World Cup Special: The Ultimate Triumph of Paul the Octopus

UPDATE 0730 GMT: In case you're wondering --- and I know you are --- Paul has picked Spain to defeat Holland in tonight's final.

I have been fortunate to follow the story of Paul the Octopus since the start of the World Cup when EA's German Bureau notified me of this wondrous eight-tentacled psychic and his ability to predict the outcome of football matches.

We continued to watch as Paul's fame grew and reached the mainstream media, but on Thursday --- the day after Spain defeated Germany 1-0 in the World Cup semifinal --- we were put on Special Alert by the German Bureau.

As Cassandra learned, a psychic's success becomes a curse when he/she brings bad news, and Paul (unwisely) had forecast the Spanish victory. So the cry had arisen: "Cut him up in thin slices and grill him on all sides with a dash of lemon juice, olive oil and garlic on it. Delicious!"

It is our great pleasure and relief, however, to bring you the reassurance this morning that Paul will not be on a dinner plate in the near-future. He (wisely) pointed to a German win in the 3rd-place match against Uruguay last night --- when Diego Forlan's last-minute shot hit the crossbar, both a 3-2 German victory and Paul's longevity were protected.

And the ever-vigilant German Bureau notes that there is a political pay-off in the latest developments. For Paul has not confined himself to sporting forecasts. This week he was placed before photographs of Iran's Supreme Leader on one side and opposition figure Mir Hossein Mousavi on the other. The outcome:

Gaza Special: UN Cancels Middle East Session But Begins Freedom Flotilla Enquiry

On Wednesday, the president of the United Nations General Assembly, Ali Abdussalam, cancelled a session on the Middle East:

After consulting with member states I have decided not to hold an interactive thematic debate of the General Assembly on the situation in the Middle East as previously envisaged for July 8, 2010. I will continue to consult with member states on the issue and will keep you informed of further developments.

Israel: Hezbollah Diversion or Threat?

There was speculation that the cancellation was due to Washington's resistance and discussions and reservations among Arab nations.

However, in spite of Washington's criticisms, the UN Human Rights Council announced that a former president of the International Criminal Court, Canadian Philippe Kirsch, will head the committee investigating the deaths of nine Turkish citizens in the Israeli military operation against the Gaza-bound Freedom Flotilla on 31 May.

Diplomats describe the relationship between the UN headquarters in New York and the Human Rights Council in Geneva as one "short on trust." A diplomat in New York said, "As far as the U.S. administration is concerned, at a time when it is trying to resume the peace process, the investigation into the events of the flotilla at this time could not have come at a worst time."

Iran Special: A Response to "The Plot Against Ahmadinejad" (Verde)

Mr Verde assesses EA's Saturday "exclusive" on the planning amongst leading Iranian conservatives/principlists to limit the President's authority or even remove him from office

I thank him and offer this quick addition. I fully agree that the plotters against Ahmadinejad are "trying to protect their own interests within the regime...[rather] than offering a real change of direction". The evidence from our sources may indicate that they no longer think their interests can be protected with the President in office.

But, as Mr Verde notes, their success depends on getting the Supreme Leader to accept this point of view (and possibly setting up defences against a response by the Revolutionary Guard). That success in turn needs more than the current base of planners: Hashemi Rafsanjani and senior clerics, in their view, have to be added. Until they see this as likely, the private manoeuvres of Larijani-Rezaei-Tavakoli will not become public beyond their speeches challenging the Government:

Iran Exclusive: The Plot to Remove Ahmadinejad, Act II

As the exclusive notes, under the present circumstances the possibility that Ahmadinejad is impeached by the Parliament is unlikely. They will need the signature of 1/3 of MPs to start the process and a 2/3 vote to actually impeach him.

We all saw what happened when the Majlis voted against the pro-Ahmadinejad Supreme Council for Cultural Revolution in the contest over Islamic Azad University, in which the Parliament backed down within 48 hours. In an impeachment process, we would probably witness more than a busload of thugs in front of Majlis.

Even if the president is impeached, the Supreme Leader will have the final say in dismissing him and Khamenei has invested too much on Ahmadinejad. And even if Ahmadinejad were to be dismissed, the First VP Mohammad Reza Rahimi would become an interim president. Because the planners have as many problems with Rahimi as they do with Ahmadinejad, they would have to get rid of him before moving on the President.

All this new talk of attacking and threatening Ahmadinejad by the Larijani-Rezaei axis is probably from a position of weakness rather than strength. They feel that, as a result of changes in the past few years and especially the last 12 months, Ahmadinejad and Co. are moving to limit their power and influence. With Khamenei’s intervention in the Azad University case, they have found some space to try to push back against Ahmadinejad ----the Kahrizak Prison abuse scandal and Rahimi’s corruption case are just convenient excuses. So this could be more a rear-guard action than a strategy for attack.

