China Deploys Warships After Japan Announces Disputed Island Purchase

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China deployed two navy vessels and launched a verbal assault on Japan after Tokyo announced it had ‘bought’ a group of islands disputed by the two countries in the East China Sea.

Osamu Fujimura, Japan’s chief cabinet secretary, yesterday confirmed that his country had agreed to purchase the islands, called Senkaku in Japan and Diaoyu in China, from a Japanese family it claims owns them.

The government will reportedly pay a total of 2.05 billion yen (£16.4 million) for the islands and the transfer of their ownership will be completed by the end of this month.

However as Mr Fujimura spoke, China’s state-controlled news agency Xinhua reported that two Chinese surveillance vessels had arrived in the region to “assert the country’s sovereignty”. Japanese media said the Japanese Coast Guard was monitoring the vessels.

Japan’s move to “nationalise” the disputed islands escalated a simmering and long-standing feud between the two nations over the territory, which is administered by Japan but also claimed by China and Taiwan.

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Muslim Brotherhood at Work: US Ambassador to Libya Killed Over Movie

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The U.S. ambassador to Libya and three other American staff members were killed Tuesday in an attack on the U.S. consulate in the Libyan city of Benghazi, the White House confirmed. President Obama, in a written statement issued Wednesday morning, called the attack “outrageous” and “senseless.”

Ambassador J. Christopher Stevens was killed Tuesday night when he and a group of embassy employees went to the consulate to try to evacuate staff. The protesters, angry over a film that ridiculed Islam’s Prophet Muhammad, were firing gunshots and rocket-propelled grenades.

“I strongly condemn the outrageous attack on our diplomatic facility in Benghazi, which took the lives of four Americans, including Ambassador Chris Stevens,” President Obama said in a statement Wednesday morning. “Right now, the American people have the families of those we lost in our thoughts and prayers. They exemplified America’s commitment to freedom, justice, and partnership with nations and people around the globe, and stand in stark contrast to those who callously took their lives.”

Obama said he’s directed the administration to provide “all necessary resources” to support security for U.S. personnel in Libya and to increase security at diplomatic offices around the world.

“While the United States rejects efforts to denigrate the religious beliefs of others, we must all unequivocally oppose the kind of senseless violence that took the lives of these public servants,” he said.

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US Embassy in Cairo Makes Outrageous Statement Against First Amendment

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Yesterday, the US Embassy in Cairo put out a shameful statement in response to anger over an anti-Muslim film:

The Embassy of the United States in Cairo condemns the continuing efforts by misguided individuals to hurt the religious feelings of Muslims – as we condemn efforts to offend believers of all religions. Today, the 11th anniversary of the September 11, 2001 terrorist attacks on the United States, Americans are honoring our patriots and those who serve our nation as the fitting response to the enemies of democracy. Respect for religious beliefs is a cornerstone of American democracy. We firmly reject the actions by those who abuse the universal right of free speech to hurt the religious beliefs of others

A stand against those who “abuse” their right to free speech is best suited to authoritarianism, and it’s absolutely grotesque to see American diplomats embracing it. The effort at appeasement was as inefficacious as it was depraved: The protests against the film in question turned more violent after the statement was issued, when the embassy wall was scaled and the American flag was torn down and burned.

By late this evening this was obvious at the White House: “The statement by Embassy Cairo was not cleared by Washington and does not reflect the views of the United States government,” a source characterized as a “senior administration official” tells Politico’s Byron Tau.

That’s all well and good; the statement does indeed look like it wasn’t carefully vetted (the missing period after “others” above isn’t my error — that’s how it is on the embassy website). But a not-for-attribution walk-back is hardly sufficient here. Somebody needs to be fired. Given that the embassy’s Twitter account spent the day defending the statement, it’s likely to be more than one somebody that needs to go, perhaps including Ambassador Anne Patterson herself.

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Communist Leader’s Absence Sets Off Rumor Mills in China

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The strange disappearance from public view of China’s presumptive new leader is turning a year that was supposed to showcase the Communist Party’s stability into something of an annus horribilis.

Over the past week, the new leader, Xi Jinping, has missed at least three scheduled meetings with foreign dignitaries, including Secretary of State Hillary Rodham Clinton last Wednesday and the prime minister of Denmark on Monday. So far officials have declined to provide an explanation for his absences.

