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S&P Comments Bolster Indian Rupee

By , August 22, 2014 7:22 am

2 banknotes of 20 rupees eachThe Indian rupee climbed after Standard & Poor’s praised the efforts of the country’s government to reduce the budget deficit, which may improve the outlook for India’s sovereign credit rating.

According to Bloomberg, S&P commented favorably on India’s attempts to cut the deficit. This should help the country’s credit rating, which currently stands at the lowest investment grade, and the agency has a negative outlook on it. The rupee also rallied with many other emerging-market currencies ahead of today’s speech of Janet Yellen at the Jackson Hole Symposium, which may be dovish, at least according to some forecasts.

USD/INR went down from 60.6850 to 60.5400 as of 13:10 GMT today.

If you have any questions, comments or opinions regarding the Indian Rupee, feel free to post them using the commentary form below.

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Indonesian Rupiah Gains as Court Supports Election Outcome

By , August 22, 2014 7:20 am

Rupiah notes and coinsThe Indonesian rupiah advanced today after the country’s Constitutional Court ruled in favor of Joko Widodo, rejecting challenges against the outcome of the July presidential elections.

Prabowo Subianto, another candidate for the presidential seat, challenged the voting outcome, claiming it to be a fraud. The court rejected the allegations, saying that there were no evidences of violations. With the court ruling, the rupiah lost the downward pressure from political uncertainty that was dragging the currency down previously.

USD/IDR fell 0.16 percent to 11,673.30 as of 13:25 GMT today.

If you have any questions, comments or opinions regarding the Indonesian Rupiah, feel free to post them using the commentary form below.

Forex News

The Flowering of Feminism in Hungary  

By , August 22, 2014 5:40 am
Judit Acsady was an early feminist in Hungary. (Photo: John Feffer)

Judit Acsady was an early feminist in Hungary. (Photo: John Feffer)

Cross-posted from

The feminist movement, which gathered strength in the 1960s and 1970s in the West, arrived in East-Central Europe much later. Women’s equality was a stated principle of the Communist governments, and official women’s organizations operated in all of the countries. But the official representation of women remained rather conservative. Alexandra Kollantai’s Marxist challenge of patriarchal structures such as marriage and the family was long forgotten as were the more radical emancipation movements that coalesced during the twilight of the Austro-Hungarian empire. “Women’s liberation” made little if any impact in the latter days of the Communist era. The social mores in the region were overwhelmingly traditional. The opposition movements tended to reflect this traditionalism as well.

As the political situation began to change in Hungary in the late 1980s, however, feminist thought began to make inroads, first in academia. Judit Acsady was studying sociology at that time. “I asked why the sociology department didn’t have a course on feminism,” she told me in an interview last May in her office at the sociology institute of the Hungarian Academy of Sciences. “And they said, ‘Why should we?’ There were no materials on feminism, no textbooks in Hungarian. But many of my professors had gone abroad on scholarship, so they must have seen these books. You can’t do social studies in Western universities without being introduced to one or two books about the theory of gender, the history of feminist thought, or some aspect of this topic. It was a very artificial refusal. All other previously rejected political systems of thought had gradually entered into the discussion. But feminism didn’t.”

Acsady organized a study group. And then a series of lectures on women and society. Out of these efforts a new initiative emerged: the Feminist Network.

“During the few years of the existence of this network, we didn’t really become widely known,” she remembers. “But in a certain circle of people who were open to it, we managed to raise certain issues in the public mind. For example, I remember a pro-choice campaign. There was also a pacifist action during the wars in the former Yugoslavia that linked up with the Women in Black movement. It was really dramatic. Every week we went to a main square and wore black, just standing there silently for an hour. Also, we did several actions against violence against women. And activists in the Feminist Network put together the first hotline for battered women. It was called NANE. It still exists today, and it provides a really professional service.”

The Network lasted until the mid-1990s. “Somehow after that, the group dissolved,” Acsady reports. “We had so many dreams. We wanted a women’s center with a cafe and library as you see in Berlin or elsewhere. Those were the models in our head.”

In many ways, women as a class suffered a loss of status during the transition. Because of economic dislocation, many women lost their jobs. The representation of women in parliament remains quite low. Women’s “economic activity and representation in politics are discussed as issues in the public,” Acsady notes. “But the debate is very timid. ‘Oh yes, we know it’s important,’ politicians will say. ‘We signed a lot of agreements. We have to make the CEDAW report. We have to show a face that shows that we are for gender equality.’ But when it comes to penalizing domestic violence, then in the public discussion and political discussion you can hear awful statements that show that the people who are now responsible for formulating new structures and institutions, they simply do not know what they’re talking about.”

But Acsady does see some progress at a local level. “At the level of local government you can see more and more women mayors and women candidates who are winning local elections,” she says. “Some say that these are not really powerful positions. But it’s a position of responsibility to be a mayor in a small village that is isolated and has lots of social and economic problems. They manage to do the job. They’re ambitious. They’re not tired of these jobs.”

We also talked about Acsady’s early peace activism, her research into the emancipation of women in public life, and the difficulty of staking out an independent political or intellectual position in current Hungarian culture.

The Interview

Do you remember where you were and what you were doing when you heard about the fall of the Berlin Wall?

I was at home. We rushed to the see it on the TV. There were reports that people were climbing to the top of the wall. The news was really special for me. Just a couple months before it happened, at the end of August, I was with a group of activists that made a street theater performance connected to the topic of the Berlin Wall.

We actually occupied a street in the middle of Budapest called Vörösmarty Square. It’s a very touristy area. We formed the Berlin Wall. We physically acted it out. One side represented the eastern side and they had posters of barbed wires. And the ones on the western side had posters filled with graffiti. One of the activists was a policeman, and he didn’t let the tourists pass. We blocked the street, and he said, “Please, your passport.” We acted out the whole thing. The end of this action was when we tore down these posters that represented the Wall. We broke it down. I still have photos of this event. I remember the East German tourists who actually understood the whole action. They were jumping on the pieces of this symbolic Wall and shouting.

And two or three months later, it really happened. It was so funny to see. We said among our friends, “Yeah, we did it first!”

If someone had asked you at that time when you thought the Berlin Wall would fall, what would you have said?

We weren’t thinking about that. But with Gorbachev and the reforms, everyone sensed some kind of change. But we didn’t really think, for instance, that the Soviet Union would fall apart. You could sense a certain change in the system, for instance economy-wise with private entrepreneurship. But when there would be a multi-party system? Nobody had a precise date when it would happen.

When you organized the event, did you think it would be a problem with the police or with anyone else?

At that time already there were some modest changes, a liberalization, and you could exercise the right of gathering. You could also report the action beforehand to the local authorities that at this and this time there will be a public assembly, and they gave permission. I wonder if they were interested in the content or not? We called that period of time, those two or three years, an “ex-lax” period — a period of no law. It was like rubber: you could stretch and play with the rules. You could openly write a letter that would have been censored before. You could sense that there was a space for social action.

