Posts Tagged ‘Asia’


>below are some excerpts from Jim Rogers interview:

Dollar will be debased; gold and silver to hit new highs

Chinese economy:

There is some overheating and inflation

setback in urban, coastal real estate is under way

China has been overbuilding ever since I have been visiting. There is at least eventual demand for much of it, but that does not preclude some bankruptcies in the future.

Europe:

I think we are getting closer and closer to the point where someone in Europe is going to have to take some losses, whether it's the banks or the countries, but somebody has to acknowledge that they are bankrupt.

Following is an interview that The Daily Bell had with Jim Rogers:

Jim Rogers: Dollar will be debased; gold and silver to hit new highs
05 April 2011 | http://www.commodityonline.com

Daily Bell: We've interviewed you before. Thanks for spending some time with us once again. Let's jump right in. What do you think of the Chinese economy these days?

Jim Rogers: There is some overheating and inflation, which they are wisely trying to cool – especially in urban, coastal real estate. They have huge reserves so will suffer less than others in any coming downturn.

Daily Bell: Is price inflation more or less of a problem?

Jim Rogers: More. At least they acknowledge inflation and are attacking it. Some countries still try denying there is inflation worldwide. The US is even pouring gasoline on these inflationary trends with more money printing instead of trying to extinguish the problem.

Daily Bell: Is China headed for a setback as you suggested last time we spoke?

Jim Rogers: Did I say a setback or a setback in real estate speculation? I think you will find it was the latter. Yes, the setback in urban, coastal real estate is under way.

Daily Bell: They are allowing the yuan to float upward. Good move?

Jim Rogers: Yes, but I would make it freely convertible faster than they are.

Daily Bell: Will that squeeze price inflation?

Jim Rogers: It will help.

Daily Bell: Why so many empty cities and malls in China? Does the government have plans to move rural folk into cities en masse?

Jim Rogers: That is a bit exaggerated. China has been overbuilding ever since I have been visiting. There is at least eventual demand for much of it, but that does not preclude some bankruptcies in the future.

Daily Bell: Is such centralized planning good for the economy?

Jim Rogers: No. Centralized planning is rarely, if ever, good for the economy. But the kind of construction you are describing is at the provincial level – not the national level.

Daily Bell: The Chinese government is worried about unrest given what is occurring in the Middle East. Should they be?

Jim Rogers: We all should be. There is going to be more social unrest worldwide including the US. More governments will fall. More countries will fail.

Daily Bell: Are they still on track to be the world's biggest economy over the next decade?

Jim Rogers: Perhaps not that soon, but eventually.

Daily Bell: Any thoughts on Japan? Why haven't they been able to get the economy moving after 30 years? Will the earthquake finally jump-start the economy or is that an erroneous application of the broken-windows fallacy?

Jim Rogers: It has been 20 years. They refused to let people fail and go bankrupt. They constantly propped up zombie companies. The earthquake will help some sectors for a while, but there are serious demographic and debt problems down the road.

Daily Bell: The Japanese were going to buy PIGS bonds. What will happen now? Does that only leave China?

Jim Rogers: Obviously the Japanese have other things on their mind right now. I think we are getting closer and closer to the point where someone in Europe is going to have to take some losses, whether it's the banks or the countries, but somebody has to acknowledge that they are bankrupt. The thing that the world needs is for somebody to acknowledge reality and start taking haircuts.

Read more »


>Snorkeling on the shore reef off the Water Villas on Rangali Island, Maldives

Rangali Snorkel Maldives @ Yahoo! Video 
Rangali Snorkel Maldives

Rangali Snorkel Maldives

Share var addthis_config = { ui_cobrand: “The MasterLiving Blog”}

________________________
The MasterLiving Blog


>

Fantasy island

By Felix Milns
Published: December 3 2010 22:56 | Last updated: December 3 2010 22:56

Laucala Island
He may own two Formula One motor racing teams (one of which has just won the world championship) but Dietrich Mateschitz is not to be found among the champagne-swilling motorsport set in Monte Carlo. The 66-year-old Austrian businessman founded the Red Bull energy drink company, expanded it into a business with a turnover of more than €3bn and created one of the world’s most visible marketing campaigns. There are Red Bull football teams from New York to São Paulo, an aircraft racing championship and Red Bull-sponsored athletes in sports from snowboarding to surfing, cycling and canoeing.
Yet despite being a master of creating publicity for his brand, Mateschitz is known for shunning the limelight (so much so that it’s often said that he bought Austria’s leading society magazine purely so he could avoid appearing in its pages). So, when it comes to holidays, there’s only one choice – a private island.
Seven years ago, Mateschitz was on business in Fiji and was told by his lawyer that one of the country’s most exclusive islands was for sale. When he set eyes on Laucala Island, he was instantly smitten.
A mountainous 12 sq km island in Fiji’s northern Lau chain, Laucala is surrounded by a calm lagoon of the deepest blue, encircled by a reef. Its coves, curves, contours and long stretches of white sand beaches are the very essence of the South Pacific.
In private hands for more than a century, it was initially run as a coconut plantation by a British family before being sold to Malcolm Forbes, of Rich List fame, in the 1970s. Forbes kept the island as a private retreat, with a small plantation house and staff quarters, for entertaining the likes of the Rockefellers and Elizabeth Taylor, so it remained undeveloped until Mateschitz bought it from Forbes’ heirs in 2003.
Since then, Mateschitz has been developing Laucala into a paradise retreat complete with numerous high-octane boys’ toys in keeping with Red Bull’s adrenalin-fuelled image. Only 25 super-luxe villas are spread along 4.2km of coastline, all sharing facilities that could happily service a large hotel. Moored off the jetty are a dive boat, three sailboats, a waterskiing boat, a game-fishing pleasure cruiser and three lightning-fast jet skis. “The best way to get a real sense of the scale of the island is by jet ski,” says an instructor.
The diving and snorkelling are superb, with 40m-plus visibility. The island has 25 dive sites – look out for schools of hammerhead sharks – and is only a half-hour boat trip from the White Wall, Fiji’s top diving location. It is definitely worth the trip – you drift along a 60m-high wall covered in iridescent lavender and white corals before swimming through a narrow passageway into a garden of corals in a thousand shades of purples, lilacs, yellows and reds.