The events of the past year have resulted in a logjam within the Islamic Republic. The election fraud and the post-election actions by the regime have left the Republic’s reputation in pieces. Violence on behalf of the Islamic Republic against its own citizens is not new; what is new is that this time the violence has been directed at the entire population rather than targeted at specific groups, like the leftists, MKO [Mujahedin-e-Khalq], reformists, etc.

As the Supreme Leader, Khamenei has clearly said that he supports Ahmadinejad, and within the regime he has concentrated power in the hands of a small faction that is behind the President. If he were to move against Ahmadinejad now, there were be two consequences. Firstly, the people who are behind Ahmadinejad would rebel against the decision, further damaging the Supreme Leader's reputation and influence. Secondly, Khamenei would be admitting that his decision to back Ahmadinejad wholeheartedly was wrong. This would lead to more serious questions about his judgement and his ability to remain in charge. More of the Republic’s servants would doubt Khamenei as the Leader and the legitimacy of the regime and their roles with it.

Therefore, the whole existence of the Islamic Republic could be threatened if Khamenei were to try to sacrifice Ahmadinejad. This might have been possible last summer: Khamenei could have withdrawn his support of the President then and allowed him to fall. Khamenei would have been damaged too, but he could probably have gotten away with it. But since Khamenei, for whatever reason, decided to stand by Ahmadinejad, the only way he could now get rid of him is if the regime had managed to create stability in Iran. The current situation is far from that: we are witnessing new crises on a daily basis.

Some might say that Khamenei could get rid of Ahmadinejad and install someone like Speaker of Parliament Ali Larijani, Tehran Mayor Mohammad-Baqer Qalibaf, or Secretary of Expediency Council Mohsen Rezaei. The problem is that this person would have to give in to at least some of the demands of the opposition and protestors. If that were to happen, the regime, which has been so inflexible, would suddenly have signalled to the population that ,with enough pressure, it would relent, no matter serious the issue. That could be the start of a new, and perhaps more determined, wave of opposition and protests.

Some might argue that the reformists can take over. They are too far from the centre of power at the present time. And it is increasingly looking like the reformists are facing ideological problems of their own. They seem to speak in paradoxes: both “return to the values Islamic Revolution” and “human rights”. They have not yet managed to explain how it would be possible to return to the values of the Revolution under Ayatollah Khomeini and install values like democracy, human rights, etc. The mess we are in at the present time is the result, not the abuse, of the values of the Revolution as interpreted by Khomeini. So a reformist takeover within the regime could lead to more public demands for change (and maybe even more protests) which could end up causing more damage to the Islamic Republic.

The regime in a precarious impasse with Ahmadinejad as a piece within the stalemate. If this piece is taken away in the present circumstances, it may lead to the whole structure collapsing

As far as the clerics are concerned, I think they are in a lose-lose situation. On the one hand, Ahmadinejad & Co. (with support from Khamenei) are moving to limit and weaken their power within the regime. On the other hand, the three decades of clerical rule in Iran have left them discredited. [Editor's Note: see an earlier analysis by Mr Verde, “The Escalating Crisis Within”).

Therefore any moves by Larijani-Tavakoli-Rezaei-etc against Ahamdinejad are probably more to do with them trying to protect their own interests within the regime, than a real change of direction. Otherwise, the regime could face more serious problems.

Israel: Hezbollah Diversion or Threat?

On Wednesday, in a briefing for journalists, Israel Defense Forces Colonel Ronen Merli revealed previously classified photographs allegedly showing Hezbollah's activities in towns and villages close to the Israeli border. Merli said:

Hezbollah is establishing itself with increasing strength in the villages. Every day they are collecting significant intelligence on our forces along the border and every day they are engaged in digging, building and laying communications infrastructure to prepare themselves for war.

Israel Video: Netanyahu “Why the World Needs Us” (8 July)

On Friday, Haaretz's Avi Issacharoff  stated that Israel not only failed in its 2006 war in Lebanon and that Hezbollah had demonstrated its capability in its campaign since "the southern Lebanon is once again in its hands". Noting the group's resistance against the French troops supposed to prevent military activities in southern Lebanon, Issacharoff listed Hezbollah's further "achievements":

According to various assessments, the Shi'ite organization has rebuilt its military capabilities north of the Litani River, where it has established a network of missile launchers any army in the world would be proud to possess. Furthermore, it has repaired the infrastructure of the Shi'ite villages south of the Litani that were severely hit in the war.

