Missile Shield Retreat

The G20 summit

Regaining their balance

A new chapter for the world economy, maybe

THE last time the leaders of the Group of Twenty (G20) met, in London in April, their unenviable task was to steer the world economy away from a 1930s-style depression. They succeeded, thanks to an unprecedented fiscal and monetary gusher and a raft of measures to prop up teetering financial giants. But while stability has returned, much more needs to be done to put economies, and particularly their banking sectors, on a sounder footing. The group’s aim this week in Pittsburgh was to “turn a page on the era of irresponsibility” by adopting reforms to “meet the needs of the 21st century economy.” But writing a new chapter will require agreement on precisely what those needs are, and the final communiqué gave sceptics plenty to chew on.

There was, at least, a consensus on what should not be done. The leaders pledged not to withdraw stimulus measures until a durable recovery is in place. They agreed to co-ordinate their exit strategies, while also acknowledging that timing will vary from country to country depending on the forcefulness of measures in place.

There was also agreement that macroeconomic policies should be harmonised to avoid the imbalances—America’s spendthrift ways and deficits; Asia’s savings glut—that made the financial crisis so much worse. But strengthening co-operation, through the snappily named Framework for Strong, Sustainable and Balanced Growth, will not be easy, even with the International Monetary Fund (IMF) knocking heads together, as is envisaged. Developing countries are uneasy about formalising such a realignment. They are publicly supportive, but that may only be because they suspect it will be impossible to police.

They will, however, be pleased with another sort of rebalancing: that of global institutions to better reflect today's economic realities. From now on, the G20 will replace the narrower, Western-dominated G8 as the primary global economic talking-shop, giving the likes of China, India and Brazil a permanent seat at the table. In return, it is hoped that they will be more flexible in other areas, such as climate change and trade. (The G20 pledged to eliminate subsidies on fossil fuels, but only “in the medium term”; as for trade, there was only a weak and implausible commitment to get the Doha round back on track by next year.) The governance structure of the rejuvenated IMF will also change, with “under-represented” (mostly developing) countries getting at least 5% more of the voting rights by 2011. Taken together, the Fund’s overhaul and the G20’s expanded powers mark an important shift in international macroeconomic policy.

The other big institutional change is the ascension of the Financial Stability Board (FSB), a club of central bankers and financial regulators, which has also been broadened to include the big developing countries. From now on it will take a lead role in co-ordinating and monitoring tougher financial regulations and serve (along with the IMF) as an early-warning system for emerging risks. To co-incide with the summit it released two reports that flesh out its thinking on a range of regulatory issues. Tim

Geithner, America’s treasury secretary, told reporters that he considered the FSB to be the “fourth pillar” of the modern global economy, along with the IMF, the World Bank and the World Trade Organisation.

The FSB will also help to ensure that the rules governing big banks are commensurate with the cost of their failure. The main tool for this will be higher capital requirements. All agree that banks need more capital and that a greater share of it should be pure equity, the strongest buffer against loss. The G20 communiqué also supported forcing banks to hold especially high levels in good times so they are better prepared to ride out the bad—though it did not endorse an American proposal for big banks to hold more than smaller ones.

But there will be much wrangling over amounts and timing. The G20 has set a deadline of the end of 2012 for new standards to be adopted, with exact figures to be decided by the end of next year. The Europeans have gone along with this but may not be able to deliver, since their banks entered the crisis with much feebler capital cushions than their American counterparts. These have since been plumped, but with hybrid instruments that do not count as pure equity.

Nor will France and Germany be particularly thrilled with the fudge on bankers’ pay. Going into the summit they had pushed hard for firm numerical limits on bonuses as a proportion of revenues or capital. The language of the communiqué, however, was closer to the Americans’ position. Efforts will be made to tie remuneration more closely to long-term value creation—more paid in restricted shares, with employers able to claw back a portion if trades lead to big losses and multi-year bonus guarantees to be avoided. But bonuses will be limited to a particular percentage of revenues only if the bank’s capital levels are dangerous low or the payouts threatens its soundness. Never one to admit to defeat, Nicolas Sarkozy, France’s president, hailed the deal on financial regulation as a “revolution.”

That is pushing it. The biggest worry, however, is not that the deal struck in Pittsburgh is too tame, but that even what has been agreed could unravel. Given how politically charged the pay issue is, there is a risk of countries like France going their own way. As for the economic rebalancing, the peer review envisioned in the communiqué is a poor excuse for an effective enforcement mechanism. The deal struck in the America’s Steel City is a step in the right direction, but it could soon begin to buckle.

Missile Shield Retreat

'We Are the Initiators'

The Indiana governor on how to be an activist—and also a popular—Republican conservative.

KIMBERLEY A. STRASSEL

Indianapolis

'You'll be the first to know," laughs Mitch Daniels. But "don't hang around the phone."

The Indiana governor is answering a question he gets asked a lot these days. Will he run for president? He keeps saying no, but the collapse of such GOP notables as Sarah Palin and Mark Sanford has people looking north. Mr. Daniels is today something rare indeed: a popular Republican.

President Barack Obama eked out an upset in Indiana last year, but Mr. Daniels's re-election was almost as notable. Amid a Democratic wave, the Republican beat his opponent by 18 percentage points and received more votes than anyone who had ever run in the state. He swept 79 of 92 counties, nearly 60% of independents and 25% of Democratic voters. His approval rating is near 70%.

At a time when the GOP has done so much wrong, strategists are asking what Mr. Daniels is doing right. Hoosiers would point to his tough fiscal discipline and his overhaul of state government. The governor summed up his approach in a Washington speech earlier this year, saying that a conservatism "that will be credible in the years ahead will be active, will be forward-looking, constructive, intimately connected with the lives of average citizens, and friendly."

