North Korea tells China of fresh nuclear tests


North Korea has told its key ally, China, that it is prepared to stage one or even two more nuclear tests this year in an effort to force the United States into diplomatic talks with Pyongyang, said a source with direct knowledge of the message.

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Further tests could also be accompanied this year by another rocket launch, said the source who has direct access to the top levels of government in both Beijing and Pyongyang.

The isolated regime conducted its third nuclear test on Tuesday, drawing global condemnation and a stern warning from the United States that it was a threat and a provocation.

“It’s all ready. A fourth and fifth nuclear test and a rocket launch could be conducted soon, possibly this year,” the source said, adding that the fourth nuclear test would be much larger than the third at an equivalent of 10 kilotons of TNT.

The tests will be undertaken, the source said, unless Washington holds talks with North Korea and abandons its policy of what Pyongyang sees as attempts at regime change.

North Korea also reiterated its long-standing desire for the United States to sign a final peace agreement with it and establish diplomatic relations, he said. The North remains technically at war with both the United States and South Korea after the Korean war ended in 1953 with a truce.

Initial estimates of this week’s test from South Korea’s military put its yield at the equivalent of 6-7 kilotons, although a final assessment of yield and what material was used in the explosion may be weeks away.

North Korea’s latest test, its third since 2006, prompted warnings from Washington and others that more sanctions would be imposed on the isolated state. The UN Security Council has only just tightened sanctions on Pyongyang after it launched a long-range rocket in December.

The North is banned under UN sanctions from developing missile or nuclear technology after its 2006 and 2009 nuclear tests.

North Korea worked to ready its nuclear test site, about 100 km from its border with China, throughout last year, according to commercially available satellite imagery. The images show that it may have already prepared for at least one more test, beyond Tuesday’s subterranean explosion.

“Based on satellite imagery that showed there were the same activities in two tunnels, they have one tunnel left after the latest test,” said Kune Y Suh, a nuclear engineering professor at Seoul National University in South Korea.

Analysis of satellite imagery released on Friday by specialist North Korea website 38North showed activity at a rocket site that appeared to indicate it was being prepared for an upcoming launch.

NORTH ‘NOT AFRAID’ OF SANCTIONS

President Barack Obama pledged after this week’s nuclear test “to lead the world in taking firm action in response to these threats” and diplomats at the UN Security Council have already started discussing potential new sanctions.

The North has said the test this week was a reaction to what it said was “US hostility” following its December rocket launch. Critics say the rocket launch was aimed at developing technology for an intercontinental ballistic missile.

“(North) Korea is not afraid of (further) sanctions,” the source said. “It is confident agricultural and economic reforms will boost grain harvests this year, reducing its food reliance on China.”

North Korea’s isolated and small economy has few links with the outside world apart from China, its major trading partner and sole influential diplomatic ally.

China signed up for sanctions after the 2006 and 2009 nuclear tests and for a UN Security Council resolution passed in January to condemn the latest rocket launch. However, Beijing has stopped short of abandoning all support for Pyongyang.

Sanctions have so far not discouraged North Korea from pursuing its nuclear ambitions, analysts said.

“It is like watching the same movie over and over again,” said Lee Woo-young, a professor at the University of North Korean Studies in Seoul.

“The idea that stronger sanctions make North Korea stop developing nuclear programmes isn’t effective in my view.”

The source with ties to Beijing and Pyongyang said China would again support UN sanctions. He declined to comment on what level of sanctions Beijing would be willing to endorse.

“When China supported UN sanctions … (North) Korea angrily called China a puppet of the United States,” he said. “There will be new sanctions which will be harsh. China is likely to agree to it,” he said, without elaborating.

He said however that Beijing would not cut food and fuel supplies to North Korea, a measure that it reportedly took after a previous nuclear test.

He said North Korea’s actions were a distraction for China’s leadership, which was concerned the escalations could inflame public opinion in China and hasten military build-ups in the region.

The source said that he saw little room for compromise under North Korea’s youthful new leader, Kim Jong-un. The third Kim to rule North Korea is just 30 years old and took over from his father in December 2011.

He appears to have followed his father, Kim Jong-il, in the “military first” strategy that has pushed North Korea ever closer to a workable nuclear missile at the expense of economic development.

“He is much tougher than his father,” the source said.

