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VOL. CLXII . . No. 55,907
+
NEW YORK, THURSDAY, SEPTEMBER 27, 2012
© 2012 The New York Times
China Politics
Stall Overhaul
For Economy
CLINTON SUGGESTS
TIE BY QAEDA ARM
TO LIBYAN ATTACK
Leaders Distracted by
Coming Transition
NO EVIDENCE IS OFFERED
Evolving Explanation of
Deadly Strike Draws
G.O.P. Criticism
By ANDREW JACOBS
BEIJING — When it comes to
confronting economic slow-
downs, the Chinese government
has not been shy about making
bold moves. Faced with the con-
tagion of global recession four
years ago, policy makers created
a $585 billion stimulus package
that helped inoculate the nation
against the economic malaise
still sapping the United States
and Europe.
But today, even as China’s
By STEVEN LEE MYERS
Secretary of State Hillary Rod-
ham Clinton on Wednesday sug-
gested there was a link between
the Qaeda franchise in North Af-
rica and the attack at the Ameri-
can diplomatic mission in Ben-
ghazi, Libya, that killed the
American ambassador and three
others. She was the highest-rank-
ing Obama administration official
to publicly make the connection,
and her comments intensified
what is becoming a fiercely parti-
san fight over whether the attack
could have been prevented.
Mrs. Clinton did not offer any
new evidence of a Qaeda link,
and officials later said the ques-
tion would be officially settled
only after the F.B.I. completed a
criminal inquiry, which could
take months. But they said they
had not ruled out the involve-
ment of Al Qaeda in the Islamic
Maghreb — an affiliate of the in-
ternational terrorist group with
origins in Algeria — in an attack
the administration initially de-
scribed as a spontaneous protest
turned violent.
Her remarks added to the ad-
ministration’s evolving and at
times muddled explanation of
what happened on the evening of
Sept. 11 and into the next morn-
ing. Republicans in Congress
have accused President Obama
of playing down possible terrorist
involvement in the midst of a re-
election campaign in which kill-
ing Osama bin Laden and crip-
pling Al Qaeda are cited as major
achievements.
Mrs. Clinton made her re-
marks at a special United Na-
tions meeting on the political and
security crisis in the parts of
North Africa known as the Ma-
ghreb and the Sahel, particularly
in northern Mali, which has been
overrun by Islamic extremists
since a military coup helped lead
to the division of that country this
year.
Al Qaeda in the Islamic Ma-
ghreb has long operated in the re-
gion, she said, and was now ex-
ploiting a haven in Mali to export
extremism and terrorist violence
CHANGING OF THE GUARD
A Reckoning Looms
vaunted export manufacturing
juggernaut loses force and the
Shanghai stock market remains
in a slump, the Communist Party
appears so distracted by its polit-
ically tangled once-a-decade
leadership transition that it is un-
willing or unable to pursue the
more ambitious agenda that
many economists say is neces-
sary to head off a far more seri-
ous crisis in the future.
Although the departing gov-
ernment has tried in recent
months to address decelerating
growth by easing bank loan re-
strictions, increasing pensions
and offering tax breaks to small
businesses, a lack of consensus
among the top stewards of the
economy has stymied a more
muscular response, insiders say.
Similarly, many analysts ques-
tion whether the incoming lead-
ership has the political will to
overcome the resistance of the
so-called princelings and other
well-connected families that have
prospered under the current sys-
tem.
China’s standard economic for-
mula, they say, is losing its poten-
cy: overzealous government in-
vestment and lagging consumer
spending are creating serious im-
balances that are expected to
lead to a much more painful reck-
oning, perhaps not long after the
new raft of younger leaders as-
sumes power in early 2013.
“There are tough choices to
make, but the central govern-
ment appears to be so paralyzed
they are just sitting on their
hands,” said Ho-Fung Hung, a po-
litical economist at Johns Hop-
kins University in Baltimore.
LOUISA GOULIAMAKI/AGENCE FRANCE-PRESSE — GETTY IMAGES
New Protests Over Austerity Plans in Greece
A protester in Athens fled the police on Wednesday during a strike called to contest potential salary and pension cuts. Page A4.
N.F.L. Reaches
Labor Accord
With Referees
Rebels Make Gains in Blunting Syrian Air Attacks
Marouf, a commander credited
by the fighters with downing the
first MIG-21 here. “With these
weapons we are preventing air-
craft from landing or taking off.”
This is a significant setback for
the government in the northern
region, where rebels had already
strengthened their position with
homemade bombs, making roads
too perilous for military vehicles
to pass and restricting the mil-
itary’s movements
.
But air power has remained a
large advantage for President
Bashar al-Assad, whose air force
has pounded many cities and
towns.
For the rebels, managing to
deny the use of this airfield has
undermined the government’s
ability to exert its full authority in
some parts of the country. It has
also improved the morale of
fighters who remain severely
outgunned.
The rebels’ boldness, and their
By C. J. CHIVERS
ABU AD DUHUR, Syria — The
rebels huddled before darkness
near the edge of the Syrian Air
Force base. They were about 40
men, hiding beside small build-
ings on the flatlands south of
Aleppo.
Each man carried little more
than a rifle and several dozen
cartridges. They had gathered
for an effort that illustrated the
lopsided nature of the fight for
Syria: Lightly armed men trying
to remove Syria’s attack jets from
the skies.
Roughly two months into this
important yet scarcely docu-
mented battle, Syria’s antigov-
ernment fighters have succeeded
in laying siege to the heavily for-
tified Abu ad Duhur Air Base.
