The Asian Development Bank (ADB) called on Monday for a fundamental "rebalancing" of regional economies in response to the global crisis, while predicting a "mild recovery" next year.
Bank President Haruhiko Kuroda said the region would record only 3.4 percent growth this year but could expect a rebound to around 6.0 percent growth in 2010, as he opened the ADB's board of governors annual meeting in Bali.
"With strong national and regional efforts and a mild recovery expected in the global economy next year, developing Asia and the Pacific should bounce back to about 6.0 percent growth in 2010," he said.
"These are positive signs, therefore this should not be a time of despair."
He outlined a huge expansion in the ADB's lending plans to help stimulate developing economies across Asia, after shareholders agreed last week to triple the bank's capital base in response to the global downturn.
The bank will increase its overall lending assistance to the region's poorest countries by more than 10 billion dollars in 2009 and 2010, including three billion to meet "urgent needs stemming from the crisis," Kuroda said.
Some of that new lending would aim to help Asian economies adjust to plunging demand for their exports to markets such as Europe and the United States.
"The transfer of savings from one part of the world to another worked well when advanced economies could absorb production from developing economies, but the current state of the global economy suggests that era has passed," Kuroda said.
"By rebalancing export-driven growth with a greater reliance on domestic demand and consumption, Asia can lead the way in charting a new, globally beneficial development course."
Interest rate cuts and government spending will help spur the recovery in Asia, whose banks are not suffering problems on the same scale as their US and European peers, according to the International Monetary Fund.
Recent economic data have raised hopes that China could be the first major economy to disentangle itself from the worldwide crisis, providing new growth momentum for its trading partners across the region.
In India, expectations of a healthy harvest fuelling consumer spending has driven India's benchmark Sensex share index to a six-month high as fund managers switch their country ratings to "overweight" from "underweight."
Japan's factory output rose 1.6 percent in March from the previous month, the first increase since September, triggering a buying spree on the Japanese sharemarket last week.
Kuroda also called for changes to the global financial architecture to give voice to the aspirations of Asia, where powerhouses like China and India are emerging as rivals to US domination of the world economy.
Ten Asian countries plus China, Japan and South Korea agreed on Sunday to set up a 120-billion-dollar regional emergency fund to help Asian economies out of crises, a move Kuroda applauded.
"It is... important to create a financial architecture that gives developing countries a voice more commensurate with their share of world output and trade," he said.
His comments echoed China's calls for a greater say in international economic decision-making at institutions such as the IMF.
Indonesian President Susilo Bambang Yudhoyono said "precautionary mechanisms" like the regional liquidity fund were necessary to "ensure foreign exchange stability and confidence" in crisis-hit local currencies.
He said Indonesia, Southeast Asia's biggest economy, had learnt from the economic turmoil that swept Asia in the late 1990s and had launched "sweeping reforms" that helped it avoid recession in the current downturn.
The Indonesian economy is forecast to track the regional rebound, with growth of around four percent this year recovering to six percent in 2010.
Monday, May 4, 2009
Apartheid funded by the Indian tax-payer
In an era when one set of Indians is manning the world’s knowledge back-office with distinction, another set of children — in Madhya Pradesh, which the ruling BJP often showcases as a “model state” – has to face such discrimination and humiliation. Everyday.
This Indian version of apartheid is taking place in schools and childcare centres run by the government, and in schemes funded by the tax-payer’s — in other words, your – money.
They are forced to sit in separate rows, bring utensils from home or given food in plates marked boldly with permanent ink to distinguish them from the rest.According to a survey on social discrimination conducted by Jansahas, an NGO, and Unicef, in 24 villages across four districts – Ujjain, Sheopur, Katni and Jhabua – in Madhya Pradesh, more than 63 per cent of Dalit children are subjected to caste discrimination while being served mid-day meals in government schools.
They are forced to sit in separate rows, bring utensils from home or given food in plates marked boldly with permanent ink to distinguish them from the rest.
The Mid-Day Meal Scheme, funded by the government, is the world’s largest school lunch programme and covers 120 million children. Ironically, one of the key objectives of the scheme is to increase socialisation among children of different caste groups.
“As many as 40 per cent of Dalit students facing discrimination were given mid-day meals in plates specially set aside for them,” Jansahas activist Ashif Sheikh told Hindustan Times.
While some were asked to bring utensils from home, most were served their mid-day meals on leaf plates. Non-Dalits, however, were served on metal plates.
The survey found that most teachers were insensitive to the discrimination against Dalits because of caste-based traditions being followed in rural areas, he said.
In a majority of the schools surveyed, Dalit students were not allowed to sit in the front row. As many as 78 per cent of school-going Dalit students were backbenchers or forced away from the front row and subjected to casteist abuses.
And 79 per cent of such students were compelled to clean the schools. In some schools, this chore was given only to Dalit girls.
The survey found that the Anganwadi scheme, a government-sponsored mother and childcare scheme catering to children in the 0-6 age group, also discriminates against Dalits. About 59 per cent of Dalits said they desisted from sending their children to the local anganwadi facilities.
The victims claimed that Dalit children were not allowed to enter the anganwadis and were forced to accept nutritional supplements outside the building.
The survey concluded that caste discrimination is one of the prominent reasons for the absence of Dalit children from school.
This Indian version of apartheid is taking place in schools and childcare centres run by the government, and in schemes funded by the tax-payer’s — in other words, your – money.
They are forced to sit in separate rows, bring utensils from home or given food in plates marked boldly with permanent ink to distinguish them from the rest.According to a survey on social discrimination conducted by Jansahas, an NGO, and Unicef, in 24 villages across four districts – Ujjain, Sheopur, Katni and Jhabua – in Madhya Pradesh, more than 63 per cent of Dalit children are subjected to caste discrimination while being served mid-day meals in government schools.
They are forced to sit in separate rows, bring utensils from home or given food in plates marked boldly with permanent ink to distinguish them from the rest.
The Mid-Day Meal Scheme, funded by the government, is the world’s largest school lunch programme and covers 120 million children. Ironically, one of the key objectives of the scheme is to increase socialisation among children of different caste groups.
“As many as 40 per cent of Dalit students facing discrimination were given mid-day meals in plates specially set aside for them,” Jansahas activist Ashif Sheikh told Hindustan Times.
While some were asked to bring utensils from home, most were served their mid-day meals on leaf plates. Non-Dalits, however, were served on metal plates.
The survey found that most teachers were insensitive to the discrimination against Dalits because of caste-based traditions being followed in rural areas, he said.
In a majority of the schools surveyed, Dalit students were not allowed to sit in the front row. As many as 78 per cent of school-going Dalit students were backbenchers or forced away from the front row and subjected to casteist abuses.
And 79 per cent of such students were compelled to clean the schools. In some schools, this chore was given only to Dalit girls.
The survey found that the Anganwadi scheme, a government-sponsored mother and childcare scheme catering to children in the 0-6 age group, also discriminates against Dalits. About 59 per cent of Dalits said they desisted from sending their children to the local anganwadi facilities.
The victims claimed that Dalit children were not allowed to enter the anganwadis and were forced to accept nutritional supplements outside the building.
The survey concluded that caste discrimination is one of the prominent reasons for the absence of Dalit children from school.
