China has begun a concerted effort to keep its export economy humming, even as demand for its goods has plummeted with the global downturn.

Risking the ire of the United States and other trading partners, the Chinese government has quietly started adopting policies aimed at encouraging exports while curbing imports, even though China, as one of the world’s largest exporters, has aggressively criticized protectionism in other countries.

The government has sharply expanded three programs to help exporters, giving them larger tax rebates, more generous loans from state-owned banks to finance trade, and more government-paid travel to promote themselves at trade shows around the world.

At the same time, Beijing has banned all local, provincial and national government agencies from buying imported goods except in cases where no local substitute exists.

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China has introduced an explicit “Buy Chinese” policy as part of its economic stimulus programme in a move that will amplify tensions with trade partners and increase the likelihood of protectionism around the world.

In an edict released jointly by nine government departments, Beijing said government procurement must use only Chinese products or services unless they were not available within the country or could not be bought on reasonable commercial or legal terms.

Read it all from the Financial Times.

Binyamin Netanyahu’s speech on the future of the Middle East peace process may have been the first time the Israeli Prime Minister publicly acknowledged a Palestinian state, but its lack of specific details prompted a bewildering array of responses, locally and internationally.

The United States and the European Union found themselves agreeing with the Yesha council, which represents Jewish settlements in the West Bank, in welcoming the Prime Minister’s address at a Tel Aviv university, while Hamas joined with the Israeli far-right in condemning it.

Most Israeli commentators poured scorn on the talk ”“ short on detail, and placing strict limits on any future Palestinian sovereignty ”“ but agreed its main audience had been President Obama, who has bluntly told the right-wing Israeli Government to accept a two-state solution and stop settlement building.

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Binyamin Netanyahu tonight endorsed the creation of a Palestinian state after weeks of pressure from Washington, but defied President Obama’s demand for a halt to all settlements.

In a high-profile speech that the Palestinian administration of Mahmoud Abbas said “hobbles all efforts to save the peace process”, the Israeli Prime Minister said that the Palestinians must recognise Israel as a “Jewish state” and that any future Palestinian state had to be demilitarised.

“If we have the guarantees on demilitarisation and if the Palestinians recognise Israel as the state of the Jewish people, then we arrive at a solution based on a demilitarised Palestinian state alongside Israel,” Mr Netanyahu said.

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Binyamin Netanyahu is expected to endorse a “two-state solution” in a much-heralded speech this weekend, but he may stall on American demands to freeze Jewish settlements in the West Bank.

Feeling the squeeze between the US Administration, which wants a moratorium on settlement growth and a commitment to a Palestinian state, and his national-religious coalition, which favours neither, the Israeli Prime Minister appears likely to try to steer a middle course.

Israeli newspapers were full of speculation about what Mr Netanyahu ”” who has so far refused openly to back a Palestinian state alongside Israel ”” might offer to deflect pressure from Washington. Ehud Barak, his Defence Minister, urged him this week to recognise a Palestinian state, but members of Mr Netanyahu’s right-wing Likud party have cautioned him against the move.

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North Korea vowed Saturday to step up its atomic bomb-making program and threatened war if its ships are stopped as part of new U.N. sanctions aimed at punishing the nation for its latest nuclear test.

North Korea’s Foreign Ministry also acknowledged for the first time that the country has a uranium enrichment program, and insisted it will never abandon its nuclear ambitions. Uranium and plutonium can be used to make atomic bombs.

The threats, in a statement issued through the official Korean Central News Agency, came a day after the Security Council approved new sanctions aimed at depriving the North of the financing used to build its rogue nuclear program.

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The big retreat to realism concerns democracy promotion. The Bush administration tried to promote democracy, even at the expense of stability. That proved unworkable.

But many of us hoped that Obama would put a gradual, bottom-up democracy-building initiative at the heart of his approach. This effort would begin with projects to create honest cops and independent judges so local citizens could get justice. It would make space for civic organizations and democratic activists. It would include clear statements so the world understands that the U.S. is not in bed with the tired old Arab autocrats.