Back on dry land, there’s an equestrian centre, tennis courts, mountain bikes and a perfectly manicured championship-level golf course designed by David Mclay Kidd, famous for the Castle course at St Andrews in Scotland and Bandon Dunes in Oregon.
Ten greenkeepers keep the course in immaculate condition, making it arguably one of the most beautiful and exclusive in the world. Those less fond of golf should not despair, however, as the course cannot even be seen from the resort, the main hub of which is built around a show-stopping swimming pool.
At 5,000 sq m, it is the largest pool in the South Pacific. There’s a stunning lap pool, a raised glass box that sits above a cluster of organically shaped pools that flow down over pebble-lined waterfalls into a vast lagoon with multiple sandy bays. It’s extravagant, bold and a little crazy.
As such, it epitomises the whole project. One fellow guest, a French banker on a seven-week worldwide honeymoon, put it succinctly: “We have travelled to some of the world’s best hotels but this beats everything. It’s like one man’s crazy dream. Yes it’s absurdly expensive but, even so, you know you are getting a bargain.”
The reason being that it has been built on such a grand scale for so few guests. Such is the air of exclusivity that, despite first opening in December 2008, the resort is still scarcely marketed and the management team is almost loath to see the hotel run at full capacity. There were three other couples on the island during our stay and, unless it was an exclusive booking, it’s unlikely you would ever share with more than 10 or 15 other guests.
With a permanent staff of 329, at first it seems almost criminally extravagant to offer such a high level of low-key yet immensely professional service for so few guests but that is at the very heart of the Laucala philosophy. Maja Kilgore, a co-manager, says: “We don’t want you to have to pre-book your diving or spa, whatever you want to do will be ready for you whenever you want.”
Unsurprisingly, it does not take long to get into the groove. Waking up one morning to some tropical rain, we put in a quick call to the spa over breakfast and saw out the storm with a three-hour treatment.
The same philosophy extends to the catering. There are five different restaurants to choose from, including a fresh grill at the beach bar, excellent Thai food at the Seagrass Lounge and fine dining at the Plantation House restaurant, plus the option of eating whatever you want, wherever you want, anywhere on the island.
Aside from the colonial-style Plantation House, which Mateschitz had rebuilt three times before he was happy with it, the architecture is rooted in a traditional Fijian aesthetic, with a very organic approach. There are no straight lines, only soft curves and free-flowing shapes.
The attention to detail is eye-catching. Not a single nail has been used in construction; instead the hardwood beams are joined by magi magi – coconut thread produced on the island – and all the buildings are thatched with local sago palm.
Some of the roof lines of the public spaces are particularly dramatic, the pool bar is almost a miniature of the Sydney Opera House and the roof of the beach bar opens up like the petals of a flower.
And yet the resort takes up only a fraction of the island, most of which remains a dense jungle, barring the farm in the south-west corner that supplies the restaurants. There is a tour of Laucala that provides a fascinating insight into running a private island.
When Mateschitz advertised for managers, he was looking for a couple with luxury resort experience as well as knowledge of forestry and farming, a spectacularly tight brief. But in Thomas and Maja Kilgore, he found exactly what he was looking for. Not only do they run the resort with an exacting eye for detail, the agricultural side of the island is thriving. To date the island is more than 70 per cent self-sufficient, producing most of its own fruit and vegetables, meat, fish and seafood. The farm rears pigs, sheep, beef (although they also import Australian Wagyu), chickens and ducks, while vast gardens and hydroponic greenhouses produce salads, herbs and vegetables.
After a golf buggy tour of the gardens and the back of house, we swapped to horseback for a ride through the avocado trees and fields of pineapples to the palm-fringed golf course. We trotted past duck ponds, grazing cattle and mangrove swamps but it was not until we reached Long Beach that we really let out the throttle, the horses happy to be galloping through the surf.
Getting to Laucala takes time – we flew via Hong Kong with a two-day stopover – but it is a quite remarkable island. And don’t worry about the jet lag – there’s Red Bull on tap.
…………………………………………..
Details
Bailey Robinson (www.baileyrobinson.com) offers a 10-night package at Laucala Island (www.laucala.com) from £18,500, including all meals and drinks, activities and a day in the spa. Felix Milns travelled from London to Fiji with Cathay Pacific (www.cathaypacific.com; return flights from £1,050) and stayed en route at the Four Seasons Hong Kong (www.fourseasons.com/hongkong; double rooms from £378)

