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The Development Intelligence Gazette

The Development Intelligence Gazette is a news journal that summarizes the most significant political and economic stories related to sustainable economic and democratic development in the world. Comments and questions can be addressed to Joseph Merton at merton.stratintsol@gmail.com.

Inside This Week’s Issue
United States and the European Union
Mild eurozone recession likely in 2012: economists………......................................................................................4 Euro declines in its longest losing streak since 2010..............................................................................................5 Head of Russian Church Urges Action on Vote Fraud Allegation….…………….……………………………..……………….…..…6 Tribute to Václav Havel attracts thousands…………………………………………………………….……………………………….……….7

Middle East
Islamists' chance to lead change ............................................................................................................................ 8 Why Islamism Is Winning ....................................................................................................................................... 9 Kenyan troops join AU Somalia mission .............................................................................................................. 10

Asia
WH calls for stable transition in North Korea . ..................................................................................................... 11 Turbulent times ahead for Korean Peninsula amid transition in Pyongyang. ...................................................... 12 Taliban Leader Claims Peace Talks Going On With Pakistan ............................................................................... 14 The Back Page Key US Economic Indicators.................................................................................................................................. 14 World Food Outlook Update from FAO ................................................................................................................ 14 Vaclav Havel: Real-World Change Can Come From Within .................................................................................. 16 ANALYSIS: North Korea in Transition by SP SETH ................................................................................................. 18

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The Development Intelligence Gazette Special Issue
"Our work isn’t done yet" Barack Obama, President of the United States, addressing the United States on New Year’s Day 2012

North America and the European Union
The intertwining of the economic crisis in the United States and the European Union reached a breaking point during the first week of the year. While retail sales fell and the general feel for the Eurozone was mild to negative to at the end of the year, the EU Commission’s business climate indicator increased for the first time in 10 months, showing optimism in industrial production. This is in line with a lack of demand for the Euro currency, which in broad terms is signaling that the group is orienting itself towards a broader export economy. The economy in the United States also recovered as well as the set of year-end economic indicators all pointed upwards, dimming the prospects of political enemies of the current administration to use economic underperformance as a cause for political change. In specific all major U.S. economic indicators rose by an average of 2.5 percent, and U.S. equity markets rose by 5.36 percent since the end of 2011. Central and Eastern Europe On December 18, Václav Havel, former Czech Republic president, dissent, and playwright passed. President Haval, who’s awards for human service include the Presidential Medal of Freedom, the Gandhi Prize, and the Order of Canada, actively worked towards change in the Soviet dominated Czechoslovakia. Through his literary works, and active dissidence, he was instrumental in enacting change, not only in his country and region, but in the world. President Haval was laid to rest as a hero of humanity. The fallout from electoral fraud allegations in Russia continue to plague the nation. The Russian Orthodox Church appealed to leaders to listen to the protesters and to stop crackdowns on protesters and politcical opponent which he terms as the “worst since the Soviet era”. While delivering a strong message, the Patriarch was silent on the fairness of the elections and of the status of Vladimir Putin, former Russian president and prime minister. Middle East The passions that erupted a wave of revolutions through the self-immolation of Tunisian fruit seller Mohamed Bouazizi on January 4, 2011. His sacrifice set off a wave of revolution and reform in a region dominated by “strong men”, and domestic policy held in hostage by the interests of the United States. For the neo-conservatives in the United States, and like-minded officials with political and military influence, the rise Islamist flavored political parties, and open democracy has caused alarm, and a feeling of the failure of decades of contrarian statecraft- where repression was more desirable than democracy in order to maintain region stability. Most notable in the wave of revolution and reform was the death of former Libyan leader, Muammar Gaddafi. While brutal at home, and responsible for horrific acts of international terrorism, most notable the 1988 bombing of Pan Am flight 103 over Lockerbie Scotland, Gaddafi is also remembered for his unwavering support for the African National Congress, and African nationalism. Muammar Gaddafi died at the hands of his own people on October 20, 1011.

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Asia
Following the unexpected sudden death of North Korean leader Kim Jong Il, the Obama administration called for a peaceful and stable leadership transition in North Korea. North Korea, once on former U.S. president George Bush’s “Axis of Evil”, is the world most repressed nation. It is responsible for weapons proliferation, the counterfeiting of U.S. and European currency, drug trafficking, the kidnapping of Japanese and Chinese citizens, the mental and physical imprisonment of its own population, and constant aggression of its neighbor, South Korea. North Korea is now held prisoner by Mr. Jong Il’s son, Kim Jong Un. Western educated Mr. Jong Un was excepted by outside observers to have a difficult rise to power within the Stalinist regime, but it appears that his rise to power was more well prepared than expected. As evidenced in the North Korean propaganda film below, Mr. Jong Un has been well prepared as an agent against change in his nation.

The Obama administration called for a peaceful and stable leadership transition in North Korea on Monday but made few demands on a nuclear-armed nation known for its unpredictability, poverty and hostility to the United States. Prospects for new nuclear disarmament talks involving North Korea and the United States appeared to dim with the unexpectedly sudden death of North Korean leader Kim Jong Il and uncertainty surrounding the planned succession to his politically untested son. Top Obama administration national security officials are focusing intelligence and other assets on the opaque internal politics of the reclusive communist nation that Obama administration called for a peaceful and stable leadership transition in North Korea.

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The Development Intelligence Gazette United States and the European Union
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Mild eurozone recession likely in 2012: economists
January 7, 2011 Source- Vancouver Sun http://www.vancouversun.com/business/Mild+euroz traction - will be, after a free fall in industrial sentiment appeared to stabilize in December. But it is clear the eurozone, which accounts for about 16 per cent of the world economy, will struggle to grow in 2012 and could contract by as much as one per cent. Retail sales fell a worse-than-expected 0.8 per cent in November from October, data from the European Union's statistics office Eurostat showed. The volume of sales fell by 0.9 per cent in Germany, the eurozone's top economy, and was down 0.4 per cent in France and 0.7 per cent in Spain. In its overall reading of economic sentiment in the eurozone, the Com-mission said its indicator fell 0.5 points to 93.3, its lowest level since November 2009. A rise in the purchasing managers' indexes for both manufacturing and services in December had been a cause for optimism, but the Commission's figure may dampen that. One bright spot in the data was the improvement in the Commission's business climate indicator, which increased for the first time in 10 months as factory managers showed optimism about future production plans and export order books. That indicator was -0.31 points in December, compared to 0.42 points in November and better than the -0.50-point reading of economists polled by Reuters for the month.