There was a democracy-promotion section to the speech, and given the struggle behind it, maybe we should be grateful it was there at all. But it was stilted and abstract ”” the sort of prose you get after an unresolved internal debate. The president didn’t really champion democratic institutions. He said that governments “should reflect the will of the people” and that citizens should “have a say” in how they are governed.

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The Arabs may have wished for more – for a tougher line on Gaza, a new peace “initiative” and an apology for past US policies. He was right to offer none of these. He did not repudiate his presidential predecessor. Nor did he denounce the two interventions that have inflamed much of the Muslim world – in Iraq and in Afghanistan. Instead, he insisted that America had no wish to stay a moment longer in Afghanistan than the threat dictated. His Administration knew that “the less we use our power, the greater it will be”. But that did not mean that America would not confront extremists.

Like his earlier address to Iran, Mr Obama’s appeal struck a chord that infuriated those peddling hatred of America. Both Iran and Osama bin Laden were swift to belittle his words. He did not, sadly, address the issue of democracy. That must remain part of the agenda. What he did was to demolish the myth of a clash of civilisations. That is the first step to bridging the chasm.

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When it comes to dealing with the Middle East, the president noted, “there is a Kabuki dance going on constantly. That is what I would like to see broken down. I am going to be holding up a mirror and saying: ”˜Here is the situation, and the U.S. is prepared to work with all of you to deal with these problems. But we can’t impose a solution. You are all going to have to make some tough decisions.’ Leaders have to lead, and, hopefully, they will get supported by their people.”

It was clear from the 20-minute conversation that the president has no illusions that one speech will make lambs lie down with lions. Rather, he sees it as part of his broader diplomatic approach that says: If you go right into peoples’ living rooms, don’t be afraid to hold up a mirror to everything they are doing, but also engage them in a way that says ”˜I know and respect who you are.’ You end up ”” if nothing else ”” creating a little more space for U.S. diplomacy. And you never know when that can help.

“As somebody who ordered an additional 17,000 troops into Afghanistan,” said Mr. Obama, “you would be hard pressed to suggest that what we are doing is not backed up by hard power. I discount a lot of that criticism. What I do believe is that if we are engaged in speaking directly to the Arab street, and they are persuaded that we are operating in a straightforward manner, then, at the margins, both they and their leadership are more inclined and able to work with us.”

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[James Baker said in 1989]: “Israeli interests in the West Bank and Gaza, security and otherwise, can be accommodated in a settlement based on Resolution 242. Forswear annexation; stop settlement activity.”

Those words make startling but depressing reading: Little has changed in 20 years. After Bush 41 and Baker, we got Clinton’s love affair with Yitzhak Rabin (“I had come to love him as I had rarely loved another man”); the disintegration of Oslo after Rabin’s tragic assassination; and the Israel-can-do-no-wrong policy of Bush 43.

Balance ”” the credential no honest broker can forsake ”” vanished from American diplomacy.

I don’t believe that’s been good for Israel. The Jewish state needs to be challenged by its inseparable ally if it is to achieve the security it craves.

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President Obama starts his much anticipated Middle East tour on Wednesday in Saudi Arabia, where he is expected to press the Arab nations to offer a gesture to the Israelis to entice them to accelerate the peace process.

But when he meets in Riyadh, the Saudi capital, with King Abdullah, he should be prepared for a polite but firm refusal, Saudi officials and political experts say. The Arab countries, they say, believe they have already made their best offer and that it is now up to Israel to make a gesture, perhaps by dismantling settlements in the West Bank or committing to a two-state solution.

“What do you expect the Arabs to give without getting anything in advance, if Israel is still hesitating to accept the idea of two states in itself?” said Mohammad Abdullah al-Zulfa, a historian and member of the Saudi Shura Council, which serves as an advisory panel in place of a parliament.

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A senior Pakistani Taliban leader has claimed responsibility for Wednesday’s deadly suicide attack in the eastern city of Lahore.

