CATO experts forecast the future of an empowered China

Dr. Ted Galen Carpenter and Justin Logan, CATO Institute experts on U.S. / Chinese relations, today spoke at a briefing entitled “China’s Rise: Is Conflict Unavoidable?” The briefing examined the different political and economic ramifications a Chinese superpower would bring about across the world.

Carpenter, home after a recent trip to Beijing, said that the relationship our nation has with China is the most important foreign policy relationship we have. He stressed the difficult nature “reunifying” a politically divided China brought with it, and noted that bringing the Chinese together might not even come about should they continue to sustain their economic success.

Both Carpenter and Logan described the immense pressure the incoming U.S. President will have to both oppose the human rights violations the Chinese have demonstrated over recent years, and forge a healthy relationship with their nation for economic purposes and political stability. Dr. Carpenter worried that Republican presidential hopeful John McCain (R-Ariz) would cause animosity to arise between Washington lawmakers and the Chinese government.

Logan noted that natural disasters, massive pollution problems, and economic disparity have highlighted Chinese infrastructure problems. He said it is “not necessarily a good thing” that their country will owe ours money in the future, but that with good statesmanship a future U.S./Chinese relationship will not necessarily turn out to be entirely detrimental for our country or theirs.

Disagreement on cause of food and oil prices

The Senate Committee on Homeland Security and Governmental Affairs met to discuss financial speculation in commodity markets and to hear statements as to whether or not investors and hedge funds are causing inflated food and energy prices. Witnesses discussed their findings on the influence of speculation on the global rise in commodity costs.

Michael W. Masters of Masters Capital Management, LLC., stated that a lack of lines at the gas pump and the availability of food on shelves, a clear indication of supply, does not warrant an increase in prices, an increase that would suggest greater demand. In addition, Masters refuted the suggestion that oil prices have increased due to increased demand from developing states such as China. Masters cited a Department of Energy report which said that Chinese demand for oil has increased by 920 million barrels over the last five years and compared that to increase in demand from index speculators, an increase of 848 million. According to Masters, this increase is not responsible for a 183% increase in oil prices in the last five years.

Thomas Erickson, the chairman of the Commodity Markets Council, mentioned five reasons as the cause of price levels: strong economic growth in China and India, increased demand, reduced yield due to weather events, export restrictions, and the weakening U.S. dollar. Jeffrey H. Harris, the chief economist of the Commodity Futures Trading Commission (CFTC,) said that price levels are the result of the laws of supply and demand and not due to speculation trends.

Senator Claire McCaskill (D-Mo.) expressed frustration with Harris, stating "The people of America are about to take-up pitchforks." McCaskill asked Harris what tools he and the CFTC need to see the influence of speculation on commodity prices. Under oath, oil company officials testified that $30-$50 dollars per barrel can be attributed to speculation.

White House Gaggle by Dana Perino

James S. Brady Press Briefing Room

MS. PERINO: Hi. The President had his normal briefings at 8:00 a.m. At 11:35 a.m. he will interview with Mike Allen for a Yahoo.com news interview in the Roosevelt Room. And then at 5:30 p.m. he and Mrs. Bush depart the White House on their way to the Middle East. We'll go to Jerusalem tonight.

An update: The President spoke with President Hu this morning. He expressed his condolences on the earthquake and reiterated his offer to assist in any way possible. On Burma, the President reiterated his desire to provide additional U.S. assistance to the Burmese people. President Hu offered to continue to assist our efforts. The President also raised Tibet. He noted the recent meeting in China between the Dalai Lama's representative and Chinese officials, and encouraged the Chinese government to continue to reach out to the Dalai Lama's representatives and engage in substantive dialogues so that longstanding issues with regard to Tibet may be resolved.



A couple of other points on the earthquake. On assistance to earthquake victims, in anticipation of an appeal by the International Red Cross, the United States will provide one-half million dollars in response to the earthquake in China. USAID's Office of U.S. Foreign Disaster Assistance -- acronym is OFDA -- is responsible for coordinating and facilitating emergency assistance overseas and will have additional information on how the funds will be dispensed.



Also, the President's Assistant for Homeland Security -- Assistant to the President for Homeland Security and Counterterrorism, Ken Wainstein, is in China, and he was there on previously scheduled meetings regarding security for the Olympics. He arrived in Beijing right when the earthquake was hitting China. He was not aware of the quake -- it was not felt where he was in Beijing. He had two meetings with Chinese officials today and expressed condolences on behalf of the United States for the tragedy, and he offered support should they request it.