Courtesy Rueters

By ROBIN EMMOTT Eurozone retail sales fell and economic sentiment soured at the end of 2011, pointing to recession in the months ahead, but the first improvement in the business climate in 10 months offered hope that the expected downturn may be mild. Europe's worsening sovereign debt crisis and governments' tough cost-cutting response appear to be driving the 17nation currency bloc back into recession following the 20082009 global financial crisis, while the number of people out of work is rising. "This data has recession written all over it," said Martin van Vliet, a euro-zone economist at ING. "It is all but guaranteed that we are going to see a contraction in the eurozone in the fourth quarter," he said. Economists are divided over how deep the recession defined by two consecutive quarters of economic con

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Euro declines in its longest losing streak since 2010

» January 8, 2012 » Source- Bloomberg » http://www.nytimes.com/2011/12/10/world/eur The euro fell for a fifth week versus the US dollar in its longest losing streak in almost two years on concern Europe’s debt crisis is worsening and as data showed the US labor market is strengthening. The 17-nation currency slid to a record low against the Australian dollar and traded at the weakest level in more than 11 years versus the yen as demand at bond auctions spurred concern European nations will struggle to sell debt. The pound rose to a 15-month high versus the euro. Hungary’s forint tumbled and Fitch Ratings downgraded the country to “junk.” “One of the factors driving the market right now is a general lack of demand for European assets,” said Shahab Jalinoos, a senior currency strategist in Stamford, Connecticut, at UBS AG. “There are enough sources of new bad news to keep the market adapting; all the bad news is not priced in yet.” The euro fell 1.9 percent to US$1.2717 on Friday in New York in its biggest five-day loss since Dec. 16 last year. It hasn’t fallen for five straight weeks since February 2010. It touched US$1.2698, its weakest level since Sept. 13, 2010. The shared currency depreciated 1.8 percent to ¥97.90 and reached ¥97.88, the lowest since December 2000. The US dollar was little changed at ¥76.97. It was the worst week for Europe’s common currency in four months. The euro lost 1.3 percent against nine developednation peers tracked by Bloomberg Correlation-Weighted Currency Indexes, the most since it dropped 1.9 percent in the five days ended Sept. 2 last year.

Courtesy Stockcharts.com

Sterling reached its strongest versus the euro on Friday since Sept. 10, 2010, touching £0.8239. It gained 1.1 percent on the week. The pound slipped 0.8 percent to US$1.5426. The euro dropped as France sold 4.02 billion euros (US$5.11 billion) of benchmark 10-year notes on Thursday at an average yield of 3.29 percent, compared with 3.18 percent at a sale on Dec. 1. The bid-to-cover ratio, the number of bids received for each unit of debt sold, fell to 1.64, from 3.05. Demand at a German auction of 10-year bonds a day earlier was lower than the five-year average. ASIAN CURRENCIES South Korea’s won and the Philippine peso led declines in Asian currencies this week on speculation investors would favor safer assets than those in emerging markets as Europe struggles to contain its debt crisis. “Asian currencies have been under downward pressure on Europe’s lingering debt crisis,” said Kozo Hasegawa, a trader at Sumitomo Mitsui Banking Corp in Bangkok. “We have seen solid US data, which lends some support.” South Korea’s won weakened 0.9 percent to 1,162.75. The Philippine peso dropped 0.7 percent to 44.138 and Thailand’s baht slid 0.4 percent to 31.69. The rupiah fell 0.3 percent this week to 9,095 per dollar in Jakarta. The rupiah dropped for a third week on speculation the central bank would cut interest rates after official data showed the inflation rate fell to a 21-month low of 3.79 percent last month. Bank Indonesia, which cut its benchmark reference rate by a total 75 basis points last quarter to 6 percent, is scheduled to review it next on Thursday next week.

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The Philippine peso dropped for a second week as government figures showed inflation eased to an 11-month low last month, boosting scope for an interest-rate cut. The New Taiwan dollar climbed 0.2 percent to NT$30.245, as demand for the local currency continued to grow ahead of the Lunar New Year holiday, dealers in Taipei said. Although the euro and other currencies in the region weakened against the greenback, the NT dollar was supported by demand from exporters who dumped the US dollar and bought into the local currency to fulfill their annual financial obligations, such as providing year-end bonuses to their employees, the dealers said. The yuan completed its first weekly drop since the five days through Dec. 9 on signs policymakers are limiting gains to protect export growth. The People’s Bank of China set the fixing 0.08 percent weaker at 6.3166 per US dollar on Friday after Chinese Minister of Commerce Chen Deming (陳德銘) said the government would unveil measures to boost consumption this year. The yuan fell 0.3 percent this week to 6.3095 per US dollar. “They are buying time to slow yuan appreciation, but not to engineer depreciation,” said Nizam Idris, a currency strategist at Macquarie Group Ltd in Singapore. “We could see a slower pace of appreciation in the months ahead until a soft landing in the Chinese economy is achieved.” India’s rupee completed its first weekly gain in a month on speculation foreign funds would step up purchases of local assets. The nation’s government said on Sunday last week it would allow overseas individual investors to directly buy local equities. Foreign funds boosted local stock holdings by US$102 million this week through Wednesday, exchange data show. The rupee gained 0.7 percent this week to 52.7225. Elsewhere, Singapore’s currency advanced 0.3 percent to S$1.2936 and the ringgit strengthened 0.9 percent to 3.1438. » » »
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Head of Russian Church Urges Action on Vote Fraud Allegation
January 7, 2012 Source- The New York Times http://www.nytimes.com/2012/01/08/world/europe/p By SOPHIA KISHKOVSKY MOSCOW — The Russian Orthodox Church continued what appeared to be an effort to get the authorities to address Russians’ grievances over the political system, with Patriarch Kirill I, the church’s leader, saying in a televised interview that it would be “a very bad sign” if the country’s leaders failed to heed recent protests over perceived electoral fraud.

