China

America and China: Joined at the Hip

dlindorff — Wed, 17 Sep 2008 10:12:30 -0400

By Dave Lindorff

With the government now having spent over $800 billion in less than
a year shoring up tottering financial companies that had become little
more than casinos (and rigged ones at that), America is looking
increasingly like China, a country where the state has been gradually
getting out of the business of directly owning companies.

At this point, with the US government owning 80 percent of the
world’s largest insurance company, AIG, and essentially owning mortgage
firms Freddie Mac and Fannie Mae as well as bankrupt Lehman Brothers,
and with the nation’s two largest automakers in line asking for $25
billion in government loans, one would be hard-pressed to spot the
difference between the two systems.

The essential point of commonality is that big
enterprises—especially banking enterprises—are being allowed to operate
as fail-proof yet operationally opaque adjuncts of the state. Their
business decisions—whom to lend to, what risks to take, etc.—are made
with the goal of enriching the key managers and shareholders, and
probably also key government officials and bureaucrats—with no thought
to the impact on the larger economy or the larger population of the
respective countries.

I saw this system in operation in China once when, as a reporter
for Business Week magazine based in Hong Kong, I visited the
neo-capitalist boomtown of Shenzhen, just across the LoWu creek from
Hong Kong. There I met a friend who introduced me to a former Nanjing
Law School classmate who was now a top officer in the Armed Police, an
800,000-man paramilitary unit used for putting down strikes,
demonstrations and “unrest” that essentially runs Shenzhen like a mob
family. The guy took us to a downtown skyscraper that housed a private
real estate company that, it turned out, was owned by the Armed Police
(all the company vehicles in the parking lot had the characters “Wu
Jing,” or “Armed Police” on their plates). In the lobby was a model of
a huge housing development planned and under construction, that would
become a bedroom community for Hong Kong office workers who would
commute to Hong Kong from Shenzhen. At the time, Chinese Finance Czar
Zhu Rongji had ordered a clampdown on lending to tamp down a Chinese
economy that was in danger of overheating. I asked this
soldier-entrepreneur how his company was planning on borrowing the
money it needed for this mega project, and he just laughed, saying, “We
can borrow all the money we need.” Later, my friend, wise in the ways
of the Chinese system, whispered, “When he goes into the bank to ask
for a loan, he’ll of course wear his army uniform, and what banker
would turn him down?”

How different is this, in the end, from the system that is evolving
here, where GM or Ford executives walk into the Federal Reserve, or the
Treasury Department, and demand $25 billion in loan guarantees, saying,
“Give us the money or we go under.” In China, an executive implicitly
puts a gun to the head of his government banker. In the US the
executive expressly puts an economic gun to the government banker’s
head.

So much for the free market, which now only applies to small
businesses. In America, as in China, individuals are left to sink or
swim, and private property is only private as long as the government,
or some well-connected developer, doesn’t want it. In China, if the
state decides it wants some land for a mega commercial development, it
just ejects the current residents, offers them a token sum for
resettlement, and moves in with the bulldozers. In the US, the
government does the same thing. Just ask the residents of New London,
ousted from their riverfront property on orders of the US Supreme Court
to make way for the “higher use” of a luxury hotel and commercial
development. As for that so-called “American Dream,” the family home,
as foreclosures rise to Depression Era levels, the government stands
idly by, but leaps to the aid of giant corporations that, having made
wildly risky gambles and lost, are about to go under. (In a
particularly ugly slap at the battered homeowner, the McCain campaign
in economically depressed Michigan has been gathering lists of
foreclosed properties to run against voter lists, intending to
challenge on Election Day the right to vote of anyone who offers an
address that is in foreclosure. Lose your home, in other words, and the
McCain will also try to make sure you lose your right to vote, too.)

The convergence of Chinese and US political-economic systems is
going on in other ways too. Both governments are using massive computer
systems (made in America) to monitor the Internet, with China making
use of equipment and techniques developed for them by US companies like
Google, Yahoo and Cisco Systems, and with the National Security Agency
then drawing on those techniques for use back here in America.

As we saw at the two national party conventions last month, the US
is also learning and applying the crowd-control techniques of the
Chinese government to the US where the default tactic wherever public
protest is planned is now to have police adopt a paramilitary approach
that features aggressive use of tear gas, concussion bombs, assault
rifles, house raids and preventive detention.

Another point of convergence is the concentration of power in a
secretive executive body. China, of course, has a national congress. It
meets once a year and passes carefully vetted resolutions. In recent
years, its members have occasionally raised a controversial issue, like
concerns about the environmental and human consequences of the Three
Gorges Dam, or about the role of shoddy construction in the deaths of
so many school children in the last earthquake. But it has no power and
plays no role in controlling the decisions of the true leaders of the
country.

Likewise in the US, there is a Congress, but over the last eight
years, it has ceded virtually all oversight power to the executive
branch, which treats any effort by its members to investigate or to
constrain its action with utter contempt.

Both countries promote widespread, worshipful display of the
national flag, and ritual oath-taking, as well as unquestioning
patriotism and worship of militarism.

In media too there is convergence. China has since 1949 had a
state-run media model, where all media organizations—newspapers, radio
and TV stations—are owned by the state, and function as propaganda
arms. In the US, while nearly all media organizations are privately
owned, by controlling the licensing of all electronic media, and thus
having the final say on any and all acquisition strategies, the
government has over the last 20 years or so, degraded the media to the
status of compliant servant. It is getting difficult to discern the
difference between the two models. In fact, Chinese citizens may
actually be better informed, having lived for decades under a
propaganda model, since they know that they are being lied to by their
newsmedia, whereas few Americans realize the extent to which their own
media are controlled and acting as government mouthpieces.

Fascism has perhaps been best defined as a system in which the
government and corporations merge, and in which militarism becomes a
dominant value. I have long argued that this is an apt description of
modern China. It is increasingly also an apt description of modern
America.
_____________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. His
latest book is "The Case for Impeachment" (St. Martin's Press, 2006 and
now available in paperback edition). His work is available at www.thiscantbehappening.net

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digg_title = "America and China: Joined at the Hip";
digg_bodytext = "By Dave Lindorff\r\n\r\n With the government now having spent over $800 billion in less than a year shoring up tottering financial companies that had become little more than casinos (and rigged ones at that), America is looking increasingly like China, a country where the state has been gradually getting out of the business of directly owning companies.\r\n\r\n At this point, with the US government owning 80 percent of the world’s largest insurance company, AIG, and essentially owning mortgage firms Freddie Mac and Fannie Mae as well as bankrupt Lehman Brothers, and with the nation’s two largest automakers in line asking for $25 billion in government loans, one would be hard-pressed to spot the difference between the two systems.\r\n\r";
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Talk is Cheap, Even with Enemies, and By the Way, Rivals Aren't Enemies

dlindorff — Fri, 30 May 2008 10:41:02 -0400

By Dave Lindorff

What the hell is Barack Obama talking about?