They have downed at least two of
the base’s MIG attack jets. And
this month they have realized re-
sults few would have thought
possible. Having seized ground
near the base’s western edge,
from where they can fire onto two
runways, they have forced the
Syrian Air Force to cease flights
to and from this place.
“We are facing aircraft and
shooting down aircraft with cap-
tured weapons,” said Jamal
By JUDY BATTISTA
The National Football League
reached agreement on an eight-
year labor deal with its game offi-
cials late Wednesday night, end-
ing a lockout that forced unpre-
pared replacement officials onto
the field, creating three weeks of
botched calls, acute criticism, fu-
rious coaches and players, and a
blemish — however temporary —
on the integrity of the country’s
most popular sport.
The agreement, which was be-
ing put in writing late Wednes-
day night, came 48 hours after
the nadir of the league’s experi-
ment with replacement officials,
when an incorrect call on the fi-
nal play of the Monday night
game cost the Green Bay Pack-
ers a victory against the Seattle
Seahawks.
That nationally televised deba-
cle spurred two days of intense
and lengthy negotiations against
the backdrop of immense public
pressure and scorn, most of it di-
rected at the league. Both sides
Continued on Page B13
Continued on Page A8
BRYAN DENTON FOR THE NEW YORK TIMES
The tail section of a Syrian Air Force jet downed by rebel forces
under Jamal Marouf near the Abu ad Duhur Air Base.
Continued on Page A3
Continued on Page A15
Nets Helped Clear Path for Builder in Brooklyn
‘Su
per PAC
s’ Are Fi
nally Dr
awing Democrats In
ed, even as the super PAC back-
ing Mitt Romney raises millions
of dollars from his friends and
former colleagues. Only a few
gay donors are among the big-
gest givers, despite Mr. Obama’s
embrace of same-sex marriage
last spring. Most of the wealthy
liberals who financed the party’s
last major outside spending ef-
fort, in 2004, remain on the super
PAC sidelines.
In their place, the Democratic
groups are raising heavily from
the party’s traditional, pre-Oba-
ma sources of campaign cash:
trial lawyers, unions and Holly-
wood. And at a time when Mr.
Obama’s own big donors often
complain about his indifference
and inattention to them, Priori-
the borough.
“So, how did we get here?” Mr.
Ratner asked last week, almost
giddy, at the ribbon cutting of the
nation’s most expensive basket-
ball arena, the Barclays Center.
“We first needed to buy a basket-
ball team, and against all odds we
did it.”
That acknowledgment high-
lights a characteristic that
emerged again and again over
the past nine years: Mr. Ratner,
one of the most prominent and
polarizing figures in real-estate-
mad New York, may portray him-
self as a reluctant developer, but
he will do what is necessary to
get a deal done.
“By nature he’s a very gener-
ous guy,” said Stuart Pertz, an ar-
Old Alliances Are
Bolstering Coffers
By NICHOLAS CONFESSORE
James Simons, a Long Island
investor and philanthropist, has
not given a cent to President
Obama’s re-election campaign
this year.
But Mr. Simons has given at
least $2 million to Priorities USA
Action, the “super PAC” aiding
Mr. Obama, and $2 million more
to two allied groups supporting
Democrats in Congress, making
him the biggest Democratic su-
per PAC donor in the country.
With the election just weeks
away — and millions of dollars in
advertising time booked but not
yet paid for — Democratic super
PACs are finally drawing the kind
of wealthy donors who have al-
ready made Republican outside
By CHARLES V. BAGLI
and JOSEPH BERGER
Bruce C. Ratner did not pre-
tend to be much of a basketball
fan when he paid $300 million in
2004 for the New Jersey Nets. Be-
fore long, the team had the worst
record in the National Basketball
Association, and he had a rep-
utation as one of the worst own-
ers in professional sports.
But he also had the leverage he
needed to pull off a real estate
megadeal.
The purchase was the most
glaring demonstration of Mr. Rat-
ner’s single-minded dedication to
a goal: building a 22-acre, $4.9
billion project in the heart of
Brooklyn, the largest develop-
ment project in the borough’s his-
groups a pivotal force in the 2012
campaign.
More than 40 individuals and
couples had given at least
$250,000 to the leading Demo-
cratic super PACs through the
beginning of September, accord-
ing to a New York Times analysis
of campaign finance records, and
dozens more have given $100,000
or more.
But the money is not coming
from the expected places. Few of
the wealthiest men and women
closest to Mr. Obama have donat-
RICHARD PERRY/THE NEW YORK TIMES
Bruce C. Ratner
tory. Though the Atlantic Yards
plan also called for residential
towers, a significant portion of
which will be subsidized, he sold
it to the public as a way to finally
bring professional sports back to
Continued on Page A27
Continued on Page A18
INTERNATIONAL A4-15
At U.N., Calls to Limit Speech
BUSINESS DAY B1-9
High-Speed Trading Curbs
HOME D1-8
British Design on the Rise
In a rebuttal to President Obama’s ad-
dress a day earlier, leaders of Egypt and
Yemen, among others, urged curbs on
speech that incites hatred.
Canada, Australia and Germany are
moving to curb high-speed stock trading
of the kind that disrupted markets in the
United States, but some in the industry
fear unintended consequences.
PAGE B1
At the 10-day Lon-
don Design Festi-
val, the city
showed signs of
emerging as the
next world capi-
tal of design, with
about 200 events and
innovative entries like the Windsor
Rocker, above, that found poetry in tra-
ditionalism.
