Obama’s Other ‘Cliff’ Is in Foreign Policy





For all the talk of a “fiscal cliff” threatening the nation’s finances, President Obama also faces a foreign policy cliff of sorts, with a welter of national security issues that he put on the back burner during the campaign now clamoring for his attention.




Atop that list, administration officials and foreign policy experts say, is the bloody civil war in Syria and the standoff with Iran over its nuclear program. The United States is likely to engage the Iranian government in direct negotiations over the next few months, in perhaps a last-ditch diplomatic effort to head off a military strike on its nuclear facilities.


Administration officials said that they had not set a date for talks and that they did not know if Iran’s supreme leader, Ayatollah Ali Khamenei, would give his blessing. But with Iran’s uranium centrifuges spinning and Israel threatening its own military action, the need to avoid a war may make this high-risk diplomatic effort Mr. Obama’s No. 1 priority.


Syria, too, will demand a pressing response, given the high human toll of the violence and the danger of a spreading regional conflict. Mr. Obama, however, remains leery of being dragged into the conflict, rejecting calls to supply weapons to rebel groups. His reluctance has been partly political, experts say, but he also has strategic qualms.


“At a time when he was running on a platform of ending wars in the Middle East, he did not want to be seen as starting one,” said Martin S. Indyk, a former American ambassador to Israel.


“But if he doesn’t try to intervene in a way that gives him a way to shape a post-Assad regime on the ground,” Mr. Indyk continued, referring to the Syrian president, Bashar al-Assad, “there’s a high risk of descent into chaos in Syria, and a sectarian war that spreads to Lebanon, Bahrain and eventually Saudi Arabia.”


Beyond those flash points, the president will have to grapple with Pakistan, an unstable nuclear state whose relationship with Washington has eroded during his presidency. And he will have to oversee an orderly exit from Afghanistan, where the waning American role threatens to throw the country back into chaos and Islamic militancy.


As he does so, some question whether he will rethink his administration’s heavy reliance on drone strikes to kill people suspected of being extremists, a policy that has proved lethally efficient but has sown deep resentment in Pakistan and Afghanistan.


More broadly, Mr. Obama will face Russia under the aggressive leadership of President Vladimir V. Putin and China with the opposite problem — negotiating a tumultuous change in power after a scandal that tainted the top ranks of its Communist leadership.


None of these problems are new, but many were effectively shelved over the past year as the president waged a bitter re-election battle dominated by his stewardship of the economy. Foreign policy played such a bit part in the election that even in the debate ostensibly devoted to it, Mr. Obama and Mitt Romney detoured into a discussion of high school test scores in Massachusetts.


For reasons of history and political reality, a re-elected Mr. Obama is likely to devote more time to foreign affairs. From Richard M. Nixon to Bill Clinton, presidents have tended to make their bid for statesman status in their second terms. The prospect of continuing gridlock — with the Republicans still controlling the House — gives Mr. Obama all the more reason to favor diplomacy over domestic legislation.


There is also some unfinished business from the past four years, not least Mr. Obama’s frustrated efforts to broker a peace agreement between Israel and the Palestinians. But several experts cast doubt on whether the president would throw himself into the role of Middle East peacemaker, as Mr. Clinton did in his second term.


The Israeli prime minister, Benjamin Netanyahu, who has had a fraught relationship with Mr. Obama, faces his own voters early next year, but he seems likely to stay in power with a right-wing government. Such an arrangement could make peacemaking difficult.


“Because he got his fingers burned and was outmaneuvered by Netanyahu, he will wait to see the outcome in the Israeli election,” said Mr. Indyk, who wrote a book about Mr. Obama’s foreign policy, “Bending History.” He added that the president is “going to think long and hard about trying again.”


The added wrinkle for the United States: the Palestinian Authority is likely to petition for nonstate membership in the United Nations next month, a step it had put off until after the election. If the United Nations were to grant it, that would trigger Congress to cut off aid not only to the Palestinian Authority but also to the United Nations itself.


The mere fact of Mr. Obama’s victory does not ease these problems. But as the president himself famously said to Russia’s former president, Dmitri A. Medvedev, at a nuclear conference in South Korea, he may have more room to maneuver in dealing with them.


Ask foreign policy experts for wild cards in a second Obama term and two countries come up: India and Cuba. Little progress was made in opening the door to Havana during the past four years, but hope springs eternal for those who advocate an end to the half-century-old trade embargo. Mr. Obama also is likely to build on his ties to India.


India figures into the biggest geopolitical bet of Mr. Obama’s presidency: the American pivot from the Middle East to China and Asia. With four more years, experts said, Mr. Obama can put meat on the bones of an ambitious, but incomplete, policy.


Here, however, is where the fiscal cliff meets foreign policy. To be credible in reasserting an American presence in Asia, experts said, will require a robust military presence from the Yellow Sea to the South China Sea. But unless the White House and Congress can strike some kind of fiscal deal, the Pentagon will face deep automatic cuts in its budget, depriving it of the ability to project power as it once did.


For Mr. Obama to realize his grandest visions abroad, then, he will still have to work with the same House Republicans who thwarted him on the home front in his first term.


