THE NEW YORK TIMES
April 3, 2008
Mugabe Foes Win Majority in Zimbabwe
By BARRY BEARAK
HARARE, Zimbabwe — President Robert G. Mugabe and his party have lost control of the nation’s Parliament, official election returns showed Wednesday, giving new impetus to the bigger question: Does that foretell a loss of the presidency itself, the job he has held tightly for the past 28 years?
As this nation waited in frustration a fourth day without official results in the race for president, the main opposition party of Morgan Tsvangirai announced its own final tally, proclaiming victory with 50.3 percent of the vote to Mr. Mugabe’s 43.8 percent — just barely enough to avoid a runoff.
Zimbabwe now waits to see if the official count matches the opposition’s, knowing it would not require a very heavy thumb on the scale to force another round of voting three weeks from now.
There were signs that Mr. Mugabe had endorsed a second vote, which, while not as humiliating as an outright defeat, would still seem a difficult pill for a man who has held power for so long and considers himself the father of the nation. Wednesday morning’s edition of The Herald, the state-run newspaper, reported that “the pattern of results” shows that no candidates “will garner more than 50 percent of the vote, forcing a rerun.”
The newspaper, considered a mouthpiece for Mr. Mugabe, published no actual election totals from Saturday’s vote and attributed its conclusion to analysts. But it probably means that governing party insiders have urged the president not to give up his — and their — power, either persuading Mr. Mugabe to keep on fighting or at least to maintain the option.
Even so, the election commission confirmed Wednesday that the balance of power had fatefully shifted in Parliament, long a bastion of support for Mr. Mugabe.
With only 11 races to be declared, the Movement for Democratic Change, the opposition party, had 106 seats in all, including one for an allied independent, in the 210-seat assembly. Mr. Mugabe’s party — known as ZANU-PF — had only 93 seats, and among its losing candidates were seven of the president’s cabinet ministers.
But the presidency remains another matter. A businessman with close connections to the party hierarchy, speaking on condition of anonymity, said Mr. Mugabe had met Tuesday evening first with the chiefs of military and intelligence and then with top members of his cabinet and the party presidium.
“They urged him to go to the bush,” the businessman said, meaning that in a runoff the party would employ tactics of intimidation and bloodshed that had worked well in earlier campaigns, especially in rural areas that could be closed off to opposition candidates.
President Mugabe was said to hesitate. He is a once lauded liberator and statesman who became a ruthless autocrat to be forever remembered for murderous campaigns against his enemies and an ill-conceived takeover of white-owned farmland that ended up wrecking the economy.
He feels a strong sense of rejection in the election results, and a part of him wants to concede, according to the businessman’s account. Still, he said, Mr. Mugabe was urged to continue — though how serious these plans were could not be independently verified.
If a runoff occurs, the opposition is ready, said the party’s secretary general, Tendai Biti, at the news conference where he released the results. “We’ll accept with protest, but it is only a delay of the inevitable,” he said.
He predicted that the president would lose the rerun by “an embarrassing margin” and suggested that Mr. Mugabe withdraw with grace.
Mr. Biti also demanded that the election commission finish its count of the voting for president, implying that something fishy was in the works. “There is a vacuum, and in a vacuum all sorts of mischief fills in,” he said. “Harare is bubbling with conspiracies and counter-conspiracies.”
Mr. Biti said the election commission’s tallies for Parliament by and large coincided with his party’s, because each side was working off numbers that were posted at every polling station. The exception, he said, was the province of Mashonaland Central, where there were discrepancies.
The delay in publishing the results has brought international criticism. In Romania, where President Bush is attending a meeting of NATO leaders, a White House spokesman said Wednesday that the administration supported calls for Mr. Mugabe to accept the results of the election, suggesting that he should step aside, though stopping short of calling on him to do so.
"It’s clear the people of Zimbabwe have voted for change," said the spokesman, Gordon D. Johndroe.
The mood among the opposition is buoyant. The results showed that it had won several seats in rural areas where President Mugabe had previously been enormously popular.
Patrick Chitaka won a Senate seat in rural Nyanga-Mutasa in Manicaland Province. “We’ll wipe Mugabe out,” he said at the prospect of a runoff. “People are tired of being poor, and now that they know the bully can be thrashed they’ll come out in greater numbers than before. Even the oldest people with canes will come.
“In 2000 and 2002, Mugabe had taken land from white people and could dangle that issue,” he added. “But now we have seen that he has not only destroyed commercial agriculture, but subsistence farming. The only people who profited were bigwigs who looted.”
But a runoff, if it comes to that, would also create difficulties for the opposition. Civic groups and Mr. Tsvangirai’s party both deployed thousands of election observers around the country, guarding against chicanery at the polls and making sure that the votes were counted openly and the tallies were posted in public view. It may be hard to recreate that effort, especially in an economically devastated nation where a huge deployment requires the use of scarce gasoline, and the cellphone system is problematic.
Then, too, the prelude to Saturday’s election was relatively free of the violence that characterized so many earlier campaigns. With his back to the wall, and with the support of military and police leaders, Mr. Mugabe might well unleash his desperation as rage, many here worry.
“A lot of areas that traditionally voted for Mugabe this time went for Tsvangirai, and there will be recriminations against those people,” said Useni Sibanda, the national coordinator for the Zimbabwe Christian Alliance.
If a runoff is set, the alliance plans to send delegations this week to South Africa, Zambia and Tanzania to ask the presidents of those countries to implore Mr. Mugabe to resign — or at the very least to send observers to monitor the election, Mr. Sibanda said.
Steven Lee Myers contributed reporting from Bucharest, Romania.
Copyright 2008 The New York Times Company
The Herald
Zanu-PF, MDC-T in photo finish
Herald Reporter
THE contest for the House of Assembly went into a photo-finish with MDC-Tsvangirai ending with 99 seats, Zanu-PF with 97, MDC with 10 and one independent.
Neither major party has an absolute majority and even when the results of three by-elections caused by death of candidates are known, neither will have the 106 seats needed for an absolute majority
Besides the 206 seats contested on Saturday, Muzarabani South was won unopposed by Zanu-PF and three by-elections are pending following the death of MDC candidates. While the MDC-Tsvangirai is likely to win at least two of these, since one is Redcliff and the other is in Bulawayo, it cannot gain the 106 seats needed to hold a majority in the House of Assembly.
While the MDC-Tsvangirai had a small lead in seat numbers, Zanu-PF was ahead in the popular vote.
In the polls for the 206 contested seats, Zanu-PF had won 45,94 percent of the votes, MDC-Tsvangirai 42,88 percent, the MDC 8,39 percent and the minor parties and independent candidates 2,79 percent.
Zanu-PF won an absolute majority of the vote in five provinces: the three Mashonalands, Midlands and Masvingo; and last night came first in Matabeleland South with just under 43 percent of the vote, although that lead was not translated into seats.
MDC-Tsvangirai won the absolute majority of the vote in just two provinces: Harare and Manicaland. No party took an absolute majority of Bulawayo, although MDC-Tsvangirai won all the contested seats with just 47 percent of the vote in a vicious three-way contest, coming first in that province and coming first in Matabeleland North with just under 37 percent of the vote.
In the two rural Matabeleland provinces, three-way fights produced some curious results. In the 12 contested constituencies of Matabeleland South, Zanu-PF came an easy first in the total vote, but won just three seats. MDC came second in the vote, but translated that into seven seats, and MDC-Tsvangirai was third, and with just two seats.
Masvingo, like Matabeleland South, produced an anomalous distribution of seats when compared to the provincial vote. Zanu-PF was an easy winner of the popular vote, taking 52,01 percent of the votes, but only 12 of the 26 seats. The other 14 seats went to MDC- Tsvangirai, although the party only managed 41,61 percent of the popular vote. Many Masvingo seats were won with minute majorities.
Zanu-PF has lost its majority in the House of Assembly for the first time since independence, despite its lead in the popular vote. It tended to win with larger majorities where it was stronger than the opposition parties were winning in their strongholds.
Since the 2000 and 2005 elections, Zanu-PF has lost significant support in Manicaland and some support in Masvingo, although a drop of less than 10 percent in its share of the vote in that province saw the huge cut in seats.
The party held its support in rural Mashonaland and rural Midlands while MDC-Tsvangirai has maintained its support base in the cities and towns, and changed the face of the next Parliament with its large gains in Manicaland and modest advances in Masvingo.
Rural Matabeleland has always tended to concentrate most of the marginal constituencies in Zimbabwe, and the strong three-way fight in that area accentuated that trend. Many seats in the region were won with well under 50 percent of the valid vote.
The ZEC, with the national agents of the candidates monitoring its work, is still compiling the totals for the presidential vote.
But if the voting patterns follow the votes for the MPs fairly closely — with Zanu-PF supporters voting for President Mugabe, MDC-Tsvangirai voters opting for Mr Morgan Tsvangirai and MDC voters voting for Dr Simba Makoni — it is difficult to see how any candidate can reach the total of 50 percent plus one required to avoid a run-off.
Even if almost all those who voted for independent candidates and the minor parties gave their presidential vote to Mr Tsvangirai, he would still fall far short of the total unless a large number of Zanu-PF and MDC voters switched to him in the presidential poll.
A look at the turnout in the four constituencies that did not vote for MPs suggests that even with the bulk of these votes, neither of the two main candidates can avoid a run-off.
Without significant cross-voting, a run-off appears the most likely outcome.
The Herald
Polls orderly, peaceful: AU observer team
Herald Reporter
THE African Union has reported that last week’s harmonised polls were conducted in an orderly and peaceful manner.
The continental body’s observer mission, headed by former Sierra Leone president Dr Ahmad Tejan Kabbah, said the polling arrangements by the Zimbabwe Electoral Commission made it possible for people to cast their votes in secret.
Several observer missions, including those from the Sadc region, Pan African Parliament and Comesa, hailed the election process, saying it allowed free and fair voting.
In a statement released on Tuesday, the AU mission commended electoral officials for their commitment, professionalism and efficiency, saying this made it possible for contesting political parties, their agents and security personnel to collaborate effectively during the conduct of the polls.
The mission also said that ZEC set up a transparent and effective framework in spite of the complexity and enormity of running the four combined elections for the very first time.
It also praised the peaceful environment that prevailed before, during and after the elections and urged all the stakeholders to accept the results as announced by ZEC.
"The AU observer team would like to take the opportunity, at this stage, to commend the people of Zimbabwe for the manner in which they have comported themselves in relation to these elections and further appeal to them to continue to be patient while ZEC finalises the release of the results," said Dr Kabbah.
The continental body’s team said it held a number of consultations with stakeholders in the country to obtain relevant information necessary for the polls.