PAGE A10
ELECTION 2012 A16-19
Romney Ad Reaches Out
NATIONAL A20-21
Budget Ax Falls on Archivists
Mitt Romney is stepping up his efforts
to repair the damage from his “47 per-
cent” comments.
As Georgia’s state archives prepares to
severely reduce its staff, archivists wor-
ry about the impact of budget cuts on
public records nationwide.
PAGE D1
PAGE A16
PAGE A20
THURSDAY STYLES E1-12
College Bars in the Texting Age
OBITUARIES B10
Andy Williams Dies at 84
NEW YORK A22-27
Traffic Deaths Increase
The bar scene plays a less important
role in college students’ lives, as more
turn to Facebook, texting and other so-
cial media to plan evenings.
The affable, boy-
ishly handsome
singer defined
both easy listening
and wholesome,
easygoing charm
for many Ameri-
can pop music fans
in the 1960s, most
notably with his
signature song,
“Moon River.”
PAGE B10
For the first time in five years, traffic fa-
talities have risen in New York City. Of-
ficials say distracted drivers and pedes-
trians may have played a role.
PAGE A22
PAGE E1
EDITORIAL, OP-ED A28-29
Gail Collins
PAGE A29
SPORTSTHURSDAY B11-17
Raising Questions in Hockey
A lawsuit by the hockey enforcer Derek
Boogaard’s family against the players
union could shake up the sport.
PAGE B11
U(D54G1D)y+&!"![!#!?
A2
THE NEW YORK TIMES, THURSDAY, SEPTEMBER 27, 2012
N
Inside The Times
INTERNATIONAL
NEW YORK
SPORTS
QUOTATION OF THE DAY
Protests in Greece
And Spain Jolt Markets
Trade unions in Greece called a na-
tionwide strike to contest new cuts
being discussed by the government,
and protesters in Spain surrounded
Parliament for a second day over
the prime minister’s austerity pro-
gram. PAGE A4
Party Chief Chosen in Japan
Shinzo Abe, a nationalist former
prime minister, was elected to lead
Japan’s main opposition party and
will seek to regain the nation’s top
job — a prospect that may worsen
Tokyo’s tense relations with China
and its other Asian neighbors.
PAGE A4
Journalist Killed in Syria
At least two large explosions struck
a military headquarters in a busy
square in central Damascus, and
Iran’s Press TV said one of its corre-
spondents was killed in the gunfire
afterward.
PAGE A8
Police Comb a Dense Forest
For a Suspect in a Killing
Eugene Palmer’s neighbors said he
often retreated to the woods to camp
and hunt. He is now hiding in those
woods, the 46,000-acre Harriman
State Park, after killing his daugh-
ter-in-law, the police said. PAGE A22
A Coach From the Past
Helps a Team Build a Future
Under Terry Bowden, North Ala-
bama became a haven for players
who needed a fresh start. Under
Bobby Wallace, the program is tak-
ing a different approach as it sheds
an image as a halfway house for
troubled players. PAGE B12
Reacquainted With Success
As the Baltimore Orioles make a run
at a playoff berth, their city is re-
learning how to care about and to
keep up with a pennant contender.
PAGE B15
‘‘
The slogans are loud
and the plans are grand,
but when it comes to im-
plementation, the con-
straints are many.
’’
ZHAO XIJUN,
a professor in Beijing, on a lack
of economic progress during a
transition in China’s
leadership. [A3]
OBITUARIES
Billy Barnes, 85
He was a composer and lyricist
whose varied work included satiri-
cal Broadway revues, “Laugh-In”
routines and songs that became
popular standards for artists like
Barbra Streisand. PAGE B10
STYLE
ARTS
Skin Creams Capture
The Eyes of Men
Many over-the-counter products for
men emphasize that they will re-
duce fine lines, puffiness and dark
circles, which can befall the poorly
rested of any age. PAGE E3
Determining a City’s
Need for More Highways
A planned expansion of highways
and bridges in and around Louis-
ville, Ky., raises a decades-old urban
question: What revitalizes a city?
PAGE C1
BUSINESS
Despite Risks, Russians
Participate in Experiments
Russians are volunteering to take
part in medical trials, an advanta-
geous development for the interna-
tional pharmaceutical industry,
which is running up against high
costs and recruitment difficulties in
the United States and Europe.
PAGE B1
Using Carrots to Avoid Tax
To avoid a tax increase imposed by
the government, a theater in Besca-
nó, a Catalan village, has found a
loophole: sell carrots in lieu of en-
trance tickets.
PAGE B1
OP-ED
HOME
NATIONAL
Nicholas D. Kirstof
PAGE A29
Organic Farming in Maine
Stops to Smell the Herbs
Organic food may not be feeding the
world yet, but it was feeding thou-
sands of people at the Common
Ground Fair in Unity, Me., where
celebrating the food and harvest has
turned into a cultural tradition.
PAGE D1
Republicans Intensify
Drive for Jewish Voters
In battleground states like Florida,
Ohio and Nevada, Republicans are
trying to persuade Jewish voters,
who might typically be expected to
support Democrats, to vote for Mitt
Romney.
PAGE A16
Crossword
C2
Obituaries
B10
TV Listings
C9
Weather
A26
Classified Ads
B17
Commercial
Real Estate Marketplace
B4
Corrections
FRONT PAGE
An article on Wednesday about
the federal budget deficit as a
presidential campaign issue mis-
stated the amount by which the
Congressional Budget Office has
estimated that the deficit would
grow if President Obama’s health
care overhaul were repealed, as
proposed by the Republican can-
didate Mitt Romney. The estimat-
ed increase would be more than
$100 billion over 10 years, not
$800 billion.
figure for the previous year.)