Kirill I Leader of Russian Orthodox Church, Courtesy AP

The church, a powerful force in Russia, made a point of announcing that the patriarch would be speaking on Saturday, which is Christmas Day in Russia. The announcement, made on Thursday, came just 15 minutes after the Interfax news agency released a report on an essay by a senior church official, Archpriest Vsevolod Chaplin, that made the same point as the patriarch, but in starker terms: it said that the authorities could be “slowly eaten alive” if they did not respond to Russians’ concerns. Church leaders have been walking a careful line since the parliamentary elections on Dec. 4, nudging the government to respond to the protesters and affirming their right to demonstrate, but Patriarch Kirill I has not questioned the

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The Development Intelligence Gazette legitimacy of the elections or criticized Prime Minister Vladimir V. Putin. Still, the drumbeat of implicit criticism has been surprising from the church, which has been a strong supporter of the government, and the patriarch’s statements on Saturday appeared to keep the pressure on. “If the authorities remain insensitive to the expression of protest, this is a very bad sign, a sign of the authorities’ inability to adjust,” Patriarch Kirill said in the interview, which was broadcast on Rossiya 1, one of Russia’s main television channels. He also warned that a crackdown on critics would mirror actions taken by the government during the Soviet era. “Every person in a free society must have the right to express his opinion, including disagreement with the actions of the authorities,” the patriarch said. Most of the complaints about vote falsification have been against Mr. Putin’s governing party, United Russia, which, despite the allegations of fraud, suffered heavy losses. Change is needed, Patriarch Kirill said, but revolution must be avoided at all costs. “If demonstrations ahead of the 1917 revolution had ended in the expression of peaceful protests and had not led to a bloody revolution and a fratricidal war, Russia would have had a population of more than 300 million and would have challenged or maybe even surpassed the United States from the point of view of economic development,” he said. The event was attended by several thousand people who filled the palace's all spaces. Rocker Ivan Kral welcomed on the stage U.S. singer Suzanne Vega who together with the people present sang the song Tom's Diner that she said she played for Havel when they met in the United States for the first time years ago. The last stage of parting with Havel followed the state funeral that was held in St Vitus' Cathedral at Prague Castle early in the afternoon. It was attended by Czech senior officials and foreign guests, including current and former presidents and leading representatives of the EU. After the funeral a family ceremony took place in the crematorium in Prague-Strasnice. The Lucerna event had the character of a meeting of friends who have something in common and who like rock, theatre and film. "I would wish for us to be always as tolerant as we are here Saturday," folklore musician Jiri Pavlica told Czech Television. The screening of documents on Havel was started with a film from 1990 showing the writer, playwright and dissident turning into Havel the president. Havel's photographs were put on display at the event.

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Tribute to Václav Havel attracts thousands
December 27, 2011 Source-The Prague Monitor http://praguemonitor.com/2011/12/27/tribute-

Prague, Dec 24 (CTK) - The Plastic People of the Universe, a favourite group of former Czech president Vaclav Havel who died on December 18 aged 75, and the personally connected Velvet Underground Revival Band ended the Homage to Vaclav Havel multicultural event in Prague's Lucerna Palace late on Friday.

former Czech president Vaclav Havel, Courtesy Reuters

The organisers handed out 4000 tickets that were available for free.

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People who did not get tickets could watch the event on a large screen in the nearby Wenceslas Square. The Czech Television broadcast the event live from 20:00 to 22:00 on Friday. The Lucerna Palace has been provided for the event by Havel's sister-in-law, Dagmar Havlova, and her husband Ivan Havel. The art-nouveau multipurpose Lucerna (lantern) Palace was commissioned by Vaclav Havel's grandfather. It was the first building of reinforced concrete with a glass-roofed passage in Prague. Lucerna was nationalised in 1948. In 1992 the palace was returned to the brothers Vaclav and Ivan Havels. by more powerful forces and fallen short of complete revolution. The challenge for Islamists, Banna said, is tempering their religious fervour with a pragmatism that can fix their countries before anger and despair is turned against them. Banna is intimate with the Islamists' strengths and failings. His older brother, Hassan, who was a schoolteacher, founded the Muslim Brotherhood in 1928. The younger Banna has often angered the group with his progressive interpretation of Islam. He has watched his brother's conservative vision evolve in the decades since his death in 1949. Grassroots activism gave way to periods of radicalism and today's often ill-defined mix of politics and social consciousness. Passions Only in Tunisia, he said, where a fruit seller set himself on fire a year ago and uncapped the passions of an entire region, is there a glimmer of a nation achieving its revolutionary ideals. Here in Egypt, the army rules. It has killed protesters and stifled civil liberties even as the nation votes for a new parliament. Security forces loyal to Syrian President Bashar Al Assad gun down protesters daily. Yemen is beset by warring tribes.

Middle East
» Islamists' chance to lead change » January 7, 2012 » Source- Gulf News » http://gulfnews.com/news/region/egypt/isla
Cairo: Wrapped in a shawl on a cold morning, Jamal Banna shuffled over a dusty carpet amid fraying books on old civilisations. He knows well the intricacies of Arab history, but is far less certain where the upheavals of the last year will lead. Like the balustrade winding to his library door, the known ways are crumbling. Moments of wonder are giving way to months of bewilderment. These days, he said, are likely to prove as seminal as those after the First World War, when western powers drew the borders that shaped the Middle East for nearly a century. Islamists, who have endured decades of oppression, appear to have their chance to redefine the region's politics. "One era has ended," said Banna, one of Islam's leading liberal thinkers. "But of the new era, we don't know exactly what is taking shape." Lacking an ideology and charismatic leaders to channel the aspirations of the street, the Arab Spring has been thwarted

Courtesy Mideastyouth.com

Muammar Gaddafi met a brutal, surreal demise, but Libya is torn by clan animosities and militias. Banna looked into the streaked morning light in his window. "The revolution," he said, "has lost its freedom." The rebellions against autocrats started with popular uprisings.