The response was not long in coming. A Hezbollah official warned London-based Asharq al-Awsat that Israel was "preparing something for us" and added that they would act with restraint.

China's Economy This Week: Mounting Difficulties, Investment in West China, Calls for Fairer US Market, & More

Difficulties for Chinese Economic Policy:Premier Wen Jiabao has warned that China's macroeconomic policy is facing mounting difficulties with the severity of the international financial crisis and the unpredictable nature of the global recovery.

"China's current economy remains good, but the domestic and international environment is extremely complicated," Wen said while addressing a symposium in Changsha, capital of central China's Hunan Province.

At the symposium, Wen reiterated the government's stance in maintaining the continuity and stability of macroeconomic policies, and making these policies more flexible and targeted.

Wen said the government would "work to promote stable and relatively fast domestic economic growth, restructure the economy and manage inflation expectations to ensure the government's goals for 2010 are met". The government would endeavor to resolve long-term structural problems while targeting urgent issues.

$100 billion for poorer West China: The central government has said it will invest more than $100 billion in 23 new infrastructure projects in the underdeveloped western regions this year to boost domestic demand.

The plan was announced on Monday after Premier Wen Jiabao said the Chinese economy is facing an "extremely complicated" situation and two purchasing manager surveys showed manufacturing activity had slowed in June.

China has long sought to boost development in the poor western areas. It spent 2.2 trillion yuan ($325 billion) on 120 major projects between 2000 and 2009.

At a conference in Beijing, President Hu Jintao said the western regions should be built within 10 years into the country's bases for energy resources, resource processing, equipment manufacturing and emerging industries of strategic importance.

Chinese steel maker buys rights to mine Australian iron ore: China's third largest steel maker, Wuhan Iron and Steel Corporation (WISCO), completed a joint venture on Wednesday with Australian Centrex Metals Ltd corporation (CXM) to develop iron ore mines on south Australia's Eyre Peninsula.

WISCO paid 51.5 million Australian dollars (US$43.7 million) to CXM for mineral exploitation rights and another 50 million Australian dollars to the joint venture to cover the cost of the first-phrase exploration, said sources of the central-China-based WISCO.

The joint project, with an estimated investment of US$1.5 billion, is expected to annually produce 33 million tonnes of raw iron ore, along with 10 million tonnes of refined iron ore, the sources said.

With a controlling share of the new joint venture, WISCO would have the final say on the exploration and operation of the Australian iron ore mines.

China steel giant calls for fair market environment in U.S.: China's Anshan Iron and Steel Group Corp. called for maintainence a fair market environment on Wednesday after 50 US lawmakers sought to block its investment in an American steel company.

In a recent letter to US Treasury Secretary Timothy Geithner, the Congressmen said the joint rebar venture proposed by Anshan Iand US Steel Development Co. threatens "American jobs" and "national security".

In a statement, the steel mill said its investments in the US and other regions were commercial acts based upon market demands and were attempts at international cooperation.

The steel "rebar" produced at the $175 million American facility, in which Anshan Iron and Steel has a 14% stake, would mainly substitute for US imports, it said. Rebar is a low-end steel product mainly used in construction. The 300,000-tonne plant in Amory, Mississippi would create jobs and increase tax revenues and would not harm local suppliers, it said.

Qi Xiangdong, deputy secretary-general of the China Iron and Steel Association, on Monday urged western countries to maintain the proper attitudes towards global trade and economic globalization. "If the (U.S) government supported blocking the deal, it was a protectionist attitude," Qi said.

Overseas grain purchasing agencies covet China's markets: Many of China's domestic grain purchasing agencies felt slighted by highly capitalized overseas purchasing groups in China's major wheat belts, Xinhuanet.com reported.

Some sources even worried that the groups will affect the central government's regulation of grain price.The foreign groups tempted the Chinese peasants with a higher purchase price which made them store the grain and wait for the better bid.

EU OKs Geely's takeover of Volvo: The European Commission said on Tuesday it had approved the takeover of Swedish carmaker Volvo by Chinese rival Geely and China's state-owned investment firm Daqing.

"The commission concluded that the transaction would not significantly impede effective competition" in the European Union, the EU's antitrust watchdog said in a statement.

The transaction did not initially qualify for the EU's one-stop shop review because the acquirers did not meet the triggering turnover threshold, but since it was notifiable in at least three EU member states, the parties asked the commission to examine the deal and the countries concerned agreed to it.

Geely signed a deal with Volvo in March, under which Geely would pay $1.8 billion in exchange for the whole shares. Part of the money came from Daqing.