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To: Kip518 who wrote (11893)1/17/2003 4:44:21 PM
From: stockman_scott  Respond to of 89467
 
CEOs see no recovery in 2003

January 17, 2003


(Reuters) — After two years of hoping in vain for a recovery, which many said was only six months away, companies are now writing off all of 2003 and focusing on 2004 for any improvements in their markets.

Two weeks into the new year, key European and U.S. companies have toned down their hopes for economic bloom. Slow consumer spending, a possible war in Iraq and the resulting high oil prices could further dampen business activity.

In the past week, airlines, technology and chemicals companies, banks and retailers have all said they are hesitant to predict the upturn for this year, opting for caution after misreading their markets during the past two years.

The chief executive of telecoms equipment giant Cisco, John Chambers, started off the miscalculation season in January 2001, when he said he was confident the downturn could be over in six months even though his clients' businesses had hit a brick wall.

``I believe we're probably talking a two-quarter phenomenon, although it could last longer. I'm talking the first half of this year for most companies in the U.S.,'' Chambers said then in Davos, Switzerland, where many of the world's business leaders will gather again next week to discuss the future.

DAVOS MANTRA

Chambers wasn't alone with his turnaround prediction in early 2001. A second-half recovery became a mantra in the cramped corridors of the conference at the Swiss ski resort.

Now, however, few CEOs express such bold dreams.

Gerco Goote, head of equity research at ABN Amro Asset Management in Amsterdam which oversees 30 billion euros ($31.96 billion), said firms are clearly afraid to stick their neck out.

``The word 'caution' is on every page of our research. Companies might be overdoing it, but nobody knows,'' he said.

Bank of America Chief Financial Officer James Hance said this week he felt positive about consumer and mid-markets, but was ``not comfortable with some segments of the large corporate book.'' He expects quarterly charges to remain high in 2003.

Hopes for a recovery are also slim in the airline industry, where U.S. players are experiencing their worst ever crisis following the September 11, 2001 attacks on the United States. U.S. airlines lost between $8 billion and $10 billion in 2002.

German airline Lufthansa abandoned its 2003 operating-profit target last week, following in the footsteps of Dutch carrier KLM, while Delta Air, the third largest U.S. airline, expects to book another loss in 2003.

Investors are a bit miffed about so much doom and gloom.

Florian van Laar, asset manager at Amsterdam-based Eureffect: ``I'm surprised when I hear people writing off all of 2003. It's like when you start a 500 kilometre trek and say after 100 metres: 'This trip ain't worth it'.''

Two weeks into the year, it's really impossible to tell what's going to happen at the end of the year, he added.

U.S. chemicals giant DuPont said on Wednesday it was struggling with anaemic demand and higher oil prices, up as a result of war looming in the Middle East.

Chief Executive Cees van der Lede of DuPont's smaller Dutch rival Akzo Nobel said in his New Year's speech there was no reason to expect that 2003 would be any easier than 2002.

British electronics retailer Dixons said last week that pressure on profit margins would continue and like-for-like sales would remain static for the time being. The firm was hit by sluggish Christmas sales due to the economic uncertainty.

``A poor December has rocked management's optimistic assumption that the product cycle is more important than the consumer cycle,'' investment bank WestLB Panmure said.

CHIPS DOWN

The technology sector remains particularly weak after it was badly bruised in the last two years as companies — telecoms firms in particular — spent less on computers, software and IT services after the Internet bubble burst in 2000.

U.S. chip behemoth Intel sees little improvement in its markets for the first six months, and cut its 2003 investment budget to below $3.9 billion from $4.7 billion.

Dutch chip equipment maker ASML said on Thursday a recovery in the battered sector, in its worst downturn ever, could happen in the second half, but the company declined to give a forecast and showed a thin order backlog entering 2003.

The same day, U.S. computer maker Sun Microsystems failed to reiterate a November target of turning a profit by the end of its fiscal year in June, blaming a murky economy.

France's Alcatel's Chief Executive Serge Tchuruk this week forecast another down year in the telecoms equipment market after a 50 percent fall over the last two years.

Software makers see no recovery either.

U.S.-based Microsoft said sales for the fiscal year ending in June would fall short of expectations. ``Our view continues to be that there has not been much change in the health of the PC ecosystem where things have continued to be soft,'' said Chief Financial Officer John Connors.

