals such as a Medicare prescription drug benefit are going to have a hard time being heard above the din of war, the Enron debacle and demands for anti-terrorism funds. Those tenacious enough might finally get the ear of a financially strapped population--and their representatives--as elections loom and if the economy falters.

Privacy, another formerly hot tech issue, has fallen by the wayside as jumpy citizens start scrutinizing their friends and family for suspicious box-cutters and powder-tainted fingernails.

The private sector was pushing the idea earlier this year that government data gathering is more to be feared than private sector marketing efforts. This campaign originally appeared aimed at diverting Congress away from passing laws regulating private data sharing towards time consuming, intergovernmental naval-gazing. Now, with the passage of the very broad monitoring and data-gathering provisions of the Patriot Act, the private sector data lobbyists may actually have a point. What gets lost, however, is that private data can be used by the government as well.

Though data-privacy rules look derailed for now, a single serious breach of trust on the part of the private sector could explode the issue. Like a terrorism attack, such a breach suddenly makes everyone feel profoundly vulnerable, and Congress would be apt to strike out fiercely to fix the perceived problem. The chance of such a breach grows daily, as Internet companies struggle for revenue and even reputable firms consider income schemes that would have been frowned on in better times.

Even if Osama bin Laden is in U.S. hands, the shift towards war will remain. Fears over terrorism are the shadows in a dark alley--not truly visible, but clear enough to make you change direction for the safer side of the street.

The question is whether the U.S. will choose a fearful path veering away from its dreams or choose instead to move towards the goals that lived before Sept. 11, and continue, albeit more slowly, along the path that made it strong in the first place.

(Dee Ann Divis is UPI's Science Editor.)

Year Ahead: The future of multiculturalism (PART 10)

By STEVE SAILER, UPI National Correspondent

LOS ANGELES, Dec. 30 (UPI) -- Multiculturalism is a word of great flexibility. In social life it often means no more than a benignly favorable attitude to the ethnic and cultural heritage of other Americans--even to such developments as "fusion" cuisines that blend Asian and European recipes.

In law and policy, however, it is a catchall term describing both attempts to ensure more equal economic outcomes between different ethnic groups, such as affirmative action preferences, and programs to preserve the cultural identity of such groups such as official bilingualism.

Paradoxically, the future of such programs is threatened by their expansion.

Multiculturalism began, in effect, as "biracialism." For generations, government had treated whites far better than blacks. From roughly 1948 to 1977, a reversal took place. Government policy paused briefly at equal treatment, or "color-blind" policies. By the early seventies, however, it was mandating an array of compensatory preferences for blacks in the name of "affirmative action."

But legislators, bureaucrats, the courts, and activists for other groups--such as women, the disabled, other ethnic minorities and certain immigrant groups--soon expanded the programs to cover these other presumed victims of discrimination who became known as "protected classes." Thus, compensatory preferences for the descendents of slaves quickly mutated into a generalized system of ethnic preferences, taking from some groups and giving to others.

But is multiculturalism (aka "diversity") a stable system?

Two main factors determine popular support for it.

First, programs that on average simply redistribute resources within families (such as quotas for women and the disabled) tend to generate less resentment than those that take from one set of families (such as white families) and give to another (such as Hispanic families). In the first case, we feel we are giving to ourselves; in the second to other people--especially when government policy is emphasizing not the common nationhood of all Americans but their cultural and ethnic separateness.

For example, wheelchair ramps are highly popular, in part because they are an insurance system that may someday benefit somebody in one's own household. Similarly, job quotas for women take from men and give to their mothers, sisters, wives, and daughters. So although there is some resentment among the white males thus disadvantaged, the net effect on families as a whole is not all that great.

Second, and more important, the ratio of those who receive to those who must pay under affirmative action is critical. Blacks were a sizable minority when affirmative action preferences begin in 1969. On the other hand, with whites outnumbering blacks almost six to one, the cost to the typical white family was not large enough to persuade whites to oppose the programs strongly.

For the same reason, very few people objected (or even noticed) in the early 1970s when preferences were quietly extended to new immigrant groups such as Hispanics--and even to illegal aliens. The price paid then by the average non-Hispanic white family still looked to be trivial because there had been so little immigration since the cutoff in 1924. The political elite did not understand that the 1965 Immigration Act was about to radically change the ethnic balance of America.