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A Capitalist’s Dilemma, Whoever Wins the Election





WHATEVER happens on Election Day, Americans will keep asking the same question: When will this economy get better?







Victo Ngai

Clayton Christensen, author of “The Innovator’s Dilemma,” says the winner of the presidential election must face “the capitalist’s dilemma."







In many ways, the answer won’t depend on who wins on Tuesday. Anyone who says otherwise is overstating the power of the American president. But if the president doesn’t have the power to fix things, who does?


It’s not the Federal Reserve. The Fed has been injecting more and more capital into the economy because — at least in theory — capital fuels capitalism. And yet cash hoards in the billions are sitting unused on the pristine balance sheets of Fortune 500 corporations. Billions in capital is also sitting inert and uninvested at private equity funds.


Capitalists seem almost uninterested in capitalism, even as entrepreneurs eager to start companies find that they can’t get financing. Businesses and investors sound like the Ancient Mariner, who complained of “Water, water everywhere — nor any drop to drink.”


It’s a paradox, and at its nexus is what I’ll call the Doctrine of New Finance, which is taught with increasingly religious zeal by economists, and at times even by business professors like me who have failed to challenge it. This doctrine embraces measures of profitability that guide capitalists away from investments that can create real economic growth.


Executives and investors might finance three types of innovations with their capital. I’ll call the first type “empowering” innovations. These transform complicated and costly products available to a few into simpler, cheaper products available to the many.


The Ford Model T was an empowering innovation, as was the Sony transistor radio. So were the personal computers of I.B.M. and Compaq and online trading at Schwab. A more recent example is cloud computing. It transformed information technology that was previously accessible only to big companies into something that even small companies could afford.


Empowering innovations create jobs, because they require more and more people who can build, distribute, sell and service these products. Empowering investments also use capital — to expand capacity and to finance receivables and inventory.


The second type are “sustaining” innovations. These replace old products with new models. For example, the Toyota Prius hybrid is a marvelous product. But it’s not as if every time Toyota sells a Prius, the same customer also buys a Camry. There is a zero-sum aspect to sustaining innovations: They replace yesterday’s products with today’s products and create few jobs. They keep our economy vibrant — and, in dollars, they account for the most innovation. But they have a neutral effect on economic activity and on capital.


The third type are “efficiency” innovations. These reduce the cost of making and distributing existing products and services. Examples are minimills in steel and Geico in online insurance underwriting. Taken together in an industry, such innovations almost always reduce the net number of jobs, because they streamline processes. But they also preserve many of the remaining jobs — because without them entire companies and industries would disappear in competition against companies abroad that have innovated more efficiently.


Efficiency innovations also emancipate capital. Without them, much of an economy’s capital is held captive on balance sheets, with no way to redeploy it as fuel for new, empowering innovations. For example, Toyota’s just-in-time production system is an efficiency innovation, letting manufacturers operate with much less capital invested in inventory.


INDUSTRIES typically transition through these three types of innovations. By illustration, the early mainframe computers were so expensive and complicated that only big companies could own and use them. But personal computers were simple and affordable, empowering many more people.


Companies like I.B.M. and Hewlett-Packard had to hire hundreds of thousands of people to make and sell PC’s. These companies then designed and made better computers — sustaining innovations — that inspired us to keep buying newer and better products. Finally, companies like Dell made the industry much more efficient. This reduced net employment within the industry, but freed capital that had been used in the supply chain.


Clayton M. Christensen is a business professor at Harvard and a co-author of “How Will You Measure Your Life?”



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A Collective Effort to Save Decades of Research at N.Y.U.





The calls started coming in late on Tuesday and early Wednesday: offers of dry ice, freezer space, coolers. By the end of Thursday there were dozens more: A researcher at Weill Cornell Medical College would clear 1,000 tanks to save threatened zebra fish; another, at Cold Spring Harbor Laboratory, promised to replace some genetically altered mice that were lost; and a doctor at the Children’s Hospital of Philadelphia even offered take over entire experiments, to keep them going.




As hurricane-driven waters surged into New York University research buildings in Kips Bay, on the East Side of Manhattan, investigators in New York and around the world jumped on the phone to offer assistance — executing a reverse Noah’s ark operation, to rescue lab animals and other assets from a flooding vessel.


“I’ve had 43 people who have offered to help so far, and some of them are direct competitors,” said Gordon Fishell, associate director of the N.Y.U. Neuroscience Institute, who lost more than 5,000 genetically altered mice when storm waters surged the night of Oct. 30, cutting off power. “It’s just been unbelievable,” he said. “It really buoys my spirits and my lab’s.”


Staff members at N.Y.U. worked around the clock to preserve research materials, running in and out of darkened buildings without elevator service, hauling dry ice and other supplies up anywhere from 2 to more than 15 floors.


The university’s medical center also got instant help, from almost every major research institution in the area.


The response reflects large shifts in the way that science is conducted over the past generation or so. Individual labs always compete to be first, but researchers increasingly share materials that are enormously expensive and time-consuming to reproduce. The loss of a single cell line or genetically altered animal can slow progress for years in some areas of biomedical research.


