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EDITORIALS

Justice on the doorstep
Rural courts will also cut delays
T
he launching of 5,000 rural courts or Gram Nyayalayas throughout the country from October 2, coinciding with Gandhi Jayanti, by the Manmohan Singh government will ensure speedy dispensation of justice at the grassroots. The Centre has now enforced the Gram Nyayalayas Act, 2008, which was enacted by Parliament in December last.

Strength ensures peace
Antony, IAF chief evoke confidence
I
t is good that Defence Minister A K Antony and Air Force chief Air Chief Marshal PV Naik have reassured the country in no uncertain terms that India is busy strengthening its capabilities, just as China is doing. After the drubbing we got in 1962, there are bound to be misgivings in the minds of many whether we are now any better prepared to withstand a similar onslaught.




EARLIER STORIES

Terrorism with ISI-mark
October 2, 2009
End ambiguity
October 1, 2009
End ambiguity
September 30, 2009
End the extortion
September 29, 2009
G20 is here to stay
September 28, 2009
Of Jinnah and Partition
September 27, 2009
US arm-twisting 
September 26, 2009
Pilots and planes
September 25, 2009
Return of FIIs
September 24, 2009
Why is Saeed sacred?
September 23, 2009

Craze for ‘phoren’
A lot is required to reverse the trend
Police had to be called in at Jalandhar and Chandigarh this week to ‘control’ the rush of applicants seeking Student Visa for the privilege of studying in Britain. A large number of applicants had reportedly queued up at midnight and yet failed to submit their applications. Many of them were turned away as the designated Visa Facilitation Service shut down before time or refused to accept more applications than they had received already.

ARTICLE

Countering Naxalism
Need to devise a suitable strategy
by K Padmanabhaiah
P
rime Minister Manmohan Singh has reiterated his consistent view that Naxalism poses the gravest internal security threat. He also stated that “We have not achieved as much success as we would have liked in containing this menace.”

MIDDLE

Alibaba and 40 others
by Amar Chandel
A
S a triumphant Alibaba entered the cave after his 10,000th successful theft, his 40 associates almost brought the dwelling down with lusty shouts of “Alibaba zindabad”. He smiled indulgently, cleared his throat and addressed them in his baritone voice:

OPED

Break the logjam
There is no alternative to talks
by Kuldip Nayar
A
s expected, the talks between the Foreign Ministers of India and Pakistan have turned out to be a fizzle. One could foresee this when the Foreign Secretaries of the two countries did not go beyond the 26/11 terrorist attacks on Mumbai. Exasperated Pakistan Foreign Secretary Salman Bashir was not wrong when he said that the relationship could not be brought to “a standstill because of a trial or one investigation”.

Brazilian economy is humming along
by Chris Kraul
B
RASILIA, Brazil—Finding the discount on the purchase of a new Renault hatchback irresistible, lawyer Roni Figueiro of Porto Alegre in Brazil took the plunge, plunking down $22,200 last week for the first new car he has ever owned.

UK retailers feel the heat from Amazon
by Jame Thompson
S
lough is now almost synonymous with the hit television series The Office, which gave birth to the fictitious paper company Wernham Hogg and the location for the UK headquarters of Amazon, the US online giant that launched on these shores in 1998.


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EDITORIALS

Justice on the doorstep
Rural courts will also cut delays

The launching of 5,000 rural courts or Gram Nyayalayas throughout the country from October 2, coinciding with Gandhi Jayanti, by the Manmohan Singh government will ensure speedy dispensation of justice at the grassroots. The Centre has now enforced the Gram Nyayalayas Act, 2008, which was enacted by Parliament in December last. These courts are inexpensive and deliver speedy justice to people who need not spend money, time and energy any more in going to regular courts situated in far off places. The Gram Nyayalaya will be a mobile court, exercising the powers of both criminal and civil court. It will be a court of the First Class Judicial Magistrate and its presiding officer, Nyayadhikari, will be appointed by the state government in consultation with the high court.

