NEWS,21.07.2013

OECD publishes plan to cut tax evasion

The Organisation for Economic Co-operation and Development (OECD) unveiled new plans to tackle tax evasion by improving the way tax authorities share information about individuals and entities like trusts.
Countries are increasingly moving to a standard of sharing information on taxpayers even in the absence of any specific request.
This is more likely to flag up inappropriate behaviour than the longer established practice of one tax authority starting an investigation into suspicions of wrongdoing, and then making a request for data.
The European Union has estimated hundreds of billions of euros are lost each year to tax evasion. The stashing of undeclared earnings in accounts in offshore jurisdictions has long been a favoured method for hiding cash from one's home tax authority, aided by the veil of secrecy.
The OECD, which advises its mainly rich nation members on economic and tax policy, issued an updated standard for the automatic exchange of information at the sidelines of a meeting of G20 finance ministers on Saturday.
The OECD has proposed a detailed description of the kinds of information that would be exchanged and proposals for common legal and technological standards to facilitate the flow of information.
The OECD hopes to have a new draft agreement ready for countries to sign in late 2013.
The shift to an international standard on automatic sharing of information has been accelerated by the US Foreign Account Tax Compliance Act (Fatca) which forces banks outside the United States to give Washington details of foreign accounts held by US citizens.
Countries like Bermuda, often labelled a tax haven by Western lawmakers, said that once they agreed to share information with the United States, other large countries pressured them for a similar deal.

China frees up lending rates

China's central bank removed controls on bank lending rates, effective on Saturday, in a long-awaited move that signals the new leadership's determination to carry out market-oriented reforms.
The move gives commercial banks the freedom to compete for borrowers, a reform the People's Bank of China said on Friday will help lower financial costs for companies. Previously, the lending floor was 70% of the benchmark lending rate.
However, the PBOC, in a statement, left a ceiling on deposit rates unchanged at 110% of benchmark rates, avoiding for now what many economists see as the most important step Beijing needs to take to free up interest rates.
The latest step underscores Beijing's resolve to start fixing distortions in its financial system and the economy more broadly as it tries to shift from export- and investment-led growth to more consumption-led activity.
Some analysts said cheaper credit could help support the economy, which has seen year-on-year growth fall in nine of the last 10 quarters.
"This is a big breakthrough in financial reforms," said Wang Jun, senior economist at China Centre for International Economic Exchanges, a prominent government think-tank in Beijing.
"Previously, people had thought the central bank would only gradually lower the floor on lending rates. Now they scrapped the floor once and for all."
The Australian dollar rose modestly on the news on hopes cheaper credit will lead to more demand from Australia's biggest export market.
The announcement provided some support to weak stock markets in Europe and a timely reminder to the world's top financial leaders meeting in Moscow of China's intention to rebalance its economy.
A Group of 20 draft communique will urge China to encourage more domestic demand-driven growth as part of wider efforts to rebalance the world economy, G20 sources said.
The United States welcomed the move, saying China promised to let markets play a bigger role in allocating credit during the US-China Strategic and Economic Dialogue in Washington last week.
"This is a welcome further step in the reform and liberalisation of China's financial system," Holly Shulman, a spokesperson for the US Treasury, said in an email.
Signal of resolve
China's big lenders, such as Industrial and Commercial Bank of China , China Construction Bank, Bank of China and Agricultural Bank of China have generally resisted interest rate reforms because they do not want to see their rate margins get squeezed.
But many economists say such a push is necessary so that lenders learn to better price risk, which will force them to allocate capital more efficiently and so help rebalance an economy saddled with overinvestment and overcapacity in sectors from cement to steel making to solar panels.
Scrapping the lending floor will likely cut borrowing costs for businesses and individuals, ending what many observers say had been artificially high rates that benefited state lenders at the expense of private enterprise.
Some economists were sceptical at how much direct economic impact the move would have because few banks have fully utilised the limited freedom they already had to charge interest rates slightly below benchmark rates, choosing instead to keep their rates slightly above the floor that has been in place.
"So the move may have more of a signalling effect than transmit immediately to the economy but it is an important signalling effect," said Manik Narain, emerging market strategist at UBS in London.
However, to the extent that it does lead banks to lower their lending rates, the move could serve to stimulate investment at a time when the world's second-largest economy is running around its lowest growth rates since 2009, having logged 7.5 percent growth in the second quarter.
More important, though, is the sign that policymakers are getting serious about tackling challenging reforms, just four months after Premier Li Keqiang took office, analysts said.
"This is one of the biggest steps they could have taken," said Mark Williams, chief Asia economist at Capital Economics. "It tells you something about the trajectory."
The need for financial reforms was put on full display in late June, when the central bank attempted to choke off funds flowing to "shadow banking" activities, leading to a crunch in the country's money markets that sent short-term borrowing rates to levels normally seen only during financial crises, prompting jitters among investors around the world.
The shadow banking sector, or non-bank lending, has ballooned in recent years, raising concerns that authorities are losing track of potential bad debts building in the economy.
Long path ahead
The central bank said it is also scrapping controls on rates on discounted bills, a common form of payment among companies.
The PBOC made clear in its statement it does not intend to ease up on its controls over mortgage rates. Beijing has been clamping down on the property sector for several years to try to keep a lid on rising prices and speculative buying.
It said it planned to free up deposit rates eventually but now was not the right time. It said it still needed to do more groundwork, which is expected to include launching a deposit insurance system, something many observers expect may happen this year.
"(Reform of deposit rates) is more difficult and more sensitive. We should not expect it to happen very soon," said Yu Yongding, former member of the central bank's monetary policy committee and a researcher at the Chinese Academy Of Social Sciences in Beijing.
Beijing worries that allowing banks to raise deposit rates to compete for funds could crush some smaller lenders and force them to go bust.
Longer term, the latest move could signal that the government will step up other reforms seen as necessary to help rebalance the economy.
"This underlines that China is moving to a fully convertible currency and floating exchange rates," said Flemming Nielsen, senior analyst at Danske Bank in Copenhagen. "Their next step will be to widen the daily trading band for RMB (yuan). They should do that within the next three months."