He says that America should be talking with leaders in Cuba, Iran, Venezuela, Korea, Syria. Fine. But he calls this “talking with our enemies.”

What enemies?

Let’s get something straight. Enemies are people who are fighting against you, who are trying to destroy you. Is Cuba fighting against America? Is Iran fighting against America? Is Venezuela fighting against America? Syria? China? No. These countries may be rivals, but they are not enemies.

The closest we come to having an actual enemy in today’s world is North Korea, where we are technically still in some kind of truce following a hot war, but of course that war itself has been over for half a frigging century, and nobody has been killing anyone on the Korean Peninsula in decades.

The truth is, America doesn’t have any real enemies, except for the ones it has made for itself in Iraq and Afghanistan, and of course the Al Qaeda organization. But Al Qaeda is a gang of terrorists, not a country, and in Afghanistan it is movement, the Taliban, once the government of that country, which we overthrew. And even there, where we have enemies, talk is better than war. It is obvious that at some point if we are ever to exit from Iraq and Afghanistan, there will have to be talks with the people we are fighting. Afghanistan’s leaders have said this—that there will have to be talks with the Taliban. And Bush’s own “Iraq Study Group,” headed by former Republican Secretary of State James Baker and former Democratic Congressman Lee Hamilton, concluded that the US will have to negotiate to settle the Iraq conflict. Both those processes should be begun immediately, not after more thousands have been killed.

By calling other countries “enemies,” Obama fell into a trap of his own making, though admittedly, he’s not the first to define all these rival nations as enemies. It’s a logical outcome of the Bush/Cheney position that “either you’re with us or you’re against us.”

Instead of buying into that nonsense, Obama should have questioned the premise. Then he wouldn’t be in the mess he’s in now, trying to fine-tune whom he would talk to and whom he wouldn’t talk to. Erstwhile Democratic presidential candidate and former Alaskan Senator Mike Gravel had it right when, during an early TV “debate” before the media decided to black him out, he replied to the moderator’s stupid question to all the candidates of “Who, after Iran, are America’s biggest enemies?” He challenged the premise, asking, “Iran’s not our enemy. Who are we afraid of? We don’t have any enemies.” He got one of the biggest applauses of the evening for that.

As for the basic point—talking with people we have disagreements or rivalries with—it is obvious that not talking is idiotic, and gets you nowhere—or worse, into a war.

Let’s take Cuba. For exactly half a century since its Communist revolution, we have treated Cuba like a mortal enemy, blockading the country, forcing other countries to join us in an embargo (an act of war, by the way), plotting and attempting to assassinate the country’s leader, Fidel Castro, and financing and supporting an obsessed group of dispossessed rich Cubans who want to return the island to its mob-infested, neo-colonial days. In those 50 years, the only thing not talking has accomplished has been the impoverishment of two generations of Cubans. Meanwhile, of course, the US has talked, conceded, caved in, given in, pandered and invested in China, another Communist country that, unlike Cuba, actually has fought against the US (in Korea, by proxy in Vietnam, and against an ally, Taiwan). There is clearly no logical reason for not talking with Cuba, and if we were talking with Cuba, life there would be better, and no doubt, things would be better here, too.

Iran is another example. It is known that when the US invaded Iraq, in 2003, Iran tried desperately to initiate talks with the US. The Bush/Cheney administration didn’t want to talk. It was calling Iran an “Axis of Evil” nation. Had talks begun, there might not even be a nuclear dispute today. Indeed, there might not even have been a rivalry. Instead, we now have the Bush/Cheney administration pushing forward for plans to attack Iran.

We could go back to Iraq, too, of course. Before the US launched its attack, Saddam Hussein was telling the Bush/Cheney administration he was willing to leave the country. All he wanted was a safe haven like Idi Amin got, and a billion dollars. We were not told about this offer until years later. Yet think how much cheaper that solution, arrived at through a little talking, would have been than what we got through not talking. Instead of letting Hussein run off with a billion of his own ill-gotten wealth, we’ve spent close to a trillion dollars, killed upwards of a million innocent Iraqis, destroyed a country, driven four million people in a nation of 24 million into exile, ruined America’s global reputation, and bankrupted the US treasury, not to mention running up the price of oil four-fold.

Talk is cheap, I’d say.

Obama should be more forthright and admit that America has no enemies, and that we can talk to anyone.
____________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. His latest book is “The Case for Impeachment” (St. Martin’s Press, 2006 and now available in paperback edition). His work is available at www.thiscantbehappening.net

Want Cheaper Gas and Oil? End the Damned Wars!

dlindorff — Fri, 16 May 2008 17:00:29 -0400

By Dave Lindorff

Americans are in a panic over rising gas and heating oil prices, and with reason. For months, the price of a barrel of crude oil has been rising steadily, hitting a record $127 yesterday.

Analysts keep getting trotted out on TV and in print, attributing the dramatic price rise to everything from “peak oil”—the idea that producing countries have reached their peak of productive capacity, and that the only direction for oil supplies looking forward is down, while demand continues to rise—to increasing demand in China and India, to supply bottlenecks, to specific news events, like a pipeline break in Nigeria, or a closed refinery in California.

Politicians, like Republican presidential candidate John McCain and Democratic presidential candidate Hillary Clinton, have called for a two-month moratorium on federal gas taxes, but with taxes running at something on the order of 18 cents a gallon, this is not going to do much to bring prices down—in fact it might do nothing, since retailers would be free to just raise prices to match the tax break, and pocket the profits.

One analyst, economist Ismael Hussein-Zadeh, a professor of economics at Drake University in Des Moines, Iowa, has a different explanation for the price rise, and American motorists and homeowners should pay close attention.

“Oil prices have gone from the mid $20 range in the fall of 2002 to $127 yesterday—a rise of $100/barrel in just over five years,” he says. “And the bulk of that increase can be attributed to the US wars in Iraq and Afghanistan, and to the threats of war against Iran.”

Hussein-Zadeh’s analysis looks at a number of ways that the Bush/Cheney wars have contributed to rising oil prices. Chief among these are two factors: the threat to supplies, particularly from the Persian Gulf region from which 20 percent of the world’s oil supplies come, and a falling dollar, because oil is priced in dollars, and as it loses value, oil producing countries raise their prices to compensate.
In an article titled Worried About the Price of Gas? End US Wars, Hussein-Zadeh writes, “Soon after the invasions of Afghanistan and Iraq the price of oil began to escalate in tandem with the escalation of war and political turbulence in the Middle East.” Furthermore, he says, “Anytime there is a renewed US military threat against Iran, fuel prices move up several notches.” If the US were to actually make good on Bush’s and Cheney’s threats to attack Iran, in Hussein-Zadeh’s view “the sky would be the limit” to oil prices, with $200/barrel being a starting point.