The rural courts will go to villages, work there and dispose of the cases. As yet another effective alternative dispute redressal mechanism like the Lok Adalats, they will try to settle the disputes by bringing about conciliation between the parties through duly appointed conciliators. The rural court’s judgement and/or order will be deemed to be a decree. To avoid delay, it will follow summary procedure for its execution. The Sessions Court and the District Court will dispose of criminal and civil appeals respectively against a rural court’s order within six months from the date of filing the appeal. An accused may even apply for plea bargaining.

The states need not worry about finances right now because the Centre has released Rs 1,400 crore by way of assistance and this will continue for three years. The Centre will meet the non-recurring expenditure on running these courts subject to a ceiling of Rs 18 lakh (Rs 10 lakh for setting up the court, Rs 5 lakh for the vehicle and Rs 3 lakh for office equipment). As there are over 2.6 crore pending cases in the subordinate courts today, the Gram Nyayalayas deserve all support and help to provide relief to the people and reduce the backlog.

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Strength ensures peace
Antony, IAF chief evoke confidence

It is good that Defence Minister A K Antony and Air Force chief Air Chief Marshal PV Naik have reassured the country in no uncertain terms that India is busy strengthening its capabilities, just as China is doing. After the drubbing we got in 1962, there are bound to be misgivings in the minds of many whether we are now any better prepared to withstand a similar onslaught. That is why Mr Antony was candid in admitting that while earlier we were “doing nothing”, the government in the past few years has been bolstering the infrastructure. As was mentioned by the air chief some days ago, our air power is only one-third that of China, but we are not sitting ducks either, as was the case in 1962. Much has happened in these 47 years and, in fact, learning from the past mistakes, defence is getting the priority that it deserves. There are numerous shortcomings, but at least things are on the upswing. The nation seems to have learnt the lesson that building strength is the best defence for the country.

This confidence shows in the way India has been dealing with China. Despite the 1962 war, India has engaged with China maturely without letting the past cloud the future for ever. It has rightly not allowed itself to be perturbed over minor incursions and arguments by the Chinese in various sectors. What is all the more creditworthy is the fact that the Indian Army joined in China’s 60-year celebrations whole-heartedly. On the whole two nations have sought to ensure that pending a border settlement peace and tranquility should prevail all along the Line of Actual Control.

Unfortunately, China has soured the atmosphere by starting to issue visas to Kashmiris on separate sheets and not on their passports. The move is being seen as an attempt by Beijing to question the status of Jammu and Kashmir. Apparently, all this is being done to please Pakistan. There is need to take up the matter with China. While good-neighbourly relations have to be maintained, that does not mean that New Delhi should take irritants lightly.

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Craze for ‘phoren’
A lot is required to reverse the trend

Police had to be called in at Jalandhar and Chandigarh this week to ‘control’ the rush of applicants seeking Student Visa for the privilege of studying in Britain. A large number of applicants had reportedly queued up at midnight and yet failed to submit their applications. Many of them were turned away as the designated Visa Facilitation Service shut down before time or refused to accept more applications than they had received already. The rush this week was anticipated because October 1 heralds a new regime of stricter Visa regulations for students seeking to study in the United Kingdom. While till September it was not mandatory for applicants to clear the International English Language Test for admission to some courses, from October all applicants are required to clear the examination. This and the requirement to maintain a minimum balance in the bank account for 28 days and not just for one day, as was the regulation till September, is what led to the rush.

Many Indians do suffer from a craze for ‘phoren’. Fewer job opportunities at home, a promising lifestyle abroad, smaller holdings and costlier inputs making farming far from rewarding are evidently some of the factors which fuel this frenzy. Many of them are also known to have bent rules, forged documents, impersonated others, married on paper and committed other kinds of fraud to go abroad. Neither the prospect of menial work, which they are loath to do at home, nor possibility of racial discrimination, violence or harassment have doused this passion, bordering often on mania. Dubious agencies and institutions have mushroomed across Punjab to take advantage of this ‘weakness’ and offer to make the journey to the promised land “ abroad” smoother.

But when students in such large numbers seek to ‘study’ abroad, it could be that some of them are in the queue to dodge stricter regulations. It should be a matter of concern. The country needs more meaningful courses, better and more committed teachers and a more practical approach to teaching languages, if the trend is to be reversed. And also there is a need to regulate the agencies which may be exploiting the students’ craze for ‘phoren’.