Israel to free Palestinian prisoners

Israel announced on Saturday it will release some Palestinian prisoners as a "gesture", after the two sides agreed to lay the groundwork to resume peace negotiations frozen for three years.

Some of those to be freed have been in prison for decades, Israeli Intelligence Minister Yuval Steinitz said.

His announcement came hours after US Secretary of State John Kerry said Israeli and Palestinian negotiators had agreed to meet to pave the way for a resumption of direct peace talks.

The last round of direct talks broke down in 2010 over the issue of Israeli settlements in the West Bank and east Jerusalem.

Speaking on privately owned Channel 2, Israeli Justice Minister and chief peace negotiator Tzipi Livni noted that while there were no preconditions to talks, "everything will be on the table", including the 1967 borders and east Jerusalem, which the Palestinians want as their future capital.

Steinitz said his government would engage in the staggered release of a "limited number" of prisoners, some of whom he defined as "heavyweights", who have been in jail for up to 30 years.

4 713 imprisoned

"There will definitely be a certain gesture here", he said, without noting how many prisoners were to be freed.

According to Israeli rights group B'Tselem, at least 4 713 Palestinians are imprisoned in the Jewish state.

Their release is one of the Palestinians' key demands for resuming peace talks, particularly the 107 prisoners arrested prior to 1993, when the Oslo peace accords were signed.

An Israeli official said no prisoners would be released before direct talks begin, and the process would then be dependent on the Palestinians proving they are "really serious and not playing games".

"It won't happen tomorrow and not next week," the official told AFP, speaking on condition of anonymity. He could also give no indication of the number of prisoners involved.

He said the releases, once they begin, would take place in stages and include "pre-Oslo prisoners, prisoners set to be released anyway, and those the Palestinians 'forgot' during the Oslo accords".

Commitment

Steinitz said Israel would not compromise "diplomatic issues", and that there was no agreement on a settlement construction freeze or on accepting the borders that existed prior to 1967 Six-Day war as the basis for talks, as the Palestinians demand.

He said the Palestinians had committed to "negotiate seriously" for "at least nine months", during time which they would refrain from taking action at the United Nations and other international institutions.

Kerry gave away very little detail of the agreement, which came after four days of consultations with Israeli and Palestinian leaders, saying both sides had reached "an agreement that establishes a basis for resuming direct final status negotiations".

"This is a significant and welcome step forward," he added, having doggedly pushed the two sides to agree to resume talks in six intense trips to the region since becoming secretary of state in February.

A State Department official said Kerry had wrenched a commitment from both sides "on the core elements that will allow direct talks to begin".

The Israelis and Palestinians remain far apart on final status issues including the borders of a future Palestinian state, the right of return of Palestinian refugees and Jerusalem.