If this sounds a bit fuzzy and Midwestern, a colleague of Mr. Daniels puts it more concisely: "It's the old formula: ideas and a big tent. Mitch's success has been in aggressively pushing conservative reform, but not alienating folks along the way." Whether Mr. Daniels's particular brand of reform politics would work nationally—and whether he is the guy to do it—are big questions. But for now, he's in the spotlight.

***

"We are the initiators, we are always in motion."

"Activism works, and we have to drive the agenda."

"There is nothing inconsistent about having a conservative outlook and being vigorous."

These statements fly at me within 10 minutes of a two-hour interview in Mr. Daniels's cavernous office. Sitting in his shirt sleeves, the governor looks easygoing but earnest. Mr. Daniels's career has included working for Sen. Dick Lugar (R., Ind.), as an adviser to Ronald Reagan, a think-tank head (The Hudson Institute), a pharmaceutical executive, and budget director for George W. Bush. His fervor for cutting waste in that last post earned him a nickname from President Bush: The Blade.

The 60-year-old won in 2004 by promising to achieve one goal. "Every successful enterprise has a very clear strategic purpose. . . . So, we said, all right, the strategic purpose of our administration is to raise the net disposable income of Hoosiers," which has fallen dramatically in recent decades. "Everything else is just a means to that end."

Mr. Daniels's first step toward that goal was cleaning up a state balance sheet that 16 years of Democratic rule had left in bad shape. He turned what was a $700 million hole into a $1 billion surplus, making Indiana one of a handful of states that today remain in the black.

How? "Well, prepared to be dazzled," he says, with his trademark dry wit. "The answer is that we spent less money than we took in."

This underplays the governor's high-profile budget fights with a spendthrift legislature—fights that he won—which allowed him to halve the state's rate of spending growth to 2.8% from 5.9% annually. That restraint has allowed Mr. Daniels to forgo the recent tax hikes of most states.

His approach works well in a state where, as Mr. Daniels puts it, "fiscal prudence never went out of style." He's earned high marks for his willingness to spar with his own party (this year's budget went into special session after he refused to let the GOP-run Senate spend away the surplus), and for his fight against pork. With the help of a power called "allotment"—the right not to spend money appropriated by the legislature—Mr. Daniels trimmed $800 million from state government in fiscal 2009. Allotment had in the past "been used very sparingly," says Mr. Daniels, smiling. "We don't use it sparingly."

He also hasn't spared state government. He axed $190 million renegotiating state contracts, bid out services, cut $250 million in unnecessary spending, and dropped 5,000 government positions. Austere as his budgets have been, they have directed more money to "priorities" like 800 new child-protection case workers, 250 more state troopers, and education spending. This approach has allowed the governor to deflect Democratic gripes that he is gutting the state in a recession. "You can invest in things, even with modest revenue growth, so long as you are willing to do a lot less of things that are a lot less important," he says.

Perhaps most appreciated was the governor's overhaul of the Bureau of Motor Vehicles. It's gone from one of the worst in the country—a place, he says, "where people would take a copy of 'Crime and Punishment'"—to one of the best, with an "average visit time of seven minutes and 36 seconds."

In 2006, Mr. Daniels gave all state employees the option of switching to health plans with health-savings accounts. A year later, he signed bipartisan legislation creating the Healthy Indiana Plan, which puts those same HSAs at the center of a plan covering 130,000 uninsured. Participants contribute to their account based on income; the state picks up the rest, up to $1,100 per adult, after which private insurance kicks in.

"It's subsidized, yes," says Mr. Daniels, but it's "designed to make sure everybody, with a few exceptions, has skin in the game." It also "doesn't expose taxpayers to the catastrophe in Tennessee or Massachusetts of an entitlement program." More than half of the state's employees have switched to the HSA plan, and Healthy Indiana is fully subscribed.

All this, says Mr. Daniels, serves as a necessary "foundation" for the state to attract jobs and fulfill that goal of raising Hoosier income. "Spend as little as you can consistent with necessary public service, leave the rest in private hands, and you get more jobs in the end." Indiana, with its business-friendly tax environment, has attracted $8 billion in foreign investment in the past two years.

Policy is one thing; selling it another. And Mr. Daniels knows how to sell. Relatively unknown in the state before his 2004 run, he toured all 92 counties—at least twice—in an RV. He bypassed hotels, staying in Hoosier homes. He debuted "Mitch TV," a reality show that pictured, warts and all, the candidate meeting wary Indiana voters.

"We have, I think, tried to face a Republican reality, which is the stereotype that Republicans are disconnected from the lives of average people. It's unfair. It's untrue. A Democrat can be a blue-blood billionaire who wouldn't recognize a working family if his limousine ran over one, but still, they benefit from the presumption that their hearts are in the right place, and we bear the opposite burden," he says.

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Ismael Roldan

Mr. Daniels still stays overnight with locals and invites citizens to tour the state with him as he rides one of his two Harleys ("one is painted like the state flag, the other is just bad and black").

He's also studiously avoided ideological debate. Most would say that "what we've done was animated by conservative principles," he says. "But I leave the labels out. I rarely mention party names, ours or theirs. I don't use the i-word [ideology] or the c-word [conservative]. I don't use the p-word [privatization]. Because I don't think most people think in those categories."

He uses the example of smaller government. "Our principle goal is not to cut government spending for the sake of cutting government spending. . . . If the goal is 'what can we do, or do more quickly, or stop doing, to make it more likely the next job comes to Indiana,' well, of course that means squeezing tax dollars, it means keeping taxes down. I just don't tend to present it as an ideological imperative, but rather the smart things to do if we are trying to be a more prosperous, free state."