FT.com / Travel – Fantasy island

Sharevar addthis_config = { ui_cobrand: “The MasterFeeds”}

The MasterFeeds


World economy: The China cycle

By Geoff Dyer – FT.com
Published: September 12 2010 20:03 | Last updated: September 12 2010 20:03

China-brazil trade
Allied by alloys: a steel market in the Chinese privince of Hubei. As well as investing in fellow emerging nations’ commodities, such as Brazilian iron ore, Beijing is increasingly investing in their infrastructure

Deep in the Amazon jungle, huge chunks of red earth are torn out of the ground at Carajás, the biggest iron ore mine in the world, to be transported halfway round the globe to the steel mills on China’s eastern seaboard. There they are turned into the backbone for millions of tower blocks in hundreds of booming Chinese cities.

Last year, China overtook the US to become Brazil’s biggest trading partner. The two large developing countries may be on opposite sides of the planet but their growing economic ties over the past decade have become among the enduring symbols of shifts in the global economy.

The duo could also be forging a path for one of the potential biggest realignments in the global economy over the next decade. With little fanfare, China is likely to emerge as the biggest direct investor in Brazil this year, following a string of deals announced in mining, steel, construction equipment and electricity transmission.

Such investments are part of a slow-burning but hugely important trend. Newly crowned the second-largest economy, eclipsing Japan, China is becoming the anchor for a new cycle of self-sustaining economic development between Asia and the rest of the developing world – one that is bypassing the economies of Europe and the US.

China is not only sucking in raw materials from other developing economies, just as it has during the past decade. It has also begun making investments in infrastructure and industry in those countries, some of which are made possible by its cut-price and increasingly sophisticated manufacturing companies or by the attractive financing terms it can offer. Beijing has for some years been investing in this way in parts of Africa: now such deals are being rolled out around the world. For many developing countries, the impact of the China boom is coming full circle.

“It is the start of a new cycle,” says Ben Simpfendorfer, an economist at RBS and author of The New Silk Road, a book on the surging economic ties between China and the Middle East, central Asia and south Asia. “China has companies that are willing to invest, they have products that are good enough, and they are backed by abundant liquidity in the country’s financial system.”

BEIJING MEETS BRAZIL
Direct investment overseas by Chinese companies has increased from just $5.5bn in 2004 to $56.5bn last year. Chinese officials predicted last week that it would reach $100bn by 2013.

About 70 per cent of the money invested last year went to other parts of Asia. Latin America came in second place with 15 per cent.

Chinese companies have so far invested only very modestly in Brazil but Brazilian officials estimate that investment will exceed $10bn this year.

Chinese banks have lent $10bn to Petrobras, the Brazilian oil company, and $1.23bn to Vale, the iron ore miner.

Ian Bremmer, president of the Eurasia consultancy and author of the recent book, The End of The Free Market, says there is no accident to this China-led process of decoupling from the west. It is, he says, a strategy to reduce economic – and to some extent political – dependence on the US.

“It is a very conscious policy, on the top of the agenda for the entire Chinese leadership,” he says. “They are looking for a hedging strategy because they feel uncertain about the long-term economic prospects of the developed world.”

Promoting innovation and stimulating domestic consumption are also part of that strategy, he argues, but pushing stronger economic integration with the rest of the developing world is the “one strategy that can be done quite quickly”.

Nowhere is the impact of this process being felt more keenly than in Brazil.
As trade has boomed with China during the past decade, Brazilians have sometimes complained of being relegated once again to their 20th-century role of providing commodities to the industrial powers. In the past year, however, the long-awaited wave of Chinese investment in the country appears finally to have reached Brazil’s shores. While it reached only $92m in 2009, the country’s officials estimate that it will exceed $10bn this year.

Wuhan Iron and Steel, for instance, paid $400m for a stake in a mining company owned by Brazilian industrialist Eike Batista, and is planning to build a huge steel mill beside the port near Rio de Janeiro that another of Mr Batista’s companies is constructing. Lifan, one of China’s biggest manufacturers of motorcycles and cars, already exports heavily to Brazil. Now the company’s founder, Yin Mingshan, says it is considering opening a plant to build cars in the country. “Brazil is a very promising market, with a vast territory and a big domestic market,” he says. “Some Chinese businessmen are foolish enough to ignore doing business in Brazil but I am not that stupid.”

If investment in Brazil is one symbol of this new stage of economic Chinese engagement with the developing world, another is the flurry of new rail networks taking shape globally. Chinese railway construction companies are some of the most efficient anywhere, and have for several years been operating in neighbouring countries in central and south-east Asia. But in the past year they have also signed contracts in such diverse places as Ukraine, Turkey and Argentina.