During our Berlin Wall event, there were policemen at that place. But they did not intervene or disturb us.

Were you a student at that time? 

Yes, a university student in sociology. I started with Hungarian and English, and I continued my studies at those departments. But in the middle I took up sociology as well. There was a possibility to pick up a third major, and by that time I must have started it.

The group that organized that action was a student group?

Mostly students, but not only. There were teachers among us. Also taxi drivers. Unemployed writers. Journalists.

Did it have a name?

The action was organized by several groups. And our group joined. Our group was called Autonomia, and this referred to freedom, to our ideas about powerless structures. It was like a workshop at the university. We came together to think about social theory. We were reading different things.

Was this the first action that Autonomia joined?

There were other actions. For example, against the testing of nuclear weapons. And against identity cards.

What was the action against identity cards?

We were publicly burning them. It was like what they did in Hair — that was so romantic.

That was quite radical.


In a public space?


Did the police intervene?


Why not?

We also notified the authorities that we would have this action, but probably the content was not reported. They didn’t think that this small group of crazy people was dangerous. Several dozen watchers were around us, but not a lot of people. That was an interesting experiment. We also had a solidarity gathering for Vaclav Havel who was in prison at that time. It was not organized by this particular group but several others, including intellectuals all over Budapest, but definitely we were there. And we also organized an action for women’s rights.

When did it start?

In 1988, 1989. It was just two years.

And then it stopped?

The gatherings did not stop. But the activists went into political party activism. That was the time when the new political parties were founded. Some of them even became candidates or volunteered to support parties. Some people went to the feminist group, like myself. Others went into ecology. And somehow it dissolved. Others formulated more radical groups.

Was that your first activism?

In fact, no. Back in secondary school, there was a petition that we signed. And there were students who were kicked out of school. The real reason wasn’t said. Instead, the school said that they were smoking in the bathroom. But everyone was smoking in the bathroom! One particular girl, who organized the collection of signatures, was dismissed from the school. There was propaganda in the early 1980s that Hungarian society and youth should protest against American missile defense. The petition that these young girls were distributing stated that we were very much against American armaments but we were also against the Russians putting their weapons in Eastern Europe. And that didn’t go over well.

And you didn’t get into trouble? 

I don’t honestly remember whether I signed it or not. I knew about it. I supported it. But I connect it to activism. Also with this young woman, I attended discussions of the so-called democratic opposition. There were free university lectures. A club called the Rakpart Group organized lectures and discussions. For me, it was very exciting, these discussions on new social questions like ecology or the Rome report on the state of the world. It was a kind of activism to attend those things. At university, there was a peace group named Dialogus. I went to some events organized by them as well.

Do you remember any conflict in your family around your activism?

Definitely. My father won’t get into trouble if I say this?


It’s important to know something about my family. My parents both came from a so-called middle-class family. This social stratum was destroyed in the 1950s, so they lost their position. They were not that wealthy. But the wealth they did have was gone. The family was part of the intelligentsia from the early part of the century. Even the women had university diplomas. For example, my grandmother was a chemist. My grandfather was a lawyer.

My father is in fact an engineer. He never entered the Party. Even though he had experience, he knew languages, and he had really established skills in his position, he didn’t get promoted. They told him, “If you enter the Party, you will be the head of the department.” He said, “No, I won’t join because of moral reasons.” So he always stayed in the middle position.

However, since he knew languages, he was very often asked to be a member of delegations that went abroad to make arrangements with factories. He really liked that responsibility. When I went home with samizdat literature, he became really disappointed and angry. He said, “This literature you’ve brought home is illegal. I could get into trouble and be kicked out of my position and lose my passport.” He was really nervous and angry about it.

In 1980, I received a copy of the declaration from the workers on strike in Gdansk. The declaration with their 21 demands was being circulated. The activist circle here was asked to type it at home to make several copies. It had already been translated into Hungarian. The demands were for democracy, freedom of gathering, defending their own rights as employed people, against the Soviets. I was typing it on my typewriter. I was so proud. “The workers in Gdansk wrote this,” I told my father. He took it out of the typewriter. He was so furious. He tore it in half. He said all the typewriters are registered. If I took the paper anywhere they would know the typewriter belonged to him and he would be punished. That was the reaction at home. He was afraid. Maybe he agreed with these things, but he never told me.

And your mother?

She was in fact silent about these things. She had been a revolutionary in 1956. So maybe she had a good reason to be silent. No one in the family had used weapons. But she was present with the students in the street. Originally she’d wanted to study medicine, but for political reasons she wasn’t accepted at the university of medicine. So she worked as a nurse and started studies as a pharmacist. During the uprising, she went to where the wounded people were kept at the building of the university and helped bandage people and bring tea for them. That’s the family legend. Unfortunately she died 10 years ago, so I can’t ask her about these things.

A colleague of yours, a nice American woman who was interested in East European history, interviewed my grandmother. This was Shana Penn, and the project was called Dark Circles. She published her work on Polish women, but I don’t think she did the same with the Hungarian material. There was a scene with my mother and grandmother. My mother said that one day in 1956, she was crossing the bridge and the Russian tanks were just opposite her. And my grandmother said, “You were not at auntie’s place that night? This is the first I’ve heard of it!” So for decades, she didn’t tell her mother about her role in the uprising.

After the free elections in 1989, my parents always insisted on arguing against those who in their eyes represented the former system.

After 1989 and the Autonomia experience, you mentioned that people went off to do different things. And you went into the women’s movement. Can you describe that process?

My involvement in feminism was rooted in two different lines. One was the activism in this group. The second was my sociological studies. I attended a course in the history of thought that was not at the sociology department. We had a wonderful professor with whom I am still in contact. She had a class on the public debate over women’s emancipation in Hungary in the 19th century. It was so interesting to hear the discussion. I thought to myself: why should one think that women shouldn’t go to university? So I started to think about this process of emancipation. Intellectually it really interested me. At the same time, in Autonomia, there were a lot of discussions about the nature of hierarchical structures and positions and attitudes. Somehow the two things came closer and closer in my mind.

I asked why the sociology department didn’t have a course on feminism. And they said, “Why should we?” There were no materials on feminism, no textbooks in Hungarian. But many of my professors had gone abroad on scholarship, so they must have seen these books. You can’t do social studies in Western universities without being introduced to one or two books about the theory of gender, the history of feminist thought, or some aspect of this topic. It was a very artificial refusal. All other previously rejected political systems of thought had gradually entered into the discussion. But feminism didn’t.

So I started to organize. I organized a study group. Since we didn’t have textbooks, we looked for something similar in Hungarian or English and sat together to talk. Later on, I organized a seminar as well. But that was a little bit later. The first important step was when, with a fellow student, we invited university professors to participate in a series of lectures on women and society. It was really interdisciplinary: economics, political science, psychology. Somehow we got this plan accredited. Students from any faculty could come and listen to this course. It was really unique. Maria Adamik, a sociology professor who really supported this idea, helped get the course included in the university curriculum. It was really successful and opened people’s minds to these ideas. It was held at a great lecture hall at ELTE University. At that time there was no Internet, but news spread. Women who were interested in this topic from all over Budapest came to hear. Maria Adamik saw this interest and said, “Why don’t we form a group that goes on thinking about these questions.” That was the first step in forming the Feminist Network.

