Request denied
Peng Weixue

THE General Committee of the 62nd Session of the UN General Assembly decided on September 19 not to include the so-called issue of “Taiwan’s participation in the UN,” raised by Solomon Islands and a few other countries, in the agenda of this year’s General Assembly. The General Assembly has thwarted proposals related to Taiwan 15 consecutive times since 1993. The Taiwanese authorities’ attempts to change the status quo - where the Chinese mainland and Taiwan belong to one China - by taking advantage of the UN ended in failure.
Futile attempts
Taiwanese authorities have backed motions on “the Republic of China’s reentry” into the UN every year since 1993. These motions have been vetoed, without exception, by the General Committee. This year, however, they prompted some countries with which Taiwan has “diplomatic relations” to table the first ever proposal on the island’s participation in the UN under the name of Taiwan. They also played up the issue across the Taiwan Island and elsewhere in the world, with unprecedented financial and human resource input. Taiwanese leader Chen Shui-bian wrote two letters to the UN secretary general, one to the president of the Security Council and one to the president of the General Assembly, all of which were returned. Chen frequently gave exclusive interviews to international media outlets. The Taiwanese authorities clamored for their UN campaign in foreign countries with paid advertisements. The ruling Democratic Progressive Party (DPP) staged a large parade in support of the referendum.
Despite all the hype, the Taiwan-backed proposal was rejected at the UN. The world body made the decision in light of the basic principles of the UN Charter, the international political situation and the Chinese people’s firm determination to oppose “Taiwan independence.” The proposal runs counter to the purposes and principles of the UN Charter. Being part of China, Taiwan is not qualified to join the UN, an international organization that requires statehood. UN General Assembly Resolution 2758 adopted in 1971 expelled representatives of the Taiwanese authorities from the UN, thereby resolving the issue of China’s representation in the UN. Consequently, there should be no such issue as Taiwan’s representation in the UN. The proposal, therefore, is essentially an attempt to seek independence for Taiwan, alter the status quo across the Taiwan Straits, challenge the General Assembly resolution and violate the UN Charter. It is bound to meet with opposition from the overwhelming majority of the countries. UN Secretary General Ban Ki-moon clearly stated that it violated the one-China principle enshrined in the General Assembly Resolution 2758. It is “not legally possible” to receive the Taiwan’s application for UN membership, he said.
If it had been adopted, the proposal would have jeopardized many countries’ interests in China. China is known as the “world’s factory” and the “world’s market.” Peace and stability across the Taiwan Straits, which create favorable conditions for other countries to strengthen their cooperation with China and allow their economies to prosper, serve the strategic interests of all countries, especially major Western powers.
Most importantly, Taiwan’s attempt to join the UN is doomed because of China’s growing national power and rising international standing. The adoption of General Assembly Resolution 2758 itself resulted from the contrast in power across the Taiwan Straits. To date, more than 160 countries have established diplomatic relations with China. All these countries uphold the one-China policy and recognize that the People’s Republic of China is the sole legitimate government of China and that Taiwan is part of China. In particular, since China adopted the Anti-Secession Law in 2005, Western countries have come to realize the danger of the hard-line “Taiwan independence” policy. They all announced that they did not support the proposal on Taiwan’s participation in the UN.
Complex developments
While pushing for Taiwan’s membership in the UN, the Taiwanese authorities are going all out to set the stage for the referendum on Taiwan’s UN bid. Chen has said that these moves are meant to pursue “democracy,” “human rights” and “international living space for Taiwan” and “let the people in Taiwan determine the future of Taiwan.” In fact, his deceptive rhetoric hides ulterior political motives. First of all, the moves can help Chen dominate the pan-green coalition, an informal political alliance in Taiwan that favors “Taiwan independence.” Chen hungers for political power and is unwilling to exit the political stage after stepping down. Moreover, he is afraid of being held responsible for his many scandals. That’s why he is trying to foster an image of an anti-American hero and hero of “Taiwan independence” and extend his political influence by manipulating the DPP’s election programs for legislators and the “president.” In this way, he will be able to gain the support of pro-independence fundamentalists as the leader of the pan-green coalition, thus sustaining his influence on Taiwan’s politics.
Secondly, the moves can give the DPP an upper hand in the “presidential elections” next year. The DPP has always canvassed votes with its Taiwanese identity. Now that its image has been severely harmed by its political incompetence and bribery scandals, Chen has to divert the public’s attention by trumpeting “Taiwan independence” topics such as the referendum on Taiwan’s UN bid. Chen’s initiatives have forced the opposition pan-blue coalition to follow suit with a proposed referendum on Taiwan’s “reentry” into the UN. The pan-blue coalition tends to prefer a Chinese nationalist identity over a Taiwanese separatist one and favors greater economic linkage with the mainland. It may lose the support of most middle-of-the-road voters if it fails to make the most of these policies. Third, the moves can help promote “de jure Taiwan independence” and raise Taiwan residents’ awareness of their Taiwanese identity. As a new Constitution can hardly materialize under the current system, Chen believes a referendum is the best choice to realize “de jure Taiwan independence.” In fact, Taiwanese independence forces have long pursued the goal of establishing a new country and formulating a new constitution with a referendum. If the referendum succeeds, Taiwan will become the official name of the country in the Taiwan region. This prospect is consistent with the DPP’s presidential candidate Frank Hsieh’s vows to run for “president of Taiwan” and DPP Chairman Yu Shyi-kun’s calls to “change the name of the country to Taiwan.” So the referendum is a referendum on “Taiwan independence” in disguise. Even if it fails, it can help Chen strengthen Taiwan residents’ sense of Taiwanese identity and self-determination through referendum.
Taiwan’s participation in the UN and especially the referendum on Taiwan’s UN bid are highly deceitful and will have grave consequences. The latter is deemed as a severe challenge to peace and stability across the Taiwan Straits, the Chinese people’s will to safeguard national unity and the Anti-Secession Law. In response, the Chinese mainland has made necessary preparations for dealing with any serious situation. The Taiwanese authorities’ hype about these issues will complicate the peaceful and stable development of cross-straits relations. If Taiwanese identity gains currency in the 2008 Taiwan “presidential elections,” the DPP will be able to steal more votes, making the prospects of the elections more elusive.
Ostensibly, the United States shares the same position on Taiwan’s participation in the UN and the referendum on Taiwan’s UN bid with China. U.S. Deputy Secretary of State John Negroponte called the referendum attempt “a step toward a declaration of independence of Taiwan and toward an alteration of the status quo.” Deputy Assistant Secretary of State Thomas Christensen said the United States does not recognize Taiwan as an independent state, and called its assertions, along with the referendum, “needless provocations.” Despite harsh warnings, the Pentagon recently announced plans to sell weapons worth $2.2 billion to Taiwan, including 12 P-3C submarine-hunting aircraft. Washington’s inconsistent policy toward Taiwan is highly concerning. The United States has always sought to maintain the status quo of “no unification, no independence, no war and no peace” across the Taiwan Straits as part of its strategy to contain China’s rise. Taiwan’s recent moves are not in its strategic interests, as they are close to crossing the bottom line of its policy. That’s why it has put harsher restraints on Chen. However, the United States is the biggest covert supporter of “Taiwan independence.” Its support and tolerance are directly responsible for the growth of Taiwanese independence forces’ and their assumption of political power on the island. Because the United States does not want to see them weakened, it sells weapons to Taiwan to show its support.
Although Taiwan’s bid to apply for UN membership turned out to be futile, Chen will not stop his secessionist efforts. Instead, Taiwanese authorities will advocate the referendum even more fervently. Against this backdrop, many are keeping a close watch on the future developments of the political situation on the island and in cross-straits relations.
(The Daily Mail-Beijing Review Articles Exchange Item)