'Ball in Israel's court'

Palestinian president Mahmud Abbas has also repeatedly called for a freeze to Israeli settlement building and a prisoner release.

"The ball is now in Israel's court," a Palestinian official said, speaking on condition of anonymity.

"Kerry has proposed the bases for a resumption of negotiations and asked [Israeli Prime Minister Benjamin] Netanyahu to respond favourably to one of them.

"The bases are the release of Palestinians jailed before the Oslo accords, minors, the sick or the elderly," he said. "And that Israel recognise the 1967 border lines as a reference point, or a halt to settlement building."

The official said Netanyahu had agreed to hold a special cabinet session to draw up Israel's response to Kerry's proposals.

The Islamist Hamas movement which runs the Gaza Strip rejected a return to talks, saying Abbas had no legitimate right to negotiate on behalf of the Palestinian people.

And the leftist Popular Front for the Liberation of Palestine warned that "a return to talks outside the framework of the United Nations and its resolutions would be political suicide".

Venezuela ends rapprochement with US

Venezuela says it has "ended" its rapprochement with the United States due to a statement by Samantha Power, nominated to become the US envoy to the United Nations.
Power said at a US Senate confirmation hearing on Wednesday that if she got the job she would stand up to "repressive regimes" and challenge the "crackdown on civil society being carried out in countries like Cuba, Iran, Russia, and Venezuela."
Washington and Caracas have not exchanged ambassadors since 2010 even though Venezuela exports 900 000 barrels of oil to the US per day.
"The Bolivarian Republic of Venezuela hereby ends the process ... of finally normalising our diplomatic relations" that began in early June, the Foreign Ministry said in a statement.
Venezuela is opposed to the "interventionist agenda" presented by Power and noted that her "disrespectful opinions" were later endorsed by the State Department, "contradicting in tone and in content" earlier statements by Secretary of State John Kerry.
Kerry and his Venezuelan counterpart, Elias Jaua, agreed on the sidelines of an Organisation of American States meeting in Guatemala in June that officials would "soon" meet for talks that could lead to an exchange of ambassadors.

NEWS,29. AND 30.05.2013

Empire State Building sell-off continues

New York's iconic Empire State Building is a step closer to being sold through an initial public offering, the owners said Wednesday, after a lengthy legal tussle with opposing investors.

The 102-story skyscraper, which is the second tallest in New York and a key fixture on the Manhattan skyline, can go ahead with the sell-off after the Malkin family, which controls the building, finally got enough support.
"More than the required supermajority has approved the consolidation and IPO," a regulatory filing at the SEC said.
At least 80% of Empire State Building Associates LLC holders had to approve the Malkins' plan for what would be one of the highest profile real estate stories in New York for years.
"We are pleased to deliver to our investors a proposal which has received such support," a Malkin spokesperson told AFP.
"The vote remains open and we urge all investors who have not yet voted in favor of the proposed consolidation and IPO to do so immediately. We look forward to delivering to our investors what we believe to be the many benefits of this transaction."

 