Today Hispanics outnumber African-Americans, and, owing to both immigration and relatively high birth rates, they are expected to continue growing rapidly in numbers. President Clinton publicly looked forward to whites becoming a minority by mid-century. And this rising number of non-black minority voters encourages politicians to grant them more special preferences, such as President Bush's proposed amnesty for Mexican "undocumented workers."

At the same time, as the number of members of "protected classes"--including legally favored immigrant groups--increases, the cost to those not enjoying preferential status, mainly white males, rises proportionately. And this is likely to stimulate opposition to such preferences. Mass immigration is thus making the future of multiculturalism radically unstable. This long-term process has ominous implications for national unity and ethnic harmony.

Whether the upsurge of national unity provoked by Sept. 11 will change matters is an open question. It has certainly altered the psychological balance between the common national identity of all Americans and their separate ethnic or sexual identities--emphasizing the former and downplaying the latter. Some feminists, for instance, have publicly worried that almost all the heroes at the World Trade Center were male and that the media failed to seek out some female role models. It might be possible in these circumstances to gain general public support for re-ordering official policies to compensate people along lines of actual individual need rather than presumed group discrimination. It would certainly be prudent in the light of immigration and America's changing demographics.

But the ethnic pressure groups and government agencies that favor the current system of preferences have not disbanded--and they see multiculturalism not as an antidote to patriotism but as the patriotism of an America that is just around the corner.

(Steve Sailer is UPI's National Correspondent, based in Los Angeles.)

High court in search of a theme (Part 11_

By Michael Kirkland

WASHINGTON, Jan. 6 (UPI) -- The Supreme Court spent much of the last decade flexing its considerable muscle, deciding cases that affected the lives of ordinary Americans as well as the other branches of government.

In the 1990s, the court tried to fine-tune how police and the public interacted; protected a woman's right to an abortion and the right to protest abortions; limited the ability of governments to make race-based decisions, particularly in drawing up new congressional districts and awarding federal contracts; and subordinated the president to the everyday jurisdiction of the courts.

Beginning with 1997's Clinton vs. Jones, and continuing through the many legal battles between President Clinton and independent counsel Kenneth Starr, the Supreme Court made it plain that the chief executive would have to take his or her chances before the bar like any other citizen.

The culmination of all those legal battles came in late 1998, when the House impeached Clinton for allegedly lying under oath and obstructing justice in the Paula Jones sexual harassment case, and Chief Justice William Rehnquist found himself, much to his personal disgust, presiding over the president's trial in the Senate.

Clinton, of course, was acquitted and history moved on.

Only a year and a half ago, the Supreme Court refused to become involved in the Elian Gonzalez custody battle. Remember him?

It was only a little over a year ago that the Supreme Court, by a 5-4 vote along ideological lines, put an end to the seemingly endless Florida recount and ensured that George W. Bush would be Clinton's successor.

Since then, however, the Supreme Court has been a markedly minor player in the Washington power game.

The climactic events of this fall -- the terror attacks of Sept. 11 and this country's war in Afghanistan -- were far removed from the high court's normal sphere of operations.

Indeed, halfway through its current season of arguments, the Supreme Court appears to be an institution in search of a theme.

The high-profile cases have been few and far between. And even those cases that stand out are demonstrably less than historic.

One case that has received much of the attention this term deals with the common elementary school practice of letting students in a class grade each others' quiz papers. The justices should decide within a month or two, in a case out of Oklahoma, whether that practice violates the Family Education Rights and Privacy Act.

Another case, which should be heard in March, will decide whether a state such as Minnesota can prohibit judicial candidates from speaking out "on disputed legal or political issues."

You can also get excited about the current Supreme Court term if you're an intellectual property lawyer. The justices hear argument Tuesday on what one company calls "a fundamental change in patent law."

At issue in the case out of Boston is how much protection a patent gives to a company's invention when a competitor manufactures a similar device with only small changes made to it.

But for the most part, the current term has been decidedly low key.

One development that could wake the court from its long winter's nap, and jerk the institution back into the center of controversy in Washington and the nation, would be the retirement of a justice.