And the population of the
Bronx has increased to 1.4 mil-
lion; it is no longer 1.1 million.
Development Corporation re-
cently spent to upgrade the
Brooklyn Army Terminal. The
agency spent $4.2 million a year
ago, not $1.2 million.
ners. He was not hitting .393 in 32
games as a Yankee after compil-
ing a .279 average with Seattle.
An article on Monday about
Manchester United’s 2-1 victory
over Liverpool in an English Pre-
mier League soccer match mis-
identified the men who released
96 balloons before the game to
signify the Liverpool fans who
died in the Hillsborough disaster
in 1989. They are Steven Gerrard
and Ryan Giggs, Liverpool and
Manchester United’s captains —
not Ian Rush and Bobby Charl-
ton, the teams’ top career goal
scorers. (Charlton presented
Rush with 96 roses during a cere-
mony before the game.) The arti-
cle also misidentified the player
who scored the tying goal for
Manchester United in the 50th
minute. He is Rafael, not Fabio.
(Fabio, Rafael’s twin brother, is
on loan to Queens Park Rangers
from Manchester United this sea-
son.)
The Appraisal column on Sept.
18, about political donations from
the San Remo apartment build-
ing on the Upper West Side, mis-
stated some contribution totals
from the building and its resi-
dents.
Through July, residents using a
San Remo address had given
$101,367 to President Obama’s re-
election effort, not about
$112,000; they had given $331,625
to Republican presidential candi-
dates, not $395,550. A couple in
the building, Kevin and Karen
Kennedy, had given $105,000 to
Mitt Romney’s side, not $160,800;
and Steven Spielberg and his
wife, Kate Capshaw, had given
$204,800 to the Obama effort from
California
SPORTS
A Sports of The Times column
on Monday, about the Yankees’
history in close playoff races,
misstated the number of games
the Yankees were behind the Red
Sox at one point in 1978, when the
Yankees rallied to tie the Red Sox
and won a one-game playoff. It
was 14 games, not 14›.
NEW YORK
The Gotham column on Tues-
day, about the continuing eco-
nomic difficulties for many New
Yorkers despite city leaders’ con-
tentions that things are improv-
ing, misstated several newly re-
leased census figures.
Manhattan had the second big-
gest income gap of any county in
the country last year, not the big-
gest. (The biggest was in Clarke
County, Ga.)
The top fifth of income earners
in the borough had a median in-
come of $371,754 in 2011, not a
minimum. Earners in that quin-
tile made more than 40 times
what earners in the bottom fifth
made, not 38 times. (That was the
A report in the Yankees base-
ball notebook in some editions on
Tuesday about Yankees outfield-
er Ichiro Suzuki’s being named
the American League player of
the week misstated, in some cop-
ies, his statistics. At the time, he
was hitting .331 after 57 games as
a Yankee after compiling a .261
average with the Seattle Mari-
addresses,
not
$235,600.
BUSINESS DAY
An article and a picture caption
in the Square Feet pages on
Wednesday about the redevelop-
ment of industrial spaces near
the waterfront in Sunset Park,
Brooklyn, misstated the amount
that the New York City Economic
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THE NEW YORK TIMES, THURSDAY, SEPTEMBER 27, 2012
N
ALY SONG/REUTERS
A depot for aluminum ingots in Wuxi, in Jiangsu Province. China’s industrial output is rising at its slowest rate in three years.
China’s Politics During Transition
Stall Overhaul of Ailing Economy
growth still robust enough to pre-
vent unemployment from rising
significantly. But unrest is in-
creasing, as riots at a big Fox-
conn electronics factory on Sun-
day demonstrated, and there is
so much uncertainty surrounding
economic policy and the leader-
ship hand-over that few are will-
ing to hazard a prediction about
the future.
“The system is so opaque and
the new guys are such unknown
entities that no one really knows
what to expect,” said Alistair
Thornton, senior China econo-
mist at IHS Global Insight.
Supporters of Xi Jinping, the
man expected to be China’s next
president, and Li Keqiang, who is
all but certain to replace Mr. Wen
as prime minister, have been qui-
etly putting out the word that the
new team plans to introduce a
more far-reaching agenda once
the incoming leaders are secure
in their new posts. Some even ar-
gue that the worse things get, the
better the chance the new leaders
will have to deal with China’s big-
gest challenges after the succes-
sors are announced at the 18th
Party Congress, expected to take
place next month.
“When the bubble bursts, there
will be an initial period of pain,”
Li Zuojun, a prominent govern-
ment economist, said in a recent
speech, “but it would be good
news for the new leadership be-
cause it would be clear who is to
blame — their predecessors. The
new leadership can start over on
solid ground.”
But so far, Mr. Xi has offered al-
most no clues as to where he
stands on overhauling the econ-
omy, while Mr. Li’s track record
during his time as a provincial
governor and party secretary
suggests he is more of a risk-
averse technocrat than a reform-
er.
For the moment, the world’s
second-largest economy is drift-
ing, as exports to Europe and the
United States wane. Some econo-
mists even suspect that the offi-
cial figure of an annual rate of
growth of 7.6 percent in the sec-
ond quarter is overstated; indica-
tors like electricity generation
are rising much more slowly.