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But in Egypt and other countries, they never found a consistent political voice. Young activists and Facebook rebels were not enduring or enticing enough to seize the moment. They still take to city squares, but the race for power has moved beyond them. "The heir of these revolutions is political Islam," said Banna. "The Islamists' parties are the big winners. The Islamists are established figures in this time of tumult. They have credibility and people are willing to give them a chance. But they must move quickly to fix years of social and economic neglect. If not, they could lose this opportunity and it all might collapse." The struggle between moderate and ultraconservative Islam over religion's role in public life will play out for years. There are already debates over banning alcohol and bikinis at Egyptian resorts. Balance The new political Islam must balance between pluralism and polemics, or else, as Banna suggested was possible in Egypt, "parliaments will become schools of bullies." The Islamic Al Nahda party in Tunisia "is more flexible than the Brotherhood in Egypt," he said. "Political Islam in Egypt hasn't reached that same kind of renaissance. It's happening at a very slow pace, and it needs time to bridge internal divides. But Islam will remain the pillar of public and private life. That is the destiny of the Middle East." One of the most striking aspects of the Arab Spring is that the legacies of defeated autocrats will not be easily scoured away. Hosni Mubarak was overthrown in a brisk 18 days; reinventing the country will take years. There are remnants of the old regime that don't want renewal, and the recent violence by security forces illustrates an increasing intolerance for dissent. "It proves there are still many in the army and police who don't want the nation to succeed," Banna said. AN OLD ACADEMIC PONDERS A NEW DAWN The 91-year-old scholar, Jamal Banna, moves gingerly, but his wit and intellectual rigour seldom rest. He has written scores of books and appears on talk show. His face is barely wrinkled. He runs a website and carries the title "president of the Revival Islamist Movement". His desk is stacked high with documents, and sometimes he appears not to be there, until one hears the rustle of papers, the creak of a chair. Unfold a map and follow the coastal road from Tunisia through Libya and into Egypt. Names from books ring out: Carthage, Tobruk, Alexandria, all existing amid ruins, the won and lost possessions of history's changing empires. The coasts, deserts and deltas are being remade again. But there was that moment in the chill of last winter when flags heralding something new coloured the streets and snapped in the wind. The fear had been broken. "What struck me most over the last year was the gathering of the masses," said Banna. "It was as if we had become a city of angels."

» Why Islamism Is Winning » January 6, 2012 » Source- The New York Times » http://www.nytimes.com/2012/01/07/opinio
By JOHN M. OWEN IV Charlottesville, Va. EGYPT’S final round of parliamentary elections won’t end until next week, but the outcome is becoming clear. The Muslim Brotherhood will most likely win half the lower house of Parliament, and more extreme Islamists will occupy a quarter. Secular parties will be left with just 25 percent of the seats. Islamism did not cause the Arab Spring. The region’s authoritarian governments had simply failed to deliver on their promises. Though Arab authoritarianism had a good run from the 1950s until the 1980s, economies eventually stagnated, debts mounted and growing, well-educated populations saw the prosperous egalitarian societies they had been promised receding over the horizon, aggrieving virtually everyone, secularists and Islamists alike. The last few weeks, however, have confirmed that a revolution’s consequences need not follow from its causes. Rather than bringing secular revolutionaries to power, the Arab Spring is producing flowers of a decidedly Islamist hue. More unsettling to many, Islamists are winning fairly:

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The Development Intelligence Gazette religious parties are placing first in free, open elections in Tunisia, Morocco and Egypt. So why are so many Arabs voting for parties that seem politically regressive to Westerners? The West’s own history furnishes an answer. From 1820 to 1850, Europe resembled today’s Arab world in two ways. Both regions experienced historic and seemingly contagious rebellions that swept from country to country. And in both cases, frustrated people in many nations with relatively little in common rallied around a single ideology — one not of their own making, but inherited from previous generations of radicals. In 19th-century Europe, that ideology was liberalism. It emerged in the late 18th century from the American, Dutch, Polish and especially French revolutions. Whereas the chief political divide in society had long been between monarchs and aristocrats, the revolutions drew a new line between the “old regime” of monarchy, nobility and church, and the new commercial classes and small landholders. For the latter group, it was the old regime that produced the predatory taxes, bankrupt treasuries, corruption, perpetual wars and other pathologies that dragged down their societies. The liberal solution was to extend rights and liberties beyond the aristocracy, which had inherited them from the Middle Ages. Suppressing liberalism became the chief aim of absolutist regimes in Austria, Russia and Prussia after they helped defeat France in 1815. Prince Klemens von Metternich, Austria’s powerful chancellor, claimed that “English principles” of liberty were foreign to the Continent. But networks of liberals — Italian carbonari, Freemasons, English Radicals — continued to operate underground, communicating across societies and providing a common language for dissent. This helped lay the ideological groundwork for Spain’s liberal revolution in 1820. From there, revolts spread to Portugal, the Italian states of Naples and Piedmont, and Greece. News of the Spanish revolution even spurred the adoption of liberal constitutions in the nascent states of Gran Colombia, Argentina, Uruguay, Peru and Mexico. Despite their varied grievances, in each case liberalism served as a rallying point and political program on which the malcontents could agree. A decade later, in July 1830, a revolution toppled France’s conservative Bourbon monarchy. Insurrection spread to Belgium, Switzerland, a number of German and Italian states and Poland. Once again, a variety of complaints were distilled into the rejection of the old regime and the acceptance of liberalism. The revolutions of 1848 were more numerous and consequential but remarkably similar to the earlier ones. Rebels with little in common — factory workers in Paris, peasants in Ireland, artisans in Vienna — followed a script written in the 1790s that was rehearsed continuously in the ensuing years across the continent. Today, rural and urban Arabs with widely varying cultures and histories are showing that they share more than a deep frustration with despots and a demand for dignity. Most, whether moderate or radical, or living in a monarchy or a republic, share a common inherited language of dissent: Islamism. Political Islam, especially the strict version practiced by Salafists in Egypt, is thriving largely because it is tapping into ideological roots that were laid down long before the revolts began. Invented in the 1920s by the Muslim Brotherhood, kept alive by their many affiliates and offshoots, boosted by the failures of Nasserism and Baathism, allegedly bankrolled by Saudi and Qatari money, and inspired by the defiant example of revolutionary Iran, Islamism has for years provided a coherent narrative about what ails Muslim societies and where the cure lies. Far from rendering Islamism unnecessary, as some experts forecast, the Arab Spring has increased its credibility; Islamists, after all, have long condemned these corrupt regimes as destined to fail. Liberalism in 19th-century Europe, and Islamism in the Arab world today, are like channels dug by one generation of activists and kept open, sometimes quietly, by future ones. When the storms of revolution arrive, whether in Europe or the Middle East, the waters will find those channels. Islamism is winning out because it is the deepest and widest channel into which today’s Arab discontent can flow.

