JUNE 2005

 California INTERNATIONAL BUSINESS Report

CONTENTS

News and Politics

Letters to the Editor 

Public Sector News

Commercial News

People on the Move

Heard on the Street

News you can Use

Meetings and Events

Editorial / Op Ed

Governor Calls Special Election

Governor Schwarzenegger announced plans for a special election in a live address on Monday.  The three initiatives that qualified for the ballot would give the governor greater power to determine spending; make it more difficult for teachers to earn job tenure; and put a commission of retired judges, instead of the Legislature, in charge of drawing legislative districts. Independently qualified measures would restrict minors' access to abortion and rein in public employee unions' political spending.  “When I was elected governor I said I would put California’s financial house in order and reform a government that no longer listened to the people,” said Governor Schwarzenegger. “Without reform, we are destined to relive the past all over again -- 22 billion dollar deficits, higher car taxes and the threat of bankruptcy". Assembly Speaker Fabian Núñez said in response: "Without warning or provocation, this Governor stopped attacking California's problems -- and started attacking Californians.  What this election will do is once again crowd our airwaves with negative, deceptive, political ads and pit Californians against one another," he said. "It will create a permanent, divisive distraction from the real solutions facing California".  The election is scheduled for November 8, 2005.

**********************

Thank you  for continuing to receive the California International Business Report. Please take a moment to formally subscribe at the link at the bottom or unsubscribe if you don't want to receive this.  Also, this newsletter is "content rich" and can trigger spam filters- make sure you "white list" this publication in your spam filter.  Please also read some important announcements at the bottom of the page about the California Trade Network.

  News and Politics    back

Drug War Raging on the Border

Heavily Armed Paramilitary Units may be Coming

A drug war has erupted on the California-Mexico border and is becoming increasingly violent as rival drug trafficking cartels vie for control of the border region drug trade.  Last Month in Rosarito, resort town about 30 miles South of San Diego, the Police Chief was gunned down in broad daylight by gunmen who attacked him in his car with pistol and rifle fire leaving more than 100 bullet holes (see picture at right).  A few days later, the director of the Mexicali Municipal Jail was gunned down outside of his home, and just a few days ago the Police Chief of Nuevo Laredo, on the Texas Border, was murdered on his first day on the job.  This city of Tijuana has already had more than 185 murders this year and most are thought to be drug related. Baja's chief homicide investigator has said of all the people murdered, 90 percent have criminal records and ties to drug traffickers.

For many years, the Arellano Félix cartel controlled the flow of drugs through the Baja California border, paying off law enforcement officials and charging other drug groups to operate here. The Arellanos' control may now be weakening following recent killings and arrests of their top leaders. A drug cartel controlled by alleged trafficker Ismael Zambada is now believed to have overpowered the Arellanos in the Mexicali border region, and some authorities say the increase in  drug-related killings in Tijuana means that the different drug groups are battling for dominance. 

Even more ominously , the U.S. Justice Department is warning local police in Arizona and California a group of rogue Mexican military commandos may be headed this way. They are elite "special forces" of the Mexican military trained in the U.S. at the School of the Americas at Fort Benning, Georgia and sent to "wipe out" one of the most powerful Mexican drug cartels.  These soldiers deserted and now provide the "muscle" for the very cartel they were supposed to destroy and there have been reports of the commandos making cross-border runs into U.S. territory in military-style vehicles, armed with automatic weapons.  According to a report by News 13 of Tucson,in 2002, U.S. Customs agents were involved in a shootout south of Phoenix with an enemy they had not seen before. Equipped with automatic weapons, body armor, and state-of-the-art communications, in a word - it looked "military". 

The group is called "Los Zetas" - the enforcement arm of the Gulf Cartel and the Justice Department memo seemed to imply that a much larger drug war between the Gulf Cartel to the east and the Tijuana Cartel to the west is already underway.  "The violence will spill over the Mexican border into the United States and law enforcement agencies in Texas, Arizona and Southern California can expect to encounter Los Zetas in the coming months". The Los Zetas organization is thought to be setting up new drug smuggling routes and could be emerging as a nation-wide mafia style organization.  

To make matters worse, U.S. and Mexican law enforcement officials have reported that crystal methamphetamine   production has now moved South of the Border and is causing a huge upsurge of addicts in the area.   This has happened mostly because a U.S. crackdown on the chemicals used to make the synthetic stimulant has given Mexican cartels the opportunity to "super labs" in cities including Tijuana, Mexicali, and the resorts of Ensenada and Rosarito.  These labs use chemicals bought wholesale from rogue suppliers in China and are able to produce large quantities of highly potent drugs. The booming trade in crystal meth has given powerful Mexican drug cartels a huge influx of cash and fueled a growing wave of addiction in the state's cities and resort towns. It has been estimated that as many as 60,000 of Tijuana's 1.2 million residents use the drug.  

We are seeing a dramatic decrease in meth super labs that used to plague San Diego, and the majority of the methamphetamine that we are now seeing is of Mexican origin," said Misha Piastro, a DEA's spokesman quoted by the San Diego Union.  He offered a warning to residents of Baja California about a problem U.S. law enforcement has observed first hand for decades. "The social ramifications of this drug are staggering," Piastro said. "This is a powerful stimulant that heightens aggressiveness, paranoia, unpredictability. It's to the point that where there is meth, there is violence".

"It's a war – kidnappings, murders and disappearances are the order of the day," said human rights activist Mauro Cruz about the situation in Mexico near the U.S. border.   The murdered have included public officials, businessmen, journalists, judges, university students, assembly-plant workers, farm hands and dozens of police officers.   It is of great concern that these groups may be spreading fear throughout Mexican society and are trying to turn that country into a narco state.   U.S. Ambassador to Mexico Tony Garza told a crowd in Monterrey last month that "drug cartels ... are destroying the economic and social fabric of our communities".