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Thought for the Day

The only tyrant I accept in this world is the still voice within. — Mahatma Gandhi

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ARTICLE

Countering Naxalism
Need to devise a suitable strategy
by K Padmanabhaiah

Prime Minister Manmohan Singh has reiterated his consistent view that Naxalism poses the gravest internal security threat. He also stated that “We have not achieved as much success as we would have liked in containing this menace.”

During the last one or two months the Union Home Ministry revisited the entire Naxal issue, and launched a series of new initiatives while at the same time strengthening some of the existing anti-Naxalite programmes. A new elite anti-Naxalite force, “CoBRA”, was established. For the first time pro-active steps have been taken to search, seek and destroy arms dumps of the Naxalites by entering into their strongholds in the jungles instead of the reactive and defensive approach followed till now. How effective are these new initiatives going to be? Has the state at last put aside its vacillating policies and are the state governments and the Centre on the same wavelength in their resolve to fight Naxalism, and is there broad agreement in the anti-Naxal policies and programmes ?

Naxalism in India had its beginnings at Naxalbari in West Bengal in the late sixties as a peasant uprising, but was brought under control by 1972. Around the same time it made its presence felt in a big way in Srikakulam district of Andhra Pradesh but by 1972 it was rooted out from the district by determined police action coupled with a serious and sincere developmental effort. However, by 1980 Naxalism took fresh roots in Andhra Pradesh with the formation of the People’s War Group (PWG). It was able to garner intellectual support from some writers, poets and human rights activists. The state followed off and on a vacillating policy of police encounters and peace parleys leading to escalation in Naxal violence.

The year 2005 was described as one of the bloodiest years in Andhra Pradesh as a result of Naxal-police clashes. As recently as in 2006, Andhra Pradesh was being described as a citadel of Naxalism. However, in the last two years Naxalite violence has been controlled in the state very effectively.

In Bihar, Naxalism made its entry into Shahar and Sandesh blocks of Bhojpur district and held sway over this and some other districts for over one decade. Here again during the last two years or so, the government by successful implementation of development programmes at the grassroot levels has been able to make a very strong dent in these two developmental blocks which were the erstwhile strongholds of Naxals.

It is said that the most important factor in ending Maoist dominance in Bihar was panchayat elections. Similarly, it is reported that effective implementation of the Aaswad Project (Aapki Sarkar Aapke Dwar) in Jehanabad district from 2006 seems to have curtailed Maoist influence. Currently the worst-affected states are Jharkhand, Chhattisgarh, Orissa, Bihar, Andhra Pradesh and Maharashtra.

Some basic questions that need to be answered are: What is Naxalism ? Who is a Naxalite? How is the movement financed and sustained? Who constitute the first and second rung leadership? Who constitute the cadres? What percentage of tribals are with the Naxals? Are the tribals or other poorer sections in remote areas being held hostage by the Naxals? The Naxalite leadership does not believe in the state, has no faith in the democratic or parliamentary system of governance, opposes elections, and believes in an armed struggle to overthrow the state.

With all its shortcomings in actual practice, parliamentary democracy has taken root in the country and people voluntarily subscribing to the Naxalite philosophy will be minuscule. Studies of the growth of Naxalism in specific districts have shown that a couple of Naxal leaders from outside ( mostly from Andhra or Bihar) visit the village chosen for making inroads, identify a local person who feels highly aggrieved with the scheme of things in the village, and form a local committee with a couple of other youth under that person’s leadership and give him a couple of guns. The gun helps in extortions.

With a handsome amount of development funds flowing into the rural areas under various schemes, including the NREGA, extortion from the village-level leadership either in collusion or coercion becomes easier. Any resistance is met with extreme and brutal violence. More extortions give more guns and more IEDs.

There is no doubt that Naxalism is the strongest in the remote hilly, forested and underdeveloped areas in the country where the physical (roads, communications, electricity, etc) as well as social infrastructure like schools, health centres, water supply, and policing is abysmally poor. In the absence of adequate policing, the vacuum is occupied by the Naxal ideologues. There is no security and some of the locals are coerced to join the movement. Even food security is a problem in many of these areas.

