China Helps the Powerful in Namibia - NYTimes.com

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By SHARON LaFRANIERE

BEIJING — Like parents everywhere, mothers and fathers in Namibia, an impoverished southern African nation, worry about college costs and opportunities for their children. The Chinese government has stepped forward to help — for a select and powerful few.

So far this year, the Beijing government has secretly awarded scholarships to study in China to the offspring of nine top officials, including to the daughter of Namibia’s president, Hifikepunye Pohamba. Two young relatives of Namibia’s former president and national patriarch, Sam Nujoma, also received grants.

The disclosure of the scholarships, first revealed by a feisty Namibian newspaper, has unleashed a wave of fury from the nation’s civil society groups and youth organizations. In a country where five in six high school graduates do not go on to college, many find it unconscionable for well-paid government leaders to accept overseas university scholarships for their children.

“Only senior people in government knew about the scholarships,” said Norman Tjombe, director of the nonprofit Legal Assistance Center. “No chance was given at all to the general public.”

The controversy has reignited a simmering debate in Namibia over deals with the Chinese government, already under scrutiny by Namibian prosecutors. Inquiries there and in other developing countries in Africa and Asia have cast a fresh light on how China sometimes uses its treasure chest of foreign loans and aid to create elite alliances and ease the approval of no-bid contracts.

Even some within Namibia’s governing Swapo party are asking whether China is trying to buy influence with their nation’s political leadership to gain access to mineral resources or to win business for its well-connected companies.

“How is it that this favor just comes like manna from heaven?” said Elijan Ngurare, secretary general of Swapo’s youth league, in a telephone interview. “Clearly there must be something that they are after.”

To some international relations experts, the scholarship controversy illustrates a blind spot in China’s aggressive strategy to cement diplomatic alliances, lock in natural resources and solicit trade and business on the African continent. In Namibia at least, Chinese government officials seem caught off guard by the public scrutiny exercised by a vibrant civil society.

The scholarship scandal was first revealed in Informante, a free tabloid in the Namibian capital, Windhoek, with a proud motto: “You conceal. We reveal.” It has no counterpart in China, where even the most aggressive media outlets stop short of raising unfavorable questions about the dealings of top officials or their children.

Bates Gill, director of the Stockholm International Peace Institute, said China was accustomed to opaque, controlled, government-to-government relations. “China’s engagement in Africa is moving further and faster than its ability to try and shape perceptions there,” he said. As a result, “there will inevitably be embarrassments.”

The list in Namibia is growing. In July, anticorruption investigators alleged that a state-controlled Chinese contractor had facilitated a $55.3 million deal to sell the Namibian government security scanners with millions of dollars in kickbacks. The inquiry is particularly delicate because until late last year, Hu Haifeng, the son of President Hu Jintao, ran the scanner company. A Chinese Commerce Ministry official recently said that China was cooperating with the Namibian authorities.

Another investigation centers on allegations that a Chinese weapons company funneled $700,000 to Lt. Gen. Martin Shalli, the commander of Namibia’s defense force. Namibia’s president suspended General Shalli from his post in July. General Shalli so far has declined comment.

Mr. Gill said such allegations threatened to undermine China’s impressive campaign to link its development with Africa’s. Over all, while China is making “an enormous and positive contribution to Africa’s development,” he said, it is still unaccustomed to the dynamics of some African democracies.

At the Forum on China-Africa Cooperation this month, the Chinese prime minister, Wen Jiabao, announced that China would double the amount of low-interest loans it offered Africa to $10 billion over the next three years, increase the number of scholarships and reduce tariffs on products from the poorest nations.

But he sounded frustrated when asked whether China was only after Africa’s natural resources.

“Why are there always accusations against China?” he said at a Nov. 8 news conference in Cairo. “Is this an African viewpoint or rather a Western viewpoint?”

In Namibia, political scientists say concerns are growing about whether officials are negotiating arm’s-length contracts with China. “People are thinking China is making secret deals with the government here and they are having all kinds of suspicions,” said Carola Engelbrecht, a citizen activist.

The scholarship recipients include children of some of Namibia’s most powerful officials, including the inspector general of the Namibian police and the justice minister, who is also the secretary general of Swapo.

One grant recipient is the son of the defense minister, whose agency buys weapons from China. Another is the son of the home affairs and immigration minister, whose agency is responsible for approving residence and work permits for an army of Chinese workers whose companies have won government or private contracts for business in Namibia.

Three other recipients are children of the minister, deputy minister, and a third high-ranking official at the Ministry of Mines and Energy. In July, the ministry renewed a license that gives a subsidiary of a state-owned Chinese company sole rights to search for uranium and other minerals in a prime prospecting area.

The nation’s anticorruption commission has begun a preliminary inquiry into how the scholarships were awarded. Chinese government officials have reacted in a familiar fashion: three government agencies in Beijing did not answer written questions.

Xia Lili, first secretary of the Chinese Embassy in Windhoek, said he had no obligation to respond to queries. “This is over,” he said.

But with national elections scheduled at the end of the month, it clearly is not. Bill Lindeke, a political scientist with the Institute for Public Policy Research in Windhoek, said Namibian officials might be forced to pay for their children’s educations in China to quiet the controversy.

Chinese Embassy officials initially insisted that the Education Ministry was in charge of the selection process. But Namibia’s education minister, Nangolo Mbumba, said at a news conference this month that his ministry handled only 10 scholarships to underprivileged students and had nothing to do with the other grants — some of which apparently cover five years of tuition.

He said the president’s daughter, Ndapanda Pohamba, who is now studying at the Beijing Cultural and Language University, “applied for the scholarship in her own right and only notified the parents afterwards.”

The minister’s statement that “you cannot bribe someone with a bursary” set off a fresh wave of indignation in a nation whose two universities can accommodate only about 2,000 of the 12,000 high school students who graduate each year.

“Mr. Mbumba: anything of value you accept, or even worse, solicit, constitutes a bribe if you hold public office,” one citizen said in a text message posted on the Web site of The Namibian, a Windhoek daily.

University of California, Crown Jewel of Education, Struggles With Cuts - NYTimes.com

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By TAMAR LEWIN

BERKELEY, Calif. — As the University of California struggles to absorb its sharpest drop in state financing since the Great Depression, every professor, administrator and clerical worker has been put on furlough amounting to an average pay cut of 8 percent.

In chemistry laboratories that have produced Nobel Prize-winning research, wastebaskets are stuffed to the brim on the new reduced cleaning schedule. Many students are frozen out of required classes as course sections are trimmed.

And on Thursday, to top it all off, the Board of Regents voted to increase undergraduate fees — the equivalent of tuition — by 32 percent next fall, to more than $10,000. The university will cost about three times as much as it did a decade ago, and what was once an educational bargain will be one of the nation’s higher-priced public universities.

