“Lives Are For Sale In Europe”, Warns UNODC

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VIENNA, 16 October (UN Information Service) - In the run up to EU anti-trafficking day (18 October), the United Nations Office on Drugs and Crime (UNODC) has issued a report showing that trafficking in persons is an under-detected crime in Europe.

The report, based on UNODC's Global Report on Trafficking in Persons (launched in February 2009), says less people (1 in 100,000) are being convicted for human trafficking in Europe than for rare crimes like kidnapping. Only 9,000 victims were reported in 2006 - around 30 times less than the total estimated number. "Perhaps police are not finding the traffickers and victims because they are not looking for them", said the UNODC Executive Director Antonio Maria Costa.

The report shows a high degree of internal trafficking, both domestically within European countries and regionally within the European Union (predominantly from South-eastern to Western Europe). At the same time, European victims represent just a fraction of the total number of victims detected in Europe. Recent trends show a steady decline of flows from traditional sources, and a marked increase in victims from China and Central Asia.

Most identified victims of human trafficking in Europe are young women, trafficked for sexual exploitation. Around 10 per cent of trafficking victims in Europe are children. There are also detected cases of men in forced labour, like construction and agriculture. "Lives should not be for sale or for rent on a continent that prohibits slavery and forced labour, and prides itself on upholding human dignity", said Mr. Costa.

Most of the prosecuted traffickers are locals, predominantly men. Where foreign traffickers are present, they are often of the same nationality as the victims. Curiously, for a crime where most victims are women, the number of prosecuted female offenders is higher for human trafficking than for other crimes. "We need to better understand why people traffic their kin, and why women exploit other women", said the head of UNODC.

On a positive note, the report shows that in the past six years since the UN Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children came into force in December 2003, most European countries have criminalized trafficking for the purpose of sexual exploitation and forced labour.

It also highlights the progress that has been made to improve collection of data on human trafficking within the European Union.

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A full copy of the report is available at:
http://www.unodc.org/documents/human-trafficking/Trafficking_in_Persons_in_Europe_09.pdf

Broadband Internet is Now a Legal Right in Finland

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The EU Parliament has on several occasions stated that access to the Internet is one of basic human rights. Now, Finland has become the first country to actually declare fast (broadband) Internet access a legal right.

In practice, this means that telecom companies in Finland will be required to provide all Finnish citizens – all 5.3 million of them – with broaband Internet connection of at least 1 Mbps, starting in July.

That’s not all. According to the legislative counselor for the Ministry of Transport and Communications Laura Vilkkonen, the plan is to provide all the citizens with even faster broadband speeds (100 Mbps) by 2015. “We think it’s something you cannot live without in modern society. Like banking services or water or electricity, you need Internet connection,” she said.

This task is easier to achieve in Finland than most other countries, since its broadband penetration rate is among the highest in the world. In the US, the FCC may need as much as 350 billion dollars to expand broadband coverage throughout the country.

This decision by the Finnish Government is in contrast with the often heard proposals (especially in France and the UK, but also – surprisingly – in Finland) about the possible introduction of the three-strikes law, under which illegal file sharers would be disconnected from the Internet after repeated offenses. Making something a legal right doesn’t mean it cannot be taken away, but the government’s stance that broadband Internet access is similar to “banking services or water or electricity” should mean that net access should not be taken away from people lightly, if at all.

While Europe Sleeps, Bosnia Seethes - NYTimes.com

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By NICHOLAS KULISH

BERLIN

NEARLY 14 years after peace for Bosnia was hammered out in Ohio, the hills rising up around Sarajevo can still lead a visitor to uncomfortable thoughts about sightlines for snipers.

As I stood there in person on a visit back in May with Vice President Joseph R. Biden Jr., the violence of the ’90s didn’t feel so far away. Mr. Biden barnstormed through the Balkans on Air Force 2, also stopping in Serbia and Kosovo, with the goal of trying to draw flagging attention back to the region, delivering his sternest lecture to the Bosnian Parliament, warning against falling back onto “old patterns and ancient animosities.”

Mr. Biden is not alone in his warnings. In the latest issue of Foreign Affairs, under the headline “The Death of Dayton,” Patrice C. McMahon and Jon Western write that because of ethnic divisions that refuse to heal, widespread corruption and political deadlock, “the country now stands on the brink of collapse” and “unless checked, the current trends toward fragmentation will almost certainly lead to a resumption of violence.”

Whether or not that happens, the peacekeeping force meant to crack down on any outbreaks now has fewer than 2,000 troops. And the American contingent, a promise and a deterrent to those who justifiably doubt the European Union’s resolve if force is needed, has left entirely.

These circumstances might be cause for widespread alarm, if anyone had noticed them in the first place. It didn’t used to be that way. It used to be that you didn’t have to shout to get heard on the subject of Bosnia. The name alone was enough to evoke the rape, torture, burned-out homes and mass graves that marked a three-and-a-half-year war in which roughly 100,000 people were killed, a majority of them Muslims.

But that was a long time ago. For much of the Western world Bosnia is an all-but-forgotten problem, far down the list of priorities after countries like Iraq, Iran and North Korea. As if to drive the point home, the chief architect of the Dayton peace accords in the Clinton administration, Richard C. Holbrooke, now a special envoy in the Obama administration, has his hands full with the war in Afghanistan and the even more complex situation in neighboring, nuclear-armed Pakistan. Mr. Holbrooke has complained in recent years of a “distracted international community.”

If the drift of public attention away from Bosnia is a result of more pressing issues in an age of terrorism and rogue nuclear states, it is also a function of the simple fact that this ethnically divided country finds itself in the middle of a far more united, stable and at times downright boring Europe than in the days of the civil war.

Bosnia could well return to violence, but it has lost a large measure of what might be called its Franz Ferdinand threat. For all of the moral and humanitarian arguments for getting involved in the violent dissolution of Yugoslavia, there was also the severe lesson from Archduke Ferdinand’s assassination in 1914, which provided the spark for World War I. That lesson was simple: conflicts start in the Balkans, but they do not necessarily stay there.

The end of the cold war brought elation but also trepidation. In hindsight, the march of countries like Poland, Hungary and Romania from the Warsaw Pact into NATO and the European Union may appear steady and all but predestined, but the paths of those newly freed countries were anything but certain at the time. Bosnia was a starkly destabilizing factor in a far more unstable continent. The fighting that began in the spring of 1992 was not quite three years after the fall of the Berlin Wall, and less than a year after the attempted coup of August 1991 in Russia, and came hard on the heels of the collapse of the Soviet Union.

Today, the picture has changed again. Now that Europe is no longer the fault line of a divided world, it looks ever more like a retirement community with good food and an excellent cultural calendar. Spies cut from the George Smiley cloth could really come in from the cold, retiring with legions of their countrymen to the Spanish coast, with no more to worry about than the decline of the pound against the euro and the sinking value of their condos.