A scenario much discussed within the walls of the Supreme Court itself has Rehnquist stepping down and Bush naming Justice Sandra Day O'Connor as his successor. The president would then name his personal friend, White House counsel Al Gonzales, to be O'Connor's replacement as associate justice.

Under the scenario, O'Connor, would take the job only on a caretaker basis, with the understanding that she would give it up in a year or two to make room for Gonzales as chief justice.

In one stroke, Bush would accomplish several historical firsts: He would be naming the first woman chief justice, and he would be naming the first Hispanic jurist to the Supreme Court. And if O'Connor subsequently retired, he would get to name the first Hispanic as chief justice.

Beyond those milestones, Bush would have a chance to change the current delicate balance of the exiting court, which decides many cases by a 5-4 margin, and make it a much more reliably conservative body into the foreseeable future.

That's the kind of power that presidents dream about.

However, even those within the Supreme Court who promote such a scenario acknowledge that they haven't got a clue as to whether the 77-year-old Rehnquist plans to retire, or whether Bush contemplates such a complicated succession, or whether a Democratic Senate would approve his choices.

Another development that could push the Supreme Court back to center stage would be a legal challenge to Attorney General John Ashcroft's domestic anti-terrorism policy and to Bush's proposal to have some non-citizen terrorist suspects tried by military tribunals rather than U.S. courts of law.

Such a challenge might travel quickly up the appellate ladder and be before the Supreme Court before the end of 2002.

At the moment, however, that possibility seems remote. Groups such as the American Civil Liberties Union are having a hard time finding any clients who want to challenge Ashcroft's rigorous crackdowns -- any challenger would have to be directly affected by the policy -- and the White House has been saying it might not use the military tribunal process after all, though it wants the option of doing so if needed.

For the moment, it seems, the Supreme Court will remain a sleeping giant.


(Michael Kirkland is UPI's Chief Legal Affairs Correspondent. He has covered the Supreme Court for nine years.)

Year Ahead: Russia, China and the US (Part 12)

By Martin Sieff and Martin Walker

WASHINGTON, Jan. 6 (UPI) -- Russia, as America's old rival for global power, and China as the most likely challenger to American dominance in the future, each begin the new year in unusual harmony with the United States.

China has signed up for the U.S.-dominated global economic system by joining the World Trade Organization, and Russia wants to be next in line. Washington, Moscow and Beijing all sing from U.S. President George W. Bush's new anti-terrorism hymnbook. Russia and America backed China's successful bid to host the 2008 Olympics, almost as important a symbol for Beijing's new global status as joining the WTO.

But that's where the common factors stop. The American economy is stalled. Russia is growing healthily after finally clambering from its lost decade of post-Communist adjustment. And China's phenomenal boom continues, at least according to the official statistics that boast another year of close to 8 percent growth in gross domestic product. The country's wealth is doubling every eight years.

Russian President Vladimir Putin celebrated exactly two years in office on New Year's Day by quietly achieving several crucial goals that Western pundits had confidently agreed were impossible. He finally pushed through legislation opening the way for a genuine free market in land sales. He has successfully re-established strong central control over the regions, ending a long slide toward disintegration that far preceded the collapse of the Soviet Union in 1991. And he has presided over a solid economic recovery based on high global oil prices -- but far from entirely dependent upon them.

Putin has re-established Russia as one of the world's great energy arbiters. His country today provides 10 percent of global oil exports, a figure only exceeded by Saudi Arabia. The 300 percent rise in global oil prices between 1998 and 2001 provided the basis, along with the August 1998 ruble devaluation, to re-establish Russian finances. Moreover, Russia's shifting oil policies reflect its wider strategic opportunities and dilemmas; Putin has strengthened ties with both East and West and so far has fluctuated between making any decisive commitment to either.

His government's decision at the end of last year to go along with the latest oil output reduction agreement of the Organization of Petroleum Exporting Countries reflected this ambiguity. In the short term, Russia's decision to cooperate with OPEC on cutting back production by 150,000 barrels a day to strengthen global oil prices was a move against the West and in support of Third World, predominantly Muslim nations, many of them radical.

But Russian oil output drops by about that amount during the winter months anyway, because so much of it is produced from remote Siberian sources literally inaccessible in winter months even with the most modern technology.