Moreover, part of the growth led
only to producing stocks of un-
projects they hope will be fi-
nanced in part by newly liberal-
ized bank loan policies.
Tianjin claims $236 billion will
be spent in the petrochemical,
aerospace and other industries.
Xi’an, home of the famed terra
cotta warriors, plans to invest
tens of billions of dollars on nine
new subway lines. In Guizhou,
one of China’s poorest provinces,
officials said they hoped to funnel
$472 billion into tourism-related
development.
In Changsha, the provincial
capital of Hunan, officials brag of
12.9 percent growth as they
spend billions of dollars on a new
subway system, a ring road, an
intercity rail line and a pair of
bridges to knit together its trans-
portation system.
“We haven’t felt any impact
from the crisis in Europe,” said
Liu Maosong, chairman of the
Hunan Economics Association
and an adviser to the Changsha
government. “Our guiding philos-
ophy is ‘investment, investment,
investment.’”
Even if many such projects
turn out to be wishful thinking,
economists have expressed
alarm that municipalities are still
chasing debt-financed growth. “It
almost scares me to death,” said
Mao Yushi, a prominent econo-
mist. “Local governments are us-
ing the people’s money for in-
vestment, but when they can’t re-
pay the banks, the financial sys-
tem will snap.”
And Liao Jinzhong, an econo-
mist at Hunan University, wor-
ries that much of the spending is
misplaced. “What we really could
use is a functioning sewage sys-
tem,” he said, speaking from his
sixth-floor apartment in a crum-
bling faculty building that has no
elevator.
Mr. Liao said he gave frequent
lectures at the local party school
about the dangerous fixation on
propping up growth figures at all
costs. He said officials often con-
gratulated him on his frank
views.
“But then they admit they
can’t change the way they do
things,” he said. “Given that the
whole system is oriented toward
bolstering the careers of official-
dom, I just don’t see things
changing any time soon.”
From Page A1
Changing of the Guard
“The situation is looking increas-
ingly dire.”
The economic data is indeed
glum. Direct foreign investment
has fallen for 9 months out of the
past 10, and industrial output is
rising at the slowest rate in three
years. Last week, Frederick W.
Smith, the chief executive of
FedEx, the global airfreight titan,
warned of more trouble to come,
saying that China’s faltering ex-
ports pointed to a weakening glo-
bal economy in the coming year.
Since the death of Deng Xiao-
ping, the wily leader who steam-
rollered his conservative oppo-
nents to introduce market re-
forms in the 1980s and ’90s, Chi-
na’s political system has increas-
ingly operated through consen-
sus. The horse-trading, involving
a dozen or so men who negotiate
in secrecy, has dimmed the pros-
pect of significant political or eco-
nomic change.
“The slogans are loud and the
plans are grand, but when it
comes to implementation, the
constraints are many,” said Zhao
Xijun, an economics professor at
Renmin University in Beijing.
Prime Minister Wen Jiabao is a
vocal advocate of what many ex-
perts see as the kind of change
China needs: breaking up state-
owned monopolies, encouraging
more consumer spending and re-
ducing reliance on investment in
real estate and heavy industry.
But he has already been ren-
dered something of a lame duck
because of his planned retire-
ment in March. He lacks the po-
litical capital to undertake a more
ambitious overhaul of the econ-
omy, particularly anything that
would undercut the favored posi-
tion of state monopolies, analysts
say.
“Wen is a spent force,” said a
person with close contacts in the
upper levels of the Chinese gov-
ernment.
To be sure, China’s developing
economy enjoys many advan-
tages over those of most other
major industrial nations, with
Articles in this series are examin-
ing the implications for China and
the rest of the world of the coming
changes in the leadership of the
Chinese Communist Party.
ONLINE:
Previous articles in
this series:
nytimes.com/world
sold appliances, toys and coal
that are piling up at warehouses
and ports.
Still, Beijing has largely held
back from the kind of prodigious
investment in housing and public
works that propped up the flag-
ging Chinese economy during the
global downturn. In an editorial
published this month, People’s
Daily, the party’s influential
mouthpiece, conveyed the official
view, saying the central govern-
Experts predict a
crisis, but tough
choices are put off.
ment should resist the tempta-
tion to spend its way out of the
slowdown.
In a speech this month at a
World Economic Forum session
in Tianjin, Mr. Wen agreed that
the government was holding its
fire, but said that it would step in
forcefully if necessary. Beijing
has a budget surplus of $158 bil-
lion, with $16 billion more in a re-
serve fund, he noted.
“We will use that money at a
right moment for pre-emptive
policy and fine-tuning to propel
stable economic growth,” Mr.
Wen said.
Local governments, alarmed
by a slowdown they fear could
lead to mass unemployment and
the kind of sluggish growth that
can dent political careers, have
decided to take matters into their
own hands. In recent months, a
number of cities have proposed
extravagant
Keith Bradsher contributed re-
porting from Beijing and Hong
Kong. Patrick Zuo contributed re-
search from Beijing.
infrastructure
CHINATOPIX, VIA ASSOCIATED PRESS
A freighter at a container terminal in Shandong Province last year. Exports to the United States and Europe have been waning.
A4
N
THURSDAY, SEPTEMBER 27, 2012
MEMO FROM NEW DELHI
As Power Flows to Regional Bosses, Questions Rise on India’s Economy
By JIM YARDLEY
NEW DELHI — It seems like eons
ago, but Prime Minister Manmohan
Singh and his coalition government
once inspired very high expectations.