– Reuters

China attaches great importance in developing military ties with India


 China attaches great importance in developing military ties with India

Chinese and Indian senior military officials met in Beijing and agreed to strengthen ties. Xu Qiliang, vice chairman of China’s Central Military Commission, met with Indian Defense Secretary Shashi Kant Sharma, reports Xinhua.

Xu said China and India, being the biggest developing countries in the world, are important neighbors for each other.

He noted that the two countries have extensive common interests and developing friendly and mutually beneficial cooperation is in line with the common aspiration of the two peoples as well as global development. He said that he believes that the two countries have enough wisdom and ability to handle their relationship and are able to pave a healthy and stable development path for it.

Xu said China attaches great importance in developing military ties with India and hopes to increase mutual strategic trust, enhance friendly communication and deepen pragmatic cooperation in order to promote the strategic partnership for peace and prosperity and make a positive contribution to world and regional peace and stability. Sharma said India attaches great importance to developing its relationship with China and he is confident in the future progress of military relations between the two countries.

China to Set Up Military Base in Indian Ocean


In a move that may cause unease in India, China announced that it will set up its first military base abroad in the Indian Ocean island of Seychelles to “seek supplies and recuperate” facilities for its Navy.

The naval fleet may seek supplies or recuperate at appropriate harbours in Seychelles or other countries as needed during escort missions, Chinese Defence Ministry announced.

China to Set Up Military Base in Indian Ocean

China has already cemented its foothold in the Indian Ocean by signing contract with the UN backed International Seabed Authority to gain rights to explore polymetallic sulphide ore deposit in Indian Ocean over the next 15 years.

The contract awarded this year to a Chinese association exclusive rights to explore a 10,000-square-km of international seabed in the southwest Indian Ocean.

The base in Seychelles is regarded significant by analysts as China is about to launch its first aircraft carrier. It is currently undergoing final trials.

Playing down its significance, Chinese Defence Ministry statement said it is international practice for naval fleets to re-supply at the closest port of a nearby state during long-distance missions.

Apparently commenting on a recent report that China will establish a military base in Seychelles, it said Chinese naval fleets have re-supply facilities at harbours in Djibouti, Oman and Yemen since China sent its first convoy to the Gulf of Aden in 2008.

The decision to establish its first naval base abroad was taken during Chinese Defence Minister Gen Liang Guanglie‘s goodwill visit to Seychelles earlier this month.

During the visit, Seychelles Foreign Affairs Minister Jean-Paul Adam said his country has invited China to set up a military base on the archipelago to beef up the fight against piracy.

“We have invited the Chinese government to set up a military presence on Mahe to fight the pirate attacks that the Seychelles face on a regular basis,” Adam was quoted as saying in the media reports.

“For the time being China is studying this possibility because she has economic interests in the region and Beijing is also involved in the fight against piracy,” he said.

During Liang’s visit, the two sides exchanged views on their countries’ and armies’ cooperation, as well as on the global and regional situation, state-run Xinhua news agency reported.

Seychelles appreciates China’s efforts to maintain safe navigation on the Indian Ocean, as well as the support it has granted to Seychelles, the ministry said.

Seychelles also invited China’s navy to re-supply and recuperate in the country during escort missions, the defence ministry statement said.

China Seeks Military Bases in Pak’s Restive Tribal Region


China has expressed an interest in setting up military bases in Pakistan’s volatile tribal area or the Northern Areas, close to the restive Chinese province of Xinjiang, to counter the activities of extremists, according to a media report.

The Chinese desire is aimed at containing the growing terrorist activities of Chinese rebels of the al-Qaeda-linked East Turkestan Islamic Movement, The News daily quoted diplomatic sources as saying.

China Seeks Military Bases in Pak's Restive Tribal Region

The Chinese rebels want an independent Islamic state and are reportedly being trained in Pakistan’s tribal areas.

China’s wish to have a military presence in Pakistan was discussed at length by the political and military leadership of both countries in recent months as Beijing has become more concerned about the Pakistan’s tribal belt serving as a haven for radicals, the report said.

“Beijing believes that similar to the American military presence in Pakistan, a Chinese presence would enable its military to effectively counter the Muslim separatists who had been operating from the tribal areas of Pakistan for almost a decade and carrying out cross-border terrorist activities in the trouble-stricken Xinjiang Province,” the report said.