Governor Addresses Global Warming at U.N. Conference.  Governor Schwarzenegger has signed an executive order committing California to reduce greenhouse gases to specific targets in the coming years.   The announcement was made at San Francisco City Hall as part of the United Nations World Environment Day conference.  ``I say, the debate is over,'' said Schwarzenegger. ``We know the science. We see the threat, and we know the time for action is now'.  California has 36 million residents and more than 20 million vehicles and is the world's 10th largest producer of greenhouse gases, releasing about 2 percent of the world's total.   This order sets a statewide target of reducing the emissions of gases that cause global warming to 2000 levels by 2010. By 2020, emissions would be reduced to 1990 levels, and by 2050, they would be reduced 80 percent from current levels.There is now a scientific consensus that global warming is definitely occurring and is being caused by human activity.  Several recent studies from California scientists have added to the growing body of evidence.  Research led by scientists at Scripps Institution of Oceanography was published this month in the journal Science describing clear evidence of human-produced warming in the world’s oceans. Another researcher- Laurence Smith, an associate professor of geography at the University of California Los Angeles recently conducted a study of 30 years of satellite photos that showed an alarming disappearance of a large number of lakes in the Siberia region (see picture).

Global Warming is already impacting California. Stephen Schneider of Stanford University and Michael Hanemann of the University of California-Berkeley said studies have shown already that Sierra snowpack is melting on average two weeks earlier now than a century ago. Faster melting means not as much water can be captured in reservoirs, which could lead to shortages in summer months during future droughts. Hotter weather also threatens agriculture, such as the state's wine grape industry, he said. ``The change is under way,'' said Hanemann, an economics professor and director of the California Climate Change Center at UC-Berkeley. ``The longer we delay, the more severe the effects going out into the future. There is no morning-after pill''  he said in an interview in Science Daily.

This executive order requires the California Environmental Protection Agency to report back to the Legislature and the governor by Jan. 1, 2006, with ways to achieve the targets. As part of that, the agency must study the feasibility of setting up a so-called state "cap and trade" system. Under such systems, the government would set a greenhouse gas emissions limit for each factory, power plant or other industrial facility in the state- businesses below the limit could sell credits to other businesses exceeding the limit.

This decision puts the Governor significantly at odds with the Bush Administration- perhaps for the first time.   President Bush has been adamantly opposed to taking any action on global warming.  He withdrew the United States from the international treaty known as the Kyoto accords and has repeatedly attacked research that cites human activity as a cause of global warming- arguing that the science is not yet conclusive.  The President dissed Tony Blair on this issue during his recent trip to Washington D.C. and now the British Government is openly criticizing the U.S. about this stand, and they are now organizing an aggressive campaign to force Bush to retreat.  The issue may cause a rift in the G8 Industrial summit in Scotland next month.  Critics who have charged the Bush administration "changes the facts to fit their policies" were not surprised last week when a senior official at the White House was caught changing Scientific reports so they would cast doubt on links between greenhouse gas emissions and rising temperatures.  Philip Cooney, the Chief of Staff of the White House Council on Environmental Quality, was forced to resign. 

Al-Qaeda Suspects Arrested in Lodi.   A suspected Al-Qaeda terrorist cell has been uncovered in the town of Lodi and five members of the Pakistani community there have been arrested.  "We believe from our investigation that various individuals connected to Al Qaeda have been operating in the Lodi area in various capacities, including individuals who have received terrorist training abroad," said Sacramento FBI chief Keith Slotter.

Hamid Hayat, 22, was named in a federal criminal complaint accusing him of receiving training at a terror camp in Pakistan. Hayat is accused of "learning to kill Americans." His father, 47-year old Umer Hayat is charged with lying to federal authorities about his son's involvement in the alleged terror operation and of helping to finance the terrorists' training facility  Court documents say Hamid Hayat specifically requested to come to the U.S. to carry out a Jihad mission. 

Initial reports said that his target were to be "hospitals and large food stores" and made reference to "hundreds" of participants in Al Qaeda terror training camps in Pakistan but this was mysteriously dropped from the final affidavit.  Hayat apparently had been in Pakistan for more than two years when he attempted to return on a flight to San Francisco late last month.  U.S. Attorney Scott said Hayat "confirmed the camp was run by al-Qaeda operatives and that they were being trained on how to kill Americans.

The town of Lodi has a large population of citizens of Pakistani descent and has generally prided itself on having good relations with that community.  When the city's mosque was attacked in 1995 by teenage white supremacists the outraged community rose in support of the local Muslims.  Once each year, Christians, Muslims and Jews hold a joint religious ceremony called, "Children of Abraham". "We've never had any problem in this town," one of the members of the mosque was quoted as saying. "The city of Lodi and the police have done everything they can to make us feel welcome".

U.S. Attorney McGregor Scott said Wednesday that the investigation has not uncovered any specific threat of danger to the public. He declined to say whether more arrests would follow.  Scott warned against any violence toward Muslims or the Pakistani community.  "These are criminal charges and immigration charges against certain individuals, not a religion or people in a community," he said. "We have zero tolerance for hate crimes and acts of retaliation."

Despite the FBI affidavit, family members in Lodi contend that the terrorist allegations are false. Salma Hayat, the mother of Hamid Hayat, said she was with him in their ancestral village of Hazro in the northern part of Pakistan's Punjab province while he allegedly was at the training camp.   The prime minister of Pakistan, Shaukat Aziz, denied the existence of terror camps in Pakistan and said he was seeking information from the FBI about the case.

UCLA Study Finds Chronic Hunger in California. Almost 3 million poor adults said they had daily trouble acquiring food in 2003, according to a study recently released by UCLA researchers. The percentage rose nearly five points from 2001. The study said that Hunger and poor nutrition are increasing in California, with low-income adults reporting that they struggle each day to keep food on the table. Nearly 34% of low-income adults in 2003 said they had to make a daily decision about whether to eat or pay for other necessities such as shelter or medical care, up from 29% in 2001. "The elderly, the employed, the unemployed, families with children — no matter how you cut it there were increases in their inability to obtain food, and that indicates a systemic problem in the state rather than a localized one," said lead investigator Gail Harrison, a public health professor at UCLA.