The European Union has its share of problems, including a rapidly graying population projected to shrink by 50 million people by 2050 and deep troubles in integrating the immigrants — particularly from Muslim countries — it so drastically needs to reverse the demographic slide. And the union’s energy security depends on its often capricious and at times menacing neighbor to the east, Russia.

Russia’s invasion of Georgia last summer served as a stern reminder that things can still get rough outside of the gated community, and certainly made newer members like Poland and Estonia nervous about the sturdiness of the fence.

Renewed fighting in Bosnia may not launch World War III, but it could well spread to other parts of the former Yugoslavia, including Kosovo. Kosovo declared independence last year, and the United States Embassy in the Serbian capital, Belgrade, burned at the hands of angry rioters. I walked the streets in the aftermath, interviewing Serbs, and found rage, sadness and desperation even among the most pro-Western elements of society.

It was something of a pleasant surprise, then, to return with Mr. Biden this year and find average Serbs on the same streets sounding deeply pragmatic about the visit by an American politician who not only represented the superpower that had bombed them but was personally an early and staunch supporter of Muslims in both Bosnia and Kosovo. While there were holdouts, most said that jobs and freedom to travel trumped old enmities.

With any luck the sentiment will find more traction in neighboring Bosnia too, drowning out the extreme voices and their loose talk of war. Given how far the world’s attention has wandered, supporters of peace in the Balkans will have to hope they find their own path to moderation. Otherwise the crack of snipers’ bullets and the whistle of mortar shells could herald the terrible spectacle of a preventable return to bloodshed.

A New Agenda for Bosnia and Herzegovina

Jim O’Brien

As concerns grow about Bosnia's post-war recovery, USIP presents its fourth report on recent developments in Bosnia and Herzegovina and various options the U.S. government, Europe and Bosnia could pursue to prevent a return to violence there. In his paper, author Jim O'Brien, who served as the presidential envoy for the Balkans in the 1990s, cautions against taking a big initiative in Bosnia to head off a future crisis, but rather advocates taking on many, smaller battles that will ultimately align Bosnia closer to the European Union. He proposes a two-part strategy: first, Bosnia should strip political parties of their ethnic, nationalist appeal, and second, the international community should speed up the European Union accession process for the Balkans region overall.

Read the full text [1] (PDF/169.31 KB)

This is the fourth in a series of reports about Bosnia and Herzegovina. Read the first [2], second [3], and third [4] reports.

About the Author

This USIPeace Briefing was written by Jim O'Brien, a principal of the Albright Stonebridge Group, a global advisory firm. He was presidential envoy for the Balkans and a lawyer involved in American Balkan policy in the 1990s.

Chicken Little Goes to Europe

Stephen Holmes | August 17, 2009

Reflections on the Revolution in Europe: Immigration, Islam, and the West by Christopher Caldwell, Doubleday, 422 pages, $30.00

What will be the consequences for Europe of decades of immigration, much of it from the Muslim world? In the eyes of Christopher Caldwell, a culturally conservative columnist at the Financial Times and an editor at the Weekly Standard, Europe is being remade, or rather unmade, from the ground up. As a result of the growing "nation of Islam" in Europe -- including 5 million Muslims in France, 4 million in Germany, and 2 million in Great Britain -- societies that used to be homogeneous and therefore coherent have become multicultural and internally divided.

But multiculturalism may be merely a halfway house. Echoing Edmund Burke in his title, Caldwell suggests that Europe is undergoing a "revolution" vaguely analogous to what happened in France in 1789. In his first letters on those events, Burke claimed to see a human society being dissolved and replaced by a world of monsters. This isn't far from how Caldwell portrays Europe today. The monstrosities he parades before us include honor killings, "menacing North African slums," anti-Semitic outrages, European police who "are petrified of Muslim men," vandals rampaging through the banlieues, and young zealots marching through European streets with signs reading "Death to anyone who insults Islam!"

You may doubt that a socially marginalized, economically impoverished, politically disorganized, and territorially dispersed minority could pull off a revolution, seizing the commanding heights from native Europeans who dominate their countries' institutions and own virtually all of Europe's wealth. After all, the groups in question are trapped in pockets of violent weakness where smoldering anger does not translate into significant power. But Caldwell mocks such doubts: "There were probably fewer Bolsheviks in Russia in 1917 than there are Islamists in Europe today."

Once the book gets under way, however, the concept of "revolution" plays virtually no role in the analysis. Instead, Caldwell wants us to see Muslim immigration into Europe as a kind of reverse colonization that may lead, you guessed it, to the Islamification of Europe. Because Europe's population is imploding and its territory is being reoccupied by non-Europeans, the homeland of Western civilization may be destined to vanish into the mists of time, in the manner of the Byzantine Empire.

If Caldwell and his fellow doomsayers are to be believed, Muslims have now done what they failed to do at the gates of Vienna in 1683. They have breached Europe's defenses and created "beachheads" behind enemy lines, "patiently conquering Europe's cities, street by street." We shouldn't view Muslim immigrants merely as seeking better lives for themselves and their families, Caldwell says. They should be seen instead as the avant-garde forces of a long campaign of cultural replacement.

Some may object that this way of seeing Europe's immigration problem is inflammatory, but the more serious problem is that it makes no sense. Given the huge numbers of non-Muslims mixed into Europe's immigrant population, Caldwell can only sustain his thesis by the gratuitous assertion that Romanian, Chinese, Dominican, and other immigrant groups will rally behind the banner of Islam in a campaign to blot out traditional European civilization.

Even if, for the sake of argument, we accept this fringe-conservative way of framing the issue, it leaves us wondering: Why are the Europeans, with so many material resources, losing this war? Caldwell's answer is that theirs "is a civilization in decline." Unlike Americans who often seem to love themselves uncritically, Europeans are mired in "self-loathing" and "hand-wringing self-detestation." He explains, "Whether or not [Europe] can defend itself, it has lost sight of why it should."

A "guilt-based moral order" took root in Europe, according to Caldwell, when shame and remorse about both the Holocaust and colonialism threw Europeans into spasms of "moral self-flagellation." Ashamed of their past persecution and oppression of non-Christian peoples, European elites began to espouse an "ideology of tolerance." You might suppose that an "ideology of tolerance" would be ethical and principled, but in Caldwell's telling, it is actually an expression of unprincipled self-disgust.

Supposedly, it is this self-loathing that has led Europeans to see the admission of Muslim immigrants as "a moral duty." In other passages, Caldwell argues more reasonably that Europe opened its doors to immigration in a fit of absentmindedness, when its own work force had been decimated by war and the reconstruction of a devastated continent required laborers from abroad. So why, after arguing persuasively that Europe opened its doors to mass immigration without thinking through the consequences, does he go on to argue, inconsistently and implausibly, that Europe invited mass immigration because of its guilt-stricken conscience?