Opec in no mood for a fight

Opec oil exporters on Thursday were in no mood to fight over how much crude to produce and instead weighed the impact of rising supplies of US shale and a looming turf war in Asia.
The Organisation of the Petroleum Exporting Countries has little room to pump more oil due to the US oil boom that has sparked competition for marketshare in Asia and set off a rivalry between its top two producers Saudi Arabia and Iraq.
At a meeting in Vienna on Friday, the 12-member group is expected to stick with its 30 million barrel a day (bpd) output target for the last six months of 2013.
"This will be a straightforward meeting leading to a rollover (of the existing output target)," a Gulf Opec delegate told . "Shale isn't an immediate threat or concern for Saudi Arabia."
Opec ministers are also comfortable with oil just above $100 a barrel, well below the $125 that rang alarms in major consumer countries last year.
But triple digit oil has also unlocked vast amounts of US shale oil in North Dakota and Texas which competes with Opec crude of similar, light quality from Nigeria and Algeria, rather than heavier Saudi output.
Gulf producers are of the view that Opec will still be able to pump at least 30 million bpd, provided US shale grows at a moderate pace.
"Shale oil is not a threat, but it changes the dynamics of where the oil is going. There will be more competition in Asia," said a Gulf Opec source.
Nigeria, along with Algeria, has already felt the heat from the US oil boom, losing ground in its most lucrative export market and diverting sales to Asia.
Fast-growing exporter Iraq is also fighting for more Asian market share, competing with regional rival Saudi Arabia. The United Arab Emirates, also building up capacity, has the region in its sights, but downplayed the prospect for battle.
"I'm not of the view that competition in Asia is going to distort the price," UAE Oil Minister Suhail bin Mohammed al-Mazroui told .
Innovative use of hydraulic fracturing, or "fracking", has put the United States in line to become the world's largest oil producer by 2017, overtaking Saudi Arabia.
That is not worrisome for Riyadh, especially when it comes to charting policy for the second half of 2013.
And the kingdom - holder of most spare capacity in Opec - shows no sign of opening the taps to bring down prices and curtail that output by making it uneconomic.
By the end of last year, the United States had recorded the biggest annual rise in oil output since it first pumped oil in the early 1860s. The 850 000 bpd increment was more than each of Opec's two smallest producers, Qatar and Ecuador, pump in total.
Opec, which dismissed shale as of little concern a year ago, has a divided view on it. While Saudi's Naimi welcomes it, his Nigerian counterpart Diezani Alison-Madueke has said it will have a "major impact".
Price worry
Some within Opec are concerned about the potential for both slow global growth and a dramatic rise in US shale oil to send prices tumbling.
But the group that pumps a third of the world's oil is not known for contingency plans.
Opec delegates now say this meeting will not be electing a new secretary general - stuck in a logjam of competing candidates from Iran, Iraq and Saudi Arabia - but will merely approve the criteria for prospective candidates to come forward.
With change in the output ceiling unlikely, short-term market management will be guided by Opec's leading producer Saudi Arabia  the only member with significant unused capacity  supported by the UAE and Kuwait.
Saudi Arabia has cut back from a 30-year high reached in 2012 of 10 million bpd, pumping 9.3 million bpd in April. That has helped bring overall Opec production down to 30.46 million bpd, 460 000 bpd above the target.
While challenges loom in the medium term, the numbers for the rest of 2013 suggest some breathing space for Opec.
Demand for Opec crude is set to rise in the second half to average 30.47 million bpd, up from 29.14 million bpd in the current quarter, according to Opec forecasts. So if Opec holds output at April's rate, supply would match the average requirement in the second half of 2013.
Price hawks Iran, Algeria and Venezuela - among those with the highest budget break even oil prices in Opec - may still call for supply cuts.
Yet Venezuela, at least, looks set to keep the status quo. Oil Minister Rafael Ramirez has said he will propose that Opec keep oil production quotas unchanged.

Fewer people travel as austerity bites

Fewer Europeans are planning to go away for a summer holiday as economic austerity bites, a new study shows, with levels of foreign vacation travel at their lowest for eight years.

No more than 54% of Europeans were planning to get away for summer holiday this year, according to the Ipsos-Europ Assistance "holiday barometer" published on Thursday.

Europ Assistance Group CEO Martin Vial said there was "a clear correlation between the intensity of the slump and holiday intentions".

Unsurprisingly the countries with the highest unemployment rates were the worst hit.

"The scope of the crisis in Spain and Italy is particularly visible in departure plans," the report said, with fewer than one in two Spaniards planning to leave on holiday this summer and little more than half of Italians.

The  departure plans for Germans and Austrians had stabilised due to “less tense” economic and social situations, the study showed.

Vacation

For the first time since the economic crisis began, the French were particularly affected this year, it said.

While 62% of them say they want to leave on holiday this year, this is still eight points down on last year and the lowest rate since 2005.

At least the stay-at-home French can comfort themselves on remaining in the leading destination chosen by Europeans.

The country is set this year to welcome 18% of European tourists, the study says, followed closely by Italy with Spain in third place with 14%.

The internet and social networks are being used more than ever for vacation preparations, with the British holidaymakers most active on the internet, followed by the Belgians, French and Germans.

The British have also retained their enthusiasm for foreign travel, being the only country studied where the intentions to leave on a summer holiday are going up this year, from 51% to 56%.

Ipsos conducted the study talking to 4 048 people from Austria, Belgium, Britain, France, Germany, Italy and Spain.

Settlements plan raises Mideast tensions

Israeli plans for 1 000 new settler homes in annexed east Jerusalem are "destroying" efforts by Washington's top diplomat to revive the peace process, a Palestinian official charged on Thursday.

But Israel said the construction plans were not new and accused the Palestinians of seeking a pretext to avoid a resumption of direct talks which broke down in 2010 and which US Secretary of State John Kerry is trying to revive.