There is exploitation of the illiterate and the poor by landlords, forest contractors, beedi manufacturers, mining companies, et al. The administration also is very thinly spread and, more often than not, in cohorts with the rich and the powerful. The grievances of the locals are either not heard, or not redressed with any sympathy. The exploited, alienated and frustrated locals form the base of recruitment to the cadres. To win more recruits, Naxal leaders have been saying that they are prepared to support any cause of the exploited masses.

Half-hearted attempts at some development works like roads or electricity supply lines or communication towers are thwarted by the Naxal groups as they have a vested interest in the area remaining undeveloped.

Therefore, arguments like whether emphasis should be on development rather than on policing, or, as someone has put it, welfare vs warfare is futile. Since Naxalite philosophy is based on armed violent conflict with the state, it has to be met and neutralised squarely by a series of adequate policing actions, including intelligence gathering. Simultaneously, determined and sincere efforts must be made to develop these areas by way of physical and social infrastructure, and adequate governmental presence. Mere development alone would not help unless there is empowerment of the local people and a convincing effort in providing social justice.

One can draw lessons from the experience of Andhra Pradesh also. The state government raised a dedicated police force called Grey Hounds in 1989 to fight Naxalism. But the police had to fight a lone battle against the Naxals, with only nominal support by other wings of the administration or even the political leadership in the state. The political leadershlip in a way abdicated its responsibility by merely shifting its political burden to the police, leaving the latter to cope with it to the best of its ability. There was no firm policy with a couple of years of the ban followed by peace overtures mostly on the eve of the Assembly elections. Naxalite groups were banned in 1992, and the same was lifted in 1995 when talks were held for one year. Talks were started in May 2002 but the same colllapsed in 45 days.

Again talks were promised on the eve of elections in May 2004, and seven rounds of talks were held, which collapsed in January 2005. An interesting development was that while the talks were on, the PWG merged with the CPI (M-L) and the MCC in September 2004 to form the CPI (Maoist), a formidable force. This switch-on-switch-off policy was ultimately given up, and in the last two years a multi-pronged strategy of strong police action coupled with sensible development activities led to a great improvement in curbing Naxalism in the state.

The government is now fully conscious of the magnitude of the Naxalite challenge. For a change there is determination to fight the menace with all means available to the government. There is a commonality of purpose between the Centre and state governments, and they are following a proactive policy, both as regards policing and development. This should yield the necessary results. However, the government should be conscious of the fact that Naxalites are now spreading their tentacles into marine warfare (their actions in the riverine areas bordering Andhra Pradesh, Chhattisgarh and Orissa and their attack on the Grey Hound force in Balimela reservoir), into mobile warfare (in Jharkhand), into communal clashes (Kandhamal) and into urban areas (Maharashtra) and hence the need to devise a suitable strategy to handle them.

The writer is a former Union Home Secretary

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MIDDLE

Alibaba and 40 others
by Amar Chandel

AS a triumphant Alibaba entered the cave after his 10,000th successful theft, his 40 associates almost brought the dwelling down with lusty shouts of “Alibaba zindabad”. He smiled indulgently, cleared his throat and addressed them in his baritone voice:

“Well, friends, we have made very good progress this year with profits increasing 200 per cent. The number of thefts we conducted has gone up from 2890 last year to 3257 this year while the number of dacoities rose from 978 last year to 1258.

“All this has been possible thanks to active participation of all of you and innovative techniques that we have jointly adopted. As a gesture of my appreciation, I am announcing a productivity linked bonus of 150 per cent”.

The announcement was greeted with even louder shouts of glee. Alibaba silenced them with a wave of his hand and continued:

“Friends. Having demonstrated our core competence in the field of wealth generation, now is the time to diversify. You will be glad to know that the Steering Committee of Alibaba and Associates Inc has decided to diversify into the field of politics. Instead of supporting various political parties, we are going to float a political party of our own”.

“Wah, wah. And what is it going to be called?”

“Honesty Party, of course,” said the Great Leader.

“And what will be its aims and objectives?”

“Out first aim is, of course, to maximise profits by a factor of at least 10. Then we are also trying to cut down risks involved in our present profession. We are getting on in years and it has been felt that politics will be an excellent complementary occupation”.