Among students and faculty alike, there is a pervasive sense that the increases and the deep budget cuts are pushing the university into decline.

The budget cuts in California, topping $30 billion over the last two years, have touched all aspects of state government, including health care, welfare, corrections and recreation. They have led to a retrenchment in state services not seen in modern times, and for many institutions, including the state university system, have created a watershed moment.

The state’s higher education budget has been slashed by $2.8 billion this year, including $813 million from the university system — about the equivalent of New Mexico’s entire higher education budget.

“Dismantling this institution, which is a huge economic driver for the state, is a stupendously stupid thing to do, but that’s the path the Legislature has embarked on,” said Richard A. Mathies, dean of the College of Chemistry here at Berkeley, long the system’s premier campus. “When you pull resources from an institution like this, faculty leave, the best grad students don’t come, and the discoveries go down.”

As the litany of cuts continues, there is a growing worry that senior faculty members may begin to defect. In fact, some colleges around the nation have begun identifying funds to use to recruit U.C. professors.

Since California adopted a master plan for higher education in 1960, the state has been, in the words of the historian Kevin Starr, “utopia for higher education.” Eight of the 10 University of California campuses — all but Merced and San Francisco — are in the top 100 in this year’s U.S. News & World Report’s rankings. But maintaining that edge, without resources, is difficult.

In 2004, international rankings by the London-based Times Higher Education named Berkeley the No. 2 research university in the world, behind only Harvard. This year, Berkeley plummeted to No. 39, mostly because of its high faculty-to-student ratio. The other international rankings, by Shanghai Jiao Tong University, rated Berkeley No. 3 this month.

Patrick M. Callan, president of the National Center for Public Policy and Higher Education, a nonpartisan group that promotes access to higher education, said that while public universities in many states were facing financial problems, California was in a class by itself.

“In most states, it’s the economy, and you can say that in a couple of years, it will bounce back,” Mr. Callan said. “But in California, it’s really part of a significant retrenchment of the whole public sector. If the perception is that it’s going to be chronic, and people give up on California, the pre-eminence of Berkeley and U.C.L.A. would be in danger.”

No wonder, then, that people like Bruce Fuller, a Berkeley professor of education and public policy, are asking themselves whether it is time to move on.

As co-director of the Institute for Human Development, an interdisciplinary research group that suffered big cuts, Mr. Fuller worries that the unit is losing its intellectual excitement and its ability to support his grant proposals. Then, too, he lost his two best graduate students last year to Stanford.

“To stay on top, you need to be bringing in new people,” Mr. Fuller said. “And I’m not sure how many of my most stimulating colleagues will still be here in three years.”

So although he was not swayed last year when the University of North Carolina came calling, Mr. Fuller said, he may be more receptive this year.

Formerly taboo ideas, like allowing U.C.L.A. and Berkeley to charge substantially more than other campuses, or even eliminating the research mission at some of the newer campuses, are being put forward. Many here seem to be in a state of shock that things have been allowed to get so bad at one of the nation’s leading public research universities, one with a long tradition of excellence. Berkeley faculty, past and present, have won 21 Nobel prizes. And last month, two of the 24 MacArthur fellowship grants went to a Berkeley computer scientist and a molecular biologist.

Students, professors and union workers alike say the state’s 20 percent cutback in financing imperils the system’s ability to provide a top-quality education to all qualified California students, particularly those from low-income families, who make up almost a third of the university’s student body.

Mark Yudof, the university system president, has created a commission that will make recommendations next spring on the future size and shape of the system. Just about everything seems to be on the table. There is even talk of creating an online “11th U.C. campus,” to bring in new revenue by offering courses — and degrees — to qualified students in other states and countries.

As support from the state dwindles, it is inevitable that the university will begin to look more like a private institution. The proportion of out-of-state students will rise next year: at Berkeley, almost a quarter of the freshmen admitted for next year will be international or out-of-state students.

And, as at private universities, student fees are rising rapidly, balanced, in large part, by bigger aid packages for low- and middle-income students. Across the 10 campuses, instructional budgets are being reduced by $139 million, with 1,900 employees laid off, 3,800 positions eliminated and hiring deferred for nearly 1,600 positions, most of them faculty.

Mr. Yudof rejects suggestions to retrench, like adopting a two-tiered system in which the Santa Cruz, Riverside and Merced campuses would be teaching institutions and no longer focus on research.

“My mission is to defend, protect, enhance and grow the University of California,” Mr. Yudof said. He added that he hoped the current measures would be enough to get the system back on track.

But that may not be the case. Just to fend off further cuts, he said, the state will need to add nearly $900 million to the university’s budget next year.

Whatever that budget looks like, Mr. Yudof said, there will be no more furloughs. “It’s too demoralizing,” he said.

This year, the University of Texas lured three senior faculty members from the University of California, among them William F. Hanks, and his wife, Jennifer Johnson-Hanks, both anthropologists.

“Last spring, when we made the decision, there were issues, but the budget hadn’t quite slammed down to the extent it has since then,” Mr. Hanks said. “It looks a lot bleaker now.

“But in our case, it wasn’t so much wanting to leave Berkeley as wanting to come to U.T. Surprisingly, there’s more intellectual excitement and dynamism here. The department is growing and expanding, and we’re part of a cohort of new people, which is a fabulous feeling, fraught with potential.”

Meanwhile, back in his old department at Berkeley, things are tight — and no replacements can be hired. “Our biological anthropology course, which is required for psych majors, used to be offered every semester,” said Meg Conkey, an archeology professor, “and now it’s just spring semester, and probably there will be students who don’t get in.

“We just don’t have as many people to draw from, and we’re likely to have three retirements coming up,” she said. For undergraduates, the budget cuts are creating new strains about graduating in four years. Classes will be larger and teaching assistants fewer, and already, dozens of students have been unable to register for sections of introductory chemistry courses.

“Last semester, I couldn’t get into a lab section for Chem 3A,” said Nawal Siddiqui, a bioengineering major who hopes to go to medical school. “So now I’m taking Chem 3B lectures, with the labs for Chem 3A. It’s kind of hard.”

The chancellor of Berkeley, Robert J. Birgeneau, expresses optimism that more money can be saved without cutting into the educational muscle of the university. “If the budget doesn’t get worse,” he said, “we can recover in two years.”

Dr. Birgeneau tells of a recent meeting with a student leader, who said students were most unhappy about the decision to end Berkeley’s tradition of keeping the library open 24 hours during finals, and an hour later, a parent meeting where he mentioned that complaint — and immediately got a $30,000 pledge to pay for round-the-clock library access during finals.

“If they keep cutting, it’ll take us longer to recover,” Dr. Birgeneau said. “But Berkeley can always recover.”