There were three high-profile visits from Pakistan to China in recent months – by Foreign Minister Hina Rabbani Khar, President Asif Ali Zardari and Inter-Services Intelligence agency chief Lt Gen Ahmed Shuja Pasha.

The Pakistani visits were reciprocated by a visit to Islamabad by Chinese Vice Premier Meng Jianzhu.

This visit was prompted by two bomb blasts in Kashgar city of Xinjiang on July 30 and 31 that killed 18 people, the report said.

The blasts provoked senior government officials in Xinjiang to claim for the first time in recent years that the attackers were trained in ETIM camps being run by Chinese Muslim separatists in Pakistan’s Waziristan tribal region.

The report contended that Beijing believes the Chinese rebels operating from the Pakistani tribal areas are well connected to Al Qaeda, which trains them and provides funding.

“Therefore, Pakistan and China, which have been cooperating for a long time in the field of counter-terrorism, have intensified their efforts to nip the evil of terrorism in the bud, especially after the Kashgar blasts,” it said.

In the aftermath of the May 2 raid by US troops that killed Osama bin Laden in his hideout in the Pakistani garrison city of Abbottabad that Islamabad started playing its “China card aggressively, perhaps to caution Washington against pushing it too hard”, the report said.

Shortly after the raid, Prime Minister Yousuf Raza Gilani travelled to Beijing too seek support for Pakistan.

Defence Minister Ahmed Mukhtar, who accompanied Gilani, said on May 21 that whatever requests for assistance the Pakistani side made, the Chinese government was more than happy to oblige, including agreeing to take over operation of the strategically located but underused port of Gwadar upon expiry of a contract with a Singaporean government company.

Mukhtar had further said that Pakistan had asked China to begin building a naval base at Gwadar, where Beijing funded and built the port.

“We would be grateful to the Chinese government if a naval base is constructed at the site of Gwadar for Pakistan,” he said in a statement.

India, China Battle it Out Over Buddhism


The sudden decision of India and China to drop the meeting of their special representatives only a day before it was scheduled in Beijing has brought a cold war on Buddhism out in the open.

China decided to drop the meeting as New Delhi reportedly turned down its demand to keep the Dalai Lama away from a four-day Global Buddhist Congregation that began in New Delhi Sunday. This glitch automatically puts off the later defence secretary level annual dialogue of Dec 8-9.

India, China Battle it Out Over Buddhism

Both sides have publicly downplayed the issue but there is far more behind the scene than what meets the public eye.

The Chinese leadership is determined to make China the supreme Buddhist power. The sudden love affair with Buddhism arises more from anxieties related to the Tibetan spiritual ruler Dalai Lama, than a change in heart on religion.

China’s Communist rulers are focused at building up enough credibility in the international Buddhist community to have their way on the selection of the Dalai Lama’s new incarnation before he dies. The Chinese believe that a friendly Dalai Lama will solve their Tibet knot that has found frequent expression through public uprisings and self-immolation sprees since 1951.

It was the unexpected Tibetan uprising of 1989 that made Chinese leaders realise that a Tibetan generation who had never seen the Dalai Lama and who grew on daily staple of Communist propaganda was to blame. Following a serious review at the third ‘Tibet Work Forum’ in 1991, China adopted a new policy in Tibet which accepts religion as a tool of winning hearts.

As part of this strategy, Chinese Communists have selected at least two top ranking lama incarnations of Karma Pa and Panchen Lama in 1993 and 1995 respectively. Gedhun Choeky Nyima, the six-year-old who was recognized by the Dalia Lama as the ‘real’ Panchen Lama, still remains under Chinese custody 18 years later.

While Chinese candidate Giancin Norbu has yet to be accepted by Tibetan masses, the Karma Pa escaped to India to join the Dalia Lama on the eve of New Year of 2000.

To the supporters of the Dalai Lama, the selection of these two senior incarnate lamas are dress rehearsals for China to impose a baby of its own choice as the Dalai Lama once the incumbent is no more.

Leaving behind Mao’s distaste for religion, Beijing hosted the first World Buddhist Forum in 2006 in Zhejian province and the second in March 2009 in Wuxi. The latter attracted over 1,700 delegates from 50 countries. In both meetings, Giancin Norbu was paraded as the senior most representative of Buddhism in the world.