“All that will be perfect. But won’t we have to expand our numbers? Just the 41 of us won’t be able to sustain a party,” said one of the senior chors.

“You are absolutely right. We are going to launch a recruitment drive. While 50 per cent of the profits will be reserved for the 41 Founding Fathers, the other 50 per cent will be shared among the new entrants. In fact, we have already started Track 2 parleys with like minded people in various political parties that we have been bankrolling so far and also in the police and other government departments”.

“What are our plans for the future?”

“The coalition era seems to have dawned only for our benefit. To begin with, we want to capture 10 per cent of the seats so that no government can be formed without our support. If all goes well, we may be able to form our own government 10 years down the line.”

“You are our Chief Minister-in-waiting, Alibaba. When we become the ruling outfit, what will be our cherished objectives?”

“Our Honesty Party is committed to the abolition of the Indian Penal Code. We will also launch a nationwide agitation demanding 99 per cent reservation for criminals in all jobs in government as well as private sector.”

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OPED

Break the logjam
There is no alternative to talks
by Kuldip Nayar

As expected, the talks between the Foreign Ministers of India and Pakistan have turned out to be a fizzle. One could foresee this when the Foreign Secretaries of the two countries did not go beyond the 26/11 terrorist attacks on Mumbai. Exasperated Pakistan Foreign Secretary Salman Bashir was not wrong when he said that the relationship could not be brought to “a standstill because of a trial or one investigation”.

Yet, public opinion in India is so irritated that any resilience by Foreign Minister S.M. Krishna from the stand that the 26/11 culprits must be brought to book before any dialogue would have evoked uproar and a feeling of let-down. Even otherwise, the Congress-led Manmohan Singh government could not afford to face any understanding that would have even remotely concurred with the delay in the 26/11 case, when the Assembly elections are due in Maharashtra and Haryana.

At the back of Krishna’s mind must also have been the stringent criticism over the interpretation of a joint statement at Sharm-el-Sheikh. Prime Minister Manmohan Singh, a signatory to the statement along with Pakistan Prime Minister Yousuf Reza Gilani, had to explain to Parliament what he meant by separating terrorism from the talks was that the 26/11 terrorists should be prosecuted before the resumption of a composite dialogue. Pakistan was disappointed because it believed that the talks would no more be dependent on other differences between the two countries.

Anyone who has followed the India-Pakistan relationship knows how domestic compulsions on both sides are so strong that the rulers cannot move forward without treading on somebody’s toes in their respective country. And the Sharm-el-Sheikh statement has become a casualty because of that. In fact, Foreign Minister Shah Mahmood Qureshi may have, unwittingly, closed the back channel by offering it before he met Krishna. These are delicate matters which become a prestige issue if they have the glare of publicity.

The situation has become more intractable because India’s litmus test is the extent to which Pakistan is willing to take action against Hafiz Mohammad Saeed, head of Lashkar-e-Toiba/Jamaat-ud Dawa, who is considered an arch planner and executer of the 26/11 attacks. Yet, the dossier against Hafiz Saeed, as Pakistan has said repeatedly, is not strong enough to get him punished at the court of law. New Delhi, which sent six dossiers, has reportedly said that it has forwarded Pakistan enough material to book Hafiz Saeed. Since Islamabad has its reservations why not make the dossiers public? There is no secrecy about them. New Delhi has shared them with 16 countries apart from Pakistan. The people would themselves judge how far Hafiz Saeed is involved in the charges levelled against him.

The deadlock once again indicates the loss of confidence in each other. But this is the story of last 62 years. The two countries have stuck to their positions which feed the ego of their government and all those who believe that there is no harm in “ignoring an impossible neighbour”. Such situations, as has been seen in the past, have only helped the terrorists. They thrive in the atmosphere of non-rapprochement. And, it is a pity that because of mistrust against each other, they find local help to sustain their nefarious activities. Since the patience is exhausted on both sides, one fears that even a small incident of terrorism may be blown up beyond proportions to exacerbate the situation still further.