Michael Hiltzik:Credit card companies as evil villains? It's not that simple
Is there any business in the United States more vilified than credit card lending?
The card companies stand accused by Congress and the Federal Reserve of gouging customers with impenetrable fees, enticing innocents to borrow themselves into bankruptcy, and blowing off cardholders who try to correct errors in their accounts.
Attacking these firms is a crowd-pleasing sport for lawmakers, in part because every constituent has a story about being mulcted by a card issuer. Last week the House of Representatives easily passed a credit card holders’ bill of rights. The Senate will take up a similar measure soon. President Obama has signaled his approval.
Someone has to stand up for these companies. I guess it'll have to be me.
Before I try to inject some perspective into the debate about card issuers, I'll stipulate that they've been guilty of genuinely sleazy behavior -- much of which is properly targeted by the measures in Washington.
They shouldn't be allowed to jack up the interest rate on card balances retroactively, except in rare cases. They should apply your payments to balances with the highest rates first. They shouldn't accept charges that put you over your credit limit and trigger a fee, if you request such a hard cap.
And they should be barred from marketing directly to young persons. Cards used to be hard to get if you had no credit history. But I could wallpaper my house with the come-ons that now come addressed to my college-age kids, a practice the banks must have learned from cigarette companies handing out free smokes at rock concerts.
But we routinely berate card issuers for actions that are actually prudent and wise. Certain purported sins, such as raising rates and cutting credit limits for some borrowers, merely ratchet back the loose standards that helped lead us to economic perdition. For years we cursed the banks for showering Americans with easy credit. Now we curse them for tightening up.
Because of their unsavory past, the issuers are unable to make this case for themselves. They remind me of some frat guys at my college who were guilty of only about half the things they were accused of, but what was true was bad enough. From them I learned this tenet of the court of public opinion: Once you've been caught firing guns at African American students from the frat house roof, no one will believe you're innocent of anything.
Still, it's proper to take an unemotional look at the rest of the prosecution brief against credit card companies.
One frequent complaint is that issuers arbitrarily jack up interest rates and slash credit limits even on customers with pristine records. Given the straitened means of many families in these tough times (the argument goes), that's like snatching away a lifeline when it's most needed.
"That's pretty nasty," says John Ulzheimer of credit.com, who appears ubiquitously on personal finance shows. The higher rates "make it harder for people to afford their existing balances," he says, and the lower limits can damage cardholders' credit scores, which get marked down when their balances come too close to their limits.
The real scandal, according to the common refrain, is that issuers such as American Express, Citigroup and Bank of America have received billions of bailout dollars from taxpayers. How dare they repay the favor by putting the squeeze on us?
This is where populism shades into demagoguery. Critics who argue that it's inappropriate for bailed-out banks to tighten credit terms on taxpayers have it exactly wrong: If we're footing the bill, we should praise these banks for being stingy with credit, not hammer them for it. It won't be any easier for them to pay us back if we hector them into maintaining the loose standards that produced this mess.
According to the latest data from Fitch Ratings, late payments on credit cards reached a record in February, with delinquencies close behind. The sad fact is that rising unemployment produces credit stress. Under the circumstances, tightening credit standards seems like a judicious precaution.
What about the claim that the issuers are perversely cutting limits for their highest-scoring, or safest, customers? It's true but misleading. Fair Isaac Corp., which invented the FICO score, found that of the 16% of consumers whose limits were cut between last April and October, two-thirds weren't guilty of any late payment or other "risk trigger."
Most of the reductions were applied to inactive or rarely utilized cards. This makes sense, because banks have to keep a reserve against the full amount of cardholders' credit limits. Why tie up capital for credit that isn't being used?
Fair Isaac says such reductions seldom produce real constraints on the consumers -- or any significant lowering of their scores. The computers and humans implementing these reductions aren't perfect, so many holders will undoubtedly feel they've been treated unjustly. (I imagine I'll hear from a few.) But the study suggests that most of the cutbacks are defensible.
Another sin laid to the card companies is charging sky-high interest rates. We know one reason for this: A 1978 Supreme Court decision enabled issuers to stick the highest rate permitted in their home states down the throats of customers nationwide -- that's why banks locate their credit card arms in jerkwater states without usury limits, like South Dakota.
But what's a "reasonable" annual rate? Who's to say that 25% is out of line for an uncollateralized balance owed by, say, someone holding six maxed-out Visa cards? (There's a customer for whom credit should not be cheap.) The banks are surely serious when they say that a federal rate cap, if set too low, would result in more Americans being refused any credit at
all.
In considering the card issuers' behavior, we need to focus on and fix what they really do wrong. Make them comply with clearly written customer contracts, yes. Make them offer cheap and copious credit to all just because their past mistakes have led to a taxpayer bailout, no.
The card companies stand accused by Congress and the Federal Reserve of gouging customers with impenetrable fees, enticing innocents to borrow themselves into bankruptcy, and blowing off cardholders who try to correct errors in their accounts.
Attacking these firms is a crowd-pleasing sport for lawmakers, in part because every constituent has a story about being mulcted by a card issuer. Last week the House of Representatives easily passed a credit card holders’ bill of rights. The Senate will take up a similar measure soon. President Obama has signaled his approval.
Someone has to stand up for these companies. I guess it'll have to be me.
Before I try to inject some perspective into the debate about card issuers, I'll stipulate that they've been guilty of genuinely sleazy behavior -- much of which is properly targeted by the measures in Washington.
They shouldn't be allowed to jack up the interest rate on card balances retroactively, except in rare cases. They should apply your payments to balances with the highest rates first. They shouldn't accept charges that put you over your credit limit and trigger a fee, if you request such a hard cap.
And they should be barred from marketing directly to young persons. Cards used to be hard to get if you had no credit history. But I could wallpaper my house with the come-ons that now come addressed to my college-age kids, a practice the banks must have learned from cigarette companies handing out free smokes at rock concerts.
But we routinely berate card issuers for actions that are actually prudent and wise. Certain purported sins, such as raising rates and cutting credit limits for some borrowers, merely ratchet back the loose standards that helped lead us to economic perdition. For years we cursed the banks for showering Americans with easy credit. Now we curse them for tightening up.
Because of their unsavory past, the issuers are unable to make this case for themselves. They remind me of some frat guys at my college who were guilty of only about half the things they were accused of, but what was true was bad enough. From them I learned this tenet of the court of public opinion: Once you've been caught firing guns at African American students from the frat house roof, no one will believe you're innocent of anything.
Still, it's proper to take an unemotional look at the rest of the prosecution brief against credit card companies.
One frequent complaint is that issuers arbitrarily jack up interest rates and slash credit limits even on customers with pristine records. Given the straitened means of many families in these tough times (the argument goes), that's like snatching away a lifeline when it's most needed.
"That's pretty nasty," says John Ulzheimer of credit.com, who appears ubiquitously on personal finance shows. The higher rates "make it harder for people to afford their existing balances," he says, and the lower limits can damage cardholders' credit scores, which get marked down when their balances come too close to their limits.
The real scandal, according to the common refrain, is that issuers such as American Express, Citigroup and Bank of America have received billions of bailout dollars from taxpayers. How dare they repay the favor by putting the squeeze on us?
