Category: Top Stories

Asia’s Lighter Taxes Provide a Lure

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Bloomberg News

Some 100 Americans opted out of U.S. citizenship in Singapore, above, last year.

SINGAPORE—Facebook

co-founder Eduardo Saverin’s recent decision to give up his U.S. citizenship in favor of long-term residence in Singapore has drawn fresh attention to the appeal of residing and investing in the wealthy city-state and other parts of Asia, where tax burdens are significantly lighter than in many Western countries.

Although the number of Americans throwing away their passports remains small, the trend has accelerated over the past two years—especially in Asian financial centers. Some 100 Americans opted out of U.S. citizenship in Singapore last year, almost double the 58 that did so in 2009, according to data from the U.S. Embassy in Singapore. Globally, 1,780 Americans renounced their citizenship last year, compared with 742 in 2009, according to U.S. government records.

The increase of Americans choosing to renounce their citizenship comes amid heated tax debates in the U.S. Many businesses and high-income individuals are worried that the urgency to reduce the country’s federal deficit will translate into tax increases in future years. Without a bipartisan deal to reduce the country’s deficit, Bush-era tax cuts and a payroll-tax cut for this year will expire by early next year.

For Americans living overseas, it may not be as easy to give up U.S. citizenship without being hit by a hefty exit tax. The WSJ’s Deborah Kan speaks to immigration lawyer Eugene Chow about the process

Even if U.S. tax rates increase slightly, they would remain historically low.

The superwealthy are also worried about possible future passage of the so-called “Buffett Rule” that would ensure high earners pay at least 30% in federal tax.

The Asian financial hubs of Singapore and Hong Kong, on the other hand, have kept personal and corporate taxes among the lowest in the world to attract more foreign investment. Top individual income-tax rates are 20% in Singapore and 17% in Hong Kong, compared with 35% at the federal level in the U.S., according to an Ernst & Young report.

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FilmMagic / Getty Images

Eduardo Saverin has given up his U.S. citizenship. He could see at least $39 million in savings on his Facebook stake, according to Wealth-X.

The two Asian financial centers have also been praised by experts for having simpler taxation systems than the U.S. and other countries. Businesses must make an average of three tax payments per year in Hong Kong and five in Singapore, compared with 11 in the U.S. and a global average of 28.5 per year, according to PricewaterhouseCoopers UK and the World Bank Group. The tax codes are also more transparent so that many people don’t require a consultant or adviser.

“The U.S. used to be a moderate tax jurisdiction compared with other countries and it used to be at the forefront of development,” said Lora Wilkinson, senior tax consultant at U.S. Tax Advisory International, a Singapore-based tax services firm that specializes in U.S. taxation laws. Now “it seems to be lagging behind countries like Singapore in creating policies to attract business.”

She said she gets at least one query per week from Americans who are interested in renouncing their citizenship in favor of becoming Singaporeans.

Not all Asian countries have a reputation for lighter tax burdens. In China, the top tax rate for high-income earners is 45%, though corporate taxes there are relatively low. Japan is also known as a relatively high-tax country.

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Associated Press

Singapore’s Supertrees near the financial district.

There are also other reasons why wealthy Americans choose to renounce citizenship. Stronger economic growth in Asia has attracted many Americans who now have no intention of returning to the U.S., which unlike many other countries requires expatriate citizens with high salaries to keep paying taxes back home.

Some private wealth managers say they no longer take on American clients because it involves too much work and risk complying with strict U.S. banking rules. The number of people renouncing in Singapore is believed to be especially high in part because the country doesn’t allow its citizens to hold dual citizenship so people with partners and children in the city-state may simply choose to keep citizenship there.

“It is not just about fat cats evading their fair share of tax,” said Eugene Chow, a principal at Chow King & Associates, a Hong Kong-based law firm that specializes in U.S. and international immigration. In addition, Asian countries offer a business climate and lifestyle that many find attractive: “America is no longer the Holy Grail.”

Because of his high profile, Mr. Saverin’s case could help popularize the practice by making more wealthy Americans aware of the potential benefits of renunciation.

For Mr. Saverin—a 30-year-old investor listed by Forbes as one of the 20 youngest billionaires in the world—giving up his U.S. citizenship could mean millions in tax savings, a decision he took months before Facebook announced its plans to hold an initial public offering. In addition to lower corporate and personal income taxes, Singapore also has no capital-gains tax, no tax on bank interest and no dividends tax.

According to Wealth-X, a Singapore-based firm that tracks information on high-net-worth individuals, Mr. Saverin could see at least US$39 million in savings on his Facebook stake alone, or roughly 1% of his approximately US$3 billion net worth. The results are contingent upon how well Facebook performs in its IPO.