The second idea is important to him, it turns out, because it helps him unmask humanitarian universalism. He wants to reveal to the world the ugly reality hidden behind the pretty ideology of universal human rights. His thinking, to the extent that I can reconstruct it, goes something like this: When rich nations subscribe to universal human rights, they lose all moral grounds for keeping out poor immigrants. After World War II, Europeans abandoned their traditional intolerance of non-Christian peoples in the name of universalism. Their inability to turn away immigrants who "present themselves in suffering humanity's name" may look like a moral choice, but it is actually a refusal to defend their own values and traditions.

And the cultural malady that allowed the Muslim invasion, as Caldwell sees it, goes back even further than postwar guilt. The true source is "Europe's spiritual void," the product of "ideological secularism, which aims to break every link between religion and public life, shepherding people out of religion altogether." As Europeans lost their Christian faith, they also lost their "anchor" (one of his favorite words). Skepticism eroded the moral justification for cultural self-preservation because "all European cultures depend for their stability on certain ethical survivals of Christianity, and would have a difficult time defending their 'values' without them."

Readers may be forgiven for feeling lost at this point. Isn't Christianity one of the cultural sources of humanitarian universalism? After all, Christ allegedly died for all mankind. That is obviously what a secular philosopher such as Jürgen Habermas has in mind when he writes, in a passage cited by Caldwell, that "Christianity, and nothing else, is the ultimate foundation of liberty, conscience, human rights, and democracy, the benchmarks of Western civilization." So how can Caldwell apotheosize Christianity for its contribution to European culture and then go on to unmask the moral decay and self-loathing that motivates the universalism that is said, in his own book, to be Christianity's most inspiring legacy?

The simplest answer, again, is that his book contains some strange contradictions. But we can untangle the yarn a bit by pointing out that Caldwell's Christianity has less to do with universalism than with dignity and a certain kind of spiritual vigor.

Once they had lost their Christian faith, Europeans were bound to become what Caldwell sees them as today -- promiscuous consumerists without souls. Such an unqualified generalization may seem cartoonish; and, indeed, Caldwell has a jolly time defending it. The principal characteristics of today's Europe are "its atomization, its consumerism, its sexual wantonness." What is the chance that the European civilization we discover in "the shopping mall, the pierced navel, online gambling, a 50 percent divorce rate, and high rate of anomie and self-loathing" could defend itself against the Muslim advance? Very little: "The spiritual tawdriness Islamic immigrants perceive in the modern West is not imaginary. It may be Europe's biggest liability in preserving its culture."

This is why Caldwell refers to poverty-stricken Muslim enclaves as "the strongest communities in Europe" -- strong, that is, in the context of a pitifully weak post-religious and post-nationalist Europe. "Islam is not the second religion of Europe but the first," he says, because it has maintained its "vital energy," while there is nothing left to European Christianity but a superficial "lifestyle." He even ends up agreeing with Hassan al-Banna, the founder of the Muslim Brotherhood, that Europe's "materialist civilization" is "on the verge of collapse." Caldwell feels more at home with Muslim values than with the values of contemporary Europe -- as, he says, would Dante. And Caldwell also values women's chastity more than women's autonomy because chastity (not to mention virginity) "can further dignity, responsibility, and self-respect." You may think that burqas and niquabs demean women, he ironizes, but what about "jeans that cinch halfway down the bum crack"?

And that is not all. "The closer one gets to European culture, the farther one gets from family and its raison d'être, children." While Muslim women living in Europe have an average of 2.34 children, nonreligious European women have an average of less than one (only 0.86), thereby doing everything in their power to insure that the descendants of native Europeans will be radically outnumbered by the offspring of immigrants. This is apparently how cultural self-loathing is put into practice.

Caldwell's unexpected embrace of Islamist criticisms of the West comes to an even less expected culmination. Europe's "most recent encounter with Islam" has been "painful and violent," he says. But it has also been "an infusion of oxygen into the drab, nitpicking, materialistic intellectual life of the West. It is a liberation to be able to talk about God once more, even in someone else's language."

Having inhaled this blast of oxygen, Caldwell is ready to turn to that old neoconservative hobbyhorse, the unbridgeable gulf between Europe and the United States. One difficulty with this analysis is that Caldwell himself asserts that Europe's national cultures have been eroded by "a homogenized, one-size-fits-all mass consumer culture" originating in America. "Europe is being taken over culturally," he suggests, not only by Islam but simultaneously "by a (market) liberalism that accords no particular value to Europe's most cherished traditions."

Unlike Europe, however, America will not be flushed down history's drain. At least not yet. For one thing, America "has not yet had any mass immigration of Muslims" and "scale matters." In addition, America has retained the moral fiber that Europe has lost. It is more Christian and more convinced that Christianity is morally superior to Islam. It is also less squeamish about using force to defend itself abroad (Iraq, Afghanistan) or at home. When Caldwell remarks that "a quarter of the prison inmates in the world are held in the United States," he means this not as criticism but as praise. Reflecting on U.S. "policies that are distasteful to most Europeans," such as the death penalty, he observes that such toughness means that "American cities and suburbs are extremely inhospitable places for immigrants who are criminally inclined." This is one of the principal ways in which America, unlike Europe, "exerts Procrustean pressure on its immigrants to conform." Most important, the United States believes in itself, while "Europeans are confused about whether they are citizens of the world or citizens of their own nations." No wonder they can neither defend their borders nor distinguish clearly between members and nonmembers of their community.

Near the beginning of his book, attempting to explain why Europeans have lost faith in their traditions, Caldwell quotes a remarkable passage from the French sociologist Raymond Aron: "Europeans would like to exit from history, from la grande histoire, from the history that is written in letters of blood." This brings us to the heart of the matter. Unlike the post-nationalist Europeans, Americans remain willing to write history in the letters of blood. Not Christ-like concern for the weak and the marginalized but readiness for organized violence is presumably why America's culture strikes the editors of the Weekly Standard as less drab than Europe's. America shares nationalist bellicosity with some parts of the Muslim world, and this is a good thing. European Muslims, he informs us, have "kept alive dreams of cultural, national, and even racial glory that were beyond the reach of Europeans' universalism because they were beyond the reach of Europeans' understanding." But thanks to America, equivalent dreams of patriotic (even "racial"?) glory have not entirely vanished from the West. Despite its sometimes-tawdry consumerism, America is pumped for war and is therefore well-positioned to take on the Islamic threat.

Yet it turns out that Caldwell has not entirely abandoned hope for Europe. While Europe's elites despise their own culture, the average, love-it-or-leave-it, tabloid-reading man in the street believes correctly that "Islam itself" is "dangerous" and understands simple truths, such as: Muslims living in Europe make life crummier. The "smoldering rage among working-class voters," moreover, suggests that at least these Europeans have not yet been drained of moral vitality.