This is where populism shades into demagoguery. Critics who argue that it's inappropriate for bailed-out banks to tighten credit terms on taxpayers have it exactly wrong: If we're footing the bill, we should praise these banks for being stingy with credit, not hammer them for it. It won't be any easier for them to pay us back if we hector them into maintaining the loose standards that produced this mess.
According to the latest data from Fitch Ratings, late payments on credit cards reached a record in February, with delinquencies close behind. The sad fact is that rising unemployment produces credit stress. Under the circumstances, tightening credit standards seems like a judicious precaution.
What about the claim that the issuers are perversely cutting limits for their highest-scoring, or safest, customers? It's true but misleading. Fair Isaac Corp., which invented the FICO score, found that of the 16% of consumers whose limits were cut between last April and October, two-thirds weren't guilty of any late payment or other "risk trigger."
Most of the reductions were applied to inactive or rarely utilized cards. This makes sense, because banks have to keep a reserve against the full amount of cardholders' credit limits. Why tie up capital for credit that isn't being used?
Fair Isaac says such reductions seldom produce real constraints on the consumers -- or any significant lowering of their scores. The computers and humans implementing these reductions aren't perfect, so many holders will undoubtedly feel they've been treated unjustly. (I imagine I'll hear from a few.) But the study suggests that most of the cutbacks are defensible.
Another sin laid to the card companies is charging sky-high interest rates. We know one reason for this: A 1978 Supreme Court decision enabled issuers to stick the highest rate permitted in their home states down the throats of customers nationwide -- that's why banks locate their credit card arms in jerkwater states without usury limits, like South Dakota.
But what's a "reasonable" annual rate? Who's to say that 25% is out of line for an uncollateralized balance owed by, say, someone holding six maxed-out Visa cards? (There's a customer for whom credit should not be cheap.) The banks are surely serious when they say that a federal rate cap, if set too low, would result in more Americans being refused any credit at
all.
In considering the card issuers' behavior, we need to focus on and fix what they really do wrong. Make them comply with clearly written customer contracts, yes. Make them offer cheap and copious credit to all just because their past mistakes have led to a taxpayer bailout, no.
Apple and Google Ties Investigated
The Federal Trade Commission has begun an inquiry into whether the close ties among the boards of two of technology’s most prominent companies, Apple and Google, amounts to a violation of antitrust laws, according to several people briefed on the inquiry.
Apple and Google share two directors, Eric E. Schmidt, the chief executive of Google, and Arthur Levinson, the former chief executive of Genentech. The Clayton Antitrust Act of 1914 prohibits a person’s presence on the board of two rival companies when it would reduce competition between them.
Antitrust experts say the "interlocking directorates" provision, known as Section 8 of the act, is rarely enforced. Nevertheless, the agency has already notified Google and Apple of its interest in the matter, according to the people briefed on the inquiry, who agreed to speak on condition of anonymity because the inquiry was confidential.
F.T.C. officials declined to comment. Spokespeople for Apple and Google also declined to comment. A spokesman for Genentech declined to make Mr. Levinson available for comment.
The inquiry, which appears to be in its early stages, is the second antitrust examination involving Google to have surfaced in recent days. It suggests that despite the company’s closeness to the Obama administration, Google will not escape scrutiny from regulators.
Mr. Schmidt campaigned for then-Senator Barack Obama during his presidential campaign and had advised the transition team and the administration on various matters. He was recently appointed to President Obama’s Council of Advisors on Science and Technology
Christine A. Varney, who was recently confirmed as the head of the antitrust division of the Justice Department, last year singled out Google as a likely source of antitrust concerns because of its near monopoly on Internet search and advertising.
Some antitrust experts said they do not expect Google’s ties to the Obama administration to play a role in antitrust issues.
“I expect the administration to be aggressive, generally, on antitrust enforcement,” said Sanford Litvack, a partner at Hogan & Hartson. Last year, while working for the Justice Department, Mr. Litvack built a case to block a high-profile advertising partnership between Google and Yahoo. “I don’t expect Google to either be singled out or to receive a free pass because of Schmidt’s relationship with the administration,” he said.
Experts say the "interlocking directorates" provision rarely lead to major confrontations between companies and the government. Executives typically choose to resign from the board of a competitor if it poses a problem rather than face a lengthy investigation or a bruising legal fight.
Like many companies in the technology industry, Google and Apple are both allies and competitors. Google, for instance, worked with Apple to design early versions of some its services, like Gmail and Google Maps, for Apple’s iPhone. William Campbell, an Apple board member, was an important, behind-the-scenes adviser to Google.
But the areas in which the companies are bumping up against each other as rivals have been increasing.
Mobile phones, in particular, loom large in the future of both Google and Apple. Much of Apple’s fortunes these days are tied to the success of the iPhone. Google, for its part, has said repeatedly that one of its biggest strategic opportunities is to expand its online advertising empire into mobile phones.
While Google benefits from the success of the iPhone, which drives more traffic to its mobile services than any other device, it also makes the Android operating system for mobile phones that compete with the iPhone. The system currently powers the T-Mobile G1, a phone that some analysts say is the most capable of a number of iPhone rivals.
Other phone manufacturers are planning to roll out devices powered by Android later this year. And the Android operating system is being built into lightweight portable computers known as netbooks, which may compete with some Apple laptops.
Google and Apple compete in a variety of other areas. Apple makes the Safari Web browser while Google makes the competing Chrome. Apple’s iTunes and Google’s YouTube are increasingly competing as venues for distribution of music and videos. And the two companies have photo-editing services.
It is not clear whether regulators have singled out any of these areas of competition as particularly troubling.
“Government actions under Section 8 are rare, but they are brought under circumstances when the presence of a common director on competing boards is likely to be anticompetitive,” said Andrew I. Gavil, an antitrust expert and a professor at Howard University School of Law.
Both Google and Apple share a rival in Microsoft, which competes with the two companies in a variety of areas. But Professor Gavil said regulators were not likely to see that as a problem, even if the two Silicon Valley companies were discussing ways to compete more effectively with Microsoft.
“Section 8 exists when you have a common director facilitating collusion so two companies coordinate their competitive strategies,” he said. “It is not clear that two companies figuring out a strategy to compete against a big common rival is anticompetitive or pro-competitive.”
Mr. Schmidt joined the board of Apple in August 2006, about five months before the company unveiled the iPhone. Google’s plans for Android, its mobile phone operating system were made public nearly a year later.
Since then, analysts and journalists have speculated that Mr. Schmidt’s position on Apple board would eventually become untenable. Google has said Mr. Schmidt typically recuses himself when Apple’s directors discuss mobile phones.
It is not clear why the agency is looking into the matter now. Some antitrust experts say, however, that the Obama administration may be more aggressive in enforcing antitrust laws. The Justice Department recently began an inquiry into the antitrust implications of a settlement of a class action brought by authors and publishers against Google.
“Clearly with the new administration, there is renewed enthusiasm for antitrust enforcement,” Samuel Miller, a partner at Sidley Austin in San Francisco, who acted as a special trial counsel in Justice Department’s first antitrust case against Microsoft.