U.S.-based IBM, which has its fingers in virtually all technology pies, said on Thursday it thought the environment had begun to stabilize.

But the company had already said this last April, when CFO John Joyce announced that IBM could achieve 2002 earnings of $4.16 a share on flat revenues of $83 billion.

On Thursday the computer services-to-chip giant reported 2002 sales of $81.2 billion and earnings of $3.07 per share, well below its April hopes, even if integration and restructuring charges of $0.88 per share would be added.



To: Kip518 who wrote (11893)1/18/2003 12:15:49 PM
From: stockman_scott  Read Replies (1) | Respond to of 89467
 
The United States must do more to woo the hearts and minds of the world

Global Image Problem
By Jonathan Curiel
San Francisco Chronicle Staff Writer
Sunday, January 12, 2003
sfgate.com
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The world doesn't trust us. You, me and other Americans. That's what the polls say.

The most recent one by the Pew Research Center for the People and the Press quotes people in China, Egypt, Uganda, Poland, Uzbekistan and elsewhere who complain that the United States is, in effect, a bully that doesn't do enough to solve global problems.

Their perception creates their reality, so even if Washington spends tens of millions of dollars every year on programs administered by the U.S. Agency for International Development -- programs that rebuild roads in Afghanistan, combat disease in Kenya and reduce infant mortality in Haiti -- it may not matter a whit to the average man or woman on the street in Cairo, Kampala, Beijing, Warsaw, Jakarata, Manila or Paris.

Even when the United States is at the forefront of worldwide humanitarian work, it often doesn't get credit. And that applies not just to the official America of Congress, the White House and the rest of federal government, but also to unofficial America, the America of Greg Hesterberg and Heidi Kuhn and other nongovernmental figures who head organizations such as Roots of Peace and thehungersite.com -- entities committed to changing the planet one step at a time.

One explanation for the world's view of us lies in America's swagger. We are rich. We are the most powerful nation on Earth. We have a military that makes other nations cringe. And we aren't shy in boasting about how great we are.

Another aspect of our failure to win the world's hearts and minds is a perception that we are arrogant, that we care about no one on Earth except ourselves.

And so, however much good we do in the world, we need to do more. Here are 10 ways that the United States can do a better job of changing the globe without resorting to bombs or the kind of gunboat diplomacy that has been the hallmark of nearly every U.S. presidential administration since World War I.

1. Be less jingoistic

U.S. foreign policy has reduced the world to a dichotomy: Countries that fall under "the interests of America" and those that don't. Iraq, with its strategic location in the Middle East and large oil deposits, is a priority. Rwanda isn't. So, in 1994, when U.S. government leaders knew about the possibility of a massacre in Rwanda that ultimately led to more than 500,000 deaths, they did nothing to stop it. (Neither did other foreign governments.)

"The Americans were interested in saving money, the Belgians were interested in saving face and the French were interested in saving their ally, the genocidal government," said Alison Des Forges in 1999, author of a study sponsored by Human Rights Watch and the International Federation of Human Rights Leagues. "All of that took priority over saving lives."

Even when the United States needs an African country -- as is the case with Djibouti, located across the Gulf of Aden from Yemen -- that country gets scant real help. For letting the U.S. military use its country as a base for a possible war against Iraq, Djibouti has gotten $4 million in USAID money, but most of those dollars are reportedly going to improving security at the country's international airport. The average resident of Djibouti is getting little from the country's new coziness with America.

2. Try harder to broker peace between Israelis and Palestinians.

Imagine the Bush administration putting as much energy and resources into establishing peace in the Holy Land as it has into trying to topple Saddam Hussein. Imagine it orchestrating special meetings in London that bring together Israelis and Palestinians, just as there were meetings in London that attempted to unite different Iraqi factions. Imagine that it called emergency sessions of the U.N. Security Council that began issuing deadlines for peace instead of deadlines for Hussein's acquiescence.

Negotiations between Israelis and Palestinians would pay instant peace dividends because that would signal the United States was serious about a future state of Palestine. Osama bin Laden, Hussein and other hatemongers have tried to piggyback on the Palestinians' cause. Remove the question of Palestine and eliminate what is one of the biggest grievances in the Muslim world.