"We consider the recent decision of the Israeli government to build a thousand homes in east Jerusalem as effectively destroying the efforts of Kerry," top Palestinian negotiator Saeb Erakat said.

He accused Israel of having "a systematic plan for destroying Kerry's efforts which involves an escalation of settlement building, a displacement of the population of the Jordan Valley, an increase of settler attacks against our people and confiscation of our land".

Erakat's remarks came just hours after an NGO told AFP Israel was readying to build more than 1 000 settler homes in east Jerusalem despite a major push by Washington to revive dormant peace talks.

Danny Seidemann, director of Jerusalem settlement watchdog Terrestrial Jerusalem, said contracts had been signed for 300 homes in Ramot and another 797 plots were to be offered for sale in Gilo.

Excuses

Both are in mainly Arab areas of the Holy City which were occupied by Israel in the 1967 Six Day War and later annexed in a move never recognised by the international community.

The news emerged just days after Kerry's latest trip to the region, his fourth visit in as many months.

Settlement construction was the issue which brought about a collapse of peace talks in September 2010 and the Palestinians say they will not return to negotiations while Israel builds on land they want for a future state.

But Ofir Gendelman, a spokesperson for Israeli Prime Minister Benjamin Netanyahu said the plans were not new, and accused the Palestinians of looking for any excuse to avoid peace talks.

"The Palestinians keep making up excuses in order to run away from peace negotiations with Israel," he wrote on Twitter.

"The Palestinians recycle old claims which are based on false information. They run to the media to avoid discussing outstanding issues," he said, calling for them to "resume peace talks immediately".

He said the plan to build hundreds of new homes in Gilo and Ramot was "not new" and had been "reposted due to administrative requirements".

Violation of international law

According to public radio, tenders for the new homes were invited late last year and it was only the names of the winning bids which were released on Wednesday.

Housing ministry spokesperson Ariel Rosenberg also said there had been no tenders for new east Jerusalem housing invited this year.

"Since the start of this year, there have not been any tenders in east Jerusalem but last year there were more than a thousand," he said, refusing to say why.

Earlier this month, Netanyahu reportedly promised Kerry he would "rein in" settlement construction in the West Bank, including east Jerusalem, to give US peace efforts a chance.

Settlement watchdog Peace Now also confirmed that not a single tender had been invited in months.

Israel does not view construction in east Jerusalem as illegal, but most of the world views all settlement activity on land seized in 1967 as a violation of international law.

The Palestinians want the eastern sector of the city as the capital of their future state.

Neo-Nazis march through Athens

Hundreds of Greek neo-Nazis marched with torches through the streets of Athens late on Wednesday to commemorate the 560th anniversary of the fall of Constantinople in 1453.

The militants from the ultranationalist Golden Dawn party shouted "Blood, honour, Golden Dawn" and "Greece belongs to the Greeks".

After several fiery speeches against the Turks and communists in the square outside Athens cathedral, they marched on parliament, where the party has held 18 seats since June.

The annual march concluded without incident, unlike last year when a Pakistani man who found himself in their path was attacked by 15-20 neo-Nazis.

Nevertheless, this year's march caused concern among tourists in the Greek capital.

"When they arrived, all the tourists paid their bills and left," said Fotis, a waiter at the Meatropoleos restaurant in central Athens.

Ruling coalition split

As he watched the neo-Nazi demonstration unfold, Antonio Leiva, a tourist from Chile, said: "I'm shocked.

"I strongly believe in freedom of expression but there are limits when it comes to encouraging racial hatred," he said.

Greece's ruling coalition is split over a bid to toughen an anti-racism law aimed at curbing Golden Dawn, amid fears it could unwittingly alienate the influential Orthodox church.

The socialist and moderate leftist parties put forward the bill on their own on Thursday after the coalition's leading conservative party backtracked.

The proposed bill would impose prison sentences of up to three years - up from the current two years - and a fine of up to €20 000 for hate speech and the denial or praise of war crimes and genocide.

Rights groups believe Golden Dawn has instigated a recent wave of violence against migrants, which the party denies.

