Monday, October 20, 2008

Green Policies in California Generated Jobs, Study Finds

OAKLAND, Calif. — California’s energy-efficiency policies created nearly 1.5 million jobs from 1977 to 2007, while eliminating fewer than 25,000, according to a study to be released Monday.

The study, conducted by David Roland-Holst, an economist at the Center for Energy, Resources and Economic Sustainability at the University of California, Berkeley, found that while the state’s policies lowered employee compensation in the electric power industry by an estimated $1.6 billion over that period, it improved compensation in the state over all by $44.6 billion.

Built into that figure were increases of $1.2 billion in the light industrial sector, $11.2 billion in wholesale and retail trade, $7.3 billion in the financial and insurance sectors and $17.8 billion in the service sector.

“Consumers were able to reduce energy spending,” the study said, adding that “these savings were diverted to other demand.”

“When consumers shift one dollar of demand from electricity to groceries,” the report said, they create jobs among retailers, wholesalers, food processors and other businesses.

The study, which examined household spending, comes as state and regional initiatives on climate-change policies have been gathering momentum. At the same time, arguments have sharpened over how much it will cost the economy to cut the emission of greenhouse gases like carbon dioxide produced by burning fossil fuels, which are linked to climate change.

Roughly half the country’s electric power is generated by burning coal, the fuel that produces among the highest greenhouse-gas emissions of any in widespread use.

Some economists focus their studies on the cost of converting the power grid to run on low-carbon technologies, like wind energy, or the cost of developing technologies to separate the carbon dioxide from coal-plant emissions and bury it underground. Others focus on the job creating potential of new energy industries.

The Berkeley study is different in that it focuses as much on historical data as on modeling the future. California’s energy-efficiency policies were adopted in 1978, long before the widespread push for greenhouse-gas reductions, but the data they provide is highly relevant to the current economic debate.

Professor Roland-Holst said that he based his calculations on residential spending on electricity over the last 30 years, factoring in both the decrease in per-capita demand for electricity — now 40 percent below the national average — and the increase in California’s electrical rates, which were about 40 percent above the national average in June, the latest month for which data is available. Household spending represents more than 70 percent of the gross state product.

Historically, Professor Roland-Holst said, the decrease in per-capita demand for electricity outstripped the increase in rates. Much of the economic growth, the study said, was driven by both efficiency standards for large appliances like refrigerators and for residential and commercial buildings.

In an interview, Professor Roland-Holst said, “What I wanted to do to support the forward-looking vision is go back and look at the evidence we have in front of us.”

In two months, California is set to adopt broad policies to enforce a new cap on greenhouse gas emissions signed into law two years ago. More detailed regulations will then be developed; that process is likely to be contentious, as it divides the overall costs of the new program among competing sectors of the state’s economy.

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Freddie Mac lobbied against regulation bill

WASHINGTON - Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.

In the cross hairs of the campaign carried out by DCI of Washington were Republican senators and a regulatory overhaul bill sponsored by Sen. Chuck Hagel, R-Neb. DCI's chief executive is Doug Goodyear, whom John McCain's campaign later hired to manage the GOP convention in September.

Freddie Mac's payments to DCI began shortly after the Senate Banking, Housing and Urban Affairs Committee sent Hagel's bill to the then GOP-run Senate on July 28, 2005. All GOP members of the committee supported it; all Democrats opposed it.

In the midst of DCI's yearlong effort, Hagel and 25 other Republican senators pleaded unsuccessfully with Senate Majority Leader Bill Frist, R-Tenn., to allow a vote.

"If effective regulatory reform legislation ... is not enacted this year, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole," the senators wrote in a letter that proved prescient.

Unknown to the senators, DCI was undermining support for the bill in a campaign targeting 17 Republican senators in 13 states, according to documents obtained by The Associated Press. The states and the senators targeted changed over time, but always stayed on the Republican side.

In the end, there was not enough Republican support for Hagel's bill to warrant bringing it up for a vote because Democrats also opposed it and the votes of some would be needed for passage. The measure died at the end of the 109th Congress.

McCain, R-Ariz., was not a target of the DCI campaign. He signed Hagel's letter and three weeks later signed on as a co-sponsor of the bill.

By the time McCain did so, however, DCI's effort had gone on for nine months and was on its way toward killing the bill.