The dollar’s fall, too, is significantly a result of the wars—particularly the Iraq War, he says. That war has been costing the US $200 billion a year, all in borrowed funds. That in itself is a huge hole that has to be funded by borrowing from China, Japan, Saudi Arabia and other nations. But as Nobel economist Joseph Stiglitz has pointed out, the true cost of the Iraq War, when interest on debt, health costs of injured veterans and other long-term costs are factored in, is more like $3 trillion and rising. And when currency speculators and traders—the ones who really set the value of the dollar—make their bets, they’re looking at that bigger number, not the little one.

Moreover, it’s not just oil that has been driven up in price because of the war. As energy costs have gone up, so has the cost of food, in no small part because most fertilizer is oil-based, and because transportation costs are also largely a reflection of oil prices. As well, to the extent that American’s food is imported, they are paying in shrinking dollars, whose value is being driven down because of the war.
Hussein-Zadeh says the Bush/Cheney administration and its neoconservative war promoters have worked hard to offer other more benign explanations for the crippling rise in energy prices, and food prices. As he puts it:

Neoconservative forces in and around the Bush administration and beneficiaries of war dividends—wishing to deflect attention away from war as the main culprit for the skyrocketing energy prices—tend to blame secondary or marginally relevant factors: OPEC, China and India for their increased demand for energy, or supply-demand imbalances in global markets. Whatever the contributory role of these factors, the fact remains that the current oil price hikes started with the beginning of the Bush administration’s wars against Iraq and Afghanistan. Furthermore, a closer examination of these factors reveals that their roles in the current price inflation of oil have been negligible.

Common sense bears him out here. China’s and India’s economies have indeed been growing rapidly, and with them, demand for oil, but over the past five years, oil prices have risen 400%, and the same cannot be said for demand. Even if Chinese and Indian growth figures of 7-9 percent per year were accurate (and there is reason to believe they are grossly inflated), that at best would amount to perhaps a 50% increase in economic activity over five years. In fact, during this time more efficient energy use in the developed countries has largely offset much of the increasing demand for oil in China and India, and even in China and India, much of the energy growth has involved replacing inefficient vehicles and power plants with more efficient ones, so oil consumption isn’t rising in lock step with economic growth.

The answer then, to rising oil prices, is obvious then. It is not some silly two-month moratorium on federal taxes—what Sen. McCain referred to, in a candid moment, as a “little gift” to American vacationers. Nor is it opening up the Artic refuge to drilling—a move that would take years to lead to any significant new supply, and which in any case would have minimal impact on overall supply, or on prices. Nor is it opening up the Strategic Oil Reserve—another drop in the barrel. Nor is it boycotting Exxon/Mobil. Nor is it hammering OPEC to boost production—something they have already done. No, it is much simpler. As Hussein-Zadeh so eloquently puts it:

The political implications of this discussion are clear: to bring down the prices of fuel and food requires bringing home the troops. By lowering the energy costs of production and transportation this will help save our own and many other economies from the plagues of inflation and stagnation. It will bring relief to hundreds of millions worldwide who are burdened by crippling energy bills and the crushing costs of feeding their families.

Got that people? If you want to see gasoline drop back below $3.89/gal, if you want to cut your food bills, if you want to see people in the developing world having enough to eat, get Congress to end the war! Meanwhile, each time you pull the trigger on that gas pump, think of the liquid that's running into your tank, and the money that's flowing out of your wallet, as blood, because that's what it all comes down to.

It’s that simple.
______________
DAVE LINDORFF is a Philadelphia-based journalist. His latest book is "The Case for Impeachment" (St. Martin's Press, 2006 and now available in paperback edition). His work is available at www.thiscantbehappening.net

China's Economic Blackmail Is Working

statusquobuster — Sat, 11 Aug 2007 11:58:46 -0400

Why the Government Tests Few Chinese Imports

Joel S. Hirschhorn

Massive amounts of Chinese imports are threatening public health and safety. Many food and consumer products pose risks. Lead in children’s toys and jewelry. Toxins in foods for pets and humans, and in toothpaste. Unsafe automobile tires. Many prescription drugs made with few safeguards. The list is endless. The federal government is not safeguarding American citizens through thorough testing of imports. Why?

Simple: The Chinese have us by our budget-deficit balls. Our government depends on China for loaning us money and for not dumping the vast hoard of over one trillion dollars it has accumulated by financing our huge deficits and selling us virtually everything. Dumping dollars is called the Chinese economic nuclear option. They can wreck the American economy any time they want. America is being held hostage because of our government’s disastrous fiscal and trade policies. And, yes, all this middle-class-killing free trade globalization favors corporate interests.

It is hard to keep track of all the ways the American public is being sold out by the federal government as our Constitution and rule of law are shredded. Our jobs are sent overseas and shifted to lower paid illegal and special-visa-legal immigrants. There is no economic security. Banks and credit card companies rape us financially through criminal interest rates and fees. Mortgage companies took advantage of millions of home buyers that now face foreclosure and financial ruin. We pay outrageous amounts for gasoline and, in many parts of the country, for electricity and natural gas. And still 15 percent of the population lacks health insurance, and those with insurance face rising costs. And millions of Americans face hunger and homelessness. And by the way our education system sucks.

Yet the vast majority of Americans that are not in the Upper Class and living lavishly are not fuming, screaming and ready to revolt. They may feel cheated and screwed, but they have not yet concluded that they are politically oppressed – that their government is criminally selling them out, with no end in sight – that their democracy is delusional.

The following facts are typical of so many that should help Americans wake up and prepare for the Second American Revolution:

The top 300,000 income earners in America make more than the bottom 150 million combined.

Ninety percent of the Fortune 1,000 companies have set up deferred pay plans that let their top executives set aside, tax-free, retirement income far above 401(k) limits, and 69 percent have set up “supplemental executive retirement plans” that shield execs from company-wide pension cutbacks. That’s how these fat cats obtain tens or hundreds of millions of dollars. All this continues even though an amazing 77 percent of Americans say corporate executives “earn too much” and 61 percent believe wealthy Americans “should be taxed more.” according to a new Harris Poll.

Billionaire Warren Buffet paid just 17.7 percent of his $46 million in income last year, without trying to avoid taxes, compared to his secretary who paid 30 percent of her $60,000 salary.

The top two execs at America’s largest private equity partnership took home over $600 million last year — and paid taxes on that windfall at the capital gains bargain rate of just 15 percent. And Congress shows no desire to close that tax loophole.