But what can they do "to stem the implantation of Muslim culture" in Europe? Caldwell holds out three possibilities. One is deportation, an option that he broaches when he asks about rioters in the French banlieues who shout "Fuck France!": "Ought these people, assuming they are noncitizens, be put on the next plane out of the country?" A second possibility is conversion: "It no longer seems unreasonable to demand that immigrants who want to stay in Europe give up the ways of their parents." About the third possibility, Caldwell does not speak so directly, but he raises it in a parable about the fate awaiting guests who overstay their welcome: "The most spectacular illustration history offers of the kinship of hospitality and mistrust is that of Captain Cook, who was feted, flattered, and worshipped for a month by the Hawaiian islanders in Kealakekua Bay in 1779. When he and his crew returned on an emergency visit to repair a broken mast, they were massacred."

I do not suppose Caldwell is seriously encouraging Europeans to return to their venerable tradition of mass murder. But readers may be forgiven for wondering what he really thinks about writing history in letters of blood.

To be fair, I need to add that Caldwell weaves into his work a number of more reasonable claims that, while not especially original, remain instructive. Although his general argument is that "Islam itself" is responsible both for the failure of Muslims to integrate successfully in Europe and for the rise of jihadist violence, he also dwells more usefully on the role of modern communication technology, bad city planning, and the trauma of displacement -- none of which has anything to do with "Islam itself." By discussing the hostile reaction of 19th-century Boston Protestants to the arrival of "the violent and crime-prone Irish," and the mutual misunderstandings between American whites and blacks caused by lack of social contact, he manages to de-exoticize the European experience. And when he describes "Islam itself" not as a cause of political violence but rather as "an idiom useful for rallying the disgruntled," he is speaking common sense. I have omitted these and other thoughts from my discussion of his book not because they are uninteresting but because they are random flashes of sobriety at odds with, and unintegrated into, the main argument.

I have tried to dive beneath the jibes and anecdotes and to restate, as clearly as possible, Caldwell's central thesis. Spelling it out, I believe, is a sufficient refutation. Few of his audacious generalizations can survive serious scrutiny. European elites are not uniformly "self-loathing." (His own examples of their complacency and snobbery suffice to refute this claim.) Europe is not a "spiritual void." "Islam itself" is not a unified actor capable of formulating aims and carrying out strategies. Islamist criticisms of the market economy are, at best, half-truths. Non-Muslim immigrants in Europe will not rally behind the Islamist flag. "Racial glory" is not a worthy aim. Societies were not healthier when the norm of female chastity was enforced (while male philandering was allowed). Life does not become colorless and petty when metaphysical questions are no longer in the air.

And, above all, immigrant communities in Europe are not "beachheads" for a likely Islamic takeover. Caldwell's suggestions to the contrary are sophomoric fantasies, contributing little to the understanding and nothing to the resolution of the very real problems surrounding immigrant communities in Europe today. About his half-veiled thoughts on how a post-post-nationalist European public should confront its immigrant communities, the less said the better. If you like this sort of exercise, you may read it for the author's wit. For wisdom, look elsewhere.

Japan Joins Recent Wave Of Economic Expansion

By Blaine Harden
Washington Post Foreign Service
Monday, August 17, 2009

TOKYO, Aug. 17 -- Japan announced Monday that its economy has returned to growth, bouncing back from what had been the steepest slide of any industrialized nation during the global economic crisis.

Japan's gross domestic product, which last winter contracted at more than double the rate of the United States', grew at an annual rate of 3.7 percent from April to June, the government said.

Helped by a rebound in exports to China and a large government stimulus program, the world's second-largest economy was able to record its first quarter of growth in more than a year, as the GDP, a broad measure of economic output, expanded 0.9 percent over the previous three-month period.

The return to growth in Japan, where the economy had shrunk at an annualized rate of 11.7 percent in the first quarter of the year, is one of the strongest signals so far that a corner has been turned in the global economy.

It comes amid a surprisingly sprightly economic bounce across Asia, as China, South Korea, Indonesia, Singapore and Hong Kong have all reported growth in the second quarter.

Japan, though, is a laggard in the region, as gains in much of Asia have galloped ahead at nearly 10 percent in the second quarter. Yoshimasa Hayashi, Japan's economic and fiscal policy minister, told reporters Monday that conditions here are likely to remain severe.

Economists have attributed the rapid recovery in Asia to large economic stimulus packages (especially in China), a spurt in manufacturing, an easing of credit, and the health of Asian banks that were largely unscathed by the U.S. and European debt crisis.

In Europe, too, there are signals of recovery, with Germany and France becoming the first two major industrialized nations to officially shake off the global recession. The growth in both countries, though, was an anemic 0.3 percent in the second quarter, and economists said it is far too early to declare an end of the recession in Europe, where Britain, Italy and Spain are still stuck in their worst decline in decades.

The U.S. economy shrank by 1 percent in the second quarter, but the Federal Reserve signaled last week that it expects the downturn to ease and that it will begin pulling back this fall from its intervention in the economy.

Officials at Japanese companies largely think their country's worst post-war recession is nearly over, according to a survey released over the weekend. Representatives of two-thirds of the 108 major companies contacted by Kyodo News said they expect the economy to recover in early 2010.

Drastic production cuts and reductions in inventory have set the stage here for recovery, economists said, as wages fell sharply and unemployment jumped to 5.4 percent, which is exceptionally high by Japanese standards.

A huge government stimulus effort -- amounting to about 5 percent of Japan's GDP -- has also perked up domestic spending and slowed layoffs.

Bank of Japan Governor Masaaki Shirakawa warned last week that the increase in demand may lessen as the effect of government stimulus spending declines. The bank kept interest rates at slightly above zero.

News that Japan's economy is growing appears unlikely to rescue Prime Minister Taro Aso and the ruling Liberal Democratic Party from what would be a historic defeat in a general election Aug. 30.

"It is too late," said Minoru Morita, a political analyst in Tokyo. "Regardless of what the numbers say, a majority of people are struggling day to day. The market will respond, but the general public will not."

Polls show that Aso's party, which has had 54 years of nearly unbroken rule, is likely to be clobbered by the opposition Democratic Party of Japan, which is promising to pay more attention to consumers and small businesses, rather than to the blue-chip corporations that traditionally have had the ear of the LDP.

The Democratic Party is also promising to guarantee pensions for the country's large and growing elderly population. In the past two years, the ruling party has been unable to reassure the elderly, in the wake of a scandal in which millions of government pension records went missing, that their pensions are safe.

The opposition candidate for prime minister, Yukio Hatoyama, a wealthy politician who has a doctorate in engineering from Stanford University, is 10 to 20 percentage points ahead of Aso in recent opinion polls.

"The wind is still blowing for the opposition party," Morita said. "The relationship of the ruling party with the grass roots has been destroyed. People feel they can no longer support LDP, and they want change."

Special correspondent Akiko Yamamoto contributed to this report.

Asia’s Economic Recovery Begins to Pick Up Steam

By BETTINA WASSENER

HONG KONG — Has Asia’s economic recovery reached a turning point?