They were going to stoke India’s econ-
omy, improve education, help the poor,
build modern transportation and ener-
gy systems and, perhaps most improba-
bly, prove that India, the most populous
and messiest of democracies, could be
successfully governed.
That was in 2009, when the governing
coalition, led by the Indian National
Congress Party, won an unexpectedly
broad re-election victory. India’s econ-
omy was motoring out of the global re-
cession, and the country seemed to be
moving from an era of fragmented poli-
tics to a new stage in which power resid-
ed with a stronger central government
in New Delhi. To those who saw India as
a rising global power, this was good
news.
If only.
Today, India’s political calculus is
again in flux. The economy is in a tail-
spin, Mr. Singh and his government are
desperately trying to regain credibility,
and power is now radiating to regional
political chieftains, who are teasingly
considering a new national political
alignment, a so-called third front to
compete with the two national powers,
the Congress Party and the opposition
Bharatiya Janata Party.
Regional bosses, once in decline, are
becoming kingmakers again: the squat,
sleepy-eyed Mulayam Singh Yadav,
who oversees the powerful Samajwadi
Party, is even publicly musing about
himself as a future prime minister.
“The incentive for every single party
from the opposition to the allies is to
send a signal that the Congress can’t
govern,” said Pratap Bhanu Mehta,
president of the Center for Policy Re-
search in New Delhi. “That’s the elec-
tion plank.”
Had Mr. Singh’s government met ini-
tial expectations, or even come close,
the political landscape would undoubt-
edly be different. “They just blew it,”
Mr. Mehta said. The rise of Mr. Yadav
and several other regional bosses has
many implications for Indian politics,
but the trend also raises a broader ques-
tion about the changing arc of the Indi-
an economic story: If the old assump-
tion was that India needed a strong cen-
tral government to compete globally,
and to avoid a competitive disadvan-
tage with China, what will happen now
that the opposite seems to be happen-
ing?
History does not provide much re-
assurance. In past decades, third-front
governments have twice taken power
and have twice collapsed because of in-
ternal bickering, a prospect of instabil-
ity certain to be unappealing to those in
New Delhi and Washington who are ea-
ger for India to become a stable and in-
fluential player in Asia. Most analysts
are skeptical that a true third front will
take power in the near future, but they
agree that the clout of regional leaders
is growing.
“Indian politics will have to live with
bargains and negotiations with regional
parties,” Ashutosh Varshney, a political
expert, said in an e-mail interview. “A
third front may or may not emerge, but
both national parties will have to negoti-
ate and bargain. That also means that
India will find it harder to make firm as-
sertions of power on the international
stage, à la China. Its power will grow,
but more gradually.”
Last week, Mr. Singh’s coalition gov-
ernment nearly collapsed after he
pushed through unpopular economic
measures, including an increase in die-
sel fuel prices and a policy shift en-
abling global giants like Walmart to
open retail stores here. Mamata Baner-
jee, the populist chief minister of the
state of West Bengal, declared the
moves “anti-poor” and withdrew her re-
gional party from the governing coali-
tion, potentially bringing down Mr.
Singh’s government. Until, that is, Mr.
Yadav and another nonaligned regional
Continued on Page A6
Markets Falter
In Europe
Amid Protests
On Austerity
By LIZ ALDERMAN
and NIKI KITSANTONIS
ATHENS — After a period of relative
calm, European markets shuddered
once again on Wednesday as protests
erupted across Greece and demonstra-
tors surrounded the Spanish Parlia-
ment for a second day to protest the
austerity program of Prime Minister
Mariano Rajoy.
Earlier this month, the European
Central Bank announced its intention to
buy unlimited quantities of debt from
European nations, including the trou-
bled economies of southern Europe.
That kept the peace in the financial
markets until Wednesday, when politi-
cal instability startled investors, with
the Spanish stock market dropping 3.9
percent and even the German DAX fall-
ing by 2 percent. The interest rate on
the 10-year Spanish bond, which had
been declining, inched closer to the omi-
nous 6 percent level.
On Tuesday in Spain, tens of thou-
sands of demonstrators besieged Par-
liament to protest austerity measures
planned by Mr. Rajoy. Last week, more
than half a million people marched in
cities across Portugal to protest an in-
crease in social security contributions,
and a million marched in Barcelona call-
ing for Catalan independence.
In Athens, trade unions called a na-
tionwide strike Wednesday to contest
billions of dollars in new salary and pen-
sion cuts being discussed by the gov-
ernment and its international creditors.
It was the first such walkout since a
conservative coalition led by Prime
Minister Antonis Samaras came to pow-
er in June.
Mr. Samaras is negotiating a $15 bil-
lion austerity package that is needed to
persuade Greece’s so-called troika of
lenders — the International Monetary
Fund, the European Central Bank and
the European Commission — to release
nearly $40.7 billion in financial aid that
the country needs to stay solvent.
Mr. Rajoy has been trying for months
to convince investors that Spain can
handle its own problems and that it will
not need a bailout that would force Ma-
drid to cede some authority over its fis-
cal affairs to its lenders, and is set to in-
troduce new cutbacks to meet budget-
ary goals. Those will include restric-
tions on early retirement and various
ARIS MESSINIS/AGENCE FRANCE-PRESSE — GETTY IMAGES
Protesters on Wednesday after the police used tear gas during demonstrations in Athens over potential cuts. More photographs are at nytimes.com/world.
measures to streamline regulations and
fight unemployment, he said in an in-
terview with The Wall Street Journal.