So, there was a lot of discussion and work preparing seminars. Was there also an activist component?

I forgot to say something. In the group Autonomia, we met a woman Antonia Burrows who came from Great Britain and lived a long time in Germany. Somehow she dropped the topic of feminism into that circle, and people said, “Oooh, really, that’s weird!” Probably when I started to deal with emancipation in sociology, I wouldn’t have called it feminism. Women’s history, maybe. But Antonia was the one who framed the issues as feminist. This was the activist line. The Feminist Network was gradually moving out of university circles. In the beginning of the 1990s, this activist group was meeting more and more regularly. Every month we had a club with open lectures, discussions, and so on. Later, we saw that once we called it feminism and activism, we became more isolated from the intellectual side, which was painful for me given my sociological studies and later research. I thought I could combine the two, but I felt marginalized in those years.

Do you remember activist events that were particularly dramatic?

During the few years of the existence of this network, we didn’t really become widely known. But in a certain circle of people who were open to it, we managed to raise certain issues in the public mind. For example, I remember a pro-choice campaign. There was also a pacifist action during the wars in the former Yugoslavia that linked up with the Women in Black movement. It was really dramatic. Every week we went to a main square and wore black, just standing there silently for an hour. Also, we did several actions against violence against women. And activists in the Feminist Network put together the first hotline for battered women. It was called NANE. It still exists today, and it provides a really professional service.

That lasted until the mid-1990s. Somehow after that, the group dissolved. We had so many dreams. We wanted a women’s center with a cafe and library as you see in Berlin or elsewhere. Those were the models in our head. We also joined some initiatives that supported and provided information for women who wanted to run as candidates.

Has the situation for women changed for the better in Hungary when it comes to the level of sexism and sexual violence or the general consciousness of average Hungarians about women’s status in society or the participation rate of women in society or the pay differential between women and men?

Probably I’m not the first person to tell you that the democratization process and the strengthening of civil society slowed down. It stagnated. I don’t see improvement in this. Certain issues introduced at the beginning of the 1990s by independent thinkers and activists who were bringing in this new wind — some of the new theoreticians use the term “west wind” — became established and institutionalized. Some offices were established. Some desks were created at the ministry. But in terms of processes and values in society, unfortunately the public did not absorb these new ideas.

As far as the position of women is concerned, their economic activity and representation in politics are discussed as issues in the public. But the debate is very timid. “Oh yes, we know it’s important,” politicians will say. “We signed a lot of agreements. We have to make the CEDAW report. We have to show a face that shows that we are for gender equality.” But when it comes to penalizing domestic violence, then in the public discussion and political discussion you can hear awful statements that show that the people who are now responsible for formulating new structures and institutions, they simply do not know what they’re talking about.

In terms of the economic position of women, the dramatic change came right after the transition. During the Communist period, 85 percent of women were employed: full employment was a state policy of the socialist system. Women and men both lost their jobs because of the closing down of factories and the transition to a different economic structure. Women’s representation in politics also changed at that point. Since then, it’s always 9 or 11 percent in parliament, and there’s been no dramatic change regardless of which party is in power, whether conservatives or the so-called Socialist party (their economic policy is not socialist, I’m sorry to say).

But there have been positive changes in terms of women’s position. For example, and many social scientists have pointed it out, at the level of local government you can see more and more women mayors and women candidates who are winning local elections. Some say that these are not really powerful positions. But it’s a position of responsibility to be a mayor in a small village that is isolated and has lots of social and economic problems. They manage to do the job. They’re ambitious. They’re not tired of these jobs. They are organized. They have connections with one another. This is good. It’s also good that in the public mind, or in women’s minds, they know that certain women are organizing. The large group of women is not organized, but they know that if they want, they can find a group that supports battered women, that defends the interests of women with diplomas. In the trade unions there are women’s sections, but they’re much more administrative. But if a woman worker wants to find some activism in a party or a union, she can find it. So, at least this is in the air. But most women in public life appear as representatives of the major parties and mouth the discourse of one party or another. It’s rare that they articulate women’s issues. There is a politician from one of the parties, however, Katalin Ertsey of Politics Can Be Different (LMP), who authentically represents these issues.

You mentioned that social attitudes have stagnated. Do you have any examples?

I’m thinking about the openly sexist attitudes in the media. In one sense, this is a change. Earlier, the way people were represented in the media was very strictly defined and designed by the Communist Party. After the liberalization, which was theoretically good, we can have multiple views in the media. It is more colorful, and many different tastes are represented. But it turned out that when a woman is represented in the media, the more feminine features are often overemphasized — feminine in the sense of attracting men. And I think that poisons the Hungarian public mind. Somehow being attractive and sexy is the major way to evaluate the person. This applies more and more to men as well.

Men have to be sexy and attractive as well?


Image is more important.

Yes, more important than values or thoughts or your real behavior. Also, the attitudes of young people have changed. But I think that this was present in Western societies earlier as well: this way of not getting into long-lasting relationships, not feeling the need to be responsible for others, not connecting to a partner. A kind of “we are free and happy” approach. But studies show that this single way of life for young women is becoming more and more of a burden. They don’t really want it, but they can’t find men who want to establish partnerships or marriage. Young women in their 20s and 30s have difficulties in these personal connections. What makes this even more difficult is that the discussion of gender roles and the understanding of what modernity has brought is interpreted such that emancipation and feminism “ruined everything.” So, people will say, “To understand men and women, you should forget everything that the so-called socialist emancipation and the stupid Western feminists say.” Somehow they think how nice it would be to turn back to the traditional norms and ways of life of the 19th century.

Woman as housewife and mother.

Exactly. But shiny and attractive. Not with an apron on.

Does this come across as a political program or is it just an underlying political philosophy? Will a politician say that a woman should do x, y, and z?

Yes, there was a great scandal just a few months ago. A politician said a woman should stay at home, give birth to kids, the more the better, and then, if she does that, there will be no more problem with domestic violence.

Was that a Fidesz politician?

I guess so. It was a huge scandal and there were street actions in response. It was so hurtful to hear that because the problem of violence in a marriage is not connected to number of children, and so on. They don’t know what they’re talking about.

Was this an older man?


I haven’t asked you what you do in your research.

I finished my dissertation and received a PhD in 2005. The title is connected to what I was talking about before: emancipation and identity. I wanted to reveal what happens in public life with the representation of women. My method was to interview women in the elite — economic, political, intellectual, art world – and ask them about their career, their profession, their experiences. I approached women whose professional achievements were visible in public life, for example a well known writer or a very well known university professor who has an international reputation because of her work or a member of parliament or a minister (which is very rare) or the director of a bank. A really diverse group. During the interview, I asked them about what they thought about emancipation and representation.