Two of the most vulnerable populations — the elderly and pregnant women — were among those reporting the most dramatic increases in food insecurity, according to the report. Among low-income adults 65 and older, 20% lacked sufficient food in 2003, up from 16% in 2001. And among pregnant women ages 18 to 44, nearly 41% lacked enough food, compared with 16% in 2001. Food insecurity was the highest in the Central Valley counties of Kern and Tulare — among the most abundant agricultural regions in the world and lowest in Marin and the far northern counties of Siskiyou, Lassen, Trinity and Modoc.

In Los Angeles, 34% of low-income adults — about 957,000 people — experienced periods when they could not afford enough food in 2003, up from 31% in 2001. There was also an increase in the number of low-income adults who faced hunger in Napa (42%) and San Mateo (41%) counties. The authors found this surprising and  theorized that people moved to the areas in search of low-cost housing and were unable to make ends meet.  The study also found that 34% of low-income adults who reported inadequate food worked full-time. "That's something that has been pretty constant over the years, and it's troubling," The LA Times quoted George Manalo-LeClair, director of legislation for California Food Policy Advocates, as saying "We want work to pay and we hope hard-working folks can afford to feed their family, and what the data is showing is it's not necessarily the case".

Median Home Prices Pass $500,000.  The median price of a home in California passed $500,000 for the first time and prices made their biggest jump in 25 years.  These stronger than expected price increases came amid concerns of speculative housing bubble in many parts of California and the United States.  At $509,230, the median price of a house sold in California last month was up 12.5 percent from the level a year earlier, according to the National Association of Realtors. The real estate boom has created a massive amount of paper wealth and easy credit for home owners through mortgage refinancing or second loans secured by their property.  

About half of Californians have been left out of this boom because they don't own homes.  Only about 26 percent of sales in California go to first-time home buyers, compared with 40 percent nationally, said Leslie Appleton-Young, economist for the Realtors and their most recent research shows that only 18 percent of California households could afford a mid-priced home in the state.  There are many antidotal reports of young professionals leaving California because they believe they have no hope of ever being able to afford a home.

Many economists have said that the rapid price appreciation of the past several years has propelled unrealistic expectations that's created an unhealthy speculative "bubble" on the verge of bursting. Inhigh-cost markets such as San Diego County, most purchases are made with adjustable-interest-rate loans. These loans also leave borrowers vulnerable to sharply higher payments when interest rates adjust or principal payments start to become due.  These "creative" loans greatly increase the risk to that the homeowners will default which could deflate property values and even lead to a recession. 

Renters are also being hit hard as property speculators drive rents in excess of incomes.  A group called the "Coalition for Economic Survival" in Los Angeles has reported an increased need for its services as more tenants report difficulty paying the rent. Last week, Federal Reserve Chairman Alan Greenspan expressed concern that prices in some regional housing markets have climbed to what appear to be "unsustainable levels."

California in 2025: Hispanics will be Majority.  A new report by the Public Policy Institute of California looks at where the state will be 20 years from now. The study came to what it called a "remarkable" conclusion that there will be a slowing of population growth and a shift in economic growth trends that will put less pressure on infrastructure. The authors said that there have been major strides in the planning and financing of infrastructure and that "demand management" will become more accepted as a way of balancing supply and demand. "Rather than facing a crises, California seems to be at at a critical point- looking at a future that could be managed with a set of policy options that fall short of budget breaking solutions", the report concluded. Here are some projections for California's future:

-Population: By 2025, the state's population will grow by 8 million to 10 million. Latinos will become the state's largest ethnic group; whites will drop to one-third of the population. The number of people over 65 will double, to one in every seven Californians.

-Education and the economy: The number of manufacturing jobs will continue to decline, and service jobs will increase. That means the state will need a more educated work force, and our colleges and universities won't be able to meet that need unless they are expanded. The report anticipates our institutions of higher education will be short over 686,000 slots for students.

-Water: By 2030, The state likely will need an additional 3.6 million acre-feet of water. During that time, California must reduce its reliance on Colorado River water by 800,000 acre-feet. However, experts say the state stands a good chance of meeting its water needs.

-Transportation: Congestion on our highways will nearly double by 2025. Meanwhile, per capita spending on transportation has dropped to $195, 29 percent below the national average of $274.

The President of the Institute, David Lyon, said that the major concern raised in the report relates to the supply of high skilled labor.  ""Providing sufficient human capital, rather than more physical capital, could well be California's biggest challenge in 20205 and beyond.   The full report can be found at this link: http://www.ppic.org/content/pubs/R_605MB2R.pdf

Hezbollah may have Operatives in Southern California.  According to testimony before the the Senate Homeland Security and Committee, Lt. John Stedman of the  Los Angeles County Sheriff's Department said that suspected Hezbollah operatives are active in Southern California and are funding their operations through the sale of counterfeit merchandise and other criminal enterprises.  "We have encountered suspects who have shown great affinity for Hezbollah and its leadership," Stedman told the committee.   Hezbollah is an Islamic militant organization that the U.S. government has designated as a terrorist group.  The LA Times reported that this case was one of several in Southern California in which alleged Hezbollah operatives had been caught trafficking in counterfeit merchandise.   Among those involved are members of Russian, Eurasian, Asian and Lebanese organized crime cells and, more recently, traditional street gang members."The profits are enormous, with minimal criminal exposure," Stedman said. "In the parlance of one suspect: 'It's better than the dope business — no one's going to prison for DVDs.' ". The Times reported  that suspected Hezbollah operatives in the U.S. and other groups accused of terrorist activity were raising as much as $30 million a year in America through the sale of counterfeit merchandise and other criminal enterprises, and sending unknown but substantial sums back home.