Getting Tough on Exploitation - Nation

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Last week, Homeland Security Secretary Janet Napolitano announced that the Obama administration would seek legal status for 12 million undocumented immigrants in early 2010. Hard-right tea party organizers reportedly switched gears immediately to denounce the move. Congressman Lamar Smith found it "ironic" that Napolitano framed the push for comprehensive immigration reform as a way to improve the economy. But Napolitano is absolutely right: reforming the nation's immigration laws to bring millions of people already participating in our economy out of the shadows would boost tax revenue, lift the economy and protect working Americans from the unfair labor market competition they now face. The biggest problem is that Congress may be dangerously slow to act: even the much-needed extension of unemployment benefits took the Senate months to approve.

While legislators drag their feet, the Obama administration can act quickly on its own to stop the erosion of middle-class jobs. Directing his agencies to enforce the nation's existing labor and employment laws more vigorously, while halting the enforcement of broken, economically harmful immigration laws is one powerful way to do it.

To the uninformed, the relationship between unemployment and immigration looks simple: if we could just deport all undocumented workers and restrict legal immigration, those jobs would instantly become available to American citizens, driving down unemployment. But the old "immigrants steal American jobs" myth holds no water. The reality is that all types of immigrants, including the undocumented, boost the American economy as taxpayers, workers, consumers and business owners. Through their work and consumption, immigrants generate economic activity that creates new jobs, jobs that wouldn't exist if immigrants were not part of our economy. As the President's Council on Economic Advisors concluded in 2007, US natives gain $37 billion a year from immigrants' participation in the economy. If enforcement efforts were effective and we somehow succeeded in pushing undocumented workers out of the country (not a likely scenario, even in these dark economic times), we would lose jobs rather than gain them.

But if the presence of undocumented immigrants doesn't harm the US economy, the fact that they are so vulnerable to exploitation in the workplace does. Because undocumented workers are often too afraid of deportation to speak up about workplace abuses, unscrupulous employers can cut immigrants' wages and benefits and degrade working conditions with impunity. Exploiting undocumented workers can drag down wages for other workers, especially those with little education: as their employers are forced to compete with companies that exploit immigrants, entire industries may see wages decline. Indeed, violations of minimum wage, overtime and workplace safety laws are rampant in the nation's immigrant-dominated low-wage industries, according to a recent eye-opening study by researchers at UCLA, the University of Illinois and the National Employment Law Project. Their in-depth investigation in three American cities reveals that as many as one in four low-wage workers--including hundreds of thousands of American citizens in these cities alone--were paid less than the minimum wage in the week prior to the survey. And while undocumented immigrants appear to be the most vulnerable to abuses, this research vividly illustrates the way that exploitation of immigrants goes hand-in-hand with an atmosphere in which citizens are also taken advantage of on the job. As long as such violations persist, economic recovery will never reach these workers.

That's why a shift from immigration enforcement to labor and employment law enforcement is so critical. Enforcing laws against undocumented immigrants--even by penalizing employers rather than raiding workplaces, as the Obama administration has chosen to do--increases immigrants' fear and corrupt employers' incentive to keep workers off the books. As a result, immigrants are driven further underground and see their risk for exploitation increases. In fact, immigration enforcement itself can be manipulated by employers to undermine all workers' rights and continue to pursue workplace violations, as another recent study illustrates.

Legalizing undocumented workers is ultimately the best way to ensure that they can exercise rights in the workplace and stop undercutting other American workers. Once everyone participating in the US economy is openly subject to American labor laws, pursuing violations of workplace protections, including minimum-wage laws, will become easier. What's more, an analysis of the mass legalization enacted in the United States in 1986 suggests that legalization would raise immigrant wages and lift up entire communities, boosting the US economy. Legalization would require an act of Congress, which may be slow in coming. But the Obama administration could unilaterally halt the enforcement of broken immigration laws, delivering tremendous economic benefits. As the Progressive States Network has pointed out, state governments can also improve conditions for workers by shifting enforcement emphasis from immigration infractions to workplace violations.

The Obama administration is moving in the right direction with the recognition that it is corrupt employers, not undocumented workers, who are a threat to the middle class, but it needs to focus on the real problem: not immigration violations but the exploitation that often accompanies them. While we wait for stronger economic recovery measures and the overhauls of immigration and labor law that American workers need, a shift in enforcement strategy can begin to provide an immediate boost to the economy and the nation's hardest-hit workers.

About Amy Traub

Amy Traub is the director of research at the Drum Major Institute for Public Policy and author of the recent report, Principles for an Immigration Policy to Strengthen and Expand the Middle Class.

Chongqing: Socialism in One City - Nation

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by Robert Dreyfuss

I'm writing today from Chongqing, a vast city in central China that is China's gateway to its western regions. By some accounts, Chongqing is the largest city in the world, a muncipality of 32 million people, but that, I've learned, is misleading, since that number includes the population of a handful of satellite cities and a rural population of 20 million. A few years ago, however, China carved Chongqing and its 32 million people out of Szechuan province and made it a municipality of its own, and today the Chongqing is a pilot project for the most important thing happening in China, and perhaps the world: the urbanization of as many as half a billion people from rural farms and villages into newly constructed cities. "Chongqinq," says Wen Tianping, the city's spokesman, "is a microcosm of China itself."

The scale of the enterprise is staggering. In Chongqing, each year for the indefinite future, the plan is to move 500,000 people from rural to urban life. That means that Chongqinq must plan, ready, and construct the equivalent of a city the size of Atlanta, Georgia, every year, providing jobs, roads, housing, infrastructure, schools, hospitals and more. It's a project that has been going on in China for the past 20 years, during which 200 million people have already been urbanized, and over the next generation another 200 to 300 million people will follow in their footsteps.

"We have plans, timetables, goals," says Qian Lee, the director of Chongqing's comprehensive business promotion project. "You can't have a plan for everything. But we don't make plans to be abandoned. We make plans to be accomplished. You do it scientifically, as we always say in China."

And the thing is, in China, plans work.

In Chongqinq, the population itself has been steady for many years, but the entire municipality is shifting from rural to urban. The city center houses 5-6 million people, satellite cities of up to 1 million or more are popping up around it, and urban townships ot 200,000 to 500,000 are springing up like mushrooms around those. "We've planned six regional centers of 1 million each," says Qian Lee. As people leave the farms and villages, some of the land is converted to industrial use, and some it is combined into more efficient, industrialized farming. "Chongqinq will become what we call a ‘dragon's head' economic engine for the upper Yangtze River region, and the model for balanced, urban-rural areas."

As an inland center, Chongqing was a bit less vulnerable to the economic downturn that followed the financial crisis of 2008. That's because unlike the cities of southern China and Shanghai, for instance, Chongqinq is less dependent on exports of manufactured goods to Europe and the United States. So when the U.S. financial collapse spread around the world, and the economy cratered, the drop in demand for Chinese-made goods didn't impact Chongqing as strongly as other parts of China. Even so, 12 percent of Chongqinq's economy is export-related, so when the crisis hit unemployment in Chongqing – and across China – spiked.