"The purpose of these consultations was to obtain relevant information that would lead to a clear understanding and appreciation of the political and social environment in which these harmonised elections were to be held as well as the legal framework and practical arrangements put in place for the conduct of the polls," said the observer team.
Members of the team were deployed to various provinces that included Harare, Bulawayo, Midlands, Mashonaland East and West, Matabeleland North, Manicaland and Masvingo.
The East African Community observer mission has also declared Saturday’s elections free and fair, New Ziana reports.
Leader of the mission Mr Clarkson Otieno Karan told journalists at a Press conference yesterday that the mission observed the pre-election period, the entire electoral process including collation and tallying, and announcement of results.
"Taking into account the observations and recommendations in this report, the harmonised elections in the Republic of Zimbabwe were, to this extent, free and fair," he said.
The mission leader, however, called on the ZEC to expedite release of the results.
"This country has good infrastructure, and two days after the elections, they should by now have announced even the senatorial results, but there is undue delay in the announcements."
He said the delays might encourage people and political parties to begin announcing their own results.
With lessons from the recent volatile Kenyan elections where the EAC participated, Mr Karan urged winners to be magnanimous in victory and losers to accept defeat graciously.
"Quest for power may destroy the country and it is (incumbent) upon the leaders to ensure that the country is peaceful," he said.
Mr Karan said the mission had learnt some good things from the elections, among them the posting of results on notice boards at polling stations.
Deputy leader of the mission Ms Dora Kanabahita also applauded the use of translucent ballot boxes and involvement of women in the entire electoral process.
"We are looking forward to citing Zimbabwe as a good example in the African region," she said.
The eight-member team, made up of parliamentarians from the East African Legislative Assembly, observed polling in eight of the country’s 10 provinces.
Other observer groups, including those from Sadc and the Pan African Parliament, have endorsed the elections as free and fair.
ZEC has said it is still verifying and collating results for the presidential election with the consent and involvement of the relevant political parties/candidates.
The Herald
Some white ex-farmers threaten new owners
Herald Reporter
SOME white former commercial farmers are reportedly threatening new owners and workers claiming that they will soon be coming back to reclaim the properties as they anticipate an MDC victory in the harmonised polls.
Such cases have been reported in Mashonaland West Province where scores of the erstwhile landowners visited farms they used to own but have since been redistributed to blacks under the land reform programme.
The former commercial farmers are said to have been to Paarl, Impofu and Bougainvillea farms a week ago and threatened resettled farmers that they were coming back for the land they owned previously.
In an interview with The Herald in Selous yesterday, Zimbabwe National Liberation War Veterans’ Association Chegutu chapter chairman Cde Edmore Matanhike confirmed the development.
"A group of whites visited Paarl, Impofu and Bougainvillea farms and later gathered at Selous Country Club celebrating that they would return to ‘their’ farms after the elections," he said.
"Our investigations have revealed that they are white former commercial farmers from Zambia camped at Kariba and others from Mozambique based at Chikwalakwala preparing to take their former farms if Tsvangirai wins this election," he said.
Cde Matanhike said he gathered the information from the white farmers who visited some farms in Chegutu East.
He said the returning farmers were linked to some white farmers in the province whose properties were not gazetted by Government for compulsory acquisition for resettlement purposes.
But Cde Matanhike said war veterans would not sit and watch them reverse the gains of the liberation struggle brought about by President Mugabe’s leadership.
"We will be left with no option except to take up arms and defend our pieces of land," he said.
In the run-up to the elections, the Commissioner of Prisons, Retired Major-General Paradzai Zimondi, said if the opposition won the elections, he would resign and go and defend his piece of land allocated under the land reform programme.
People interviewed at Paarl, Impofu and Bougainvillea farms confirmed the visits by the white farmers.
Mrs Irene Richard Nikwi of Paarl Farm, a former maid to one of the white farmers, confirmed that a Mr Cray Wherret and his brothers visited her family at their plot.
"I was away but they saw my husband. It was my former boss’s children who visited us. They were on motorbikes and said they were going to a wedding and had just decided to pass by to pay a courtesy call," she said.
She said she nursed Mr Wherret when she was the family’s maid.
At Impofu, Mrs Serina Phiri confirmed that some white farmers had been to the farm.
"I saw them on motorbikes. They told people that they were coming back to the farms."
Former white farmer Mr Triegaardt Stefanus Lombard is said to have also visited Bougainvillea Farm and took photographs of the farm.
"He came here together with four other white farmers and inspected the whole farm taking photographs in the process," said Mrs Lydia Mukucha, a resettled farmer.
Mrs Audrey Hativagone, Zanu-PF councillor for Ward 29 Chegutu East and also a farmer, said she was surprised by the development.
"I am surprised and I wonder how this is going to happen. We voted for President Mugabe so that we can retain our land. We hear that Morgan Tsvangirai is promising the whites that same land."
Several white commercial farmers whose properties were compulsorily acquired for redistribution to the landless black majority settled in neighbouring Zambia, Mozambique, South Africa, Nigeria and Australia.
They are reported to be camping on Zimbabwe’s borders with neighbouring countries waiting to return once the MDC is declared winner of the elections.
Last month reports from Nigeria said former farmers who had settled in that country where desperate to return home and repossess properties they previously owned.
The farmers were banking on the MDC winning the elections.
The MDC Tsvangirai faction has said it would reverse the land reforms if elected into power.
Its leader, Morgan Tsvangirai, has described the land redistribution programme as illegal and detrimental to foreign investment.
ABC News
Zimbabwe's White Minority Speaks
The Country's Affluent White Community Reacts to the Deadlock Following Election
Reporter's Notebook
HARARE, Zimbabwe, April 2, 2008 —
It is rather easy to find the latest and largest Sony high-definition television in Harare, Zimbabwe. Or perhaps you are looking for a pair of limited re-edition Nike tennis shoes?
Whatever you are interested in buying, a short drive to Sam Levy's Village will do the trick. This is a sprawling outdoor mall located in the affluent Burrowdale district of Harare, where families can spend the whole day getting lost in the various red-brick paved pathways.
Mr. Mercer, a white employee at an audio and video store, stands in front of his largest Sony television screen.
He does not move as he watches the report. After a moment he lowers the volume and steps away from the television. "It's like watching a film. It's pure fiction. All of it."
Says another store employee, also white: "The good news is that the opposition now has control over the parliament. Everyone now knows the numbers. Math does not lie."
Speaking of math, whites make up less than 1 percent of the total population in Zimbabwe. And they make up more than 80 percent of Zimbabwe's upper class.
"Life must go on," says Beth, a thin young white woman who is the manager of a shoe store in the outdoor mall. "I can't let it affect me."
Boxes in hand, Beth walks towards the stockroom, saying, "I will be back tomorrow. No matter what happens."
Until a decade ago, the minority white population controlled the majority of the once-lucrative agricultural industry. That came to an end when Robert Mugabe enforced his infamous Land Reform Act, which, in effect, stripped the white farmers of their property and placed it into the hands of blacks.
Yet unemployment in Zimbabwe is at an all-time high, affecting about 90 percent of the country's population.
Back in the audio and video store, another white employee explains the situation. "Our shelves are not empty because no people are buying, they are empty because it is very difficult for us to import the products.
"Bush says he will come to Zimbabwe if Mugabe is gone," he continues. "And the British prime minister would love to come here, too. But instead of them coming, all they do is send sanctions."
The widespread rumor of a possible runoff election enters the conversation as one of the employees, who is white, reads a text message on his cell phone.
"It says the Web site is reporting that MDC [the opposition Movement for Democratic Change] has 50.3 percent of the presidential vote," he says.
"But what does that mean? Runoff or no runoff?" asks the other employee.
No one says anything for a moment.
Finally, the white manager of the store speaks: "So what if the opposition wins? They may end up doing the same thing, going down the same road."
Copyright © 2008 ABC News Internet Ventures
The Herald
Unite to solve economic problems
EDITOR — A quick analysis of the results of the harmonised elections released so far clearly shows that the electorate has opted for a system where no one political party can exercise absolute power but that all parties are being forced to co-operate with each other.
The economic problems Zimbabwe is facing require all parties to come together to offer solutions. One newly resettled farmer agreed that without indigenous ownership of farms, the future of farming is bleak. Gone are the days when farm workers of Malawian, Zambian and Mozambican origin were willing to offer their labour for rations and clothes.
It is well known that the local people look towards white collar jobs in the service sectors or in factories. But they are willing to go and work on South African farms to earn the rand.
What then could be solution to increase production on the farms? Maybe we should adopt the highly mechanised farming methods where farms are subdivided into small units of not more than 300 hectares.
This would make it easier to work with less workers but with advanced technological equipment. Many farmers could even opt for smallholding farming if better equipment was provided.
But one businesswoman suggested that while farming would take time to restore to viability, manufacturing could be the quickest way to turn around the economy.
She gave examples of manufacturing clothes under contract for the American market which Zimbabwe lost to South Africa for lack of inputs.
If foreign currency were to be made available after these elections, many companies could resume production for exports and earn the much-needed foreign currency.
If all parties co-operate and come up with a common economic policy to address high inflation, the valueless currency and escalating prices, then the voter could get a relief and confidence in the future.
Albert Nhamoyebonde.
Harare.
The Herald
Zim, be wary of Western stooges
By Tendai Hildegarde Manzvanzvike
GARIKAI MUSANONOKA SITHOLE, son of veteran nationalist, the late Dr. Edson Sithole, has called on Zimbabweans to avoid aborting the revolution at this critical stage.
Garikai (35) said: "2008 itai mbiri yakakosha yokuvhotera Zanu-PF.
"Tava negwara.
"Tava neindependence". (In 2008, let the people of Zimbabwe be well known for voting en masse for Zanu-PF and for giving Zanu-PF a resounding victory).
Born in Mt Selinda on December 24, 1973 to veteran nationalist Dr Edson Sithole and Sihle (Mavhu) Khupuka, a South African
national from KwaZulu-Natal, Garikai Sithole is not a newcomer to Zimbabwe’s political issues.
On June 17, 2007, The Sunday Mail reported that Garikai initiated moves to have the late Rhodesian prime minister Ian Douglas Smith indicted over the mysterious disappearance in 1975 of his father Dr Edson Sithole, who was a central committee member of the then Zanu.
A retired soldier and now an A2 cattle farmer in Masvingo Province, Garikai instructed his lawyers to institute litigation against Smith whom he held responsible for the death of his father and for denying him and his siblings the right to grow under the guidelines of a loving father.
He told The Sunday Mail: "I have already instructed my lawyers, Tshuma, Gurajena and Partners, to take up the issue with the courts because I feel the family has a right to redress."