Long Beach City Council Votes to Continue LNG Negotiations.  Four hundred people packed Long Beach City Hall on for a City Council debate over the future of a controversial liquefied natural gas terminal proposed for a pier in the city's harbor. The Council was deciding whether to end talks with a subsidiary of Tokyo-based Mitsubishi Corp., which is planning a $450-million gas terminal less than two miles from downtown. Terminal supporters, most of them union members, outnumbered opponents, and many wore bright orange T-shirts supporting the project and fluorescent orange "Yes! LNG" stickers. The project has provoked opposition among residents who fear that an accident or terrorist attack could cause a catastrophic fire. Others, however, argued vehemently that Long Beach needs the jobs the terminal would provide.  The gas terminal debate in Long Beach is drawing national attention at a time when the energy industry is seeking to dramatically increase imports of liquefied natural gas. As prices rise and domestic supplies dwindle, importing the fuel from overseas has grown increasingly attractive.  After long hours of debate, the Long Beach City Council voted to continue negotiating a plan to build a liquefied natural gas plant in the port. The council voted 5-4 to continue talks.. Many council members said they had concerns about the project but said they thought it was better to continue an environmental impact report on the LNG plant rather than stopping the study midway.

Curator of J. Paul Getty Museum to Stand Trial in Rome. A Rome judge has ordered the curator for antiquities at the J. Paul Getty Museum in Los Angeles to stand trial on charges of receiving stolen ancient artifacts. Prosecutors have accused Marion True, curator for antiquities at the museum, of criminal association and receiving stolen goods. She is due to stand trial on in Rome July 18, according to the office of her defense lawyer, Francesco Isolabella. True denies the charges and Getty officials have defended True's work, saying they found no evidence of wrongdoing and insisted they have provided relevant documents to the Rome prosecutors.The case stems from a 10-year investigation into the trafficking of ancient artifacts that centers on Italian art dealer Giacomo Medici. He was sentenced in December to 10 years in prison for conspiracy in international trafficking in antiquities. Prosecutors allege that True knowingly obtained around 30 stolen artifacts, some of which passed through Medici's hands, after becoming curator at the Getty in the mid-1980s.   The investigation began in 1995 when police found photographs of objects they deemed to be of uncertain origin in Medici's office in Geneva, Switzerland. The Getty returned some ancient works, including an illegally excavated kylix, to Italy after determining they were stolen. Some of the works had been placed in the collection before True began working as a curator. "We trust that this trial will result in her exoneration and end further damage to the personal and professional reputation of Dr. True," the museum said in a statement.

Stanford to Divest from Sudan. To protest the ongoing genocide in the Darfur region of Sudan, Stanford University will divest any direct stock investments it holds in four international energy companies with business ties to the government of the African nation, officials announced. The businesses are the Chinese companies PetroChina and Sinopec, the Russian company Tatneft, and Swiss-based ABB.

  Letters to the Editor   

Likes Newsletter Content

Thank you for sending me this newsletter. I found it to be newsworthy and diverse in its content. I look forward to the next issue.

Thank you,

Robert Calix

Los Angeles County

Metropolitan Transportation Authority

U.S. Vietnam Chamber of Commerce Opens in California

Hello Rob:

Could you please post the following on your Report:

FYI, the U.S. Vietnam Chamber of Commerce has just been established and incorporated in California to provide small and medium sized US companies with networking activities in developing business opportunities in Vietnam

for more info: you could get into: www.usvnchamber.org

Thank you very much

Trung Trinh

Managing Partner

Vietnam Resource Group

Trade-Tours & Training

Tel: 202-271-8200 www.vietgroup.net

USDOC Announces "New Products USA 2005" Catalog Exhibition

Dear Business Colleague:

Whether you’re launching a new product line or seeking additional markets for your proven technology, “New Products USA 2005,” a U.S. Department of Commerce Catalog Exhibition, offers a convenient way to explore five leading markets in Asia.

“New Products USA 2005” will showcase the product and service literature of U.S. companies in a wide variety of industry categories in Taichung, Taiwan; Chengdu China; Manila, the Philippines; Jakarta, Indonesia; and Hanoi, Vietnam, Sept. 20-30, 2005.

For only $450, you can have your company’s literature displayed at “New Products USA” to hundreds of visitors in each of these expanding markets and receive customized trade lead reports at the close of the show.

To take advantage of this unique trade promotion opportunity, simply respond to this e-mail with the following subject line: “Send info NP”  I will send you an electronic attachment with all the information you need to participate.

Please don’t delay. The invitation to take part in "New Products USA 2005" closes June 24, 2005.

Thank you for your consideration.

Sincerely,

Louis Quay

International Catalog Exhibitions

U. S. Department of Commerce

Room H-2116, Washington, DC 20230

Tel: 202-482-3973

Fax: 202-482-2718

louis.quay@mail.doc.gov

India Firm Wants Outsourcing Information

Dear Rob,

I have been reading all the newsletters of CALTRADE. I find all of them very interesting. I would like to make a suggestion. I would love to see more sectorwise information. The report could focus on various work sectors along with general information and updates.  

Adil Kapuswala

Pune, India

www.mechatronics-us.com

We would like to hear from you.  Please send us your ideas and opinions to caltrade@gmail.com

  Public Sector    back

United Nations World Environment Day Conference Held in San Francisco.  Mayors from around the world gathered in San Francisco and signed an international treaty intended to imporve the environment in urban areas. The non-binding treaty calls for increased use of public transportation and drastic cuts to the amount of trash sent to landfills. The signing of the "Urban Environmental Accords" capped the United Nations World Environment Day Conference in San Francisco. San Francisco was the first U.S. city to host the annual conference. As reported in the San Francisco Chronicle, The nonbinding accords list 21 specific actions that can make cities greener. Much of the conference focused on global warming and what mayors can do to curb emissions of "greenhouse gases" such as carbon dioxide that trap heat in the Earth's atmosphere. Mayors participating in the signing ceremony came from Zurich, Istanbul, Melbourne, Seattle and dozens of other cities. "What you are doing here today is taking a different approach — a united approach — on the stewardship of the environment," U.S. House Minority leader Nancy Pelosi said. The accords call for policies to expand affordable public transportation coverage for city residents within a decade. They also call for increasing access to safe drinking water, with a goal of access for all by 2015. Other goals include creating an accessible park or recreation space within a half-mile of every city resident by 2015 and achieving zero growth in the amount of waste being sent to landfills and incinerators by 2040.