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» The United States is still looking for better relations with the North Korean people despite the "evolving situation," Clinton said. She did not say how Kim's death would affect the U.S. approach to his country. Nor did she make any demands on the new leadership, passing up the opportunity to reiterate longstanding U.S. calls for North Korea to follow through on previous nuclear disarmament pledges. The omission of what has been a standard element of any U.S. officials' comments on North Korea appeared to underscore Washington's concern about the situation. The State Department later said it still was the U.S. view that North Korea make good on those commitments. But the department said Kim's passing and assumption of power of his son, Kim Jong Un, would delay anticipated developments on resuming nuclear disarmament talks with the North and supplying the nation with food aid. The United States had been quietly pursuing a new diplomatic opening with North Korea, including hopes for new nuclear talks as soon as next week. That opening now appears on hold, while U.S. officials warily assess whether Kim Jong Un can seize his father's mantle. As sources tell CBS News political correspondent Norah O'Donnell, there are real concerns about the volatility of Kim Jong Un. U.S. officials say Kim Jong Un is young, untested, and inexperienced and has quote "shown proclivities toward violence," reports O'Donnell. U.S. intelligence believes he encouraged the attacks on the South last year - including the sinking of that South Korean naval ship killing 46 and the shelling of islands in the South. Belligerent moves that U.S. officials suspect was meant to bolster Un's credibility with North Korean military leaders. The administration had been expected to decide, possibly as early as Monday, whether to try to re-engage the reclusive country in nuclear negotiations and provide it with food aid. State Department spokeswoman Victoria Nuland said that decision had been postponed as the administration was now focused on consulting with concerned nations on events in Pyongyang.

WH calls for stable transition in North Korea

» December 11, 2011 » Source- CBS News » http://www.cbsnews.com/8301-202_162-

The Obama administration called for a peaceful and stable leadership transition in North Korea on Monday but made few demands on a nuclear-armed nation known for its unpredictability, poverty and hostility to the United States. Prospects for new nuclear disarmament talks involving North Korea and the United States appeared to dim with the unexpectedly sudden death of North Korean leader Kim Jong Il and uncertainty surrounding the planned succession to his politically untested son. Top Obama administration national security officials are focusing intelligence and other assets on the opaque internal politics of the reclusive communist nation that former President George W. Bush once placed on an "axis of evil" enemies list. "We both share a common interest in a peaceful and stable transition in North Korea as well as ensuring regional peace and stability," Secretary of State Hillary Rodham Clinton told reporters at the State Department after a meeting with Japanese Foreign Minister Koichiro Gemba.

Courtesy Getty Images

"We reiterate our hope for improved relations with the people of North Korea and remain deeply concerned about their well-being," she said.

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Officials have said the U.S. was concerned about any changes Kim's death might spark in the military postures of North and South Korea, but were hopeful that calm would prevail, despite the test of a short-range missile by the North just hours after the announcement of Kim's death. » If history is any indication, some analysts say, the young leader will follow his father's footsteps. "North Korea has always engaged in saber rattling when it feels the need to strengthen internal political order," said Yoon Deok-min, a professor at the Institute of Foreign Affairs and National Security, a research organization affiliated with Seoul's foreign ministry. "There is a possibility that North Korea could launch provocations such as a nuclear test or a missile test-launch," Yoon said. "At this moment, it is very hard to predict what will come next from North Korea." Inter-Korean ties are currently at one of their lowest levels in years. In its latest hostilities against South Korea last year, North Korea sank a South Korean warship and attacked a border island with artillery fire, killing a total of 50 South Koreans.

Turbulent times ahead for Korean Peninsula amid transition in Pyongyang

» December28, 2011 » Source- Yohap News Agency » http://english.yonhapnews.co.kr/national/201 By KIM DEOK-HYUN SEOUL, Dec. 28 (Yonhap) -- For years, officials and security experts in nations surrounding an unpredictable North Korea have warned of a nightmare scenario: the sudden death of Kim Jong-il that could trigger a chaotic power struggle at home and an implosion of the communist regime. With the death of the "Dear Leader," the worst-case scenario has become a reality. Kim led the impoverished regime with an ambition of building nuclear weapons, but died following a heart attack on Dec. 17. The son and successor of the deceased leader, Kim Jong-un, appears to be consolidating his grip on power by assuming key titles of the North's military and the ruling Workers' Party since the demise of his father. Despite this, the "Great Successor" may launch provocative acts to further secure his place as successor, analysts say. South Korea and its key ally, the United States, have kept a wary eye on the delicate leadership transition in North Korea. China, which wields significant leverage over the North, has ostensibly thrown its backing behind the North's young leader, believed to be in late 20s. Before the deceased Kim formally inherited the North's regime in 1994, when his father Kim Il-sung died, he spent years solidifying his leadership by precipitating crises such as the 1987 bombing of a South Korean airliner and a 1983 assassination attempt against a South Korean president visiting Myanmar.