That set off furious speculation on the Internet that the 59-year-old Mr. Xi’s health, either physical or political, has taken a turn for the worse. Some diplomats say they have heard that Mr. Xi suffered a pulled muscle while swimming or playing soccer. One media report, since retracted, had it that Mr. Xi was hurt in an auto accident when a military official tried to injure or kill him in a revenge plot. A well-connected political analyst in Beijing said in an interview that Mr. Xi might have had a mild heart attack.

Whatever the actual reason, Mr. Xi’s unexplained absences are conspicuous on the eve of what is supposed to be China’s once-in-a-decade transfer of power. It also adds to a litany of woes that have disrupted the Communist Party’s hopes that a seamless political transition would send a signal of stability to the Chinese people and the world at large.

Two unusual political scandals have sidelined people considered contenders for seats on the all-powerful Politburo Standing Committee, most recently including a close ally of President Hu Jintao’s. China’s economy has fallen into an unexpectedly deep slump, confounding government forecasts for a measured slowdown. Party leaders have also yet to announce a date for the 18th Party Congress, the event to mark the retirement of this generation of leaders and the accession of the next, though it is supposed to take place as soon as next month.

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Jim Rogers: Eurozone Certain to “Pay Terrible Price”

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A “terrible price” will be paid for the euro zone crisis eventually, whether the European Central Bank (ECB) embarks on mass bond purchases or not, Jim Rogers, investor and co-founder of the Quantum Fund with George Soros, told CNBC Monday.

Rogers said: “These guys have been saying the same old garbage for a long time. It’s not a game-changer – it’s good for the market for maybe a month. The debt keeps going higher and higher and eventually we’ll all going to pay a terrible price.”

He warned that the market rally, which many have seen as an opportunity to get back into riskier assets, would only be a short-term rebound.

“It’s not an opportunity to make money for me. This is not good for the market and it’s not going to last. Every three or four months they have a summit and they say: Ok guys, everything is ok now. The market goes up. But we’re getting a little tired of this and the market is getting a little tired of this,” Rogers argued.

There should be some opportunity to make money in the short term, Peter Toogood, director of investment, Old Broad Street Research, said. “There is a little window for risk trade – not a sustainable one, but there’s some stability to the short-term outlook,” he argued. He pointed out that ECB President Mario Draghi “has already been expanding the balance sheet through disguises.”

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European Union Abandoning Crop-Based Biofuels Due to Food Crisis, Environmental Concerns

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Photo credit: Sweeter Alternative

The European Union will impose a limit on the use of crop-based biofuels over fears they are less climate-friendly than initially thought and compete with food production, draft EU legislation seen by Reuters showed.

The draft rules, which will need the approval of EU governments and lawmakers, represent a major shift in Europe’s much-criticized biofuel policy and a tacit admission by policymakers that the EU’s 2020 biofuel target was flawed from the outset.

The plans also include a promise to end all public subsidies for crop-based biofuels after the current legislation expires in 2020, effectively ensuring the decline of a European sector now estimated to be worth 17 billion euros ($21.7 billion) a year.

“The (European) Commission is of the view that in the period after 2020, biofuels should only be subsidized if they lead to substantial greenhouse gas savings… and are not produced from crops used for food and feed,” the draft said.

A Commission spokeswoman said the EU executive would not comment on the details of leaked proposals.

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France’s Socialist President Defends his 75% Tax Rate

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Francois Hollande last night tried to justify his plans for multi-billion-pound tax rises to an increasingly disillusioned France.

The Socialist president, whose popularity has slumped, appeared on live television to convince the public his policies could help turn the country’s economy around.

During the 25-minute appearance, he unveiled plans for tax increases of ‘between 15 to 20 billion euros’ (£12billion to £16billion), targeting wealthy households, savings and firms.

The money raised will be used for public services, including thousands of new civil servant jobs.

He confirmed that ‘all earnings over one million euros will be taxed at 75 per cent’, adding: ‘It’s symbolic, it will show an example.’