Under the Clayton Act, interlocking directorates are not considered a problem if the revenue from products in which the companies compete is less than 2 percent of either company’s sales. Some antitrust experts say it may be hard for regulators to determine the revenue that Google earns from various products. Android, for instance, is free, but Google earns advertising revenue when users of an Android phone click on an ad
Apple and Google share two directors, Eric E. Schmidt, the chief executive of Google, and Arthur Levinson, the former chief executive of Genentech. The Clayton Antitrust Act of 1914 prohibits a person’s presence on the board of two rival companies when it would reduce competition between them.
Antitrust experts say the "interlocking directorates" provision, known as Section 8 of the act, is rarely enforced. Nevertheless, the agency has already notified Google and Apple of its interest in the matter, according to the people briefed on the inquiry, who agreed to speak on condition of anonymity because the inquiry was confidential.
F.T.C. officials declined to comment. Spokespeople for Apple and Google also declined to comment. A spokesman for Genentech declined to make Mr. Levinson available for comment.
The inquiry, which appears to be in its early stages, is the second antitrust examination involving Google to have surfaced in recent days. It suggests that despite the company’s closeness to the Obama administration, Google will not escape scrutiny from regulators.
Mr. Schmidt campaigned for then-Senator Barack Obama during his presidential campaign and had advised the transition team and the administration on various matters. He was recently appointed to President Obama’s Council of Advisors on Science and Technology
Christine A. Varney, who was recently confirmed as the head of the antitrust division of the Justice Department, last year singled out Google as a likely source of antitrust concerns because of its near monopoly on Internet search and advertising.
Some antitrust experts said they do not expect Google’s ties to the Obama administration to play a role in antitrust issues.
“I expect the administration to be aggressive, generally, on antitrust enforcement,” said Sanford Litvack, a partner at Hogan & Hartson. Last year, while working for the Justice Department, Mr. Litvack built a case to block a high-profile advertising partnership between Google and Yahoo. “I don’t expect Google to either be singled out or to receive a free pass because of Schmidt’s relationship with the administration,” he said.
Experts say the "interlocking directorates" provision rarely lead to major confrontations between companies and the government. Executives typically choose to resign from the board of a competitor if it poses a problem rather than face a lengthy investigation or a bruising legal fight.
Like many companies in the technology industry, Google and Apple are both allies and competitors. Google, for instance, worked with Apple to design early versions of some its services, like Gmail and Google Maps, for Apple’s iPhone. William Campbell, an Apple board member, was an important, behind-the-scenes adviser to Google.
But the areas in which the companies are bumping up against each other as rivals have been increasing.
Mobile phones, in particular, loom large in the future of both Google and Apple. Much of Apple’s fortunes these days are tied to the success of the iPhone. Google, for its part, has said repeatedly that one of its biggest strategic opportunities is to expand its online advertising empire into mobile phones.
While Google benefits from the success of the iPhone, which drives more traffic to its mobile services than any other device, it also makes the Android operating system for mobile phones that compete with the iPhone. The system currently powers the T-Mobile G1, a phone that some analysts say is the most capable of a number of iPhone rivals.
Other phone manufacturers are planning to roll out devices powered by Android later this year. And the Android operating system is being built into lightweight portable computers known as netbooks, which may compete with some Apple laptops.
Google and Apple compete in a variety of other areas. Apple makes the Safari Web browser while Google makes the competing Chrome. Apple’s iTunes and Google’s YouTube are increasingly competing as venues for distribution of music and videos. And the two companies have photo-editing services.
It is not clear whether regulators have singled out any of these areas of competition as particularly troubling.
“Government actions under Section 8 are rare, but they are brought under circumstances when the presence of a common director on competing boards is likely to be anticompetitive,” said Andrew I. Gavil, an antitrust expert and a professor at Howard University School of Law.
Both Google and Apple share a rival in Microsoft, which competes with the two companies in a variety of areas. But Professor Gavil said regulators were not likely to see that as a problem, even if the two Silicon Valley companies were discussing ways to compete more effectively with Microsoft.
“Section 8 exists when you have a common director facilitating collusion so two companies coordinate their competitive strategies,” he said. “It is not clear that two companies figuring out a strategy to compete against a big common rival is anticompetitive or pro-competitive.”
Mr. Schmidt joined the board of Apple in August 2006, about five months before the company unveiled the iPhone. Google’s plans for Android, its mobile phone operating system were made public nearly a year later.
Since then, analysts and journalists have speculated that Mr. Schmidt’s position on Apple board would eventually become untenable. Google has said Mr. Schmidt typically recuses himself when Apple’s directors discuss mobile phones.
It is not clear why the agency is looking into the matter now. Some antitrust experts say, however, that the Obama administration may be more aggressive in enforcing antitrust laws. The Justice Department recently began an inquiry into the antitrust implications of a settlement of a class action brought by authors and publishers against Google.
“Clearly with the new administration, there is renewed enthusiasm for antitrust enforcement,” Samuel Miller, a partner at Sidley Austin in San Francisco, who acted as a special trial counsel in Justice Department’s first antitrust case against Microsoft.
Under the Clayton Act, interlocking directorates are not considered a problem if the revenue from products in which the companies compete is less than 2 percent of either company’s sales. Some antitrust experts say it may be hard for regulators to determine the revenue that Google earns from various products. Android, for instance, is free, but Google earns advertising revenue when users of an Android phone click on an ad
Porous Border With Pakistan Could Hinder U.S. Troops
President Obama is pouring more than 20,000 new troops into Afghanistan this year for a fighting season that the United States military has called a make-or-break test of the allied campaign in Afghanistan.
But if Taliban strategists have their way, those forces will face a stiff challenge, not least because of one distinct Taliban advantage: the border between Afghanistan and Pakistan barely exists for the Taliban, who are counting on the fact that American forces cannot reach them in their sanctuaries in Pakistan.
One Pakistani logistics tactician for the Taliban, a 28-year-old from the country’s tribal areas, in interviews with The New York Times, described a Taliban strategy that relied on free movement over the border and in and around Pakistan, ready recruitment of Pakistani men and sustained cooperation of sympathetic Afghan villagers.
His account provided a keyhole view of the opponent the Americans and their NATO allies are up against, as well as the workings and ambitions of the Taliban as they prepared to meet the influx of American troops.
It also illustrated how the Pakistani Taliban, an umbrella group of many brands of jihadist fighters backed by Al Qaeda, are spearheading wars on both sides of the border in what for them is a seamless conflict.
The tactician wears a thick but carefully shaped black beard and a well-trimmed shock of black hair, a look cultivated to allow him to move easily all over Pakistan. He spoke on the condition of anonymity for fear of retribution by his fellow Taliban members.
But on an array of issues, discussed over six months of interviews with The Times, he has shown himself to be knowledgeable of Taliban activities, and the information he provided has matched up consistently with that of other sources.
He was well informed — and unconcerned, he said — of the plans of the head of the United States Central Command, Gen. David H. Petraeus, to replicate in Afghanistan some of the techniques he had used in Iraq to stop the Sunni tribes from fighting the Americans.
“I know of the Petraeus experiment there,” he said. “But we know our Afghans. They will take the money from Petraeus, but they will not be on his side. There are so many people working with the Afghans and the Americans who are on their payroll, but they inform us, sell us weapons.”