Taliban official Hakimullah Mehsud told news agencies Thursday that the attack on police and intelligence offices was revenge for the ongoing military offensive in northwestern Pakistan’s Swat Valley.

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North Korea escalated its vitriol against South Korea and the United States on Wednesday with warnings of a “powerful military strike” if any North Korean ships were stopped or searched as part of an American-led operation to intercept vessels suspected of carrying unconventional weapons.

South Korea agreed to join the operation after North Korea tested a nuclear device on Monday, its second nuclear test in three years. The North had earlier warned the South not to participate in the operation, known as the Proliferation Security Initiative.

“We consider this a declaration of war against us,” North Korea said in a statement carried by its official news agency, KCNA. “Any hostile act against our peaceful vessels, including search and seizure, will be considered an unpardonable infringement on our sovereignty, and we will immediately respond with a powerful military strike.”

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President Obama and Dick Cheney conspired on Thursday to propagate a myth. The myth is that we lived through an eight-year period of Bush-Cheney anti-terror policy and now we have entered a very different period called the Obama-Biden anti-terror policy. As both Obama and Cheney understand, this is a completely bogus distortion of history.

The reality is that after Sept. 11, we entered a two- or three-year period of what you might call Bush-Cheney policy. The country was blindsided. Intelligence officials knew next to nothing about the threats arrayed against them. The Bush administration tried just about everything to discover and prevent threats. The Bush people believed they were operating within the law but they did things most of us now find morally offensive and counterproductive.

The Bush-Cheney period lasted maybe three years. For Dick Cheney those might be the golden years. For Democrats, it is surely the period they want to forever hang around the necks of the Republican Party. But that period ended long ago.

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A day after North Korea’s nuclear test, tensions on the Korean Peninsula rose further as Seoul announced that it would join a U.S.-led initiative to curb nuclear trade and the North reportedly test-launched two more short-range missiles.

North Korea said Monday that it had conducted a nuclear test followed by several short-range missile launches, drawing criticism from world capitals as well as a warning that Pyongyang had violated a United Nations Security Council resolution.

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Iran has sent six warships to international waters, including the Gulf of Aden, to show its ability to confront any foreign threats, its naval commander said on Monday.

Admiral Habibollah Sayyari, quoted by the ISNA news agency, made the announcement five days after Iran said it test-fired a surface-to-surface missile with a range of 2,000 km (1,200 miles), putting Israel and U.S. bases in the area within reach.

Iran said on May 14 it had sent two warships to the Gulf of Aden to protect oil tankers from the world’s fifth-largest crude exporter against attacks by pirates but ISNA did not make clear whether they were among the six Sayyari talked about.

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Iranian President Mahmoud Ahmadinejad on Monday rejected a Western proposal for it to “freeze” its nuclear work in return for no new sanctions and ruled out any talks with major powers on the issue.

The comments by the conservative president, who is seeking re-election in a June 12 presidential vote, are likely to further disappoint the U.S. administration of President Barack Obama, which is seeking to engage Iran diplomatically.

The United States, Russia, China, France, Germany and Britain said in April they would invite Iran to a meeting to try and find a diplomatic solution to the nuclear row.

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As President Obama defends his national security strategy, he faces a daunting challenge. He must convince the country that it is in safe hands despite warnings to the contrary from the right, and at the same time persuade the skeptical left that it is enough to amend his predecessor’s approach rather than abandon it.

Arguably on the defensive over policy for the first time since taking office, Mr. Obama is gambling that his oratorical powers can reassure the public that bringing terrorism suspects to prisons on American soil will not put the public in danger.

At the same time, he must explain and win support for a nuanced set of positions that fall somewhere between George W. Bush and the American Civil Liberties Union.

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The 76th General Convention this July will be asked in various ways to continue the Episcopal Church’s mission of living out the baptismal covenant vow to “strive for justice and peace.”

Already-filed resolutions, most contained in the triennial reports of the church’s commissions, committees, agencies and boards, address social justice issues and echo the baptismal promise to “respect the dignity of every human being.”