There was a very interesting shift in the interviews. They said that they wanted to distance themselves from Communism, so they decided not to represent women’s issues publically. They thought it might harm their career if they did so. It was really breathtaking to analyze this attitude, which came up in so many interviews. They all constructed a narrative of a very professional person, in a good sense, in terms of education, building social connections, doing their best to get promoted. They did this consciously, and these attributes are not traditionally connected to a feminine attitude. It can be a part of being a woman, obviously. But in the public mind, it’s not. But then as soon as they represented themselves publically, they shifted their face to become the most feminine person on earth: a good cook, very caring. It was if they were saying, in public, that it’s best if women stay women and men stay men. It was interesting to see how the Hungarian public is not open to a discussion about the emancipation of women in public life.

I also continue to work on the history of the feminist movement in Hungary. It turns out from the study of the original sources in the archive that the public, 100 years ago, was discussing really deeply the right to vote and women’s position in the media. So, we find ourselves using the same terms as this 100-year-old debate but without a strong feminist presence. At least at that time, people were open-minded and were trying to think through the stereotypical approaches. But now these stereotypes are diffused through society. You can find some activists or scholars who think otherwise, but it’s not a strong group.

I also did research on care workers: how they construct gender in their minds. Is care work gendered or not? It was really exciting to meet people who work in orphanages, homes for the elderly, places where they help drug addicts, and many other diverse places. It turned out, through these interviews, that men who are involved in such professions don’t think that their role is gendered. They don’t think it should be a women’s role. Once you are in a profession and you do it, then you don’t think it is connected to a particular gender. It’s a much deeper understanding that is not present in everyday speech. The care workers connected their work to transcendental motives.


Yes — exactly. Sometimes they framed in terms of religion but not necessarily.

And the overall view of society is that care work is gendered.

Yes, that it is something that women should or can do. It’s an archetypal image of the woman who cares for the child and therefore all caring in society should be performed by women. And it’s devalued financially. There’s a very good American thinker, Virginia Held, who has written a book on the ethics of care. I borrowed from many aspects of her book when I constructed my research questions. Let’s think about a society that devalues caring attitudes so much, she writes, when care is necessary for social integration, for the strength of groups and individuals.

When you look back at the way you were thinking in the 1989-90 — when you were a student and involved in Autonomia — have you had any major shifts in the way you look at the world based on your experiences?

I think I was full of ideas to change the world and to promote new things that had not been present in Hungarian social life before. I understood, after a few years, that obviously feminism was not absolutely right, that it couldn’t give the final answers to all personal or social questions. But I still believe that it’s important to bring it into the public discussion, so that when people search for questions and values, they can take from this point of view and that point of view and make up their own minds.

In terms of my own thinking, I had to withdraw for almost ten years from public activity for personal reasons. My husband died ten years ago, which was obviously something beyond just losing a person you love. I found myself in the situation of a single mother in a society that has no structural support for a single academic mother who has to support herself and demonstrate progress in her academic life as well. This institute was very supportive of me and so was the director, but he couldn’t do anything for my scientific progress. That’s my responsibility. Otherwise, I learned how difficult it is for single mothers. Also, this way of life made it impossible for me to get involved in public activity.

There’s another thing, and this is beyond the personal level. I realized that I have difficulty defining my position in Hungarian public life. It is so divided among very strictly constructed categories — leftist, rightist, liberal, traditional, national, blah blah blah. In my thinking I have elements from all of these. I understand the problems in conservative thinking, the limits of liberal thinking, of socialist thinking, but I cannot position myself in any of these categories. I can’t say that I’m 100 percent part of this or that category. And without being in any of these positions, you don’t really have a public space. Once you say something, they say, “Ah, yes, you’re an nationalist,” or “you’re a socialist.” No, I’m not. I’m thinking. I’m asking questions. I’m defining social problems.

There are very few thinkers or actors in Hungarian public life who can be independent. They also have problems and endure lots of attacks. But I didn’t want that. So I wait. I am waiting to see women’s activities that are independent. A year ago, I found such a student group. But then I saw that these women’s activities were getting supported by one specific political party. And I said, “Sorry, this is not what I really meant.” Maybe my position is not a very brave position, but I feel uncomfortable in these categories. In this way, my position changed from the time before. But I don’t remember identifying with political parties at that time either.

Budapest, May 8, 2013

Foreign Policy In Focus

Beheading of American By ISIS Shows Brutality Long Known By Assyrian Community

By , August 22, 2014 5:37 am

San Jose, California — The beheading of American journalist James Foley brought swift and strong words by US leaders.

“ISIS has not ideology or any value for human beings. Their ideology is bankrupt,” said President Obama.

But, the video that shocked the American public showed a kind of brutality that Assyrian Christians in Iraq say they suffered since ISIS claimed significant territory in Iraq.

“From the Assyrian community I would like to give condolences to the Foley family. It’s a loss for all of us,” said Romena Jonas, a news anchor with San Jose based Assyrian National Broadcasting.

“That’s typical of what ISIS does. And they are going to continue doing this,” said Jonas.

There is a large population of Assyrian Christians that call the Central Valley and South Bay home.

Assyrians, indigenous to Iraq, have been forced to leave their homes by the hundreds of thousands to flee to the northern portions of that country controlled by Kurdish forces.

Here in the US, Assyrians have tried to raise public awareness of what they call genocide and ethnic cleansing at the hands of ISIS.

“It seemed like no one cared. No matter how many letters we wrote to congress, no matter how many rallies we went to it seemed like no one really cared,” said Jonas.

That changed on August 8th when President Obama ordered airstrikes against ISIS forces moving closer to the Kurdish capitol of Erbil.

Since then, ISIS has suffered territorial losses.

Jonas says a friend in Erbil said US involvement has made a difference.

“He told us that since the air strikes, the Assyrians feel much more comfortable. They’re not as afraid. It’s like a savior has come to save them from getting killed.”

Assyrians are seeking U.S. help to ultimately create a state in Iraq that they can call their own and defend against future threats such as ISIS.

Assyrian International News Agency

Iraqi National Museum Heralds Expansion

By , August 22, 2014 5:27 am

Iraqi National Museum Heralds Expansion

By John Lee.

No doubt in the hope of happier times ahead, Iraq’s National Museum has opened two new halls at a recent well attended ceremony.

Showcasing objects from a span of 7000 years of Mesopotamian history, a key feature of the new part of the museum was some 500 objects from the Hellenistic period, some 3 centuries before Christ.

Many artefacts in the museum have been painstakingly sought out and brought back to Iraq following devastating looting of the museum in 2003. UNESCO has been instrumental in this effort, and critical to the new exhibition was a series of statues from Hatra, and area south of Mosul.

The stunning and critically endangered Hatra site is perhaps best known (outside of archaeologist circles) as being the setting for the opening scene of cult ’70s horror film The Exorcist.

(Source: The Guardian) 

Iraq Business News

Iraqi National Museum Heralds Expansion

By , August 22, 2014 5:27 am

Iraqi National Museum Heralds Expansion

By John Lee.