He acknowledged that the Americans would have far superior forces and power this year, but was confident that the Taliban could turn this advantage on its head. “The Americans cannot take control of the villages,” he said. “In order to expel us they will have to resort to aerial bombing, and then they will have more civilian casualties.”
The one thing that impressed him were the missile strikes by drones — virtually the only American military presence felt inside Pakistan. “The drones are very effective,” he said, acknowledging that they had thinned the top leadership of Al Qaeda and the Taliban in the area. He said 29 of his friends had been killed in the strikes.
The drone attacks simply prompted Taliban fighters to spend more time in Afghanistan, or to move deeper into Pakistan, straddling both theaters of a widening conflict. The recruits were prepared to fight where they were needed, in either country, he said.
In the fighting now under way in Buner and Dir Districts, in the North-West Frontier Province of Pakistan, the Pakistani Taliban are taking on the Pakistani Army in a battle that is the most obvious front of a long-haul strategy to destabilize and take over a nuclear-armed Pakistan.
In Afghanistan, the Pakistani Taliban are directly singling out the United States and NATO forces by sending guerrillas to assist their Afghan Taliban allies in ousting the foreigners from Afghanistan.
While to the Taliban those conflicts are one fluid and sprawling war, the border between Afghanistan and Pakistan has long presented a firm barrier for the United States.
Although Pakistan is an official ally of the United States, the Pakistanis will not allow American troops to cross the border from Afghanistan. They will also not allow the troops to be present as a fighting force alongside the Pakistani military in the tribal areas that Al Qaeda and the Taliban use as a base.
The United States has helped Pakistan and Afghanistan recently open a series of joint posts to share intelligence and improve border monitoring. But those efforts are slight when compared with the demands of a 1,600-mile frontier of unforgiving terrain.
Despite years of demands by American and NATO commanders for Pakistan to control Taliban infiltration, the Taliban tactician said getting his fighters over the border was not a problem. The Pakistani paramilitary soldiers from the Frontier Corps who guard the border were too busy looking after their own survival, he said.
He has already begun moving 80 Taliban fighters in four groups stealthily into Afghanistan in the past month to meet the new American forces, he said.
The tactician says he embeds his men in what he described as friendly Afghan villages, where they will spend the next four to six months with the residents, who provide the weapons and succor for the missions against American and NATO soldiers.
In March, he made a reconnaissance trip by motorcycle to Paktika Province in Afghanistan from Wana, the main city in South Waziristan, in Pakistan’s tribal areas, to make sure the route was safe for his men. It was.
He recently received news by cellphone that one group, his third, had safely arrived in Ghazni Province in Afghanistan. A fourth group was scheduled to leave shortly for Afghanistan, he said.
The main task for his first two groups of fighters will be to ambush convoys of NATO goods and soldiers on the Kandahar-Kabul highway, a major supply line for the allied war effort. “We want to inflict maximum trouble, to lower their morale, to destabilize,” he said.
His guerrillas, in their late teens to mid-20s, are handpicked for their endurance and commitment, he said. Some, like him, were trained by the Pakistani government as proxy fighters against India in Kashmir and have now joined the Qaeda and Taliban cause.
In a new twist, cameramen instructed to capture video of faltering American soldiers for propaganda DVDs are increasingly accompanying the guerrillas.
The tactician, a heavily built man who says he has put on weight in the past two years and is now too heavy and old to fight, said he was loyal to a commander named Mullah Mansoor.
In turn, Mr. Mansoor serves under the aegis of Siraj Haqqani, the son of a veteran Afghan mujahedeen leader, Jalaluddin Haqqani.
The tactician worked mostly from Wana, where he owns a small business and where, he acknowledged, the American drone strikes had disrupted life.
One of his close friends, a Taliban commander, Waheed Ullah, was killed Nov. 7 in a drone attack, he said. In Wana, the threat of the drones had ended the custom of gathering in groups of 10 to 20 men to discuss the issues of the day. “The gossip has finished,” he said.
The relationship between the Pakistani Taliban and Qaeda operatives, most of whom are Arabs, is respectful but distant, according to his descriptions.
The Arabs often go to the bazaar in Wana. But they bristle when asked questions, he said. “They never tell us their activities,” he said. “They take it very badly when you ask questions.”
But the Taliban are willing providers for Al Qaeda, he said. “When they need a suicide bomber, like blowing up a government building, we provide it,” he said.
There was respect for the scale of Al Qaeda’s ambitions. “They have a global agenda, they have a big design,” he said.
The Taliban goal was more narrow. “Capturing Afghanistan is not an Al Qaeda mission,” he said. “It’s a Taliban mission. We will be content in capturing Afghanistan and throwing the Americans out.”
The Pakistani Taliban will fight as long as it takes to defeat the Americans, he said. At the end of this fighting season, he said, “We will have a body count, and we will see who has broken whose back.”
But if Taliban strategists have their way, those forces will face a stiff challenge, not least because of one distinct Taliban advantage: the border between Afghanistan and Pakistan barely exists for the Taliban, who are counting on the fact that American forces cannot reach them in their sanctuaries in Pakistan.
One Pakistani logistics tactician for the Taliban, a 28-year-old from the country’s tribal areas, in interviews with The New York Times, described a Taliban strategy that relied on free movement over the border and in and around Pakistan, ready recruitment of Pakistani men and sustained cooperation of sympathetic Afghan villagers.
His account provided a keyhole view of the opponent the Americans and their NATO allies are up against, as well as the workings and ambitions of the Taliban as they prepared to meet the influx of American troops.
It also illustrated how the Pakistani Taliban, an umbrella group of many brands of jihadist fighters backed by Al Qaeda, are spearheading wars on both sides of the border in what for them is a seamless conflict.
The tactician wears a thick but carefully shaped black beard and a well-trimmed shock of black hair, a look cultivated to allow him to move easily all over Pakistan. He spoke on the condition of anonymity for fear of retribution by his fellow Taliban members.
But on an array of issues, discussed over six months of interviews with The Times, he has shown himself to be knowledgeable of Taliban activities, and the information he provided has matched up consistently with that of other sources.
He was well informed — and unconcerned, he said — of the plans of the head of the United States Central Command, Gen. David H. Petraeus, to replicate in Afghanistan some of the techniques he had used in Iraq to stop the Sunni tribes from fighting the Americans.
“I know of the Petraeus experiment there,” he said. “But we know our Afghans. They will take the money from Petraeus, but they will not be on his side. There are so many people working with the Afghans and the Americans who are on their payroll, but they inform us, sell us weapons.”
He acknowledged that the Americans would have far superior forces and power this year, but was confident that the Taliban could turn this advantage on its head. “The Americans cannot take control of the villages,” he said. “In order to expel us they will have to resort to aerial bombing, and then they will have more civilian casualties.”
The one thing that impressed him were the missile strikes by drones — virtually the only American military presence felt inside Pakistan. “The drones are very effective,” he said, acknowledging that they had thinned the top leadership of Al Qaeda and the Taliban in the area. He said 29 of his friends had been killed in the strikes.
