This past month we honeymooned and you can see the details on this site. The short version is that we had lots of rain and clouds in Italy – don’t go there, even in the south, till May. In 3 weeks we are off to Australia to visit the Great Barrier Reef, Sydney and the Blue Mountains. After that, we will be domestic for awhile. A 90-day moratorium on travel outside the regional area to just be at home and do homely things.

A few global observations:

China – they may be moving forward, but it is still a very corrupt place without the rule of law and an investor should be very cautious. The Financial Times recently highlighted a company that invested $60 million, and then the Chinese partner had the signature cards changed and withdrew $58 million of the funds, which the foreign investors couldn’t get back. When it got to the government level, they got nothing but stonewalling and problems.

The ‘Stans as in Central Asian republics – Arabies Trends, an excellent Middle East business oriented monthly published in Paris in the English language, offers a convincing view that America is backing family dynasties being set up in these countries, just like we did a century ago in the Gulf countries. One day we will pay the price because the citizens are being let down after supposedly being freed from the communist empire. In the short run though, the Americans are really extending their influence in this region.

Iraq – the US is trying to get a bit smart and play the Sunnis and the Shiites off each other. Over the long term, this may work because the US is needed. The US really does want to get its troops outta there. As to the recent prison abuses, it is no surprise but what is ultimately good is that the news gets out and causes outrage and reform. I admit that I really don't know what is going on inside the country and that I don't trust the news that the Pentagon is allowing to get out. Simply put, to a certain extent it doesn't matter what is going on there. It is a tricky wicket;  the Americans are afraid to look weak there and on one hand feel there is no alternative but to attack the militants who are resisting because it is the militants against the rest of Iraq and Sunni holdouts who are interested in regaining power that will be the winners if the Americans let up. They will only be encouraged to make even more trouble. On the other hand, the faster the Iraqis take over the ground situation, the faster the militants will be out of business, so the Americans have to really decide whether or not they want to take on these militants and risk making more enemies. It is very sad – a lot of money and goods that were destined for rebuilding Iraq were diverted to warfare these past few months because of all the sabotage and chicanery going on there. People hate the US so much in that region and there is so much there that needs to be fixed (which takes time) that there is almost nothing right that can be done. Americans can try to change their policies, but there is a real disconnect with people in the region and their attitudes, which are deep and hostile. Consider this: some Americans were killed in western Saudi Arabia this week by Islamic terrorists. The crown prince said to a local audience that he is 95% sure (but not 100% sure) that Zionists were responsible for it and then went on to talk about how they were encouraging devil worship and other evils. He was quoted word for word in the New York Times on Monday 3 May. This guy is worse than anti-semitic; he is just a moron because there is no way that Saudi Arabia can be anything in this world if it can’t admit that Saudi Arabia is 100% responsible for these terrorists because it created them by having a society built around a system that encourages hatred and refuses to deal with truths staring them in the face. I don’t care if Zionists is a code word for local Satans. You can’t lead a country into the future without calling things by their names and showing people that it is OK to criticize domestic sources of evil. If this is what leaders say, you can imagine how it will take 50 years to get ordinary people living in a secluded tribal country to change their thinking. The Saudis are in perpetual denial when the chips are down, even though they keep talking about reforming their system and probably intend to do so around the edges, a meaningless proposition. Foreigners are exiting the country and the worlds of business and knowledge will ultimately go elsewhere. Even if the price of oil is high today, think 20 years into the future and you can see that the world is moving along and Saudi Arabia is going to be left behind, no matter how many times they talk about the WTO and how many potential deals are keeping lawyers busy.

India – This relates to the previous paragraph. Interesting thing going on – outsourcing has its limits. Companies save 4x on the salary by hiring an Indian, but the Americans are 6x as productive and are much better innovators than Indians who keep using checklists to work around problems. They can set up all the schools they want in India and in Dubai, for that matter, but exposure to American society and the way people think and innovate is the edge that people have to be exposed to if they will bring innovation to their countries. America has to open itself to more visas to encourage development, but the rest of the world has to become more hostile to those that threaten America and not give America so many reasons to keep them out.