He's been just as circumspect on flashpoint social debates. "My record is, far as I know, unimpeachable. It's just not what we've emphasized."

Mr. Daniels's tendency to say what's on his mind is a double-edged sword. In a commencement speech this spring at Butler University, the governor lambasted his generation as "self-centered, self-absorbed, self-indulgent, and all too often just plain selfish." Many admired his candor, but the words sparked an uproar.

Controversy over some of his big reforms also serves as a warning of how a bad rollout of even a good idea can spiral out of control. Mr. Daniels was dogged for years by anger over his early decision to privatize the Indiana toll road. Critics accused the state of selling off valuable assets, leaving Mr. Daniels to scramble to claim the deal provided necessary revenue for public works.

His reluctance to tout ideology has also left some conservatives skeptical of what he believes. The governor paid for his health plan with a cigarette-tax hike that offended some purists, though Mr. Daniels is unrepentant: "I'm from the Reagan school. You want less of something, tax it more."

He's been at more pains to explain his first-year proposal for a one-year surtax on wealthy Hoosiers to pay off the state's debt. He was blocked by state GOP legislators. "As the Frenchman said, worse than a crime is a mistake," he says with a rueful smile. He explains that he was "in a hurry" to get the fiscal situation under control.

"I always had the following chronology in mind: Stop the deficits. Pay back the debt. Build up a reserve. Cut taxes." He nonetheless insists "I know my supply-side catechism," and he argues that because the tax was one-time, designed to expire when the legislature was out of session, that it would not have had a long-term effect. "A one-time tax does not get figured into people's investment decisions," he says.

In the end, Indiana closed its budget hole with a tax amnesty program. And Mr. Daniels points out that last year the state enacted reform that cut property taxes an average of 30%. But were he ever to go national, he'd still have some reassuring to do.

He's clearly thought a lot about the national scene, even if he continues to insist he won't run. "I do sometimes get a little frustrated that my fellow Republicans miss opportunities," and also that the national party "forfeited our birthright" on fiscal discipline.

But he's uncertain that his approach is transferable. "This business of our advancing ideas . . . and not spending a lot of time arguing the philosophy—that's a luxury you have in state or local office that's harder if you are running for federal office where you are, appropriately, dragged into all the litmus tests and the yes-nos."

He muses about whether the financial crisis has prepared the nation for a candidate willing to run on a "grown-up" discussion about the coming entitlement bomb. "We all know that it's been a given in our politics that nobody wins elections railing about deficits. And maybe those things are as true as they've ever been," he says. "But maybe there is a different dynamic. When people start saving at 6%. When there's been a learning moment about spending too much and borrowing too much and people see Washington making that mistake . . . maybe it could be that a majority could be assembled for a fundamental restructuring."

I ask him again why he wouldn't want to be the guy to do it. His answer is sincere enough: "I've said all along that I'd like to leave a less cynical state. I really would. I really would like for people to say, whether they agreed or not, 'there was a group of people who told us what was good for the state, who went and did it, or tried to do it, and who weren't just on the make for another office.'"

The governor then launches into a list of all the things he's still got to do in Indiana—education reform, more work to keep the budget from going red, more of this and more of that. Whether the nation ever hears from Mr. Daniels, Hoosiers can bet they will.

Ms. Strassel writes the Journal's Potomac Watch column.

Quality Reporting Doesn't Come Cheap

The decline of newspapers is a tragedy for democracy. How can it be stopped?

PETER R. KANN

Imagine yourself the proprietor of a venerable and profitable business whose success is based on the quality of your distinctive product, the brand loyalty of your customers, and the fair price they are willing to pay for the value you provide.

Then you hire some bright young managers who develop a new and improved version of your product that can be distributed faster and accessed more conveniently than the old one. The new version—essentially a repackaging since core components are the same—appeals to traditional and new customers. No mystery there, since unlike the older version, for which you still charge, the new one is given away for free.

Consequently, your total customer base grows but your revenues do not. Your profits shrink as the free version lures customers from the paid one. You begin to wonder whether there might be a little flaw in your new business model, whether perhaps you should have charged for the new and improved version, but all the experts now tell you it is too late for that.

So it was that newspaper proprietors, seduced by the allure of a new distribution medium called the Internet, gave young Web disciples license to take their preciously crafted product—news—and repackage it with all manner of bells and whistles from interactivity to instant updates to historical archives and then give it away for free to the very same people and more who still were expected to pay for the traditional product on sheets of inky newsprint. Something was wrong with the logic.

Indeed, a business analyst landing here from Mars logically might question why an unwieldy newsprint product, stale as soon as it rolls off the press and not updated till another sun rises, should not be free whereas the new Internet product, offering all the same news plus more and evolving as does the news around the clock, should not be worth a pretty price? An even wiser Martian might conclude that customers should be given a choice, or offered a combination, but that they should be expected to pay for both.

Based on a nearly 60-year habit of reading them and some 50 years working for them, newspapers still are my preferred way to access and absorb news, but that is not nearly so true of my children and will be even less so for theirs. More and more people clearly prefer to get their news online and, not surprisingly, prefer to get it for free. Good for them, but not so good for the increasingly impoverished publishing companies selling (or these days giving away) news, for the steadily diminishing cadre of reporters and editors who produce it, or for the future of news as we have come to know it.

The start of this downward spiral predated the Internet by some decades as publishers relied more and more on advertising as their primary revenue source, chased larger and larger audiences to appeal to those advertisers, and displayed less and less confidence they could attract those audiences by charging full and fair value for the publications they produced. Thus, well before the advent of the Web, publishers were discounting subscriptions, providing all sorts of peripheral premiums, and giving away more and more copies to maintain artificial circulation bases.