The drone attacks simply prompted Taliban fighters to spend more time in Afghanistan, or to move deeper into Pakistan, straddling both theaters of a widening conflict. The recruits were prepared to fight where they were needed, in either country, he said.
In the fighting now under way in Buner and Dir Districts, in the North-West Frontier Province of Pakistan, the Pakistani Taliban are taking on the Pakistani Army in a battle that is the most obvious front of a long-haul strategy to destabilize and take over a nuclear-armed Pakistan.
In Afghanistan, the Pakistani Taliban are directly singling out the United States and NATO forces by sending guerrillas to assist their Afghan Taliban allies in ousting the foreigners from Afghanistan.
While to the Taliban those conflicts are one fluid and sprawling war, the border between Afghanistan and Pakistan has long presented a firm barrier for the United States.
Although Pakistan is an official ally of the United States, the Pakistanis will not allow American troops to cross the border from Afghanistan. They will also not allow the troops to be present as a fighting force alongside the Pakistani military in the tribal areas that Al Qaeda and the Taliban use as a base.
The United States has helped Pakistan and Afghanistan recently open a series of joint posts to share intelligence and improve border monitoring. But those efforts are slight when compared with the demands of a 1,600-mile frontier of unforgiving terrain.
Despite years of demands by American and NATO commanders for Pakistan to control Taliban infiltration, the Taliban tactician said getting his fighters over the border was not a problem. The Pakistani paramilitary soldiers from the Frontier Corps who guard the border were too busy looking after their own survival, he said.
He has already begun moving 80 Taliban fighters in four groups stealthily into Afghanistan in the past month to meet the new American forces, he said.
The tactician says he embeds his men in what he described as friendly Afghan villages, where they will spend the next four to six months with the residents, who provide the weapons and succor for the missions against American and NATO soldiers.
In March, he made a reconnaissance trip by motorcycle to Paktika Province in Afghanistan from Wana, the main city in South Waziristan, in Pakistan’s tribal areas, to make sure the route was safe for his men. It was.
He recently received news by cellphone that one group, his third, had safely arrived in Ghazni Province in Afghanistan. A fourth group was scheduled to leave shortly for Afghanistan, he said.
The main task for his first two groups of fighters will be to ambush convoys of NATO goods and soldiers on the Kandahar-Kabul highway, a major supply line for the allied war effort. “We want to inflict maximum trouble, to lower their morale, to destabilize,” he said.
His guerrillas, in their late teens to mid-20s, are handpicked for their endurance and commitment, he said. Some, like him, were trained by the Pakistani government as proxy fighters against India in Kashmir and have now joined the Qaeda and Taliban cause.
In a new twist, cameramen instructed to capture video of faltering American soldiers for propaganda DVDs are increasingly accompanying the guerrillas.
The tactician, a heavily built man who says he has put on weight in the past two years and is now too heavy and old to fight, said he was loyal to a commander named Mullah Mansoor.
In turn, Mr. Mansoor serves under the aegis of Siraj Haqqani, the son of a veteran Afghan mujahedeen leader, Jalaluddin Haqqani.
The tactician worked mostly from Wana, where he owns a small business and where, he acknowledged, the American drone strikes had disrupted life.
One of his close friends, a Taliban commander, Waheed Ullah, was killed Nov. 7 in a drone attack, he said. In Wana, the threat of the drones had ended the custom of gathering in groups of 10 to 20 men to discuss the issues of the day. “The gossip has finished,” he said.
The relationship between the Pakistani Taliban and Qaeda operatives, most of whom are Arabs, is respectful but distant, according to his descriptions.
The Arabs often go to the bazaar in Wana. But they bristle when asked questions, he said. “They never tell us their activities,” he said. “They take it very badly when you ask questions.”
But the Taliban are willing providers for Al Qaeda, he said. “When they need a suicide bomber, like blowing up a government building, we provide it,” he said.
There was respect for the scale of Al Qaeda’s ambitions. “They have a global agenda, they have a big design,” he said.
The Taliban goal was more narrow. “Capturing Afghanistan is not an Al Qaeda mission,” he said. “It’s a Taliban mission. We will be content in capturing Afghanistan and throwing the Americans out.”
The Pakistani Taliban will fight as long as it takes to defeat the Americans, he said. At the end of this fighting season, he said, “We will have a body count, and we will see who has broken whose back.”
Harriet Harman quells speculation over Gordon Brown's future
Harriet Harman was yesterday moved to issue an emphatic commitment that she would not run for leader of the Labour party in an attempt to draw a line under a weekend of widespread speculation about Gordon Brown's future.
The deputy Labour leader's comments mean all three senior politicians tipped to be "caretaker" leaders of the Labour party have appeared in public over the bank holiday weekend to rule themselves out.
Rebellious MPs, convinced Brown is too damaged to remain as PM, are pushing for a veteran to be prepared to take over after what they expect will be a mauling in the local and European elections on 4 June.
Labour MPs are astounded at inept government handling of changes to MPs' expenses and a misreading of the mood on the backbenches over plans to limit rights for Gurkhas – inflicting on the government its first parliamentary defeat under Brown – and believe the prime minister's position will be untenable should the party not improve on its performance last year when it only got 24% of the national vote.
The vocal minority agitating for a leadership change, with as much as a year before the next general election, appeared to receive high-profile endorsement this weekend when the communities secretary Hazel Blears described the government's "lamentable failure" to engage with voters and warned of "dire consequences" if the government did not re-engage.
Within hours, however, Blears issued a statement saying Brown had her "100% support". Later justice minister Jack Straw and health secretary Alan Johnson mounted gushing defences of Brown, with their united front bolstered by former Labour leader Neil Kinnock describing rumours of leadership challenges as "ludicrous and damaging".
As part of a renewed reckoning with its increasingly fractious backbenches, the government is working hard to head off another Commons rebellion on plans to part-privatise the Royal Mail by reaching a compromise with the centre-left campaign group Compass which would see the service run along the lines of Network Rail.
Yesterday, Harman also dashed backbenchers' hopes, denying a newspaper report suggesting she would fight to replace Brown if he stood down. Harman called the reports "rubbish".
When asked on the BBC's Today programme whether she planned to run, should a vacancy arise, Harman said: "No." She went on: "I am saying there are no circumstances ... I do not want to be prime minister. I do not want to be leader of the party. I want Gordon Brown to remain PM after the next election as well as before the election."
Harman allies said the current atmosphere made it necessary for the deputy leader to knock on the head all speculation. Emily Thornberry, MP for Islington South and Finsbury, described her comments as "neither here nor there". She said: "It wasn't a surprise to me that Harriet ruled herself out. She's been the subject of endless tittle tattle and it's not surprising that she'd want to draw a line under them."
However, the force of Harman's comments is surprising since she has been seen to command the kind of broad support across unions, MPs and party members needed in any race to replace Brown. In contrast to Alan Johnson – who apparently inadvertently found himself saying over the weekend "I'm not saying there are no circumstances" – Harman has now put on record that there are no circumstances in which she will go for the top job. Brownites will be concerned that since Johnson's comments were the most ambiguous, he has now become the front runner for those intent on mobilising.