China exports
Chinese companies in the sector have not restricted their activities to the manual task of laying rail lines. They are hoping to start signing overseas deals to sell high-speed rail equipment, including locomotives and signalling systems. The first customer could be the planned high-speed line between São Paulo and Rio de Janeiro.

There are two factors that have made these new links possible. The first is that China has produced a generation of companies making capital goods that are now internationally competitive. They can offer developing countries new trains, power stations, mining machinery and telecommunications equipment of sufficient quality at prices that are often well below those of their multinational competitors.

GLOBAL RENMINBI USE
‘It’s like a Formula One starting race, everyone jostling for position’
Although China is both the second- largest economy and the biggest exporter in the world, the renminbi is virtually unseen outside the country. For global transactions, China depends on foreign currencies – in particular the US dollar.
The perils of this arrangement became clear during the financial crisis, when China’s mighty export machine was hit by a freeze in dollar-denominated trade credit. So in recent months Beijing has unveiled measures to facilitate the use of the renminbi and reshape the global monetary system. “We’re at the beginning of something huge,” says Dariusz Kowalczyk, a Hong Kong-based strategist at Crédit Agricole. “Intermediation through the dollar will be gradually eliminated.”
In June, Beijing expanded the scope of a year-old pilot scheme for settling cross-border trades in renminbi, opening it up to the world. Global banks such as HSBC, Deutsche Bank and Citigroup have since been encouraging companies from London to Tokyo to use the Chinese currency rather than the dollar. Some even offer discounted transaction fees as an incentive. “It’s like a Formula One starting race – everyone’s jostling for position,” says Philippe Jaccard of Citigroup.
The financial infrastructure is now in place to allow an Argentinian grain producer, for example, to sell goods for renminbi then use the proceeds to buy farm machinery from China. Cross-border trade in renminbi totalled Rmb70.6bn ($10bn) in the first half of the year. But that figure remains tiny compared with the $2,800bn worth of goods and services traded across China’s borders last year, most of which was settled in dollars or euros.
One of the obstacles to greater global use of the renminbi is a lack of ways for foreign companies to invest their renminbi or hedge their exposure to the currency. Strict capital controls place China’s financial markets almost entirely off limits. But that is changing. Last month, China opened its domestic interbank bond market to foreign central banks and commercial banks that have accumulated renminbi through cross-border trade settlement. Curbs on the free flow of renminbi in Hong Kong have also been lifted. Since July, financial groups in the special administrative region have been able to create a range of renminbi-denominated investment products and hedging tools – all open to global companies and investors.
McDonald’s, the US fast-food chain, last month became the first foreign multinational to issue a renminbi-denominated bond in Hong Kong. It plans to use the proceeds to fund its operations on the Chinese mainland. Robert Cookson

The second element is the financial backing from a banking system that has been mobilised to follow behind these businesses. Yi Huiman, a senior executive at Industrial and Commercial Bank of China, told a conference recently that the institution was working with the government to provide “railroads plus finance” around the world. Vale, the Brazilian company that operates the giant iron ore mine in the Amazon, announced on Friday that it had signed a $1.23bn credit with two Chinese banks to finance the purchase of 12 huge cargo ships from a Chinese shipyard, which will transport iron ore between the two countries.

The scale of these transactions is clearly much smaller than Beijing’s holdings of US securities, estimated to be in the order of $1,500bn, but the underlying dynamic is the same: the Chinese financial system is starting to recycle some of its holdings of foreign currency into the economies of its developing country trading partners, in order to stimulate demand for its own goods.

The impact is already apparent in China’s trade statistics, with the biggest increases in exports in the past year coming from developing countries. Trade with the Association of Southeast Asian Nations increased by 54.7 per cent in the first half of the year, and by 60.3 per cent with Brazil.

If Chinese investment does indeed help to kick off a growth cycle in other parts of the developing world, it will be a tonic for a global economy in which the outlook for many leading economies remains subdued, with some even facing the risk of a double-dip recession. The combination of Chinese demand and booming investment is one reason for Brazil’s ability to record China-style growth rates of 8.9 per cent in the first half of the year.

Yet for western economies there are also plenty or risks involved. The investment push is likely to herald an era of intense competition between developed-world multinationals and state-owned Chinese companies. The strong financial backing that such groups receive is also likely to fuel accusations that they are not playing on a level field. It is perhaps no surprise that some of the multinationals that in recent months have publicly voiced criticisms of Beijing’s industrial policies – GE and Siemens – operate in sectors in which China is becoming a fierce competitor, such as power equipment and railways.

China’s new clout is also raising questions about the future of the dollar. Chinese officials have talked about a long-term goal of replacing it as the global reserve currency with a basket of others, potentially including the renminbi.