The proposed cuts in Greece have ig-
nited new anger, with many talking
openly of increased impoverishment as
the nation grapples with a third round
of austerity measures in three years.
The protests in Athens were peaceful in
the morning, as civil servants, teachers,
medical personnel, bank employees and
lawyers made their way to the city cen-
ter. A police spokeswoman put the turn-
out at 35,000 to 40,000 people — modest
by Greek standards.
But violence broke out shortly after 1
p.m., as a group of protesters wearing
black masks hurled gasoline bombs at
police officers on Vasilissis Sofias, a
wide avenue abutting Parliament, send-
ing bursts of flame and black smoke into
the air. Firebombs were also thrown at
the Finance Ministry and into the lush
National Gardens next to Parliament.
Officers wielding batons responded
with bursts of tear gas, scattering dem-
onstrators and tourists as police heli-
copters circled overhead and flares ex-
ploded. Many cursed the police with
cries of “traitors” and “Merkel’s pigs”
— a reference to Chancellor Angela
Merkel of Germany, the country widely
blamed for insisting on strong austerity
measures in exchange for aid.
Mr. Samaras is scheduled to meet on
Thursday with his coalition partners —
Evangelos Venizelos, the Socialist lead-
er, and Fotis Kouvelis of the Democratic
Left — to seek a common line regarding
the $15 billion austerity plan.
Representatives of the troika left Ath-
ens last week after tussling with the
government over the depth of cuts
planned for salaries and pensions. The
two sides need to reach an agreement
before the lenders can issue a report in
October grading Greece’s ability to
mend its tattered finances. Additional
aid depends on a positive assessment,
and is critical to lifting confidence that
Greece will remain in the euro zone.
But for many Greeks who took to the
streets, that pact amounts to a bargain
with the devil.
Anna Afanti, 50, a secondary school
teacher, removed a surgical mask she
had been wearing to ward off the tear
gas to denounce Greece’s foreign credi-
tors. “They just want to impoverish us,
to bring our salaries down to the level in
India and swoop in and buy everything
on the cheap,” she said, referring to
planned privatizations of state assets.
Ms. Afanti, who traveled about 40
miles to Athens from the town of Halki-
da with several colleagues to attend
Wednesday’s protest, said her salary
had been cut by a third since the crisis
hit. “I should have left this country a
long time ago,” Ms. Afanti said. “Now
I’m stuck here.”
Smaragda Aivalioti, 21, an economics
student at Athens University, had
planned to stay in Greece despite the
crisis. “But now I just don’t see any
hope,” she said. “All the odds are
stacked against Greece. Even if we stay
in the euro, life will be wretched. What’s
the point?”
Speaking to state television, Alexis
Tsipras, the head of the leftist opposi-
tion party Syriza, which opposed
Greece’s bailout terms, said the coun-
try’s only hope was in Greeks’ rejecting
austerity.
Numerous government services
across the country were shuttered for
the day, and main transportation arter-
ies in central Athens were disrupted.
Flights to and from the main Athens air-
port were delayed as air traffic control-
lers briefly took part in the strike.
Former Prime Minister in Japan
Elected to Lead Opposition Party
that the Democrats would probably lose
their majority in Parliament’s lower
house in an early vote, but the Liberal
Democrats are seen as unlikely to win a
majority either, inviting further political
gridlock.
Mr. Abe had not been the front-run-
ner in the party balloting on Wednes-
day; he ran second in the initial round
to Shigeru Ishiba, a conservative but
less ideological former defense minis-
ter. But party elders did not back Mr.
Ishiba in the runoff, analysts said, be-
cause of an independent streak that led
Mr. Ishiba to leave the party for a time
in the 1990s. Mr. Abe ultimately won the
party vote, 108-89.
Now, the Liberal Democrats and
Democrats appear set to limp into an
election to decide which party is the
least unpopular.
“I don’t think the Liberal Democrats
can hope for much more support under
Mr. Abe, who comes with a sense of
tired déjà vu,” said Atsuo Ito, an inde-
pendent political analyst who has
worked in the secretariats of both par-
ties. “But there will be no change to the
public’s deep-rooted disillusionment
with the Democrats,” he said.
If the two largest parties perform as
tepidly as recent polls suggest, the fu-
ture political landscape may depend on
whether they can work together, given
that their platforms are similar on most
issues.
“It would be good if the parties can
somehow cooperate across party lines,”
Harumi Arima, a well-known political
commentator and newscaster. “But if
they can’t, I’m afraid we’re heading into
more confusion.”
During his brief term, he angered
China and South Korea with moves to
change Japan’s pacifist Constitution,
denials that Asian women were forced
into sexual slavery for the Japanese
military during World War II, and ef-
forts to alter school textbooks to
present what critics called a white-
washed version of Japan’s wartime his-
tory. But in some ways, he kept tensions
with China from boiling over, picking
Beijing for his first official trip overseas
and refraining from visiting a conten-
tious Tokyo war shrine.
But with emotions running high be-
tween Japan and China in recent weeks
over a set of disputed islands, a return
to office by Mr. Abe could help fuel more
tension. Mr. Abe has veered further to
the right since his time as prime min-
ister, suggesting recently that he in-
tends to visit the Yasukuni war shrine if
he becomes prime minister again and
may even seek to nullify some of Ja-
pan’s war apologies.
Speaking to reporters on Wednesday,
Mr. Abe promised to take a strong stand
in the dispute with Beijing over the is-
lands, even as he referred to Japan’s
strong economic ties with China. He
said he would also seek to strengthen
Japan’s defense cooperation with the
United States by taking a more active
military role.