Cut your debts — or get sunk in cash storm
William Rees-Mogg

FOR a couple of months in 1952 I was a trainee fund manager in a Wall Street bank. I was staying with my cousins in Westchester County. Every morning I would be given a lift to the Rye railroad station and would read the old Herald Tribune on the journey to Grand Central Station. The bank to which I owe my primary training in investment was then called the National City and Farmers Trust, and is now called Citibank. For a while it became the biggest bank in the world. I am not sure that it still holds that title, which must eventually pass to some Chinese bank, but it has been a highly successful institution in the years since I was an intern.
I still feel grateful to the investment managers who took me around to visit brokers and attend company meetings. I remember that they introduced me to the splendidly named firm of Merrill Lynch, Pierce, Fenner and Beane, who were then the largest stockbrokers in the world. Merrill Lynch has long since dropped the names of its junior partners. It must be distressing to the Pierce, Fenner and Beane families that their names are no longer attached to one of the world’s great financial institutions.
In those days, investment was an older man’s game. Perhaps the highest quality investment still is. The young, enthusiastic gunslinger had not yet made his appearance; the name ‘hedge fund’ had yet to be invented. The men who took me out to lunch in the inexpensive post-war restaurants of Wall Street were, I suppose, in their late 40s, but they were appointed by men in their late 50s to carry out policies that reflected the lifetime experience of men in their 60s. In those days we were a single generation away from the great Wall Street Crash of 1929, and the slump of the early Thirties that brought Franklin D Roosevelt and — regrettably — Adolf Hitler to power.
The men I was working with had mostly been students when the Crash occurred. The American stock market was still recovering from the Crash — many shares were still well below their 1929 level. A whole generation of investors had been burnt in the flames of the great Crash. They had absorbed that lesson. I was taught the copybook maxims of traditional investment. I was told it was important to make a profit, but even more important to avoid a loss. I was told one should never invest in anything one did not understand. I was instructed in the importance of reading the balance sheet as well as the profit and loss account.
I was encouraged to favour investment in real values and to avoid following fashion. I was taught that shares could go down as well as up by people who had seen them fall through the floor and make a big dent in the floor of the cellar. No one who was working for Merrill Lynch or what is now Citibank in 1952 is at all likely still to be working for them now. The Wall Street of 2007 is more youthful and happier to take risks. Recently, Merrill Lynch had to announce painful news of billion-dollar risks that had not done well. Merrill Lynch is now called an investment bank, no longer to be regarded as mere stockbrokers in a world in which every boutique finance house seems to be involved in complex financial derivatives.
Merrill had to report write-downs — reductions in the book value of assets — of $8.4billion (£4.1billion), $3.5billion (£ 1.7billion) more than it had predicted only two weeks before. It damages confidence to make so large a revision in so short a time. Many of these losses were incurred on mortgage-related securities. Standard & Poor’s, the ratings agency, cut Merrill Lynch’s credit rating to A+ from AA-, and commented that the $2.3billion losses for the third quarter were ‘startling’ and the write-downs ‘staggering’. Naturally, this story made not only the front page but the lead story of Financial Times. Its second lead was equally disturbing. The FT reported the deeply pessimistic ‘financial stability review’ of the Bank of England itself. It might have been called the ‘financial instability review’. The Bank’s function is to stabilise British finance. One should take the Bank’s warnings seriously.
The review says the UK financial system ‘remains vulnerable’ to shocks from the global credit squeeze. The Bank gives a particular warning that there may be a further fall of the dollar. It warns the commercial property sector is ‘particularly prone to further shocks and to rises in the cost of finance’. This was the bad news last Thursday morning. One can add the warning from billionaire investor Warren Buffett of the dangers of a bubble in the Chinese stock market. Yet it is not only China or the credit crunch that the world needs to worry about.
On Thursday, the oil price reached a record $90 a barrel and the gold price hit a 28-year high of $777 an ounce. The winds of financial change are blowing from all directions. Nobody seems to have foreseen this crisis, and nobody yet is close to getting it under control. The trigger for a global credit crisis came from mortgage defaults of a growing number of American householders who were not creditworthy in the first place. A year ago hardly anyone outside technical banking had heard the phrases ‘sub-prime mortgage’ or ‘collateralised debt obligations’. Bankers lived in happy ignorance of this bomb in their baggage.—Khaleej Times