As trade with the developing world balloons, Beijing has also been taking important steps to expand the international use of the renminbi, including allowing overseas holdings of the currency to be invested in the onshore bond market. Some economists believe it could become the reference currency for Asian trade over the course of the next decade.
Yet the irony is that, while there is strong economic momentum behind the Chinese currency taking on a much larger international role, Beijing is reluctant to let this happen. “China is still very hesitant about whether it really wants the currency to be international,” says Yu Yongding, an influential economist at the Chinese Academy of Social Sciences think-tank.
To become an important trading currency is one thing: but to become a global reserve currency with the power to threaten the role of the dollar, the government would need to lower capital controls and open up its domestic bond market. This would mean giving up its tight control of exchange and interest rates.
Furthermore, if economic integration with other developing countries is really to take off, it will require careful management by Beijing. There is a very real risk that the new-found interest in emerging markets will provoke a backlash, especially if China’s exports of manufactured goods keep up such a rapid pace of growth.
There are already plenty of warning signs. India, for instance, has tried this year to reduce supplies of Chinese power equipment in favour of goods made by local producers. For several months, New Delhi blocked Huawei, the Chinese maker of telecoms equipment, from the Indian market.
In Brazil, there are fears that companies such as carmaker Lifan want to use the country to assemble kits of nearly-completed cars made in China rather than promote a domestic industry. There is also concern about fresh competition for access to markets elsewhere in Latin America. Kevin Gallagher of Boston University calculates that 91 per cent of Brazilian exports of manufactured goods to the region are under threat from lower-priced Chinese products. If that market wilts away, industry is likely to become much more critical of the new China ties.
China’s growing links with the rest of the developing world could provide a huge boost both to the country itself and to the global economy during the course of the next decade. But a wave of protectionism could yet halt the process. Beijing will need to work hard to ensure its new partners in the developing world do not feel steamrollered by the Chinese juggernaut.


Sent from my iPad


China: Employment Situation ‘Very Grave’ – Spokesman
September 10, 2010

China’s employment situation is “very grave,” with job seekers outnumbering jobs by two to one in 2010, Chinese Ministry of Human Resources and Social Security spokesman Yin Chengji said Sept. 10, Xinhua reported. Yin said 12 million jobs were available this year for 24 million people, including 6.3 million new college graduates and 6 million high school graduates. Beijing must help shift people from rural areas to cities, Yin said. There is also an issue with structural unemployment, Yin said, adding that Beijing will continue to prioritize employment. At the end of 2009, China’s urban unemployment rate was 4.3 percent, with 9.21 million unemployed, according to a Human Resources white paper.


The MasterBlog
http://www.the-masterblog.blogspot.com


Why Africa won’t be the next Bric

August 27, 2010 5:26pm

Prompted by this week’s application from South Africa for Bric “membership”, the man who coined the acronym – Jim O’Neill of Goldman Sachs – asks in today’s FT whether Africa as a whole could become the next Bric.
On several measures he says the continent has a reasonably strong case, but he notes that its biggest economies would still need to raise their games on many fronts – and he misses some more profound weaknesses in the Africa-as-a-Bric idea.
O’Neill created the Bric acronym in 2001 as a neat way of grouping together four countries that shared the potential for generating rapid growth, attracting foreign investment, and reshaping the global economy.
Ngozi Okonjo-Iweala, managing director at the World Bank, latched onto the idea of Africa joining the group in a speech earlier this year in which she sold it as a “trillion dollar economy”.

It’s high time Africa saw and presented itself as the fifth Bric, an attractive destination for investment, not just aid. This is realistic and within reach. As Nelson Mandela said, “It always seems impossible until it’s done”.

But before you can decide where to squeeze an “a” into the acronym, old Africa hands will jump in to say that it’s nonsense to compare it to a single country: not only is Africa a continent, it’s arguably the most diverse on the planet in terms of economics, politics, culture and the environment.
What’s more, 20 African countries have populations of less than 5m people. O’Neill is alive to that and focuses his discussion on the biggest African economies.

If you … look at the potential of the 11 largest African economies for the next 40 years (by studying their likely demographics, the resulting changes in their working population and their productivity) their combined GDP by 2050 would reach more than $13,000bn, making them bigger than either Brazil or Russia, although not China or India.

But even those 11 are highly diverse – including two of the biggest, Egypt and Nigeria. And due to Africa’s lamentable roads and railways, as well as its internal border restrictions, many of them function as isolated economic islands.
Afro-optimists would say regional trading blocs are changing that, but the reality is that only about 10 to 12 per cent of African trade takes place with other African countries, according to a study from the UN Economic Commission for Africa and others.
For those reasons, it doesn’t make a lot of sense to suppose that Africa’s biggest economies will follow the same development trajectories over the next few years, let alone the next few decades.
Yet it’s worth remembering that the Bric grouping initially attracted flak for not having any coherence either, but its runaway popularity with western businesses and investors has given the four countries more in common than they had before.
Funnily enough, one thing they share is a growing hunger for mineral resources from Africa (notably Nigeria, Angola, the Democratic Republic of Congo, and Sudan).
But it’s doubtful whether any country other than South Africa has the right mix of factors to make it an attractive destination for serious western investment, across a broader range of sectors, which could rival that going to the Brics.
Earlier this year Shanta Devarajan, the World Bank’s chief economist for Africa, responded with a dose of scepticism to Okonjo-Iweala’s call:

The distinguishing feature of the Brics is that they are both middle-income and large. So it’s not clear how any individual African country can aspire to being a Bric. Countries such as Malaysia or Chile may be more appropriate models for most African countries.