NEWS,08.02.2013

Northeast Blizzard Warnings Posted As Region Braces For Up To Several Feet Of Snow

Snow began falling across the Northeast on Friday, ushering in what was predicted to be a huge, possibly historic blizzard and sending residents scurrying to stock up on food and gas up their cars. The storm could dump 1 to 3 feet of snow from New York City to Boston and beyond.Even before the first snowflake had fallen, Boston, Providence, R.I., Hartford, Conn., and other towns and cities in New England and upstate New York towns canceled school Friday, and airlines scratched more than 3,700 flights through Saturday, with the disruptions certain to ripple across the U.S."This one doesn't come along every day. This is going to be a dangerous winter storm," said Alan Dunham, meteorologist for the National Weather Service in Taunton, Mass. "Wherever you need to get to, get there by Friday afternoon and don't plan on leaving."The heaviest snowfall was expected Friday night and into Saturday. Wind gusts could reach 75 mph. Widespread power failures were feared, along with flooding in coastal areas still recovering from Superstorm Sandy in October.Boston could get 2 to 3 feet of snow, while New York City was expecting 10 to 14 inches. Mayor Michael Bloomberg said plows and 250,000 tons of salt were being put on standby. To the south, Philadelphia was looking at a possible 2 to 5 inches.Massachusetts Gov. Deval Patrick banned all traffic from roads after 4 p.m., believed to be the state's first such ban since the blizzard of 1978.In the southeastern Massachusetts town of Whitman, where up to 2 1/2 feet of snow was forecast, public works crews were clearing crosswalk signs, trash barrels and anything else that might impede plows later in the day."We've had instances where they have predicted something big and it's petered out," said Dennis Smith, a public works employee. "I don't think this is going to be one of those times."Smith's partner, Bob Trumbull, sounded a note of optimism, saying the relative lack of snow earlier this winter would make this storm easier to clean up. "At least there is room for this snow. There are no snowbanks so we will have a place to put it," Trumbull said.Snow was being blamed for a 19-car pileup in Maine Friday morning in Cumberland, as 6 inches blanketed the area.A New Jersey town hit hard by Superstorm Sandy issued a voluntary evacuation order for areas that are still recovering from that storm. Residents in flood-prone sections of Brick Township were also urged to move their cars to higher ground by 5 p.m.Amtrak suspended train service between New York and Boston in the afternoon.The organizers of New York's Fashion Week a closely watched series of fashion shows held under a big tent said they will have extra crews to help with snow removal and will turn up the heat and add an extra layer to the venue.Airlines canceled at least 3,775 flights ahead of the storm, according to airline tracking website FlightAware. At New York City's three main airports, most U.S. airlines planned to suspend operations between 2 p.m. and 5 p.m., resuming after noon on Saturday, FlightAware said. At Boston's Logan and other New England airports, most airlines were to cease operations between noon and 4 p.m.This is a storm of major proportions," Boston Mayor Thomas Menino said Friday. "Stay off the roads. Stay home."Blizzard warnings were posted for parts of New Jersey and New York's Long Island, as well as portions of Massachusetts, Rhode Island and Connecticut, including Hartford, New Haven, Conn., and Providence. The warnings extended into New Hampshire and Maine.In New England, it could prove to be among the top 10 snowstorms in history, and perhaps even break Boston's record of 27.6 inches, set in 2003, the National Weather Service said. The last major snowfall in southern New England was well over a year ago the Halloween storm of 2011.Dunham said southern New England has seen less than half its normal snowfall this season, but "we're going to catch up in a heck of a hurry." He added: "Everybody's going to get plastered with snow."Some gas stations in Connecticut ran out of fuel Thursday night during the rush to prepare for the storm. Long lines were reported at many stations.At Stop & Shop supermarket in Mount Vernon, N.Y., on Friday morning, there was a line of shoppers outside when it opened at 7 a.m., and a steady stream followed. Checkout lines were long.Mary Anne DiBello was stocking up her cart as the snow began to fall. She said she hosted a sleepover Thursday night with four 9- and 10-year-olds, including her daughter."Now I think I'm going to be stuck with them until I bring them to school on Monday," she said.The governors of Connecticut and Massachusetts ordered nonessential state workers to stay home Friday and urged travelers to stay home.