UC to bid against Texas for Los Alamos Contract.  The University of California Regents decided to bid on the Los Alamos National Laboratory (LANL) management contract Thursday, citing the importance of national security and the two institutions’ historic relationship. The 11-1 vote granted UC President Robert Dynes permission to submit a proposal to the U.S. Dept. of Energy’s National Nuclear Security Administration (NNSA) by the July 19 deadline, a University press release said. The UC stands to earn between $53 million and $79 million. “I believe we should compete for the Los Alamos contract for three essential reasons: the excellence in science that we bring to the table, the strength of the management team we have put together and the contribution this unique combination of players can make to the nation,” Dynes said in the press release. This is the first time the UC has had to compete to maintain control of the laboratory. In 2003, the Dept. of Energy announced it would put the LANL contract up for competitive bids because of alleged mismanagement by the University. The UC will partner with private nuclear facilities manager Bechtel National and will compete against a partnership between the University of Texas and private defense contractor Lockheed Martin for management of the laboratory, which has a $2.1 billion yearly budget.

New Center for Global Prosperity in Oakland.  The Independent Institute, a non-partisan, public policy organization based, is launching the new Center on Global Prosperity to examine potential enterprise-based solutions to end poverty in developing countries in Latin America and around the world. The Center is the result of a $500,000 award from the John Templeton Foundation's "What Works in Enterprise-Based Solutions to Poverty" competition. The Independent Institute was selected from among fifteen invited think tanks as one of three recipients of the award. "We are very encouraged by this prestigious award," said Alvaro Vargas Llosa, Senior Fellow at the Independent Institute, and the Center's Director. "Our new Center on Global Prosperity will conduct case-studies of many communities in Latin America and other parts of the underdeveloped world that have actually been able to create wealth by using their entrepreneurial and innovative spirit to overcome numerous obstacles". David J. Theroux, founder and president of the Independent Institute, noted that the critical role of entrepreneurs has been largely ignored in analyses of approaches to eliminating poverty in developing countries. He indicated that the Center's scope would include case studies examining how and why central economic planning has widely failed as well as how enterprise-based solutions may have succeeded in advancing the economic welfare of the poor. "Nearly 200 years after the industrial revolution, it is a tragic fact and demonstrably unnecessary that half the world's population is living in abject poverty and misery," he said, "and yet there already exists a wealth of both science and practical examples of the kinds of solutions that would end world poverty." For more on the Center on Global Prosperity and The Independent Institute, please go to: http://www.independent.org.

Study on Second generation immigrants Released.  U.S. citizens with at least one foreign born parent, constitute a large and growing segment of the population in California, according to a study released by the Public Policy Institute of California. The study, which relied primarily on 2004 data from the U.S. Bureau of Labor Statistics and the U.S. Census Bureau, pegged the total number of Californians born to an immigrant parent at 7.4 million - approximately 21 percent of the state's population. Nearly 4 million are younger than 18. By far, Mexico is the leading nation of origin: Nearly three in five children highlighted in the report have fathers who were born there. There is a great disparity in education and poverty levels in this population, the report noted: "Second generation Asians have very high levels of education, and very low levels of poverty, whereas second generation Latinos have relatively low levels of education and high poverty rates".http://www.ppic.org/content/pubs/CC_505KRCC.pdf

MS-13 Task Force Created. The FBI has created of an MS-13 task force the first nationwide effort targeting a single street gang on an order by Director Robert Mueller. MS-13 is the code name for a growing international gang that was originally the Los Angeles branch of Mara Salvatrucha, a street gang formed 20 years ago in immigrant neighborhoods west of downtown LA.  Today, the gang has 30,000 to 50,000 members in half a dozen countries, including up to 10,000 members in the United States.  It is know for its extreme violence and the sophistication and reach of its network. 

The gang may have formed partly as a result of "blowback" from past U.S. policies. Refugees formed the gang in the 1980s after fleeing a U.S.-backed civil war against insurgents in El Salvador. As the gang grew, immigration officials began a 10-year campaign to deport members, including ex-convicts and hardened leaders who helped spread MS-13 across Central America and form an organization.  .

Four Central American presidents In met in Honduras in April to address the gang crisis. Citing the destabilizing influence of groups such as MS-13, they appealed for economic aid to curb the poverty and joblessness fueling the growth of gangs.  In the United States, the gang has spread from California into 33 other states, including Washington, and the District of Columbia. Authorities say members are involved in homicide, extortion, drug dealing and witness intimidation. The expansion has come from migration and efforts by its Los Angeles leaders to expand into new markets for criminal activity.

California Teachers Retirement System to Cut Back on VC Funding.  The California State Teachers' Retirement Systems will vote in July on a proposal from the pension fund's staff to cut back its allocation to venture capital by boosting its exposure to the buyout side of the market. CALSTRS is the third largest public pension fund in the U.S. and has always been a generous bankroller of venture capital funds. About 60% of the of fund's portfolio sits in buyout funds, and the proposal calls for that figure to climb to 70%, working out to roughly $1 billion more being available for buyout commitments. This move would cut the pension fund's target allocation to venture capital to 15% from 25%. The fund's staff based their recommendation on the fact that that the buyout sector is growing faster than the venture capital sector, and thus the private equity portfolio's exposure to venture capital has been falling anyway. Other funds have made similar moves out of concern that there are not enough high return venture funds, and to fears that future industry returns may be limited by the excess supply of institutional capital coming into the venture industry.

Have you heard  any public sector news related to "international business"please let us know at caltrade@gmail.com. 