Rebel MPs, such as former ministers Frank Field and Kate Hoey, were already talking openly of a possible challenge if Labour did badly in the European and local government elections. This week another serial rebel Graham Stringer is to convene a meeting of dissatisfied MPs to discuss mechanisms for changing leader.
Moves by Harman over the last year – including attacks on City bonuses, sex discrimination, and the pension of Sir Fred Goodwin – have consistently been interpreted as positioning to be the natural successor to Brown if he were unseated. After Labour's defeat in the Glasgow East byelection, Harman is alleged to have said "this is my moment".
However, Jon Cruddas, the MP for Dagenham, who has been described as a possible running mate for Harman, has said he believes the deputy leader to have been briefed against by cabinet colleagues for "having the temerity to develop a policy agenda of her own".
Yesterday colleagues said Harman's denial was not quite as copper-bottomed as that made by Lyndon B Johnson in 1968 – himself borrowing that of American Civil War General William Tecumseh Sherman – announcing he would not seek a second full term when he said: "I shall not seek, and I will not accept, the nomination of my party for another term as your president."
Deputy news editor
Harriet Harman leaned across the BBC's sofa yesterday morning, "grabbed" a marker pen and into the headline Harman: I'd Fight for Leadership on the front page of the Daily Telegraph inserted the word NOT. She explained: "When I ran … in a big contest for the deputy leadership of the Labour party I said first and foremost I'll be a loyal deputy to Gordon Brown. That is exactly what I am doing. That is why I corrected the headline for you."
Harman is the not the first to prefer some theatrics with a marker pen to the letters page of a newspaper. Last summer her cabinet colleague David Miliband was similarly accused of plotting to replace Brown and into the main headline of that day's Daily Telegraph, proclaiming Labour at War, he also added the word NOT.
The deputy Labour leader's comments mean all three senior politicians tipped to be "caretaker" leaders of the Labour party have appeared in public over the bank holiday weekend to rule themselves out.
Rebellious MPs, convinced Brown is too damaged to remain as PM, are pushing for a veteran to be prepared to take over after what they expect will be a mauling in the local and European elections on 4 June.
Labour MPs are astounded at inept government handling of changes to MPs' expenses and a misreading of the mood on the backbenches over plans to limit rights for Gurkhas – inflicting on the government its first parliamentary defeat under Brown – and believe the prime minister's position will be untenable should the party not improve on its performance last year when it only got 24% of the national vote.
The vocal minority agitating for a leadership change, with as much as a year before the next general election, appeared to receive high-profile endorsement this weekend when the communities secretary Hazel Blears described the government's "lamentable failure" to engage with voters and warned of "dire consequences" if the government did not re-engage.
Within hours, however, Blears issued a statement saying Brown had her "100% support". Later justice minister Jack Straw and health secretary Alan Johnson mounted gushing defences of Brown, with their united front bolstered by former Labour leader Neil Kinnock describing rumours of leadership challenges as "ludicrous and damaging".
As part of a renewed reckoning with its increasingly fractious backbenches, the government is working hard to head off another Commons rebellion on plans to part-privatise the Royal Mail by reaching a compromise with the centre-left campaign group Compass which would see the service run along the lines of Network Rail.
Yesterday, Harman also dashed backbenchers' hopes, denying a newspaper report suggesting she would fight to replace Brown if he stood down. Harman called the reports "rubbish".
When asked on the BBC's Today programme whether she planned to run, should a vacancy arise, Harman said: "No." She went on: "I am saying there are no circumstances ... I do not want to be prime minister. I do not want to be leader of the party. I want Gordon Brown to remain PM after the next election as well as before the election."
Harman allies said the current atmosphere made it necessary for the deputy leader to knock on the head all speculation. Emily Thornberry, MP for Islington South and Finsbury, described her comments as "neither here nor there". She said: "It wasn't a surprise to me that Harriet ruled herself out. She's been the subject of endless tittle tattle and it's not surprising that she'd want to draw a line under them."
However, the force of Harman's comments is surprising since she has been seen to command the kind of broad support across unions, MPs and party members needed in any race to replace Brown. In contrast to Alan Johnson – who apparently inadvertently found himself saying over the weekend "I'm not saying there are no circumstances" – Harman has now put on record that there are no circumstances in which she will go for the top job. Brownites will be concerned that since Johnson's comments were the most ambiguous, he has now become the front runner for those intent on mobilising.
Rebel MPs, such as former ministers Frank Field and Kate Hoey, were already talking openly of a possible challenge if Labour did badly in the European and local government elections. This week another serial rebel Graham Stringer is to convene a meeting of dissatisfied MPs to discuss mechanisms for changing leader.
Moves by Harman over the last year – including attacks on City bonuses, sex discrimination, and the pension of Sir Fred Goodwin – have consistently been interpreted as positioning to be the natural successor to Brown if he were unseated. After Labour's defeat in the Glasgow East byelection, Harman is alleged to have said "this is my moment".
However, Jon Cruddas, the MP for Dagenham, who has been described as a possible running mate for Harman, has said he believes the deputy leader to have been briefed against by cabinet colleagues for "having the temerity to develop a policy agenda of her own".
Yesterday colleagues said Harman's denial was not quite as copper-bottomed as that made by Lyndon B Johnson in 1968 – himself borrowing that of American Civil War General William Tecumseh Sherman – announcing he would not seek a second full term when he said: "I shall not seek, and I will not accept, the nomination of my party for another term as your president."
Deputy news editor
Harriet Harman leaned across the BBC's sofa yesterday morning, "grabbed" a marker pen and into the headline Harman: I'd Fight for Leadership on the front page of the Daily Telegraph inserted the word NOT. She explained: "When I ran … in a big contest for the deputy leadership of the Labour party I said first and foremost I'll be a loyal deputy to Gordon Brown. That is exactly what I am doing. That is why I corrected the headline for you."
Harman is the not the first to prefer some theatrics with a marker pen to the letters page of a newspaper. Last summer her cabinet colleague David Miliband was similarly accused of plotting to replace Brown and into the main headline of that day's Daily Telegraph, proclaiming Labour at War, he also added the word NOT.
PM seeks deal with rebel MPs over Royal Mail
Gordon Brown's aides have been in private talks with leaders of the Labour rebellion over the future of Royal Mail in an effort to avert another Commons revolt which could fatally weaken the prime minister's authority.
The aides have been examining proposals to turn Royal Mail into a not-for-profit company on a similar model to Network Rail and the BBC Trust instead of pursuing a plan to sell a 49% stake to the private sector. Details of a possible change of heart came as ministers were told that up to 100 Labour rebels were determined to vote against Brown's original plan.
After a weekend of turbulence surrounding Brown's leadership, in which Harriet Harman and Alan Johnson faced close questioning about their ambitions for the top job, the prime minister will try to right himself tomorrow with a policy speech on education, promising parents fresh powers to drive school improvement.
But questions over Brown's ability to control his party continue to dominate after his first Commons defeat on the Gurkhas vote last week.
The future of Royal Mail is the next combustible problem he faces and Nick Brown, the chief whip, has warned the strength of backbench opposition means it may be impossible to pass legislation through the Commons next month without the support of the Conservatives.
The prospect of another defeat in the Commons weeks after what is expected to be a bad showing in the European elections triggered the search for a compromise.