Telling the whole truth about oil
Gwynne Dyer

IF A diplomat is “an honest man sent abroad to lie for the good of his country” (Sir Henry Wotton, 1612), then oil industry executives used to be the business world’s equivalent of diplomats. The big international companies were chronically optimistic about the extent of their reserves, and state-controlled oil companies were even more prone to exaggeration. But now we have the spectacle of oil companies telling the truth about oil supplies — or at least more of the truth than usual. The occasion was last week’s Oil and Money conference in London, and the most spectacular truth-teller was Christophe de Margerie, CEO of the French oil company Total, one of the international “big five.” Last year his predecessor, Thierry Desmarest, caused a flutter in the industry by predicting that world oil output would peak around 2020. This year, de Margerie said that “100 million barrels (per day)...is now in my view an optimistic case.”
He was referring to the International Energy Agency’s estimate that world oil output would reach 116 million barrels/day by 2030, and the slightly more optimistic US government prediction that it will reach 118 million b/d by that date. Even these acts of faith are really a forecast of crisis, since calculations based on current trends (like a 15 percent annual growth in Chinese demand) suggest that 140 million b/d will be needed by 2030. The implication of De Margerie’s remarks is that the crisis is coming a lot sooner than that. World oil output is nearing 90 million b/d now, but it is never going to reach 100 million b/d. “Peak oil” may be just a few years away, or it may be right now. (You will never know until after the fact, since it is the point at which global oil production goes into gradual but irreversible decline.)
Peak oil was first forecast by an American petroleum geologist, M. King Hubbert, who noticed that the curves for oil discoveries and oil production were a very close match, but with a lag of thirty to forty years between the discovery curve and the production curve. At that point, in 1956, Hubbert was the director of research for Shell Oil, and the focus of his research was American oil production, then still the biggest in the world. At that time, American oil output was still rising rapidly, but Hubbert noticed that the shape of the output curve closely fitted the curve plotting the growth of American oil reserves during the years of the great discoveries in Texas, Oklahoma and California. However, there had been no other huge discoveries since, so the annual amount added to American oil reserves had peaked and begun to decline in the late 1930s. Hubbert simply assumed that the production curve would continue to match the discovery curve with a three— or four-decade lag, in which case, he predicted, US oil production would peak and start to decline in 1970. That is exactly what it did, and American oil production is now down to about half of output in that peak year. So “Hubbert’s Curve” became famous in the industry, and was duly applied to global discovery and production rates as well.
Oil discoveries worldwide peaked in the 1960s, so Hubbert’s own forecast was that peak oil production worldwide would arrive in the 1990s. The discovery of two giant new oilfields in the 1970s (probably the last two) in the North Sea and the Alaskan North Slope pushed that date down a bit, however, and one of Hubbert’s successors as chief of research at Shell, Colin J. Campbell, subsequently calculated that peak production globally would not arrive until 2007. Now, in other words.—Arab News