To achieve their “2050 potential”, O’Neill says African countries need more macroeconomic stability, less external debt, a stronger rule of law, better education, (even) more mobile telephones, and a purge of corruption.
But it’s worth paying more attention to the parallel trends of population growth (seen as a good thing by many investors in India and Brazil) and job creation (a difficult task that most African governments are failing to manage).
Each of the Bric countries have their own pockets of poverty, and in some parts of Africa poverty is actually falling. But too many countries are producing more people than they can employ. And not only does that limit their potential as new consumer markets. It has ugly consequences in terms of crime, conflict and social unrest that can strangle economic growth.
Related reading:
Building Brics, FT
Is Russia the best Bric after all? beyondbrics
Why Africa won’t be the next Bric | beyondbrics | FT.com

Share this|var addthis_config = { ui_cobrand: “The MasterBlog”}

________________________
The MasterBlog


A Botched Hostage Rescue in the
Philippines
Created Aug 26 2010 – 10:55
[1]
Not Limited Open Access
By Scott Stewart
On Aug. 23, Rolando Mendoza, a former senior police inspector with the Manila police
department, boarded a tourist bus in downtown Manila and took control of the vehicle,
holding the 25 occupants (tourists from Hong Kong and their Philippine guides) hostage.
Mendoza, who was dressed in his police inspector’s uniform, was armed with an M16-type
rifle and at least one handgun.
According to the police, Mendoza had been discharged from the department after being
charged with extortion. Mendoza claimed the charges were fabricated and had fought a
protracted administrative and legal battle in his effort to be reinstated. Apparently,
Mendoza’s frustration over this process led to his plan to take the hostages. The fact that
Mendoza entertained hope of regaining his police job by breaking the law and taking
hostages speaks volumes about his mental state at the time of the incident.
After several hours of negotiation failed to convince Mendoza to surrender,
communications broke down, Mendoza began to shoot hostages and police launched a
clumsy and prolonged tactical operation to storm the bus. The operation lasted for more
than an hour and left Mendoza and eight of the tourists dead at the end of a very public
and protracted case of violence stemming from a workplace grievance [2].
Hostage-rescue operations are some of the most difficult and demanding tactical
operations for police and military. To be successful, they require a great deal of training
and planning and must be carefully executed. Because of this, hostage-rescue teams are
among the most elite police and military units in the world. Since these teams are always
training and learning, they pay close attention to operations like the one in Manila and
study these operations carefully. They seek to adopt and incorporate tactics and
techniques that work and learn from any mistakes that were made so they can avoid
repeating them. Even in highly successful operations, there are always areas that can be
improved upon and lessons that can be learned.
Indeed, in the Manila case, the events that unfolded provided a litany of lessons for
hostage-rescue teams. The case will almost certainly be used in law enforcement and
military classrooms across the globe for years as a textbook example of what not to do.
Breakdown of the Incident
Shortly after 10 a.m. on Aug. 23, Mendoza commandeered the bus and its occupants (his
police inspector’s uniform was likely helpful in gaining him access to the vehicle). Within
minutes, he released two female hostages. Soon thereafter he released four hostages (a
woman and three children). Mendoza used a cell phone to call the Manila police, inform
them of the situation and make his demands: that the charges against him be dropped by
the police ombudsman’s office and that he be reinstated to the police force. These early
hostage releases would generally be seen as a positive sign by the authorities, showing
that Mendoza had some compassion for the women and children and that even if he was
reducing the number of hostages for pragmatic, tactical reasons (to allow him better
control over the group), he was at least reducing the number by releasing people and not
killing them.
The police maintained communications with Mendoza, who stayed aboard the bus and
kept the motor running. This not only kept the vehicle cool, but allowed Mendoza to watch
events unfold around the bus on the onboard television set. He had his hostages close the
curtains on the bus to make it more difficult for the authorities to determine where he was
in the bus.
Shortly after 1 p.m., Mendoza requested more gasoline for the bus and some food. He
released another hostage, an elderly man, in return for the gas and food. Two other
hostages, both Philippine photographers, were released as a 3 p.m. deadline for action set
by Mendoza came and went (one of the photographers was released before, one after).
There were also reports that Mendoza had initially set a 12:30 p.m. deadline for action.
The fact that these deadlines passed without violence would be an encouraging sign to the
authorities that the incident could be resolved without bloodshed. Food was again taken
out to the bus just before 5 p.m. During the afternoon, Mendoza could have been engaged
by snipers on at least two occasions, but since negotiations were proceeding well and
Mendoza did not appear to be close to shooting, the decision was made to try and wait
him out and not attempt to kill him. If the snipers failed to incapacitate Mendoza, it could
have risked the lives of the hostages.
During the ordeal, Mendoza continued to watch events unfold on the television inside the
bus and reportedly even talked to journalists via cell phone. Mendoza also ordered the bus
driver to park the vehicle sideways in the center of the road in an apparent attempt to
make it more difficult to approach without detection.
Things took a marked turn for the worse around 6:20 p.m., when negotiators,
accompanied by Mendoza’s brother Gregorio (who is also a police officer and who had
earlier helped convince Mendoza to extend his deadline), approached the bus with a letter