This aggressive marketing by China as the real Buddhist powerhouse of the world has not gone down well with India, where the Buddha attained enlightenment. New Delhi too has launched its own Buddhist conferences in Singapore, Cambodia and Sri Lanka. There will be similar shows in Nepal and Vietnam.

While the current posturing by New Delhi and Beijing over border dialogue shows where their real concerns lie, the new religious theatre is bound to lead to new fireworks.

China Seeks Military Bases in Pak’s Restive Tribal Region


China has expressed an interest in setting up military bases in Pakistan’s volatile tribal area or the Northern Areas, close to the restive Chinese province of Xinjiang, to counter the activities of extremists, according to a media report.

The Chinese desire is aimed at containing the growing terrorist activities of Chinese rebels of the al-Qaeda-linked East Turkestan Islamic Movement, The News daily quoted diplomatic sources as saying.

China Seeks Military Bases in Pak's Restive Tribal Region

The Chinese rebels want an independent Islamic state and are reportedly being trained in Pakistan’s tribal areas.

China’s wish to have a military presence in Pakistan was discussed at length by the political and military leadership of both countries in recent months as Beijing has become more concerned about the Pakistan’s tribal belt serving as a haven for radicals, the report said.

“Beijing believes that similar to the American military presence in Pakistan, a Chinese presence would enable its military to effectively counter the Muslim separatists who had been operating from the tribal areas of Pakistan for almost a decade and carrying out cross-border terrorist activities in the trouble-stricken Xinjiang Province,” the report said.

There were three high-profile visits from Pakistan to China in recent months – by Foreign Minister Hina Rabbani Khar, President Asif Ali Zardari and Inter-Services Intelligence agency chief Lt Gen Ahmed Shuja Pasha.

The Pakistani visits were reciprocated by a visit to Islamabad by Chinese Vice Premier Meng Jianzhu.

This visit was prompted by two bomb blasts in Kashgar city of Xinjiang on July 30 and 31 that killed 18 people, the report said.

The blasts provoked senior government officials in Xinjiang to claim for the first time in recent years that the attackers were trained in ETIM camps being run by Chinese Muslim separatists in Pakistan’s Waziristan tribal region.

The report contended that Beijing believes the Chinese rebels operating from the Pakistani tribal areas are well connected to Al Qaeda, which trains them and provides funding.

“Therefore, Pakistan and China, which have been cooperating for a long time in the field of counter-terrorism, have intensified their efforts to nip the evil of terrorism in the bud, especially after the Kashgar blasts,” it said.

In the aftermath of the May 2 raid by US troops that killed Osama bin Laden in his hideout in the Pakistani garrison city of Abbottabad that Islamabad started playing its “China card aggressively, perhaps to caution Washington against pushing it too hard”, the report said.

Shortly after the raid, Prime Minister Yousuf Raza Gilani travelled to Beijing too seek support for Pakistan.

Defence Minister Ahmed Mukhtar, who accompanied Gilani, said on May 21 that whatever requests for assistance the Pakistani side made, the Chinese government was more than happy to oblige, including agreeing to take over operation of the strategically located but underused port of Gwadar upon expiry of a contract with a Singaporean government company.

Mukhtar had further said that Pakistan had asked China to begin building a naval base at Gwadar, where Beijing funded and built the port.

“We would be grateful to the Chinese government if a naval base is constructed at the site of Gwadar for Pakistan,” he said in a statement.

Italy under pressure as debt worries grow


Italy had to pay record interest to sell its bonds on Tuesday as it raced to calm market fears that it was losing control of a huge public debt and could trigger a crisis that threatened the euro zone.

Prime Minister Silvio Berlusconi said a 54 billion euro austerity plan would be approved by parliament on Wednesday and promised to pursue other measures to boost growth. Sources told Reuters the government was also considering sales of property and local utilities to raise funds to cut its debt — now around 120 percent of annual national output.

“Quite simply, investors have lost confidence in Italy’s ability to extricate itself from the euro zone debt crisis,” said sovereign debt consultancy Spiro Sovereign Strategy.

“The implications of this for Europe’s monetary union are quite worrying”.

Rome has been dependent on the European Central Bank, which has bought its bonds to keep borrowing costs at a manageable level, but a surge in yields over the past week suggests that markets have lost faith in the ECB intervention.