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Chad Crowe

Watching Russia's Stance on Iran

Nations Agree to Vet Each Others' Policies

Economic Accord Aims to Coordinate Countries' Strategies to Promote Growth; Critics Warn Plan Lacks Enforcement Mechanism

BOB DAVIS JONATHAN WEISMAN

Getty Images

German Chancellor Angela Merkel (center) and Spanish Prime Minister Jose Luis Rodriguez Zapatero (right) talk at a G-20 plenary session on Friday.

PITTSBURGH -- The Group of 20 nations agreed to establish an elaborate structure to coordinate economic policies, but without any enforcement mechanism to make countries live up to their word, critics warned the plan could be toothless.

For the U.S., winning approval of what the G-20 called "A Framework for Strong, Sustainable and Balanced Growth" was a major objective of the summit here that concluded Friday as leaders issued a communiqué documenting their agreement.

G-20 Summit

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Reuters

The leaders of the G-20 summit gather around the meeting table for the first plenary session of the summit in the Pittsburgh Convention Center.

Protests in Pittsburgh

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Reuters

G-20 leaders struck a partial compromise on bankers' compensation and bank capital requirements, though details must be resolved. The U.S. notched another gain, according to negotiators, persuading Europe to back a shift in ownership of the International Monetary Fund in favor of developing countries. On energy issues, the leaders embraced an effort to eliminate subsidies but didn't set a deadline for action.

French President Nicolas Sarkozy said the pacts on financial rules represented a "revolution," while British Prime Minister Gordon Brown said G-20 initiatives would save millions of jobs. U.S. President Barack Obama was less effusive, saying "we laid the groundwork today for long-term prosperity."

The framework accord to coordinate policies comes at a time when U.S. consumers, who have been the main engine of economic growth, are expected to save more and spend less, reducing global demand.

Among the policy changes leaders envision: China and Japan would rely less on exports and more on domestic consumption; the U.S. would slash its budget deficit; and Europe would make tough structural reforms to prod business investment.

Under the framework, members will meet periodically to review each nation's policies and see that they are making necessary adjustments. The IMF will do analyses.

The group will act by moral suasion, not sanctions. Work on the framework is to begin in November.

The G-20 Summit

• Communiqué: Decoding the G-20
• 'Framework' Precedents | G-20 Dispatches
• Leaders Drop Climate Deadlines
• Move to Bigger Group Risks Weaker Pacts
• Obama: Iran on Notice on Nuclear Activities
• Protesters March on Final Day of Summit
• Complete Coverage: News, analysis, graphics

Journal Community

• Vote: Will the G-20 meeting have a meaningful impact on a global economic recovery?

Some critics say the plan is likely to deteriorate into a talkfest -- as have similar international efforts to get countries to make economic changes. The International Labor Organization, for instance, works largely by consensus on its labor standards and is criticized as toothless and ineffective.

"Without sanctions, this agreement doesn't mean anything," said University of Maryland economist Peter Morici. "The countries will just discuss changes and make statements."

G-20 officials say sanctions aren't needed to force action on the economic front because the depth of the recession and the need for change is clear.

"The whole logic is to use discussions and peer pressure to get consensus views" on economic policies, said Montek Singh Ahluwalia, a senior Indian economic official who represents New Delhi at the G-20.

Surprise Announcement That G20 Will Supplant G8

1:25

WSJ's Jonathan Weisman explains from Pittsburgh why the Group of 20 will replace the venerable Group of Eight as the world's key economic leaders' forum.

Australia's Rudd: Why G20 Should Supplant G8

4:07

At the Clinton Global Initiative, Australian prime minister Kevin Rudd says that it makes no sense to have an institution of global economic governance that excludes China, Mexico and Brazil.

The group noted the global economy has improved since the group last met in the spring.

"Our forceful response helped stop the dangerous, sharp decline in global activity and stabilize financial markets," it said, but warned that a lot of work needs to be done to ensure growth, noting "a sense of normalcy should not lead to complacency."

The G-20 said nations must continue stimulating the economy "until recovery clearly has taken hold" but also "develop a transparent and credible process for withdrawing our extraordinary ... support." But it didn't provide a detailed strategy for unwinding stimulus, which it said would "vary across countries or regions and across the type of policy measures."

On the issue of financial-sector regulation, leaders agreed that all countries should implement limits on compensation at financial firms immediately to align pay with "long-term value creation."

However, they stopped short of suggesting that specific limits should be placed on pay. Leaders agreed that banks should face much more stringent capital requirements, but didn't endorse a U.S. position that the largest banks should hold more capital than smaller ones.

Energy was another area where the U.S. fell short of its goals and didn't reach an agreement on eliminating fossil-fuel subsidies, or win approval for a specific program to finance climate-change mitigation in developing countries.

On the IMF, leaders approved increasing by "at least" five percentage points, the stake in the IMF held by "under-represented" countries, which are largely developing countries.

The latter now have about a 43% share, compared with 57% for industrialized nations. Detailed negotiations over reallocating shares will be conducted at the IMF and are set to be finished by January 2011.

The U.S. argues that giving the developed and developing world more equal ownership of the IMF will boost the fund's standing in poorer nations and make it seem less like a tool of U.S. foreign policy.

Germans Vote in Tight Election

Iran Tests New Missiles

Iran Test-Fires Short-Range Missiles

By CHIP CUMMINS

Iran said it test-fired a handful of short-range missiles Sunday -- part of a large-scale military exercise planned for the next few days -- as Iranian diplomats defended a recently revealed nuclear site.