A book, entitled The Clinton Tapes, has rightly pointed out the casual manner in which Indians and Pakistanis spoke of a nuclear war scenario. According to the author, “a doomsday nuclear volley would kill 300 to 500 million Indians while annihilating all 120 million Pakistanis”.

There is no alternative to the talks. They may well begin with the 26/11 attacks on top of the agenda and go on to other subjects, but the meeting should be attended by the top military brass and the intelligence chiefs in both the countries.

They are as much partners to the situation that obtains as bureaucrats and political leaders. Without Pakistan army’s participation, the talks would be like Hamlet without the Prince of Denmark. No doubt, this does dilute the importance of elected government at Islamabad, but such is the reality in Pakistan. Despite the numerous acts of omission and commission, the army is fully rehabilitated in the minds of Pakistanis and they have forgotten the hard days of General Pervez Musharraf.

New Delhi must realise that the fear of India is one of the big factors which give shape to Pakistan’s policies. In fact, from day one, I have heard even in top quarters at Islamabad that India has not reconciled to the creation of Pakistan. We can argue that there should be no such fears till the cows come home, but we cannot completely eliminate that fear.

Foreign Minister Qureshi has claimed after his meeting with the Indian Foreign Minister that they had discussed Kashmir, water and other related matters. Although the Indian media has ignored Qureshi’s press conference, the two-hour meeting would not have been confined to the 26/11 and Hafiz Saeed, even if the two Foreign Ministers were discussing the subject threadbare. Even a cursory discussion on Kashmir or the water issue must have taken place, giving an insight into the thinking at New Delhi and Islamabad. Krishna’s observation that the talks had been “candid and useful” says a lot.

The point to consider for Islamabad is that Prime Minister Manmohan Singh, a staunch supporter of the process to normalise relations with Pakistan, has said: “The only obstacle is that Pakistan should give up its old attitude regarding the use of terror as an instrument of state policy.” How does Pakistan disabuse Manmohan Singh on this subject?

In the meanwhile, Islamabad would do well to invite an all-party delegation of Indian MPs to visit the country to see for themselves that Pakistan was not conspiring against its neighbour. Even otherwise, the meeting of Indian MPs with their counterparts and others may provide a key to the lock which does not look like opening.

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Brazilian economy is humming along
by Chris Kraul

BRASILIA, Brazil—Finding the discount on the purchase of a new Renault hatchback irresistible, lawyer Roni Figueiro of Porto Alegre in Brazil took the plunge, plunking down $22,200 last week for the first new car he has ever owned.

Prodded by government incentives, consumers such as Figueiro are not just keeping the Brazilian economy afloat amid the global crisis but propelling it toward a robust recovery next year, according to a survey of Brazilian economists made public by the central bank last week.

The expected recovery is another example of how things seem to be breaking Brazil’s way. Friday, the nation will find out whether Rio de Janeiro will host the 2016 Olympic Games. Last year, Brazil was named the venue for the 2014 World Cup soccer championship.

Figueiro has company in the driver’s seat. Brazil’s auto industry expects 2009 unit sales to reach a record 3 million cars and light trucks, a 10 per cent increase. That compares with a 25 per cent decline anticipated for U.S. vehicle sales.

“I’ve waited all my life for this. I’m 54 years old and have finally realized my dream,” Figueiro said. “If I didn’t act now, it would have been impossible in the future.”

In a forecast issued Thursday, the International Monetary Fund said Brazil is leading Latin American nations out of recession and will register flat to slight growth in 2009 before its economy expands at a rate of 3.5 per cent in 2010.

By comparison, the IMF projects that Brazil will best Mexico, whose total economic output will shrink by a startling 7 per cent in 2009. The United States economy will contract by an estimated 2.7 per cent. Mexican and U.S. growth rates projected for next year were pegged at 3 per cent and 1.5 per cent respectively.

Consumer spending is a big part of Brazil’s success story. Incentives that have been offered to consumers by the government of President Luis Inacio Lula da Silva include forgiveness of sales tax on cars, which lured Figueiro to the auto showroom.

The government is also mandating subsidized loan rates on homes and appliances underwritten by three huge state-owned lenders. To increase Brazilians’ spending power, Lula added public sector jobs this year and increased welfare payments to 11 million families by 30 per cent, said Renato Baumann, economist at the United Nations office in Brasilia.