China launched a stimulus of its own, whose size is pretty much unknown. According to Stephen Green of Standard and Chartered Bank, who I met in Shanghai, China's domestic stimulus likely dwarfed the American version. Officially, he says, it was as least $600 billion, but it may have been as much as $3.5 trillion, especially if you count the provincial-level stimulus provided by cities and provinces such as Chongqinq.

"When the financial crisis hit us, a lot of factories closed," says Wen Tianping. Chongqing launched its Warm Winter stimulus plan, spending vast sums, including credit programs to allow many of the 3.5 million unemployed workers to start their own businesses, providing loans and credit guarantees to small business, launching start-up industrial parks, providing direct subsidies to 1,500 businesses, and, of course, using China's ace-in-the-hole: the fact that it is still a communist country with a huge panoply of SOEs (state owned enterprises) that control all of the most important sectors of the economy. The SOE's, says Wen, "were instructed by the government not to cut jobs." Now, not only has Chongqinq recovered fully, but it is currently experiencing a 13 percent growth rate.

In the United States, there is a widely shared perception that China has abandoned socialism and that it has become a Wild West-style, capitalist free-for-all. That's wrong. True, US multinationals, among others, are sidling up cheek by jowl to invest and build factories in China, both for export and to supply China's 1.3 billion consumers. (More than a hundred US Fortune 500 companies operate in Chongqinq already, including Hewlett-Packard, whose laptop assembly plant here will produce 10 million computers a year, Chongqing officials say.) But the fact remains that in China, all of the key industries are government-owned: banks, energy, oil, transport, telecommunications (including China's huge cell phone company, which will soon have its 500 millionth subscriber). China's banking system – which includes four or five giant national banks, 17 mid-sized commercial banks, and about 140 city commercial banks – sailed serenely through the worldwide crisis of 2008-2009. Virtually none of it was exposed to the bad debt and high-flying securities speculation bubble that collapsed AIG, Lehman, and countless other players.

From what I've seen so far, there's no likelihood in the near future that China intends to privatize its core industries. And it's centralized planning system is humming along.

Taliban chief hides in Pakistan - Washington Times

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Eli Lake, Sara A. Carter and Barbara Slavin THE WASHINGTON TIMES

Mullah Mohammed Omar, the one-eyed leader of the Afghan Taliban, has fled a Pakistani city on the border with Afghanistan and found refuge from potential U.S. attacks in the teeming Pakistani port city of Karachi with the assistance of Pakistan's intelligence service, three current and former U.S. intelligence officials said.

Mullah Omar, who hosted Osama bin Laden and other al Qaeda leaders when they plotted the Sept. 11, 2001, attacks, had been residing in Quetta, where the Afghan Taliban shura -- or council -- had moved from Kandahar after the U.S. invasion of Afghanistan in 2001.

Two senior U.S. intelligence officials and one former senior CIA officer told The Washington Times that Mullah Omar traveled to Karachi last month after the end of the Muslim holy month of Ramadan. He inaugurated a new senior leadership council in Karachi, a city that so far has escaped U.S. and Pakistani counterterrorism campaigns, the officials said.

The officials, two of whom spoke on the condition of anonymity because of the sensitive nature of the topic, said Pakistan's Inter-Services Intelligence agency, the ISI, helped the Taliban leaders move from Quetta, where they were exposed to attacks by unmanned U.S. drones.

The development reinforces suspicions that the ISI, which helped create the Taliban in the 1990s to expand Pakistani influence in Afghanistan, is working against U.S. interests in Afghanistan as the Obama administration prepares to send more U.S. troops to fight there.

Bruce Riedel, a CIA veteran and analyst on al Qaeda and the Taliban, confirmed that Mullah Omar had been spotted in Karachi recently.

"Some sources claim the ISI decided to move him further from the battlefield to keep him safe" from U.S. drone attacks, said Mr. Riedel, who headed the Obama administration's review of policy for Afghanistan and Pakistan last spring. "There are huge madrassas in Karachi where Mullah Omar could easily be kept."

Mr. Riedel also noted that there had been few suicide bombings in Karachi, which he attributed to the Taliban and al Qaeda not wanting to "foul their own nest."

A U.S. counterterrorism official said, "There are indications of some kind of bleed-out of Taliban types from Quetta to Karachi, but no one should assume at this point that the entire Afghan Taliban leadership has packed up its bags and headed for another Pakistani city."

A second senior intelligence officer who specializes in monitoring al Qaeda said U.S. intelligence had confirmed Mullah Omar's move through both electronic and human sources as well as intelligence from an unnamed allied service.

The official said that neither Osama bin Laden nor al Qaeda No. 2 Ayman al-Zawahri has been spotted in Karachi. The official said the top two al Qaeda figures are still thought to be in the tribal region of Pakistan on Afghanistan's border.

But, the official said, other midlevel al Qaeda operatives who facilitate the travel and training of foreign fighters have moved to the Karachi metropolitan area, which with 18 million people is Pakistan's most populous city.

"One reason, [al Qaeda] and Taliban leaders are relocating to Karachi is because they believe U.S. drones do not strike there," the official said. "It is a densely populated urban area."

Al Qaeda has had a presence in Karachi since at least 2001.

In late 2001, a cell likely commanded by Khalid Shaikh Mohammed -- the admitted operational planner of the Sept. 11, 2001, attacks -- abducted and killed journalist Daniel Pearl.

Mohammed, who was captured by the CIA with ISI help in Pakistan in 2003, was sent to the detention facility at U.S. Naval Base Guantanamo Bay, Cuba, and is now set to go on trial in New York. In 2007, at a closed military hearing at Guantanamo, he confessed that he personally beheaded Mr. Pearl, a Wall Street Journal reporter.

Pakistani officials said they were perplexed by the U.S. reports regarding Mullah Omar and denied that the ISI had facilitated a move by the Quetta shura to Karachi.

Nadeem Kiani, a spokesman for the Pakistani Embassy in Washington, said the U.S. has not provided Pakistan with any credible intelligence regarding Mullah Omar's whereabouts.

"We have no evidence of his presence in Pakistan," Mr. Kiani said. "If anybody in the U.S. government knows of any Quetta shura or Karachi shura, why don't they share that intelligence with Pakistan so we can take care of the issue ourselves? We have not been made aware of any presence of Mullah Omar in the region."

He said the ISI and Pakistani military have "suffered a lot of losses fighting the terrorists" and that "people who are making these accusations have their own agendas."

"Our forces are fighting the Taliban in Waziristan and other areas," he said. "The terrorists are now killing and targeting innocent people in Pakistani cities. ISI is a very professional intelligence agency and these allegations are baseless."

