In this issue:

India Procures 25% Stake in Greater Nile Project in Sudan

Al-Qaeda Kills 10 Pakistani Soldiers

Chinese Unemployment Closer to 7% Than 4%

Chinese PM Zhu Rongji Calls Meeting of Leading Economists

Philippines President Agrees to Utopians' Perpetual War

Arroyo Administration in Turmoil Over Failed Firing of Foreign Minister

Singapore Looks to Hedge Funds To Revive Its Economy

From the Vol.1,No.17 issue of Electronic Intelligence Weekly
Asia News Digest

India Procures 25% Stake in Greater Nile Project in Sudan

India's procurement of a 25% stake in the Greater Nile Project in Sudan, has surprised many. However, Delhi's investment of nearly $750 million in Sudan is part of a new diplomatic thrust aimed at ensuring India's energy security, says an eminent Indian analyst.

India's search abroad for "equity oil" started in Vietnam a few years ago. Later, the government took a stake in a hydrocarbon project in Sakhalin, in Russia's Far East. India and China have linked up for oil exploration in Kazakhstan, and China is also a partner in the oil project in Sudan that India has now decided to join.

In going for "equity oil," India is emulating China, whose energy diplomacy is far more intensive than India's. Since becoming a net oil importer in 1993, China's quest abroad for production-sharing contracts, equity investments, and old oil fields that could be rejuvenated has taken it to faraway places in Nigeria and Venezuela.

As for India, there are expectations that New Delhi will be re-opening talks with the visiting Nepalese monarch, King Gyanendra, on the development of Nepal's 80,000 MW of hydropower. King Gyanendra is now in India, meeting top Indian leaders.

Al-Qaeda Kills 10 Pakistani Soldiers

Suspected al-Qaeda terrorists have killed 10 Pakistani soldiers, including two officers, in a four-hour-long gun battle near the border with Afghanistan. Pakistani soldiers launched a hunt near the town of Wana on a tip from the FBI that al-Qaeda/Taliban operatives were on the area. Subsequently, the Pakistani Army said the al-Qaeda members were Chechens.

In Spin Boldak in southern Afghanistan, al-Qaeda activists have blown up a large ammunition dump, killing 19 Afghan soldiers and civilians. Another 15 Afghan soldiers working in the depot were missing.

Meanwhile, U.S. Secretary of Defense Donald Rumsfeld has told reporters that, from recent seizures of weapons, it is evident that al-Qaeda is receiving and storing fresh caches of armaments. Rumsfeld also indicated that the weapons have come from various countries. "If I spread out all the passports, it would cover many different countries," he told the reporters.

He also made it a point to note that the money sources of al-Qaeda have not dried up. Money is still coming into their accounts, and they are still using it to buy weapons.

Although there is general agreement in Washington that al-Qaeda is far from being finished, there exists a difference of opinion over where the al-Qaeda remains concentrated. According to Rumsfeld, al-Qaeda is operating in southern Afghanistan and the border areas in Pakistan. According to the Deputy Secretary of State, Richard Armitage, al-Qaeda is also active in the Pakistani-held part of Kashmir. Rumsfeld, when he was in Islamabad recently, had said that there did not exist enough evidence to claim that the al-Qaeda activists were in Kashmir.

Chinese Unemployment Closer to 7% Than 4%

"China should put ensuring a higher rate of employment as the core point of all its economic policies," wrote CASS economist Cai Fang, director of the Population and Labor Economics Institute of the CASS, in a People's Daily article June 24. Despite the annual economic growth rate of around 8%, ensuring enough jobs to the unemployed is becoming the biggest headache for Chinese policy makers, the article stated.

Cai Fang and colleagues released a report earlier this month, warning that the real unemployment rate in China is closer to 7% rather than it is to the official government figure of less than 4%. A 7% unemployment rate is a serious warning signal, Cai wrote, which usually means growing mass dissatisfaction and potential social instability.

At the spring session of the National People's Congress, Premier Zhu Rongji ranked the effort "to broaden employment channels and create jobs," as the first priority of his administration's agenda.