Mr. Saverin will still have to pay a hefty exit tax in giving up his U.S. citizenship, calculated as a one-time payment for any American with assets with over US$2 million. U.S. tax experts note that while this exit tax sometimes dissuades older American millionaires from giving up their citizenship—with few years left to make huge capital gains, tax-free—the move often makes more financial sense for younger people like Mr. Saverin.

Mr. Saverin now holds Brazilian citizenship, where he was born, and permanent residence in Singapore, a status that allows foreigners to stay in the city-state without visa restrictions and opens the door to full citizenship later on. It is unclear whether Mr. Saverin is seeking to obtain Singapore citizenship. Mr. Saverin, who rarely speaks to the press, declined to comment and forwarded press queries to a New York-based spokesman.

The spokesman said Mr. Saverin’s decision to renounce his citizenship was primarily rooted in “business reasons” rather than being tax-related. “U.S. citizens are severely restricted as to what they can invest in and where they can maintain accounts,” said Tom Goodman, the spokesman, in a statement to The Wall Street Journal. “Many foreign funds and banks won’t accept Americans.”

On Monday, Mr. Goodman added that Mr. Saverin has been living in Singapore since late 2009, and felt the city-state was “an attractive place to live and a convenient travel hub for doing business in Asia.”

Write to Shibani Mahtani at shibani.mahtani@wsj.com

A version of this article appeared May 17, 2012, on page C3 in the U.S. edition of The Wall Street Journal, with the headline: Asia’s Lighter Taxes Provide a Lure.

© 2011 Wall Street Journal (www.wsj.com)

Man killed in Sharjah road accident

Sharjah: A 31-year-old Emirati man was killed on Wednesday morning in a road accident after his car collided with a truck on Muweilha road here, an official at Sharjah police told Gulf News.

The official said the victim, Obaid Khalfan Sultan Abdullah Al Suweidi, was killed when his car collided with a truck near Sharjah University roundabout.

The victim’s car collided with a truck driven by an Asian, said an Emirati man who rushed to rescue the victim. According to the police official, the Emirati was busy with his mobile and he did not notice the truck in front of him and could not stop as he was speeding.

Two Emirati men who were at the scene of the accident told Gulf News that they rushed to rescue the victim and informed police about the incident. The accident took place around 10:00am, they said.

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© 2011 Gulf News (www.gulfnews.com)

Some Banks Give Student Loans the Old College Try

Associated Press

Graduates at Duke University this month in Durham, N.C.

Even as the growth of student debt stirs debate on everything from whether the government should move to ease borrowers’ burden to the ability to discharge obligations through bankruptcy, some banks are jockeying for position to lend to students.

The latest salvo in the fast-moving field: RBS Citizens Financial Group, the U.S. banking subsidiary of Royal Bank of Scotland Group

PLC, this week said it would expand its student-lending business beyond the 12 states where it has bank branches.

While the expansion coincides with some banks pulling back from the business, RBS Citizens is putting its stake in the ground in a competitive field. Wells Fargo

& Co. and Discover Financial Services,

which are among the nation’s largest student lenders, have also said they want to expand rather than shrink in student lending.

The cost of college continues to rise and private student loans provide financial flexibility beyond government student loans, said Brendan Coughlin, the president of RBS Citizens’ education finance business. “I don’t believe” student lending “is the next bubble,” he said. “There is no doubt that the cost of education is outpacing inflation, and it’s an issue for America.”

The bank started to make student loans in 2009, and the retrenching of some banks made the decision to expand easier, Mr. Coughlin said.

“Some of the students who banked with us were able to get a loan to one school but not the other” because RBS Citizens would lend only in the states where it had branches, he said. Now students can apply to schools in all 48 contiguous states and apply from states where RBS Citizens has no branches.

RBS Citizens, which is branded Charter One in Midwestern markets, was a rapidly expanding bank before the financial crisis, moving from its New England roots into the Midwest. But the mortgage-related trouble of its parent has raised speculation over whether the Edinburgh-based bank might sell rather than expand its U.S. banking operations. RBS had to be bailed out and is majority-owned by the British government.

But that speculation has died down, and the bank has been expanding its commercial banking business lately. Student lending is another business where RBS Citizens believes it can gain market share.

The bank will lend only to students at not-for-profit universities, about 90% of loans are co-signed, usually by a parent, and those who don’t have a co-signer have to show income. RBS Citizens doesn’t disclose its default rate, but Mr. Coughlin said it is “very significantly below” the 8% for U.S. government student loans.

Still, RBS’s expansion comes at a pivot point in student lending. College affordability has become a campaign issue and some lenders are retreating from the business as college costs rise and federal scrutiny increases.

J.P. Morgan Chase

& Co. recently decided to restrict student loans to customers who do other business with the bank. “The private student loan market has continued to decline and government programs have expanded to help more students,” the bank had previously said in a statement.