Dr Edson Sithole, who disappeared mysteriously in the then Rhodesia in October 1975 and whose body was never recovered, was accorded national hero status in 1994 together with eleven other 11 nationalist and liberation war heroes: Lieutenant-General Lookout Masuku, Dr Samuel Tichafa Parirenyatwa, Cde Benjamin Burombo, Cde Lazarus Nkala, Cde Artwell Bokwa, Cde Amon Jirira, Cde Jini Ntuta and Cde Nikita Mangena.
Dr Sithole has a cenotaph at the National Heroes Acre.
Referring to Simba Makoni and Morgan Tsvangirai as unfocused individuals, Garikai said the duo are pawns of the British and their Western allies, especially the United States, and they were being used in attempts to sabotage the land reform programme, and to serve British interests.
He, however, said that their projects were exercises in futility, arguing that Makoni and Tsvangirai will not govern Zimbabwe until and unless the remains of the children of Zimbabwe who perished during the liberation struggle have been identified, brought home and properly interred, including the remains of his father Dr Sithole.
Garikai hailed President Mugabe for returning land to its rightful owners saying: "Cde Mugabe has a vision of wanting to see all of us develop.
"The youths today have land, the elderly have land, but Makoni and Tsvangirai are saying that whites or the West should come and administer this country.
"Am I at my age supposed to be a recipient of the land reform programme, let alone being an A2 farmer? Garikai was allocated his farm when he was 30.
"Am I supposed to be a recipient of farm implements being allocated by Government, over and above the farm that I got?
"Pazera rangu ndonzi ndine tractor.
"Tractor yandisina kushandira.
"How much does one tractor cost?"
He attributed the prevailing economic hardships to the illegal Western sanctions imposed at the instigation of the MDC, which sanctions were imposed in retaliation to the land reform programme. Garikai accused Tsvangirai of "killing Zimbabwe", saying Tsvangirai was destroying Zimbabwean families, and challenged the people of Zimbabwe to have discerning minds and eyes regarding people like Makoni and Tsvangirai.
Turning to Makoni, he said: "My father disappeared without trace in 1975 and we were left as orphans.
"Simba Makoni must also know that his ancestor Chingaira’s head was decapitated by the British and taken away to Britain, and it has not been repatriated to Zimbabwe," adding: "Mudzimu wokwaChingaira nhasi wave kuwirirana papi nevarungu?
"Chingaira nhasi angazvirumbidza here kuti mwana (Simba Makoni) ari kuita basa?
"I would have wanted to see Makoni as one of my relatives being in the forefront, assisting our family to find the remains of our father. But he has failed us."
He also challenged Makoni’s performance track record, arguing: "What did
Makoni develop in Manicaland in the past 28 years? Did he ever buy a bus for the people of Manicaland, even something small for cross-border shoppers?
"Just one vehicle to assist the people of Manicaland Province?
"I just want him to mention one developmental milestone he achieved in his Manicaland Province, before he can tell the nation
that he can do this and that for them as a president."
Garikai said President Mugabe had never denied putting his leadership to the test through constitutional and democratic processes like elections. This is why elections are held regularly and on a timely basis in this country. In a caveat, Garikai made a very interesting analogy when he said that all problems are now being blamed on President Mugabe.
"Munhu unoita barika rako asi woshaya kuziva kuti mhuri yakakura inoda mari. Zvokunetsa woti ndiMugabe. (You become a polygamist, but fail to realise that a big family requires a lot of money for its upkeep. When you cannot maintain your family, you turn around and say it is Mugabe’s fault.)
"Uku kwangove kuhwanda chokwadi. Vamwe vanhu President Mugabe havamudiri chokwadi chaakamirira. (This is just hiding from the truth. Some people do not like President Mugabe because he stands for truth and honesty.)"
He urged all Zimbabweans to remember that "Zimbabwe yakabva murimi remoto, haigoni zvakare kudzorerwa makare." (Zimbabwe was tempered by fire and brimstone, and it cannot be returned into fire again).
British Broadcasting Corporation
Page last updated at 04:25 GMT, Thursday, 3 April 2008 05:25 UK
Opposition wins Zimbabwe assembly
MDC leader Morgan Tsvangirai, 1 April, 2008
Morgan Tsvangirai's MDC has ended Mr Mugabe's grip on parliament
The rivals
Zimbabwe's main opposition party has won a majority of seats in parliament, displacing the ruling Zanu-PF, final official results show.
The Movement for Democratic Change (MDC) took 99 seats, while President Robert Mugabe's party polled 97.
With presidential election results yet to be declared, the MDC said its leader had won, but Zanu-PF denied this.
Meanwhile Mr Mugabe's ambassador to the UN told the BBC the president had no intention of leaving the country.
"Robert Mugabe is Zimbabwean," said Boniface Chidyausiku. "He has lived his life to work for Zimbabwe. Why should he choose another country?"
'A fighter'
Zimbabwe's Deputy Information Minister Bright Matonga said no clear winner had emerged in the presidential poll.
In the event of a run-off against MDC leader Morgan Tsvangirai, he said Mr Mugabe would fight on.
ELECTION RESULTS SO FAR
Parliamentary constituencies
MDC-Tsvangirai: 99
Zanu-PF: 97
Breakaway MDC faction: 10
Independent: 1
Undeclared: 3
Presidential results
None so far
Winner needs more than 50% to avoid run-off
Source: ZEC
Hope for change in Zimbabwe
Zimbabwean voices
Is Mugabe losing his grip?
"He's a fighter," said Mr Matonga. "And he fights best when he's put in a corner like this."
The MDC released its own results to back up its claim of victory in the presidential poll, saying Mr Tsvangirai had won 50.3% of the vote to Mr Mugabe's 43.8%, so avoiding a second round of voting.
But those figures have been questioned. The Zimbabwe Election Support Network, a coalition of civil society organisations, said Mr Tsvangirai had won 49% to Mr Mugabe's 42%.
MDC Party Secretary General Tendai Biti said the party would be prepared to take part in a run-off if the Zimbabwe Election Commission (ZEC) decided neither of the main candidates had won outright.
British Foreign Secretary David Miliband said official results of the presidential election should be announced swiftly.
'Safe MDC areas'
In elections for the 210-member assembly, an offshoot MDC faction at odds with Mr Tsvangirai won 10 seats, according to the ZEC's final results.
Robert Mugabe, 29 March 2008
Mr Mugabe has not been seen in public since Saturday's elections
One seat was won by an independent candidate and polling in three constituencies was postponed as candidates died in the run-up to elections.
Wilf Mbanga, editor of the UK-based Zimbabwean newspaper, told the BBC the postponed elections could hand more seats to the MDC.
"The three seats are in what were previously safe MDC areas," he said.
While the parliamentary victory is significant, Mr Mugabe has changed Zimbabwe's constitution several times in the past 28 years to leave most power in the president's hands, says the BBC's Grant Ferrett in neighbouring South Africa.
There are real fears of unrest if the presidential contest enters a second round, our correspondent adds.
Mugabe 'weakness'?
In a separate development, a senior Zanu-PF official has told the BBC he believes Mr Mugabe has been fatally damaged.
The official, who did not want to be identified, said that by not declaring victory on Sunday or Monday, Mr Mugabe had shown weakness.
Now civil servants and police were determined to show even-handedness in their treatment of the Zanu-PF and the opposition, he said.
Zanu-PF has rejected suggestions that talks have been taking place with the MDC on a possible handover of power.
MDC sources had earlier told the BBC that the outline of an agreement had nearly been reached for Mr Mugabe to leave office.
Mr Mugabe, 84, has not been seen in public since the election but Mr Matonga has denied rumours the president had left the country.
He came to power 28 years ago at independence but in recent years Zimbabwe has been plagued by the world's highest inflation, as well as acute food and fuel shortages.
csmonitor.com - The Christian Science Monitor Online
Mugabe era's end may be near
Zimbabwe's long-time ruler may be running out of options after Saturday's vote.
By Scott Baldauf | Staff writer of The Christian Science Monitor
from the April 3, 2008 edition
Media Moment: At a Harare media conference, the opposition Movement for Democratic Change party declared victory in recent elections over President Robert Mugabe, who has been in power for 28 years.
Howard Burditt/Reuters
Johannesburg, South Africa - It may be the beginning of the end of the Mugabe era, and Zimbabweans can taste it.
Army chiefs loyal to President Robert Mugabe now meet with opposition leaders looking for a smooth end to his ruinous – and often brutal – 28-year reign. Official results from Saturday's elections show he's lost his parliamentary majority. And the opposition has declared an outright win in the presidential race, claiming a razor-thin majority of 50.3 percent of the vote.
Even if Mr. Mugabe manages to make it to a runoff, most experts predict he would lose. The question observers now ask is not whether this is the end of his rule, but how he'll go out.
"Mugabe has run out of options," says Sikhumbuzo Ndiweni, a Zimbabwe political analyst in Johannesburg. "He wasn't able to rig these elections because, with a man from his own party, Simba Makoni, running against him, he didn't know who he could trust to do the rigging. The head of Mugabe's intelligence is Mr. Simba's man. The deputy commander in charge of police is Simba's man. [Mugabe's people] don't know who is on their side."
Tricks up his sleeve?
No one stays in power 28 years – surviving two elections and multiple power plays within his own party – without having a few tricks up his sleeve, of course, and Robert Mugabe has always been the quintessential survivor.
Yet while Mugabe still retains the personal loyalty of the commanders of the Army, the Air Force, the police, the prison service, and, most important in recent days, the Zimbabwe Electoral Commission (ZEC), there is clearly a sense of desperation among Mugabe's supporters and possible signs that the octogenarian leader may be losing support by the day.
"There are clear signs within the ZANU-PF [Mugabe's party] that there is discontent," says Ozias Tungawara, a senior policy analyst at the Open Society Institute in Johannesburg. "The head of the Central Intelligence Organization and some of Mugabe's cabinet members had to come out and restate their loyalty to Mugabe. That's a clear sign of distrust, panic, and paranoia."
Discontent runs deep within ZANU-PF, and is most strongly felt by rank-and-file members and civil servants, who have been impoverished by the disastrous past few years of Mugabe, Mr. Tungawara adds. "The likelihood is that even people who believe in the ideology of ZANU-PF would rather see a change in leadership than another term for Robert Mugabe."
"I don't know if I can go so far as to say that Mugabe has run out of options," Tungawara adds. "There is still the tested and tried strategy of choice, which is simply beating people and creating a level of fear to prevent people from voting."
This tested strategy of beating was used as recently as a year ago against Morgan Tsvangirai, the leader of the opposition Movement for Democratic Change (MDC), after he led protest rallies without government permission. At the time, Mugabe said Mr. Tsvangirai deserved to be beaten.