In recent days, McCain has said Freddie Mac and Fannie Mae were "one of the real catalysts, really the match that lit this fire" of the global credit crisis. McCain has accused Democratic presidential candidate Barack Obama of taking advice from former executives of Fannie Mae and Freddie Mac, and failing to see that the companies were heading for a meltdown.

McCain’s campaign manager, Rick Davis, or his lobbying firm has taken more than $2 million from Fannie Mae and Freddie Mac dating to 2000. In December, Freddie Mac contributed $250,000 to last month’s GOP convention.

Obama has received $120,349 in political donations from employees of Freddie Mac and Fannie Mae; McCain $21,550.

The Republican senators targeted by DCI began hearing from prominent constituents and financial contributors, all urging the defeat of Hagel's bill because it might harm the housing boom. The effort generated newspaper articles and radio and TV appearances by participants who spoke out against the measure.

Inside Freddie Mac headquarters in 2005, the few dozen people who knew what DCI was doing referred to the initiative as "the stealth lobbying campaign," according to three people familiar with the drive.

They spoke only on condition of anonymity, saying they fear retaliation if their names were disclosed.

Freddie Mac executive Hollis McLoughlin oversaw DCI's drive, according to the three people.

"Hollis's goal was not to have any Freddie Mac fingerprints on this project and DCI became the hidden hand behind the effort," one of the three people told the AP.

Before 2004, Fannie Mae and Freddie Mac were Democratic strongholds. After 2004, Republicans ran their political operations. McLoughlin, who joined Freddie Mac in 2004 as chief of staff, has given $32,250 to Republican candidates over the years, including $2,800 to McCain, and has given none to Democrats, according to the Center for Responsive Politics, a nonpartisan group that tracks money in politics.

On Friday night, Hagel's chief of staff, Mike Buttry, said Hagel's legislation "was the last best chance to bring greater oversight and tighter regulation to Freddie and Fannie, and they used every means they could to defeat Sen. Hagel's legislation every step of the way."

"It is outrageous that a congressionally chartered government-sponsored enterprise would lobby against a member of Congress's bill that would strengthen the regulation and oversight of that institution," Buttry said in a statement. "America has paid an extremely high price for the reckless, and possibly criminal, actions of the leadership at Freddie and Fannie."

Nine of the 17 targeted Republican senators did not sign Hagel's letter: Sens. Mitch McConnell of Kentucky, Christopher "Kit" Bond and Jim Talent of Missouri, Conrad Burns of Montana, Mike DeWine of Ohio, Lamar Alexander of Tennessee, Olympia Snowe of Maine, Lincoln Chafee of Rhode Island and George Allen of Virginia. Aside from the nine, 20 other Republican senators did not sign Hagel's letter.

McConnell's office said members of leadership do not sign letters to the leader. McConnell was majority whip at the time.

Eight of the targeted senators did sign it: Sens. Rick Santorum of Pennsylvania, Mike Crapo of Idaho, Jim Bunning of Kentucky, Larry Craig of Idaho, John Ensign of Nevada, Lindsey Graham of South Carolina, George Voinovich of Ohio and David Vitter of Louisiana. Santorum, Crapo and Bunning were on the Senate Banking, Housing and Urban Affairs Committee and had voted in favor of sending the bill to the full Senate.

On Thursday, Freddie Mac acknowledged that the company "did retain DCI to provide public affairs support at the state and local level." On Friday, DCI issued a four-sentence statement saying it complied with all applicable federal and state laws and regulations in representing Freddie Mac. Neither Freddie Mac nor DCI would say how much Goodyear's consulting firm was paid.

Freddie Mac paid DCI $10,000 a month for each of the targeted states, so the more states, the more money for DCI, according to the three people familiar with the program. In addition, Freddie Mac paid DCI a group retainer of $40,000 a month plus $20,000 a month for each regional manager handling the project, the three people said.

Last month, the concerns of the 26 Republican senators who signed Hagel's bill became a reality when the government seized control of Freddie Mac and Fannie Mae amid their near financial collapse. Federal prosecutors are investigating accounting, disclosure and corporate governance issues at both companies, which own or guarantee more than $5 trillion in mortgages, roughly equivalent to half of the national debt.