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Pacific Rim Nations: Food Security Mounting Problem

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Photo Credit: NASA Goddard Photo & Video

Asia-Pacific leaders focused their attention on rising concern over food security on Sunday, as they prepared to wrap up their annual summit with an agreement to slash tariffs on trade in environmental goods and a call to keep markets open even in hard times.

Food security “is one of the most acute problems of our time,” Russian President Vladimir Putin said in convening Sunday’s second and final “informal retreat” of the Asia-Pacific Economic Forum in this far eastern Russian seaport.

“Without ensuring food security, we cannot achieve our goal of enhancing the quality of life for our people,” he said before the closed door session got under way.

The explicit focus on food security by the leaders of the 21-member APEC reflects abiding concern over the potential for food prices to surge to politically volatile levels.

Current prices are high, though they remained flat in August and are below the levels that triggered rioting and unrest in parts of the developing world in 2007-2008. Another food crisis, in 2010-2011, also caused hardships for poorer consumers, especially in countries heavily dependent on food imports.

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Israel’s Knesset Speaker: Democratic ‘Jerusalem Mistake’ No Accident

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The absence of Jerusalem’s status as the capital of Israel in the Democratic Party platform was no oversight, and not the result of a “bureaucratic snafu,” as some Democrats tried to claim in the face of the embarrassing flip-flop on the matter at the party’s convention Wednesday night, Knesset speaker Reuven Rivlin said Thursday. The Democrats intended to leave Jerusalem off the agenda, and only changed their minds due to the sharp criticism from Republicans and supporters of Israel in the U.S., he said.

“And I see no cause for optimism on their decision to change the platform to reflect Jerusalem’s status,” Rivlin said in a radio interview Thursday. “This was no mistake or slip of someone’s mind. I have no doubt that President Obama restored Jerusalem to the platform because of political and electoral pressure, and because of the sharp criticism in Israel and the U.S.,” he said.

The party most definitely suffered a black eye over the brouhaha, media reports in the U.S. said. After sharp criticism earlier in the week over the removal of a section in the platform saying that Jerusalem is Israel’s capital, as well as removal of all references to G-d, party officials moved to reinstate both sections. The proposed change would include a line that said that “Jerusalem is and will remain the capital of Israel,” and that “it should remain an undivided city accessible to people of all faiths.” G-d was also restored t the platform, with the sentence that Obama, on his second term, will conduct “an administration that will give every hard-working American the opportunity to realize his G-d given potential.”

However, when convention chairman Mayor Antonio Villaraigosa, the mayor of Los Angeles, called for a voice vote to approve the insertion of the Jerusalem sentence, he was met by a loud chorus of opposition – with witnesses saying that at least half, if not more, of delegates voicing opposition to inserting the clause about Jerusalem. Voice approvals require a [two thirds] majority, and after the first vote, Villaraigosa awkwardly called for a second vote, citing “interference” that prevented him from clearly hearing the results. Only after three votes was the resolution declared approved. In response, witnesses said, the crowd turned on Villaraigosa, jeering him as he left the stage.

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Fruits of Biden’s Iraq Policy: Iran using Iraqi airspace to Supply Assad

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Iran has resumed shipping military equipment to Syria over Iraqi airspace in a new effort to bolster the embattled government of President Bashar al-Assad of Syria, according to senior American officials.

The Obama administration pressed Iraq to shut down the air corridor that Iran had been using earlier this year, raising the issue with Prime Minister Nuri Kamal al-Maliki of Iraq. But as Syrian rebels gained ground and Mr. Assad’s government was rocked by a bombing that killed several high officials, Iran doubled down in supporting the Syrian leader. The flights started up again in July and, to the frustration of American officials, have continued ever since.

Military experts say that the flights have enabled Iran to provide supplies to the Syrian government despite the efforts Syrian rebels have made to seize several border crossings where Iranian aid has been trucked in.

“The Iranians have no problems in the air, and the Syrian regime still controls the airport,” said a retired Lebanese Army general, Hisham Jaber, who heads the Middle East Center for Studies and Research in Beirut.

Vice President Joseph R. Biden Jr., who has played the lead role on Iraq policy for the Obama administration, discussed the Syrian crisis in a phone call with Mr. Maliki on Aug. 17. The White House has declined to disclose details, but an American official who would not speak on the record said that Mr. Biden had registered his concerns over the flights.

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