from the office of the ombudsman offering to reopen his case. Mendoza rejected the letter,
saying he wanted his case dismissed, not reviewed. At this point, there are conflicting
reports of what happened. The police negotiators told the Philippine Daily Inquirer that
Mendoza’s brother told Mendoza that the letter from the ombudsman’s office was garbage
and that he should not surrender. Other press reports indicate that the brother pleaded
with Mendoza to take him hostage and release the tourists and that his pleading was seen
as counterproductive to the negotiations.
Whatever the story, Mendoza’s brother was then arrested and his arrest was carried live
on television and seen by Mendoza in the bus. Shortly after his brother’s arrest, Mendoza
fired two warning shots and demanded in a radio interview that all the Manila Police
Department SWAT officers be removed from the scene. Shortly after 7 p.m., Mendoza
repeated his threats and refused to speak to his family members. Growing increasingly
agitated, Mendoza shot two of the hostages when his demand for the SWAT officers to
retreat was not met. He released the Philippine bus driver, who reportedly told police that
all the hostages were dead. (We are unsure why the driver said this when only two of the
passengers had been killed, but the police would have been able to tell from the volume of
fire that Mendoza had not truly killed all the hostages.)
At about 7:30 p.m., the tires of the bus were shot out and a police tactical team
approached the vehicle and began to smash its windows with a sledgehammer. The police
attempted to slowly enter the back of the bus by crawling through one of the shattered
windows from the top of a police truck but were forced back out of the window by gunfire.
At about 8:40 p.m., police deployed tear gas into the back of the bus through the missing
windows. Gunfire erupted and Mendoza was finally killed in a hail of bullets. Six additional
hostages also perished during the exchange of gunfire. It is unclear at this point if they
were intentionally shot by Mendoza or if they were caught in the crossfire.
Hostage Situations
By the time of the rescue attempt, the saga of Mendoza’s firing from the police force had
been going on for some time, and it is important to recognize that he did not make a
spontaneous decision to seize the tourist bus. Even if the bus was targeted shortly before
the attack, Mendoza’s path toward violent action would have included several significant
warning signs. As in almost any case of violence that stems from issues in the workplace,
once the chain of events are examined more closely, reports will emerge that warning
signs were either missed or ignored. Had those warning signs been noted and acted
upon, this situation might have been avoided.
Since the event was not pre-empted, once it happened and developed into a hostage
situation, the primary objective of the authorities was to resolve the incident without
violence. Skillful hostage negotiators do this by allowing the hostage-taker to vent. They
also work hard to defuse any tension that has the attacker on edge and to gently wear the
attacker down to the point of surrender. One of the essential principles in this effort is to
isolate the hostage-taker so that he or she cannot receive outside communication,
motivation, encouragement or other forms of support. Hostage negotiators seek to control
the flow of all information into or out of the crime scene. That did not occur in this case.
Mendoza was able to talk to outsiders on his cell phone and even gave media interviews.
He was also able to use the television in the bus to watch live media coverage of the
incident, including video of the deployment of police officers. This gave him a considerable
advantage and far more information than what he could have observed with his eyes from
inside the curtained bus.
As shown in the November 2008 attack in Mumbai, India, it has become more difficult to
isolate assailants from outside communications in the cell phone era, but there are ways
that such communications can be disabled. It is not known why the Manila police did not
attempt to jam the outside communication signals going to and from the bus, but that is
certainly something that will come up in the after-action review, as will their handling of the
media and onlookers (one of whom was wounded) during the incident.
As negotiations are proceeding in a hostage situation, the authorities must always be
busily preparing to launch an assault in case negotiations fail. When the assailant is
agitated or mentally disturbed, the situation on the ground can sometimes change quite
rapidly, and the rescue team needs to be prepared to act on a moment’s notice. Usually
the team will come in with an initial assault plan and then alter and refine their plan as
more intelligence becomes available, and as they become more familiar with the site and
the situation.
If the hostages are being held in a building, the rescue team will get the blueprints of the
building and collect as much information as possible in an effort to plan their assault on
the location where the hostages are being held. In this case, the hostages were being held
on a stationary bus, which made it far easier to collect that type of intelligence — a bus is a
bus. The authorities also had access to released hostages who, had they been debriefed,
could have described to authorities the situation inside the bus.
In a protracted hostage situation, the authorities will frequently employ technical measures
to gather additional intelligence on the activities of the hostage-taker. This may involve the
use of overt or clandestine video equipment, parabolic microphones or microphones
surreptitiously placed in or near the site. Even thermal imaging sets and technical
equipment to intercept cell phone communication or radio transmissions are sometimes
used.
All the information gleaned from such efforts will not only go to the negotiators, to help
them understand the hostage taker’s frame of mind, but will also be used to help the
rescue team fine-tune their assault plan.
Meanwhile, as the assault plan is being tweaked, negotiations continue and the hostage
negotiators work to wear down the hostage-taker. It appears that the negotiators in the