And I think that's all I have.



Q The President expressed a little bit of hesitation in one of the interviews yesterday over whether he'll actually be able to meet in Egypt with Siniora. What's the feeling on that now? Has he -- has the White House reached out to the Lebanon government, and is there a chance that if he leaves Lebanon he won't be able to get back home?



MS. PERINO: I think the President would certainly like to meet him while he's there in Egypt, but obviously there's considerations that have to be taken into account. And so we'll keep you updated as those developments occur.



Q Does it seem less likely now than before that there will be such a meeting?



MS. PERINO: I wouldn't put it that way, no.



Q On that topic, there are reports that many of the politicians are Christian, Sunni and Druze are saying that they believe U.S. statements on their crisis there right now have been too weak, and they are calling for more pressure on Hezbollah and Syrian backers. In particular, they're asking the U.S. to help broaden a U.N. resolution to put Beirut's airport and harbor under the control of international peacekeeping troops. What do you say to their concerns that they say that they feel abandoned by the U.S. and they've heard nothing substantial on this?



MS. PERINO: Well, I think that -- I don't know when those comments were made, but later last night we issued a statement by the President condemning Hezbollah's action and pledging our continued support. In addition to that, Secretary of State Condoleezza Rice participated in a phone call last night with the Friends of Lebanon, and issued a media note, which is quite detailed and very strong in its support for Lebanon. So I think let's just check the time now on when those statements were made, because I think that our statements could have come after that.



Q What about the idea about the airport and the harbor, international peacekeepers there?



MS. PERINO: That could have been something that Secretary Rice talked about specifically with the Friends of Lebanon, and so before any final decisions are made I think I'll decline to comment. But let's check the timing on that just to make sure.



Q Any reaction to a poll that shows that Americans are more pessimistic about the economy than since --



MS. PERINO: This is the same question ABC asked me yesterday.



Q I'm sorry, I wasn't here yesterday.



MS. PERINO: And then I gave the answer and ABC didn't use it. (Laughter.)



Q I withdraw the question.



MS. PERINO: Go ahead.



Q There's a report on the FT that the U.S. has decided to send 500,000 tons of food aid to North Korea, 400,000 through the World Food Program and 100,000 through NGOs.



MS. PERINO: Yes.



Q Is that decision -- can you clarify or comment on that?



MS. PERINO: I've got some points here for you, but I'm going to have to take a look at them because I just came from a meeting. Well, in the past, as you know, we've had some useful discussions concerning the parameters of a program for the resumption of U.S. food assistance for the North Korean people. North Korea has been open in saying that it faces a major shortfall in food supplies. We have discussed providing additional assistance. One way to do that would be through NGOs and through the World Food Program.



If finalized, that formal announcement would be by the State Department. And I believe an experts meeting is going to be convened in the near future to talk about how to begin detailed implementation of the program. So for right here I don't have more specifics for you on that, but there are discussions that are ongoing in figuring out a way to make sure that people there are taken care of.



It's one of the things that the President talks about repeatedly, which is his concern for the humanitarian condition for the people of North Korea, many of whom are starving. The President thinks that the government is certainly diverting food to the military and not giving it to its people. But outside of politics, the President's heart hurts when he knows that people are starving, and especially because -- especially for children who are maybe trying to go to school, and it's really hard to study and work and do all the things that you need to do to live if you don't have enough nutrition. So it's something we're concerned about, and I'll refer you to the State Department for details on those discussions.



Q Dana?



MS. PERINO: Yes.



Q We talk a lot about what the government is trying to do with respect to lowering our energy costs, whether it's more refinery capacity, whether it's alternative fuels, trying to work with the oil companies. But I'm wondering what the President is thinking about food prices. They continue to soar. They're up dramatically, in particular since 2003. What is his opinion about what can be done for the American people who are struggling now as much with food prices as they are with energy prices?



MS. PERINO: Well, there's no doubt that food prices have gone up, and let me refer you to -- I'll ask Scott Stanzel to attach to this* -- we'll release this gaggle transcript today since we're only doing a gaggle, and I'll ask for us to attach some points at the end, because I don't have them at my fingertips, but some statistics that talk about -- that put this in context in terms of core inflation, which has remained relatively low, but energy and food prices have gone up. And it's a concern that the President has. And most importantly, first things first, make sure Congress does no harm in terms of exacerbating problems when it comes to energy or food prices. That's number one.