Freddie Mac was so pleased with DCI's work that it retained the firm for other jobs, finally cutting DCI loose last month after the government takeover, according to the three people familiar with the situation.

Freddie Mac's problems began when Hagel's legislation won approval from the Senate committee.

Democrats did not like the harshest provision, which would have given a new regulator a mandate to shrink Freddie Mac and Fannie Mae by forcing them to sell off part of their portfolios. That approach, the Democrats feared, would cut into the ability of low- and moderate-income families to buy houses.

The political backdrop to the debate "was like bizarre-o-world," said the second of three people familiar with the program. "The Republicans were pro-regulation and the Democrats were against it; it was upside down."

Sen. Richard Shelby, the committee chairman at the time, underscored that in a statement Wednesday, saying that with Democrats already on their side, it was not surprising that Freddie Mac and Freddie Mae went after Republicans. "Unfortunately," said Shelby, R-Ala., "efforts then to derail reform were successful."

In a sign of bad things to come, Freddie Mac was already having serious problems in 2005. Auditors had exposed massive accounting issues, so improved regulation was one obvious remedy.

Once Freddie Mac's in-house lobbyists failed to keep Hagel's bill bottled up in the committee, McLoughlin responded by secretly hiring DCI.

DCI never filed lobbying reports with Congress about what it was doing because the firm was relying on a long-recognized gap in the disclosure law.

Federal lobbying law only requires reporting and registration when there are contacts with a legislator or staff.

"To have it stealthy, not to let people know who is behind this, in my opinion is unethical," said James Thurber, director of the Center for Congressional and Presidential Studies at American University who long has taught courses about lobbying.

Goodyear is a longtime political consultant from Arizona who resigned from the Republican convention job this year after Newsweek magazine revealed he had lobbied for the repressive military junta of Myanmar.

McLoughlin, Freddie Mac's senior vice president for external relations, was assistant treasury secretary from 1989 through 1992 in the administration of President Bush's father. McLoughlin served as chief of staff to Sen. Nicholas Brady, R-N.J., in 1982 and to Rep. Millicent Fenwick, R-N.J., from 1975-79.

Seven of the 17 targeted Republican senators were in the midst of re-election campaigns in 2006, and according to one of the three people familiar with the program, Freddie Mac and DCI hoped those facing tough races would tell their Republican colleagues back in Washington that "we've got enough trouble; you're making it worse with Hagel's bill."

Five of the seven DCI targets who ran for re-election in 2006 lost, and Senate control switched to the Democrats.

A Freddie Mac e-mail on May 4, 2006 — the day before Hagel's letter — details the behind-the-scenes effort that Freddie Mac and DCI generated to hold down the number of Republicans signing Hagel's letter urging a full Senate vote. It said:

"What I'm asking is that DCI get a few of their key well-connected constituents from each state to call in to the DC office of their Republican senators and speak to the (legislative director) or (chief of staff) and urge them not to sign the letter. The following could be used as a short script."

The proposed script read: "We can all agree that Fannie's and Freddie's regulator should be strengthened but unfortunately, S.190 goes too far and could potentially have damaging effects on Georgia's — example — home buyers."

According to the third of the three people familiar with the program, "DCI was asked to help keep senators from signing; it was a big part of their effort that year and it was viewed as a success since many DCI targets did not sign the letter."

DCI's progress after the first four months of the campaign was spelled out in a 19-page document dated Dec. 12, 2005, and titled, "Freddie Mac Field Program State by State Summary Report."

A snippet of a senator-by-senator breakdown of the efforts says this about Maine's Snowe:

"Philip Harriman, former state senator, co-chair of Snowe's 2006 campaign, personal Snowe friend, major GOP donor and investment adviser, has written the senator a personal letter on this issue. Dick Morin, vice president Maine Association of Mortgage Brokers, has been in direct contact with Sen. Snowe's committee staff, has sent a letter to Snowe, and is pursuing a dozen(s) of letters from his members."

On Wednesday, Snowe's office issued a statement saying that she "literally gets hundreds of 'Dear Colleague' letters seeking support for their positions that she does not sign. Had this legislation come up for a vote in 2006, she certainly would have considered it on its merits — as she does every vote. Just last July, she voted for the housing bill that established a new, stronger regulator."