Putin therefore maintains the option of increasing oil supplies to the global energy market in the spring. That would fulfill the satisfying, mutually compatible goals of expanding market share and therefore long-term income at the expense of the Saudis while undermining them financially and therefore destabilizing them at the same time. And none of it would carry any risks of confrontation with the United States.

Currently, Putin's policy toward the United States appears poised on a knife-edge of either indecision or deliberate ambiguity, keeping all options open. On the one hand, he has won Bush's approval for Russia to become virtually the 20th member of NATO. That would transform the security situation in Europe and defuse Russian fear and resentment at the alliance's eastward expansion since 1997.

It also would outflank new NATO members -- and former Soviet satellites and Warsaw Pact members -- Poland, the Czech Republic and Hungary. They can hardly look to NATO as a protection against Russia when Russia may have a more powerful say in the alliance's innermost council chambers than they have themselves.

However, Putin was damaged by Bush's decision unilaterally to go ahead with pulling the United States out of the 1972 Anti-Ballistic Missile treaty to clear the way for development of an eventual multi-tiered ABM shield against missiles fired from so-called "rogue nations." So the Russian leader is still keeping his options open for playing a key role in an anti-American, balancing Eurasian coalition as well. He has dispatched Foreign Minister Igor Ivanov to Beijing to attend a coordinating meeting Monday of the Shanghai Cooperation Organization, also known as the Shanghai Pact.

That organization, established in Shanghai on June 15, includes the four Central Asian Islamic former Soviet republics of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan along with Russia and China. The Beijing meeting has been presented and reported as being intended to discuss the fight against Islamic militancy in Central Asia. But the organization also had as its not-at-all concealed aim the rolling back of U.S. influence in Central Asia.

Aligning with China to squeeze U.S. influence out of Central Asia also makes sense if Putin continues on his systematic policy of smothering independent electronic mass media journalism and opinion at home.

Currently Russia's last truly independent television channel, TV6, owned by billionaire oligarch Boris Berezovsky, is fighting a last-ditch legal battle to stay open. A minority shareholder in the channel, the pension fund closely linked to Russia's biggest oil producing corporation Lukoil, successfully won a Moscow court ruling in November that TV6 should be shut down. On Dec. 29, the Federal Arbitration Court overturned that order and ordered the dispute to be re-examined. That ruling does not save TV6 but gives it at least a new breathing space.

Still, the direction of media policy under Putin is clear. The state is systematically snuffing out any possibility of independent radio or television commentary or expression through powerful private sector companies with close ties to the Kremlin. And so far, this drive has provoked little protest from the Russian public. A December opinion poll recorded 73 percent approval ratings for the president, the Interfax news agency reported.

Russia still has a long way to go. Its per capita gross domestic product remains a derisory $2,000 per head as opposed to $30,000 in the United States. But the trend is currently upward. A whopping 8.3 percent GDP growth rate was reported in 2000 and figures for 2001 are expected to show 5.5 percent growth on top of that. Per capita income growth in 2001 is expected to turn out to be even more, around 9.1 percent.

This optimism has filtered down to ordinary Russians. Stores in Moscow and other major cities have reported one of the biggest spending booms ever. Well-off middle class Russians are still stocking up on a colossal scale with consumer durables such as refrigerators, color televisions and modern furniture. And in contrast to the Boris Yeltsin era, domestic rather than foreign businesses are the beneficiaries of this surge in consumer demand.

But Russia's economic recovery is dwarfed by the progress of China. Last year was the year that China overtook Italy to become the world's sixth biggest economy. This year, it should overtake France. By 2005, it hopes to overtake Britain. And by 2010 -- if the growth continues -- Germany and Japan could both be trailing in China's economic wake.

Or it could all go horribly wrong. The real Chinese economy, with an estimated 100 million unemployed peasants looking for work in China's cities and a stagnant rural economy dreading the impact of cheap food imports through the WTO, looks far less healthy. And the global slowdown has hurt China's export-led growth strategy.

"China's export engine has stalled," wrote Morgan Stanley economist Andy Xie in a sobering recent analysis. "State investment now accounts for three-quarters of gross capital formation, having been pushed up for three years to spur the economy. Investment will not be able to accelerate fast enough in the next two quarters to offset export weakness."