No doubt in the hope of happier times ahead, Iraq’s National Museum has opened two new halls at a recent well attended ceremony.

Showcasing objects from a span of 7000 years of Mesopotamian history, a key feature of the new part of the museum was some 500 objects from the Hellenistic period, some 3 centuries before Christ.

Many artefacts in the museum have been painstakingly sought out and brought back to Iraq following devastating looting of the museum in 2003. UNESCO has been instrumental in this effort, and critical to the new exhibition was a series of statues from Hatra, and area south of Mosul.

The stunning and critically endangered Hatra site is perhaps best known (outside of archaeologist circles) as being the setting for the opening scene of cult ’70s horror film The Exorcist.

(Source: The Guardian) 

Iraq Business News

A Unified Korea—on the Soccer Field at Least

By , August 21, 2014 11:58 pm

Korean Americans and Korean Canadians waving unification flags and playing Korean drums at the 2014 FIFA Women’s Under-20 World Cup in Toronto. (Photo: Betsy Yoon)

On a Tuesday in early August, North Korea’s women’s soccer team defeated Finland 2 to 1 in the opening match of the FIFA Women’s Under-20 World Cup in Toronto.

Yes, it was just a soccer game. But for those of us who were there to cheer on the North Korean team, the stakes were profound. International soccer fans routinely express their support by adorning themselves in the national colors and symbols of a single country. In our case, however, we came as the supporters of a peacefully reunified Korea.

Ranging in age from 27 to 80, a group of Korean Americans and Korean Canadians converged in Toronto for the game. Armed with flags and wearing t-shirts bearing images of a unified Korea, the group included nearly 50 grandfathers and grandmothers who had come from as far away as Vancouver, Texas, and Kansas. The backside of our t-shirts displayed the text of the 6.15 Joint Declaration, signed in 2000 by the leaders of North and South Korea, declaring their mutual desire for peaceful reunification.

Someone unfamiliar with Korea’s history might ask, why would a group of Korean immigrants travel so far to cheer on the North Korean women’s soccer team?

Rules of the Game

The Unification Flag had been openly displayed at international sporting events as early as 1991, when athletes from North and South Korea for the first time participated on a single team.

But even though the 6.15 resolution had been agreed to by both Koreas, a FIFA representative informed us during halftime that because Korea is currently recognized by the United Nations as two separate states, promoting the idea of a single Korea on our t-shirts and flags constituted a political statement, which FIFA prohibits at its events. “I understand. I’ve been to Korea myself,” he said over our protests. “But I warn you, if you don’t take off the shirts and stop waving the flags, I will have to call on guards to escort all of you out of the stadium.”


Korean Americans holding small unification flags at the 2003 FIFA Women’s World Cup. (Photo: Tongkyun Kim)

Fan support for Korean teams at international sporting events under the banner of one Korea was not, however, without precedent. In the 2003 FIFA Women’s World Cup hosted by the United States, Korean American fans unfurled a giant unification flag that covered an entire section of a Philadelphia stadium, with no admonition from FIFA. North and South Korea memorably marched under the Unification Flag in the 2000 and 2004 Summer Olympics, the 2006 Winter Olympics, and the 2006 Asian Games.

Presumably unaware of the use of the flag at past FIFA events, the FIFA official foisted responsibility for the decision onto the ironclad rules of the game, saying that he had no choice but to enforce them.


Korean American fans waving the Unification Flag at the 2003 FIFA Women’s World Cup in Philadelphia. (Photo: Tongkyun Kim)

For those of us supporting North Korea under the banner of a unified Korea, the division of Korea was not just political, but deeply personal. Many of the elderly members of our group were survivors of the Korean War who have been separated from family in the North. They have lived with unhealed wounds that stem from the unresolved war and Korea’s enduring division.

The Political is Deeply Personal 

Coming to cheer on the North Korean team and to wave the Unification Flag was one way in which Noh Chunhee sought to redress the painful past. During the war, as her family was preparing to flee from the southern city of Daegu, a relative urged her parents to abandon Ms. Noh and her sister, the youngest of her parents’ many children. In the end, her parents did not leave the city, but this painful memory remains.

“My sister was 3 and I was 2, and my mother heard my sister saying something to her pillow, hugging it like a baby,” recounted Ms. Noh. “My mother leaned in to listen. She heard her saying, ‘They’re going to throw us away. They’re going to throw us away.’ Years later, when my older sister hears our mother tell this story, she still cries.” Now 64 years old, Ms. Noh, a New York resident, drove all the way to Toronto to see the match.

Cheering on the North Korean team until his voice turned hoarse, Soobok Kim was both haunted and galvanized by his memories of the war. “I was hit here,” he said, pointing to the sole of his foot, “Six years old, hit by a U.S. airstrike. Not only me, two sisters also.” Now 70, Kim gestured toward his foot and added, “And this, even though it looks OK now, I still ache every day when I walk.”

Our outraged response to FIFA was not simply a matter of asserting our right to free speech. FIFA’s demand was in effect a de-legitimization of the experiences of Koreans who had lived through the devastation of war and the externally imposed division of our homeland.

Our desire to cheer on the North Korean team under the banner of a peacefully reunified Korea was not “political” in a divisive or provocative sense, as FIFA implied. To the contrary, our actions were a necessary expression of hope for those of us who continue to believe in a resolution to the ongoing war and division, and the urgency of lasting peace in Korea.

Overcoming the Past

The scars of the past were not just present in the audience. When the teams from Finland and North Korea emerged onto the field, the significant height disparity was immediately noticeable: The Finnish team was strikingly tall whereas the North Korean team was uniformly short.

While this might not seem odd to the casual observer who likely carries a bleak vision of North Korean life, we recognized the height disparity as visible scars of a painful recent past. Born between 1995 and 1997, at the height of North Korea’s economic crisis, the North Korean soccer players were survivors of an especially bleak period marked by widespread food shortages, which North Koreans refer to as the “Arduous March.”

With the country’s fuel supply cut off due to the collapse of the Soviet Union and the socialist trading bloc, North Korea’s factory production came to an abrupt halt. Its idle tractors were transformed from tools for developing their country into immovable reminders of their changed reality. A series of floods and droughts devastated the country’s annual harvests, and U.S.-imposed sanctions blocked virtually all sources of income for the cash-strapped country. Among the many deprivations suffered by the North Korean people during this time, undernourished mothers were unable to breastfeed and did not have access to infant formula, so children born during the “Arduous March” possess a searing memory of hunger.

It was those children, now grown, who were representing their country on the world stage. If it were a contest based solely on size, the North Koreans would have stood no chance. But when the game opened, they ruled the field. They outran, outfought, and outscored the Finnish opponents who towered over them. In our minds, they became giants, criss-crossing the field with stunning speed and power, gritting their way to pulling off a herculean feat that seemed implausible just moments before.

A Step Toward One Korea

Outraged by FIFA’s denial of our right to claim our nation as one and exhilarated by the tough determination of the North Korean team, we chanted the name of the last united Korean kingdom: “Joseon! Joseon!”