Rosario Marin, a staunch McCain supporter who spoke at the GOP convention in September, was among the people DCI used in carrying out the campaign.

Marin, the U.S. treasurer during the first term of the Bush administration, went to Missouri and to Montana, Burns' state, where she spoke out against Hagel's bill.

At the time, Burns, who ended up losing his re-election bid, was caught up in a Washington influence peddling scandal centering on disgraced lobbyist Jack Abramoff.

Marin's visit triggered a local newspaper story in which the reporter contacted Burns' staff for comment. Burns' office told the newspaper the senator was not supportive of the latest version of Hagel's bill.

On Wednesday, Marin, now state consumer services secretary in California, issued a statement confirming that her trips to Missouri and Montana were in her capacity as a DCI consultant.

The December 2005 summary listing 17 Republican targets outlines the inroads DCI was making.

"On day one" of the effort, Sen. George Allen of Virginia had not addressed Hagel's bill and his legislative aide for housing was not assigned to it, the report said.

"Today," the report added, "the senator is aware of the issue and ... at the moment he is undecided." Allen's deputy chief of staff "has said that the senator will take into consideration before he decides that Freddie Mac is located in Virginia and is one of the largest Virginia employers."

"Grasstops/opinion leaders James Todd, president, the Peterson Companies wrote to both senators," the report added. "Milt Peterson, the founder and CEO of the company is one of Allen's major donors."

In the end, Allen, who lost his bid for re-election in 2006, did not sign Hagel's letter.

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Russia Is Striving to Modernize Its Military


WASHINGTON — As they tracked Russian military maneuvers in recent days, the American government’s career Kremlin-watchers might have been forgiven for wondering if they were seeing recycled newsreels from the worst of the bad old days.

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Joseph Sywenkyj for The New York Times

Russian soldiers going on patrol in Georgia in August. A reduction in troop strength is planned.

A huge exercise, called Stability 2008, spread tens of thousands of troops, thousands of vehicles and scores of combat aircraft across nearly all 11 time zones of Russian territory in the largest war game since the collapse of the Soviet Union.

There was no specified enemy, but the Russian forces appeared to be enacting a nationwide effort to quell unrest along Russia’s southern border — and to repulse an American-led attack by NATO forces, according to experts in Moscow and here.

In a grim finale, commanders launched three intercontinental ballistic missiles, the type that can carry multiple nuclear warheads. It was a clear signal of the drastic endgame the Kremlin might consider should its conventional forces not hold. One of the missiles flew more than 7,100 miles, allowing Russian officials to claim they had set a distance record.

If these images of Russian power projection appeared drawn from the dark decades of Dr. Strangelove, the response from Washington was anything but.

When asked to assess what seemed to be a Russian resurgence, Defense Secretary Robert M. Gates and Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, have provided the same sanguine response, echoed down through the ranks of government analysts who have spent years reading obscure Russian military journals and scrutinizing classified satellite photographs.

The Russian military fell to third world standards from neglect and budget cuts in the turbulent years when Boris N. Yeltsin was president, they say. The new Kremlin leadership is working to create a force that can actually defend the nation’s interests.

The military has embarked on a program to buy modern weapons, improve training and health care for troops, trim a bloated officer corps and create the first professional class of sergeant-level, small-unit leaders since World War II.

Which is not to say that the United States will stop judging Russian behavior in light of what it considers a clumsy, ill-advised and unnecessary invasion of the former Soviet republic of Georgia.

Yet policymakers also say the Kremlin’s efforts at military modernization should not prevent cooperation on mutual concerns, including countering terrorism and halting nuclear proliferation.

Even a high-profile speech three weeks ago by President Dmitri A. Medvedev, ordering a military modernization program and the largest increases in defense spending since the death of the old Soviet Union, was viewed here as short on substance and designed more for a domestic political agenda.

Mr. Medvedev declared that by 2020, Russia would construct new types of warships and an unspecified air and space defense system. Military spending, he said, will leap by 26 percent next year, bringing it to 1.3 trillion rubles (about $50 billion), its highest level since the collapse of the Soviet Union — but still a small fraction of American military spending.

Mr. Medvedev pledged that Russia would shore up its nuclear deterrence and upgrade its conventional forces to a state of “permanent combat-readiness.”