Mr. Kiani added that the U.S. and Pakistan have "24-hour intelligence sharing."

Another Pakistani official, who spoke on the condition of anonymity because of the nature of his work, told The Times, "If Pakistan is made aware of the allegations and we do nothing, then the U.S. will know who to blame. Pakistan can take action with credible information.

"But to shift the blame on Pakistan and the security forces because Afghanistan is becoming more of a problem is not going to be helpful but have a demoralizing effect on the situation both here and there," he said.

Mary Habeck, a professor and analyst on radical Islam at Johns Hopkins University's School of Advanced International Studies, said the reported move "suggests the Afghan Taliban and the Pakistani Taliban are one and the same thing."

She said that it also "shows the Taliban are not the marginalized group we have been saying they are. They can move into a major city in Pakistan and believe they are safe there."

GAO finds fault with stimulus jobs data but touts transparency - washingtonpost.com

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By Ed O'Keefe
Washington Post Staff Writer
Friday, November 20, 2009

Government auditors raised doubts Thursday about the number of jobs created or saved by the economic stimulus program, but they also said that mistakes reported in recent weeks signal the benefits of government transparency.

Roughly 10 percent of the recipients of stimulus dollars failed to submit quarterly reports last month, according to a Government Accountability Office report released Thursday.

"I think missing reports may drive the job numbers up, and I think there are enough inaccuracies in here to drive the numbers down," said Earl E. Devaney, who oversees Recovery.gov, the government's stimulus-tracking Web site. The Obama administration reported last month that the stimulus has created or saved about 640,000 jobs thus far.

Some recipients' failure to report spending data last month "is distressing and must be addressed," Devaney said, adding that Congress should penalize recipients who fail to report.

The doubts expressed by Devaney and acting GAO Comptroller General Gene L. Dodaro at Thursday's House oversight committee hearing lend nonpartisan credence to general concerns about stimulus data. Devaney, who assumed his position in the spring, has repeatedly cautioned government officials at all levels that early data would probably contain errors. But some of those mistakes aren't necessarily a bad thing, he said.

"In reality, this data should serve in the long run as evidence of what transparency can achieve," he said. "In the past, this data would have been scrubbed from top to bottom before its release. The agencies would never have released the information until it was near-perfect."

Republicans attacked the jobs figures, referring to the data as "propaganda" and "garbage," and called the entire stimulus reporting process "disgusting."

"The administration continues to misread the economy, misunderstand the nature of economic growth, mislead the American people with faulty jobs claims and miss the steps this country needs to take to get our economy back on track," said Rep. Darrell Issa (R-Calif.).

The Obama administration has struggled to clearly define stimulus job creation because -- as Devaney and Dodaro noted -- it is difficult to know what role the funding played.

"This has never been done before," White House stimulus adviser Ed DeSeve said after the hearing. "You can't name another government program that has done this."

U.S. part of global crackdown on counterfeit medicines - washingtonpost.com

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RAIDS HELD WORLDWIDE
Fake medicines a growing enterprise

By Ylan Q. Mui
Washington Post Staff Writer
Friday, November 20, 2009

NEW YORK -- In highly orchestrated raids around the world this week, Interpol officers in Europe, drug agents in the United States and task forces from Sweden to Singapore hunted down counterfeit prescription drugs in an effort to stem a rapidly growing criminal business preying on financially pressed consumers looking for bargains.

The operation, code-named Pangea, is expected to be disclosed Friday in an effort to put fraudulent businesses on notice that police around the world are fighting back against what has become a $28 million industry in the United States alone.

The national crackdown uncovered nearly 800 alleged packages of fake or suspicious prescription drugs including Viagra, Vicodin, and Claritin, and shut down 68 alleged rogue online pharmacies. Some counterfeit drugs may have as much as three times more of an active ingredient than is typically prescribed; others may be placebos. Drywall material, antifreeze and yellow highway paint have been found in counterfeit pills.

The front line of the operation is deep in the bowels of a sprawling mail center in the industrial outskirts of John F. Kennedy International Airport. This week, federal agent Stephen Buzzeo, wielding a letter opener, ripped open a manila envelope lined with cardboard from a diaper package and pulled out three packages of what looked like diet pills, anxiety medicine and OxyContin, an often abused painkiller.

Hundreds of packages of potentially fake medicines were dumped into orange bins, piled on skids and stacked high around him and the half-dozen others from the alphabet soup of government agencies -- ICE, CBP, FDA, DEA -- hoping to intercept them before they were shipped to often unwitting consumers. Overseas, Interpol officers and task forces stormed suspected counterfeit drug warehouses and distribution centers.

"We don't know what's in here, actually," Buzzeo said as he inspected the pills. "All this is shady."

Counterfeit drugs are the latest -- and potentially most dangerous -- front in the long-running battle against intellectual-property crimes. Law enforcement officials said consumers typically think of counterfeited products as fake Louis Vuitton purses or Nike sneakers. Although shoes are the most common phony product, accounting for 38 percent, or $102 million, of counterfeit products seized by customs officials last year, pharmaceuticals are one of the fastest-growing categories.

In 2007, they made up about 6 percent of total seizures. Last year, they accounted for 10 percent to become the third-largest category, with an estimated market value of $28 million. Federal officials say that trend is particularly disturbing because of the health dangers that such drugs present.

"The public safety part of intellectual property has really taken off in the last couple years and become the moving force," said John T. Morton, an assistant secretary of U.S. Immigration and Customs Enforcement, which spearheaded the Pangea operation. "This is a huge problem."

Though counterfeit drugs have a history as old as snake oil, the high cost of many prescription drugs has driven some consumers to hunt for cheaper alternatives on the Internet. According to the National Association of Chain Drug Stores, a trade group, Americans spent $254 billion on prescription drugs last year, up 1.8 percent from 2007. The long-running recession has made such costs more difficult for many consumers, experts said.

Meanwhile, the rise of Internet pharmacies has expanded the marketplace and supply chain for the drugs. One site under federal investigation that is selling a "power pack" of erectile dysfunction drugs Cialis and Viagra purports to have a warehouse in New Delhi, headquarters in Canada and a license to sell medicine in the United States through Minnesota.

However, the investigation found that the site was registered in China and its server was hosted in Russia. Its headquarters had previously been listed in Louisiana. ICE agents have placed several orders and are trying to build a case against the site.

The National Association of Boards of Pharmacy maintains a list of roughly 4,000 online pharmacies it says is questionable. It also certifies legitimate sellers through its Verified Internet Pharmacy Practice sites program. Seventeen have passed the test.

"The Internet is just the wild, wild West," said Dr. Bryan A. Liang, vice president of the Partnership for Safe Medicines, an advocacy group.