  Commercial News    back

Ask Jeeves acquires Excite Europe.  Ask Jeeves, Inc., Oakland based provider of information retrieval technologies, brands and Internet advertising services, announced the acquisition of Excite Italia B.V., the operator of Excite Europe, a network of pan-European portal properties, from Tiscali, S.p.A. Ask Jeeves acquired the U.S.-operated Excite.com portal in March 2004. "This deal is a next step in Ask Jeeves' European expansion strategy," said Steve Berkowitz, CEO of Ask Jeeves, Inc. "Access to Excite's pan-European operational infrastructure and market knowledge will accelerate our European growth initiative and provide an instant revenue stream from additional users and advertisers". This acquisition will give the company ownership of Excite's Internet domains throughout Europe as well as control of existing portal offerings in several major European markets including Spain, Italy, France, UK, Germany, Austria and the Netherlands. Excite will remain a separate brand under Ask Jeeves Inc., with operations continuing out of Excite Europe's headquarters in Rome, Italy.

Danish toy maker to sell Legoland.  Danish toy maker Lego Holding is near an agreement to sell its Legoland theme-park business to New York private-equity firm Blackstone Group for about $468 million, sources close to the negotiations said. Lego, famous for its brightly colored little plastic bricks, put its four Legoland parks on the block this year as part of a turnaround plan. This will include the high performing Legoland in Carlsbad, north of San Diego. Lego said the parks are cash-intensive to operate and that selling them will allow the company to focus on its core toy business. Five bidders have submitted binding offers after Dubai International Capital, which recently purchased Tussauds Group, the owner of the U.K. wax museum, dropped out of the race. Blackstone's bid is expected to be selected as the winner. Attendance at Legoland California climbed 9.3 percent last year to 1.42 million people. Park officials said revenue was up 11 percent. Blackstone is on of the world's largest private equity fudns and in May agreed to pay $190 million to buy Merlin Entertainments, which operates the London Dungeon tourist attraction, in addition to Sea Life, Seal Sanctuary and Earth Explorer parks.

Utility Firms Oppose Governor's Energy Reorganization Plan.  Two of California's two largest utilities have expressed serious concerns about the Schwarzenegger administration's energy reorganization plan. In statements prepared for a hearing before the state's Little Hoover Commission, both Pacific Gas and Electric Co and Southern California Edison voiced complaints about the administration's call to take away the Public Utility Commission's siting authority over placement of natural gas and electricity transmission lines. The were joined in this protest by The Utility Reform Network (TURN) a consumer group advocating reform in the public utility industry. Under the reorganization plan, a new Cabinet-level of Secretary of Energy position would be created and four separate agencies: the California Energy Commission, the California Power Authority, the Electricity Oversight Board and the California Energy Resources Scheduling Division will be combined into a single Department of Energy. TURN, in its statements filed with the commission called the proposed reorganization "a solution in search of a problem". Southern California Edison said that the administration has failed to define a state energy policy and places too much authority into a proposed new state Department of Energy. PG&E expressed concern about a provision that would strip the PUC of a role in siting new natural gas facilities. The Little Hoover Commission has a month in which to make an advisory recommendation to the Legislature on the proposed energy reorganization. The Legislature then has 60 days from when it receives the plan from the governor to either approve or reject it, otherwise it will go into effect on its own.

Fugitive in Counterfeit Software Case Extradited from China.  Chinese authorities have arrested and deported a California man who fled prosecution in a smuggling case involving $130 million worth of counterfit computer software. Vincent Koo, 48, was returned to Los Angeles International Airport and appeared in federal court, where a judge ordered him held without bail pending a hearing next. He faces charges of bribery, smuggling and conspiracy stemming from the 2001 seizures of tens of thousands of phony copies of Symantec and Microsoft programs from storage lockers in La Puente and a 40-foot container that had been shipped to the United States from Taiwan. Koo, who lived in Monterey Park, is a U.S. citizen originally from Taiwan. After fleeing three years ago while free on $20,000 bond, Koo was detained last January in Shanghai by Chinese authorities acting on information from American immigration officials. Though Chian had the U.S. have no extradition treaty, authorities there made tracking down Koo a top priority and deported him on immigration violations. Also arrested were Tony Lu, 51, of Hacienda Heights, sentenced to four months in prison; Lisa Chen, 54, of Alhambra, sentenced to nine years in prison on state charges in August 2002; and Alex Lu, 48, sentenced to more than a year.

Chinese Still Want Unocal.The China National Offshore Oil Corporation (CNOOC) said that it might try to top Chevron Corp.'s $16-billion proposed acquisition of Unocal Corp., and this has raised the possibility of a bidding war for the El company.  In a filing with the Securities and Exchange Commission, CNOOC said it was "continuing to examine its options with respect to Unocal" and this might "include a possible offer." - how CNOOC said no decision had been made. Such an offer would by far be the largest acquisition ever attempted by a Chinese company.

According to a report in the Los Angeles Times, some analysts noted that CNOOC world face huge obstacles with such a bid, including intense U.S. regulatory scrutiny and a likely bidding war with giant Chevron. The Unocal-Chevron deal included a major deterrent in the form of a "break-up fee," in which any other acquirer of Unocal would have to pay $500 million to Chevron. If CNOCC offers stock as part of its bid, Unocal's investors might object to the offer because of political risks associated with China. This would likely make even more cash necessary to make a successful bid. It has also been reported by the Financial Times that there is division within CNOOC about Unocal. The Chinese company's nonexecutive directors have delayed its senior managers' efforts to launch a bid, and both sides hiring separate investment advisors to evaluate the proposal.

Several of Unocal's major oil and natural gas projects are in the Asia Pacific region and the Gulf of Mexico, and about 66% of its sales come from foreign sites. Chevron also operates in those areas, and it bid for Unocal in part because it expects to save $325 million a year in operating efficiencies once the companies are joined. In agreeing to purchase Unicol, Chevron Company Executives also noted the unique "California cultures" of the two firms. Energy Secretary Samuel Bodman declined to say whether the Bush administration would try to block a CNOOC takeover of Unocal. In an interview with Bloomberg press, however, he was quoted as saying: "We were very pleased with the fact that Chevron stepped up and paid the price and was the winning bidder for Unocal".  After he made this comment,  the Federal Trade Commission approved the merger between Chevron and Unocal ending a legal fight between Unocal and the FTC over the energy company's rights to a patent for reformulated gasoline.  While the Chinese have made some huge acquisitions recently- most notably IBM's Personal Computer division, this decision will probably making it far more difficult for the Chinese to acquire the company. 