Courtesy Reuters

The North's bombardment of South Korea's Yeonpyeong Island, its first on South Korean territory since the 1953 end of the Korean War, drastically heightened tensions on the Korean Peninsula. South Korea has since vowed to make North Korea pay for further provocations. The late Kim began grooming Jong-un to be the North's next leader in 2009 and many analysts have already suggested that the younger Kim plotted the two attacks on the South to build his military credentials. "Kim Jong-un has been credited with the North Korean provocations of 2010 -- the sinking of a South Korean warship and the artillery shelling of a South Korean island -as an effort to demonstrate his strength and his support of the North Korean military," said Bruce W. Bennett, a senior defense analyst at RAND Corporation, a U.S. think tank.

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The Development Intelligence Gazette
"Further provocative acts in the first quarter of 2012, such as a nuclear weapons test, are hardly out of question," Bennett said. North Korea conducted two nuclear tests in 2006 and 2009 and is believed to have enough plutonium for at least a halfdozen nuclear bombs. Most analysts have said, however, that North Korea has yet to master the miniaturization technology to mount a nuclear warhead on a missile. The North's next leader has also been associated with some major mistakes, including the 2009 botched currency reform that caused hyperinflation and a worsened food situation, Bennett said. "This incredible hyperinflation has undermined public confidence in his leadership, even among the elites," Bennett said. "For South Korea and the United States, this is a time to maximize the deterrence of North Korea," he said. The U.S. stations some 28,500 troops in South Korea. There are some analysts who think that it does not make sense for the North's young leader to launch any provocative acts at a time when Pyongyang desperately needs to shore up its moribund economy, which has been in shambles since mid-1990s, hit by natural disasters and mismanagement. North Korea has declared it will become a "strong and prosperous nation" in 2012, marking the 100th anniversary of the birth of Kim Il-sung, the North's founder and grandfather of Jong-un. "It is highly likely that the regime of Kim Jong-un could actively engage in negotiations with the outside world to win economic assistance and cooperation," said Kim Philo, a research professor at Seoul National University. The professor said the six-party talks won't be doomed if regional powers can better manage the situation, citing a case in 1994. The North's founder Kim Il-sung died in July 1994, when the U.S. and North Korea were scheduled to hold a high-level meeting in Geneva. Three months later, the two sides resumed bilateral talks and reached an agreement on a nuclear issue. Days before the demise of Kim Jong-il, North Korea had been widely expected to announce its agreement with the United States to suspend its uranium enrichment program and accept U.N. nuclear monitors in exchange for food aid. Such North Korean moves were preconditions set by the U.S. and South Korea for resuming the six-party talks. The six-party nuclear talks, which involve the two Koreas, China, Japan, Russia and the U.S., have been dormant since the last session in late 2008.

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The Development Intelligence Gazette
 Key U.S. Economic Indicators from the U.S. Bureau of Labor Statistics

Employment Situation January 06, 2012 Nonfarm payroll employment rose by 200,000 in December, and the unemployment rate, at 8.5 percent, continued to trend down. Job gains occurred in transportation and warehousing, retail trade, manufacturing, health care, and mining. Real Earnings December 16, 2011 Real average hourly earnings fell 0.1 percent from October to November, seasonally adjusted. Average hourly earnings fell 0.1 percent, while the CPI-U was unchanged. Real average weekly earnings fell 0.1 percent over the month. Consumer Price Index December 16, 2011 On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers was unchanged in November after decreasing 0.1 percent in October. The index for all items less food and energy rose 0.2 percent in November after increasing 0.1 percent in October. Producer Price Index December 15, 2011 The Producer Price Index for finished goods advanced 0.3 percent in November. Finished goods prices fell 0.3 percent in October and moved up 0.8 percent in September. The index for finished goods less foods and energy inched up 0.1 percent. U.S. Import and Export Price Indexes December 14, 2011 Following declines in each of the previous three months, U.S. import prices rose 0.7 percent in November, as an upturn in fuel prices more than offset decreasing prices for nonfuel imports. Export prices ticked up 0.1 percent in November, after a 2.1 percent drop in October.



World Food Outlook Update from FAO http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/ » The FAO Food Price Index (FFPI) averaged 215 points in November 2011, marginally (1 point) down from October and 10 percent (23 points) below its February 2011 peak. Among the various commodities, a recovery of oils quotations compensated for a decline in sugar, while prices of the other commodity groups were little changed. At its current value, the FFPI is only 1 percent (2 points) above its level in November 2010. » The FAO Cereal Price Index averaged 228 points in November, down 1 percent (3 points) from October. The small decline was mainly on account of wheat, which lost 3 percent (6 points) following a marked upgrade of world supplies, mostly driven by larger output and stocks in the Russian Federation. Rice export prices were down slightly too but coarse grain prices were almost unchanged in November after sliding for two months. »The FAO Oils/Fats Price Index increased to 235 points in November, up 5 percent (11 point) from October, reversing the downward trend that had persisted since March. Markets responded to a prospective tightening of global supply and demand for vegetable oils. In particular, the recent rise in prices reflects concerns about the anticipated slowdown in palm

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The Development Intelligence Gazette oil and soyoil output, increased absorption of vegetable oils by the biodiesel industry and rising import demand by China and other players. » The FAO Meat Price Index averaged 177 points in November, virtually unchanged from October. Pig meat prices were the only ones recording an increase of significance, in the order of 2 percent (3 points), while poultry, bovine and sheep meat prices were little changed. Nonetheless, meat prices this year continue to be well above the levels seen in 2010, averaging 17 percent higher from January to November compared with the same period in 2010, with particular strength characterizing the bovine and sheep meat markets. » The FAO Dairy Price Index averaged 201 points in November, down 1 percent ( 3 points) from October. The decline reflects a weakening of butter and cheese prices, which lost 6 percent and 2 percent respectively, while skim milk powder, whole milk powder and casein prices registered gains in the order of 2-3 percent. From January to October, dairy prices have consistently exceeded their corresponding monthly levels in 2010. However, in November, prices were about 3 percent lower than a year ago, amid a recovery of supplies in Oceania and South America. » The FAO Sugar Price Index averaged 340 points in November, down 6 percent (21 points) from October and 15 percent (60 points) from its July 2011 peak. The decline largely reflects expectations of a large global production surplus over the next twelve months, on the back of good harvests in India, the EU, Thailand and the Russian Federation.