With each goal, our chants became more impassioned and our drumbeats even louder, because what we were rooting for was much more than just a soccer team. It was for an underdog, battered by a long history of war and crippling sanctions, and an object of international scorn that overcame impossible odds to stand up, heads held high, to an immeasurably more privileged opponent. Having been forced to put away our flags, we poured our hearts out as we stomped, clapped, and screamed for the tenacious North Korean women.

When the game-ending whistle blew with North Korea as the winner, our group did not simply erupt into triumphant cheers. Someone in the group began singing a well-known reunification song: “Uri-ui sowon-un tong-il…” (“Our dream is for reunification…”). The rest of us spontaneously joined in, as if to reclaim our right to hope for peace and healing.

While this opening match is likely to end up being one brief moment in the World Cup record books, for those of us rooting for North Korea, it brought renewed excitement and great hope. FIFA’s ham-fisted demands lent clarity to the tragic fact that much of the world would prefer to keep the human consequences of Korea’s division out of sight and out of mind. Yet as we closed out the opening match with a song that expressed our shared desire to see a unified homeland in our lifetime, we established this day as one step in our long path toward unification.

Hyun Lee is a member of the New York City-based Nodutdol for Community Development and the Working Group for Peace and Demilitarization in Asia and the Pacific. She co-produces Asia Pacific Forum, a weekly radio show on the culture and politics of Asia and the Asian diaspora.

Betsy Yoon is a member of Nodutdol for Korean Community Development and is part of the Korea Education and Exposure Planning Team, which organizes annual trips to both Koreas. She has a degree in international relations and lives in Queens.

This piece was co-published with the Korea Policy Institute.

Foreign Policy In Focus

A Five-Step Plan to Destroy the Islamic State

By , August 21, 2014 11:55 pm

More so than encompassing narratives, such as Pan-Arabism and Islamism, local identities have gained in recent years in the Middle East, politicizing and militarizing the conflict between Shiites and Sunnis in Syria and Iraq. These trends have created an opening for the Islamic State (IS), which has morphed into a large, difficult and complex challenge.

The U.S. intervention to date has produced important gains. Although the city of Sinjar taken from Kurdish forces remains under IS control, humanitarian aid has reached the beleaguered Yazidi population on Mount Sinjar. Kurdish morale has been shored up, helping Kurdish forces to recover most of the areas briefly lost to IS in Gwer, Makhmour and the Mosul Dam, while preventing the group from advancing toward the Kurdish capital of Erbil.

However, the terrorist network is far from being defeated. IS has become the world’s most powerful quasistate and internationally networked extremist entity. This terrorist network is in the process of establishing a state called the Khalifat. Limited U.S. actions taken up to now are unlikely to be sufficient even to contain the threat from IS–that is, preventing IS from expanding beyond the large areas across Iraq and Syria that it currently controls–much less to defeat the network and eliminate its sanctuaries.

IS retains support from key power centers, such as tribes and former Baath military officers. After capturing immense financial resources, oilfields and military equipment from deserted Iraqi forces, IS is earning over $ 1 million in revenues per day. Since the U.S. strikes began, IS has taken over Jalula from the Kurds and is currently focused on the Iraqi town of Qaim on the Syrian border. The fall of Qaim would set the stage for an IS capture of Haditha–a vital link between the Tigris and Euphrates valleys, and home to Iraq’s second-largest dam–and eventually, the provincial capital in Ramadi. Losing Haditha and Ramadi would mean that the whole of Anbar province would come under IS control, leaving anti-IS Sunni tribes without major strongholds.

Defeating IS is important. But achieving it will take time and calls for a long-term humanitarian, political and military strategy, including addressing the underlying sources of Sunni discontent. IS takes advantage of Sunnis’ discontent and promises to return them to a dominant position. It has embraced the concept of Khalifat as the right form of government for Muslims. In the history of Islam, the Khalifat period marked a period in which Sunnis were dominant. IS hopes that the Khalifat can stand as a model of Sunni government and a rival to the Shiite Vilayati-faqih in Iran.

There is considerable discontent among Sunnis in Iraq and Syria, Sunnis have found themselves on the losing end of Shiite-dominated governments. Nouri al-Maliki alienated Sunnis and Kurds alike, while Bashar al-Assad ignored and even supported IS operations against the nationalist Syrian opposition. Millions of Sunni internally displaced persons and refugees are now living in squalid conditions in Jordan, Lebanon, Turkey and beyond. As a result, opposition to Shiism is the key ideological underpinning of IS.

IS is the successor of Al Qaeda in Iraq (AQI). In the Sunni areas of Iraq, disaffected tribes and other local leaders supported AQI before turning against the network in 2006. By 2008, AQI reached a state of near-destruction due to three main factors: widespread outrage at AQI’s maltreatment of the local population; U.S. outreach to the Sunnis through political, financial and security support; and a commitment by Iraq’s central government to respond fairly to the Sunni community’s aspirations.

Moderate and nationalist Sunnis, however, lost ground to IS amid the total U.S. withdrawal from Iraq and the unraveling of Syria. Without the restraining influence of the United States, Maliki moved to snub and persecute Sunnis. And in the absence of support from the international community in the face of Assad’s brutal tactics, disaffected Sunni Arabs–even those who do not necessarily embrace its neo-Salafist ideology and intolerance towards Christians and Yazidis–embraced IS as the answer to Shiite repression.

The Obama administration has not clarified whether the objective of U.S. policy is to defeat IS or merely to contain the network. Containment would involve a more limited U.S. humanitarian, political and military effort. But it would present risks similar to those that the United States assumed during the 1990s when it opted for a policy of containment and coercive diplomacy against the Taliban–Al Qaeda nexus. A more ambitious strategy now could avoid greater risks over the long term.

Defeating IS would involve a long-term, comprehensive strategy consisting of the following five steps:

Mobilize a Major Humanitarian-Relief Effort:

The humanitarian catastrophe resulting from the conflicts in Iraq and Syria requires a massive response. This is essential strategically. Friendly countries who host large number of refugees, such as Jordan and the Kurdish region of Iraq are at risk of destabilization. For displaced Sunni Arabs, poor refugee conditions can lead to radicalization and opportunities for IS to recruit them. If we allow IS to exploit this opportunity, the threat could expand exponentially.

Moreover, IS is seeking to establish itself as a quasistate, providing humanitarian aid and services in areas it controls. The international community and its local partners must compete for the hearts and minds among refugees and communities seeking protection from or willing to align against IS. This competition will be waged in part in the provision of humanitarian relief and basic services. It is a competition that we must win.

This effort also should be used as an instrument for expanding the coalition of countries working to defeat IS. While some governments may join us in military actions, many more will be willing to participate on the humanitarian side. The United States should mobilize a coalition of donors on the scale of the effort to support the first Gulf War financially. It could set the stage for a major effort that would continue beyond the defeat of IS to promote economic growth and development in the region along the lines of the Marshall Plan in postwar Europe.