The Islamic Revolutionary Guard Corps said Sunday the exercise, called "Great Prophet 4," was being carried out to assess "recent development and tactical progress" in Iran's missile-defense systems, according to Brig. Gen. Hossein Salami, an IRGC spokesman quoted by state news outlets.

Iran's elite Revolutionary Guards tested short-range missiles and conducted war games in a bid to bolster its military capabilities. Courtesy of Reuters.
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* Vote: How big a threat is Iran's nuclear program?

Iran's state-run English-language news service, Press TV, said Sunday morning that the IRGC fired several missiles, including the Fateh and Tondar missiles. Both are short-range missiles that are well-known components of Iran's arsenal. Iran said the firings included a successful test of a multi-missile launcher, but didn't elaborate.

A U.S. official confirmed missile and rocket launches, saying they were conducted inside Iranian airspace in the north of the country. The official declined to comment further.

The military exercise appeared part of a now-familiar Iranian response to heightened international pressure. In July 2008, Iran briefly rattled oil markets when it said it had successfully tested advanced shore-to-sea, surface-to-surface and sea-to-air missiles during an exercised called "Great Prophet 3."

At the time, Iranian officials also said they had successfully launched an enhanced version of a previously tested missile capable of reaching Israel. Western military analysts viewed the claim of a significant technology advance skeptically.

The 2008 exercise came during a spike in tensions between Iran and the West. At the time, members of the United Nations Security Council and Germany had recently presented Tehran with an offer of economic incentives in exchange for Iran halting its uranium-enrichment program. Last year's missile drill also came after reports Israel had conducted a bombing test run against an Iranian nuclear site.

This time, the military exercise comes ahead of talks with the same U.N. Security Council members, plus Germany, scheduled for Oct. 1 in Geneva. On Friday, the U.S., France and Britain announced a previously undisclosed Iranian facility for the enrichment of uranium and demanded Iran give the International Atomic Energy Agency access to the site.

The disclosure, made after Iran declared the existence of the site to the IAEA, could boost Western leverage over Tehran in this week's talks. Iran maintains it is developing peaceful, nuclear energy. Western and Arab officials worry it is pursuing weapons.

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Iran missile test
AFP/Getty Images

An Iranian short-range missile is test-launched during war games in Qom.
Iran missile test
Iran missile test

The newly disclosed site raises fresh questions about Iranian intentions. It also gives Washington and European capitals more ammunition to push the case for tough new economic sanctions against Iran, if Tehran doesn't agree to give up its enrichment program.

U.S. Defense Secretary Robert Gates said the disclosure of the site could force more economic penalties against Iran, the Associated Press reported.

He played down the effectiveness of military strikes against the site, however, arguing that pressuring Tehran economically and diplomatically would have a better chance of changing the Tehran government's policies.

"The reality is, there is no military option that does anything more than buy time," he told CNN's "State of the Union" in an interview broadcast Sunday.

Over the weekend, Iranian diplomats defended the facility. Ali Asghar Soltaniyeh, Iran's ambassador to the IAEA, said Iran hadn't been trying to hide the facility and disclosed its existence well before it was required under the Vienna-based IAEA rules, according to a weekend interview with Press TV.

He said those rules stipulate the IAEA must be informed of an enrichment plant six months before the plant goes into operation. Mr. Sotaniyeh said the new plant was still two years from starting up.

"Now I challenge the United States or the U.K. or France to come to Vienna with their top legal experts and prove to me that we had had concealment," Mr. Soltaniyeh said.

Israel has trumpeted the latest discoveries as proof of its long-held assertion that Iran is seeking nuclear weapons.

"The revelation of the secret Iranian facility also demonstrates to even the most skeptical people the evil intentions of Iran," said Danny Ayalon, Israel's deputy foreign minister told AP.

"The Iran's ongoing military maneuvers including the last one and all their missile tests are a huge challenge to the international community," he added in an interview with Israel's Channel 10.

He described Iran as the "most serious threat" to peace in the world.

Saturday, September 26, 2009

The Three R’s in the Age of Obama: Rappin’, Revolution and RadicalismBy: Michelle Malkin

When the White House announced plans for the president’s nationwide address to schoolchildren two weeks ago, worried parents were dismissed as “kooks.” We pointed to the subtext of “social justice” activism rampant in American classrooms. It’s time for a big fat Told You So.

Out of the spotlight, politicized lessons continue to supplant core academics.

Earlier this year, at the B. Bernice Young Elementary School in Burlington Township, N.J., schoolchildren were instructed to memorize a paean to Barack Obama. A video uploaded to the YouTube account of Charisse Carney-Nunes, author of the children’s book “I Am Barack Obama” and a self-described Harvard Law “schoolmate” of the president’s, showed students lined up in the auditorium snapping their fingers and chanting in unison:

Mmm, mmm, mmm, Barack Hussein Obama

He said all should lend a hand to make the country strong again.

Mmm, mmm, mmm, Barack Hussein Obama

He said we must be fair today, equal work means equal pay.

Mmm, mmm, mmm, Barack Hussein Obama

He said take a stand, make sure everyone gets a chance.

Mmm, mmm, mmm, Barack Hussein Obama

He said red, yellow, black and white, all are equal in his sight.

Mmm, mmm, mmm, Barack Hussein Obama.

Yeah! Barack Hussein Obama.

…Hello, Mr. President, we honor you today

For all your great accomplishments, we all do say hooray.

Hooray, Mr. President, you are No. 1

The first black American to lead this nation.