American experts were unimpressed. “Russia is prone to make fairly grandiose announcements about its military,” said a Defense Department official who discussed government analyses on condition of anonymity. “These programs have long been in the works. They are not new plans. They are not new programs.”

Even so, veteran analysts of Russian military affairs acknowledge that a military renaissance would allow the Moscow leadership to increase political pressure on former Soviet republics, now independent, as well as former Warsaw Pact allies that embraced NATO after the collapse of communism.

“What the Russian leadership has discovered is proof of an old maxim: that a foreign policy without a credible military is no foreign policy,” said Dale R. Herspring, a scholar on Russian military affairs at Kansas State University.

Eugene B. Rumer, of the National Defense University here, said events of recent weeks were “not a sign, really, of the Russian military being reborn, but more of a Russia being able to flex what relatively little muscle it has on the global scale, and to show that it actually matters.”

One example is how Russia’s navy is seeking to display global reach. A flotilla of warships, including the nuclear battle cruiser Peter the Great, is under sail for exercises next month with Venezuela.

Russia has also announced more than $1 billion in new arms deals with the Venezuelan president, Hugo Chávez.

“This Venezuela adventure is basically Russia’s payback for what they consider the humiliation of American ships’ operating in the Black Sea during the war in Georgia,” said Mikhail Tsypkin, of the Naval Postgraduate School in Monterey, Calif. “This is to annoy the United States.”

Some of the steps undertaken to wrench the Russian military out of mediocrity resemble changes in the American military over several decades.

Russia plans for its ground forces to move to a system designed for the deployment of brigades, rather than bulkier division or corps headquarters — nearly copying the United States Army’s approach.

The Russian military also plans to offer pay and housing incentives to attract noncommissioned officers — the valuable class of sergeants — to make a long-term career of military service.

While not as drastic as the move by the post-Vietnam American military to switch from the draft to an all-volunteer force, the plan would shift Russia further from reliance on one-year conscripts, who are not in uniform long enough to master even basic skills.

Just last week, the Russian military leadership announced it would further reduce the number of people in uniform, to about 1 million from the current 1.1 million, far below the 4 million-strong military at the end of the cold war.

Most significant, according to American government officials, is a four-year plan to reduce to 150,000 a Russian officer corps that now numbers 400,000, a shrinking that is certain to produce significant opposition within the senior ranks.

The Russian General Staff will be trimmed, and the number of generals is planned to fall to 900 from the current 1,100. But in an acknowledgment that the general officer corps can slow the pace of change throughout the military, most of those reductions will occur through retirement.

The Kremlin knows that its military bureaucracy is riddled with corruption, Pentagon officials say.

Experts here say that audits ordered after Vladimir V. Putin took over from Mr. Yeltsin in 2000 found that 40 percent of the budget for some weapons programs and salaries was lost to theft and waste.

The new defense minister, Anatoly E. Serdyukov, was a surprise choice, given that he had no military background but was an expert in finance and taxes. As he moved to clean house across the military-industrial complex, the reason for his selection became clear.

Analysts of Kremlin affairs note that a central risk to Russian military reform might not be foreign armies, but the current economic collapse, which has sent oil prices plummeting, robbing Russia of profits earmarked for upgrading the armed forces.

An irony is emerging. One central cause of the Soviet Union’s collapse was that its centrally planned, calcified economy simply could not support the Kremlin’s superpower military ambitions. If oil prices continue to drop, Mr. Medvedev and Mr. Putin may be faced with the same economic limits on their military plans.

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Factory closure in China a sign of global woes

DONGGUAN, China (AP) -- Unemployed worker Wang Wenming was angry at his boss for shutting down a massive Chinese factory this week that made toys for Mattel Inc., Hasbro Inc. and other American companies.

Workers gather outside a large toy factory in Guangdong province on Friday.

Workers gather outside a large toy factory in Guangdong province on Friday.

But the assembly line worker was also furious at the United States.

"This financial crisis in America is going to kill us. It's already taking food out of our mouths," the 42-year-old laborer said Friday outside the shuttered Smart Union Group (Holdings) Ltd. factory in the southern city of Dongguan.

The company, which has struggled as global growth has slowed in recent months, employed 7,000 people in mainland China and Hong Kong. It wasn't immediately clear how many have lost their jobs.