Israel – Did Sharon lose big time this week? Maybe. Or maybe he has a strategy to use popular support for his policy to wreck the machinery of the Likud party’s central committee which voted against the referendum and which is controlled by Bibi Netanyahu, someone whose future Sharon would like to block. Maybe Sharon will move against Arafat to regain the initiative domestically because he was wounded. Bush took a hit for so publicly backing him so close to a referendum that he lost (and alienating others in the process) although Jordan has coordinated with Bush and knows it will get some goodies this month that it can show to the Palestinians. 

As of 2 weeks ago when I visited the country, I was told as a consensus matter that Sharon is in for at least 3 years more because there is so much corruption that to take him down is to take many others along. All he has to do is agree with Bush. I have to assume that Bush assumes that Sharon will not soon be indicted otherwise he has wasted American currency in the region backing a loser. I am told that Sharon will continue his plan without calling it cantonization; he will pull out of Gaza and some of the West Bank. He will punish those towns that give Israel a problem by making heavy sieges for them. One point about Sharon: I never see Arab leaders say anything bad about him. Much worse was said about Peres and Barak, both Labor leaders. People respect Sharon and his Yes or No means what he says. 

Thoughts of Hamas Leader Killings: Killing of Yassin shows how little the Israelis think of Arafat – if he was useful to the Palestinians, they would have killed him. I'm sure the Palestinian Authority is so sad that the Israelis are knocking off their rivals. Since they killed Yassin, there were a good number of cancellations of tourists fearing the other shoe would drop. The King David Hotel was about 20% vacant during Passover. The Russians carry wads of cash and buy up a good number of the good rooms; they make up for the Americans. Also, European and UK condemnation of the killing shows how cowardly they are although the UK is just playing games (see next paragraph). Kofi Annan is an ineffective appeaser who should just keep his mouth shut sometimes and I suppose will not get US backing when his term finishes. If the oil-for-food scandal has legs long enough to entangle Annan’s son, he might even wind up in trouble. With the likes of Annan, The UN has turned itself into a cluck-cluck organization that has no leverage anywhere. At least we know that if Israel pulls out of the West Bank, Arafat will ultimately be killed first and it is interesting that Sharon recently said that he is no longer bound by a promise not to kill him. Before I left the US in early April, I was told that the Israelis would go after the other Hamas leaders. Obviously, they didn’t waste any time going after Rantisi and I am told that the Hamas leaders in Syria had better not feel too safe, even inside Syria. I was almost expecting the Damascus explosion to be an Israeli assassination attempt, and I understand some Mossad operatives were recently picked up in Damascus.

UK and Palestinians are working closely to prepare the ground for Dahlan to run Gaza. They even have a control room set up on site, but so far I understand that they don’t have very much working; the Israelis are cool to the British proposals. 

Overall, Israel has come out of the past 3 years of Arab uprising having taken its destiny into its own hands. It is moving forward in a rather united fashion, and even though Sharon did not get the referendum passed, he will soon unveil some other plan which will get broad support (which may be the plan he wanted all along); the Palestinians I believe history will show, made a big mistake in 2000. Despite problems in Iraq, the world needs America to succeed and the Palestinians cannot gain from this issue; the silent majority of Arabia also wants America to succeed because it offers the best hope of change for them too. The Americans are also resilient; they are no pushovers and Osama bin Laden has accomplished nothing except to put Islam on the run around the world and turn Al-Qaida into Public Enemy One even in Saudi Arabia, where the grass roots would have most likely supported him. 

Economy – I think it is time to bet that the dollar is going back up. Interest rates are also going back up. Some companies are recovering, such as Nortel. The rental real estate market is going soft in New York City. I am hopeful that this means that property values are also going to drop, and that my decision not to buy this year will have been the correct one.

Biggest surprise so far this year -- Arnold, the Governor of California, is making good moves and getting a reputation as one who is getting an unruly state under control.