Millions of non-wealthy Americans face home foreclosure and bankruptcy, but right now there are five residential properties in the United States listed at $100 million or more

Like some science fiction fantasy, millions of hard-working Americans are popping anti-depressants with abandon to dull the pain of obscene political and economic realities. American puppets, slaves, and victims obediently obey laws, pay taxes, borrow and consume, and endure stress, fatigue and sleeplessness. Meanwhile, the mainstream media feed them propaganda and entertainment. Worst of all, far too many believe they can elect Democratic or Republican politicians that will make things better. Though millions are suffering, bitching and moaning, they remain stuck in a political stupor. They are unready to rebel politically and take back their country from corrupt politicians and the moneyed interests that control them. They have not become political dissidents – the kind that throughout human history rise up and overturn dreadful ruling classes and governments.

Rather than contagious political activism we have compulsive consumerism. Americans keep borrowing and spending, providing about 75 percent of the economy that mostly benefits the Upper Class. That spending is their potential political power. Yet they do not understand that only by using their spending (and debt) as a political force will they get the government to serve and protect them. That means reducing spending to obtain specific political actions, like cutting spending by 10 percent until President Bush ends the Iraq War.

Cheap Chinese products help keep consumers pacified and distracted, even as Americans lose jobs as industry after industry collapses because of floods of Chinese imports. Our delusional democracy produces delusional prosperity. How much worse must life for ordinary Americans become before the masses rise up in rebellion? Apparently, a lot worse.

By then, communist China will probably become the world’s only superpower, built with the wealth extracted from the USA. The lesson of history is the rise and fall of great (arrogant, self-indulgent) nations. The USA is in free-fall. Soaring economic inequality is just one symptom.

Cheap Chinese products are a powerful and insidious destructive force. Free trade globalism more than violent terrorism or military attack is bringing America to its knees. But no presidential candidate is making this their main campaign theme. Shame on them. And shame on anyone voting for them. Perhaps if voter turnout dropped to, say, 20 percent, then we might stop playing our bipartisan delusional democracy game and take our country back.

CHINA'S NEW WEAPONS

JOHN CHUCKMAN — Tue, 26 Jun 2007 12:59:09 -0400

June 25, 2007

CHINA’S NEW WEAPONS

This is an excerpt from What's It All About? The Decline of the American Empire by John Chuckman published by Constable & Robinson Ltd, London. Available from Indigo Books, Canada.

John Chuckman

In military matters, China has taken America by surprise a number of times recently, and surprises of this nature are not things with which Americans deal well, some portion of America's political establishment becoming irritable and uncomfortable. It is not clear how much of this is based on genuine analysis and how much on the kind of paranoid reaction which characterizes America's attitude towards Arabs since 9/11. There is also the distinct possibility of traces of anti-Asian prejudice which has a long history in America and in its policies. America's paranoid reaction to a number of events in the past - the rise of Japan, Communism, Islamic fundamentalism - reflect an arrogant imperial attitude of expected easy superiority which does not welcome any clouds on the horizon.

China's explosion of a thermonuclear warhead not many years ago that proved through chemical analysis of atmospheric samples to resemble America's best at the time, the W-88 warhead, lead to a McCarthy-like campaign to track down a betrayer of American secrets. Attention focused on a Chinese-American scientist at Los Alamos Laboratories, and the New York Times, undoubtedly prompted by the FBI, conducted a terrible campaign of innuendo. The FBI charged the man with a ridiculous number of things, a favorite technique of political police trying to get a plea on something, but the lack of any evidence saw him released with his career ended and his reputation muddied. It seems never to have occurred that China's new army of clever scientists and engineers, always seen going about with the best laptop computers in hand much the way British businessmen in London once all wore derbies and carried umbrellas, might just have developed this technology themselves, or largely so, of course benefiting from the bits and pieces garnered from others that always support new work anywhere.

China has put a number of satellites into orbit, including a manned one, and has a very ambitious space program, including plans for landing people on the moon. The American military sees near-earth space as its most important base for future "projection of power" over the planet, its militarization of space well underway, so China represents a potential challenge not yet felt from India. The huge noise made by Republicans under Clinton's administration over the remote possibility that China may have secretly contributed to an American election gave us a heady whiff of the paranoid fears that reside in some quarters of American society.

Most recently, China launched a vehicle into space designed to destroy a satellite. An obsolete Chinese weather satellite in an orbit about 500 miles above the earth, roughly the same orbit as that occupied by many of America's fleet of spy or global-positioning satellites, was the target for this apparently successful test. The message was clear: China is now capable of destroying the satellites which are now America's eyes for war. The news was especially dramatic coming as it did not long after America's admitting that a powerful Chinese laser, or other directed-energy beam on the ground, had, a while back, swept an American spy satellite over China, temporarily blinding it.

The satellite-killer led to a lot of noisy accusations about China's aggressiveness and its militarizing space, but these claims are quite inaccurate. The United States has been militarizing space for many years, gradually and in many surreptitious ways. The space shuttle program, for example, was always a military one, the shuttles actually being very costly, inefficient vehicles for science, sometimes even leading to delays in the launch of important science projects.

America's fleet of military and spy satellites, many of whose capabilities remain secret, is used actively today as a weapon. Nations friendly to American policy are given priceless data to support their efforts while opponents are left at a serious disadvantage. This was done, as just two examples, in supporting Iraq's invasion of Iran and in supporting Israel's assault on Lebanon - both examples, by any sensible reckoning, of America's using these sophisticated machines not for defense but to support aggression it regarded as being in its own interest at the time.

Perhaps, the clearest militarization of space is America's new anti-missile missile program, a program not just of research but of deploying actual weapons. No matter how ineffective the existing American system is - it has failed many tests, and independent scientists advise us that the computer programming for such a system is truly beyond our existing ability - America's spending new billions on it has to make China and Russia uneasy. The same scientists and other experts warned some years back that a new American "Star Wars" program would start a new weapons race, and they were right. The Russians have already announced the development of a new warhead that spirals unpredictably when heading for its target. It also may put into service a mobile version of its highly-accurate Topple-M intercontinental missile.

China's response includes its ability to destroy spy satellites needed as eyes for such a system plus an increase in the number and quality of its intercontinental missiles. China's DF-31A missile is its first solid-fueled intercontinental missile, meaning it can be fired more quickly than its existing liquid-fueled ones, and it is the first Chinese intercontinental missile that can reach all parts of the United States. It could be made mobile, and a submarine-based version is under development. It should be noted that China's nuclear deterrent until now has been extremely modest, consisting of about two dozen known missiles plus some element of uncertainty as to whether there are in fact a limited number more.