Do you know some commercial news related to "international business"please let us know atcaltrade@gmail.com. 

   People on the Move    back

Do you know someone who's "on the move"- please let us know at caltrade@gmail.com. 

  Heard on the Street    back

What's the Matter with California?  Remember that book "What's the matter with Kansas?".  This book described how people in this mostly blue collar State seem to consistently vote against their own interests much to the dismay of Democrats who try to create economic policies for people exactly like them.  The author summed up his thesis: "The conservative establishment has tricked Kansans, playing up the emotional touchstones of conservatism and perpetuating a sense of a vast liberal empire out to crush traditional values while barely ever discussing the Republicans' actual economic policies and what they mean to the working class".   I bring this up, because I think the campaign for the upcoming special election might have Republicans shaking their heads in dismay and asking, "What's the matter with California?".

Here's why I think this.  I wanted to listen to the Governor's speech but couldn't find it on the FM dial, so I checked the AM dial.  San Diego radio is clogged with conservatives- Texas based Clear Channel Communications owns virtually the entire radio spectrum here. As an aside, they got around the FCC's already generous 8 station limit by buying major radio stations in Tijuana and broadcasting in English, and they have been very active in conservative politics in the area- even organizing pro war rallies.  In looking for the speech, I came upon the radio station KOGO and immediately recognized the shrill right wing ranting of Roger Hedgecock.

Mr. Hedgecock is a former Mayor of San Diego who was forced from office after being charged with money laundering and participating in a ponzi scheme and later was disbarred from practicing law for "moral turpitude".  None of that is what bothers me though- it's his savage attacks on anything he considers "liberal" or Democratic with no concern whatsoever on whether he is telling the truth.  Just one example: months after the invasion of Iraq, he remained adamantly convinced of the presence of WMD and publicly attacked anyone who expressed doubts.  Every time the Coalition Authorities found some shed with with a bottle of rat poison or a few sticks of dynamite he would triumphantly claim that WMD had been found.  He was wrong every time, but to my knowledge he never issued a retraction or apology for the false information even though he viciously attacks "the liberal media" whenever there is a well publicized mistake.  Anyway, it turns out that the Governor's speech was so short that I missed it.

Anyway, it took only a few minutes of listening to Roger Hedgecock ranting support the Governor's special election initiatives to know that I will probably vote against them- or at least be a really hard sell. California was finally and slowly coming to the point where we could put some divisiveness behind us and work on finding common ground.  This decision, unfortunately, will unleash a torrent of nasty politics that will make it harder than ever to get things done and will likely make our Government even more dysfunctional.   The way I see it one of two things will happen.   People in California will come to believe that greedy bureaucrats are bleeding the system dry and they will vote for the initiatives, or they will come to believe that these initiative are not for the good of California, but are designed for the good of the Republican party.  In that case, they may look East, and see the vast swaths of red and Conservatives in control of the Presidency, the House and the Senate and not doing all that great of a job of running the country.  Then they might just vote against the initiatives, even though it is not in their interests and bureaucrats really are bleeding the system dry.  That's what's the matter with California.

Let's move on.  As readers of this publication know, we are intensely interested in international strategies, and especially like to know what the government is doing in this area.  As we reported here in February, The University of California created a $192,000-a-year job of "international strategy development" for Gretchen Kalonji, the domestic partner of the new UC Santa Cruz chancellor Denice Dee Denton.  Ms. Kalonji was a professor of materials science andshe was given a full tenured professorship.   We didn't think nepotism was a good way to make the decision for an important position like this but we made it clear that we have absolutely nothing against Ms. Kalonji- in fact, as we said she would have had to have been an idiot to not take the job.  Our beef was with the Chancellors of the University of California, who made this decision in a closed door meeting.  Now I'm not so sure- why is it that people who have "tenure" are always so unresponsive?   I tried to call her because I wanted to know how the work of developing an international strategy for the U.C. system.  It seems like a reasonable question and I know people who read this newsletter would like to know.  That is quite a bit of public money so if anyone has any advice on how to persuade Ms. Kalonji to return her calls please let me know. 

In his first California visit since taking office, Homeland Security Secretary Michael Chertoff inspected technology to screen airline luggage and passengers for bombs at Los Angeles International Airport. He also had a message for the Governor, who has praised the "Minutemen Project" - a group of volunteer citizens patrolling the border looking for illegal immigrants and said that responsibility for securing the borders should fall to the federal government, not groups like the Minuteman Project. "We hear your message," he said. "But again I have to caution: People should not to try to take the law into their own hands".  The approach proposed State Assemblyman Ray Haynes, (R-Murrieta), however, would not let people "take the law into their own hands".  He has has introduced legislation that would create of a California Border Police Agency to enforce immigration laws. 

This would require the creation of an entirely new agency, but we already have a force that could possibly perform this role- the California National Guard.  The problem though, is that they are not here- they are in Iraq.  Now an interesting question has been raised on the left- could a Governor recall the National Guard?  They are supposed to be under State jurisdiction and their usual duties are to provide relief during local or statewide emergencies, such as hurricanes, fires or civil disorders.  The legalities are uncertain, but they are being used in Iraq in a way that was never intended and even the Republican Governor of Connecticut is said to be studying the matter.  Now however, their are reports that the paramilitary units of Mexican drug Cartels like Los Zetas may be probing our border.  Could the Governor order that the California National Guard be recalled to protect of from a more immediate threat on our own border?