Source: http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/

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The Development Intelligence Gazette
In Depth: Vaclav Havel and Transition in North Korea  Vaclav Havel: Real-World Change Can Come From Within http://www.huffingtonpost.com/parker-j-palmer/the-inner-revolution_b_1170426.html "...the salvation of this human world lies nowhere else than in the human heart, in the human power to reflect, in human meekness and in human responsibility. Without a global revolution in the sphere of human consciousness, nothing will change for the better..." Folks who fancy themselves political realists often dismiss that kind of "heart talk" as irrelevant to the rough-and-tumble world of power. Proposing inner-life solutions to our political and economic catastrophes is something done, say the critics, only by people who've spent more time in la-la land than in the "real world." In fact, it's dangerous to promote the illusion that social change can be animated by inner work, which is more likely to lead to narcissistic escape than to political engagement. People swept up in some New Age version of The Rapture are of no earthly use. Some political realists are so certain that heart talk is nonsense they use rhetoric rather than reason to blow it off: "wishful thinking," "touchy-feely," "pipe dream," "spiritual mumbo-jumbo." Unless you are a therapist or pastor, they say, forget about individuals and their inner lives. People who care about politics must focus on real problems: unjust structures and systems; the movement of big money and military might; long-term cultural and historical trends that shape our lives as inexorably as glaciers shaped our land. But the words at the head of this post are from a man who had some bragging rights when it comes to political realism -- the late Vaclav Havel, who led a "revolution in the sphere of human consciousness" that helped topple the Czech Communist Party. The quote can be found in his 1990 address to a joint session of the U.S. Congress, delivered a few months after the denouement of the Velvet Revolution. Havel's political philosophy and accomplishments put him in a league with Gandhi, King, Mandela and other practitioners and advocates of the inner life whose real-world political impact makes one wonder if the "political realists" are in touch with reality. The notion that social change can be sparked by an inner revolution is not only realistic. It also gives us a gift that conventional "realism" withholds -- a chance to do something that might make a difference. What passes for political realism may make for lively academic debates. But it often functions, ironically, as a tool of social control, rendering us passive with an analysis that overwhelms and paralyzes us. If massive structures, complex systems, big money, military might and longterm cultural-historical trends are where all the action is, how do you and I become part of the action? The inner life agenda, however, is always actionable, even when we are isolated -- as Nelson Mandela was as he spent 27 years in prison preparing inwardly to lead the anti-apartheid movement. Yes, of course, structures and systems must be transformed. Yes, of course, we must redeploy money and might. Yes, of course, we must understand the historical and cultural forces that deform us so we can resist them. But we cannot help any of that happen until we understand how political reality is co-created by inner and outer powers, and learn in practical terms how to participate in that co-creation. These are the deep demands made upon us by Gandhi's famous exhortation, "Be the change you want to see in the world" -- demands that we evade when we chant that phrase as an incantation, as if saying it makes it so.

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The clearest example of co-creation in real-world politics, and of how we can join the action, is found in social movements. From the Velvet Revolution to the struggle against apartheid, from the campaign to defend American democracy against an oligarchy of wealth to the fight for LGBT rights, every social movement I've studied has unfolded through four stages. And every stage offers human-scale ways in which we can join the struggle: The Decision To Live Divided No More Movements begin when oppressed people make -- and keep remaking -- a deeply inward decision to stop consenting to external demands that contradict a critical inner truth, the truth that they are worthy of respect. I call this "the Rosa Parks decision," a decision to act on the heart's imperatives against all that diminishes us and what we value. People who make this decision are willing to suffer punishment because they come to understand that no external punishment can possibly be greater than the one we impose on ourselves by conspiring in our own diminishment. The Formation Of Communities Of Congruence As people start living undivided lives, they discover others who are on the same path, and come together in communities that offer three forms of support: (1) sustaining their sanity in a culture that regards the divided life as safe and sane; (2) practicing a private and fragile language of identity, integrity and meaning until it becomes muscular enough to enter the public realm; (3) developing skills and disciplines of social change that help people implement the heart's imperatives in the external world. The Process Of Going Public As people gain the tools to work for social change -- and find the courage to go public within and between themselves -- two things happen: (1) they spread their message to others who are on the same path without knowing it, growing the community of congruence toward critical mass; (2) they attract critics who help and even compel them to check and correct themselves, purging the movement of distortions and making its message clearer and more compelling. This is one of the points at which democratic and fascist movements diverge. Fascist movements kill off their critics, literally or metaphorically, while democratic movements value, invite and even welcome criticism. The Emergence Of Alternative Rewards Institutions exercise oppression by maintaining systems of punishment and reward that favor the oppressor over the oppressed. As a movement expands, it creates new institutions that reward people for ideas and actions that challenge the status quo. Once-marginalized people find themselves at the center of new sources of power which they can use to gain leverage for change on the larger system. As this happens, participants find new inner resolve as they come to understand that no reward can possibly be greater than the one we give ourselves by acting on our own sense of identity, integrity and meaning. Of course, no movement unfolds as neatly and tidily as things do in this model. In real life, the stages overlap, cycle back and intertwine with each other. But teasing these threads out of the tangle of history helps us see how co-creation happens, how we might play a role in it and what we might do today to help it along. Is this a day when I need to renew my decision to live divided no more? Or join with others in a community of congruence to help me deepen and enact that decision? Or find the courage to go public with my convictions, adding my words and actions to the larger story? Or celebrate the reward that comes from knowing that I can live and, some day, die confident that I did my best to be faithful to my inner truth? In a piece written two days after Vaclav Havel's death on Dec. 18, Paul Begala says that Havel had "an almost mystical faith in democracy," even when the going got rough. Havel's brand of mysticism took him into the world, not out of it. His faith gave

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The Development Intelligence Gazette him the courage to stand among the hard realities of politics with an open and transformed heart. The result? A life-giving political legacy that challenges all of us to "live divided no more." Portions of this post are adapted from Parker J. Palmer, 'Healing the Heart of Democracy: The Courage to Create a Politics Worthy of the Human Spirit.'