China used the anti-satellite test to get America's attention for negotiations over the anti-missile missile system. They did get American attention, there being a very unpleasant reaction in Washington, but it is not clear that any kind of negotiations will follow. China's immediate offer to negotiate a treaty against the militarization of space was ignored. America's stubbornly-held view of anti-missile defense is that it is part of its overall anti-terrorist efforts, an argument which stretches credibility rather thin, especially in view of plans for basing some of these anti-missile missiles in former Soviet satellite states, plans that are highly confrontational towards Russia. There has also been talk of American anti-missile missiles being placed in Afghanistan, intended for Chinese I.C.B.M.s, again a highly provocative idea, going towards creating uncertainty in China's sense of its nuclear deterrent.

Another recent military surprise from China was the unveiling of the new Jian-10, swept-wing fighter. The project to develop this plane apparently was a closely kept secret, hence the surprise at its appearance. It is the same general type of fighter represented by America's F-16 or the Eurofighter Typhoon or Russia's MIG-29, although its capabilities are not well understood. Whether or not it meets the performance standards of these other front-line, supersonic fighters, the plane represents a remarkable technical and manufacturing achievement by the Chinese, portending also the day when China learns to compete in civil aviation. China's current military philosophy of husbanding its resources for only the kinds of projects best fitting what are deemed its greatest future needs has apparently permitted it to compete in this costly field of high-tech aviation which includes only a small number of nations.

China's new investments in its military are, like so many things about China, heavily criticized by the American establishment. The truth is they represent a small fraction of what the U.S. spends, no matter what accounting you use. Widely accepted, published data put China's military spending at about 10% of America's, although some say it may be about half again more than that through hidden spending. They may be right, but they ignore the reality of a great deal of hidden spending in America, particularly when it comes to so-called black programs, and the unquestioned fact remains that America accounts for fully half of the entire planet's military spending.

China's new spending is to a considerable extent driven by what it sees as American imperial attitudes and behavior. Recall the incident of the American spy plane flying right up against Chinese air space early in Bush's administration and being forced down by the Chinese. This was an extremely provocative act, somewhat resembling the flight of an American U-2 over Russia just days before a scheduled summit between Eisenhower and Khruschev. During the first hours of this recent, smaller crisis, the new Bush administration took a hard-line approach, making no apologies (a Chinese pilot had died bringing the spy plane down) and demanding the plane and its crew be returned immediately. After a while Bush relented, reportedly after his having consulted his much more knowledgeable father, and took a more accommodating approach. China then promptly allowed the crew to be flown home and returned the spy plane, after a bit of time, disassembled in a crate, mimicking a much earlier American exploit, one that undoubtedly had provided many laughs over the years at the Pentagon, when a defecting Soviet pilot landed one of the U.S.S.R.'s most advanced fighters in Japan. No one knows how successful the Chinese were in studying the spy plane's top-secret electronic gear, but generally such machines are destroyed by explosive devices detonated by the crew when crashing or being forced to land. Things can be learned even from demolished mechanisms. Then again, those devices don't always work.

China has not challenged American world leadership, nor has it set it as a goal to be able to do so, but this incident of the spy plane was interesting for a number of reasons, mainly in that it demonstrated China's willingness to confront America behaving aggressively in China's own backyard. Had it come to shooting, China could not have won, but much of the world's public opinion was on China's side in what clearly was reckless American behavior.

Few Americans appreciate the extent to which such high-risk behavior characterized American activity during the Cold War. Intrusive American military over-flights of the Soviet Union in the 1950s were common, indeed Krushchev was irritated and angry over the extent of these flights which Eisenhower observed once would have started a war had the Russians behaved the same way over the territory of the United States. There were also many confrontations with nuclear submarines, including a number of scrapes and collisions owing to close approaches on Soviet boats. Indeed, it has been reported, and there is some evidence from photographs for believing, that the advanced Russian submarine, Kursk, which sank during tests in 2000, sending its crew to a slow death, was the result of a torpedo fired in error by an American commander whose boat was closely observing the Kursk's maneuvers. If so, it might help explain what many regard as a rather kid-gloves approach Bush has taken towards the Russians despite a belligerent history and many differences over policy.

This is an excerpt from What's It All About? The Decline of the American Empire by John Chuckman published by Constable & Robinson Ltd, London. Available from Indigo Books, Canada.

International Media In Overdrive At Prospect Of War With Iran

Chris Elliott — Wed, 31 Jan 2007 00:07:28 -0500

First I invite you to watch this excellent 10 minute speech by George Galloway to the British Parliament on January 27, 2007 in which he delivers a stark warning that Britain is sleepwalking into a catastrophic war with Iran along with the US and Israel. George Galloway was the man who you may remember lambasting the US Senate over false accusations of oil bribes with Saddam.

George Galloway's speech to the British Parliament, January 2007

Now, if that very sobering speech has got your attention, the following should also be noted.

In the last few days international media have gone into war overdrive, in exactly the same way they did prior to the Iraq invasion in 2003. I was going to write that later this week the Bush Administration will make public it has evidence that Iran is involved in the Iraq insurgency and attacks on US troops, but in fact this is already being touted by CNN.

I include here a sample of the hundreds of international media reports pointing towards a war with Iran, thought to take place in the next few weeks. I have highlighted some significant sentences in the reports.

It should also be noted that Iran has a defensive alliance with Syria and close economic and to some extent military ties to Russia, China and other SCO members (see my blog on Chinese anti-satellite weapons for more on this relationship). Venezuala has also pledged to support Iran in the event of war with the US.

Iran involvement suspected in Karbala compound attack
POSTED: 9:50 p.m. EST, January 30, 2007
NEW: U.S. probing possible Iranian involvement in brazen compound raid

BAGHDAD, Iraq (CNN) -- The Pentagon is investigating whether a recent attack on a military compound in Karbala was carried out by Iranians or Iranian-trained operatives, two officials from separate U.S. government agencies said.

"People are looking at it seriously," one of the officials said.

That official added the Iranian connection was a leading theory in the investigation into the January 20 attack that killed five soldiers.

The second official said: "We believe it's possible the executors of the attack were Iranian or Iranian-trained."

Five U.S. soldiers were killed in the sophisticated attack by men wearing U.S.-style uniforms, according to U.S. military reports.

Both officials stressed the Iranian-involvement theory is a preliminary view, and there is no final conclusion. They agreed this possibility is being looked at because of the sophistication of the attack and the level of coordination.

Bush 'spoiling for a fight' with Iran

Simon Tisdall
Wednesday January 31, 2007
The Guardian

US officials in Baghdad and Washington are expected to unveil a secret intelligence "dossier" this week detailing evidence of Iran's alleged complicity in attacks on American troops in Iraq. The move, uncomfortably echoing Downing Street's dossier debacle in the run-up to the 2003 Iraq invasion, is one more sign that the Bush administration is building a case for war.