Number two, make sure that we have policies in place to have a strong and growing economy, so that we can have -- more jobs are being created, and also deal with lots of different issues when it comes to food. A lot of our food costs come down to the issues of packaging and a lot of transportation costs, which goes back to energy. So these things are interrelated. It's something the President is concerned about and he knows that it hits people hard, especially -- this is the ultimate kitchen table issue. And the President is concerned about it. And we'll get you those points in this gaggle transcript.



Mark.



Q Dana, on the earthquake assistance to China, the half-million dollars, is that a perfunctory initial offer?



MS. PERINO: It's an initial contribution in response to the event. As other NGOs move toward the area and needs become evident we'll consider what, if any, additional funding is needed to help the people of China through our embassy in Beijing. I think they're still -- given the assessments that are ongoing right now, the half-a-million dollars is our initial offer.



Q Did President Hu request any U.S. assistance in particular?



MS. PERINO: He did not. But he thanked the President for his offers.



Q So the President mentioned that in the phone call and said we're going to give an initial layout of aid?



MS. PERINO: He offered to assist in any way possible. I can't tell you exactly -- I wasn't there. I don't know if he specifically said there would be this half-a-million dollars. I don't know when -- that information could have come right afterwards. But obviously, our State Department and our embassy have been working with the Chinese government to try to assess the damage, make sure all of our American citizens are accounted for. I refer you to State Department for that. I haven't heard of anything saying that they aren't, but I would refer you to them.



Also the Peace Corps Headquarters for the United States is right there in that province. So -- but I understand last night that Josie Duckett, their press secretary, said everybody was accounted for.



Go ahead.



Q Just one back to Myanmar. I wanted to see how strongly the President backs a move by some members of the Security Council to invoke a 2005 resolution they passed that could circumvent the generals under a U.N. mandate, and basically air-drop aid.



MS. PERINO: I know that that's something that's been talked about at the State Department and Defense Department. There's lots of interagency discussion about it, especially because people are so concerned about the human condition there in Burma. So I don't have anything specific for you on what the President specifically thinks.



We are pleased that we were able to land a flight yesterday. Two more are going to be landing today, and I understand we have -- we're going to have access to getting four or five more by the end of the week. Additional aid is being allowed in, in trickles. So it's certainly not enough. Again, when I say "trickle," that's what I mean in terms of a drop in the bucket.



So I'll see if I can get you more on the specific U.N. Security Council resolution.



Q -- he just wants to open up the floodgates and just --



MS. PERINO: Drop it in.



Q -- go for it.



MS. PERINO: We'll check. And Pete or I will get back to you.



Victoria.



Q Given the very slow progress in the Palestinian peace process, and Prime Minister Olmert's own problems, does the President accept that any kind of peace deal in the near future is extremely unlikely?



MS. PERINO: I would refer you to all the interviews that the President did yesterday, because he talked a lot about this, but I will reiterate here in brief for you, which is that the President believes that these two governments, the Israelis and the Palestinians, have been doing a lot of good work behind the scenes, out of the glare of the spotlight and away from the microphones, which has helped them make some halting progress. It's sluggish, that's true. They have very complex issues to deal with, with decades of conflict that have built up. And if this was easy it would have been solved a long time ago.



But they have an opportunity in front of them right now, because of the people they have in place on both sides of their governments, who are working together, who have good conversations, to go back and forth. But the issues of the right of return and of Jerusalem and settlements and a map that would define the borders are all issues that are very difficult. And the President is going to be able to go there, first and foremost, celebrate the 60th anniversary of Israel -- that's one of the main purposes of his trip -- and at the same time, be able to continue to try to push them along.



As he said before, this is not something that the President of the United States is going to solve; there's not going to be a headline that says, "Bush defines state." It is going to be that the Israelis and the Palestinians come together to define their state.



Q And can I follow up on that? Is there a realistic expectation that something is going to come to fruition, given the domestic problems of Olmert, given what's happening with Abu Mazen? These are essentially damaged leaders.



MS. PERINO: I would put it this way, that it's -- while it's exceedingly difficult, it's not impossible.



Q Does the President have any specific expectations, though, for this trip?



MS. PERINO: Well, this trip certainly -- we don't anticipate any major breakthroughs I don't think to be announced. But the President believes that his one-on-one meetings are very important and one of the best ways to make progress. And he'll have meetings with the Israelis while we're there in Jerusalem, and then when he goes to Sharm el Sheikh, he'll have lots of other additional meetings.