Economic upheaval in the U.S. is already changing and shrinking China's vast manufacturing hub in the southern province of Guangdong, long regarded as the world's factory floor. However, factory closures won't just be a China problem -- shoppers will feel the effect in malls and stores in the U.S. and Europe.

"When these companies go bust, the outcome is higher prices," said Andy Xie, an independent economist in Shanghai. "Labor costs have gone up 70 to 100 percent in the last three or four years. But these guys have not been able to raise their prices because Toys "R" Us, Home Depot and Wal-Mart are saying no price increase. How is that possible?"

For years, there were too many factories competing to win bids from foreign buyers demanding prices that were often unrealistically low. The winners were American and European consumers, who enjoyed rock-bottom prices.

But many factories were scrimping on materials and stiffing their suppliers just to survive, Xie said. The financial crisis will be the final culling factor that forces many wobbly factories to go belly up and end an unsustainable situation, he added.

Already, China's toy industry is hurting. The official Xinhua News Agency reported this week that 3,631 toy exporters -- 52.7 percent of the industry's enterprises -- went out of business in 2008. The causes: higher production costs, wage increases for workers and the rising value of the yuan, the report said.

Even before the financial crisis, China's exports were dropping because of the slowdown in America and Europe. For the first time in three years, the growth rate for Chinese exports in the first quarter of 2008 declined, according to customs figures.

Chan Cheung-yau, chairman of toy and games subcommittee under the Chinese Manufacturers' Association of Hong Kong, agreed that the outlook was gloomy for toy makers. He predicted that thousands more factories would close in China next year.

"The tightening credit market has made it more difficult for manufacturers to raise funds," he said. "It has created a huge cash flow problem."

Workers at the Smart Union toy factory said that for several months the plant was less busy and paychecks were arriving late.

"The management said the problem was that our American customers weren't paying for the goods they ordered so the company couldn't pay us," said worker Shao Xiaoping.

He was among 100 workers who on Friday gathered outside the gates of the factory, a sprawling five-story complex. About 2,000 other laborers protested outside the local government's offices, demanding that the Hong Kong-based company pay their wages, severance and other benefits. The building was guarded by 50 riot police with shields and clubs. Video Watch anger boil over among the factory's workers »

The workers said the Hong Kong-based owner of the factory didn't warn them before the plant closed Wednesday.

"I've been working here for eight years. I have no idea whether I'll ever get paid. The government says we will, but I'm not optimistic," said a man who would only give his surname, Zhang. Most workers wouldn't completely identify themselves for fear speaking to the press would cost them their wages.

A sign posted by the local government on the factory gates said workers could be detained for 10 to 15 days for stirring up unrest, unlawful gathering, protesting and ignoring orders from security officials.

Calls to Smart Union's offices in Hong Kong went unanswered. On Friday, the company said in a filing to the Hong Kong Stock Exchange that it informed Hong Kong's High Court it has stopped operating and was seeking buyers.

Last year, the company, listed on Hong Kong's stock market, said in a financial report its core customers included Mattel, Hasbro and Spin Master Ltd. The company's stock was suspended from trading Wednesday.

In another report this year, the company reported a pretax loss of US$25.9 million (HK$201 million) in the first six months.

Higher manufacturing costs -- including a 20-percent rise in the cost of plastic -- took a big bite out of profits, along with the 7 percent appreciation of the yuan, it said. The company was also hammered when Mattel and other toy giants recalled millions of Chinese-made toys last year because of safety concerns, the company said.

Although Smart Union wasn't directly involved in those recalls, "the product recall incident badly affected the toy industry," it said.

Most of China's toy factories are in Guangdong province -- the main laboratory for the bold economic reforms China began 30 years ago when it began shifting away from communism. The province was a good place to start dabbling with capitalism because it shares a border with Hong Kong, the main gateway into China for foreign investors.

Companies from Hong Kong, Taiwan, America and Europe flooded into the province to set up low-cost factories that made everything from sneakers and bras to laptops and iPods. The booming region close to Hong Kong became known as the Pearl River Delta.

Most of the factory closures are happening in the Pearl River Delta, and the changes didn't seem to bother one of the province's highest-ranking economic officials, Vice Governor Wan Qingliang.