At the auction on Tuesday, the Treasury sold some 6.49 billion euros of long-term bonds — not far off its maximum target of 7 billion euros — but was forced to pay 5.6 percent on nearly 4 billion euros of five-year paper.

That yield was the highest since the introduction of the euro more than a decade ago, underlining growing investor concern about the sustainability of a 1.9 trillion euro public debt mountain.

The bid-to-cover ratio, an indicator of investor demand, fell to 1.279, well below the 1.93 on a previous auction of five-year paper.

Amid reports that Rome had also asked China to buy Italian bonds, the euro fell against the dollar after the results, which did nothing to allay concerns that the euro zone’s crisis is still deepening.

“Markets want to see decisive action and they want to see someone in control of the situation,” said Marc Ostwald, a London-based analyst with Monument Securities.

“Nothing that we’ve had, be it at a domestic level in Italy, be it at a pan euro zone level, or above all from Germany, indicates that anyone really is getting to grips with presenting euro zone policy with one voice.”

Berlusconi, who has been embroiled in a fresh prostitution scandal, skipped a meeting with magistrates on Tuesday to meet European Union officials in Brussels.

STATE ASSET SALE

The government called a confidence motion for Wednesday in the Chamber of Deputies to hasten approval of the plan to balance the budget in 2013, but the measures announced have failed to convince investors the crisis is under control.

The confidence vote, which would force the government to resign if it lost, follows the same procedure in the Senate last week. The result is expected at around 1200 GMT on Wednesday and definitive approval of the plan is seen at around 1800 GMT (2 p.m. EDT).

In Rome, a senior Treasury official said the government was considering plans to reinforce the package with extra measures including the sale of state assets and expected to meet potential investors as early as next week.

The premium investors demand to buy Italian 10 year bonds rather than safer benchmark German debt rose above 400 basis points ahead of Tuesday’s auction but eased slightly in the afternoon, narrowing to 397 points..

Credit default swaps, an insurance-like instrument to hedge against debt default, hit a record spread of more than 500 bps on Monday.

Under pressure from the ECB to cut its debt and reform its economy, Berlusconi’s center-right government has promised to balance the budget by 2013 and pass other measures to boost Italy’s creaking economy.

But it has drawn widespread criticism for the haphazard way it has handled the package, which underwent four major overhauls before it was presented to parliament last week following major differences within the government.

Ratings agency Moody’s, which placed Italy on review for possible downgrade on June 17, may cut its AA2 debt rating as early as this week, although a senior Treasury official said on Monday Rome did not believe a downgrade was likely.

CHINA HELP?

Earlier, a Treasury spokesman confirmed that Economy Minister Giulio Tremonti had met Chinese officials last week but he declined to confirm a Financial Times report that Italy was asking Beijing to buy “substantial quantities” of Italian debt.

The spokesman declined to comment on the substance of the meeting with a delegation that a second source said included the head of China Investment Corp Lou Jiwei and officials in charge of investment and fixed income. There were separate meetings with state investment agency Cassa Depositi e Prestiti.

Similar reports that Beijing was buying peripheral euro zone bonds have not proved conclusive in the past.

The head of Italy’s largest manufacturer Fiat warned that there was a risk “that the system goes off the rails,” unless governments took urgent action to restore confidence but he appeared skeptical about the prospects of help from China.

“If the Chinese are willing to invest, they are welcome, God bless them. But the fact that we had to go there (to China) asking for money is not a good sign,” Fiat Chief Executive Sergio Marchionne told reporters at the Frankfurt car show.

Two weeks ago, Italian officials were in Beijing to meet CIC and China’s State Administration of Foreign Exchange (SAFE), which manages the bulk of China’s foreign exchange reserves, the FT said. CIC is a sovereign wealth fund managing $300 billion.

The Italian Treasury spokesman gave no indication that bond-buying was discussed.

With about a quarter of China’s record foreign currency reserves of $3.2 trillion estimated by analysts to be held in euro assets, Chinese leaders have repeatedly voiced support for the debt-mired single currency area.

There was no confirmation from Beijing of any concrete buying of Italian bonds. (Additional reporting by Stefano Bernabei, Gavin Jones in Rome, Silvia Aloisi in Frankfurt, Kevin Yao in Beijing, Brian Gorman in London)

(Writing by James Mackenzie; editing by Patrick Graham)