China is grappling with three internal revolutions simultaneously. The first is the breakneck pace of economic change, fuelled by 16 years of GDP growth at rates of up to 10 percent a year. This has created a class of new rich, an even larger and growing middle class, and a new openness to the outside world with 25 million Chinese now linked to the Internet. These are the people, articulate and connected and with the self-confidence to defend their hard-won new status, whose prosperity is most at risk from an American slowdown.

The second revolution is the social dislocation that has come with the economic change. Growth has hugely benefited the coastal regions around Shanghai and Canton, but the vast inland countryside with the bulk of the population has not kept pace. The result has been some 100 million Chinese migrating to the cities in search of work -- just as the Beijing government is trying to slim down or close the vast and obsolete state-owned industries that have been shedding some 4 million jobs a year.

Inevitably, there have been outbursts, quickly suppressed, of labor unrest. Although there are reports of police baton charges and a sudden spate of 30 bombings in six cities in 10 days in December, few details leak out. One veteran labor activist, Zheng Shanguang, was sentenced to 10 years in prison for telling the U.S.-backed Voice of Free Asia radio about rural protests. An internal Chinese Communist party document, "On Several Serious Issues Facing Us," was leaked last year. It cited 230 incidents of mobs laying siege to party and government offices in 82 cities, with 5,500 party officials injured or even killed.

"Any factors that could jeopardize stability must be annihilated in the early stages," Chinese President Jiang Zemin declared in a nationally televised address.

These changes are about to speed up, as China joins the World Trade Organization, which requires China to open its markets and financial system to outside competition. The aging political leaders in Beijing have gritted their teeth and decided to go ahead with China's integration into the global economy, even though it means further weakening their grip on the economy.

They have little choice. Every year, 9 million Chinese are added to the work force. To find them jobs, under the calculations long used by Beijing planners, requires an annual GDP growth rate of at least 8 per cent -- a target that China has now missed for the past three years. Like men on a treadmill which runs a little faster every day, Beijing's leaders are trapped, committed to WTO membership as the only way to keep the economy growing, whatever the social and political implications.

So China's third revolution is the growing disconnect between the authoritarian political leadership which is trying to maintain an unfree society by embracing free markets and free trade, and the new generation of ambitious and Internet-linked people they rule.

There is a Chinese public opinion, and it has little to do with the innocent democratic yearnings of the Tienanmen Square demonstrators of 1989. It was on display in the angry crowds demonstrating outside the U.S. Embassy after the Chinese embassy in Belgrade was bombed by mistake during the Kosovo war, the furious anti-American demonstrations during the spy plane crisis, and by the public pressure for reunification with Taiwan. There is a new mood of nationalism surging in China (as it did in other fast-growing and authoritarian economies, like Germany before 1914), which already is a constraint upon Beijing's leaders who are trying to manage a complex foreign policy with Taiwan and the United States.

So the event to watch this year will be the 16th Party Congress in October, when the current leadership will start handing power to the coming "Fourth Generation" of 50-something leaders like vice premier Wen Jiabao and Vice President Hu Jintao. For moderate reformers and believers in economic growth like the current leader, Jiang, and Premier Zhu Rongji, the question is whether the fast re-arming and modernizing Chinese military will defer to the new generation.

That is why most observers expect Jiang to keep his hands on the reins of power as head of the Central Military Coalition. And despite China's support for the U.S.-led war on terrorism, some ominous military tensions are swirling. The presence of American troops near China's western frontiers in oil-rich Central Asia, along with the traditional U.S. military bases in Japan and South Korea and new U.S. weapons being delivered to Taiwan, may well look from Beijing's standpoint like encirclement.

The deeper concern for U.S. policy-makers is that they are now, after the Afghan war and the big Western investments in the oil-rich Caspian basin, deeply involved in that part of the world where Russian and Chinese interests meet. The heart of Eurasia, the hard land that spawned global conquerors like Genghis Khan and Tamerlane, is the dangerous neighborhood where the cultures of China, of Islam and Russia all meet -- and often clashed even before the great oil discoveries of the 1990s. And now the United States is involved as well.


(Martin Sieff is chief news analyst for United Press International and Martin Walker is the news service's chief international correspondent.)

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