While Mugabe has clearly lost support within his party, some Zimbabwe watchers say that he still has the ability to manipulate vote results through the hand-picked leadership of the ZEC. On Wednesday, the ZEC announced that ZANU-PF had lost control of parliament to the MDC, but ZEC's pattern of releasing results slowly has raised concerns that the voting tallies are being manipulated in favor of Mugabe.
"The delay in announcing the [official] outcome must be seen as a deliberate and calculated tactic," said Foreign Secretary David Miliband from London. Mr. Miliband said that Zimbabwe had not taken proper precautions to ensure free and fair elections on Saturday and urged that any runoff be held "in a way that gives far greater respect ... to electoral standards."
"I think [Tsvangirai] would be crazy to go for a runoff," says Marian Tupy, an expert on southern Africa and economic reform at the Cato Institute in Washington. "To go into a second round would mean defeat. The ZEC is not independent – they would come up with the numbers to ensure that Mugabe wins."
"This is Mugabe we're dealing with here," Mr. Tupy adds. "He's stolen two elections and he's trying to steal a third."
In the event of a runoff, Mugabe would deploy his war veterans and youth militia to use violence to intimidate the opposition, says Eldred Masunungare, a University of Zimbabwe political scientist. But Mugabe would be unlikely to rely on the Army, police, and intelligence services because "the police and the soldiers are equally disgruntled and the foot soldiers might refuse to obey orders to beat up people or stage a coup."
Hard to steal this election
If Mugabe stole elections in the past, he did it with a very different ZANU-PF than the one he has today. In 2002, ZANU-PF was unified against Tsvangirai, and even though the popular vote seemed to go against Mugabe, the president still won soundly.
Today, with an inflation rate of 100,000 percent, 80 percent unemployment, and life expectancy rates for men dipping down to age 37, even ZANU-PF members are finding it difficult to survive.
Consider the electoral workers who ended up running the polls on election day. In past years, teachers from state schools – each of whom relied on ZANU-PF for their state jobs – were dragooned into being poll workers. This year, one Zimbabwe watcher says, "they brought in police and other civil servants to run the polls, and even then, they didn't know if they could trust them."
And because of new electoral laws, insisted on by the Southern African Development Community, ZEC poll workers had to count votes in polling stations and announce results on election night, two measures that made it harder for the government to cook up voter numbers in their favor. That, too, will remain true in the case of a runoff.
• A journalist who could not be named for security reasons contributed from Harare.
Find this article at:
http://www.csmonitor.com/2008/0403/p01s07-woaf.html
What's next for Zimbabwe? [Comment on this story]
April 03 2008 at 06:42AM
By Fiona Forde
Senior members of Zimbabwe's security forces and Zanu-PF have met Robert Mugabe to persuade him not to contest a second round of elections while Simba Makoni paves the way for a government of national unity.
The ruling party on Wednesday lost control of parliament and it is expected that the official presidential results will force Mugabe into a run-off against Morgan Tsvangirai of the Movement for Democratic Change (MDC), despite Tsvangirai's insistence that he won the lion's share of the vote - 50.3 percent, according to unofficial results.
'They don't trust Tsvangirai'
Advisers to Makoni, the former finance minister, said negotiations were laying the groundwork for a government of national unity that would include not only the MDC, but also Zanu-PF. Makoni would take on a senior role with extended executive powers.
"Simba wants to be at the top," said Godfrey Chanetsa, Makoni's right-hand man and a former spokesperson for Mugabe.
"He didn't enter this campaign to play second fiddle. He came in to lead.
"This country doesn't need regime change now. It needs new leadership. And many people believe Simba is the man who can bring this country to the level that it should be."
But the likelihood of Tsvangirai handing over the reigns to Makoni, who won only a fraction of the vote, is slim.
'Stepping down is his only alternative to impending defeat'
o "But this is not about numbers," Chanetsa said. "The eight percent is an illusion. Many people were afraid to vote for Simba, afraid of letting Zanu-PF in the back door and losing their chance of getting rid of Robert. But if they got rid of Robert, do you still think they would see Morgan as the right man for the job?"
Zimbabwe needed a transition, Chanetsa said.
"If (Tsvangirai) goes it alone he would be dealing with a very unstable structure for the next 10 years because the dismantling of the entrenched Zanu-PF structure will take a long time.
"But we can avoid conflict if we go the route of a government of national unity."
Makoni has the support of moderate Zanu-PF members.
"A lot of people have gone down," Chanetsa said, referring to many of the old guard who lost their parliamentary seats, among them Mugabe loyalists Justice Minister Patrick Chinamasa and Public and Interactive Affairs Minister Chen Chimutengwende.
Chanetsa said many in the ruling party saw in Makoni a man who could help them bridge the divide between the Mugabe era and what followed next.
But it is not only ruling party members who will look to Makoni for security.
Retired army major and current Makoni adviser Kudzai Mbudzi said senior members of the country's security forces were also considering their futures as they encouraged Mugabe to step down, in his own interest and in theirs.
"The military runs the presidential campaign in this country, and they gave feedback to Mugabe that he was not to run.
"They don't trust Tsvangirai, but they also knew that Mugabe would be heavily defeated in a second round. And with Simba backing Morgan in the event of a run-off, they knew it was time for a compromise."
It is understood that in return for reasoning with the 84-year-old leader to bow out gracefully, the role players want an understanding that "the status quo and the present status of Zanu-PF would not be totally destroyed. And Simba can give them that assurance".
Under Zimbabwean law, 21 days must lapse after the results have been officially announced before a second round can take place. Makoni's men believe that provides an ideal window of opportunity for Mugabe to step down. "Stepping down is his only alternative to impending defeat," Mudzi's defeat.
In the event that he does, Chanetsa was confident that any future government will allow Mugabe to reside peacefully in the country he fought to liberate.
"He is no Charles Taylor. And there is no point in us looking back. We want to move on."
This article was originally published on page 1 of Pretoria News on April 03, 2008
South Africa's National Financial Daily
Business Report, South Africa
Analysis: Foreign investors cautiously eye Zimbabwe with new interest
April 3, 2008
By Peter Apps
London - Having long written Zimbabwe off as one of the least appealing investment destinations, international investors are starting to show interest as they suspect the end of President Robert Mugabe's rule is approaching.
After iron-fisted farm seizures and slum clearances raised fears over the safety of outside holdings, even risk-hungry investors avoided an economy with 100 586 percent inflation.
But sentiment is starting to shift after Mugabe failed to win a clear majority in elections on Saturday, paving the way for a likely run-off with Movement for Democratic Change (MDC) leader Morgan Tsvangirai.
"It looks like the endgame is very close," said Renaissance Capital strategist Richard Segal. "There is certainly more interest. Hopefully we'll have a unity government, with a reasonable stance on property rights. That could work out quite well for foreign investors."
Renaissance, a Russian investment bank aiming to become Africa's market leader, says it has been pushing Zimbabwe as a good opportunity for six months, with interest rising in the run-up to the polls.
Renaissance snapped up a stake in CBZ Holdings sold by Absa last year, while African Banking Corporation says Citigroup has approved a $25 million (R195 million) purchase of a 20 percent stake.
Segal said the end of Mugabe's 28-year rule could see a donor conference bringing in about $1.5 billion of foreign aid.
And two-thirds of the 3 million Zimbabweans who had left during the economic crisis could return over time, he said, potentially bringing home between $2 billion and $3 billion.
China invested $1.6 billion in Zimbabwe last year, it says, and analysts say this may increase.
Zimbabwean equities already look cheap, according to analysts, and there is enthusiasm for stocks such as cellular operator Econet and retail and hotel chain Meikles Africa.
African equities rose 60 percent last year and the continent expects ongoing growth of 7 percent, but Zimbabwe has long bucked the trend. Its gross domestic product (GDP) has contracted each year since 2000, bottoming out at 10.4 percent in 2003. The International Monetary Fund expects GDP to fall 4.5 percent this year.
Bond brokerage Exotix said it had received new inquiries for prices of Zimbabwean traded debt, although as far as it knew none existed. The nation had outstanding medium- and short-term debt of $4.3 billion, it said, 95 percent of it official debt with multilateral lenders.
Given the scale of the slump, most are cautious. Some say it would take much more than Mugabe's exit to tempt them in. The presence of Zanu-PF names in a unity government could further spook investors.
With Kenya's debacle fresh in the mind, one Africa fund said it was refusing to comment on Zimbabwe, while another major bank said it would not talk for fears over staff safety.
"It's not a place we will rush to take a look at," said Aberdeen Asset Management emerging equities fund manager Andrew Brown. "You'd have to see inflation come under control and the business environment improve. Political change might be the catalyst, but we want to stand back. It's more the sort of place you would find private equity."
Others have taken a dip. London-listed Mwana, which has a nickel mining project in Zimbabwe, climbed 20 percent in early trade on Tuesday on talk of an MDC victory.
"Once [Mugabe] goes, there will be a rush to get in," said one South African analyst. "People who are already positioned will make a lot of money."
UK-based Lonrho last month unveiled plans to raise $140 million to expand in Zimbabwe.
With its gold, nickel, platinum, palladium and ferrochrome reserves, Zimbabwe could benefit from continued high global commodity prices, but huge constraints remain.
Analysts warn that the electricity system is failing to supply a manufacturing sector that has shrunk by 70 percent, ruling out a sudden spike in production.
Even with high global food prices, the devastated agricultural sector would also be difficult to resuscitate.
"There are questions over property rights," said analyst Mike Davies at risk consultancy Eurasia Group. "People are going to be cautious given the history of land grabs. It will take time to clear that sentiment."
http://talkzimbabwe.com/
The role of the British government in Zimbabwe
Thu, 03 Apr 2008 05:17:00 +0000
DEAR EDITOR ─ I watched yesterday with shock Tendai Biti announcing the results of the elections in Zimbabwe at a press conference which was televised at the same time as British foreign minister’s special address in the House of Commons.
Martha Nyenyedzi, PhD ─ Opinion
DEAR EDITOR ─ I watched yesterday with shock Tendai Biti announcing the results of the elections in Zimbabwe at a press conference which was televised at the same time as British foreign minister’s special address in the House of Commons.
I thought such an announcement was the prerogative of the Zimbabwe Electoral Commission (ZEC) in conformity with the Zimbabwe Electoral Commission Act, which means Biti broke the law by pre-empting the role of ZEC and making such an announcement.
In essence, this is taking the law into their own hands. One could conclude that they are no longer a political party, but a pressure group. Surely the MDC should respect the law that they intend to use if they assume power, and not break that law.
The Chief Elections Officer of ZEC is responsible for the execution of electoral operation (Zimbabwe Electoral Commission Act Chapter 2:12, 11) ─ including the announcement of election results ─ not the MDC.
David Milliband, the British Foreign Secretary said that “He committed himself to following Zimbabwean law providing all the more reasons for the results to be announced promptly.”