Catalyze Settlements to Unify Anti-IS Groups in Iraq and Syria:

The Obama administration has signaled that it will accelerate efforts against IS once a unity government is formed in Baghdad. The administration is right to use military support–including material for the Iraqi military and moderate Sunni forces, and air attacks against IS–as leverage in encouraging Shiite political leaders to share power and resources with Sunnis and Kurds. Sunni participation in the fight against IS is vital, but Sunnis forces are unlikely to take up arms against IS without sufficient political concessions.

Even in the face of an existential threat from IS, it will be difficult for Iraq’s political parties to agree to meaningful power- and resource-sharing. Iraq’s prime minister designate Haider al-Abadi–the descendent of an old Baghdadi family and a London-based exile during the reign of Saddam Hussein–may be more open-minded than his fellow Dawa-party predecessor al-Maliki. But Abadi represents the same ideological and Islamist part of Iraq’s political spectrum and must be responsive to his predominantly Shiite constituency in pursuing any compromise that satisfies Kurdish and Sunni demands.

The goal for many Sunni political leaders is a detailed agreement–not a statement of principles–entailing an end to de-Baathification, release of prisoners, decentralization of security responsibility and devolution of authority. This would allow Sunni provinces to form federal regions with their own local security forces.

The United States should immediately engage with Sunni political leaders, not only to help formulate the needed political settlement, but also to bring moderate Sunni forces onto the battlefield against IS and to find ways to split Baathists and tribes away from their alliance with IS. Also, if a Sunni-Shiite power-sharing arrangement proves impossible to attain, the disintegration of Iraq will become inevitable. In that case, a U.S. relationship with a Sunni leadership capable of defeating IS on its home turf in western Iraq will be critically important.

Kurds, meanwhile, want a country with two systems–a federal Iraq in the Arab part of the country and a confederal Kurdistan–in which the regional government keeps recently acquired territories and controls its own air space, arms purchases and oil exports. If power sharing does not work, Kurdish leaders would likely push for sovereignty and independence. Kurdish leader Massoud Barzani has stated that the current effort at forming a unity government is Iraq’s last chance. Should this effort fail, it would serve the interests of both Baghdad and Erbil for the Kurds to pursue sovereignty and independence through an agreement with the central government.

Even if progress is made in Iraq, the IS threat will persist in the absence of a settlement in Syria. As in Iraq, the most feasible formula for resolving the crisis in Syria is a unity government with power sharing at the center between the Assad government, moderate Sunnis, and Kurds and other groups, and devolution of authority to regions and provinces, perhaps organized on an ethnic and sectarian basis.

Field Robust Supporting Military Operations:

The defeat of IS will require a stronger military response than the United States has fielded to date. The model should be based on the successful effort to topple the Taliban government after 9/11, which involved U.S. special forces and air power working in combination with local forces. However, it should be more robust than the Afghan campaign in terms of security assistance and follow-on stabilization efforts.

In Iraq, this means working simultaneously with the Iraqi government, the Kurdish regional government, and friendly Sunni forces to develop and execute a campaign plan against IS. The Kurds should be provided with heavy weapons and materiel and supported by U.S. special forces and air strikes to liberate IS-controlled areas from the north. Similar support should go to Iraqi Security Forces and friendly Sunni tribes in a concerted effort to take control of western Iraq. As territory is taken, it is essential that governance and services be put in place to consolidate gains and win the political competition against IS.

Increased U.S. support for the national Syrian opposition and timely military strikes against IS targets in Syria are necessary both to put pressure on IS across all the territory it controls and to lay the groundwork for a political settlement. While the Obama administration has proposed a $ 500 million program for nationalist forces fighting IS, delays in the provision of this assistance are working to the advantage of IS, which is seizing ground from moderate Syrians. Given the slow rate at which the proposal is moving through Congress, it may take another year before U.S. assistance makes a real impact on the ground in Syria. IS could take Syria’s largest city of Aleppo in the meantime. This program must be accelerated on an emergency basis.

Internationalize the Anti-IS Effort:

IS poses a security and economic threat to the international community. The more than one thousand Western citizens who have already joined IS could very well turn their attention toward their own countries. The threat from Islamic extremists to Russia and China would also increase, were IS to expand and gain more converts. And IS can disrupt energy supplies from Iraq, increasing oil prices around the world.

The UK, France and others are already providing assistance to the Kurds following recent U.S. strikes against IS. The United States could galvanize even more international action by publicly declaring that its objective is to defeat IS. Engagement at the presidential level would demonstrate U.S. resolve, and would ease negotiations with allies and partners on how they can support U.S. strategy. A presidential envoy, empowered by the White House to oversee the implementation and execution of this strategy, would facilitate unity of effort and shared goals between the military, intelligence community and diplomatic service, and coordinate humanitarian aid efforts between participating countries, international organizations and local communities.

Beyond Syria and Iraq, the Middle East as a whole is threatened by IS. Regional cooperation, in turn, can help in defeating IS. The United States should promote cooperation by Iran, Turkey and Saudi Arabia–behind a coordinated strategy to confront the IS challenge and stabilize Iraq and Syria. The establishment of a contact group offers a potentially useful vehicle through which regional actors could help temper the sectarian polarization that is fueling IS. As seen in Afghanistan, where Pakistan continues to fuel the Taliban threat, defeating IS will be difficult in the absence of regional cooperation.

In the less than thirty days that he has to form a new government, Abadi will need support from the United States, Iran, Turkey and major Arab states to negotiate a formula for power sharing. Agreement on reconciliation and power sharing in Iraq and Syria could facilitate greater cooperation from regional players in sharing the economic and military costs of dealing with the IS threat.

Prepare the American People for a Costly, Long-Term Mission:

Without a sustained effort by the Obama administration and congressional leaders to explain the stakes in the Middle East and prepare the American people for a long-term effort, the wars in Iraq and Syria could become a partisan issue in the 2016 presidential elections at precisely the time when the situation on the ground calls for an expanded U.S. presence. It is incumbent on the president to reach out to congressional leaders and the American people and explain the nature of the IS challenge, how it threatens America’s vital interests and why the United States must address it. With the U.S. population eager to wind down the “war on terror,” this will not be an easy conversation. Indeed, even a minor escalation in U.S. engagement will be difficult in the current war-weary political climate.

The lesson of the rise of the IS is that sustained U.S. engagement in the Middle East is essential to stability and progress. Many may wish to turn their backs on the region, but the costs of doing so have already proven higher than those of a smart engagement strategy. This lesson implies that we should keep a residual force in Afghanistan beyond 2016 and that shaping the region in positive ways will require presence and active management of partnerships across the region.

With respect to Iraq and Syria, a long-term strategy to defeat IS is preferable to containment or other alternatives. Similar to the approach that the United States took in 2001 during the early phase of the Afghanistan campaign, a military campaign relying principally on special forces and air strikes could create space for a major humanitarian effort in Iraq, favorable conditions for internal rebellions against IS, increased support to Syrian nationalists and intensified efforts to degrade IS’ predominantly local sources of financing. Demonstrable progress now would preclude the need for the deployment of combat ground forces, and would help the United States internationalize the mission and promote burden sharing over the long run.