The private talks have been held between No 10's policy unit and Neal Lawson, the author of a pamphlet published tomorrow by the left-leaning thinktank Compass, calling on all sides of the Labour party to "step back from the brink" and rally behind the idea of keeping Royal Mail in the public sector on the model of Network Rail.
Some of Brown's aides claim the scheme would achieve the government's objective of new management, private finance and modernisation, but without selling a minority stake.
The Blairite moderniser Stephen Byers said tonight: "With goodwill on both sides it should be possible for the government to meet its manifesto commitment [not to privatise the Royal Mail] and to modernise the service." He believes the Network Rail structure should be examined as a possible model. Dan Corry, the head of No 10's policy unit, was Byers's special adviser and helped design the Network Rail model, but there is concern in Downing Street that such a move may not be seen as enough of a fresh start for Royal Mail.
Lord Mandelson, the business secretary currently steering the bill through the Lords, is unimpressed by the Compass proposal. His aides are concerned by the risk-averse mood of the whips following last week's Gurkhas defeat and recognise the issue is now in the balance and a decision lies with the prime minister.
Mandelson is concerned that Royal Mail is losing its business at a rate of 8% a year and needs fresh management expertise to oversee modernisation.
In his Compass pamphlet, Lawson says his solution "would heal wounds and suspicions in the party". He writes: "The alternatives of defeat at the hands of Labour backbenchers, or privatisation, but only with the help of Tory frontbench, are both too awful to contemplate."
The pamphlet concedes that Royal Mail does need new investment, some job losses, and a change in industrial relations. The leadership of the Union of Communication Workers, the main Royal Mail union, recognises the need to change, the pamphlet says.
But it also criticises the government's review of Royal Mail, conducted by Richard Hooper, for considering only a solution involving the sale of a major minority stake to a private sector mail operator such as TNT, the Dutch postal company.
It is claimed there is no need to sell shares in Royal Mail, which would, in any case, have to be sold at a knockdown price. The investment necessary for the service to meet the pressures created largely by competition from the internet can be secured from within the public sector, the pamphlet states. It points to an adapted version of Network Rail – "a not for profit dividend company, operating under a licence, whose sole purpose is to provide a service and not a profit".
It goes on: "Network Rail's financing requirements are principally met by debt raised from the capital markets. In total the government has borrowed close to £20bn which does not count as government borrowing because technically it is deemed by the Office of National Statistics not to be in the public sector".
Network Rail's board's objectives are set by 110 members that act as shareholders, drawn from industry and public.
The Compass pamphlet also challenges the government's view that Royal Mail is a commercial basket case, noting it made a profit of £225m in the first three quarters of this year. "It could be making profit of £600m a year if it did not have to fund the pension deficit and in effect subsidise the private sector competitors through lower than cost access charges," the pamphlet says. Ministers have committed themselves to take on the deficit but only on the condition that shares are sold and private sector expertise introduced.
A Downing Street said: "The government has said its door is open to those with ideas on the future of the Royal Mail and Neal Lawson has taken advantage of the opportunity to present the proposal he is publishing this week to government officials.
"We do not believe his alternative is workable and it is not under consideration."
The aides have been examining proposals to turn Royal Mail into a not-for-profit company on a similar model to Network Rail and the BBC Trust instead of pursuing a plan to sell a 49% stake to the private sector. Details of a possible change of heart came as ministers were told that up to 100 Labour rebels were determined to vote against Brown's original plan.
After a weekend of turbulence surrounding Brown's leadership, in which Harriet Harman and Alan Johnson faced close questioning about their ambitions for the top job, the prime minister will try to right himself tomorrow with a policy speech on education, promising parents fresh powers to drive school improvement.
But questions over Brown's ability to control his party continue to dominate after his first Commons defeat on the Gurkhas vote last week.
The future of Royal Mail is the next combustible problem he faces and Nick Brown, the chief whip, has warned the strength of backbench opposition means it may be impossible to pass legislation through the Commons next month without the support of the Conservatives.
The prospect of another defeat in the Commons weeks after what is expected to be a bad showing in the European elections triggered the search for a compromise.
The private talks have been held between No 10's policy unit and Neal Lawson, the author of a pamphlet published tomorrow by the left-leaning thinktank Compass, calling on all sides of the Labour party to "step back from the brink" and rally behind the idea of keeping Royal Mail in the public sector on the model of Network Rail.
Some of Brown's aides claim the scheme would achieve the government's objective of new management, private finance and modernisation, but without selling a minority stake.
The Blairite moderniser Stephen Byers said tonight: "With goodwill on both sides it should be possible for the government to meet its manifesto commitment [not to privatise the Royal Mail] and to modernise the service." He believes the Network Rail structure should be examined as a possible model. Dan Corry, the head of No 10's policy unit, was Byers's special adviser and helped design the Network Rail model, but there is concern in Downing Street that such a move may not be seen as enough of a fresh start for Royal Mail.
Lord Mandelson, the business secretary currently steering the bill through the Lords, is unimpressed by the Compass proposal. His aides are concerned by the risk-averse mood of the whips following last week's Gurkhas defeat and recognise the issue is now in the balance and a decision lies with the prime minister.
Mandelson is concerned that Royal Mail is losing its business at a rate of 8% a year and needs fresh management expertise to oversee modernisation.
In his Compass pamphlet, Lawson says his solution "would heal wounds and suspicions in the party". He writes: "The alternatives of defeat at the hands of Labour backbenchers, or privatisation, but only with the help of Tory frontbench, are both too awful to contemplate."
The pamphlet concedes that Royal Mail does need new investment, some job losses, and a change in industrial relations. The leadership of the Union of Communication Workers, the main Royal Mail union, recognises the need to change, the pamphlet says.
But it also criticises the government's review of Royal Mail, conducted by Richard Hooper, for considering only a solution involving the sale of a major minority stake to a private sector mail operator such as TNT, the Dutch postal company.
It is claimed there is no need to sell shares in Royal Mail, which would, in any case, have to be sold at a knockdown price. The investment necessary for the service to meet the pressures created largely by competition from the internet can be secured from within the public sector, the pamphlet states. It points to an adapted version of Network Rail – "a not for profit dividend company, operating under a licence, whose sole purpose is to provide a service and not a profit".
It goes on: "Network Rail's financing requirements are principally met by debt raised from the capital markets. In total the government has borrowed close to £20bn which does not count as government borrowing because technically it is deemed by the Office of National Statistics not to be in the public sector".
Network Rail's board's objectives are set by 110 members that act as shareholders, drawn from industry and public.
The Compass pamphlet also challenges the government's view that Royal Mail is a commercial basket case, noting it made a profit of £225m in the first three quarters of this year. "It could be making profit of £600m a year if it did not have to fund the pension deficit and in effect subsidise the private sector competitors through lower than cost access charges," the pamphlet says. Ministers have committed themselves to take on the deficit but only on the condition that shares are sold and private sector expertise introduced.
A Downing Street said: "The government has said its door is open to those with ideas on the future of the Royal Mail and Neal Lawson has taken advantage of the opportunity to present the proposal he is publishing this week to government officials.
"We do not believe his alternative is workable and it is not under consideration."
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