“We are totally dependent on each other in the life sciences now, for a very large number of cell lines and extracts, research animals and unique chemical tools and antibodies that might not have backup copies anywhere in the world, or in very few places,” said Dr. Steven Hyman, director of the Stanley Center for Psychiatric Research at the Broad Institute of M.I.T. and Harvard. “Losing any of these tools tears a significant hole in the entire field.”


Danny Reinberg, a professor of biochemistry at N.Y.U.’s medical school, has studied genetics for 30 years, accumulating valuable mice strains and stocks of extracts from cell nuclei that would be extremely difficult to replace. The extracts must be stored at minus 112 degrees Fahrenheit.


Dr. Reinberg said he lost all of his mice: nine strains, including more than 1,000 animals that died in the storm surge. But he managed to save all of the cell extracts by moving some containers into freezers at N.Y.U. labs that weren’t affected and others to the Rockefeller, Columbia and Cornell medical centers, each of which cleared space, he said.


“We were able to save many things; it was just phenomenal to get that kind of help,” said Dr. Reinberg, whose house in New Jersey has had no power.


“Later in the week, at a Starbucks, I could finally download all my e-mail, and there were messages from people at the University of Pennsylvania and the Howard Hughes Medical Institute, asking how they could help us re-establish the mouse lines we lost,” he said.


Some scientists have become interdependent because their students, who develop a specialty in specific tissues or animals, often move among labs. Research projects sometimes draw on experiments or analyses the students worked on at more than one place.


One researcher working in Dr. Fishell’s lab was formerly a student of Dr. Stewart Anderson of the Children’s Hospital of Philadelphia, who sent Dr. Fishell a text message on Wednesday to offer help. “I told him that even if it costs money, we’re happy to keep experiments rolling, if we’re able to,” Dr. Anderson said.


By late Thursday, freezer space in minus-112-degree units was extremely tight in the city. So was dry ice.


Susan Zolla-Pazner, director of AIDS research at the Manhattan Veterans Affairs Medical Center, had lost power in her 18th-floor lab in the department’s building at 23rd Street and First Avenue. She finally hired a company to haul her 20 freezers-full of specimens, for safekeeping.


“We spent all of Tuesday and Wednesday hauling 1,300 pounds of dry ice up to the 18th floor, using the stairs, to stabilize the freezers first,” said Dr. Zolla-Pazner, who is also a professor of pathology at N.Y.U. School of Medicine. “And the dry ice people would only take cash. I have about 25 to 30 people working for me, and everyone was out there on 23rd Street, reaching into their pockets to get what we needed. It was a herculean and heroic effort on the part of everyone here, and that is the story that needs to be told.”


Read More..

A Collective Effort to Save Decades of Research at N.Y.U.





The calls started coming in late on Tuesday and early Wednesday: offers of dry ice, freezer space, coolers. By the end of Thursday there were dozens more: A researcher at Weill Cornell Medical College would clear 1,000 tanks to save threatened zebra fish; another, at Cold Spring Harbor Laboratory, promised to replace some genetically altered mice that were lost; and a doctor at the Children’s Hospital of Philadelphia even offered take over entire experiments, to keep them going.




As hurricane-driven waters surged into New York University research buildings in Kips Bay, on the East Side of Manhattan, investigators in New York and around the world jumped on the phone to offer assistance — executing a reverse Noah’s ark operation, to rescue lab animals and other assets from a flooding vessel.


“I’ve had 43 people who have offered to help so far, and some of them are direct competitors,” said Gordon Fishell, associate director of the N.Y.U. Neuroscience Institute, who lost more than 5,000 genetically altered mice when storm waters surged the night of Oct. 30, cutting off power. “It’s just been unbelievable,” he said. “It really buoys my spirits and my lab’s.”


Staff members at N.Y.U. worked around the clock to preserve research materials, running in and out of darkened buildings without elevator service, hauling dry ice and other supplies up anywhere from 2 to more than 15 floors.


The university’s medical center also got instant help, from almost every major research institution in the area.


The response reflects large shifts in the way that science is conducted over the past generation or so. Individual labs always compete to be first, but researchers increasingly share materials that are enormously expensive and time-consuming to reproduce. The loss of a single cell line or genetically altered animal can slow progress for years in some areas of biomedical research.


“We are totally dependent on each other in the life sciences now, for a very large number of cell lines and extracts, research animals and unique chemical tools and antibodies that might not have backup copies anywhere in the world, or in very few places,” said Dr. Steven Hyman, director of the Stanley Center for Psychiatric Research at the Broad Institute of M.I.T. and Harvard. “Losing any of these tools tears a significant hole in the entire field.”


Danny Reinberg, a professor of biochemistry at N.Y.U.’s medical school, has studied genetics for 30 years, accumulating valuable mice strains and stocks of extracts from cell nuclei that would be extremely difficult to replace. The extracts must be stored at minus 112 degrees Fahrenheit.


Dr. Reinberg said he lost all of his mice: nine strains, including more than 1,000 animals that died in the storm surge. But he managed to save all of the cell extracts by moving some containers into freezers at N.Y.U. labs that weren’t affected and others to the Rockefeller, Columbia and Cornell medical centers, each of which cleared space, he said.