Reflecting the situation of China's manufacturing under the reform, Cai Fang wrote that he considers service-sector employment as the solution to the problem. Up until 1979, employment in all three main sectors—farming and mining, manufacturing, and services—grew at about the same rate. But by 2000, while employment in manufacturing had fallen by -39%, it had grown by 105% in services.

Chinese PM Zhu Rongji Calls Meeting of Leading Economists

Chinese Prime Minister Zhu Rongji called together a meeting of China's leading economists at the government compound in Beijing in recent days. The meeting focussed on China's economic situation, including the agricultural sector, finance and taxation, banking, foreign trade, state enterprise reforms, employment and social security, and income and distribution.

Meanwhile, on June 23, the Chinese State Council officially cancelled a plan to sell the huge state holdings of listed companies on the domestic stock market. (The government had wanted to raise funds to finance pensions). As a result of the June 23 decision, the markets, which had been in the doldrums for a year, rose sharply—for the moment.

The Chinese government has some $241 billion of holdings in publicly traded companies; the plan to sell off these assets was not welcomed, because of fears it would draw liquidity from the markets—the Chinese stock markets have fallen by 30% over the past year.

The plan, formulated in June 2001, was that government shares should be 10% of all shares sold by any company on the markets, and the proceeds thereof would go to the pension fund. Government holdings are about two-thirds of every publicly traded firm, accounting for the vast majority of the stock market capitalization, which is some $500 billion.

Philippines President Agrees to Utopians' Perpetual War

Philippines President Gloria Macapagal-Arroyo has agreed to the Philippine side of the utopian perpetual war scenario. Arroyo said, according to the June 23 issue of Straits Times, that she had conveyed to the Bush Administration that "while the military training portion"—of the U.S. military Balikatan "exercise" in Mindanao—"will end on July 31, we can start the next Balikatan exercise immediately." This comes just days after she also accepted the Bush "offer" to allow Special Forces troops to join the combat missions against terrorists. She also said that the deployment would not be limited to Mindanao, as the current operation is, but would be extended to other parts of the country.

Defense Secretary Angelo Reyes and Army Chief Roy Cimatu will meet with Asia Pacific Commander Adm. Thomas Fargo on June 27 in Hawaii, to prepare for the "mission-creep." Secretary of Defense Donald Rumsfeld told a press briefing at the Pentagon on June 26 that the next stage is being prepared.

Arroyo Administration in Turmoil Over Failed Firing of Foreign Minister

The Arroyo Administration in the Philippines is in turmoil, after the President tried, and failed, to fire Foreign Minister Guingona. President Gloria Macapagal-Arroyo released a letter June 27 accepting the resignation of Teofisto Guingona as Foreign Minister (although he was to remain as Vice President). However, Guingona denied that he had resigned, denied he had discussed it with Arroyo, and said he did not intend to leave office, reported the June 28 Daily Tribune of Manila.

Thereupon Arroyo backed down, saying her Press Secretary was to blame for releasing the letter, despite the fact that she had signed it!

Guingona openly opposed the U.S. military Balikatan operation in Mindanao before it began, and almost resigned over it. The fact that the U.S. troops were barred from taking part in combat operations is due at least partly to his fight over the issue, and his demand that, as Defense Minister he had to sign off on the final agreement. In her letter, Arroyo said they had had honest differences, but that they had worked them through, leading to the "successful" Balikatan operation. The fact that a followup "exercise" to replace Balikatan after it ends on July 31, is now being discussed in the U.S. and the Philippines indicates that the issue of U.S. military presence is behind the crisis in the Arroyo Administration.

Singapore Looks to Hedge Funds To Revive Its Economy

A working group including mainly private-sector representatives has been formed to look into positioning Singapore as a hub for hedge-fund management.

The group, according to the Singapore Business Times, is understood to be part of the network of subcommittees that ultimately report to the high-level Economic Review Committee (ERC), looking into ways to revitalize the Singapore economy. The number of hedge funds in the city-state is believed to have more than doubled, from 11 in 2000, based on a study by the Bank of Bermuda, to around 28—as compiled by Eureka Hedge Advisors in its first Asian hedge fund directory this year. The Government of Singapore Investment Corp. (GIC) last year indicated that it was willing to "invest selectively" in hedge funds.

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