Nicholas Burns, the senior US diplomat in charge of Iran policy, says Washington "is not looking for a fight" with Tehran. The official line is that Washington has made a conscious decision to "push back" against Iran on a range of fronts where the two countries' interests clash. Primarily that means Tehran's perceived meddling in Iraq, where its influence with the Shia-led government and Shia majority population appears to be increasing as Washington's weakens.

State department spokesman Sean McCormack claimed this week the administration has a body of evidence implicating Iran in sectarian attacks against Iraq's Sunni minority. "There is a high degree of confidence in the information that we already have and we are constantly accumulating more," he told the New York Times.

CIA and Pentagon officials are also touting intelligence that "Iranians are smuggling into Iraq sophisticated explosive devices, mortars, and detailed plans to wipe out Sunni Arab neighbourhoods," the paper said. Officials would make a "comprehensive case" this week. But President George Bush has already acted on information received. He confirmed yesterday that he has ordered US forces in effect to kill or capture Iranian "agents" targeting Americans in Iraq - as happened earlier this month when five Iranian officials were detained in Irbil.

Tuesday, Jan. 30, 2007 11:00 a.m. EST
Sen. Robert Byrd: Bush Wants War with Iran

Top Democrat Sen. Robert Byrd is warning that the Bush administration is preparing to go to war with Iran.

In a e-mail message sent to activist Democrats, the West Virginia lawmaker – who is now President pro tempore of the Senate and third in line for the presidency after Dick Cheney and Nancy Pelosi – rails against President Bush’s plans for a troop surge in Iraq and declares:

"Not only does Mr. Bush intend to plunge us deeper into what is now clearly a civil war in Iraq, but he is now increasing his belligerence towards Iran and Syria. In his State of the Union address, Mr. Bush called out Iran no less than seven times.

"I fear that what we are seeing now is an administration intent on laying the groundwork for a wider war in the Middle East.

Europeans fear US attack on Iran as nuclear row intensifies
Ian Traynor in Brussels and Jonathan Steele
Wednesday January 31, 2007
The Guardian

"There's anxiety everywhere you turn," said a diplomat familiar with the work of the International Atomic Energy Agency in Vienna. "The Europeans are very concerned the shit could hit the fan."

A US navy battle group of seven vessels was steaming towards the Gulf yesterday from the Red Sea, part of a deployment of 50 US ships, including two aircraft carriers, expected in the area in weeks.

"No path is envisaged by the EU other than the UN path," the EU's foreign policy chief, Javier Solana, told the Guardian yesterday. "The priority for all of us is that Iran complies with UN security council resolutions."

The IAEA chief, Mohamed ElBaradei, called at the weekend for a "timeout" in the worsening confrontation in an attempt to enable both sides to save face and climb down. But the Americans rejected the proposal and European officials involved in the dispute also believe the Iranians cannot be trusted to stick to a deal.

Russia queries US military build-up
Published: Sunday, 28 January, 2007, 08:18 AM Doha Time

MOSCOW: Russian Foreign Minister Sergei Lavrov yesterday said he would demand an explanation from the US over its military build-up in the Middle East and criticised Washington for “hardline” policies against Iran.

Lavrov said he would discuss Moscow’s concerns during a meeting of the international Quartet group, which meets in Washington next week to try to revive Israeli-Palestinian peace talks.

“I have not seen any change in the rather aggressive rhetoric from Washington. It continues, as does the growing military presence in the region. This will be one of the questions that we want to clear up in Washington,” he was quoted as saying by state-run news agency RIA Novosti.

Lavrov also criticised what he said were US threats to bypass the UN in taking new measures against Iran’s controversial nuclear power programme.

Washington believes the programme, in which Russia is building the first civilian power station at Bushehr, secretly aims to build an atomic weapon.

“Washington’s hardline policy concerning Iran foresees... much tougher sanctions than those called for in the last UN Security Council resolution,” he was quoted as saying by Itar-Tass. “We would like to get an explanation on what stands behinds this.”

Iran’s strategic proposal to Russia

Tehran Times Political Desk
TEHRAN -- The Islamic Republic of Iran welcomes the development of ties with Russia in all areas and believes that there is great potential for their expansion, Supreme Leader of the Islamic Revolution Ayatollah Ali Khamenei said here on Sunday.

“The two countries can be two complementary partners in the political, economic, regional and international arenas,” Ayatollah Khamenei told Russian Security Council chief Igor Ivanov on Sunday.

The Leader said that both Iran and Russia would benefit from enhanced ties.

He also thanked Russian President Vladimir Putin for sending him a written message, which was delivered by Ivanov. Pointing to the fact that Iran and Russia control about half of the world’s gas reserves, the Leader proposed that “the two countries can jointly establish an organization like OPEC for dealing with gas cooperation.”

Iran and Russia can block Washington’s hegemonistic plans

U.S. Freezes Sales of F-14 Fighter Parts

By AGENCE FRANCE-PRESSE

The Pentagon has frozen the sale of all spare parts for F-14 “Tomcat” fighters because of concerns about their transfer to Iran, a Defense Department spokeswoman said Jan. 30.
The sales of all F-14 parts were suspended on January 26 pending a review, the Defense Logistics Agency said in a statement.

Dawn Dearden, a spokewoman for the agency, told AFP the sales were frozen “given the current situation in Iran.”
Iran bought 79 F-14s from the United States before the fall of Shah Mohammed Reza Pahlavi in 1979.
The move comes amid growing U.S.-Iranian tensions over Tehran’s disputed nuclear program and what Washington sees as Iranian subversion of U.S. efforts to stabilize Iraq.

US must abandon Iraqi cities or face nightmare scenario, say experts

By Rupert Cornwell in Washington
Published: 30 January 2007

The US must draw up plans to deal with an all-out Iraqi civil war that would kill hundreds of thousands, create millions of refugees, and could spill over into a regional catastrophe, disrupting oil supplies and setting up a direct confrontation between Washington and Iran.

This is the central recommendation of a study by the Brookings Institution here, based on the assumption that President Bush's last-ditch troop increase fails to stabilise the country - but also on the reality that Washington cannot simply walk away from the growing disaster unleashed by the 2003 invasion.

Even the US staying to try to contain the fighting, said Kenneth Pollack, one of the report's authors, "would consign Iraqis to a terrible fate. Even if it works, we will have failed to provide the Iraqis with the better future we promised." But it was the "least bad option" open to the US to protect its national interests in the event of full-scale civil war.

US troops, says the study, should withdraw from Iraqi cities. This was "the only rational course of action, horrific though it will be", as America refocused its efforts from preventing civil war to containing its effects.

The unremittingly bleak document, drawing on the experience of civil wars in Lebanon, the former Yugoslavia, Congo and Afghanistan, also offers a remarkably stark assessment of Iraq's "spill-over" potential across the Persian Gulf region.