“We were able to save many things; it was just phenomenal to get that kind of help,” said Dr. Reinberg, whose house in New Jersey has had no power.


“Later in the week, at a Starbucks, I could finally download all my e-mail, and there were messages from people at the University of Pennsylvania and the Howard Hughes Medical Institute, asking how they could help us re-establish the mouse lines we lost,” he said.


Some scientists have become interdependent because their students, who develop a specialty in specific tissues or animals, often move among labs. Research projects sometimes draw on experiments or analyses the students worked on at more than one place.


One researcher working in Dr. Fishell’s lab was formerly a student of Dr. Stewart Anderson of the Children’s Hospital of Philadelphia, who sent Dr. Fishell a text message on Wednesday to offer help. “I told him that even if it costs money, we’re happy to keep experiments rolling, if we’re able to,” Dr. Anderson said.


By late Thursday, freezer space in minus-112-degree units was extremely tight in the city. So was dry ice.


Susan Zolla-Pazner, director of AIDS research at the Manhattan Veterans Affairs Medical Center, had lost power in her 18th-floor lab in the department’s building at 23rd Street and First Avenue. She finally hired a company to haul her 20 freezers-full of specimens, for safekeeping.


“We spent all of Tuesday and Wednesday hauling 1,300 pounds of dry ice up to the 18th floor, using the stairs, to stabilize the freezers first,” said Dr. Zolla-Pazner, who is also a professor of pathology at N.Y.U. School of Medicine. “And the dry ice people would only take cash. I have about 25 to 30 people working for me, and everyone was out there on 23rd Street, reaching into their pockets to get what we needed. It was a herculean and heroic effort on the part of everyone here, and that is the story that needs to be told.”


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Investors on Wall St. React Nervously


Henny Ray Abrams/Associated Press


A trader on the floor of the New York Stock Exchange on Wednesday. A day after the election, the outlook of continued divided government in Washington and little prospect for compromise unnerved traders.







Business leaders and investors on Wall Street reacted nervously to President Obama’s re-election Wednesday, as the focus shifted quickly from electoral politics to the looming fiscal uncertainty in Washington. A gloomy economic outlook in Europe also prompted selling in markets worldwide.




Stocks were sharply lower in afternoon trading in New York, with both the Standard & Poor’s 500-stock index and the Dow Jones industrial average down 2.2 percent, as European shares sank and Asian stocks were mixed. While many executives on Wall Street and in other industries favored Mitt Romney, many had already factored in the likelihood of Mr. Obama winning a second term.


Still, continued divided government in Washington and little prospect for compromise unnerved traders.


“The bottom line is that this looks like a status quo election,” said Dean Maki, chief United States economist at Barclays. “The problem with that is that it doesn’t resolve some of the main sources of uncertainty that are hanging over the economy.”


Companies in some sectors, like hospitals and technology, could see a short-term pop, said Tobias Levkovich, chief United States equity strategist with Citi. Other areas, like financial services as well as coal and mining, could be hurt as investors contemplate a tougher regulatory environment.


Shares of Alpha Natural Resources, a coal giant, were down 11.8 percent, while Arch Coal was off 11 percent. But HCA Holdings, a hospital operator, was up 8 percent, to $33.39 a share. As a result of Mr. Obama’s victory, Goldman Sachs said it upgraded its rating on HCA to buy from neutral, and raised its price target to $39 from $31. It also raised price targets for Tenet Healthcare and Community Health Systems, although both are still rated neutral.


Goldman downgraded shares of Humana, a leading managed care company, to sell, and its shares fell 9.9 percent. Goldman warned that Humana and other managed care providers could be hurt as health care reform moves forward, especially new rules for health insurers that become effective in 2014.


Mr. Levkovich predicted that the market would remain volatile between now and mid-January. If Congress and the president cannot come up with a plan to cut the deficit, hundreds of billions in Bush-era tax cuts are set to expire at the beginning of 2013 while automatic spending cuts will sharply cut the defense budget and other programs.


Known as the fiscal cliff, this simultaneous combination of dramatic reductions in government spending and tax increases could push the economy into recession in 2013, economists fear.


But it was not just the election results driving shares lower — there was more gloomy economic news out of Europe.


The European Union will experience only a very weak economic recovery during 2013 while unemployment will remain at “very high” levels, according to a set of forecasts issued Wednesday by the European Commission.


This year, gross domestic product will shrink by 0.3 percent for the 27 members of the union as a whole and by 0.4 percent for the 17 European Union countries that use the euro, the commission predicted. Growth in 2013 will be a meager 0.4 percent across the union and only 0.1 percent in the euro area, it said.


Not only is that level of growth far slower than even the tepid pace of the recovery in the United States, it also makes it more difficult for debt-burdened European economies to get their financial house in order. As markets neared the close in Europe, the Euro Stoxx 50 index, a barometer of euro zone blue chips, fell 2.2 percent, while the FTSE 100 index in London was 1.5 percent lower.