Leading the list of new domestic initiatives to be considered at the convention in Anaheim, California, is one from the Executive Council’s Jubilee Advisory Committee to establish a program to alleviate domestic poverty.

Arising from Presiding Bishop Katharine Jefferts Schori’s May 2008 summit on domestic poverty, the resolution focuses on the poorest counties in the United States that encompass federal reservations for Native Americans.

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Iranian President Mahmoud Ahmadinejad announced Wednesday that his country had successfully launched a medium-range missile, just two days after President Obama and Israeli Prime Minister Binyamin Netanyahu discussed the importance of halting Iran’s nuclear ambitions.

The missile was test-fired in Semnan province, east of Tehran. Ahmadinejad visited the province Wednesday as part of a campaign tour in advance of national elections June 12.

The hard-line Iranian leader told a crowd of several thousand that the missile — which according to previous descriptions by Iranian officials would be capable of striking Israel or U.S. bases in the Persian Gulf region — was an important scientific achievement. But he also described the launch in belligerent terms as a blow to those trying to thwart Iran’s nuclear program.

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Members of Congress have been told in confidential briefings that Pakistan is rapidly adding to its nuclear arsenal even while racked by insurgency, raising questions on Capitol Hill about whether billions of dollars in proposed military aid might be diverted to Pakistan’s nuclear program.

Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, confirmed the assessment of the expanded arsenal in a one-word answer to a question on Thursday in the midst of lengthy Senate testimony. Sitting beside Defense Secretary Robert M. Gates, he was asked whether he had seen evidence of an increase in the size of the Pakistani nuclear arsenal.

“Yes,” he said quickly, adding nothing, clearly cognizant of Pakistan’s sensitivity to any discussion about the country’s nuclear strategy or security.

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You started out on Monday questioning why we were being so opposite of George Bush in all these questions. And on Friday I’m answering questions about why are we so much like George Bush on all these questions.

I’ll let you guys discern what period of day that all changed.

—Robert Gibbs, Barack Obama’s Press secretary, as quoted in this morning’s Globe and Mail

Is this what the first trade war of the global economic crisis looks like?

Ordered by Congress to “buy American” when spending money from the $787 billion stimulus package, the town of Peru, Ind., stunned its Canadian supplier by rejecting sewage pumps made outside of Toronto. After a Navy official spotted Canadian pipe fittings in a construction project at Camp Pendleton, Calif., they were hauled out of the ground and replaced with American versions. In recent weeks, other Canadian manufacturers doing business with U.S. state and local governments say they have been besieged with requests to sign affidavits pledging that they will only supply materials made in the USA.

Outrage spread in Canada, with the Toronto Star last week bemoaning “a plague of protectionist measures in the U.S.” and Canadian companies openly fretting about having to shift jobs to the United States to meet made-in-the-USA requirements. This week, the Canadians fired back. A number of Ontario towns, with a collective population of nearly 500,000, retaliated with measures effectively barring U.S. companies from their municipal contracts — the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects.

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America’s spy chief was sent on a secret mission to Israel to warn its leaders not to launch a surprise attack on Iran without notifying the US Administration.

As Binyamin Netanyahu, the Israeli Prime Minister, prepares to visit Washington, it emerged yesterday that Leon Panetta, the head of the CIA, went to Israel two weeks ago. He sought assurances from Mr Netanyahu and Ehud Barak, the Defence Minister, that their hawkish new Government would not attack Iran without alerting Washington.

Concerns have been rising that Mr Netanyahu could launch a strike on Tehran’s atomic programme, in the same way that Israel hit Saddam Hussein’s Osirak reactor in 1981. Israel has been preparing for such an eventuality. It has carried out long-distance manoeuvres and is due to hold its largest civil defence drills this summer. The country’s leaders reportedly told Mr Panetta that they did not “intend to surprise the US on Iran”.