Recent economic data, some unexpectedly good results from companies around the region, early signs of some new hiring, and a stock market rally that has defied most analysts’ expectations would seem to indicate that perhaps it has.

On Tuesday, economic reports from Singapore, the Philippines, Australia and China provided the latest fuel for hopes that Asia was on track for a recovery that would outpace that of Europe and the United States and give the region more economic and political clout.

Even in Japan, which is mired in its deepest recession in decades, the central bank’s governor, Masaaki Shirakawa, struck an upbeat note after a rate-setting meeting on Tuesday.

“Asian economies seem to be growing at a faster pace,” he said, according to Reuters. “Since the spring, the financial system has also been improving. The overall direction is heading toward improvement.”

Still, Asia has depended heavily on government stimulus projects. Exports remain weak, and a renewed downturn in the West — the primary market for Asian goods — or a turnaround in the rise in Asian stocks, could pose major risks.

But these days, economists see an improved economy. “Things certainly look better than they did three months ago,” said Simon Wong, regional economist at Standard Chartered in Hong Kong.

All through the crisis that engulfed the world financial system and tipped much of the world into recession last year, Asia has had a major advantage: Its banks steered clear of the complex financial instruments that caused some Western banks to collapse. Asian governments and companies were in relatively sound financial health, having repaired their finances only recently after the Asian financial crisis of 1997-98.

Asia’s export-dependent economies suffered badly when consumers and companies in the United States and Europe curtailed purchases, leading to a collapse in Asian exports late last year. But over all, Asia has recovered more rapidly than most analysts had dared to hope, as governments spent heavily to lift their economies.

In recent weeks, companies like Sony, Panasonic and Samsung have reported better — or at least less bad — results for the quarter from April through June. Hyundai Motor even reported a record quarterly profit.

Although many companies are continuing to cut jobs, job recruiters in Asia say they see evidence that some companies are adding staff again. “It’s been a very tough 10 months, but over the past six or seven weeks, we’ve seen a modest upturn in jobs activity in banking — albeit from a very, very low position,” said Nigel Heap, managing director for the recruitment firm Hays in Sydney. “We’re cautiously optimistic that the worst is over in Hong Kong and Singapore.”

China in particular has stood out in Asia. After years of double-digit growth, the Chinese economy stumbled this year. A giant spending package, deep interest-rate cuts and much greater lending by state-controlled banks have pulled the economy back to a healthy level of growth in recent months.

Data for July, released by the statistics office on Tuesday, illustrated the point: Industrial output, an indicator of broader growth, rose 10.8 percent from a year earlier, while retail sales gained 15.2 percent.

Although the rise in output was less than expected, and exports took a further hit, economists at Goldman Sachs say they believe that China could return to growth of more than 10 percent as soon as next year. This week, Goldman raised its forecast for full-year growth for China to 9.4 percent. That was up from the 8.3 percent previously projected and higher than the government’s 8 percent target. For 2010, the economists say they expect China to expand by 11.9 percent.

Not all economists agree that the picture is quite as rosy. For one thing, China’s policy makers now face a delicate balancing act. A spike in property and equities markets —the Shanghai stock index is up about 80 percent this year— has led many to worry that another bubble is in the making. Analysts say the authorities now have to scale back bank lending to deflate price spikes without choking growth.

Data on Tuesday showed that bank lending dropped off sharply in July, but so far most economists remained relaxed.

“We believe that investment in the coming months will continue to be well supported by lending that has already taken place,” Tao Wang, a economist at UBS in Shanghai, said in a note.

Exports, which account for about a third of China’s economy, remain depressed, sinking 23 percent in July from a year earlier. The decline was smaller than economists had expected, and indicated that external demand was steadily recovering, Qing Wang, China economist at Morgan Stanley, said in a note. But it nevertheless showed that overseas demand for Asian-made goods remained well below the level of a year ago.

At the same time, the pace of recovery is uneven across Asia.

In Australia, business confidence is at the highest level in almost two years, and the central bank has indicated that it could raise interest rates.

By contrast, Japan remains in a deep recession. “The global economy has suffered a great shock,” said Mr. Shirakawa, the central bank governor. “We can’t expect to see an impressive recovery.”

The key question now is what happens “beyond the near-term,” said Mr. Wong, the Standard Chartered economist.

“We’ve seen a short-term rebound,” he said. “The question is what happens longer term — how will countries like China and Indonesia switch from export-dependent to something else? There are still lots of uncertainties about that.”

Feud Between Greece, Macedonia Continues Over Claim to Alexander the Great

By Craig Whitlock
Washington Post Foreign Service
Tuesday, July 28, 2009

SKOPJE, Macedonia -- Alexander the Great died more than 2,300 years ago. But his cult of personality is just starting to grip this tiny Balkan country.

To the annoyance of next-door Greece, which has long claimed the conqueror as its own, Macedonia has anointed Alexander its national hero. The government has renamed the international airport here in his honor, as well as the main highway to Greece. Soon to come: a 72-foot-tall marble colossus of Alexander astride his favorite warhorse, Bucephalus, which will dominate the skyline of the capital, Skopje.

The mania over Alexander is the latest chapter in a long-running feud between Macedonia and Greece that some officials fear has the potential to destabilize a region still trying to recover from the Balkan wars of the 1990s.

The dispute centers on a basic question: Does Macedonia, a country born out of the rubble of the former Yugoslavia, have the right to call itself what it wants? For 18 years, the conflict has defied attempts by the United States, the United Nations and European powers to find a solution.

The Greek government refuses to recognize its neighbor's constitutional name, the Republic of Macedonia, which it sees as a thinly veiled bid to lay claim to three of its northern districts, a region known as Greek Macedonia. After Macedonia declared independence in 1991, Greece prevented it from joining the United Nations and imposed an economic blockade that nearly strangled the fledgling country.

Greece also vetoed Macedonia's bid to join NATO last year and is blocking its admission to the European Union until it changes its name to the Republic of Skopje, the Slavic Republic of Macedonia or something similar.

Macedonian officials said they cannot understand why Greece sees their country's name as a threat or thinks they have a secret plan to annex northern Greece.

"It's laughable," said Foreign Minister Antonio Milososki, noting that the Macedonian military consists of 8,000 troops and a fleet of eight helicopters. "In America, you have a good phrase to describe a confusing situation. You say, 'It's all Greek to me.' Sometimes we say it's all Greek to us as well."

Greeks complain that the Republic of Macedonia is challenging their national identity and stealing their history. Alexander, the ruler of the ancient kingdom of Macedonia, was born in the city of Pella, located in present-day Greece. The Athens government says there is no question that he was Greek. The Republic of Macedonia, it says, consists of Slavs and other outsiders who invaded the region a millennium after Alexander died.

"This practice is bothering Greece a lot," said Greek Deputy Foreign Minister Yannis Valinakis. "It demonstrates Skopje's lack of goodwill and respect."