Renewed tension between China, Japan

China and Japan engaged on Friday in a fresh round of invective over military movements near a disputed group of uninhabited islands, fuelling tensions that for months have bedevilled relations between the two major Asian powers. China's defence ministry rejected a Japanese allegation that a naval vessel had aimed a weapons-targeting radar at a Japanese military ship in the East China Sea, its first comment on the week-old incident. It said Japan's intrusive tracking of Chinese vessels was the "root cause" of the renewed tension.A Japanese official on Friday dismissed the Chinese explanation for the 30 January incident. He said Beijing's actions could precipitate a dangerous situation in waters around the islets, known as Diaoyu in China and Senkaku in Japan, believed to be rich in oil and gas.His comments came a day after Japan said two Russian fighter jets briefly entered its air space near other, long-disputed islands, prompting Japan to scramble combat fighters. Russia denied the charge.China's defence ministry, in a statement issued late on Thursday, said Japan's remarks "do not match the facts". The Chinese ship's radar, it said, had maintained regular alerting operations and "did not use fire control radar". The ministry said the Chinese ship was tracked by a Japanese destroyer during routine training exercises. Fire control radar pinpoints the location of a target for missiles or shells and its use can be considered a step short of actual firing.Japan, it said, had recently "made irresponsible remarks that hyped up the so-called 'China threat', recklessly created tension and misled international public opinion."... In recent years, Japanese warships and aeroplanes have often conducted long periods of close-range tracking and surveillance of China's naval ships and aeroplanes. This is the root cause of air and maritime security issues between China and Japan."In Tokyo, Japan's Chief Cabinet Secretary Yoshihide Sugatold a news conference on Friday: "We cannot accept China's explanation."Japan's allegations, he said, had been "a result of our defence ministry's careful and detailed analysis. We urge China to take sincere measures to prevent dangerous actions which could cause a contingency situation."Japanese Defence Minister Itsunori Onodera said this week that the incident could have become very dangerous very quickly, and that use of the radar could be seen as a threat of military force under UN rules.Hopes have been rising in recent weeks for a thaw in ties after months of tension, sparked, in part, by Japan's nationalisation of three of the privately owned islets last September.Fears that encounters between aircraft and ships could degenerate into an accidental clash have given impetus to efforts to improve links, including a possible summit between Abe and Chinese leader Xi Jinping, who takes over as head of state in March.