Although they express reservations about inflation and the impact of Brazil’s strengthening currency on trade, economists seem to agree that incentives offered by Lula to minimise the impact of the global slump have worked—at least so far.

Ernani Torres, an economist at the state-owned Brazilian Development Bank, said rising investment is another factor priming the growth pump. Foreign investment in factories and offices continued to pour into Brazil in 2009.

Moreover, foreigners are expected to invest up to $25 billion in Brazilian initial public stock offerings this year, a vote of confidence that Brazil’s economic system will withstand global gyrations.

An essential factor in that confidence is that Brazilian interest rates of 8.5 per cent are the lowest in history in real terms, Baumann said.

Despite a 40 per cent appreciation in the value of its currency against the dollar since the beginning of the year that has hurt the competitiveness of its manufactured exports, Brazil will still show a trade surplus in 2009 because of its global demand for natural resources, economists expect.

Mexico, on the other hand, is hurt by the slumping U.S. economy, he said, which has reduced demand for exports and also cut deeply into remittances sent home by Mexicans living and working abroad.

— By arrangement with LA Times-Washington Post

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UK retailers feel the heat from Amazon
by Jame Thompson

Slough is now almost synonymous with the hit television series The Office, which gave birth to the fictitious paper company Wernham Hogg and the location for the UK headquarters of Amazon, the US online giant that launched on these shores in 1998.

While he eschews all Brentisms, Amazon UK’s chief executive, Brian McBride, is a big fan of Slough and The Office.

More importantly, Slough has a typical high street, says Mr McBride, which lets Amazon keep a close eye on its high-street rivals, which have felt its powerful tentacles both in cyberspace and in their stores. “It is a great window for us,” says Mr McBride, who was the UK managing director of T-Mobile before he joined Amazon UK in January 2006.

The scale and breadth of Amazon’s operation in the UK is colossal. Partly through third-party retailers and sellers of new and used items, Amazon offers millions of products, ranging from shoes to power tools. Among online retailers that sell multiple items, Amazon’s UK and US website receives more than 40 per cent of UK web traffic — streets ahead of Marks & Spencer, Tesco, Next, John Lewis and Debenhams, according to Hitwise.

Mr McBride says Amazon’s fastest-growing products categories are those it has launched in the past 18 months, including jewellery, clothing and shoes. Speculation has been rife that Amazon UK is considering an online grocery offer, following a trial in Seattle, where its US parent is based.

But Mr McBride says: “The jury is still out. Grocery anywhere is still an urban proposition and you still need critical mass.”

While Amazon is cautious about online grocery, Mr McBride says the company's dynamic culture and chief executive, Jeff Bezos, were key reasons for him taking the job. “I met Jeff and the senior team in Seattle and was blown away by their enthusiasm. It was more the people and company that appealed to me rather than the industry.”

Planning is critical for Amazon UK as it gears up for its busiest time of the year, Christmas. Amazon starts planning in March for product orders and warehouse capacity. The scale of the task should not be under-estimated. On its busiest day last year, 8 December, Amazon received orders for 1.4 million items—equivalent to 16 items a second over the 24 hours.

As a result, the online retailer increases its number of workers, primarily temporary staff, by nearly half over the Christmas period.

While Amazon does not break out country sales data, it is understood that Amazon's UK second-quarter sales to 30 June were in line with its international growth of 16 per cent. Mr McBride says that its UK operation has continued to grow and has not been affected by the falling sales that has afflicted much of the high street during the recession. “We have not seen that slowdown,” he says. According to IMRG, UK consumers spent £ 3.8bn online in August, a 16 per cent jump on the year before.

“There is no sign that the move to online is slowing down,” says Mr McBride.

Globally, Amazon delivered a 26 per cent jump in net income to $645m, on total sales up 22.5 per cent to $19.17bn for the year to 31 December 2008.

In terms of the wider market, Mr McBride says one of the biggest changes with online shopping is the age of cyber shoppers. “The demographic has really widened. The internet has become so much more pervasive in our society. You see over-sixties using it far more.” As the web evolves, Amazon will not be standing still.

— By arrangement with The Independent

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