And every time he's there in the region he talks to all the leaders about the issues of the Middle East, the importance of having a free and fair society right there in the heart of the Middle East when it comes to Iraq. And then he also talks to them about the Palestinians and the Israelis, and how they have a chance right now, and that they need to be supported by their neighbors.



One of the most important things that we can do is work with the Palestinian Territories to build up the economy, to make sure that there are schools and jobs and vocational training, so that people have a hopeful vision, rather than one of despair, which is the one that certainly the people living in Gaza are feeling right now.



Did you have one more?



Q I did, on Iran. The President of Iran is out saying they'll have new proposals on the nuclear negotiations. Do you have any --



MS. PERINO: Well, the P5 plus one, which is our crew, is finalizing the details of the incentives package, and it will be delivered as soon as it's ready. And we continue to reiterate our call to Iran to suspend enrichment and come to the table, as called for in the U.N. Security Council resolutions. And our incentives package is the one that is the one with merit.



Last one, Andre.



Q Dana, I wanted to come back to yesterday's telephone call between the Presidents. They want to --



MS. PERINO: Yes.



Q -- nuclear agreement. Is it true that it has not yet been sent up to Congress? And isn't it true that even if it is sent to Congress now, it is too late, because there are less than 90 days in the term?



MS. PERINO: Let me check on the specific details on the timing. I don't know if it's been sent up yet, but we'll check on it for you.



Last one. Okay.



Q One more. On Colombia's announcement extraditing 14 drug lords to the U.S., do you think this sort of action by Uribe is going to influence the logjam on the Colombia free trade agreement, any sort of residual effect?



MS. PERINO: Well, you can certainly hope that this would persuade Congress, the Democratic leaders in Congress, specifically Speaker Pelosi, that she would see this as yet another sign. But I would point out to you that this is not the first time that these types of extraditions have taken place, and in fact, since President Uribe has been in power since 2002, he has worked tirelessly on a range of issues, especially in regards to the security front.



And some -- our best hope to continue to combat drug crime and drug proliferation from Colombia is through President Uribe. And as the President has said, and Prime Minister Harper and President Calderón have said, the most important thing the United States Congress can do, for the safety and prosperity and security of our hemisphere and our own neighborhood, is to pass the Colombia free trade agreement. We remain dismayed that Speaker Pelosi decided to renege on a deal. I believe that if President Bush had taken the same kind of action, that everybody would be up in arms and we would never hear the end of it until we relented.



So we're not going to relent. We're going to continue to push on it. And in addition to that, I think you have to look at the other aspect of this that's in front of Congress right now, which is the Merida Initiative. This is the initiative that the President wants to help provide Mexico with support in their law enforcement activities and security activities, especially right there along the border, to combat gang and drug crime. Most recently, Mexico has endured horrible violence against -- even losing its national police chief to murderers.



And so we need to pay attention to our own neighborhood, and the Congress has an opportunity to have an agreement that's in front of them on the Colombia free trade agreement that would simply level the playing field for our workers to have the same type of access to their markets as they have to ours. It really is nonsensical for them not to call for a vote before too long. And obviously, the reason that the President sent the legislation when he did is because we are mindful of the clock and we had a certain number of days to get this legislation done.



END 10:22 A.M. EDT



*Here is a graphic that shows the increase in food prices domestically and around the world, and the small impact of increased biofuel production on food prices.



If the average U.S. consumer made the same food purchases they did last year, they would pay an additional $300 for food this year. Overall, the price Americans pay for food increased 4.5% during the past 12 months, compared to a 3.3% increase a year earlier. This includes processed food and restaurant food purchases. The price Americans pay for food is impacted far more by processing and marketing costs than the cost of the commodities used to produce food. Approximately 20 cents of every dollar spent on food goes back to the farm, while 80 cents goes to costs such as labor, transportation and packaging. Energy costs are at historic levels. Increases in oil, gas, and fertilizer prices have increased the costs of producing and transporting food.



The federal government will dedicate nearly $60 billion in fiscal year 2008 to domestic food assistance programs. International Food Assistance in FY08 is 2.3 billion, by comparison. Our school lunch program serves 30 million children in 100,000 schools and the Food Stamp Program serves more than 26 million Americans each month. USDA increased the 2008 benefit level for food stamp recipients by 4.6%, based on the increased cost of food. On April 21, USDA alerted Congress it would transfer $150 million into the program that helps low-income women and children buy food (WIC) from its contingency fund to ensure that benefits continue.