The big fish that got away.  Remember Amy's Kitchen and the Governor's heroic attempt to keep them in the State.- even offering them a board seat on his Commission for Jobs and Economic Growth.  He lost that fight to the Governor of Oregon but no one even seemed to notice when Flour Corporation also said Hasta La Vista Baby and moved their headquarters to Texas.  Fluor is one of the biggest engineering firms in the nation, and was one of Orange County's most prestigious companies.  The Schwarzenegger Administration has emphasized their relationships with large Corporations so how did this one get away?   We don't know the inside story but it must have been humiliating for them when Texas Governor Rick Perrywelcomed Fluor's CEO Alan Boeckmann when he arrived at Dallas/Fort Worth International Airport last month to start the move to their new home in Texas. 

Normally we don't pay too much attention to www.ArnoldWatch.com but they did make a good point about the Governor's recent fundraising trip to Texas where he charged $50,000 for a photo and two seats at the Governor's table.  they quoted Texas Oilman T. Boone Pickenswho was at the meeting and "said recently that the US will see a boom market for Liquid Natural Gas (LNG) imports and, not surprisingly, Schwarzenegger called on the federal government this week to maintain state oversight of LNG and LNG terminals to be built on the West Coast. That gives Schwarzenegger continued jurisdiction over an area of great interest to Pickens... Yesterday six San Diego pension board members were indicted for violating Government Code Section 1090, which prohibits members of public boards from having a financial interest in any contract the board engages in. Surely, the spirit of that law should apply to a Governor profiting from out-of-state contractors".

By the way, we have also learned that the overseas California Trade Forums the Lt. Governor Cruz Bustamante has started in China, Taiwan and Mexico have no official sanction. "We have renounced them", an administration official told us.

A small but passionate political group gathered in San Diego's Balboa Park on Memorial Day to encourage Chinese to denounce the Chinese Communist Party. The group is called "the Good Riddance, CCP Global Coaltion" and they claim that two million Chinese have "renounced the CCP" Mr. David Gao discussed San Diego residents' reaction to the San Diego "Quitting the CCP" Service Center. “When we first showed up in Chinese supermarkets, some raised their thumbs, some were shocked, and others laughed at us. Now, looking at these numbers, those who once mocked us are laughing no more. They’ve begun to consider this issue more seriously and attentively”

What have you "Heard on the Street?" please let us know atcaltrade@gmail.com. 

California Video Cams.  Just for fun it can be interesting to get a little voyeuristic from time to time by checking out some Video cams- especially around our home State.  We have been compiling a list of cams for the California Trade Network portal and here are a few that caught our attention. 

UCSB Bookstore

Sonoma State University

California Maritime Academy

Chemsoft in San Jose

San Francisco Donut Shop

Death Valley

Catalina Island

Santa Monica Pier

San Diego Bike Shop

I especially like that donut shop in San Francisco. Please let us know if you know of any interesting video cams in California.

Book Review: Three Billion New Capitalists

"Ex-Reagan administration trade official Prestowitz follows up his critique of U.S. unilateralist foreign policy in Rogue Nation with this perceptive diagnosis of the nation's economic decline under globalization. While China and India focus on trade and industrial policies and turn out competent workers who put in long hours at a fraction of American wages, the U.S., Prestowitz argues, struggles with crushing trade and budget deficits, a zero savings rate, failing schools, dwindling investments in scientific training and research, a collapsing dollar and a debt-dependent economy that will face an "economic 9/11" once foreign creditors bail out. The argument echoes Thomas Friedman's The World Is Flat (Forecasts, Apr. 4), but Prestowitz's analysis is more thoughtful than Friedman's pro-globalization cheerleading. He criticizes, from firsthand experience, Washington's cavalier embrace of free trade and aversion to industrial policy ("they'll sell us semi-conductors and we'll sell them poetry," notes one Reagan administration economist) and argues cogently that the research and development apparatus and high-tech entrepreneurship that is supposed to save America's economy is likely instead to follow the manufacturing base offshore. It's a lucid and sobering forecast."

From Publishers Weekly: June 2005

Have you found some cool, interesting or useful information or links?  Please let us know at caltrade@gmail.com. 

The California Trade Network

The California Trade Network is a private sector initiative with the goal of providing high quality information and communication services the will help nurture and grow California's international business community.  As part of this effort, we have launched the following initiatives and services:

California International Business Directory.  This is a "Registry" of firms and professionals in California with international business interests.  The service includes a free international profile record and directory listing for any company or professional in this State.  Please review the directory and if you find a listing for your company use the Password Request form to gain access to your international business profile. If you are not listed please register at the link below.

California International Business Association.  NEW: We are just launching a new non-profit organization for small companies and professionals working in international markets.  This association will be separate from the commercial services on the portal and we are looking leaders to help us develop a dynamic new NGO.

Communication and Collaboration Portal.  We are especially excited about this new "4C" portal- connectivity, communications, collaboration and community.  Currently in beta test. it uses a business networking technology with integrated Internet Telephony through Skype and has many other features including photo uploads, private messaging, instant messaging, message boards, guest books and is especially designed for international business professionals in California. 

Trade Opportunity Database.  The California Trade Network also operates a trade opportunity database as well as several other information services and on-line business forums.  We are also developing more sophisticated commercial services including an international trade opportunity matching services and higher quality information content.   

We are still actively looking for partners and sponsors for these initiatives so please contact us if you would like to discuss business possibilities.  For more information about the current services of the California Trade Network please see this link or visit us on the web at:

WWW.CALTRADE.COM

This report is published by the California Trade Network and we are solely responsible for its content.  Please send comments, suggestions, corrections and ideas for inclusion to CALTRADE@gmail.com or call 858-483-7250.  We will also consider short opt-ed pieces.  This is part of an outreach effort to the international business community in California.  Please help us by using the link at the bottom to forward this to the person responsible for international business development in your organization, or to your associates who may be interested in this topic.  To remove yourself from this mailing list use the "unsubscribe" link at at the lower left.  Also use the unsubscribe link if you want this delivered to a different email address- the current delivery address will be removed and a form will display that will allow you to enter a new email address.