The Role of Psychological Resistance

The most puzzling aspect of the Israeli-Palestinian conflict is that after 65 years of mutual violence, enmity and suffering, it remains unresolved even when coexistence is inevitable and a two-state solution remains the only viable option. Although there are many contentious issues that must be specifically addressed, it is the psychological dimension of the conflict which directly impacts every conflicting issue and makes it increasingly intractable. To mitigate the conflict, we must first look into the elements that inform the psychological dimension and how to alleviate them as prerequisites to finding a solution. This is the first of six articles.On the surface, the deadlock in the Israeli-Palestinian peace process seems illogical and unsettling. After all, a majority of Israelis and Palestinians realize the inevitability of coexistence and presumably understand the general parameters of a negotiated peace agreement: a two-state solution based on the 1967 borders with some land swaps, Jerusalem would remain a united city (but a capital of two states), and the vast majority of Palestinian refugees would be compensated or resettled in the newly-created Palestinian state in the West Bank and Gaza Strip. These fundamental imperatives, coupled with appropriate security guarantees for Israel, represent what was on the negotiating table in 2000 at Camp David and in 2008/2009 in Jerusalem and Ramallah, with each round coming closer to finalizing an agreement yet ultimately failing to do so. The question is: why?The answer lies far beyond the political concessions on the ground and is deeply embedded in the psychological dimension of the conflict, which impacts every conflicting issue between the two parties. This dimension is at play here: biased and selective perceptions, reinforced by historical experience, religion and incompatible ideologies, have locked both sides into immobile positions. The factors that maintain and enhance these patterns include emotions such as fear, distrust and insecurity; the psychological outcome is mutual denial of the narrative of the other and mutual delegitimization. Put together, the operative result is stagnation and polarization. What is therefore needed is a consensus-oriented dialogue at the leadership level, by both officials and non-officials, to resolve the issues of perception a tall order given the current environment that buttresses rather than ameliorates perceptions.There are certain psychological concepts which are relevant to understanding the Israeli-Palestinian conflict; the concept of illusion is an essential one. In "The Future of an Illusion" (1927), Freud offers the following definition: "We call a belief an illusion when a wish-fulfillment is a prominent factor in its motivation and in doing so we disregard its relations to reality, just as the illusion itself sets no store by its verification." An illusion then is not necessarily an error, unlike a delusion - that is, illusions "need not necessarily be false... unrealizable or in contradiction to reality." What is characteristic of illusions is that: 1) they are derived from deep human wishes, and 2) the belief is held (or would be held) in the absence of any compelling evidence, or good rational grounds, in its behalf.It is impossible to deny that both Israelis and Palestinians are in the grip of very powerful illusions which only serve to prolong the conflict and prevent any mutual understanding. What are some of these illusions, or pipe-dreams, as the great American playwright Eugene O'Neill would call them? Following O'Neill, we can distinguish between pipe-dreams of yesterday and pipe-dreams of tomorrow. For example, the belief shared by many Israelis that they have a biblical right to the land (the ancient biblical lands of Judea and Samaria) and that God gave the Jews this land for all time is undoubtedly an illusion or a pipe-dream of yesterday. It is not affirmed because there is any real evidence for it, but because it satisfies a deep-seated psychological need for a God-given Jewish homeland. The belief that by expanding the settlements Israel will augment its national security is a pipe-dream of tomorrow. It is important to note how these illusions sustain and reinforce one another, and constitute a psychological barrier which is that much more impervious to critical reflection. Israel's illusions have served to create the logic for occupation, ultimately perpetuating the dehumanization of the Palestinians.The Palestinians, for their part, are not without their own illusions. They believe, for example, that God has reserved the land for them, and appeal to the fact that they had inhabited the land for centuries. The presence of the al-Aqsa Mosque and the Dome of the Rock in Jerusalem attest to their unmitigated historical and religious affinity to the Holy City. They also cling to the idea that they will someday return to the land of their forebears, as they have and continue to insist on the right of return of the Palestinian refugees, even though this has become a virtual impossibility. The Palestinians cling to their pipe-dreams of yesterday and tomorrow just as blindly and desperately as the Israelis, which leads to resistance to and fear of change.This has contributed to making the Israeli-Palestinian conflict both chronic and intractable, as the various illusions are continuously and consciously nurtured by the daily encounters between the two sides. It would thus appear that the psychological concept of resistance to change is extremely relevant as well. First, a distinction is needed between resistance to persuasion, which is conscious and deliberate, and inner unconscious resistance to change. In his essay, "The Psychological Dimensions of the Israeli-Palestinian Conflict: the Role of Psychological Resistance," David Rabinowitz, one of Israel's leading psychiatrists, observes that an important function of unconscious resistance is that it is protective in nature. In seeking bridging concepts that could link between the domains of psychology and politics in the Israeli-Palestinian conflict, it could be proposed that a collective mutual resistance to change protects a vulnerable identity. Compared to the stable and mature political identities of the American, British and French nations, the political identities of both the Israeli and Palestinian peoples are, in a way, in their adolescence. Identities in this setting are more vulnerable, and the protagonists are naturally more defensive and resistant to change. By its very nature, the players must find it difficult (if not impossible) to articulate this publically, as to do so is to admit to this vulnerability.The concept of psychological resistance to change may well affect the political setting in general and the Israeli-Palestinian conflict in particular; it is closely connected to perceptions at many levels. Indeed, the psychological resistance provides protection for vulnerable identity formation in the Israeli-Palestinian conflict. It is this mindset, strengthened by historical experiences, which transcends the more than nine decades since the Israeli-Palestinian conflict began. The individuals and groups, Israelis and Palestinians alike, have and continue to interpret the nature of the discord between them as "you versus me" in a prejudiced and selective way. In turn, this has stifled any new information and enabled the continuing resistance to change, which could shed new light on the nature and the substance of the conflict and help advance the peace process.The concept of unconscious resistance to change in this setting links well to the view of perceptions driving the polarization in the conflict. Historical experience, which formulates perceptions, serves among other things to enhance the sense of identity of "who we really are," a formative collective assumption that sits at the bedrock of both key players and drives functional and dysfunctional behavior. As Rabinowitz puts it, "the central benefit of this powerful unconscious resistance to change provides is the protection of a relatively vulnerable core identity [primary gains]. Secondary gains, however, are essentially the side-effects of the chronic polarization of this conflict: powerful allies offering material and political support [the US' support of Israel and moderate Palestinians verses Iran's support for Palestinian militants such as Hamas], engaging in alluring narratives, public attention and useful alliances etc." In principle, such a mindset prevents either side from entertaining new ideas that might lead to compromises for a peaceful solution. The paradox here is that majorities on both sides do seek and want peace, knowing full well that this would require significant concessions, but are unable to reconcile the required concessions with imbedded perceptions that have precluded these compromises as a result of resistance to change.Thus, to mitigate the Israeli-Palestinian conflict, we must first carefully look into the various elements that inform the psychological dimension of the conflict, and discuss how they impact the relationship between the two sides and what it would take to alleviate these psychological impediments as prerequisites to finding a solution.