Treasury officials hope Paulson will end up working with Li Keqiang, a highly regarded reformer and rising star in the Communist Party. But it’s unlikely anyone on the Chinese side will give much more anyway. The dialogue was supposed to work like this: Beijing would make concessions on hot issues like piracy and the value of the yuan, and Paulson would dampen China bashing from Washington. It hasn’t happened, because China was never going to make real concessions to relieve protectionist pressure, which has been rising in Congress and from U.S. presidential candidates anyway. It’s not easy to manage a relationship with China when both Democrats and Republicans in the United States are “screaming” about alleged Chinese misdeeds, notes Charles Freeman, a former senior trade official in the Bush administration.
Both sides sold each other a phony premise for the talks. A senior U.S. official not cleared to speak by name insists the dialogue has produced major achievements, including a recent air-service agreement and U.S. support for China’s membership in the Financial Activity Task Force, an anti-money-laundering agency. Thin gruel, most analysts agree, compared with the expectations for what Paulson, an old China hand, could get done.
The United States, burdened by its trade deficit, needs this dialogue more than China does. Paulson’s vision that it would become a permanent framework for U.S.-China relations lies in ruins. China is in a strong position, not in a mood to grant favors to itinerant foreigners. (A delegation from the European Union, which went to Beijing last week also seeking a higher price for the yuan, left empty-handed.) It now looks likely that this effort to regulate Sino-American affairs will fade away when Bush leaves office in 2009—just one more misguided effort to “hustle” the East, as Kipling put it.
Iran: A November Surprise American intelligence agencies can be leaky, but one secret they kept was the new National Intelligence Estimate’s stunning reversal on Iran’s nuclear ambitions. This past spring, officials told NEWSWEEK, the report was postponed because U.S. agencies needed more time to confirm or reject “new information.” In late summer, experts briefed President George W. Bush and senior members of Congress on the reports that Iran’s program may have been shuttered in 2003—but said they were unsure the new findings were valid.
Last month preliminary briefings were held for senior officials, including a highly skeptical Vice President Dick Cheney. The full analysis did not come until Nov. 27; Bush was briefed the next day. Republicans on intelligence committees vowed to investigate; hard-liners suggested U.S. agencies were snookered by Iranian disinformation. Not so, says a senior intelligence official. “We’re confident. We stand by our analysis and tradecraft.”
Commodities: The Metal Kingdom What’s the most exceptional ingredient in your PC, iPod, cell phone and digital camera? Rare earth. The rare earth industry (including minerals and oxides like indium, tungsten and dysprosium) is worth $1 billion and poised to grow by 50 percent in the next three years as high-tech devices become more ubiquitous. And, surprise: China has a stranglehold on it. While China imports nearly every other important commodity, it currently supplies about 97 percent of rare earths, thanks to a crafty state decision to develop the industry.
Chinese export quotas and taxes to control rare earth supply, along with increased demand, have propped up prices, expected to increase 10 to 20 percent annually for the next five years. Companies are racing to develop reserves in the U.S., Canada and Australia, but production cannot meet demand.
That has outsiders worried. The United States recently said its supplies of rare earths used to make LCD TVs, catalytic converters and pace-makers were potentially at risk. The military is also concerned about supply critical to defense. This year Japan declared it would begin stockpiling minerals indispensable for its automotive and high-tech manufacturing. Last month, Japan’s minister of Trade urged China to ease its grip, then visited Africa in search of alternative sources. Whatever happens, China won’t be hurting—it sits on 31 percent of known reserves, the highest proportion in the world.
By the Numbers Just because they do business around the globe doesn’t mean CEOs get around it. A study of top American and European CEOs by executive search firm Heidrick & Struggles exposes Americans as the homebodies.
In Palermo, 106 stores now advertise mob-free shopping. In Naples last month, non-mob bakers handed out 20,000 loaves of “honest bread” to protest that city’s 2,500 mob-linked bakeries. And Luca Cordero di Montezemolo, head of Ferrari and Fiat, vowed to ban anyone associated with the mob from Italy’s employers’ federation. He called on businesses to “take on the responsibility even though it entails serious risks.”
These initiatives and fearless knights like Saviano build hope. But even Saviano admits this road has been traveled many times before. “And,” he says, “the trail is always bloody.”
Worth Your Time: Jackson Was King Michael Jackson is handsome and charming. He’s flirtatious. He’s mostly guileless, sometimes a little confrontational. He’s magnetic.
I don’t mean now. Now he’s a creepy symbol of the afflictive nature of fame. But on “Thriller,” his 1982 blockbuster and masterpiece, he’s the man with the glitter-gloved Midas finger. This month marks the 25th anniversary of “Thriller,” a milestone sure to be obscured by his recent lunacy. But I’m using it as an excuse to revisit one of pop music’s golden moments.
On “Thriller,” he’s lustful (“Pretty Young Thing”) and lusted after (“Billie Jean”). He’s tough (“Wanna Be Startin’ Somethin’”) and dashing (“The Lady in My Life”). He’s everything that the Michael we’ve come to know is not.
His voice still contained its clarity and sweet tone. Say what you will about the man, his work is unassailable. “Thriller” captures the soulful brilliance of the King of Pop before his crown rusted.
Fast Chat: ‘Hamas Closing In’ BBC journalist Alan Johnston was freed by Hamas in July after being held for 16 weeks by Palestinian extremists of the Army of Islam. His new book is “Kidnapped.” He spoke to NEWSWEEK’s William Underhill. Excerpts:
You must’ve feared for your life. Three times. On the last night I thought I was more likely to die. Hamas was closing in, and my fear was that they would storm the building. It was unlikely the people holding me would allow me to be rescued alive in that situation.
How did this change your opinion of the Palestinian cause? Over those three years of being completely immersed in the conflict it would be a bit pathetic if an individual experience were to profoundly reorder your understanding of the dynamics. The one thing that I had always suspected would happen as the occupation grinds on is a further radicalization of the Palestinians, the emergence of a jihadi element—and those were exactly the people who took me.
Is there hope for peace? Even if Israel were to withdraw from every inch of the West Bank and Gaza, that would leave the Palestinians with just 22 percent of the land between the River Jordan and the Mediterranean Sea. Obviously, selling that to the Palestinian people is difficult.