USDA has a $6 billion contingency fund to cover unexpected increases in the costs and participation rates of USDA food assistance programs and projects that it will use half of the fund to cover increased costs in 2008. Just last week on May 7, USDA Under Secretary for Food, Nutrition and Consumer Services Nancy Johner briefed President Bush on all of the federal government efforts to provide food aid to Americans.

White House Gaggle

Briefer: Scott Stanzel

President’s Schedule

This morning the President and Mrs. Bush did an interview with ABC’s Good Morning America. Later today, the President will participate in a photo opportunity with Uno the Beagle, winner of the Best in Show at the Westminster Kennel Club.
Tonight, The President and Mrs. Bush will host a social dinner tonight in honor of Cinco the Mayo.

Deputy Press Secretary Scott Stanzel will brief the press at 12.30 pm today.



Myanmar

Scott Stanzel was asked to comment on the situation in Myanmar, and said, “We are concerned about the reports coming out of Burma and more of the loss of lives. The US Embassy is in touch with Burmese authorities and the ambassador has released some assistance funds under her authority; and that money will go under the world food program and other aid entities and does not necessarily go directly to the government. But we are in the process of assessing what more we can do.


Iran

When asked about a report suggesting that the US has provided Iraq will intelligence that shows Hezbollah has been training militia members, Stanzel said that General Petreus talked about that in his testimony during his last visit to Washington. General Petreus discussed that fact that Iran has made efforts to support special groups inside Iraq. This is something the Iraqis want to stop and therefore Iraqi Prime Minister sent a delegation to Iran last week, Stanzel said. “Iraqis are clearly tired of their disruptive activity and they do want it to stop. “


Food Aid

Stanzel was asked if the White House has gotten any reaction from Congress regarding the announcement last week to increase the food aid money by $ 770 million. “The word that we heard from Congress is that they could potentially put the FY 09 supplemental request that was for $ 70 billion, that included the $ 770 million in food aid; that they could couple that with the FY 08 supplemental request, that has been pending since last fall, and that actually also include our $ 350 million request on food aid,” Stanzel said. He continued to talk about the broad recognition that there is a need around the world for increased support. “We expect Congress to move forward on it. “

Dalai Lama and China

The White House said that they believe that a dialogue between the Dalai Lama and the Chinese government was the best way to address some of the fundamental issues.
“Dalai Lama has said himself that he does not seek change in political status for Tibet, but the people in Tibet has said that they are unable to freely practice their religion and freely practice some of their cultures and values, so we believe that talks to discuss those issues is important, ” Stanzel said. The White House said that they will have to wait and see what sort of readout they can get from the parties after their discussions but it is a positive step that they have had talks.

Oil demand and its impact

The President talked about this in his interview this morning, but he is willing to look at anything that Congress might put forward in terms of the gas tax issue. Stanzel said that the White House has had the idea of drilling in ANWR, and if that idea was not rejected in the mid 90s, there could have been potential for millions of barrels of oil per day from the United States. “We have to increase domestic exploration in an environmentally friendly way, and we have to continue to look for those alternative fuels…” Stanzel said. He also mentioned the discussion of investments in cellulosic research that the Administration thinks is the next step beyond the use of corn-based ethanol. “This is a problem that is long time coming and there are no quick fixes to it, “Stanzel ended.

Brownback, others condemn China human rights violations at Olympic protest

A passionate news conference to condemn human rights abuses by China only 99 days before they host the 2008 Olympic games in Beijing was held today., The news conference included speeches by prominent senators such as Bob Menendez (D-NJ) and Sam Brownback (R-KS), and human rights activists from organizations including SaveDarfur.org and Amnesty International.

The crowd, activists, and each of the speakers was incredibly passionate about protesting the United States’ involvement in the Olympic games. The press conference’s attendees called for President Bush to not attend the opening ceremonies, and described the Chinese as oppressive people, who violate human rights and are the biggest supporters of the genocidal Sudanese government in the world.

Menendez said that since the Chinese received the honor of hosting the games they have continuously “abused the basic human rights of their people.” Congessman Frank Wolf (R-PA) focused on the relationship the Chinese have with other oppressive nations, such as Korea, mentioning that China is actively engaged in espionage efforts against our nation.

Speakers described the painful lengths the Chinese take to enforce strict religious policies that limit what religion their people can legally worship. Congressman Chris Smith (R- NJ) called the attacks the Chinese have held against pregnant females, in which they force them into terrible abortions, “gender-cide.”