Last fall, a new law was enacted that prohibited Internet pharmacies from dispensing prescription drugs over the Internet without a prescription and also increased some criminal penalties. Another bill sponsored by Rep. Steve Israel (D-N.Y.) this summer proposed increasing penalties for drug counterfeiters and enhancing the Food and Drug Administration's ability to track them. It stalled in committee.

In 2004, ICE began targeting drug counterfeiters under what it called Operation Apothecary. It has since expanded into a veritable global surveillance system encompassing half a dozen U.S. agencies and 24 countries for a week of intense enforcement. In the United States, task forces descended on seven major mail hubs this week, including in San Francisco, Miami and Cincinnati, and inspected 7,088 packages.

In New York, federal agents spent the week at Kennedy Airport pulling suspicious packages from China, India, Peru, Pakistan, Brazil, Turkey, Taiwan and Russia, trying to spot distribution trends and gathering leads. The leads can take months or years to track down, but officials said they need to start somewhere.

"For the criminals, at least," said Richard Halverson, unit chief at the National Intellectual Property Rights Coordination Center, "we're telling them that everybody's looking."

Afghan President Hamid Karzai sworn in for second term - washingtonpost.com

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Afghan leader's focus on security, corruption matches U.S. aims

By Joshua Partlow
Friday, November 20, 2009

KABUL -- President Hamid Karzai set two ambitious goals in his inauguration speech Thursday: to have Afghan soldiers and police take full responsibility for security within the next five years and to root out the pervasive corruption that hobbled his first administration.

In many ways, Karzai's words dovetailed precisely with the aims of the Obama administration. Both Afghanistan and the United States want to reduce the presence of foreign troops on the battlefield and in the prison system. And both now concede that bribery and misspent funding are among the most serious obstacles to progress in Afghanistan.

But many here doubt whether such goals can be achieved as the Taliban gains strength, and there has been little action to date in stemming corruption.

The electoral process itself left little reason for optimism. Karzai initially had a majority of the votes in the Aug. 20 election, but widespread ballot-stuffing erased his lead and set up a second round. His challenger, former foreign minister Abdullah Abdullah, dropped out of the race in protest, saying the system that allowed the initial fraud had not been reformed.

"I don't think Karzai will be able to do the things he says. Afghans do not trust him anymore," said Hamidullah Tokhi, a parliament member from Zabul province. "All the things he promised when he took an oath in the last inauguration have not been fulfilled."

In a 30-minute speech in the presidential palace, Karzai repeated many of his themes from the campaign. He said reconciliation with the Taliban would be his top priority. He invited fighters to lay down their arms and said he would convene a council of Afghan leaders to try to reach peace through negotiation.

"To put an end to the three decades of war is what most Afghans want," he said, adding that "peace and security cannot be achieved only militarily."

But Afghan-led efforts at dialogue with insurgents have achieved little, and experts say funds devoted to encouraging fighters to give up their cause have been squandered.

Karzai spoke in front of about 800 people, including foreign dignitaries such as Secretary of State Hillary Rodham Clinton and Pakistani President Asif Ali Zardari.

In addition to Afghan security forces taking over from NATO troops within five years, Karzai called for all operations by private security companies to cease within two years and for Afghans to control their own detention system.

"Afghans want to take the lead on security and no longer depend on foreign forces," Interior Minister Hanif Atmar said. "It is our strong commitment that we have to grow our own national security forces to defend our country."

After Karzai took the oath of office and kissed the Koran, his two vice presidents, Mohammed Fahim and Karim Khalili, were sworn in.

Clinton, making her first trip to Afghanistan as secretary of state, described Karzai's goals as ambitious but worthy.

"We want to assist him and the military and police leadership in Afghanistan to move as quickly as they can, to stand up and deploy a professional, motivated, effective force," she said at a news conference. "We're going to work with the president to try to work toward the goal he set."

But U.S. officials seemed more enthusiastic about Karzai's statements on corruption, including his vow to push for a law requiring all senior officials to declare their property and assets. He promised to convene a conference to generate ideas for fighting corruption and said his new cabinet would include "expert ministers" who could lead with integrity.

"The government of Afghanistan is committed to end the culture of impunity and violation of law and bring to justice those involved in spreading corruption and abuse of public property," Karzai said.

Clinton said she was pleased with the level of detail in Karzai's speech about steps to tackle corruption. "We think that the issue now is to ensure that it is implemented, that we see results," she said.

Clinton said she was under no illusions about the difficulty of turning around an increasingly deadly war. On Thursday, two U.S. service members were killed in a bombing in southern Afghanistan, and a suicide bomber detonated explosives in a market in Uruzgan province, killing at least 10 people, officials said.

"The road ahead is fraught with challenges and imperfect choices, setbacks are inevitable, and we have to be realistic about what we can accomplish," Clinton said.

President Obama said Wednesday that he is close to deciding whether to send thousands of additional troops into the war, but senior aides said Thursday that he will meet at least once more with his advisers on the topic and that no decision will be announced before Thanksgiving.

Special correspondent Javed Hamdard contributed to this report.

E.U. picks little-known politician as bloc's first full-time president - washingtonpost.com

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Choice of conciliator suggests bloc is not yet ready for bolder role

By Edward Cody
Washington Post Foreign Service
Friday, November 20, 2009

BRUSSELS -- Champions of European unity hoped their new president would be a continental George Washington, a brand name who could pull the European Union closer together and fulfill their dream of a strengthened role for Europe in world affairs.

But after weeks of backroom haggling and private international telephone conversations, the presidents and prime ministers of the 27 E.U. nations on Thursday picked a little-known politician, Belgian Prime Minister Herman Van Rompuy, as the union's first permanent president.

The choice of a conciliator, rather than a bold leader, for the new job suggested the European Union was not ready for the dramatic departure advocated by ardent unity advocates, analysts said. As a result, they added, the United States and other E.U. partners should expect little change in their traditional bilateral dealings with national governments in Europe despite Van Rompuy's addition to the vast Euro-bureaucracy in Brussels.

"Europe is not a country," said Nicolas Véron of the Brussels-based Bruegel institute for European and world economic affairs. Notwithstanding lyrical talk of European unity and joint action on the world stage, he added, the continent's elected presidents and prime ministers showed they were not yet prepared to cede significant new powers to an E.U. figurehead or choose an activist in Brussels likely to vie with national leaders on European policies.

Van Rompuy, 62, a professorial veteran of Belgium's intricate coalition politics, indicated he would be comfortable in a facilitator's role when he takes office Jan. 1. "As president of the European Council, I will listen to every country and make sure every country comes out a winner in every negotiation," he said.

The election of the European Union's first full-time president, along with the appointment of Britain's Catherine Ashton as high representative for foreign affairs, was made possible by ratification this month of a treaty strengthening and reorganizing the political and trade bloc.