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Ms Saberi’s release shows that while Iran’s President Mahmoud Ahmadinejad likes to wave a big stick, he is also capable of talking softly. It indicates that relations between Washington and Tehran need not be poisoned permanently by a sense of hostility. It suggests that Iran – and, crucially, President Ahmadinejad, given expectations of his victory in next month’s elections – are ready to respond to America’s wooing.

That does not mean the diplomatic path from here will be either straight or easy. Suspicion that hangs like a fog between the two countries will not lift like a summer morning mist. It will not bring a swift end to the two countries’ friction over the aims of Iran’s nuclear programme.

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So you might expect the mood in the Middle East to be awful, bordering on desperate. Although it is sombre, those who know the region feel that there is all to play for. There are two reasons for this.

The first is the complex personality of Mr Netanyahu. I have met him several times and had informal conversations with him. He is usually reticent on strategy but a master at tactics. I have no doubt that he deeply dislikes the concept of a Palestinian state but that is not the same as saying that he could never endorse one….

That brings me to the second and, perhaps, decisive reason why the situation is more fluid than might first be apparent. Unlike George W. Bush, Barack Obama is engaging himself in the Israel-Palestine issue from the very outset of his presidency. He is doing so with more goodwill from the Arab world than any recent president.

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Russia on Saturday sternly warned its foes not to dare attempt any aggression against the country, as it put on a Soviet-style show of military might in Red Square including nuclear capable missiles.

The display to mark the 64th anniversary of the Soviet victory over Nazi Germany in World War II came amid renewed tensions with Georgia after NATO’s decision to hold war games in the Caucasus country infuriated Moscow.

“We are sure that any aggression against our citizens will be given a worthy reply,” President Dmitry Medvedev said in a speech in Red Square side-by-side with powerful Prime Minister Vladimir Putin.

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As Taliban forces edged to within 60 miles of Islamabad late last month, the Obama administration urgently asked for new intelligence assessments of whether Pakistan’s government would survive. In briefings last week, senior officials said, President Obama and his National Security Council were told that neither a Taliban takeover nor a military coup was imminent and that the Pakistani nuclear arsenal was safe.

Beyond the immediate future, however, the intelligence was far from reassuring. Security was deteriorating rapidly, particularly in the mountains along the Afghan border that harbor al-Qaeda and the Taliban, intelligence chiefs reported, and there were signs that those groups were working with indigenous extremists in Pakistan’s populous Punjabi heartland.

The Pakistani government was mired in political bickering. The army, still fixated on its historical adversary India, remained ill-equipped and unwilling to throw its full weight into the counterinsurgency fight.

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Pakistani forces battled Taliban fighters on Monday as the militants denounced the army and government as U.S. stooges and said a peace pact would end unless the government halted its offensive.

The February pact and spreading Taliban influence have raised alarm in the United States about the ability of nuclear-armed Pakistan — which has a vital role in efforts to stabilize Afghanistan — to stand up to the militants.

Last month, U.S. Secretary of State Hillary Clinton accused Islamabad of abdicating to the Taliban while President Barack Obama expressed grave concern the government was “very fragile” and unable to deliver basic services.

Obama will present his strategy for defeating al Qaeda to Pakistan and Afghanistan leaders on Wednesday amid growing U.S. concern it is losing the Afghan war.

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When American forces in Iraq wanted to lure members of Al Qaeda into a trap, they hacked into one of the group’s computers and altered information that drove them into American gun sights.

When President George W. Bush ordered new ways to slow Iran’s progress toward a nuclear bomb last year, he approved a plan for an experimental covert program ”” its results still unclear ”” to bore into their computers and undermine the project.

And the Pentagon has commissioned military contractors to develop a highly classified replica of the Internet of the future. The goal is to simulate what it would take for adversaries to shut down the country’s power stations, telecommunications and aviation systems, or freeze the financial markets ”” in an effort to build better defenses against such attacks, as well as a new generation of online weapons.

Just as the invention of the atomic bomb changed warfare and deterrence 64 years ago, a new international race has begun to develop cyberweapons and systems to protect against them.

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