Zalmay Khalilzad was the U.S. Ambassador to Afghanistan, Iraq and the UN.

Assyrian International News Agency

Potential Genocide at Amerli

By , August 21, 2014 11:45 pm

Potential Genocide at Amerli

By John Lee.

The Associated Press has reported recently on the northern Iraqi town of Amerli where some 15,000 members of Iraq’s Shi’a Turkmen minority are cut off from food and water supplies and besieged on all sides by Islamic State of Iraq and the Levant (ISIL) fighters.

If ISIL are able to enter the town it is highly likely there would be mass killing of civilians, given the group’s stated aim of eradicating Shi’as, who they believe are “apostates”.

As such, townsfolk have armed themselves and Iraqi army armoured columns from the 9th division (pictured) are on their way to try and break the siege. Given that recent attempts by Iraqi units to recapture Tikrit have fared badly, it is uncertain whether an attempt to save Amerli would succeed.

Conditions inside the town are said to be terrible. Iraqi air force helicopter re-supplies are insufficient for the number of trapped and starvation is said to have taken hold.

The mayor of Amerli has appealed to the US government to intervene and save the town in a similar manner to the operation to save members of the Yazidi community.

(Source: AP)

Iraq Business News

Shanghai Gold Exchange Launching International Bullion Exchange In Yuan Next Month

By , August 21, 2014 11:04 pm

Shanghai Gold Exchange Launching International Bullion Exchange In Yuan Next Month
By: Zerohedge on: 21.08.2014 [10:21 ] (167 reads)

Shanghai Gold Exchange Launching International Bullion Exchange In Yuan Next Month
Submitted by GoldCore on 08/20/2014 05:09 -0400

China Becoming Global Gold Hub And Gold Price Discovery CentreChina is moving closer to positioning itself as the physical gold trading hub of the world and the world’s gold price discovery centre. It is a natural progression for the largest economy in the world and for the world’s largest gold buyer, importer and indeed producer.The Shanghai Gold Exchange (SGE) is launching its yuan denominated international bullion trading exchange next month. This is another important step in internationalising the yuan or renminbi and positioning it as an alternative global reserve currency.Bloomberg reports this morning thatThe Shanghai Gold Exchange plans to start bullion trading in the city’s free-trade zone on Sept. 26, according to three people with knowledge of the matter.

The people asked not to be identified because they aren’t authorized to speak to the media. Gu Wenshuo, a spokesman for the exchange, confirmed that the trading system is being tested, without giving further details.

Shanghai wants to become a regional bullion-trading hub, giving foreigners access to the world’s largest physical-gold market, Xu Luode, the exchange’s chairman, told a conference in Singapore in June.

The gold contract will be priced and settled in yuan and the infrastructure is in place for trading to start in the third quarter, Xu said in June. The zone will have a vault capable of holding 1,500 metric tons of gold, which can either be imported into China or be in transit to other markets, Xu said.

China is seeking to open up its bullion markets just as domestic demand weakens. Consumption contracted 19 percent in the first six months of the year, according to the China Gold Association. Bullion of 99.99 percent purity traded on the Shanghai Gold Exchange climbed 8.7 percent this year, damping demand which reached a record in 2013.

Reuters reports this morning thatChina has allowed three more banks, including a foreign lender, to import gold, sources with direct knowledge of the matter said, as the world’s top gold buyer gears up for its strongest effort yet to gain pricing power of the metal.

The move, which brings the number of firms allowed to import gold into China to 15, comes ahead of the launch in September of a new international bullion exchange in Shanghai with which China hopes to become a price-discovery centre.

China and other Asian gold trading centres such as Singapore are calling for more localised pricing of the precious metal as they seek alternatives to the so-called London fix, the global benchmark for spot gold prices, which is being investigated by regulators on suspicion that it may have been manipulated.

Standard Chartered (STAN.L), Shanghai Pudong Development Bank (600000.SS) and China Merchants Bank (600036.SS) were given regulatory approval recently to import gold, five sources with direct knowledge of the matter told Reuters.

China approached foreign banks, gold producers and refiners to participate in SGE’s international bourse, sources told Reuters earlier in the year, to boost its position as a price-discovery centre for gold. It plans to launch three physically-backed gold contracts.

The chairman of the exchange said in June that China should have its own pricing benchmark as it is the biggest consumer and producer of gold.

ConclusionChinese gold demand has fallen from record levels in recent months. this was to be expected given the huge leap in demand seen in recent years. Nothing moves in a straight line and a fall was inevitable and reflects the natural ebb and flow of demand, one would expect.

However, an important fact, not realised by most market participants, is that the people of China were banned from owning gold bullion by Chairman Mao in 1950. This means that the per capita consumption of over 1.3 billion people is rising from a miniscule base. This suggests that demand will consolidate at these levels and could again return to record levels – particularly if there are losses in the Chinese property market or stock markets.

This prohibition continued until 2003 when the Chinese gold market was first liberalised and China made its first steps to becoming a global gold hub to rival New York or London.Since the market in China was liberalised, gold in yuan terms has risen by more than 250% while the stock market has performed poorly.

Even after the significant increase in demand seen in recent years – Chinese per capita gold ownership remains well below that of the levels seen in India and other Asian countries and indeed below levels seen in more affluent Hong Kong.

Culturally, India is known to have the greatest affinity for gold in the world. China had a similar cultural affinity prior to the “cultural revolution” and in time its levels of gold ownership will likely rival those seen in India, Vietnam and other Asian countries.

Within the lifetime of many Chinese people living today is the experience of hyperinflation as many middle aged and elderly Chinese people experienced hyperinflation in 1949. Therefore, as in Germany, there is a greater awareness of what inevitably happens when a central bank debases the paper currency.

Many market participants and non gold and silver experts tend to focus on the daily fluctuations and “noise” of the market and not see the “big picture” or major change in the fundamental supply and demand situation in the gold and silver bullion markets.

This is particularly due to investment, store of wealth and central bank demand from China and the rest of an increasingly affluent Asia.

Gold Bust (2.8 Kilogramme) of Deng Xiaoping (Reuters/Bobby Yip)

It is worth noting that the People’s Bank of China’s official gold reserves are very small when compared to those of the U.S. and indebted European nations. They are miniscule when compared with China’s massive foreign exchange reserves of more than $ 3 trillion.

The People’s Bank of China is continuing to quietly accumulate gold bullion reserves. As was the case previously, they will not announce their gold bullion purchases to the market in order to ensure they accumulate sizeable reserves at more competitive prices. They also do not wish to create a flight from the dollar – thereby devaluing their sizeable dollar reserves.

Expect an announcement from the PBOC, sometime later this year or in 2015, that they have trebled or even quadrupled their reserves to over 3,000 or 4,000 tonnes.Source: China Becoming Global Gold Hub And Gold Price Discovery Centre

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