The treaty, a watered-down version of an earlier pact rejected as overly ambitious, provided for a permanent president with a 30-month term to give Europe a recognizable face -- in effect, an answer to Henry Kissinger's question of where to call if he wanted to speak to Europe.

Leaders of the 27 E.U. nations have so far assumed the role of part-time bloc president on six-month rotations, which produced mixed results depending on the energy and clout of whoever had the rotation. It fell on the current president, Swedish Prime Minister Fredrik Reinfeldt, to navigate the bloc through what turned out to be a difficult decision on the full-time post.

Former British prime minister Tony Blair quickly emerged as the early favorite, particularly among those pushing for a greater voice for Europe in places such as Washington and Beijing. The media-savvy Blair was well known, supporters argued, and had personal standing with leaders worldwide.

In addition, his candidacy was being pushed by the British government, which traditionally has dragged its feet on European integration. Having Blair at the helm, his backers said, would make British officials more amenable to further unity efforts, such as the project to mount an effective E.U. defense organization alongside NATO.

But opposition to Blair flared almost immediately, particularly among smaller countries such as Belgium and Luxembourg that have been the most ardent advocates of increased integration. Britain has refused to use the European currency, the euro, they noted, and remained aloof from the common European visa. Moreover, Blair offered warm support for the Bush administration's 2003 invasion of Iraq, which was opposed by most Europeans and their governments.

As a result, attention veered toward figures of less status but more flexibility, such as Van Rompuy or Prime Minister Jan Peter Balkenende of the Netherlands. Both were hailed as able negotiators likely to reconcile competing national interests and sail the European Union on a smooth course -- without, however, boosting its place in world affairs.

Vaira Vike-Freiberga, a former president of Latvia, put forward her candidacy, which was backed in particular by those who complained that few women held E.U. positions of authority. Another small-nation champion, Prime Minister Jean-Claude Juncker of Luxembourg, also declared his interest.

With the field opened up, however, a raft of competing interests among the E.U. nations' leaders complicated the negotiations, leading Reinfeldt to complain that he was having trouble getting his colleagues to agree on anything in all the horse-trading. The balancing act included small vs. large countries, left vs. right political leanings, and nations favoring unity vs. those leery of integration.

Arrests in Chicago drive home global nature of terrorism threat - washingtonpost.com

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By Peter Slevin and Spencer S. Hsu
Washington Post Staff Writer
Friday, November 20, 2009

CHICAGO -- David C. Headley, a peripatetic Chicagoan accused of scouting potential terrorism targets in India and plotting to kill two Danish journalists, was not always David C. Headley.

Until 2006, he was Daood Gilani, but he told investigators he had changed his name to raise less suspicion when he traveled abroad. He lived anonymously in an apartment leased in the name of a dead person. He changed e-mail accounts often and spoke in code on the telephone.

The strategy worked less than perfectly, according to the FBI, which arrested him on terrorism charges last month at O'Hare International Airport on the first leg of a trip to Pakistan. In his luggage were digital videos he took of a Danish newspaper office and a book titled "How to Pray Like a Jew."

Headley and Chicago businessman Tahawwur Hussain Rana are suspected Islamist militants charged not with targeting the United States, but with staging foreign operations from relative anonymity on American soil. Their profile is a fresh one, and it is being viewed by U.S. authorities with alarm.

One counterterrorism official described as "eye-opening" an investigation that concluded the two men worked with two Pakistan-based terrorist organizations allied with al-Qaeda, Lashkar-i-Taiba and Harkat-e-Jihad-e-Islami. It is a reminder, others said, that al-Qaeda or its imitators continue to try to build a network of operatives inside the United States.

The case "stands our counterterrorism approach on its head," said Rep. Jane Harman (D-Calif.), chairman of a Homeland Security subcommittee on intelligence. "We've been looking for people who want to attack us, whether foreign or U.S. persons, in the United States. We haven't really been looking at U.S. persons who want to attack other countries."

Several American officials saw an echo of the case against Najibullah Zazi, a Denver airport shuttle driver accused in September of training with al-Qaeda in Pakistan and plotting a backpack bombing in New York.

A U.S. law enforcement official said investigators are tracking several suspects in the Zazi case, mostly in the United States. A counterterrorism official said the investigation into Headley's domestic contacts remains open and active.

Mumbai attacks

One of Headley's alleged Lashkar-i-Taiba associates was arrested in Pakistan this summer, and the U.S. case has triggered a broad investigation in India. Government authorities there suspect Headley played a role in advance of the November 2008 terrorist assault on Mumbai and may have been working on future operations, as the FBI alleges.

Indian police say they think Headley scouted Mumbai targets, including a cafe and two upscale hotels that drew fire in the coordinated attack, which left 165 people dead. He also allegedly posed as a Jew to visit Chabad House, the site of an Orthodox Jewish center also targeted that day.

The investigation of Headley and Rana captured telephone conversations and e-mails with Pakistani militants, according to court documents in Chicago. Among Headley's associates was Ilyas Kashmiri, a leader of Harkat-e-Jihad-e-Islami.

Attorneys for Headley and Rana declined to discuss recent developments or FBI reports that Headley is now cooperating with U.S. authorities. Lawyer Patrick W. Blegen has told reporters that Rana, a Canadian citizen born in Pakistan, is not guilty and looks forward to answering the charges in court.

Blending in

Headley, 49, and Rana, 48, met as students in a military school in the Pakistani town of Hasan Abdal. Decades later on Chicago's far North Side, Rana is considered a well-connected businessman on Devon Avenue, a bustling corridor crowded with shops owned by residents of Pakistani and Indian heritage.

Before his October arrest, Rana ran his businesses, including a rural Illinois farm that slaughters lambs and goats according to Islamic law, from a cluttered storefront on Devon called First World Immigration Services. He provided space to Raymond J. Sanders, an American immigration lawyer.

"He's an excellent and all-around gentleman who has many business interests," said Sanders, who described Rana as a non-practicing medical doctor "very active in the community." He said Rana focused on clients seeking immigration status in Canada.

Headley appeared in the office sporadically, according to Sanders.

"He came in, talked to people, talked to Dr. Rana, worked on the computer a little bit and didn't say a lot," Sanders said. "He bounced in and out and did his business with Rana."

Rana is charged with "providing material support" to conspirators who plotted to "murder and maim." The FBI contends that Rana supported Headley -- who allegedly used the immigration business as a front -- in a plot to murder a Danish cartoonist and editor connected to the 2005 publication of cartoons lampooning militant Islamists.

According to the charges, Rana lied to a former classmate and official in Pakistan's Chicago consulate in an attempt to get a five-year visa for Headley.

News of the investigation broke in dramatic fashion in Kinsman, Ill., the small town 80 miles southwest of Chicago where Rana owns a farm. One day in October, scores of federal agents backed by an armed helicopter swept into town and searched the property.