I do not know what he means by this statement. Results should not be published promptly, but only when they are ready to be published; not when Milliband or the British government wants them published.
Milliband was referring to the fact that Tsvangirai had promised not to pre-empt the announcement process by announcing the results of the poll himself.
We now know that the MDC went on to announce their version of the results, even though they had vowed to respect the law of the land.
In one campaign speech that I listened to MDC leader Morgan Tsvangirai accused the Zimbabwean government for not respecting the rule of law. How then can they be law breakers themselves and expect civility on the part of the government?
David Miliband should retract his statement that he committed himself to following Zimbabwean law as the British government is in connivance with the MDC in illegally claiming a win?
A government that respects democracy and the rule of law would not use unofficial results to comment on the future of a country. What happened to Britain respecting our own institutions and their independence?
I have always found the British government’s role suspicious in Zimbabwe. Mugabe’s regime change mantra is now beginning to make sense and this situation is very disturbing. We voted for change, but do not want that change brokered by the British. We want it to be homegrown so that it makes sense to us.
The huge interest in Zimbabwe is very concerning and the blatant sidelining of ZEC by both the British government and the MDC seems suspicious, to say the least.
As a lawyer, Secretary General of the MDC, Tendai Biti should respect ZEC — the only organisation legally and constitutionally mandated to issue the results.
ZEC has not yet declared a winner, let alone the winner of the presidential contest.
And why did the MDC not announce the result of the Senate?
Martha Nyenyedzi
Zimbabwean Attorney writing from Dallas, TX
allAfrica.com
A New Tide is Turning
The Zimbabwe Guardian (London)
OPINION
2 April 2008
Posted to the web 2 April 2008
By Arthur Gwagwa
A CURSORY glance at history reveals a providential order in the generational progression of mankind, with tides of change relentlessly lashing at humanity to spur us towards positive change. With the counting of Zimbabwean election votes under way, I have no doubt that there is a tide of positive change on the horizon whatever the outcome of the election.
Every Zimbabwean who doesn't see this tide of change approaching or indeed any politician who chooses to ignore it might be buried alive by this tsunami and will definitely risk being a political dinosaur which will forever be frozen by the ice of this age of change. When the pace of change outside a nation becomes greater than the pace of change inside it, then its end is near. There are currently global winds of change all over the world both economically and in corridors of power which are too numerous to mention.
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Our hope for a better future hinges on politicians realising that we are going through a global season of change and the dispensation that we are in calls for them to be courageous in aligning their thinking accordingly, no matter how painful this might be. The days of a political honey moon are long gone in Zimbabwe now.
The current socio, economic and political pains that the nation is going through is not something that should make us panic at all. We are going through change and change by its nature is slow and painful because we are creatures of habit. We are like rubber bands- useless unless stretched. It is therefore necessary that we accept the reality of what we are going through and just hope that whatever outcome from this election will be a positive one.
Whether Zanu PF or MDC claim victory, I do not think that the future of Zimbabwe will ever be the same again. People have become so desperate that they want to see change but the danger with desperation is that we may base eternal decisions on temporary circumstances; therefore let us not forsake the virtue of patience. We need to realise that we are a young emerging democracy and therefore the baby steps that we are currently taking are highly commendable.
Now is the time for Zimbabwe, like a little bird, to fly off from the comfort of the nest without having to look back at it with mixed feelings. This might mean plunging into an uncertain future but yet nothing is lost by making that effort. It is time the little Zimbabwe bird fly on its own wings. Only then will we able to confront the reality with a more mature and responsible manner.
We must endure the pain of an unfamiliar environment as we learn to fly and only hope that politicians across the political divide will accept the reality of this change. Change is the only evidence of life; therefore where there is no change there is no life.
Copyright © 2008 The Zimbabwe Guardian. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com).
Thursday, April 3, 2008
Leveraged Planet
THE NEW YORK TIMES
Leveraged Planet
April 2, 2008, 2:04 am
By ANDREW ROSS SORKIN
JUST after JPMorgan Chase announced its initial $2-a-share deal to buy Bear Stearns, government officials held an extraordinary impromptu conference call. The participants on the Sunday night call, who got a preview of the deal, were Wall Street’s biggest power brokers: Lloyd Blankfein of Goldman Sachs dialed in from home. John Mack of Morgan Stanley rushed to the office to listen on speakerphone. Richard Fuld of Lehman Brothers, who had been directed to return home from a business trip in New Delhi by none other than Henry Paulson, the Treasury secretary, was patched in, too, among others.
The half-hour call, led by Mr. Paulson and Timothy F. Geithner, the president of the New York Federal Reserve Bank, was a rallying cry for support of Bear Stearns — and more broadly, the financial markets, which, as it was described on the call, were on the verge of a major meltdown if not for the pre-emptive steps that the Fed and JPMorgan took. “It was much worse than anyone realized; the markets were on the precipice of a real crisis,” said one participant. Given that Bear held trading contracts with an outstanding value of $2.5 trillion with firms around the world, “we were talking about the possibility of a global run on the bank.”
In another era, the participants in the phone call would have been an exclusive fraternity of high-powered Manhattanites. But this conversation was also filled with foreign accents — from UBS, Credit Suisse, Deutsche Bank, HSBC and beyond.
In truth, though, the call was still more of a courtesy to our foreign neighbors than it was a genuine effort to gather outside views. Call it speakerphone diplomacy. The “possibility of a global run on the bank” may have been real, but the important decisions had been made long before the folks in London, Dubai and Hong Kong were let in on the code-red secret. The chief executives of Wall Street’s top banks had been taking calls from each other and the Fed all weekend.
So goes the solipsistic world of Wall Street. The Four Seasons crowd may talk a big game about being global — sending lieutenants to start offices halfway around the world — but when it comes to opening up its secret society to foreigners, oddly, doing so is still an afterthought.
It is not just a problem in business. While the Fed and the Treasury Department often check in with their foreign counterparts, they still sometimes take a view that is more local than global. Mr. Paulson, formerly of Goldman Sachs, can propose a radical plan to regulate the financial industry in the United States, as he did this week, but it doesn’t address the larger problem: we’re now so interconnected with the markets abroad, whether it be Japan or even Brazil, that whatever we do on our own is almost beside the point.
“We need much tighter global coordination,” Bruce Wasserstein, the chairman of Lazard, told me this week. “It is myopic to look at things in a narrow box. Where we’ve been moving right, the E.U. is moving left. That doesn’t seem sensible.”
If the United States, for example, were to limit the amount of leverage — or debt — that investment banks or hedge funds could use, that wouldn’t offer any protection from debt-fueled implosions at rival firms abroad. A blowup at a highly leveraged fund in China would still ripple across the system.
Superleveraged funds have been a major culprit in the latest downturn, because their use of debt to juice returns has amplified the effects on the downside. (Just ask investors in two of Bear Stearns’s now-bankrupt hedge funds.) When things go bad, the fallout doesn’t stop at national borders. A fund in London may be connected to another in Thailand and not even know it. Who would have imagined that dentists in Germany owned subprime mortgages in Texas? (They did, or rather, still do — at a huge loss.)
The explosion in the use of derivatives has only tightened the global links — and made a worldwide meltdown easier to imagine. Banks and hedge funds across the world are routinely on opposite sides of contracts tied to debt, interest rates or other, more esoteric benchmarks. The collapse of one party (or sometimes just the possibility of a collapse) can be disastrous for the other. Bear’s downfall will very likely induce new calls to address the unnerving problem of “counterparty risk.” To be more than just a public-relations campaign, any such effort will need to have global reach.
In case there’s a question about how interconnected we really are, just witness the global markets’ near collapse in January when Société Générale, the French bank, blamed what it said was a rogue trader, Jérôme Kerviel, for $7.1 billion in losses. Société Générale’s efforts to unwind its positions — before announcing them publicly — came close to creating a market panic. George Soros, who was attending the World Economic Forum in Davos, declared at the time: “This is not a normal crisis. It is the end of an era.”
The Fed, itself unaware of Société Générale’s ordeal, felt compelled to lower interest rates. But let’s be honest: that didn’t do much, and three months later, we’re in worse shape. As Mr. Soros said then, “I question how far the Fed can go given the reluctance of people to hold dollars.” In the end, he agreed, there will have to be worldwide regulation of some sort. “The financial system needs a global sheriff,” he said.
A global financial cop is an idea that has been raised before, but it has never taken flight. E. Gerald Corrigan, who worked at the Fed for 25 years — as special assistant to the chairman, Paul Volcker, and later as New York Federal Reserve president — reminisced to me about his efforts to create global standards in the mid-1980s.
“I can tell you it was very challenging,” Mr. Corrigan said, referring to his work on the Basel Committee on Banking Supervision, an institution created in 1974 by the central bank governors of 10 of the most developed nations. “How do you get 10 countries to agree on detailed, word-for-word provisions when there are questions about what’s the definition of capital? Just start there.”
Still, he said, “While it is fair to say the cross-border consultation process has gotten much better, there is no question we need a better framework for international coordination of our policies.”
But even the thought of a global oversight committee to develop standards stirs fear in the minds of people who can’t stand the thought of regulation. And the chance that a coalition of countries could ever agree on a set of standards is probably slim. Just look at the debate over climate change, a much direr problem without an agreement on a global solution or even a basic set of standards.
The alternative — a global regulatory patchwork, with havens for leverage junkies — could be just as messy, however.
You might ask, why do we need any regulation? After all, it doesn’t seem to ever help. Every seven years or so, the markets plummet for one reason or another, followed by hand-wringing and calls for new regulations. Laws get passed in haste and the markets improve again. Then we do it all over. We may not repeat the old mistakes, but we have a knack for finding new ones.
All of this is true. But Wall Street, long thought to be the front-runner in globalization, is actually just catching up. Rules have always been lax, or at least inconsistent. The cowboy culture that created Bear Stearns has been exported to far-off corners of the world. The only difference is that the far-off corners aren’t that far off at all.
This column earlier referred imprecisely to the secret conference call held with the leaders of the world’s biggest financial firms about the sale of Bear Stearns to JPMorgan Chase. The call began just after JPMorgan’s announcement of the deal, not just before, according to a spokesman for the Federal Reserve Bank of New York. Also, the call was led by the president of the New York Fed, Timothy F. Geithner, and Treasury Secretary Henry Paulson, not by Ben Bernanke, the Fed chairman.
Leveraged Planet
April 2, 2008, 2:04 am
By ANDREW ROSS SORKIN
JUST after JPMorgan Chase announced its initial $2-a-share deal to buy Bear Stearns, government officials held an extraordinary impromptu conference call. The participants on the Sunday night call, who got a preview of the deal, were Wall Street’s biggest power brokers: Lloyd Blankfein of Goldman Sachs dialed in from home. John Mack of Morgan Stanley rushed to the office to listen on speakerphone. Richard Fuld of Lehman Brothers, who had been directed to return home from a business trip in New Delhi by none other than Henry Paulson, the Treasury secretary, was patched in, too, among others.