Mendoza case were doing a fairly good job of keeping the situation calm until the situation
flared up involving Mendoza’s brother and the letter from the ombudsman’s office.
Authorities clearly erred by not sending him a letter saying they had dropped the case
against him. (They did not need the extortion charges now that they could arrest him and
charge him with kidnapping and a host of other crimes.) It is hard to understand why the
police department quibbled over words and refused to give him the piece of paper he
expressly demanded. The police then aggravated the situation greatly with the public
arrest of Mendoza’s brother. Those two events caused the situation to deteriorate rapidly
and resulted in Mendoza’s decision to begin shooting. Once he shot the first two hostages,
the negotiations were clearly over and it was time to implement a tactical solution to the
problem.
The Use of Force
In a hostage situation, the use of force is a last resort. If force is required, however, the
rescue team needs to hit hard, hit fast and hit accurately. There is little time for hesitation
or error: Lives hang in the balance. This is where things began to get very ugly in the
Mendoza case. Not only was there a delay between the murder of the first hostages and
the launching of the first assault attempt, the assault was not hard, fast or accurate. To
succeed, an assault should be dynamic, assume control of the scene by overwhelming
force and use surprise and confusion to catch the hostage-taker off guard and quickly
incapacitate him. The rescue team needs to dominate the place where the entry is being
made and then quickly and accurately shoot the assailant. When the police began to
smash the windows of the bus with sledgehammers and then continued to beat on the
windows for more than a minute, Mendoza had ample time to kill his hostages had he
wished to do so. The only thing that saved the hostages who did survive was Mendoza’s
apparent reluctance to kill them.
It appears that the intent of the police was to smash the rear window to provide an
opening and then to continue smashing windows as they moved forward in an effort to
draw Mendoza’s attention to the front of the bus while the assault team entered from the
rear. When the police did attempt to enter the bus using the roof of the police vehicle,
however, it was a slow, clumsy attempt that was quickly repelled by Mendoza once he
opened fire on the team. They did not enter the bus quickly, and their tepid approach
caused them to lose the element of tactical surprise, denied them the opportunity to
employ overwhelming force and allowed Mendoza time to think and react and begin firing.
There was no hope of the assault team’s dominating the breaching point (or the rest of the
bus) when they entered in such a half-hearted manner. Then, instead of following through
with the assault by storming the front door while Mendoza was firing at the police in the
rear of the bus, the police withdrew and went back to the drawing board. Again, had
Mendoza wanted to kill all his remaining hostages, the withdrawal of the assault team
gave him ample time to do so.
More than an hour after the first assault, the police again approached the bus and
deployed tear gas grenades through the broken windows at the back of the bus. This
flushed Mendoza toward the front of the bus and, after a brief exchange of gunfire, he was
killed. There were some reports that he was killed by a police sniper, but we have seen no
evidence to corroborate those reports, and it appears that he was shot from a relatively
short range. Eight of the hostages survived the ordeal.
Granted, a bus does offer some challenges for a takedown operation, but is also a very
common form of transportation throughout the world, and there have been numerous
hostage situations involving buses in many different countries. Because of this,
professional rescue teams frequently practice bus takedowns in much the same way they
practice building takedowns or aircraft takedowns.
It was very apparent that the Manila SWAT unit lacked the experience, equipment and
training to conduct effective hostage-rescue operations, and we have seen this problem in
other local police departments in the developing world. We have not been able to learn
why the police did not seek the help of a national-level hostage-rescue unit for the tactical
aspect of this situation rather than leaving it to the Manila SWAT team to resolve. Given
the prolonged duration of the situation and the location in the nation’s capital, higher-level
assets should have had time to deploy to the scene.
Unlike many cases of workplace violence, this one did not involve a disgruntled employee
charging into his former office with guns blazing. Instead, Mendoza embarked on a course
of action that would, as it turned out, cause a great deal of public humiliation for his former
employer. Indeed, the head of the Manila police district tendered his resignation Aug. 24.
Four leaders of the Manila SWAT team were also placed on administrative leave.
In the past, some botched rescue attempts have spurred inquiries that have resulted in
countries creating or dramatically improving their hostage-rescue capabilities. For
example, the failed rescue attempt in Munich in 1972 led to the creation of Germany’s
GSG-9, one of the most competent hostage-rescue teams in the world. It will be
interesting to see if the Mendoza case spurs similar developments in the Philippines, a
country facing a number of security threats.
Terrorism/Security Scott Stewart China Philippines Security Portal: Featured
Analysis and Intelligence Security Weekly
Terms of Use | Privacy Policy | Contact Us
Sponsorship | Affiliate Program
&copy Copyright 2010 STRATFOR. All rights reserved
Source URL: http://www.stratfor.com/weekly/20100825_botched_hostage_rescue_philippines
Links:
[1] http://www.stratfor.com/weekly/burton_and_stewart_on_security?fn=6716995385
[2] http://www.stratfor.com/weekly/20081126_workplace_violence_myths_and_mitigation?fn=7816995364
<a href=”http://www.stratfor.com/weekly/20100825_botched_hostage_rescue_philippines”>A Botched Hostage Rescue in the Philippines</a> is republished with permission of STRATFOR.


The MasterBlog
http://the-masterblog.blogspot.com





%d bloggers like this: