Rice: Israeli Settlements Have 'Negative Effect' on Peace Talks

America's top diplomat is in the Middle East trying to get the peace process back on track.

Israeli settlement expansion topped the agenda as Secretary of State Condoleezza Rice met separately with Israeli and Palestinian leaders. Rice used exceptionally harsh language to condemn Israel's announcement on Friday that it plans to build 1,300 new homes in disputed East Jerusalem, on land the Palestinians claim for their future capital.

"I do believe and the United States believes that the actions and the announcements that are taking place are indeed having a negative effect on the atmosphere for negotiation," said Condoleezza Rice. "And that is not what we want. We should be in a position of encouraging confidence, not undermining it."

Rice spoke at a news conference with Palestinian President Mahmoud Abbas in the West Bank town of Ramallah.

"We believe that settlement is the highest hurdle on the road of our political endeavors," said Mahmoud Abbas. "With the continued expansion and building of settlements the more tough the hurdle would become."

Israel says it has the right to build anywhere in Jerusalem because it will remain the capital of the Jewish state in any final peace agreement.

Despite the obstacles, Rice said both sides remain committed to the peace process.

"We are all devoted to and believe that it is possible to establish the agreement between the Palestinians and the Israelis for the establishment of a Palestinian state by the end of the year," said Mahmoud Abbas.

But that goal is in doubt because in addition to the settlements, gaps are wide on core issues like Palestinian refugees and the status of Jerusalem.

　
Israeli Prime Minister Ehud Olmert is also embroiled in a corruption scandal that could force him to step down. In the meantime, Mr. Olmert is widely seen as too weak to close a peace deal involving major territorial concessions to the Palestinians.

Countdown Begins for U.S. Elections

Polls ahead of congressional and gubernatorial elections next week continue to show the Republican Party poised to make big gains. 

A public opinion poll from the Gallup research organization indicates Republicans remain in position to seize control of the House of Representatives from Democrats, who now have majorities in both the House and Senate. Republicans need to gain 10 seats to win a majority in the Senate, but most analysts believe they will fall short.

Election activity has surged in the past few days with both major parties trying to motivate their supporters to vote.

U.S. President Barack Obama campaigned in the northeastern state of Rhode Island on Monday, while first lady Michelle Obama campaigned in the city of San Francisco with House Speaker Nancy Pelosi. The president will resume campaigning for Democratic candidates later in the week.

All 435 seats in the House of Representatives are at stake, plus 37 of the 100 U.S. Senate seats.

Stocks in Hong Kong and Japan fell and the U.S. dollar rose a day after China raised interest rates for the first time since December 2007

Economists interpret the move as a sign that authorities are taking a more aggressive stance against inflation and bank lending.
Chinese borrowers will now have to pay at least 0.25 percentage points more interest on their loans. China's central bank increased the cost of borrowing late Tuesday, ahead of releasing inflation figures for September.
Higher inflation rate
Market analysts expect the inflation rate to be higher than the 3.5 percent recorded in August – already the fastest pace in nearly two years. They think China hopes higher rates will cool price increases.
Jan Lambregts, global head of financial markets research at Rabobank, says the central bank is also trying to slow lending.
"Chinese policy makers are very unhappy about bank lending and they want to curb that more…. It's really a warning shot, to those banks – 'curb your bank lending, we're serious,'" Lambregts said.
Credit boom
For the first nine months of the year, bank lending reached $948 billion – just 19 percent shy of the government's target for the year. The credit boom has sparked a surge in property prices nationwide.
Last week, the central bank asked six major banks to raise the ratio of deposits they hold as reserves, which reduces the amount available for lending.
With the increase, the one-year lending rate now stands at 5.56 percent, while the deposit rate climbs to 2.5 percent. China had not moved its interest rates in nearly three years.
On Wednesday, stock prices in Hong Kong declined just under 1 percent, led by property companies. Japan's Nikkei index fell by 1.6 percent. But Shanghai managed to claw back losses earlier in the day. And in Seoul and Taipei, main stock indexes closed higher.
Investment money
A flow of investment money from developed economies seeking higher returns could complicate China's efforts to slow its economy. The problem could worsen if the U.S. Federal Reserve increases the amount of money in circulation in the coming weeks to stimulate the American economy.
Strong foreign investment flows may boost China's currency. A stronger yuan would make imported commodities cheaper, helping manage inflation. Lambregts says expectations of more rate increases could have an influence on the exchange rate.
"I think we should take a broader view, that in terms of hot money inflow, any prospect of further tightening on the monetary front only increases the feeling that you should be in China," he added.
The yuan's exchange rate is tightly managed by the central bank, although it has risen 2.5 percent against the dollar since June. But on Wednesday, the dollar recorded its biggest gain against the yuan since June, after the Chinese central bank sharply lowered the reference rate for yuan movements.

White House Condemns Killing of Iraqi Governor

The White House is condemning Tuesday's assassination of the governor of Baghdad province. The Bush administration says continuing violence will not delay Iraqi elections later this month.

White House spokesman Scott McClellan says President Bush condemns in the strongest terms the killing of Governor Ali al-Haidari, who was shot along with his bodyguards as they drove through a Baghdad neighborhood.

Mr. al-Haidari, who was one of 17 provincial governors, survived a previous attempt on his life several weeks ago.
Noting that a group led by al-Qaida ally Abu Musab al-Zarqawi has claimed responsibility for the governor's killing, White House spokesman McClellan says the choice for Iraqis is clear: either stand on the side of freedom, democracy and peace or stand on the side of the terrorists.

Mr. McClellan says continuing to move toward this month's scheduled elections is an important part of defeating what he says is the terrorist ambition of returning to a past of tyranny and oppression.

He says there was no discussion of delaying those elections during a Monday telephone call between President Bush and Iraqi interim Prime Minister Iyad Allawi.


"We fully support the independent Iraqi Election Commission timetable of January 30 for holding those elections,” he said. “It is important that we continue to move forward on all fronts, to help the Iraqi people realize a better future, a future that stands in stark contrast to the one of the brutal regime of Saddam Hussein."
Mr. McClellan says President Bush and Prime Minister Allawi discussed security surrounding the vote and how U.S. troops can continue working with Iraqi forces to make sure the country is as secure as possible so the election goes forward.

Mr. McClellan says Prime Minister Allawi's administration is continuing to work with Sunni leaders to ensure widespread participation in the vote.

"They are moving forward on reaching out to areas where there is a heavy population of Sunnis to encourage as broad a participation in that segment of society as well. We want to see all parts of Iraq participate to the fullest extent possible in these elections," he added.

Sunnis are a minority in Iraq, and many Sunni leaders say the country is not secure enough to hold the vote. One Sunni party has already announced a boycott and several Sunni groups have said they want the balloting postponed because of security concerns.

Violence continues ahead of the January 30 vote. In a separate attack, a suicide bomber rammed an explosives-laden truck into a police checkpoint near Baghdad's heavily protected Green Zone, killing at least 10 people and wounding 60 others.

Three American soldiers were killed and two wounded in a different bomb attack in Baghdad. Elsewhere, another U.S. soldier and a Marine were also killed.

A new U.N. report says foreign direct investment by transnational corporations will start to recover in 2010 and rebound substantially in 2011

The U.N. Conference on Trade and Development has published the results of this year's World Investment Prospects Survey.

　

More than 240 transnational corporations were surveyed for this report. The results show a drastic 54 percent decline in foreign direct investment inflows for the first quarter of 2009.

　

The UNCTAD survey finds cross border mergers and acquisitions dropped by an even more dramatic 77 percent, compared to the same period last year.

　

Although this gloomy situation is expected to persist throughout the year, the transnational corporations surveyed indicate they expect foreign direct investment will progressively recover in 2010 and gain momentum in 2011.

　

But, UNCTAD Director of Division on Investment and Enterprise James Zhan warns of several risks related to the recovery of FDI.

　

"One is the further global economic downturn," he said. "A second is an increase in financial instability and a third, which is very interesting, is the rise of protectionism involving a change in foreign investment regime."

　

Zhan says protectionism is not a big deal at the moment. But, he says the TNC's concerns about the risk of protectionism in foreign investments is not ungrounded.

　

"The economic stimulus packages could give rise to what can be labeled as smart protectionism," said Zhan. "Furthermore, a new wave of economic nationalism could occur in the aftermath of the crisis when the exit of the public investment from the bailout flagship industries might lead to the protectionism of the national 'champions' from the foreign takeovers."

　

The survey finds FDI prospects remain bright in the agriculture and services industries, while the situation is less optimistic for the manufacturing sector.

　

It says developed countries from North America and the European Union are the regions most affected by the crisis. Sub-Saharan Africa and North Africa are least affected.

The survey shows developing countries in East and Southeast Asia are particularly attractive destinations for foreign investment. And, it notes the top five spots favored by TNC's are China, the United States, India, Brazil, and Russia.

Afghanistan's government-appointed Independent Election Commission has released what it calls "final but preliminary" results from the August 20 vote for president

The disputed returns show incumbent President Hamid Karzai with enough ballots to avoid a runoff with former Foreign Minister Abdullah Abdullah. But the controversy is far from over.

　
The complete preliminary results show Afghan President Hamid Karzai with more than 54 percent of the votes and Abdullah Abdullah with less than 28 percent.

　
Chief Electoral Officer Daoud Ali Najafi informed reporters of the vote totals.

"Abdullah Abdullah has received 1,571,581 votes. Hamid Karzai has received 3,093,256 votes," he said.

　
The Abdullah campaign has complained for weeks that supporters of the president rigged the election, even at polling booths where Mr. Karzai had strong support. It is an allegation that has gained credence from neutral observers.

　
The Election Complaints Commission has ordered a recount involving at least 10 percent of voting stations nationwide. The ECC, dominated by appointees of the United Nations, issued the order to the Afghan government's Election Commission following hundreds of what it deemed serious complaints of ballot box stuffing and other allegations of fraud.

　

European Union election observers question the validity of about a third of the ballots, nearly 1.5 million. EU observers tell reporters in Kabul that under suspicion are some 1.1 million votes cast for Mr. Karzai and 300,000 ballots marked for Mr. Abdullah.

President Karzai's campaign calls the EU observer team's comments "irresponsible." Karzai supporters say they are hoping that even after ballots deemed fraudulent are discarded the president will still have more than 50 percent of total votes to avoid a runoff election with Mr. Abdullah.

The head of the EU observer team, Phillippe Morillon, says that in the mean time, the Karzai campaign should refrain from declaring victory.

"Any claim for any count or of victory will be premature and not credible and will be premature due to the fact that the Afghan electoral law asks for the results to be authenticated at the end of the process," he said.

But recounting and certifying the results are expected to take some weeks, if not longer.

　
A runoff election is supposed to be held two weeks after the final results are certified. But a second round of balloting might not feasible if inclement weather sets in. That might leave Afghanistan with what many would view as an illegitimate government until the snow melts in April.

South Korea plans an unprecedented peace-time mobilization of soldiers

South Korea's military, coast guard and police said they are preparing for all imaginable disruptions during next month's G-20 Summit in Seoul.
Those include large demonstrations, riots, terror and cyber-attacks, and attempts by rival North Korea to spoil the meeting.
The commissioner general of the South Korean National Police Agency, Cho Hyun-Oh, noted Monday that some previous G-20 and other major international summits have been plagued with violence. Combining that with the aggressive reputation of South Korean demonstrators, he said, means authorities must be prepared for the worst during next month's event.
Cho predicts that protests during the G-20 Seoul Summit, though, will not be very violent, and his forces will be able to prevent the situation from getting out of hand. He is mobilizing 50,000 police officers - more than one-third of the national force - to provide security in Seoul during the summit November 11th and 12th.
South Korea's Joint Chiefs of Staff say the armed forces will go on a "Level 3" alert, which is the highest, starting at the end of this month.
The Defense Ministry is preparing for eight possible types of provocative acts by North Korea, including intrusions south of the Northern Limit Line, the disputed maritime border in the Yellow Sea. The Coast Guard will defend the Han River in Seoul. And the Air Force will be on the lookout for planes that may try to intrude into the airspace over the summit. Cho said he expects the military will be prepared to use anti-aircraft missiles in the capital should any invasions of airspace occur.
The fifth G-20 summit is expected to be the largest so far - attracting 10,000 participants, including 32 heads of government and leaders of international organizations.
The leaders attending include U.S. President Obama, Chinese President Hu Jintao, and the heads of several European countries. In addition, U.N. Secretary-General Ban Ki-moon and the heads of the International Monetary Fund and World Bank will be there.
South Korean officials say they have ample experience in holding such an event, noting the successful 2002 World Cup and the 2005 APEC summit. Even so, they say severe traffic congestion can be expected throughout the capital during the G-20 Summit.