The S.&P./ASX 200 in Australia closed up 0.7 percent, as did the Hang Seng Index in Hong Kong. The Nikkei 225 stock average in Japan ended trading little changed.


“There’s a huge question mark hanging over what happens in the next few weeks,” said Aric Newhouse, senior vice-president of policy and government relations at the National Association of Manufacturers. “The fiscal cliff is the 800-pound gorilla out there.”


“We can’t wait,” he said. “We think the idea of going over the cliff has to be taken off the table. We’ve got to get to the middle ground.”


For all the anticipation, some observers said the election still left plenty of unanswered questions.


“While we have clarity on the players now, we don’t have any more clarity on what will happen in terms of the fiscal cliff,” Mr. Maki said. “We still have a divided government and they haven’t been able to agree on what to do.”


If the full package of tax increases and spending cuts go into effect, that would equal a $650 billion blow to the economy, Mr. Maki said, equivalent to 4 percent of the gross domestic product.


Mr. Maki envisions a partial compromise, with $200 billion in tax increases and spending cuts. Partly because of that, he estimates, the annual rate of economic growth will dip to 1.5 percent in the first quarter of 2013 from 2.5 percent in the fourth quarter. He predicted that if the full fiscal cliff were to hit, the economy would contract in the first half of 2013.


James Kanter contributed reporting.



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Putin Fires Defense Minister Linked to Real Estate Investigation





MOSCOW — President Vladimir V. Putin of Russia fired his powerful defense minister on Tuesday after the police raided the property of a real estate company involved in the privatization of valuable ministry land near Moscow.




The firing of Anatoly E. Serdyukov, a longtime Putin ally, is one of the highest-level dismissals tied to a corruption case in recent memory in Russia. It was also a rare move by Mr. Putin, who has been reluctant to dismiss members of his inner circle.


Mr. Putin appointed another longtime political ally, Sergei K. Shoigu, the former minister of emergency situations, as the country’s new defense minister.


Dmitri S. Peskov, Mr. Putin’s spokesman, said the firing was necessary to allow the police to continue their investigation of wrongdoing within the Defense Ministry, which he said would not be possible if Mr. Serdyukov remained. Even as Mr. Putin forced Mr. Serdyukov from office, he praised the minister’s past work.


Many ministers in the Russian government have secondary roles in business and extensive property and wealth that is typically tolerated unless they fall from favor for another reason, analysts of Russian politics say.


“In Russia, where what matters first and foremost are informal deals and relations, we should be looking for some kind of intrigue behind this all, some kind of a clash of very important interests,” Maria Lipman, a researcher at the Carnegie Moscow Center, said in an interview.


Ms. Lipman said that corruption cases are sometimes opened as a way of settling scores and that “in an environment as corrupt as Russia, almost anyone can fall victim.”


Why Mr. Serdyukov was removed from office is unclear. Russian media have suggested that there may have been a clash of a personal nature between Mr. Serdyukov and his father-in-law, a close associate of Mr. Putin, or a conflict with military generals.


Since his appointment in 2007, Mr. Serdyukov, a former furniture store manager, alienated the uniformed military through a reform that thinned the top-heavy officer ranks. It was a policy to change the “egg-shaped” hierarchy of the Russian Army into a pyramid form.


To do so, Mr. Serdyukov fired or forced into early retirement 40,000 officers since 2008 and reduced the number of active-duty generals and admirals by almost by half, from 1,107 four years ago to 610 today.


Such moves won Mr. Serdyukov no friends within the officer corps, which he once derisively referred to as a group of “little green men.”


Officers, in turn, took to calling him “General Stool,” in reference to the 15 years he managed the Mebel-Market furniture shop in St. Petersburg.


Russia’s defense industry was a crucial base of support for Mr. Putin in the presidential election he won in March. As part of the campaign, Mr. Putin pledged major increases in defense spending, promises that have been cast into uncertainty during budget negotiations.


Now that the painful cuts are behind him, Mr. Putin wanted to distance himself from them by summarily firing the unpopular Mr. Serdyukov, thus appeasing the officers, suggested Ruslan Pukhov, director of Center for the Analysis of Strategy and Technologies, a Russian research group.


Mr. Serdyukov had also reportedly fallen out with his father-in-law, the close associate of Mr. Putin, Mr. Pukhov and other analysts said


In this light, the firing of Mr. Serdyukov, who had overseen the nuclear arsenal, raised the prospect of potentially destabilizing family disagreements within the tight ruling elite in Russia, where nepotism is tolerated.


Mr. Serdyukov was married to Yulia V. Pokhlebenina, the daughter of Viktor A. Zubkov, a former prime minister and chairman of Gazprom, the natural gas company, a post in Russia with power at least rivaling that of minister of defense. Mr. Zubkov first worked as an aide to Mr. Putin in 1992, in the St. Petersburg mayor’s office, where Mr. Putin was a vice mayor.


But the couple had recently become estranged, some commentators said.


“In the understanding of our leaders, betraying the family is a crime more dangerous than theft or murder,” Aleksei A. Navalny, an anticorruption activist and opposition leader, wrote in an online posting.