In a briefing with foreign reporters this month, Wan said the global economic crisis wouldn't deter the provincial government from pressing on with a sweeping plan to restructure the Pearl River Delta's manufacturing base. He said the government wanted low-end factories to move farther into China's interior so that they could be replaced with more high-tech, advanced industries.

"We have a policy to empty the cage for the new birds," he said. "The ultimate target is to build the Pearl River Delta into the core region of modern manufacturing."

If the strategy works, China might eventually come out of the toy crisis stronger.

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Search is on for caskets unearthed by Ike

IN THE MARSH OF CAMERON PARISH, Louisiana (AP) -- Joe Johnson craned his neck from the airboat as it circled a patch of brown marsh grass. The runaway coffin was not where it was supposed to be.

A coffin disgorged by Hurricane Ike is found in Cameron Parish, Louisiana, on October 8.

A coffin disgorged by Hurricane Ike is found in Cameron Parish, Louisiana, on October 8.

Johnson pulled up to a pile of rocks, killed the motor and hopped out. After a few minutes of scouring along the tall, reedlike grass, he flagged down two fishermen.

"Can you possibly take me along the shoreline?" Johnson asked. "I'm looking for a casket."

Beyond the usual, dismal rebuilding, Hurricane Ike left another grim task when it struck last month: Its 13-foot storm surge washed an estimated 200 caskets out of their graves, ripping through most of Cameron Parish's 47 cemeteries and others in southwest Louisiana and coastal Texas. Some coffins floated miles into the marsh.

At Hollywood Cemetery in Orange, Texas, Ike unearthed about 100 caskets. Dozens more were disgorged in hard-hit Galveston.

Officials in coastal areas have long struggled with interring the dead, as caskets buried in low-lying areas are susceptible to being belched up by floodwaters. Some areas -- most notably New Orleans -- house the dead in above-ground crypts to keep them from drifting away in storms.

For many of the dead forced up by Ike, it wasn't their first disturbance. About 80 percent of the caskets in southwest Louisiana displaced by Ike were rousted by Hurricane Rita just three years earlier, said Zeb Johnson, the Calcasieu Parish deputy coroner who has headed casket recovery efforts for Rita and Ike.

Of the caskets ejected by Rita in September 2005, 335 were found and reburied, he said. Eighteen were never found.

"Our mother came out for Rita, and now she came out for Ike," said Debra Dyson, a commercial fisher whose house in Cameron was destroyed by Ike.

Dyson said coffins holding her brother-in-law and cousin also were heaved out by Rita. Ike was worse -- the storm thrust out caskets containing her mother, brother-in-law, cousin, niece, three uncles and two aunts.

The one containing Dyson's mother floated to the same spot it came to rest after Rita, 22 miles from the cemetery. Only this time, it didn't take nine months to find it.

"It's hard to lose your home, but the first stop you make is that cemetery just to make sure they're still there, and it's heartbreaking when they're not," said Marilyn Dyson Elizondo, Dyson's sister who lives in Dayton, Texas.

Zeb Johnson helms a team of two employees, volunteer boat pilots and state prisoners to search hundreds of miles of marsh with loaned equipment and haul coffins back to shore. The work is backbreaking, with caskets weighed down by mud in swampy areas teeming with alligators and snakes and the stench of rotting marsh grass.

"It's a job that has to be done," said Joe Johnson, a funeral director and embalmer from Lake Charles who is not related to the deputy coroner.

Joe Johnson's half-hour ride with the fishermen didn't turn up the pink casket reported to the coroner's office, like so many other tips that don't pan out. An hour later, however, he returned with another coffin found in thick grass near a canal bank.

A hole was drilled into the silver metal container to drain out marsh muck and lighten the load for the airboat. Prisoners pulling the casket from the boat tipped it again to empty out more of the fetid water.

The coffin was trucked to the city coliseum in Lake Charles, where the Federal Emergency Management Agency was providing refrigerated trucks to hold caskets until reburial arrangements could be made.

"It's a slow process," Zeb Johnson said.

The Calcasieu Parish Coroner's Office is footing most of the search and recovery bill, which hasn't been tallied. But reburying the dead is estimated to cost as much as $100,000 on top of the recovery costs, with much of the money needed for new caskets and vaults. Zeb Johnson wasn't sure who'll cover that price tag, so he wasn't sure when reburial could begin.