Questions have swirled about Yasser Arafat's future status and whether Ariel Sharon will accept him as a true diplomatic partner, but if the Palestinians re-elect Arafat as president when their elections are finally held, Sharon and Bush will have to accept the vote's outcome -- just as Americans accepted (many grudgingly) that Bush took the 2000 presidential election. Move forward and make the best out of tough and trying circumstances.

3. Sign the international land mine treaty

It's been six years since representatives from 121 nations met in Ottawa and signed a treaty to ban anti-personnel land mines. Every year, land mines kill or injure about 26,000 people, most of them children and women. As many as 110 million land mines are buried around the world -- and yet the official U.S. policy is de facto tolerance. As a State Department spokesperson recently argued, the 1997 treaty "does not adequately address U.S. security requirements and international responsibilities."

In everyday language, that means the United States uses land mines for military purposes. The United States, therefore, has decided to skirt international consensus on this issue, even as many nongovernmental organizations like Kuhn's Roots of Peace, which is based in San Rafael, work to demine the world of these vicious weapons.

"The most basic form of terrorism is a land mine," Kuhn says.

4. Sign the Kyoto Accord on greenhouse gases

The 1997 Kyoto Accord was also signed by more than 100 nations -- and, as in the land mine treaty, the United States rejected international consensus. President Bush has famously described the accord, which aims at reducing greenhouse gases, as "fatally flawed." Bush complains that compliance would hurt U.S. businesses -- and that "scientific uncertainties remain" about the exact problem of global warming. For those who believe Washington is arrogant, selfish and hypocritical, the pattern of behavior on Kyoto and Ottawa offers confirmation.

5. Increase commitment to HIV/AIDS prevention in developing countries

In sub-Saharan Africa, almost 30 million people live with HIV or AIDS. Last year, about 3.5 million new infections occurred there, according to the Joint United Nations Program on HIV/AIDS, or UNAIDS. The disease is worsening famine in southern Africa and expanding alarmingly in countries like Uzbekistan, where there were "almost as many new infections reported in the first six months of 2002 as in the entire previous decade," a UNAIDS report says.

The United States has pledged $500 million to the Global Fund to Fight AIDS,

Tuberculosis and Malaria, but -- as the world's richest and most powerful country -- it should commit even more money to a problem that kills more people worldwide than any other infectious disease. (Money, of course, isn't the only factor in stemming the AIDS crisis.)

To effectively decrease the spread of HIV and AIDS in developing countries, $10.5 billion is required by 2005, UNAIDS says. As the Pew report makes clear, "The spread of disease is judged the top global problem in more countries than any other international threat, in part because worry about AIDS and other illnesses is so overwhelming in developing nations, especially in Africa."

6. Work with the U.N. consistently -- not just when it suits U.S. needs

Selective enforcement was one of the biggest complaints I heard on a reporting tour of Jordan, Syria and Lebanon 14 months ago. The gist: Why does the United States use the United Nations when it wants to single out Iraq or another country yet ignores U.N. resolutions aimed at its allies?

This perception isn't limited to the Arab world. Nelson Mandela, in an interview he gave to Newsweek in September, excoriated the United States' long history of U.N. intransigence, saying, "The most catastrophic action of the United States was to sabotage the decision that was painstakingly stitched together by the United Nations regarding the withdrawal of the Soviet Union from Afghanistan.

"If you look at those matters, you will come to the conclusion that the attitude of the United States of America is a threat to world peace. Because what (America) is saying is that if you are afraid of a veto in the Security Council, you can go outside and take action and violate the sovereignty of other countries. That is the message they are sending to the world."

7. Recognize the International Criminal Court

"The promise of universal justice" -- that's what the International Criminal Court represents to U.N. Secretary-General Kofi Annan. But to the United States, the court -- which began meeting last July -- is a jurisprudential dead end that shouldn't be trusted. Among the nations that agree: Iraq, which has also refused to endorse its tenets.

Based in The Hague, Netherlands, the court is set up to prosecute those who commit war crimes and crimes against humanity. The United States opposes the tribunal because it could theoretically go after American officials and American troops. Washington has come out against international standards of justice.