The half-hour call, led by Mr. Paulson and Timothy F. Geithner, the president of the New York Federal Reserve Bank, was a rallying cry for support of Bear Stearns — and more broadly, the financial markets, which, as it was described on the call, were on the verge of a major meltdown if not for the pre-emptive steps that the Fed and JPMorgan took. “It was much worse than anyone realized; the markets were on the precipice of a real crisis,” said one participant. Given that Bear held trading contracts with an outstanding value of $2.5 trillion with firms around the world, “we were talking about the possibility of a global run on the bank.”
In another era, the participants in the phone call would have been an exclusive fraternity of high-powered Manhattanites. But this conversation was also filled with foreign accents — from UBS, Credit Suisse, Deutsche Bank, HSBC and beyond.
In truth, though, the call was still more of a courtesy to our foreign neighbors than it was a genuine effort to gather outside views. Call it speakerphone diplomacy. The “possibility of a global run on the bank” may have been real, but the important decisions had been made long before the folks in London, Dubai and Hong Kong were let in on the code-red secret. The chief executives of Wall Street’s top banks had been taking calls from each other and the Fed all weekend.
So goes the solipsistic world of Wall Street. The Four Seasons crowd may talk a big game about being global — sending lieutenants to start offices halfway around the world — but when it comes to opening up its secret society to foreigners, oddly, doing so is still an afterthought.
It is not just a problem in business. While the Fed and the Treasury Department often check in with their foreign counterparts, they still sometimes take a view that is more local than global. Mr. Paulson, formerly of Goldman Sachs, can propose a radical plan to regulate the financial industry in the United States, as he did this week, but it doesn’t address the larger problem: we’re now so interconnected with the markets abroad, whether it be Japan or even Brazil, that whatever we do on our own is almost beside the point.
“We need much tighter global coordination,” Bruce Wasserstein, the chairman of Lazard, told me this week. “It is myopic to look at things in a narrow box. Where we’ve been moving right, the E.U. is moving left. That doesn’t seem sensible.”
If the United States, for example, were to limit the amount of leverage — or debt — that investment banks or hedge funds could use, that wouldn’t offer any protection from debt-fueled implosions at rival firms abroad. A blowup at a highly leveraged fund in China would still ripple across the system.
Superleveraged funds have been a major culprit in the latest downturn, because their use of debt to juice returns has amplified the effects on the downside. (Just ask investors in two of Bear Stearns’s now-bankrupt hedge funds.) When things go bad, the fallout doesn’t stop at national borders. A fund in London may be connected to another in Thailand and not even know it. Who would have imagined that dentists in Germany owned subprime mortgages in Texas? (They did, or rather, still do — at a huge loss.)
The explosion in the use of derivatives has only tightened the global links — and made a worldwide meltdown easier to imagine. Banks and hedge funds across the world are routinely on opposite sides of contracts tied to debt, interest rates or other, more esoteric benchmarks. The collapse of one party (or sometimes just the possibility of a collapse) can be disastrous for the other. Bear’s downfall will very likely induce new calls to address the unnerving problem of “counterparty risk.” To be more than just a public-relations campaign, any such effort will need to have global reach.
In case there’s a question about how interconnected we really are, just witness the global markets’ near collapse in January when Société Générale, the French bank, blamed what it said was a rogue trader, Jérôme Kerviel, for $7.1 billion in losses. Société Générale’s efforts to unwind its positions — before announcing them publicly — came close to creating a market panic. George Soros, who was attending the World Economic Forum in Davos, declared at the time: “This is not a normal crisis. It is the end of an era.”
The Fed, itself unaware of Société Générale’s ordeal, felt compelled to lower interest rates. But let’s be honest: that didn’t do much, and three months later, we’re in worse shape. As Mr. Soros said then, “I question how far the Fed can go given the reluctance of people to hold dollars.” In the end, he agreed, there will have to be worldwide regulation of some sort. “The financial system needs a global sheriff,” he said.
A global financial cop is an idea that has been raised before, but it has never taken flight. E. Gerald Corrigan, who worked at the Fed for 25 years — as special assistant to the chairman, Paul Volcker, and later as New York Federal Reserve president — reminisced to me about his efforts to create global standards in the mid-1980s.
“I can tell you it was very challenging,” Mr. Corrigan said, referring to his work on the Basel Committee on Banking Supervision, an institution created in 1974 by the central bank governors of 10 of the most developed nations. “How do you get 10 countries to agree on detailed, word-for-word provisions when there are questions about what’s the definition of capital? Just start there.”
Still, he said, “While it is fair to say the cross-border consultation process has gotten much better, there is no question we need a better framework for international coordination of our policies.”
But even the thought of a global oversight committee to develop standards stirs fear in the minds of people who can’t stand the thought of regulation. And the chance that a coalition of countries could ever agree on a set of standards is probably slim. Just look at the debate over climate change, a much direr problem without an agreement on a global solution or even a basic set of standards.
The alternative — a global regulatory patchwork, with havens for leverage junkies — could be just as messy, however.
You might ask, why do we need any regulation? After all, it doesn’t seem to ever help. Every seven years or so, the markets plummet for one reason or another, followed by hand-wringing and calls for new regulations. Laws get passed in haste and the markets improve again. Then we do it all over. We may not repeat the old mistakes, but we have a knack for finding new ones.
All of this is true. But Wall Street, long thought to be the front-runner in globalization, is actually just catching up. Rules have always been lax, or at least inconsistent. The cowboy culture that created Bear Stearns has been exported to far-off corners of the world. The only difference is that the far-off corners aren’t that far off at all.
This column earlier referred imprecisely to the secret conference call held with the leaders of the world’s biggest financial firms about the sale of Bear Stearns to JPMorgan Chase. The call began just after JPMorgan’s announcement of the deal, not just before, according to a spokesman for the Federal Reserve Bank of New York. Also, the call was led by the president of the New York Fed, Timothy F. Geithner, and Treasury Secretary Henry Paulson, not by Ben Bernanke, the Fed chairman.
Russia challenges US in the Islamic world
ASIA TIMES
Central Asia
Mar 29, 2008
Russia challenges US in the Islamic world
By M K Bhadrakumar
When US President George W Bush named Karachi-born Pakistani American Sada Cumber as the first US envoy to the Organization of Islamic Conference (OIC), the White House announcement of February 27 almost passed off as pork-barrel politics on the part of a lame-duck administration. Cumber is a Texan entrepreneur - and so was Bush.
Cumber is founder of CACH Capital Management based in Austin, Texas, which is a high-performance wealth management firm with acumen and expertise in rendering advisory services to Muslim countries flushed with disposable petrodollar sovereign wealth funds. But then wouldn't Bush know the OIC is not an institution for investment selection and portfolio structure?
White House press secretary Dana Perino explained that Bush considered the OIC to be an important organization and that's why he appointed a special envoy. She said, "The [OIC] has a constructive role to play in the world, and the president is signaling our desire to have a greater dialogue with the organization as well as Muslims around the world." But the OIC has been existence for 39 years - and Muslims for over a millennium. Why now?
In June last year Bush first articulated the thought of deputing an envoy to the OIC. Why the delay? When the media asked Perino why Bush had taken so long, she merely said, "He [Bush] wanted to find the right person and he found that in Sada Cumber."
Islamic card in Kosovo
There is reason to believe, however, that it was in the month of February that the Bush administration woke up to a new reality that cultivating the 57-member OIC could indeed make all the difference in the years to come. Around that time, Washington almost instinctively played the "Islamic card" against Moscow, and found to its dismay that what used to be a highly dependable and potent trump card in Cold War politics is no longer so, and, in fact, it turned out to be a dud card.
Russian Foreign Minister Sergei Lavrov succinctly captured Washington's "OIC heartache" when he commented in an interview with the government newspaper Rossiskaya Gazeta, "It is not without meaning that many nations, including Islamic states, do not intend to recognize Kosovo's independence."
With a touch of sarcasm, Lavrov underscored post-Soviet Russia's reversal of roles with the US in the Muslim world. He added, "I would like to caution against the temptation to succumb to exhortations that are coming from non-Arab and non-Islamic countries but are addressed precisely to Islamic countries to display Islamic solidarity and recognize Kosovo. For, the situation in Kosovo is the most striking example of ethnic separatism."
He was cautioning the Islamic world to be wary of the US attempt to "Islamize" the geopolitical setting in the Balkans. He warned, "Disturbances have also begun in other regions of the world. To encourage separatist tendencies, I believe, is immoral. You see what is happening in China's autonomous region of Tibet, the way the separatists are acting there ... And then developments in other parts of the world as well suggest that we see only the beginning of an extremely explosive process. And those who follow this path should not call for a show of solidarity, whether Islamic or Euro-Atlantic. They ought to think of their responsibility in the first place."
Soon after his interview in Moscow, Lavrov set out on yet another extended tour of the Middle East, but starting with the eleventh summit of the OIC at Dakar, Senegal, on March 13, which was he attending as an "observer" for the second time in a row.
Among the many laurels that Russian President Vladimir Putin gathers as his eight-year tumultuous stewardship in the Kremlin draws to a close, it is often overlooked that history will most certainly judge him as a great bridge-builder between Russia and the Muslim world. Putin's achievement is extraordinary since Russia had a complex, difficult and hugely controversial relationship with the Islamic world for the better part of the last century.
To be sure, Putin's effective handling of the Chechnya problem helped remove a potentially debilitating embarrassment with regard to the Muslim world. But that shouldn't detract from the singular success of his policy in ensuring that no adversary can today hope to get away with manipulating the Muslim world against Moscow in "civilizational" terms in the fashion in which the West managed to do through the Soviet era.
Russia, instead, today is well placed to offer its good offices to mediate a dialogue of civilizations between the Christian West and the Islamic East. In fact, Lavrov in his speech at the Dakar summit of the OIC drew the attention of the Islamic world to the "situation of Muslims in the European countries and the attempts by some politicians to stir up Islamophobia".
Religions as a panacea for conflicts
Being no longer a citadel of atheism has certainly helped the Kremlin. But it is altogether a new level of exhilaration of the mind and intellect to be able to transmute the newfound religious belief into a hardcore political agenda. Lavrov went on the offensive at Dakar and assured the OIC that Russia is determined to "make its major contribution to ensuring Europe's civilizational compatibility and promoting tolerance, in particular towards different faiths". He expressed hope that "a Christian Europe would have been able to find common grounds with other religions more easily".