More than 140 coffins had been found by Wednesday, and about 20 others that didn't stray far from their burial sites were quickly reburied. Zeb Johnson doesn't expect to find all of the two dozen or more that remain missing.

"The first day we found caskets that had floated 30 miles from their cemeteries," he said. "You just have caskets floating out in the marsh. At least seven of these caskets ended up in Texas, kind of like boats, they just got out in the currents from the high waters and carried them to Texas."

The identification work in many instances is easier this time around. Bodies found after Rita were tagged with special markers, as were the silver metal coffins in which they were reburied. The coffins include a scroll with the deceased's name, where they were buried and other information.

A few families are considering reburials on higher ground. Cameron Parish's government has proposed requiring deeper burials.

Elizondo, whose family awaits word on the missing Dyson caskets, said her brother was buried in January in a deeper vault than those that housed her missing relatives. Ike didn't disturb her brother, so Elizondo wants to rebury her mother the same way, though it is more expensive.

"It's worth it. That way we have the peace of mind that mom won't be gone again," Elizondo said. "We've even offered to do the backhoe ourselves. We just don't want her coming back up again."

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Iraqis raise reservations over pact with U.S.

By Peter Graff and Mariam Karouny

BAGHDAD (Reuters) - A pact that would allow U.S. troops to stay in Iraq for three years failed to secure the support of Iraqi political leaders on Sunday, raising doubts about whether it can survive without new negotiations.

The Iraqi government took pains to say the pact was not yet dead, but the lack of an endorsement from a body known as the political council for security -- which groups parliamentary faction leaders -- makes its future far from certain.

"They just finished the meeting and they did not take a decision on the pact because some groups had reservations," government spokesman Ali al-Dabbagh told Reuters.

The leaders were "still hesitant to approve or reject" the deal, he said, adding that only the main Kurdish groups supported the pact without reservations.

Earlier, the Shi'ite alliance that forms the core of Prime Minister Nuri al-Maliki's government said it wanted changes in the pact, despite a government position that the draft is final and unlikely to be renegotiated.

Enacting the pact would mean that, for the first time, U.S. troops in Iraq carry a mandate from Iraq's elected government, seen as a major step on the road to full sovereignty.

But Iraqi politicians are keen to win more control over a foreign force that has previously operated outside Iraqi law.

"Beside the positive points that were included in this pact, there are other points that need more time, more discussion, more dialogue and amendments to some articles," the Shi'ite alliance said in a statement.

Dabbagh said that among the issues leading to doubts at Sunday's meeting were details of a mechanism to let Iraq try U.S. troops for crimes.

"They say it needs clarification," he said.

The pact will still go to Iraq's cabinet for approval later this week, Dabbagh said, adding that the cabinet's decision could reflect the reservations of the faction leaders.

Even if the cabinet backs the plan, it still must pass in Iraq's notoriously fractious parliament where the faction leaders hold sway.

The U.N. Security Council resolution authorizing the U.S. mission expires at the end of this year, and Iraqi leaders have already discussed seeking an emergency extension as a plan B.


The draft requires U.S. troops to leave Iraq at the end of 2011 unless Baghdad asks them to stay. It also provides certain conditions under which U.S. troops might be tried in Iraqi courts for serious crimes committed while off duty, which Iraqi officials have described as a major concession from Washington.

The Shi'ite parties' call for amendments appears to contradict Foreign Minister Hoshiyar Zebari, a Kurd, who said on Saturday that Washington and Baghdad both consider the draft final and would be unlikely to reopen it.

Iraq's parliament would be sent the draft to approve or reject but would not be permitted to make changes, Zebari said.

U.S. officials still have yet to comment on the contents of the draft in public, but briefed members of Congress -- including the two presidential candidates -- about it on Friday.

"When the agreement is finalized, and both sides agree that that is the final language, it will be an open and transparent document so that the citizens both of Iraq and the United States can understand what is in it," U.S. military spokesman Rear-Admiral Patrick Driscoll said on Sunday.

Followers of Shi'ite cleric Moqtada al-Sadr oppose the pact, and thousands of Sadrists marched against it on Saturday.

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