“That is why today the son-in-law stopped being the minister of defense. Or, more accurately, the son-in-law stopped being the son-in-law, and so we need a new minister.”


In one police raid late last month targeting the company that was engaged in real estate deals with the ministry, the authorities searched the home of a female employee, Yevgenia N. Vasilyeva. Though it was a pre-dawn raid, they found Mr. Serdyukov at that location, LifeNews, an online publication that often receives exclusive news from the security services, reported. The police reportedly led Ms. Vasilyeva from the apartment in handcuffs and confiscated her jewelry and other valuables.


“This is a personal matter,” Vladimir A. Ryzhkov, an opposition politician, said, describing the affair as evidence of the “clannish, Byzantine and deeply personal” nature of the relationships among the high-placed officials around Mr. Putin who have ruled Russia for more than a decade.


Aleksei A. Venediktov, editor of Ekho Moskvy radio station noted in a commentary over the weekend that under Russian nuclear deterrence policy the defense minister is entrusted, like the president, with the so-called nuclear suitcase of launch codes and communication equipment needed to order a nuclear strike. As such, he is also under round-the-clock guard.


Only an order from Mr. Putin or his chief of staff, Sergei Ivanov, could compel the guard detail for the launch codes to stand aside, Mr. Venediktov said, allowing criminal investigators to enter the apartment in the Arbat neighborhood of Moscow where the defense minister and Ms. Vasilyeva were located.


“It was a demonstrative humiliation,” Mr. Venediktov said.


Andrew Roth contributed reporting.



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Facebook Cancels Shortcut Over Concern for Security


SAN FRANCISCO — What was supposed to be a shortcut for Facebook users to log into their pages ended up exposing their e-mail addresses — and, in some cases, potentially allowing access to their accounts as well.


A Facebook spokesman said on Friday that the company had created the shortcut, called auto login, to let some users go directly to their pages by clicking on a Web link sent to their e-mail addresses. Once they clicked on the link, they could get into their accounts, rather than having to go to Facebook.com and log in.


Some of the links required users to type their passwords, while others did not, the company said.


On the Web site Hacker News, a technology discussion board, Matt Jones, an engineer at Facebook, said the company had offered the service for “ease of use” and never made the Web addresses “publicly available.”


But they did become publicly available, as the discussion on Hacker News revealed on Friday.


The Facebook spokesman, Frederic Wolens, said some users may have posted the links on the Web, allowing anyone to search for them. Those links could give a stranger access to the Facebook pages connected to them, as well as the e-mail addresses of those users. Mr. Wolens said he had no explanation why someone would post the links.  


When Facebook found the problem, it discontinued the shortcut.


The Hacker News thread said over one million Facebook accounts had been affected. Facebook could not confirm that figure on Friday afternoon.


TrendMicro, a private security company that offers safety tools for Facebook users, said Web address shortcuts were inherently dangerous because they could ultimately end up on the Web.


“Many, many hackers are targeting these portals because of the ubiquitous trust and use of them,” said Tom Kellermann, vice president for cybersecurity at TrendMicro. He added, “You don’t take shortcuts through the woods in cyberspace.”


The news of the security hole comes a week after a Bulgarian blogger, Bogomil Shopov, said he had bought 1.1 million Facebook users’ names and e-mail addresses on the Web for $5. He found the information for sale on a marketplace site, gigbucks.com. The items are no longer available.


Mr. Wolens of Facebook said the data had been acquired and compiled by someone who took whatever information Facebook users made public on their pages — and from other publicly available data about those users.


Mr. Kellermann of TrendMicro said the problem with the shortcut could explain how the names and e-mail addresses that Mr. Shopov had found became public. Facebook said the security flaw and the user data for sale had nothing to do with each another.


“We have no reason whatsoever to believe that these two incidents are related,” Mr. Wolens said.


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Unlikely Model for H.I.V. Prevention: Adult Film Industry


Stephanie Diani for The New York Times


INDUSTRY DATABASE Shylar Cobi, right, a film producer, confirmed test results of the actors who perform as James Deen and Stoya.







LOS ANGELES — Before they take off all their clothes, the actors who perform as James Deen and Stoya go through a ritual unique to the heterosexual adult film industry.




First, they show each other their cellphones: Each has an e-mail from a laboratory saying he or she just tested negative for H.I.V., syphilis, chlamydia and gonorrhea.


Then they sit beside the film’s producer, Shylar Cobi, as he checks an industry database with their real names to confirm that those negative tests are less than 15 days old.


Then, out on the pool terrace of the day’s set — a music producer’s hilltop home with a view of the Hollywood sign — they yank down their pants and stand around joking as Mr. Cobi quickly inspects their mouths, hands and genitals for sores.


“I’m not a doctor,” Mr. Cobi, who wears a pleasantly sheepish grin, says. “I’m only qualified to do this because I’ve been shooting porn since 1990 and I know what looks bad.”


Bizarre as the ritual is, it seems to work.


The industry’s medical consultants say that about 350,000 sex scenes have been shot without condoms since 2004, and H.I.V. has not been transmitted on a set once.