In a major political initiative at Dakar, Lavrov sought the support of the OIC for a Russian proposal that an "advisory council of religions" should be set up under the auspices of the United Nations, predicated on the estimation that "the involvement of the religious factor could be of help in settling different conflicts through strengthening confidence and concord of all parties based on international law with full respect of the UN role in international affairs".
The proposal altogether elevates Moscow's two-year "dialogue" with the OIC since it gained observer status in the organization to a qualitatively new level. Moscow would know that Washington cannot match the Russian initiative, but at the same time would be hard-pressed to oppose it. Washington's predicament is that it has no effective way of countering Moscow's insistent claim that as a multinational and multi-faith society with a centuries-old history, "Russia is also a part of the Islamic world", to quote Lavrov.
Moscow identifies with Palestine
But it isn't a matter of oneupmanship. Russia currently enjoys several advantages over the US. The entire regional scenario in the Middle East is loaded against the US. The Bush administration is seen as primarily motivated by Israeli interests. There is a pervasive trust deficit even among the old US allies.
Israel-Palestine relations have deteriorated recently. The acute humanitarian crisis has further deepened in Gaza, compounded by the mindless Israeli military operations with tacit US support. The level of violence has increased sharply since mid-January. The peace process of the Annapolis conference of last November has run aground. The continued exclusion of Hamas by Israel and the US as a full-fledged political participant makes nonsense of the peace process.
On all these fronts, Russia today happens to be standing on the right side of the fence. Moscow has stepped up consultations and coordination with Syria; it unequivocally condemns the construction of Jewish settlements; it seeks the lifting of the Israeli blockade against the Palestinian territories; it keeps in regular touch with the Hamas leadership - Lavrov again met Khaled Meshal in Damascus last week, and, furthermore, he has got Israel to learn to live with such contacts.
The resonance of Russia's Middle Eastern stances in Arab opinion is extremely favorable for Moscow. Meanwhile, Iraq weighs around the American neck as an albatross. Moscow has sized up that the US is bogged down in a protracted guerrilla war in Iraq. As a Moscow commentator wrote recently, "The end of this conflict is not in sight. Intensive mine warfare is being waged on Iraqi roads. Not a single allied convoy passes without an explosion. Road mining has assumed such a scale that the US Air Force is using its strategic B-1B bombers for remote mine clearance. Weapons and ammunitions are freely crossing Iraq's lengthy and difficult-to-control borders, while the continued occupation is increasing the mobilization potential of the guerrilla movement."
Again, if three quarters of politics in the Middle East are about public perceptions, it works to the advantage of Moscow when it insinuates that American oil companies are siphoning off Iraq's oil wealth and are making a killing out of high oil prices (though these are also provideing Russia with a windfall); that the US strategy is to establish political and military control over the region; that the US "simply does not want stabilization in Iraq, and will keep a sustained conflict"; that the Bush administration may deliberately launch an intensive air attack against Iran with the sole purpose of crippling Iran's military and economic infrastructure, which would make Tehran's "claims to regional leadership unrealistic for a long time to come", to quote Moscow commentators.
Russia is now shifting gear and is extending its involvement in the Middle East by directly challenging the US's traditional dominance of the region. Lavrov made as the signal tune of his regional tour the Russian proposal to sponsor an international conference on the Middle East. The Arab countries have nothing against the Russian proposal, though they doubt its efficacy, but Israel bristles. Moscow is aware that Washington expects Israel to stifle the proposal. The issue, again, becomes one of public perceptions. Lavrov tauntingly told the Western media while on a visit to Paris on March 11, "My trip to the Middle East next week will make it clear finally who is ready for a [international] conference, and who is not. If all the parties are ready for that, we will hold such a conference."
Lavrov claimed all the so-called Quartet members - the US, the European Union, the United Nations and Russia - have "already shown an interest" in Moscow hosting the international conference. Washington would be seething with irritation that it couldn't afford to publicly contradict the Russian claim.
Similarly, the Kremlin's policy criss-crosses the "Shi'ite-Sunni" divide that the Bush administration meticulously tried to erect on the Middle East and the Persian Gulf chessboard in recent years. Moscow stresses the "civilizational" aspect of the crisis and dilutes the relevance of the sectarian barriers that the US encourages in the Muslim world. In his message to the Dakar summit, Putin stressed the "danger of the world divided between religions and civilizations", while he called for efforts "aimed at preventing an inter-faith and inter-ethnic divide".
To be sure, the Russian policy spontaneously strikes a chord of affinity in the Muslim psyche when Moscow blames the Western world for portraying Islam as a religion that drives international terrorism, whereas, the issue, Russian thinkers maintain, really concerns manifestations of Islamic fundamentalism. As the doyen of Russian "Orientalists" and former prime minister Yevgeny Primakov wrote in an essay some two years ago when the Kremlin's new thinking towards the Muslim world began to surface, "Islamic fundamentalism is about building mosques, observing Islamic rites, and providing assistance to the faithful. But aggressive, extremist Islamic fundamentalism is about using force to impose an Islamic model of governance on the state and society."
With a strong undertone of irony, Primakov pointed out, "History knows of periods when Christian fundamentalism grew into Christian-Catholic extremism: Remember the Jesuits or the Crusades."
Economic gains of friendship
But everything in the Russian policy is not about politics and history, either. Ultimately, Moscow places emphasis on the expansion of economic interests. The "peace dividend" of Russia's growing friendship with the Islamic world is already not inconsiderable in economic terms. In January, for instance, Russia won an US$800 million tender to construct a 520-kilometer railway line in Saudi Arabia. The Russian arms export monopoly, Rosoboronexport, is on record that Russia was discussing supply of T-90 tanks and armored vehicles to Saudi Arabia worth $1 billion.
Again, Russia delivered to Egypt upgraded S-125 Pechora-2M and Tor M-1 air defense systems despite US control over Cairo's military-technical policy. On Tuesday, Russia signed a path-breaking agreement with Egypt allowing Russian companies to build nuclear power plants in Egypt and envisaging Russia providing training for Egyptian nuclear technicians and supplying nuclear fuel.
Evidently, Cairo expects that cooperation with Russia will be more advantageous since the US imposes strict conditions, including regular inspections and control. The US has been pressuring Egypt to place its nuclear program under American control, even as a tender is expected to be floated later this year for Egypt's first nuclear power plant estimated to cost about $2 billion.
Indeed, politics and business are developing between Russia and Egypt on parallel tracks. Speaking after the signing of the Russia-Egypt nuclear power agreement in Moscow, Putin said in the presence of visiting Egyptian President Hosni Mubarak that the two countries will work together as "mediators" to end Israel-Palestine violence and that they saw eye-to-eye on the criticality of an accord between Hamas and Fatah before progress could be made on forming an independent Palestinian state.
No less important is the return of the Russian oil company LUKoil to Iraq. The company had a contract with the regime of Saddam Hussein, signed in 1997, to develop Iraq's largest oil field, West Qurna-2, which has estimated reserves of about 6 billion barrels of oil.
On Wednesday, following talks in Baghdad by a Russian team led by Deputy Foreign Minister Alexander Saltanov, the prospects have brightened for reviving LUKoil's production-sharing agreement over West Qurna-2. (Chevron has been reportedly keen to jettison LUKoil and secure West Qurna-2). Again on Wednesday, one of Russia's largest engineering firms in the oil sector, Stroytransgaz, signed a protocol on reconstructing the Kirkuk-Baniyas pipeline connecting north Iraqi fields to the Syrian port of Baniyas.
Coincidence or not, the very next day, on Thursday, a Russian Foreign Ministry spokesman said in Moscow, "We are urging political and religious leaders in Iraq to do their utmost to end this fratricidal conflict, creating the necessary conditions for building a democratic and prosperous state. Moscow is convinced that a path to settling the crisis in Iraq lies through comprehensive dialogue, the search for compromise, and the achievement of real national reconciliation and accord between all ethnic and religious communities in the country."
The Russian challenge is indeed becoming serious for Washington. Kosovo was a wake-up call over the decline of US influence and the rise in Russia's prestige in the Islamic world. Conceivably, the White House press secretary had a point when she admitted Bush had a hard time locating a personality endowed with the genius of a Renaissance man to be the US's special envoy to the OIC. Cumber's background at CACH Capital does give him a keen insight into how economic integration affects the political and cultural relationship between the US and the Muslim world.
M K Bhadrakumar served as a career diplomat in the Indian Foreign Service for over 29 years, with postings including India's ambassador to Uzbekistan (1995-1998) and to Turkey (1998-2001).
(Copyright 2008 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)
Central Asia
Mar 29, 2008
Russia challenges US in the Islamic world
By M K Bhadrakumar
When US President George W Bush named Karachi-born Pakistani American Sada Cumber as the first US envoy to the Organization of Islamic Conference (OIC), the White House announcement of February 27 almost passed off as pork-barrel politics on the part of a lame-duck administration. Cumber is a Texan entrepreneur - and so was Bush.
Cumber is founder of CACH Capital Management based in Austin, Texas, which is a high-performance wealth management firm with acumen and expertise in rendering advisory services to Muslim countries flushed with disposable petrodollar sovereign wealth funds. But then wouldn't Bush know the OIC is not an institution for investment selection and portfolio structure?
White House press secretary Dana Perino explained that Bush considered the OIC to be an important organization and that's why he appointed a special envoy. She said, "The [OIC] has a constructive role to play in the world, and the president is signaling our desire to have a greater dialogue with the organization as well as Muslims around the world." But the OIC has been existence for 39 years - and Muslims for over a millennium. Why now?
In June last year Bush first articulated the thought of deputing an envoy to the OIC. Why the delay? When the media asked Perino why Bush had taken so long, she merely said, "He [Bush] wanted to find the right person and he found that in Sada Cumber."
Islamic card in Kosovo
There is reason to believe, however, that it was in the month of February that the Bush administration woke up to a new reality that cultivating the 57-member OIC could indeed make all the difference in the years to come. Around that time, Washington almost instinctively played the "Islamic card" against Moscow, and found to its dismay that what used to be a highly dependable and potent trump card in Cold War politics is no longer so, and, in fact, it turned out to be a dud card.
Russian Foreign Minister Sergei Lavrov succinctly captured Washington's "OIC heartache" when he commented in an interview with the government newspaper Rossiskaya Gazeta, "It is not without meaning that many nations, including Islamic states, do not intend to recognize Kosovo's independence."
With a touch of sarcasm, Lavrov underscored post-Soviet Russia's reversal of roles with the US in the Muslim world. He added, "I would like to caution against the temptation to succumb to exhortations that are coming from non-Arab and non-Islamic countries but are addressed precisely to Islamic countries to display Islamic solidarity and recognize Kosovo. For, the situation in Kosovo is the most striking example of ethnic separatism."