Political analysts had all but written
off Mr. Abe after his abrupt resignation,
By HIROKO TABUCHI
TOKYO — Shinzo Abe, a nationalist
former prime minister, was elected to
lead Japan’s main opposition party on
Wednesday, giving him a chance of re-
gaining the nation’s top job — a pros-
pect that could worsen the country’s
tense relations with China and its other
Asian neighbors.
Mr. Abe’s Liberal Democratic Party is
poised to make gains in nationwide elec-
tions expected soon, in part because of
the unpopularity of Prime Minister Yo-
shihiko Noda. Poll ratings for Mr. Noda
and his Democratic Party have been
pulled down by the party’s handling of
last year’s disasters and gridlock in Par-
liament that has crippled policy making.
“We are going to win back Japan and
build a strong country, a prosperous
country,” Mr. Abe said after defeating
four other candidates in the party ballot.
It is a striking return to the spotlight
for Mr. Abe — who called for a stronger
and unapologetic Japan when he took
office in 2006, but stepped down just a
year later, citing a health problem — af-
ter his party suffered a defeat in an in-
terim election. At the time, Mr. Abe’s
nationalist agenda seemed off the mark
for a public that was more interested in
jobs and economic recovery.
HARUYOSHI YAMAGUCHI/BLOOMBERG NEWS
Shinzo Abe on Wednesday. He was the premier for a year, starting in 2006.
which drew much ridicule and greatly
weakened the long-ruling Liberal Dem-
ocrats. His party eventually lost to the
Democrats in 2009, ending a half-centu-
ry of almost uninterrupted rule.
But now the Democratic Party has
lost much of its support, having fallen
short on many of its promises to wrest
power away from the country’s bureau-
crats. The public is disillusioned with re-
construction efforts after the tsunami
and nuclear crisis last year, and the
moribund economy remains a drag. Mr.
Noda is under mounting pressure to call
elections soon, though he need not hold
them until next summer. Analysts agree
Makiko Inoue and Hisako Ueno contrib-
uted reporting.
INTERNATIONAL
A5
THE NEW YORK TIMES
THURSDAY, SEPTEMBER 27, 2012
N
Fallen South African Politician Charged With Laundering
ousting the country’s president
at the time, Thabo Mbeki, as
leader of the A.N.C., paving the
way for Mr. Zuma to become
president.
But the two fell out, and Mr.
Malema has become one of Mr.
Zuma’s most vociferous critics at
a time when the president is fac-
ing serious challenges to his posi-
tion ahead of the party’s leader-
ship conference in December.
Mr. Zuma himself faced a se-
ries of corruption charges, all of
which were dropped amid accu-
sations of prosecutorial miscon-
duct. Several other major politi-
cal figures have also been in-
vestigated for corruption.
Mr. Malema’s expulsion from
the A.N.C. earlier this year came
after a lengthy internal disciplin-
ary process. That seemed to be
the end of his political career,
since no party has managed to
challenge successfully the super-
majority the A.N.C. has held
since the first fully democratic
elections in 1994, when apartheid
ended.
Limpopo, Mr. Malema’s home
province and a bastion of support
for him, has been facing a finan-
cial crisis for the past year, sap-
ping social services and infra-
structure projects. The provincial
government overspent its budget
by about $250 million, and in-
vestigations into bloated con-
tracts, many of which are linked
to Mr. Malema and his associ-
ates, have begun.
ers cheering for him outside the
courthouse.
“I have never been part of any
criminal activity,” he said. “I am
not corrupt, and I do not engage
in fraudulent activities. What you
see is what you get.”
In recent weeks, Mr. Malema
has resurfaced after an attempt
by South Africa’s leaders to ban-
ish him from politics. Although he
was expelled from the governing
A.N.C., he has emerged to cham-
pion miners engaged in wildcat
strikes at gold and platinum
mines.
The police killed 34 striking
workers in a barrage of gunfire
on Aug. 16 in the bloodiest epi-
sode of labor unrest since the end
of apartheid. Mr. Malema has
also sharpened his attacks on
President Jacob Zuma, a man he
once supported but has since
turned against bitterly.
The Limpopo charge arises
from one of several investiga-
tions targeting Mr. Malema, a
rabble-rousing politician who has
proposed seizing white-owned
property and nationalizing South
Africa’s mines.
Last week, the government
billed him for nearly $2 million in
unpaid taxes. The government’s
anticorruption czar, Public Pro-
tector Thuli Madonsela, is also
preparing a report on accusa-
tions of criminality in Mr. Male-
ma’s business dealings.
Mr. Malema and his supporters
have argued that the charges
against him are spurious and po-
litically motivated. Contrary to
earlier news reports, Mr. Malema
was not charged with fraud or
corruption.
“They are sent by Jacob
Zuma,” Mr. Malema said of the
prosecutors, “that illiterate Jacob
Zuma.”
During the time when Mr.
Malema fiercely supported Mr.
Zuma, he played a crucial role in
By LYDIA POLGREEN
JOHANNESBURG — Julius
Malema, the firebrand former
leader of the African National
Congress youth wing, appeared
in a court in his home province of
Limpopo on Wednesday to face a
charge of money laundering in
connection with state contracts
with an engineering company
linked to him.
After being released on bail of
around $1,200 following a brief
court appearance, he denounced
the charge.
“I have nothing to hide,” Mr.
Malema told a throng of support-
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