When the residents of Kinsman, population 100, learned about the arrest, they said they started wondering about the Muslims who had appeared on Fridays at the farm to pray and buy halal meat.

"They could be terrorists -- it did cross my mind," Mayor Mark Harlow said.

William Rodosky, 72, who once owned the farm, calls himself "dumbfounded." He started getting to know Rana years ago and considered him "a polite, respectful, well-dressed man and a good businessman."

"This is a small-town farming community," Rodosky said. "It's something the FBI will take care of. No one's going to be blowing anything up around here."

Hsu reported from Washington. Staff writer Kari Lydersen in Kinsman and correspondent Emily Wax in New Delhi contributed to this report.

Obama faces congressional anger about economy - washingtonpost.com

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ECONOMIC WOES TAKING A TOLL
House Republicans call on Geithner to resign

By Brady Dennis, Zachary A. Goldfarb and Neil Irwin
Washington Post Staff Writer
Friday, November 20, 2009

Growing discontent over the economy and frustration with efforts to speed its recovery boiled over Thursday on Capitol Hill in a wave of criticism and outright anger directed at the Obama administration.

Episodes in both houses of Congress exposed the raw nerves of lawmakers flooded with stories of unemployment and economic hardship back home. They also underscored the stiff headwinds that the administration faces as it pushes to enact sweeping changes to the financial regulatory system while also trying to create jobs for ordinary Americans.

President Obama's allies in the Congressional Black Caucus, exasperated by the administration's handling of the economy, unexpectedly blocked one his top priorities, using a legislative maneuver to postpone the approval of financial reform legislation by a key House committee.

Two buildings away, at a session of the Joint Economic Committee, Republicans escalated their attacks on Treasury Secretary Timothy F. Geithner, including a call for his resignation.

"Conservatives agree that as point person, you failed. Liberals are growing in that consensus as well," said Rep. Kevin Brady (R-Tex.). "For the sake of our jobs, will you step down from your post?"

Rep. Michael C. Burgess (R-Tex.) took a different tack. "I don't think that you should be fired," he told Geithner. "I thought you should have never been hired."

Even Sen. Charles E. Schumer (D-N.Y.), a friend of the administration, suggested that Geithner had been inconsistent in addressing China's practice of keeping its currency low against the dollar.

And Rep. Peter DeFazio (D-Ore.) said Wednesday on MSNBC that he thinks Geithner should step down, pointing to his handling of the aftermath of American International Group's meltdown.

Across Capitol Hill, senators signaled their opposition to rushing regulatory reform. While some Democrats voiced reservations about parts of the bill, Republicans went further, faulting Sen. Christopher J. Dodd (D-Conn.) for pushing ahead before the roots of the crisis were understood.

Perhaps most troubling for the administration was that one of the few measures to succeed Thursday was an amendment by Rep. Ron Paul (R-Tex.) that would subject the Federal Reserve to unprecedented scrutiny. The amendment, which won bipartisan support in the House Financial Services Committee despite the reservations of administration officials, would allow the Government Accountability Office to audit all of the Fed's operations, including its decisions on interest rates and its transactions with foreign central banks.

Paul and allies in both parties -- more than 300 members of Congress have endorsed the measure -- are looking to increase oversight of an institution they consider partly to blame for the financial crisis. Federal officials and many private economists worry that the amendment could make future central bank policymakers reluctant to take unpopular steps to prevent inflation or support the economy for fear of second-guessing by Congress and government auditors.

The House committee had been set to vote to send the final piece of its regulatory reform package to the House floor after months of debate. That is, until the committee's chairman, Rep. Barney Frank (D-Mass.), told a shocked committee room that passage of the bill would be delayed until Dec. 1 because the Congressional Black Caucus wanted the administration to do more to help African American communities suffering in the economic decline.

Frank told committee members that black lawmakers were "frustrated by the response to the economic situation by the administration." He said the caucus had no issues with the legislation itself. "They want obviously to continue to have some bargaining power with the administration," he said after the hearing.

The caucus itself did not publicly detail its concerns Thursday, but one member, Rep. Maxine Waters (D-Calif.), issued a statement: "The recession has created a unique systemic risk that threatens all parts of the African-American community, including the poor and the middle class."

The caucus began discussing its concerns with Frank and the administration several weeks ago. Frank hosted a meeting Monday night between caucus members, Geithner and White House Chief of Staff Rahm Emanuel.

"You're talking about people whose constituents have been badly hammered by this," Frank said. "Given the nature of this recession, there needs to be some more conversations."

Frank said the caucus had concerns about whether minorities were being fairly represented in helping carry out Treasury's bailout programs and other federal efforts to resolve the financial crisis. The government has contracted out much of the work to Wall Street firms.

Congressional aides said the caucus's concerns are similar to those of the Democratic Party's liberal wing. Caucus members are pushing for legislation that would directly lead to new jobs by providing tax benefits, for example, that would provide incentives for home renovations and funding for new infrastructure projects. They also want to extend health-care and unemployment benefits.

Meanwhile, Geithner was taking a beating as he urged Congress to pass regulatory reform as quickly as possible, arguing that delay would create uncertainty for businesses across the country. Lawmakers sharply criticized him for his role in the crisis during the tense Joint Economic Committee meeting. They were particularly critical of his involvement in the decision, as president of the New York Fed, to bail out AIG.

But Geithner pressed forward: "To ensure the vitality, the strength and the stability of our economy going forward, we must bring our system of financial regulation into the 21st century. Nobody in my job should ever be in the position again of having to come into a crisis like this without those basic authorities."

Dodd, chairman of the Senate Banking Committee, chose the marbled Caucus Room in the Russell Senate Office Building -- site of past hearings on Watergate, Pearl Harbor and the Wall Street abuses during the Great Depression -- to open debate on a massive draft bill designed to achieve the most ambitious reworking of the financial system in decades.

"This is one of those moments in our nation's history that compels us to be bold," Dodd said.

But soon, ranking committee Republican Richard C. Shelby (Ala.) took the floor, and for 18 uninterrupted minutes he opined that nearly every element of Dodd's bill was misinformed, uninformed, unnecessarily rushed or just plain flawed. "This committee has not done the necessary work to even begin discussing changes of this magnitude. Nevertheless, you have laid a bill before the committee," Shelby said. "I will be opposing this legislation. Not because we disagree on its ends, but rather on its means."

Shelby said Dodd was wrong not to conduct an investigation into the causes of the recent financial crisis before pushing forward with legislation. He said rather than ending the problem of institutions that are "too big to fail," the current bill expands the government's ability to bail out big banks. Shelby apologized for the length of his critique, expressed his hope that the two men might "yet find some common ground," and yielded the floor.

"Well," Dodd said in the morning's only moment of levity, "I thank you for the endorsement."

Staff writer David Cho contributed to this report.