8. Embrace microcredit

Microcredit is the lending of small amounts of money to the poor who want to start or expand self-sustaining businesses and programs. It's not welfare, it's not grant-making -- it involves loans that are repaid -- and it has a more-than-20-year history of success, pioneered by Bangladeshi economist and professor Muhammad Yunus. There is now a regular Microcredit Summit Campaign whose goal is to reach 100 million people by 2005.

The United States has been slow to embrace the concept of microcredit but it has recognized its effectiveness with such initiatives as the Microenterprise for Self-Reliance Act, which took effect three years ago. The initial funding: $155 million. As is the case with the global fight against AIDS, this is a start but it's not enough.

9. Use the Internet as a greater portal of change

Go to www.hungersite.com to see the Internet's potential for positive change. Every time someone clicks a certain section of that site, a cup of food is donated to someone in need around the world. The cost to the person who clicked: nothing. The cost to the owners of hungersite.com: nothing. The companies that put their advertising on the Web site -- companies like Land's End and Dell Computer -- pay for the food. Since July 1999, the site has raised $4.6 million.

"We've raised significant amounts of money," says Hesterberg,who co-owns the site with Tim Kunin. "We saw the Internet as a great opportunity to have an exciting business as well as to do something good."

Other sites like Hesterberg's and Kunin's have emerged on the Web. People who go to www.catalog.heifer.org can make a direct purchase of a cow, buffalo, pig, rabbit or other animals to be sent to needy families around the world. (A buffalo in northern India, for example, can provide a family milk to drink and to sell.)

The White House has a feature on its Web site that allows people to take virtual tours of 1600 Pennsylvania Ave. The animal featured on the site (www.whitehouse.gov) is the president's Scottish Terrier, Barney, whose so-called Barney Cam lets people see the famous residence from the viewpoint of a dog. The official White House Web site should display more innovation than just a canine tour -- and should be updated more regularly.

Three weeks after Paul O'Neill (who toured Africa with Bono last year to see the continent's AIDS problem firsthand) was fired as Treasury secretary, he was still listed in that position on the White House site. Shouldn't the White House Web site -- a symbol of the most powerful country on earth -- have a special section for visitors from other countries who want to ask questions or learn more about the machinations of the U.S. government? The site does have information in Spanish -- but what about Arabic, Mandarin and other languages?

10. Fix unhappy perceptions with truth, not spin

Since the terrorist attacks of Sept. 11, the Bush administration has tried to change the perception of America around the globe, especially the Muslim world. Bush made Charlotte Beers, the former head of two big ad agencies (J. Walter Thompson and Ogilvy & Mather), undersecretary of State for public diplomacy and public affairs. Instead of peddling Uncle Ben's Rice, as she did in the 1960s, Beers is now selling a TV ad campaign that's run in Indonesia and Malaysia and shows American Muslims heralding U.S. tolerance, etc.

Egypt has rejected the campaign and the United States has been criticized for trying to change people's minds with glossy pictures that belie a fast- changing reality (like the recent Immigration and Naturalization Service crackdown that led to the arrests of many Iranian-born professionals).

It can't just be spin. The United States should change its foreign policy first, then show the world the difference between reality and perception. If the United States really wants to project America's substance to an overseas audience, it should consider inviting that audience directly to our shores.

Establish something akin to a cultural exchange program for ordinary non- Americans that -- every year -- invites people to the United States for two- week visits. This could bring average Egyptians, Moroccans, Syrians, Turks, Vietnamese, Chinese, Germans and maybe even North Koreans on a personal tour of a country they've seen only on television or read about in newspapers. (The program could be limited to low-income and middle-income people who've never been to the United States.)

Once here, they could meet Spencer Abraham, an Arab American who is energy secretary. They could meet Donna Shalala, Secretary of Health and Human Services in the Clinton administration, who was the first Arab American appointed to a Cabinet post. The perception of the United States would change, one person at a time.

It wouldn't always change for the better -- how could it considering that the United States has as many cultural and political contradictions as other countries -- but at least these "reality tours" would produce real changes in perception -- changes that would be brought back to countries around the globe and, by word of mouth, spread from village to village, city to city. The news of America would travel fast.

E-mail Jonathan Curiel at jcuriel@sfchronicle.com.