Acknowledging the historic nature of Obama’s presidency (”the first black American”) is one thing. Deifying him with creepy spiritual references (”red, yellow, black and white, all are equal in his sight” is cribbed from the famous hymn “Jesus Loves the Little Children”; cheering “you are No. 1″) is quite another. Burlington Township school officials said Thursday the recording and dissemination of the video was “unauthorized,” but acknowledged that the Obama praise session was part of the students’ official curriculum.

Carney-Nunes’ Obama book was on prominent display during the students’ performance. It is a tool, she says, that “allows children to see themselves through the inspirational story of President Obama growing up as an ordinary child, asking, ‘Who will change the world?’ Ultimately, he realizes that he will.” Seeing everything through the lens of Obama, as his incessantly self-referential United Nations speech demonstrated, is a trademark of the perpetual Obama campaign.

This O-cult lesson is exactly the kind of junior campaign lobbying activity that White House officials planned around the president’s education speech.

Alert parents and administrators called out the Department of Education’s activist, Obama-centric education manuals before the event. Federal officials altered the language. Obama delivered an innocuous speech. But on cue, education radicals goaded students to engage in political activism.

White House and Hollywood moguls launched a “Get Schooled” initiative this month with Obama that urges students to lobby for higher teacher pay and to embrace the rallying cries “Know Your Rights” and “Change the System.”

At the New Trier High School in Northfield, Ill., educators followed up on Obama’s address with a 45-minute “extended adviser” discussion last week to explore “the significant messages inherent in his speech.” Illinois writer/blogger Tom Blumer reports that “parents were not informed on a timely basis as to what was going to happen, and were given no specific instructions on how to have their child opt out of the ‘discussions.’” The school’s principal and assistant principal sent out suggestive questions focused on Dear Leader’s Do Something missives:

— Why do you think President Obama listed the responsibilities of teachers, parents and the government before discussing your responsibility for your education?

— What are you “good at,” and what do you have “to offer” your family, friends and community?

— In the speech, President Obama spoke of some of the steps of Effective Effort. Identify them, using direct quotations from the text to support your assertions.

— Respond to President Obama’s final questions for you: “What’s your contribution going to be? …”

In addition to radical White House Teaching Fellows like Chicago high-school educator Xian Barrett (an outspoken charter school foe who founded a “Social Justice Club” and bussed students to protest) and Michelle Bissonnette, a Los Altos, Calif., teacher who is “focused on developing my leadership as a more culturally and racially conscious educator,” the White House has embraced controversial homosexual rights advocate Kevin Jennings as “Safe Schools czar.” Jennings founded the controversial GLSEN (Gay, Lesbian and Straight Education Network), which aggressively pushes sexually explicit, age-inappropriate books and lesson plans on alternative lifestyles.

Lost in all the chanting for change is the core commitment to impart actual knowledge. For progressives in the Age of Obama, setting high academic standards is secondary to the self-improvement of the “whole child” and “service” to the cause of social justice.

Out: readin’, writin’ and ‘rithmetic. In: rappin’, revolution and radicalism. Mmm, mmm, mmm.

China: Lean, Mean, Modern Fighting MachineBy: Matt Gurney

In a recent speech to the Air Force Association, Defense Secretary Robert Gates conceded that the rapid modernization of the Chinese military is casting into doubt the long-term prospects for continued U.S. influence in the Western Pacific. While no surprise to interested observers, what is indeed surprising is how little interest the Obama Administration seems to have in maintaining America’s current position of strength relative to Beijing.

It is no secret that China has been investing heavily in converting its military from a cumbersome, Industrial Age formation into a lean, modern fighting machine. For two generations, all American military planning for any possible conflict with China has assumed that the admitted and unavoidable Chinese numerical superiority would be offset by American and allied technological advancement. American defence doctrine has long favoured firepower over sheer weight of numbers, and that is what has allowed it to project power so successfully across the globe. As the Chinese military rapidly advances, however, the United States may soon find itself in the unenviable position of facing an enemy with weapons of comparably or only slightly less advanced, carried by a far greater number of enemy planes, ships, and troops.

As Gates pointed out in his address, the Chinese would not even have to do battle with the American military to badly erode America’s position of strength. Chinese missiles, conventional and nuclear, will soon be an undeniable threat to America’s chain of air bases stretching across the Pacific Rim, while Chinese naval and air power will soon threaten the Navy’s enormous, and dreadfully vulnerable, aircraft carriers.

It must be recalled, particularly in this the instance, that in the race between firepower and armour, firepower will always win. An AEGIS-equipped vessel must always accompany American aircraft carriers, so as to protect them from attack by guided missile. These defensive ships themselves cost a billion dollars. The economics simply don’t work out for America. Cruise missiles are relatively cheap, and China would gladly trade a few hundred million dollars in mass-manufactured missiles for an American carrier. The more vulnerable the carriers become, the less likely the Pentagon will be to deploy one anywhere near China. Millions of dollars worth of missiles can render useless billions of dollars of warships. Such a scenario seemed to be on Gates’ mind when he commented upon China’s growing ability to, “disrupt our freedom of movement and narrow our strategic options.”

If the Navy gets cold feet about sending its priceless carriers into harm’s way, and if the Air Force’s bases in the Pacific become too vulnerable to remain operationally tenable, than America’s allies in the region — Japan, Australia, South Korea, the Philippines, and most emphatically Taiwan — will begin to feel very far away indeed from the United States. Japan is already drifting in the direction of closer relations with China, having clearly decided that America’s day as the global superpower has ended. This could create a self-reinforcing downward spiral for America’s influence in the region: as bases close, allies will drift away, leaving America with even fewer bases…

The American military, while for the moment technologically superior, has recently lost out on several high-tech military programs that would have helped keep it ahead of China or any other foreign competitor. Production of F-22 fighters will be ended early. The DDGX-1000 stealth destroyer programhas been cancelled. The Virginia-class submarines have potentially serious manufacturing flaws. And China is threatening to soon match, and possibly overtake, the United States in space, conferring upon itself tremendous advantages in the fields of communications and reconnaissance. And there is still no decision on whether or not to replace America’s rapidly aging stockpile of nuclear warheads.

