Ominous Sign for Zardari: Kayani Cancels U.S. Trip

May 3 (EIRNS)—Pakistan Army Chief Gen. Ashfaq Pervez Kayani will not accompany President Asif Ali Zardari to the U.S. for a trilateral summit, which also involves Afghanistan, to discuss a regional policy to tackle terrorism. The U.S. Administration was keen that Kayani should head the Pakistani military team for the trilateral talks in Washington next week. Ostensibly, the Pakistani Army Chief chose to stay home in light of the growing insecurity in Pakistan.

But the real reason could lie somewhere else. It is evident that the Obama Administration has begun to identify Zardari as a lame-duck President and is now talking to Prime Minister and Pakistan Muslim League (Nawaz) leader Nawaz Sharif, as a desired replacement. The Washington Post's David Ignatius reported in his column today that the U.S. "is looking increasingly" to Nawaz to replace the weak Zardari.

Also, the Pakistani Army has never accepted Zardari as President, and it sees Nawaz as a better alternative. Nawaz is Punjabi, endorses Sharia, has good contacts with the Pakistani Taliban leaders, is considerably more anti-India than Zardari, and is very close to Saudi King Abdullah.

To some in Washington, replacing Zardari with Nawaz would provide an opportunity to start negotiating with the Afghan Taliban. The Saudis have close contacts with Mullah Omar, the Taliban supremo, and Team Obama is making its move to begin negotiations with the Afghan Taliban in order to set the ground for an exit at some point in time, say two years.

"One of the most stupid things that was done, was getting rid of Musharraf," Lyndon LaRouche responded. "And the motives for doing it were evil. Now, we have an uncontrollable situation, because of that policy, the dumping of Musharraf. Whatever you want to say, he could hold the country together, and our objective should have been, 'Hold the country together!' But the Administration had a different policy, as they always did.

"You're creating a situation in which one figure, you use to replace another, is less competent than the person he's replacing," LaRouche continued. "And this is where the damn problem comes: you're losing credibility, in the ability to manage the international situation, by destroying anybody who has any credibility. That's what really the British are doing! Destroying anybody who has credibility, and that way you can manage the situation."

"At this point, we just say, 'Stop this shit!'" LaRouche concluded.

Nepal Threatened with Military Coup, Chaos

May 3 (EIRNS)—Nepal's army chief, Gen. Rukmanga Katawal, who was sacked by the ruling Maoist Party yesterday, has refused to accept the decision, according to TV reports. Times Now TV channel says that an emergency meeting is being held by the top brass of Nepal's Army at the residence of Katawal over the issue. News from the meeting suggests that generals at Nepal Army Headquarters in the capital Kathmandu have decided to keep all of their divisions on high alert.

Located between India and China, Nepal has long been the center of Indian and Chinese interest. Recent moves by the Maoists to court China, and undermine India, have not gone over well with New Delhi. It is likely that General Katawal's decision not to quit and to challenge the Maoists has clearance from India.

Meanwhile, the Nepali Ministry for Home Affairs asked the Nepal Police and Armed Police Force to stay on high alert, after the main opposition party Nepal Congress (NC)-affiliated Nepal Student Union (NSU) cadres clashed with United Communist Party of Nepal (Maoist) (UCPN-M) cadres in the capital.

The crisis arose when 61-year-old General Katawal, who received his marching orders just three months before he is due to retire, challenged the government's decision last month to retire eight brigadier generals, and encouraged the generals to go to court, challenging the order from the Maoists.

Meanwhile, the second largest party in the government, Communist Party of Nepal-Maoist, has pulled out of the government, protesting the move against General Katawal. The Maoists, who abolished the monarchy and formed a republic, now face the biggest political challenge of their short reign. Demonstrations in support of, and against the Army chief's sacking erupted in Kathmandu shortly after the government announced its decision, and top Army commanders met at an emergency meeting.

China Is Facing 'Daunting Challenges'

May 4 (EIRNS)—The Chinese economy is facing "daunting challenges" despite some "positive signs," Finance Minister Xie Xuren said today at the meeting of the Asian Development Bank in Bali, Indonesia. "The Chinese government's basic approach is to expand domestic demand, particularly consumer demand, to promote growth," Xie said. Despite some positive signs, however, he said, "the People's Republic of China still faces daunting challenges such as a sharp decline in exports, over-capacity in some industries, slow recovery in industrial growth, drop of economic returns, reduction in fiscal revenue and severe pressure on employment."

The State Information Center, a policy institute of the National Development and Reform Commission, today released a report saying that while China should continue its current government investment program, and also be making contingency plans for a deeper world crisis. Exports will fall another 20.2% in the coming quarter, after a 19.7% decline so far this year, and even worse, imports, used to fuel the processing trade for re-export, fell over 30% so far, and will fall over 25% in the coming quarter, the SIC reported.

Two regions which had been foci of China's export-dependent sector, are showing the strain. Guangdong, the hub of globalization in China, reported yesterday that output of big industrial enterprises had stagnated in the first quarter. Output growth, worth 304 billion yuan ($44.5 billion), was up just 0.9% from a year ago, and more than 4% lower than the national average. Big enterprises' profits were down more than 33% in January and February, the provincial economic and trade commission reported.

The Yangtze Delta, which was being promoted to follow Guangdong as a producer for export, is also in trouble. The biggest cities in the region, which are some of the biggest industrial cities in China, are all showing lower growth, the Wuxi statistical bureau reported yesterday. Industrial output was down 3.7% from a year ago, and exports fell 22% to worth $91.6 billion.