Outside the world of pornography, the industry’s testing regimen is not well known, and no serious academic study of it has ever been done. But when it was described to several AIDS experts, they all reacted by saying that there were far fewer infections than they would have expected, given how much high-risk sex takes place.


“I don’t think there’s any question that it works,” said Dr. Allan Ronald, a Canadian AIDS specialist who did landmark studies of the virus in prostitutes in a Nairobi slum. “I’m a little uncomfortable, because it’s giving the wrong message — that you can have multiple sex partners without condoms — but I can’t say it doesn’t work.”


Despite the regimen’s apparent success, California health officials and an advocacy group, the AIDS Healthcare Foundation, are trying to make it illegal to shoot without condoms. They argue that other sexually transmitted diseases are rampant in the industry, though the industry trade group disputes that.


In January, the city of Los Angeles passed a law requiring actors to wear condoms. A measure to do the same for the whole county is on the ballot on Tuesday.


Producers say the condom requirement will drive them out of business since consumers will not buy such films. Local newspapers like The Los Angeles Times oppose the ballot measure, calling it well-intentioned but unenforceable, and warning that it could drive up to 10,000 jobs out of state.


Very frequent testing makes it almost impossible for an actor to stay infected without being caught, said Dr. Jacques Pepin, the author of “The Origins of AIDS” and an expert on transmission rates. “And if you are having sex mostly with people who themselves are tested all the time, this must further reduce the risk.”


When the virus first enters a high-risk group like heroin users, urban prostitutes or habitués of gay bathhouses, it usually infects 30 to 60 percent of the cohort within a few years, studies have shown. The same would be expected in pornography, where performers can have more than a dozen partners a month, but the industry says self-policing has prevented it.


“Our talent base has sex exponentially more than other people, but we’re all on the same page about keeping it out,” said Steven Hirsch, the founder of Vivid Entertainment, one of the biggest studios.


Performers have to test negative every 28 days, although some studios recently switched to every 14.


If a test is positive, all the studios across the country that adhere to standards set by the Free Speech Coalition, an industry trade group, are obliged to stop filming until all the on-screen partners of that performer, all their partners, and all their partners’ partners, are found and retested. In 2004, the industry shut down for three months to do that.


It has had briefer shutdowns in each of the last four years.


In 2009 and 2010, no other infected performers were found. Coalition representatives said an infected woman in 2009, from Nevada, may have had an infected boyfriend, and offered evidence that a man infected in 2010 in Florida had worked outside the industry as a prostitute. The 2011 test was a false positive.


A shutdown in August came after several actors got syphilis, not H.I.V. All performers were given a choice: Take antibiotics, or pass two back-to-back syphilis tests 14 days apart.


Read More..

Unlikely Model for H.I.V. Prevention: Adult Film Industry


Stephanie Diani for The New York Times


INDUSTRY DATABASE Shylar Cobi, right, a film producer, confirmed test results of the actors who perform as James Deen and Stoya.







LOS ANGELES — Before they take off all their clothes, the actors who perform as James Deen and Stoya go through a ritual unique to the heterosexual adult film industry.




First, they show each other their cellphones: Each has an e-mail from a laboratory saying he or she just tested negative for H.I.V., syphilis, chlamydia and gonorrhea.


Then they sit beside the film’s producer, Shylar Cobi, as he checks an industry database with their real names to confirm that those negative tests are less than 15 days old.


Then, out on the pool terrace of the day’s set — a music producer’s hilltop home with a view of the Hollywood sign — they yank down their pants and stand around joking as Mr. Cobi quickly inspects their mouths, hands and genitals for sores.


“I’m not a doctor,” Mr. Cobi, who wears a pleasantly sheepish grin, says. “I’m only qualified to do this because I’ve been shooting porn since 1990 and I know what looks bad.”


Bizarre as the ritual is, it seems to work.


The industry’s medical consultants say that about 350,000 sex scenes have been shot without condoms since 2004, and H.I.V. has not been transmitted on a set once.


Outside the world of pornography, the industry’s testing regimen is not well known, and no serious academic study of it has ever been done. But when it was described to several AIDS experts, they all reacted by saying that there were far fewer infections than they would have expected, given how much high-risk sex takes place.


“I don’t think there’s any question that it works,” said Dr. Allan Ronald, a Canadian AIDS specialist who did landmark studies of the virus in prostitutes in a Nairobi slum. “I’m a little uncomfortable, because it’s giving the wrong message — that you can have multiple sex partners without condoms — but I can’t say it doesn’t work.”


Despite the regimen’s apparent success, California health officials and an advocacy group, the AIDS Healthcare Foundation, are trying to make it illegal to shoot without condoms. They argue that other sexually transmitted diseases are rampant in the industry, though the industry trade group disputes that.


In January, the city of Los Angeles passed a law requiring actors to wear condoms. A measure to do the same for the whole county is on the ballot on Tuesday.


Producers say the condom requirement will drive them out of business since consumers will not buy such films. Local newspapers like The Los Angeles Times oppose the ballot measure, calling it well-intentioned but unenforceable, and warning that it could drive up to 10,000 jobs out of state.