All of this is taking place against the backdrop of ever-greater reliance upon China to keep the economy propped up. Reckless spending by American governments and consumers alike has been financed largely by Chinese investors. Most Americans would be aghast to know just how much of their country has been purchased out from beneath them. And the trend is continuing. China recently made a play to purchase a stake in Canada’s oil supply, vital to the security of both North American allies. China has also shown interest in purchasing distressed American real estate assets. America may find itself in a bleak situation vis a vis China: too weak to fight, and too broke to compete.

Given the narrowing of America’s military lead over China, China’s rapid acquisition of economic clout, and the uncomfortable fact that the United States is heading at breakneck speed towards insolvency, it is no surprise that the Obama Administration would seek friendly accommodation with the Chinese, even going so far as to postpone a meeting with the Dalai Lama so as to avoid ruffling China’s feathers before an upcoming meeting. US military commanders in the region are expressing their hopes that any future conflict with China can be avoided. This is of course quite right – war is always to be avoided whenever possible, especially between two mighty nations. Even so, one must question whether America seeks to avoid conflict with China simply for humanitarian reasons, or out of growing fear that it would lose.

It is not unreasonable to speculate that a debt-ridden America, trapped in two foreign wars and with a sick economy at home, might find it necessary to reach some sort of accommodation with China. Perhaps one wherein China maintains the trading relationship so vitally necessary to keep America afloat while America quietly dismantles its military presence in areas China would rather dominate itself. This is not to say that Chinese military commanders are already scouting prime real estate locations in southern California or on Vancouver Island, the security of North America is not at risk. But what is increasingly possible is that America comes to accept Chinese hegemony over the Western Pacific, with Hawaii and the Pacific Fleet out of Pearl Harbor forming an unofficial border between the two spheres of influence, Western and Eastern. To those who have a hard time imagining the Obama Administration selling out an ally to appease a potential enemy, talk to Poland and the Czech Republic. They’ll have plenty to say.

The tragedy in all of this is that so little will be accomplished. For too long, America has blithely ignored the inevitable consequences of its mounting debt. A day of financial reckoning was inevitable for a country addicted to short-term solutions and easy credit. If the current situation had been brought about by difficult but unavoidable budget cuts from an Administration determined to put the country on a financial diet, it would be hard to swallow, but at least commendable, in its own bitter way. But what will America get for its loss of preeminence in the Western Pacific and Eastern Europe? Hundreds of billions of wasteful stimulus and potentially trillions spent on chasing the false promise of a better world through socialist intervention in the private market.

America is trading power abroad for the illusion of progress at home. By the time the American people realize what they’ve bargained for, the only ones benefiting will be the powerbrokers in Beijing and Moscow. It could be a generation or more before the mistakes of the next three years are rectified, if they can ever be rectified at all.

UNITED IN HATE

THE LEFT’S LETHAL LOVE AFFAIR

By RALPH PETERS

Last Updated:Sat., Sep. 26, 2009, 06:57pm

If you’ve ever wondered at the delight with which academics excuse Islamist terrorists, or at the callousness with which radical feminists ignore the oppression of Muslim women, or at the gushing adulation the Left devoted to the last century’s worst butchers, from Stalin to Saddam, “United In Hate’ is the book for you.

Radical Leftists have been losing their war against human nature for a long time, but they continue to search desperately for a winning formula. After Stalin, Mao, Uncle Ho, Pol Pot and countless Third World thugs had let them down, they believed they’d found redemption at last on 9/11. Jamie Glazov, the editor of Frontpagemag.com, describes the reaction of Leftist acquaintances to the fall of the Twin Towers: “Never had I seen them so happy, so hopeful and ready for another attempt at creating a glorious and revolutionary future. Without doubt, September 11 represented a personal vindication for them.” Noam Chomsky agreed with Osama that we deserved our misery. Ward Churchill had finally met his love match.

This rigorous, fight-back book dissects the Leftist identity in which personal dissatisfaction and social dysfunction are externalized as the fault of our wicked society an uncanny reflection of the Islamist platform that worldly evil flows from the US and Israel. Glazov is scathing on the inability of Islamists and Western fellow-travelers to form healthy male-female relationships: Sex may (or may not) be OK, but love between a man and a woman threatens the collective.

No matter whether the idealized system is a Communist utopia or an Islamist caliphate, the happy couple is a mortal threat. Worst of all, “The pursuit of happiness implies … that the world can be accepted for what it is,” Glazov argues, “and human beings can be accepted for what they are.”

So the Leftist believer embarks upon “the desperate search for the feeling of power to help him counteract the powerlessness he feels in his own life.” That could equally describe a suicide bomber. You and I may be too stupid to realize we’re miserable or damned, but the American Left and the mullahs are going to perfect us for our own good. The horrific bloodshed along the way is the outcast’s great revenge.

Whether analyzing Code Pink or “Code Sharia,” the book’s descriptions hit the target dead-center again and again: “Like Islamists, Leftists have a Manichean vision that rigidly distinguishes good from evil. They see themselves as personifications of the former and their opponents as personifications of the latter, who must be slated for ruthless elimination.”

Welcome to the hellish alliance that encourages American college brats to root for Hamas andHezbollah. Dead Jews? Today’s Left has no more problem with the Holocaust than Stalin did or Hezbollah’s Hassan Nasrallah does.