Under a truce brokered in 1995 by former U.S. secretary of state Cyrus Vance, Macedonia was allowed to join the United Nations on the Greek condition that it refer to itself in multinational institutions as the Former Yugoslav Republic of Macedonia, or FYROM. It was also required to change its flag and rewrite its constitution to include a promise never to violate Greek territory or interfere in Greece's internal affairs.

Macedonians hate the FYROM label, which is a reminder of communist times. Although the government has persuaded more than 120 countries, including the United States, to recognize it as the Republic of Macedonia, it is still forced to go by FYROM at the United Nations.

Officials in Skopje said that they were willing to swallow FYROM again as the price of admission to NATO last year but that Greece refused. Matthew Nimetz, the U.N.'s special envoy for the dispute, said recently he was optimistic a compromise could be reached but gave no details.

Leaders in Macedonia, a poor, landlocked country about the size of New Hampshire, warned they may have trouble holding the nation together if Greece does not relent soon. Internal unrest, they said, could easily spread to other fragile nations in the Balkans, such as neighboring Kosovo, where 1,500 U.S. troops serve as part of a peacekeeping force.

"The problem is threatening the fabric of our society," Gjorge Ivanov, the president of Macedonia, said in an interview. "The pressure that Greece is making is destabilizing the whole region."

In the Balkans, it doesn't take much for conflicts to spin out of control. Macedonia almost descended into civil war in 2001 because of fighting between ethnic Albanians, who are Muslim and constitute a quarter of the population, and ethnic Macedonians, who are Orthodox Christian.

Since then, the two groups have shared power under a peace agreement based on the assumption that Macedonia would join NATO. Both sides see the military alliance as a guarantee of internal stability. "It would give us medicine for our hot heads," said Menduh Tachi, leader of the opposition Democratic Party of Albanians.

But Tachi said the pact could be derailed if the dispute over the country's name persists much longer. "I don't even want to think of what would happen if we can't resolve it and join NATO," he said. "It would be a Frankenstein scenario."

Macedonians say the name of the country is crucial to developing their still wobbly national identity. Ethnic Albanians say they would revolt if the Slavic Republic of Macedonia was the new name because they are not Slavs. Almost nobody wants another Greek-preferred version, the Republic of Skopje, which ignores everyone outside the capital.

Historically, territory inhabited by ethnic Macedonians has belonged to other nations: Greece, Bulgaria and Serbia. Those countries have been reluctant to recognize ethnic Macedonians as a separate people, to recognize their Slavic language as a distinct tongue or even to recognize the Macedonian Orthodox Church.

Todor Petrov, president of the World Macedonian Congress, a group founded by Macedonian exiles in 1899, said the country should stop kowtowing to Greece and just call itself the Republic of Macedonia, regardless of how badly it wants to join NATO or the European Union.

In an interview, he accused Greece of "practicing ethnic cleansing and genocide on the Macedonian nation" for the past 100 years. "They're denying our nationality and culture and church and history and our borders," he said.

It is not just Macedonia's national identity that is at stake. The Greek government does not recognize ethnic minorities within its own borders, including Macedonian-speaking residents of northern Greece.

Pavle Voskopoulos, a Greek citizen who leads the Rainbow Party, a group of ethnic Macedonians in northern Greece, said the country subscribes to a myth of a "pure" Greek people who are directly descended from Alexander and others from his era. "This is all about modern Greek identity," he said. "If there is a Macedonia as an independent state, this is a great threat against Greek policy and Greek ideology."

Lacking the clout to force Greece to budge, Macedonia has intensified its glorification of Alexander and other ancient heroes, a campaign that critics in Skopje deride as "antiquization."

The country has renamed its national stadium for King Philip II, Alexander's father, and organized dozens of archaeological digs. Officials also like to needle Greeks that the philosopher Aristotle, who tutored the teenage Alexander, was from the kingdom of Macedonia, not Athens.

Pasko Kuzman, the government's director of cultural heritage, is a driving force behind Macedonia's surge of interest in the past. With flowing white hair, three heavy-duty watches strapped to his thick wrists and a National Geographic fanny pack, he has been described as a cross between Indiana Jones and Santa Claus.

In an interview in his office, sitting next to a wall-size copy of a 13th-century icon of Alexander, Kuzman insisted that Greece had stolen the conqueror's legacy from Macedonia, not the other way around.

"The Greeks are sorry that they are called Greece and not Macedonia," he said. "What else can I tell you?"

Europe's Jobless Youth

By Mark Scott

London, July 23—On paper, Jerome Delorme seems like a pretty desirable job candidate. The 23-year-old has a master's degree in European studies from the prestigious Sciences Po university in Grenoble—once a sure ticket to a top company, even in hard times. And he spent a year studying in Dublin, speaks fluent English, and has already had several high-profile internships. But in three months of looking for work, Delorme has been able to land only another internship, at a nonprofit organization. "The crisis has made getting a real job very difficult," says the native of the southern French city of Valence.

Delorme is typical of Europe's Gen Y these days. Most of his friends are also pounding the cobblestones in search of employment—as are about 5 million other young Europeans, or about 20% of the under-25 population, the European Union estimates. That's nearly a third higher than a year ago and well above the 8.9% unemployment rate for the EU as a whole. In some countries the situation is far worse. Nearly 37% of Spain's Gen Yers can't find work. In France, it's 24%, vs. 17% in the U.S.

Policymakers worry prolonged unemployment will hurt an entire generation's ability to compete in the workplace. When the economy finally recovers, many of the under-25s will have become over-25s, and younger rivals will be nipping at their heels for entry-level jobs. The big fear: Europe's Gen Yers will suffer the fate of Japan's Lost Generation—young people who came of age in the recession-wracked 1990s but lacked the skills to find good jobs even after the economy started to pick up steam.

Government Schemes

If that happens, the Continent would struggle to cope with large numbers of jobless young people. Violent protests over lousy job prospects earlier this year in Eastern Europe made politicians acutely aware of mounting social problems. "Most countries are moving in the right direction, but there's still a risk that unemployment will last for years," says Stefano Scarpetta, head of employment analysis at the Organization for Economic Cooperation & Development in Paris.

Governments are spending billions to keep the young busy via college grants and vocational courses until the economy recovers. On June 29, British Prime Minister Gordon Brown unveiled a $1.6 billion scheme to create 100,000 jobs for young people, with a special emphasis on helping those who've been out of work for more than a year. And on Apr. 24, French President Nicolas Sarkozy announced a $1.9 billion plan to find work for 500,000 young people by June 2010. That includes grants to companies that employ Gen Yers and a 12% increase in new government-funded apprenticeships in plumbing, carpentry, and other trades.

Some wonder how much good those programs will do given the severity of the downturn. "There's pressure on governments to find employment for young people, but I don't see how that's going to happen in the short term," says Giorgio S. Questa, a professor at City University's Cass Business School in London.