'US poised to attack,' claims Bulgarian agency
Tuesday, January 30, 2007

ISTANBUL - Turkish Daily News

The United States “could be using its two air force bases in Bulgaria and one at Romania's Black Sea coast to launch an attack on Iran in April," the Bulgarian news agency Novinite claimed. Commenting on the report, The Sunday Herald wrote that the U.S. build-up along the Black Sea, coupled with the recent positioning of two U.S. aircraft carrier battle groups off the Straits of Hormuz “appears to indicate that U.S. President Bush has run out of patience with Tehran's nuclear misrepresentation and non-compliance with the U.N. Security Council's resolution.”

“Whether the Bulgarian news report is a tactical feint or a strategic event is hard to gauge at this stage. But, in conjunction with the beefing up of the America's Italian bases and the acquisition of anti-missile defense bases in the Czech Republic and Poland, the Balkan developments seem to indicate a new phase in Bush's global war on terror,” wrote the Scottish paper.

The Bulgarian agency named Colonel Sam Gardiner, "a U.S. secret service officer stationed in Bulgaria," as the source its story.

Before the end of March, 3,000 U.S. military personnel are scheduled to arrive "on a rotating basis" at the United States' Bulgarian bases. Under the U.S.-Bulgarian military cooperation accord, signed in April, 2006, an airbase at Bezmer, a second airfield at Graf Ignitievo and a shooting range at Novo Selo were leased to the U.S. Army.

Resource Wars
by William K. Tabb

Ted Koppel, writing in the New York Times (February 24, 2006), responded to what he described as the Bush administration’s “touchiness” about the charge that we are in Iraq because of oil by stating the obvious, though often unsaid, truth, “Now that’s curious. Keeping oil flowing out of the Persian Gulf and through the Strait of Hormuz has been bedrock American foreign policy for more than half a century.” Today control over the world’s oil supply is at the forefront of Washington policy makers’ thinking, even if the president and his team deny any such intent and talk publically of reducing dependence on Middle East oil by three-quarters of present levels, an absurdly impossible goal. Two-thirds of the oil in the world is in the Middle East, much of it under Iraq and Iran, the axis of oil, the current targets of the U.S. war on terrorism. Control of oil is integral to Washington’s official goal of world domination, a goal stated this baldly in national security documents.

During the administration of the first President Bush, the Pentagon under then defense secretary Dick Cheney produced a strategy paper stating the mission of “convincing potential competitors that they need not aspire to a greater role or pursue a more aggressive posture to protect their legitimate interests.” The United States would defend their interests for them and so the policy was to “discourage them from challenging our leadership or seeking to overturn the established political and economic order.”6 Control of the world is facilitated through control of essential resources. By controlling the world’s energy, and in the presence of its overwhelming military superiority, the United States is potentially able to deny the lifeblood of any society and intimidate and coerce the world more effectively, a design going back easily to Henry Kissinger, and earlier to the emergence of U.S. global power at the end of the Second World War, but now carried to new heights by the neoconservatives.

Hegemony has always been a bipartisan consensus. With regard specifically to the Middle East we have the Carter Doctrine: “An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.” Since Carter created the Rapid Deployment Force with this intervention in mind the United States has moved to forward positioning, the establishment of a huge permanent military presence in the region, including a number of multi-billion dollar bases in Iraq, huge fortified cities with all the comforts of home, fast food places, video stores, and car rental agencies for the soldiers who garrison the empire along “the arc of instability.” All of this takes place in territories which coincide with the parts of the Global South where oil is found. That the official rationale is now the war on terrorism in place of anticommunism is secondary to the continuation of the basic policy of world domination.

Chinese Test Anti-Satellite Weapon And Americans Should Take Note

Chris Elliott — Sat, 20 Jan 2007 04:53:28 -0500

China’s unannounced test of an anti-satellite ballistic missile on the 11 January 2007 has evidently caused significant concern in the West and in particular the US. Not only does it put existing military and civilian satellite networks at risk, the act was clearly intended as a warning in the true cold war sense.

As I write this report, the story has finally hit the mainstream media but in most cases only a fairly sanitized version of the events is being made public. This very newsworthy event was not made public for 6 days after the launch, but despite the delay in publication, some interesting details are emerging that indicate increasing tensions between China and the US.

Chinese Test Anti-Satellite Weapon

By Craig Covault/Aviation Week & Space Technology 01/17/2007 07:45:59 PM

U. S. intelligence agencies believe China performed a successful anti-satellite (asat) weapons test at more than 500 mi. altitude Jan. 11 destroying an aging Chinese weather satellite target with a kinetic kill vehicle launched on board a ballistic missile.

The Central Intelligence Agency, the National Security Agency, the Defense Intelligence Agency, NASA and other government organizations have a full court press underway to obtain data on the alleged test, Aviation Week & Space Technology will report in its Jan. 22 issue. If the test is verified it will signify a major new Chinese military capability.

Neither the Office of the U. S. Secretary of Defense nor Air Force Space Command would comment on the attack, which followed by several months the alleged illumination of a U. S. military spacecraft by a Chinese ground based laser.

“Illumination of a U. S. military spacecraft by a Chinese ground based laser” is a significant omission in most accounts. Clearly China can now track US spy satellites with laser guided precision and has now demonstrated the ability to destroy them.

On January 19th, Al Jazeera also carried the story with this interesting addition.

Debris threat

A senior White House official, requesting anonymity, said that Britain, Japan and South Korea were expected to express their concerns to China soon.

A key concern of the test is that debris could interfere with civilian and military satellite operations on which the West increasingly relies.

On the day of the test, a US defense official said the United States was unable to communicate with an experimental spy satellite launched last year by the Pentagon's National Reconnaissance Office.

However, there was no immediate indication that this was a result of the Chinese test.

By itself, China’s development of this technology would not be of such concern. The US and Russia have possessed equivalent systems for decades. But set against the backdrop of cooling Sino-US relations and open threats of war with Iran (who has observer membership status within the SCO) it looks increasingly like a shot across America’s bow.

The fact that the launch was not announced beforehand and would certainly be detected by the US suggests this was indeed meant to cause “concern”. It wasn’t meant to be secret and the timing may also be significant.

Just two days before the missile launch the Associated Press published this report concerning US displeasure at multi-billion Euro $ gas deals signed between Iran and China.

U.S. cautions China over reported multibillion dollar gas deal with Iran

The Associated Press Published: January 9, 2007

BEIJING: The United States has urged China to reconsider a reported multibillion dollar (euro) natural gas deal with Iran amid international efforts to sanction Tehran for its nuclear programs, a U.S. Embassy spokeswoman said Tuesday.