Fearlessly, Glazov rips into “the deep-rooted hatred and fear of female sexuality that permeates Islamist-Arabic culture.” But he also unveils our pseudo-feminists who excuse the burqa, genital mutilation, honor killings and general savagery toward Middle-Eastern women, noting that the privileged Americans need to ignore the suffering of their distant sisters in order “to hold onto their self-created victim identity.” If America isn’t so bad, it spoils everything.

I’d quibble with a few propositions: I find all fanatics dangerous, Left or Right but no honest person could deny this book’s validity and power. It’s a serious work by a brave scholar. It’s also fun to read (fun’s another no-no to Islamists and the Left).

Ralph Peters is a Post Opinion columnist and the author of “Looking For Trouble: Adventures in a Broken World.”

Netanyahu to UN: Don’t Go Back to the Dark AgeBy: P. David Hornik

Up until Binyamin Netanyahu’s speech to the General Assembly on Thursday, one might have thoughtIsrael was celebrating the events at the United Nations this week.

“Obama spoke clearly in his speech,” Netanyahu told the Israeli press, “about Israel as a Jewish state.” ToIsrael’s Channel 2 news he said, “The president said let’s come and resume the peace process without preconditions. As you know I have been saying that for nearly six months. I was happy.” To ABC he said, “The president assured me time and again that the goal is to prevent Iran from developing a nuclear weapon. And I think that’s the right goal.”

Foreign Minister Avigdor Lieberman also lauded the absence or walkout of about a dozen countries from Mahmoud Ahmadinejad’s speech. As Lieberman told the Israeli press, “What happened…at the UN assembly is a great victory and an achievement [for] Israeli diplomacy—the majority of the free world left the auditorium, thanks to our determination on the Iranian issue since the ‘Durban 2’ conference. If we had to work hard there, run around and convince the countries not to listen to Ahmadinejad’s speech, this time it was much easier for us. The free world’s response was natural and did not take a lot of effort.”

Also praised by some as a breakthrough was Obama’s statement before his three-way photo-op with Netanyahu and Mahmoud Abbas that “The Israelis…need to act to restrain activities in the settlements”—indeed a softer and more equivocal formulation than Hillary Clinton’s assertion just last May that Obama “wants to see a stop to settlements—not some settlements, not outposts, not ‘natural growth’ exceptions,” or Obama’s own pronouncement a few days later in Cairo that “It is time for these settlements to stop.”

At the same time, it wasn’t difficult to see a darker dimension of the week’s events. Walking out on a speech, for instance, by a Holocaust-denying despot is easy; but there was also the fact that he was there, walking free and (by most) honored, after years of violating international law by repeatedly inciting genocide and referring to a UN member state with such choice terms as “rotting corpse” and “filthy germ”—years in which no legal action has been taken and instead he’s been plied, and keeps being plied, with Western suitors treating him and his regime as a potentially reasonable interlocutor interested in peace.

And while it is also true that some of Obama’s remarks about Israel reflect an easing of the confrontational stance he started taking last spring, he had other things to say that were less comforting—such as, in his most-applauded statement, that “we continue to emphasize that American does not accept the legitimacy of continued Israeli settlements.” Combining this with a call for a “Palestinian state…that ends the occupation that began in 1967” is not supportive of Israel or even impartial but is, instead, a delegitimization of the very Israeli claims to the disputed territory that are supposed to be the subject of negotiation, as well as a falsification of history implying that Israel “occupied” the strategically vital territory out of the blue instead of capturing it in a war of survival.

Some of the cheery spin that Netanyahu and other Israelis put on this busy week at the UN was finally belied, however, by Netanyahu’s own speech. Not surprisingly, cautious and diplomatic as always regarding Israel’s superpower ally, the Israeli leader barely mentioned Obama; the UN itself was another matter.

Noting that “Yesterday the president of Iran stood at this podium spewing anti-Semitic rants” and “Just a few days earlier…claimed the Holocaust is a lie,” Netanyahu went so far as to display a facsimile of the Wannsee protocols for the Final Solution and, as he put it, “the original construction plans for the Auschwitz-Birkenau concentration camp,” and continued: “For those who refused to come [to Ahmadinejad’s speech], and those who left in protest—I commend you…. But for those who stayed…what a disgrace, what a mockery of the charter of the UN.”

Sounding much less sanguine on whether Iran would be stopped, Netanyahu, after noting that “the greatest threat facing the world today is the marriage between religious fanaticism and weapons of mass destruction,” went on to ask: “Is the UN up to that? Will the international community stand up to the despotism of a government against its own people?” His own answer, in a far more somber key, was “The jury is still out on the UN. Recent signs are not encouraging.”

Netanyahu became, if anything, even more bitter in turning to the UN-commissioned Goldstone Report that condemns Israel for finally defending itself against terror from Gaza, noting that, in “eight years of unremitting assault…not one UN resolution was passed condemning Hamas rocket attacks on Israel…life in the Israeli towns and cities near Gaza became nothing less than a nightmare. Hamas attacks increased tenfold after we withdrew [from Gaza], and again, the UN was silent, absolutely silent.”

After warning that a failure to reject the report would mean “the UN would revert to its darkest age—when Zionism was equated with racism,” and claiming that “The biased and unjust report provided a clear-cut test to all governments—will you stand with Israel or with the terrorists?,” Netanyahu concluded with some relatively anodyne words about Israel’s desire for peace and his readiness for an “effectively demilitarized” Palestinian state.

Netanyahu’s reversion to calmer, more or less rote formulations on the Palestinians was, indeed, appropriate insofar as the tripartite meeting with Abbas and Obama was no more than a ceremony at a time when mounting

Ron Paul: G-20 Summit in Pittsburgh

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