Business groups, meanwhile, fret that new apprenticeships could take jobs away from older workers and may prove unsustainable if government funding dries up. Neil Carberry, head of employment policy at the Confederation of British Industry, says similar programs in the 1980s failed because they simply kept young people busy without giving them sufficient skills to land more interesting work when the economy recovered. "People digging ditches and painting walls just doesn't add value," he says.

Spain's Setback

Lavish welfare systems ease some of the strain for Europe's Gen Y. With state-sponsored health care and ample jobless benefits, Europeans have fewer worries than unemployed twentysomethings in the U.S. And young Europeans are more likely to bunk with Mom and Dad than their American counterparts are, so it's easier for them to make ends meet while looking for a job. In Spain, for instance, more than half of people under 30 still live at home.

But that has done little to ease the pain of the crisis for many Spaniards. When the country's construction and real estate industries were booming, under-25s often skipped college to go straight to work, cashing in on the credit-fueled bonanza. Since 2007, though, the economy has imploded and may contract by 3.2% this year. Many young people were on short-term contracts, so they were first to be laid off when times got tough. And skipping further education in favor of employment, they often lack such skills as foreign languages, IT know-how, and advanced math that employers demand. Says Carlos Serrano, a 25-year-old electronic engineer from northern Spain who has been looking for a job for a year, with no luck: "The crisis has trapped us graduates at the worst possible time."

Scott is a reporter in BusinessWeek's London bureau .

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Health Lessons from Europe

Time, Eben Harrell, Copenhagen, May 20 - High infant mortality, low life expectancy, soaring health-care costs — the symptoms are numerous and the diagnosis unmistakable: America's health-care system is ailing. But like a patient who coughs or limps his way through an illness, the U.S. has often been reluctant to look for help.

That's changing. The Obama Administration promises to offer universal coverage, introduce electronic records and wrestle health-care costs under control — in short, at least part of the health-care revolution that many Americans have advocated for years.

Inevitably, perhaps, that means Americans are looking to European models, hailed by some, dismissed as socialized medicine by others. In truth, European health care is neither the nirvana of Michael Moore's imagination, nor the publicly funded money pits that so scare conservatives. For one thing, Europeans spend less — about $4,000 a person less, in some cases — than Americans on health care annually, and often with better outcomes. The good news is that without reassembling its entire health-care system, there are many relatively simple measures that could help the U.S. get a handle on soaring costs — and keep its population healthier, too. America, here is your prescription:

Denmark: Electronic records save money and improve outcomes

At the Frederiksberg University Hospital in Copenhagen, there are no clipboards. Instead, doctors and nurses carry wireless handheld computers to call up the medical records of each patient, including their prescription history and drug allergies. If a doctor prescribes a medication that may cause complications, the PDA's alarm goes off. In the hospital's department of acute medicine — where patients often arrive unconscious or disorientated — department head Klaus Phanareth's PDA prevents him from prescribing dangerous medications "on a weekly basis," he says. "There's no doubt that it saves lives."

President Obama recently pledged $19 billion to computerize America's medical records by 2014. Denmark has already made the transition. The country has a centralized computer database to which 98% of primary care physicians, all hospital physicians and all pharmacists now have access. While basic records go back to 1977, a detailed history is available of all "patient contacts" since 2000. A recent study by the Commonwealth Fund, a health-care-reform nonprofit, rated the country's health-care IT systems as the most efficient in the world, with computerized record-keeping saving Danish physicians an average 50 minutes a day of administrative work. "That's essential for [U.S.] doctors," says Jeff Harris of the American College of Physicians, who points out that U.S. family physicians have the highest administration costs in the developed world and "are already under strain from all the paperwork required to run an office."

Denmark boasts several advantages that have helped in the early adoption of electronic health records. It is small (population: 5 million) with a tech-savvy citizenry and a public sector-run health system. Trust in the government is high. Most crucially, when the health service established a National Patient Registry in 1977 — a system that required doctors to file patient visit details in order to be reimbursed for their work — the country unknowingly laid the groundwork for electronic health records by putting in place centralized record-keeping.

But there have been slipups. After the government decided to move away from paper records in 1999, a team of officials came up with a coding system that required doctors to insert information and notes in alphanumerical form. The system was never implemented and eventually abandoned in 2006 after physicians and nurses complained. Now, instead of a single system, record-keeping utilizes various compatible systems, linking networks established by regional health agencies. "What we found is that adoption of electronic health records must be done by evolution rather than revolution," says Jens Andersen of Sunded.dk, the state health-care web portal. "You have to work with the systems already in place."

The latest phase of the program focuses on telemedicine. In the past year, the health-care service has piloted two home-monitoring programs for patients with diabetes and those on blood-thinning medication — groups at high risk of emergency hospitalization. At Frederiksberg Hospital, Dr. Phanareth is running a ground-breaking study to test whether patients with exacerbation of chronic obstructive pulmonary disease — responsible for 10% of all hospital admissions in Denmark — can be treated at home using telemedicine technology. "Sometimes, a lack of resistance is all you need for change to happen," Phanareth says.

Germany: Easing the burden of chronic disease; strengthening peer review

Sudden illness may be what scares most people, but chronic conditions place the greatest strain on health care. Around 75% of the U.S.'s $2 trillion annual health-care expenditure goes toward ailments such as heart disease, asthma, diabetes and certain cancers, and the vast majority of that is spent when these conditions require hospitalization and emergency care. The problem is particularly acute in the U.S. public sector: over 20% of U.S. Medicare patients have five or more chronic illnesses.

Preventing these conditions from developing in the first place is helped by a holistic approach to preventive medicine that encourages changes in what people eat or how much exercise they get. But for those patients already battling a chronic illness, there are steps health-care providers can take to keep them stable and out of hospital — as Germany's experience shows. The solutions can be as simple as educating patients about their condition, having nurses call patients to make sure they are staying on top of their medication and allowing doctors to compare their success rate with other physicians.

Germany's "disease-management programs" began in 2002 and cover some 3 million chronic patients. The results are promising. One survey by the University of Heidelberg of some 11,000 patients in the Saxony Anhalt and Rhineland-Palatinate regions found that the death rate in older diabetics in the program was about 8% lower than among diabetics who received regular care. And when one of Germany's largest insurers tracked 20,000 coronary heart disease and diabetes patients enrolled in disease-management programs for 15 months, it found the percentage of patients requiring hospitalization dropped from 4.3 to 2.9 — and 25% of the patients also gave up smoking.