 ANALYSIS: North Korea in Transition by SP SETH http://www.dailytimes.com.pk/default.asp?page=2011%5C12%5C30%5Cstory_30-12-2011_pg3_4 The immediate concern for the region and its principal stakeholders, like the US, China, Japan, Russia, South Korea and North Korea, is the unpredictable nature of how the political transition in North Korea might pan out The television images of mass grief in North Korea over the death of Kim Jong-il says a lot about the country. While a fair bit of it is required by the regime, it is not difficult to imagine that many North Koreans might be genuinely sad over the passing of their Great Leader, as he was called. North Korea’s population has only known the Kim dynasty as the country’s rulers ever since the Korean Peninsula was divided in the aftermath of the Second World War. The death of Kim Jong-il, who succeeded his father Kim Il-sung in 1994, does create a vacuum of sorts in a country so structured around the personality cult of its leader. Kim Jong-il’s anointed heir, Kim Jong-un, his third son, is an unknown quantity, having been groomed by his ailing father for only a little over a year before he died. He is very young at about 28 years of age and with little political experience, the Kim Jong-un era might be a little rocky, though his lineage is an advantage for him in a country where virtually all authority has percolated down from the ruling Kim dynasty from the beginning. For a small country with a population of about 24 million, Kim Jong-il’s death has created a lot of flutter in the major capitals of the world. Indeed, both the US and China are equally worried about the political transition in Pyongyang, and their foreign ministers have been in touch to ensure that the political transition there happens peacefully to ensure regional stability. While the US and China might agree broadly about this, they remain distrustful of how a crisis in North Korea might pan out. For China the Korean Peninsula is its strategic space, and it regards the US as an outside power. On the other hand, for the US, South Korea is its military and strategic ally. Indeed, the two halves of Korea are technically still at war with each other — the war having ended in an armistice without a peace treaty. A bit of history to the Korean problem might be in order here. When North Korea attacked South Korea in 1950, the Peninsula was not only plunged into a brutal war but also became a theatre of Cold War between the US and the Soviet Union. Additionally, there was a new China under the leadership of the Communist Party. It felt threatened when the US forces in South Korea started pushing closer toward its border with North Korea. This brought China into the war on behalf of its North Korean neighbour and ally. China’s forces finally pushed the US troops back and the war ended in 1953 with a truce along the 38th parallel dividing North and South Korea. The two countries are now separated by a demilitarised zone, more or less eyeballing each other with the not infrequent fear of a military confrontation. Indeed, the sinking of a South Korean naval ship last year, believed to be by a North Korean torpedo, and the shelling of one of its islands, created the fear of a military flare up. The Korean Peninsula remains a flash point with the likelihood of the US and China drawn into it by virtue of their alliance relationship — China with North Korea, and the US with South Korea. Things might get even more than usually dangerous in the new situation created by the death of its ruler, Kim Jong-il, and the succession of his inexperienced son, Kim Jong-un. With North Korea’s economy in dire straits, and its political transition worrisome, there are fears that the country might collapse from within. If this were to happen, it would pose serious challenges for regional stability. For instance, China might be faced with the prospect of a large influx of refugees from

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The Development Intelligence Gazette across a crumbling North Korea. The same will be true of South Korea. For South Korea, the bigger challenge/danger will be to prepare for a possible unification of the Korean Peninsula in the event of a North Korean collapse. Even with South Korea’s relatively strong economy, the economic cost of integrating North Korea will be prohibitive. Germany’s example is instructive, but the West German economy was much larger and it was not facing a precarious strategic situation: not knowing how China will react to such sweeping developments on the Korean Peninsula. With South Korea allied to the US, any unification process under South Korean terms and patronage will make the unified country a military ally of the US. The prospect of having US troops on its border is unlikely to be acceptable to China. China, therefore, will seek to perpetuate the new political order in Pyongyang under the nominal or effective leadership of the younger Kim. The problem, though, is that even China does not really know the internal workings of the hermit kingdom, as North Korea is called. Therefore, there are more questions thrown up by Kim Jong-il’s death than there are plausible answers. What is known, though, is that North Korea is an economic basket case, hugely dependent on aid and trade with China. Despite this, Beijing’s political leverage over North Korea seems rather limited. Short of ditching its ally, thus giving the US a foothold on its border, Beijing cannot afford to wash its hands of the hermit kingdom. This is why it is seeking to enlist the US cooperation in bringing about a peaceful political transition in North Korea to perpetuate the Kim dynasty. The US interest in North Korea is centred on ridding it of its nuclear capability. China does not favour a nuclear North Korea, but it is against joining the US and its allies for sanctioning North Korea, and worse. It does not want to be a party to upsetting the status quo on the Korean peninsula lest it works against its strategic interest, as earlier discussed. If the political transition in North Korea goes peacefully, avoiding an internal collapse, it is likely that the suspended talks for North Korea’s denuclearisation might be revived, with Beijing as its venue. China has played the host in these on-off talks in the last few years, but without much success. This is so because Pyongyang wants to use its nuclear leverage to get the maximum mileage from these talks through a phased process of linking abandonment of its nuclear programme with concrete diplomatic, aid and trade concessions from its negotiating partners. On the other hand, the US and its allies would require North Korea to abandon its nuclear programme first under a rigorous process of international verification. Only after that Pyongyang will become entitled to diplomatic recognition as well as trade and aid provision. This remains the sticking point, with seemingly no way out. In any case, the immediate concern for the region and its principal stakeholders, like the US, China, Japan, Russia, South Korea and North Korea, is the unpredictable nature of how the political transition in North Korea might pan out. Any internal implosion has the potential of plunging the region into a turbulent crisis that might involve the US and China on opposing sides. Hopefully, it will not come to that as the world can hardly afford another area of instability and confrontation.

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