He was cautioning the Islamic world to be wary of the US attempt to "Islamize" the geopolitical setting in the Balkans. He warned, "Disturbances have also begun in other regions of the world. To encourage separatist tendencies, I believe, is immoral. You see what is happening in China's autonomous region of Tibet, the way the separatists are acting there ... And then developments in other parts of the world as well suggest that we see only the beginning of an extremely explosive process. And those who follow this path should not call for a show of solidarity, whether Islamic or Euro-Atlantic. They ought to think of their responsibility in the first place."
Soon after his interview in Moscow, Lavrov set out on yet another extended tour of the Middle East, but starting with the eleventh summit of the OIC at Dakar, Senegal, on March 13, which was he attending as an "observer" for the second time in a row.
Among the many laurels that Russian President Vladimir Putin gathers as his eight-year tumultuous stewardship in the Kremlin draws to a close, it is often overlooked that history will most certainly judge him as a great bridge-builder between Russia and the Muslim world. Putin's achievement is extraordinary since Russia had a complex, difficult and hugely controversial relationship with the Islamic world for the better part of the last century.
To be sure, Putin's effective handling of the Chechnya problem helped remove a potentially debilitating embarrassment with regard to the Muslim world. But that shouldn't detract from the singular success of his policy in ensuring that no adversary can today hope to get away with manipulating the Muslim world against Moscow in "civilizational" terms in the fashion in which the West managed to do through the Soviet era.
Russia, instead, today is well placed to offer its good offices to mediate a dialogue of civilizations between the Christian West and the Islamic East. In fact, Lavrov in his speech at the Dakar summit of the OIC drew the attention of the Islamic world to the "situation of Muslims in the European countries and the attempts by some politicians to stir up Islamophobia".
Religions as a panacea for conflicts
Being no longer a citadel of atheism has certainly helped the Kremlin. But it is altogether a new level of exhilaration of the mind and intellect to be able to transmute the newfound religious belief into a hardcore political agenda. Lavrov went on the offensive at Dakar and assured the OIC that Russia is determined to "make its major contribution to ensuring Europe's civilizational compatibility and promoting tolerance, in particular towards different faiths". He expressed hope that "a Christian Europe would have been able to find common grounds with other religions more easily".
In a major political initiative at Dakar, Lavrov sought the support of the OIC for a Russian proposal that an "advisory council of religions" should be set up under the auspices of the United Nations, predicated on the estimation that "the involvement of the religious factor could be of help in settling different conflicts through strengthening confidence and concord of all parties based on international law with full respect of the UN role in international affairs".
The proposal altogether elevates Moscow's two-year "dialogue" with the OIC since it gained observer status in the organization to a qualitatively new level. Moscow would know that Washington cannot match the Russian initiative, but at the same time would be hard-pressed to oppose it. Washington's predicament is that it has no effective way of countering Moscow's insistent claim that as a multinational and multi-faith society with a centuries-old history, "Russia is also a part of the Islamic world", to quote Lavrov.
Moscow identifies with Palestine
But it isn't a matter of oneupmanship. Russia currently enjoys several advantages over the US. The entire regional scenario in the Middle East is loaded against the US. The Bush administration is seen as primarily motivated by Israeli interests. There is a pervasive trust deficit even among the old US allies.
Israel-Palestine relations have deteriorated recently. The acute humanitarian crisis has further deepened in Gaza, compounded by the mindless Israeli military operations with tacit US support. The level of violence has increased sharply since mid-January. The peace process of the Annapolis conference of last November has run aground. The continued exclusion of Hamas by Israel and the US as a full-fledged political participant makes nonsense of the peace process.
On all these fronts, Russia today happens to be standing on the right side of the fence. Moscow has stepped up consultations and coordination with Syria; it unequivocally condemns the construction of Jewish settlements; it seeks the lifting of the Israeli blockade against the Palestinian territories; it keeps in regular touch with the Hamas leadership - Lavrov again met Khaled Meshal in Damascus last week, and, furthermore, he has got Israel to learn to live with such contacts.
The resonance of Russia's Middle Eastern stances in Arab opinion is extremely favorable for Moscow. Meanwhile, Iraq weighs around the American neck as an albatross. Moscow has sized up that the US is bogged down in a protracted guerrilla war in Iraq. As a Moscow commentator wrote recently, "The end of this conflict is not in sight. Intensive mine warfare is being waged on Iraqi roads. Not a single allied convoy passes without an explosion. Road mining has assumed such a scale that the US Air Force is using its strategic B-1B bombers for remote mine clearance. Weapons and ammunitions are freely crossing Iraq's lengthy and difficult-to-control borders, while the continued occupation is increasing the mobilization potential of the guerrilla movement."
Again, if three quarters of politics in the Middle East are about public perceptions, it works to the advantage of Moscow when it insinuates that American oil companies are siphoning off Iraq's oil wealth and are making a killing out of high oil prices (though these are also provideing Russia with a windfall); that the US strategy is to establish political and military control over the region; that the US "simply does not want stabilization in Iraq, and will keep a sustained conflict"; that the Bush administration may deliberately launch an intensive air attack against Iran with the sole purpose of crippling Iran's military and economic infrastructure, which would make Tehran's "claims to regional leadership unrealistic for a long time to come", to quote Moscow commentators.
Russia is now shifting gear and is extending its involvement in the Middle East by directly challenging the US's traditional dominance of the region. Lavrov made as the signal tune of his regional tour the Russian proposal to sponsor an international conference on the Middle East. The Arab countries have nothing against the Russian proposal, though they doubt its efficacy, but Israel bristles. Moscow is aware that Washington expects Israel to stifle the proposal. The issue, again, becomes one of public perceptions. Lavrov tauntingly told the Western media while on a visit to Paris on March 11, "My trip to the Middle East next week will make it clear finally who is ready for a [international] conference, and who is not. If all the parties are ready for that, we will hold such a conference."
Lavrov claimed all the so-called Quartet members - the US, the European Union, the United Nations and Russia - have "already shown an interest" in Moscow hosting the international conference. Washington would be seething with irritation that it couldn't afford to publicly contradict the Russian claim.
Similarly, the Kremlin's policy criss-crosses the "Shi'ite-Sunni" divide that the Bush administration meticulously tried to erect on the Middle East and the Persian Gulf chessboard in recent years. Moscow stresses the "civilizational" aspect of the crisis and dilutes the relevance of the sectarian barriers that the US encourages in the Muslim world. In his message to the Dakar summit, Putin stressed the "danger of the world divided between religions and civilizations", while he called for efforts "aimed at preventing an inter-faith and inter-ethnic divide".
To be sure, the Russian policy spontaneously strikes a chord of affinity in the Muslim psyche when Moscow blames the Western world for portraying Islam as a religion that drives international terrorism, whereas, the issue, Russian thinkers maintain, really concerns manifestations of Islamic fundamentalism. As the doyen of Russian "Orientalists" and former prime minister Yevgeny Primakov wrote in an essay some two years ago when the Kremlin's new thinking towards the Muslim world began to surface, "Islamic fundamentalism is about building mosques, observing Islamic rites, and providing assistance to the faithful. But aggressive, extremist Islamic fundamentalism is about using force to impose an Islamic model of governance on the state and society."
With a strong undertone of irony, Primakov pointed out, "History knows of periods when Christian fundamentalism grew into Christian-Catholic extremism: Remember the Jesuits or the Crusades."
Economic gains of friendship
But everything in the Russian policy is not about politics and history, either. Ultimately, Moscow places emphasis on the expansion of economic interests. The "peace dividend" of Russia's growing friendship with the Islamic world is already not inconsiderable in economic terms. In January, for instance, Russia won an US$800 million tender to construct a 520-kilometer railway line in Saudi Arabia. The Russian arms export monopoly, Rosoboronexport, is on record that Russia was discussing supply of T-90 tanks and armored vehicles to Saudi Arabia worth $1 billion.
Again, Russia delivered to Egypt upgraded S-125 Pechora-2M and Tor M-1 air defense systems despite US control over Cairo's military-technical policy. On Tuesday, Russia signed a path-breaking agreement with Egypt allowing Russian companies to build nuclear power plants in Egypt and envisaging Russia providing training for Egyptian nuclear technicians and supplying nuclear fuel.
Evidently, Cairo expects that cooperation with Russia will be more advantageous since the US imposes strict conditions, including regular inspections and control. The US has been pressuring Egypt to place its nuclear program under American control, even as a tender is expected to be floated later this year for Egypt's first nuclear power plant estimated to cost about $2 billion.
Indeed, politics and business are developing between Russia and Egypt on parallel tracks. Speaking after the signing of the Russia-Egypt nuclear power agreement in Moscow, Putin said in the presence of visiting Egyptian President Hosni Mubarak that the two countries will work together as "mediators" to end Israel-Palestine violence and that they saw eye-to-eye on the criticality of an accord between Hamas and Fatah before progress could be made on forming an independent Palestinian state.
No less important is the return of the Russian oil company LUKoil to Iraq. The company had a contract with the regime of Saddam Hussein, signed in 1997, to develop Iraq's largest oil field, West Qurna-2, which has estimated reserves of about 6 billion barrels of oil.
On Wednesday, following talks in Baghdad by a Russian team led by Deputy Foreign Minister Alexander Saltanov, the prospects have brightened for reviving LUKoil's production-sharing agreement over West Qurna-2. (Chevron has been reportedly keen to jettison LUKoil and secure West Qurna-2). Again on Wednesday, one of Russia's largest engineering firms in the oil sector, Stroytransgaz, signed a protocol on reconstructing the Kirkuk-Baniyas pipeline connecting north Iraqi fields to the Syrian port of Baniyas.
Coincidence or not, the very next day, on Thursday, a Russian Foreign Ministry spokesman said in Moscow, "We are urging political and religious leaders in Iraq to do their utmost to end this fratricidal conflict, creating the necessary conditions for building a democratic and prosperous state. Moscow is convinced that a path to settling the crisis in Iraq lies through comprehensive dialogue, the search for compromise, and the achievement of real national reconciliation and accord between all ethnic and religious communities in the country."
The Russian challenge is indeed becoming serious for Washington. Kosovo was a wake-up call over the decline of US influence and the rise in Russia's prestige in the Islamic world. Conceivably, the White House press secretary had a point when she admitted Bush had a hard time locating a personality endowed with the genius of a Renaissance man to be the US's special envoy to the OIC. Cumber's background at CACH Capital does give him a keen insight into how economic integration affects the political and cultural relationship between the US and the Muslim world.
M K Bhadrakumar served as a career diplomat in the Indian Foreign Service for over 29 years, with postings including India's ambassador to Uzbekistan (1995-1998) and to Turkey (1998-2001).
(Copyright 2008 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)
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