Very frequent testing makes it almost impossible for an actor to stay infected without being caught, said Dr. Jacques Pepin, the author of “The Origins of AIDS” and an expert on transmission rates. “And if you are having sex mostly with people who themselves are tested all the time, this must further reduce the risk.”


When the virus first enters a high-risk group like heroin users, urban prostitutes or habitués of gay bathhouses, it usually infects 30 to 60 percent of the cohort within a few years, studies have shown. The same would be expected in pornography, where performers can have more than a dozen partners a month, but the industry says self-policing has prevented it.


“Our talent base has sex exponentially more than other people, but we’re all on the same page about keeping it out,” said Steven Hirsch, the founder of Vivid Entertainment, one of the biggest studios.


Performers have to test negative every 28 days, although some studios recently switched to every 14.


If a test is positive, all the studios across the country that adhere to standards set by the Free Speech Coalition, an industry trade group, are obliged to stop filming until all the on-screen partners of that performer, all their partners, and all their partners’ partners, are found and retested. In 2004, the industry shut down for three months to do that.


It has had briefer shutdowns in each of the last four years.


In 2009 and 2010, no other infected performers were found. Coalition representatives said an infected woman in 2009, from Nevada, may have had an infected boyfriend, and offered evidence that a man infected in 2010 in Florida had worked outside the industry as a prostitute. The 2011 test was a false positive.


A shutdown in August came after several actors got syphilis, not H.I.V. All performers were given a choice: Take antibiotics, or pass two back-to-back syphilis tests 14 days apart.


Read More..

Changing of the Guard: Facing Protests, China’s Business Investment May Be Cooling





SHIFANG, China — Local leaders were all smiles this summer at a groundbreaking ceremony for a vast copper smelting project that seemed like the answer to the chronic unemployment that has plagued this city in northern Sichuan ever since a devastating earthquake in 2008.







Reuters

A protest against plans to expand a petrochemical plant in Ningbo, China, last month. More investment projects are running into opposition from a growing Chinese middle class concerned about environmental damage.






Articles in this series are examining the implications for China and the rest of the world of the coming changes in the leadership of the Chinese Communist Party.







But within days, the tree-lined plaza at the heart of the city was packed with thousands of youths, protesting that the $1.6 billion factory would pose a pollution hazard. After two nights of street battles pitting youths against the riot police, city leaders canceled the smelter.


“The environment is more important” than new investments or jobs, said a young woman sitting on a recent afternoon at the cafe across the street from the plaza, now empty except for a clutch of retirees gathered under the clock tower.


China’s economic boom over the last three decades has depended overwhelmingly on a build-at-all-costs investment strategy in which pollution concerns, the preservation of neighborhoods and other such questions have been swept aside. But that approach is starting to backfire, posing one of the biggest challenges for the new generation of Chinese policy makers who will take over at the Communist Party Congress, which starts on Thursday.


New investment projects used to be seen as the best way to keep the Chinese public happy with jobs and rising incomes, assuring social stability — a paramount goal of the Communist Party — while frequently enriching local politicians as well.


But from Shifang in the west to the port of Ningbo in the east, where a week of sometimes violent protests forced the suspension on Oct. 28 of plans to expand a chemical plant, more projects are running into public hostility.


In many cases, they are running into opposition not just from farmers who do not want their houses and fields confiscated, but also from a growing middle class fearful that new factories will lead to more environmental damage.


In response to this and other worries about the economy, a number of influential officials and business leaders in China have stepped up their calls for changes aimed at increasing the efficiency of investment and simultaneously shifting the country toward a greater reliance on consumption.


But China’s leaders, including the outgoing prime minister, Wen Jiabao, have been talking about such a transformation for years with little sign of success, as state-controlled banks continue to lend huge sums to politically powerful state-owned enterprises and local governments.


Frenzied construction of roads, bridges, tunnels and rail lines over the last decade has left China with world-class infrastructure. But it has also produced deeply indebted local governments that are struggling to finance more projects.


At the same time, vast unused capacity in practically every industrial sector has crippled profitability and left manufacturing companies straining to repay their borrowings, a problem that has been partly masked by banks in the habit of simply rolling over loans rather than recognizing losses.


“All Chinese industries are like that — can you dig out which area of Chinese industry is not in overcapacity?” said Li Junfeng, a longtime director general for energy at China’s top economic planning agency.


Investment reached 46 percent of China’s economic output last year. By comparison, Japan’s investment rate peaked at 36 percent, which it reached in the early 1970s; South Korea topped out at 39 percent in the late 1980s.


Growth in Japan and South Korea started to slow and eventually tumbled after investment peaked. The big question now is when China will run into the same limits, and how rapidly change will take place, said Diana Choyleva, an economist at Lombard Street Research in Hong Kong. “The potential for a big crisis is always there,” she said.


Even experts who strongly favor fundamental policy changes, like moving to a more market-oriented system for allocating bank loans and setting interest rates, doubt that China’s leaders are preparing to move quickly. Conversations at senior levels of the Communist Party appear to have focused so far on reducing the state’s role in the day-to-day management of many state-owned enterprises rather than selling them or breaking them up.


Read More..