China's No. 3 oil company, China National Offshore Oil Corp., was reported last month to be in talks to develop Iran's Northern Pars gas field.

Around the same time, the U.N. Security Council unanimously agreed to impose sanctions on Iran for refusing to suspend a uranium enrichment program that is suspected of being part of a nuclear weapons project.

Given the sanctions and Tehran's continued defiance, "We think this is a particularly bad time to be initiating major new commercial deals with Iran," U.S. Embassy spokeswoman Susan Stevenson said in an e-mail.

Less than a week after this warning to China, we read in the London Times

Britain is joining an American military campaign to blunt Iranian influence in Iraq and the Gulf.

In a move likely to heighten tension in an already volatile part of the world, US forces have been ordered to detain Iranian agents in Iraq and to strengthen substantially America’s military presence in the Gulf.

Two Royal Navy minehunters have arrived in the Gulf to reinforce a naval frigate on patrol in the area.

continues

Britain’s contribution is two minehunters HMS Blyth and HMS Ramsey, which will remain in the Gulf for an unusually-long two-year mission to keep shipping routes open in the event that Iran attempts to block oil exports.

The presence of 2 US carrier strike groups in the Gulf is not only provocative to Iran.

It must surely also be a pressure on China to show solidarity with it’s fellow SCO member and essential energy provider, or risk dissatisfaction with the other member states. [on edit this is misleading - Iran has applied for membership but has not yet become a member, but it's close status as a business partner makes this likely in the near future.] The SCO is after all an alliance of convenience to counter the strength of US and NATO military influence in the whole region. Iraq never had such powerful friends but Iran not only has good relations, it has long term energy contracts essential for China’s growing industry. The fact these contracts are remunerated in Euro $’s can only inflame the situation further.

It should also be noted that the nuclear power plant that is the casus belli for the US campaign against Iran is the result of a very lucrative contract with Russia; the deaths of Russian engineers and nuclear scientists in a strike against these facilities, not to mention the radioactive contamination throughout that region would also put a great deal of pressure on Vladimir Putin, the other leading statesman in the SCO.

Another point to consider is the West’s reliance on the GPS satellite network for civilian and military aircraft navigation and even the guidance systems for long range missiles. Even if there are back-up satellite systems for military use these would likewise be very vulnerable to attack. A sudden and overwhelming attack on these satellite systems, in a defensive capacity in the face of a perceived threat of war, would render a good deal of the West’s aircraft grounded and prevent early warning systems from detecting long range ballistic missile launches.

Collectively, the SCO controls a large portion of the world’s population and strategic resources and the Bush administration’s determination to provoke it is extremely dangerous for us all. [On edit China's launch of this missile is also highly provocative but perhaps less so than the huge build up of armed forces in the Gulf region. The consequences of a military confrontation between the SCO and NATO across the war torn regions of the Middle East are profound to say the very least].

[edited to correct html and clarify some assumptions]

Update January 21st, 2007

It seems there is more to the “Illumination of a U. S. military spacecraft by a Chinese ground based laser” statement than first appears. It isn't as I assumed a laser targetting system for tracking satellites.

The London Telegraph published this report back in September 2006 and it seems likely that this "Illumination" is the result of a laser weapon powerful enough to blind a spy satellites optical sensors.

Beijing secretly fires lasers to disable US satellites
By Francis Harris in Washington
Last Updated: 1:55am BST 27/09/2006

China has secretly fired powerful laser weapons designed to disable American spy satellites by "blinding" their sensitive surveillance devices, it was reported yesterday.

The hitherto unreported attacks have been kept secret by the Bush administration for fear that it would damage attempts to co-opt China in diplomatic offensives against North Korea and Iran.

Sources told the military affairs publication Defense News that there had been a fierce internal battle within Washington over whether to make the attacks public. In the end, the Pentagon's annual assessment of the growing Chinese military build-up barely mentioned the threat.

Update January 22nd, 2007

The Chinese government have announced that the launch of the anti-satellite missile was intended to force the United States to the negotiating table and reconsider a ban of the use of weapons in Space.

On January 20th the London Times reports

Washington’s response will be crucial in determining what happens next: an arms race in space or an agreement to limit the use of Star Wars technology. American analysts said that the test had exposed the “soft underbelly” of America’s national security apparatus, because most of the Pentagon’s spy satellites orbit at a similar height to the weather satellite destroyed by the Chinese test.

White House critics said that the Chinese test was a result of President Bush’s aggressive unilateralism, this time in his space policy. Last year the US expressly ignored Chinese and Russian calls for a global ban on the development of space weapons. Instead, a new policy preserved America’s right to develop military space technology, while “dissuading” others.

However, China's warning appears to have fallen on deaf ears. Before most of the public were even aware of the launch, the Bush administration have dismissed calls to alter their controversial space weapons policy.

China’s Anti-Satellite Test Widely Criticized, U.S. Says No New Treaties Needed

By Jeremy Singer and Colin Clark
Space News Staff Writers
posted: 19 January 2007
6:20 p.m. ET

Standing by the new space policy the White House issued last year, a U.S. State Department official said China’s Jan. 11 test of an anti-satellite weapon in space is not cause to open negotiations on a new treaty that would place limits on what countries can do in space.

“We do not think there is an arms race in space. The United States believes that the existing body of existing international agreements — including the Outer Space Treaty, as well as the liability and respective compensation conventions — provide the appropriate legal regime for space,” the State Department official said in a Jan. 19 telephone interview.

The official said the space policy clearly states that the United States will oppose the development of new legal regimes or other restrictions that seek to prohibit or limit U.S. access to, or use of, space and that no change in that policy is warranted.

“Arms control is not a viable solution for space. For example, there is no agreement on how to define space weapon. Without a definition you are left with loopholes and meaningless limitations that endanger national security. No arms control is better than bad arms control,” the State Department official said.

A new development is likely to inflame Sino/US relations further. Yesterday the Chinese premier announced he had authorised the diversification of up to 1/3 of their foreign exchange reserves now mostly locked up in US Treasury bonds.

The Financial Times reports

China’s multibillion dollar question
By Richard McGregor in Beijing

Published: January 21 2007 20:04 | Last updated: January 21 2007 20:04

With a vaguely worded statement from Wen Jiabao, China’s premier, at the close of a weekend meeting in Beijing on finance policy, the die has been cast for a momentous change in the management of the country’s massive foreign exchange reserves.

Mr Wen said the management of the reserves, the world’s largest at more than a thousand billion dollars, should be improved and the channels through which they are invested diversified.

continues

Mr Wen did not endorse any specific plan but has indicated the government will consider proposals on how to use some of the money – now mostly locked up in US Treasury bonds – more aggressively.

Initial projections for the amount of money that could be more actively managed are $200bn-$300bn but Mr Wen shed no light on this.