The challenge is finding the funding to implement such schemes. In America's health system, there are few financial incentives for providers to take proactive measures to keep people healthy: the longer and more extensively a doctor or hospital treats a patient, the more income they recoup. That's why the American College of Physicians and others are calling for reform in health-care reimbursement, with the Federal Government and large insurance companies setting up "Patient Centered Medical Homes" in which a portion of doctors' pay will be linked to performance targets. As in Germany, these homes will target chronic diseases by allowing doctors, nurses, dietitians and therapists to educate all patients — especially chronic ones — on how to stay healthy. In 2007, Geisinger Health System began a pilot program in Pennsylvania, hiring nurses to check on patients with diabetes, heart disease and other chronic ailments, as well as linking 20% of physician income to targets in areas such as patient weight loss, smoking cessation and cholesterol levels. After the first year of the study, hospitals reported a 20% fall in admissions in the area and health-care expenditure dropped 7%.

The Germans have also shown how effective it can be to allow physicians to compare their performance against their colleagues. The country has the largest database on hospital performance in the world, which helps spread best practice. Such ideas would prove equally effective in the U.S., according to Karen Davis of the nonprofit Commonwealth Fund, but change needs to come at the policy level. "Right now we can see how successful these programs are in places like 
 Germany and Pennsylvania but then doctors and hospitals come back and ask, 'Who's going to pay for it?'," she says. 
 "It's a fair question."

Britain: How much is a year of life worth?

Placing a cap on drug costs could save U.S. health care billions. But it's not without controversy. England and Wales have set up a body called the National Institute for Health and Clinical Excellence (NICE) which reviews treatments to decide which are the most cost-effective and which the National Health Service (NHS) should pay for. A new drug has to offer value for money — and if it doesn't, whether it is life-saving or not, NICE won't approve it.

NICE uses a metric called "quality-adjusted life year," or Qaly, which grades a person's health-related quality of life from 0 to 1. Say a new drug for a previously untreatable condition comes on the market and the drug is proven to improve a patient's quality of life from .5 to .7 on the scale. A patient on the drug can expect to live an average of 15 years following the treatment. Taking the new drug thus earns patients the equivalent of three quality-adjusted life years (15 years multiplied by the .2 gain in quality of life). If the treatments costs $15,000, then the cost per quality-adjusted life year is $5,000.

Taking its lead from Britain's Department of Transport — which has a cost-
per-life-saved threshold for new road schemes of about $2.2 million per life, or around $45,000 per life year gained — NICE rarely approves a drug that costs more than $45,000 per Qaly (the fictitious drug would easily pass).

Not only does the equation make hard-nosed sense in a public-health system, its use can reduce costs in other ways. Eager to gain NICE's approval, drug companies have started giving away portions of expensive treatment for free in Britain in order to ensure their drugs meet the threshold. Sir Michael Rawlins, chairman of NICE, believes that if the U.S. adopted a similar system, it would revolutionize the culture of major pharmaceutical companies, many of which spend more on marketing than research and development. A 2008 study in the New England Journal of Medicine predicted that incorporating information about cost-effectiveness into the design of U.S. insurance would save $368 billion over 10 years.

NICE approves over 90% of new drugs, and those it rejects are rarely life-saving. But it has turned down some expensive treatments that prolong life — most notoriously, the kidney cancer drug Sutent in 2008 — angering patients and oncologists. The organization has since promised to approve more expensive life-saving drugs for illnesses affecting fewer than 7,000 patients a year. Rawlins concedes that NICE is "muddling through" uncharted waters: "The biggest lesson we've learned is to be open and transparent. But you have to be willing to make difficult decisions."

Aware that the idea of "rationing" health care would prove controversial in the U.S., advocates of reform — from the American College of Physicians to the advocacy group Center for Medicine in the Public Interest — have suggested a system of review that doesn't take into account the cost of new treatments. This would help doctors decide a course of treatment, as currently they have no way of comparing the efficacy of different drugs for the same condition. But it could also raise prices. "In a free-market economy the manufacturers may use the effectiveness review to charge higher prices for the best drug," says Jeffrey Harris, president of the American College of Physicians.

Peter Pitts of the Center for Medicine in the Public Interest says higher prices are a risk America will have to take. "Because NICE is concerned about saving money and not what's in the best interest of the patient, its methods are not only imprudent, they are unethical," he says, arguing that pharmaceutical firms use profits to fund research and development. Rawlins has a different take. "All health-care systems have implicitly, if not explicitly, adopted some form of cost control. In the U.S. you do it by not providing health care to some people. That's a rather brutal way of doing it."

France: The benchmark system is neither truly socialized nor fully equal

In 2000 the World Health Organization (WHO) used statistical measures, such as life expectancy and infant mortality, to rank the world's health-care systems. France topped the rankings. In 2008, researchers at the London School of Hygiene and Tropical Medicine followed up the WHO study by showing that France is not only a good place to stay healthy, but also a good place to be sick: of 19 industrialized nations, France has the lowest number of "amenable deaths" — fatalities that could have been prevented by good health care. (The U.S. had the highest.) But France is not immune to the challenges of modern health care. Despite massive government spending, its health-care system regularly runs over budget; in 2009 the deficit is expected to be $10.4 billion. Frustrated with the overstrained public-health sector, many people are now choosing private care.

France's state-run health insurance scheme reimburses 60% to 70% of most medical bills. The remaining costs are assumed by the patient. More than 90% of French citizens pay for supplementary health insurance to cover these costs — mostly from state-run providers called mutuals. But those who can afford it are increasingly abandoning mutuals in favor of private insurance. For most ailments, that makes little difference: 80% of France's general practitioners work under a regime that caps how much they can charge. But the reverse is true for specialists and surgeons — 80% of them set their own fees, often exceeding the reimbursement ceiling of most mutuals.

The result: a two-tiered system that runs counter to the utopian ideals of most health-care reformers. That's inevitable, says Dr. Roger Rua, secretary general of Syndicat des Médecins Libéraux, a union representing private practitioners. "Anywhere you've got a degree of socialization in a nation's health-care system, you'll eventually find people who feel they aren't finding what they want within it and decide to opt out," he says. "This is particularly true when systems begin having trouble financing themselves, and start cutting back on services."

Rua and others say that what's exemplary about France's system is that it has managed to foster patient choice while continuing to provide a generally high level of care for even the most vulnerable. All French citizens have affordable access to a doctor, thanks in part to one of the highest rates of doctors per capita in the world (3.4 per 1,000, compared to 2.4 in the U.S. and 2.5 in Britain). A sick French citizen who stays inside the public funding system might not get to choose from a list of specialists, but he or she will get a referral and the needed care. In some cases, patients even get paid to go to the doctor: for new mothers, a network of prenatal and early childhood facilities, called Protection Maternelle et Infantile, provides basic care, with financial incentives for the poor to attend.

France shows how a health-care system might realistically function in the face of daunting 21st century challenges: find a way to take care of your middle class and poor, and let the rich top up care as they see fit. As Rua puts it: "The [French] system ensures quality treatment for everyone, but it isn't there to eliminate the realities that exist in every country — and in every professional and economic sector — that give the more affluent a wider variety of choices, and the ability to seek élite care."

With reporting by Bruce Crumley / Paris and Stephanie Kirchner / Berlin

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