U.S. Bancorp

stopped making student loans altogether last year. The bank had said it was “relatively small” in private student lending and “decided to … move resources to other areas.”

Citigroup Inc.

sold its Student Lending Corp. as part of its decision during the financial crisis to slim down. Discover Financial Services bought it, and wants to expand.

“As some look to exit the business, we’ll capitalize on these opportunities to strengthen our market position,” said Mark Graf, chief financial officer of Discover. “College students are upwardly mobile and mostly new to Discover, allowing us to establish an early relationship and to subsequently build on it.”

Wells Fargo’s Chief Financial Officer Timothy Sloan recently said: “The last time I checked, a third of the people in this country go to college and a good portion of those need to borrow some money to do that.” Like RBS Citizens now, Wells Fargo lends to bank customers as well as with students who, at least initially, only need a loan.

To be sure, private student loans should be taken only as a funding source of last resort, the National Association of Student Financial Aid Administrators argues. “Private student loans are a risky way to finance higher education,” said Haley Chitty, the director of communications at the advocacy group. “They lack the consumer protections and benefits of federal student loans.”

Nevertheless, he said, “these loans are a vital resource for some students looking to cover the growing gap between rising college costs and what they can get in student aid and federal student loans.”

RBS’s Mr. Coughlin said he makes students and parents aware of the risks, and in some cases discourages them from borrowing because a government loan fits better. But for other borrowers, the terms “are very competitive with the government program. For some families, this is actually the more affordable option.”

—Andrew R. Johnson contributed to this article.

© 2011 Wall Street Journal (www.wsj.com)

Castaway sues over rescue failure

A Panamanian fisherman who survived 28 days adrift in the Pacific and watched two companions die is suing the owners of a cruise ship that sailed past.

She said she had been assured the information had been passed on to the crew.

Mr Vasquez and his friends set out in their three-metre-long open fishing boat the Fifty Cents from the port of Rio Hato in February, and were on their way back after their catch when the engine failed.

After 16 days adrift, he says, they saw a cruise ship sailing past, and had made attempts to flag it down with a red sweater.

"We felt happy, because we thought they were coming to rescue us," he said.

Mr Vasquez was eventually rescued 1,000km (620 miles) off the mainland, near the Galapagos Islands. His friends had already died of thirst.

He said he survived thanks to a sudden rainstorm that replenished his drinking water supplies.

Princess Cruises said there appeared to have been a "breakdown in communication".

It said the captain – Edward Perrin – and the officer of the watch were not notified.

Princess Cruises said it understood its responsibility under the law of the sea to help any vessel in distress, and said its ships had been involved in more than 30 rescues over the past decade.

© 2011 BBC News (www.bbc.co.uk)

Dubai’s school transport revolution

Dubai: The quality and standard of school transport in Dubai has seen a dramatic change since 2008, when the Dubai Executive Council issued a law to control school transport.

Since then the Roads and Transport Authority has issued detailed regulations, guidelines and specifications for buses. It has also provided training to school bus drivers and attendants, and only those who are certified by the authority can drive school buses.

"What has happened since 2008 is a big revolution. There was no law to govern school transport before, nobody was accountable and no responsibilities were assigned. There is a huge difference between what you see now and before 2008," said Eisa Al Dossary, CEO of RTA’s Public Transport Agency, which also governs school transport.

The basic objective of the changes was to improve safety of pupils on the road and to achieve this RTA has divided the roles and responsibilities with all parties are held accountable. "We have issued guidelines for school administrators, teachers, drivers, attendants as well as parents and students and we keep organising safety awareness campaigns in schools," said Al Dossary.

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© 2011 Gulf News (www.gulfnews.com)

Finding justice for Haiti’s rape victims

But her nightmare was just beginning.

“I was gang-raped while I was sleeping in the middle of the street,” she said. “And I got pregnant.”

Alvana did not know her attackers. Depressed and unsure of what to do next, she was directed by a friend to a clinic run by KOFAVIV, a Creole acronym that translates into the Commission of Women Victims for Victims.

“By the time I got to them, my belly was already big,” she said. “But they took care of me.”

Alvana was given food, water, housing and prenatal care. She decided to keep her daughter, even though the psychological pain could be difficult — and still is, two years later.

“It’s terrible,” said Alvana, 33. “I love my daughter … (but) I look at myself and see that I have a child that is a product of a gang rape.”

Her story is, unfortunately, all too common in Haiti, said Malya Villard-Appolon, one of KOFAVIV’s co-founders.

“After (the earthquake), the situation was inhumane and degrading,” Villard-Appolon said. “There was no security in the (displacement) camps. There was no food; there was no work. And now there is a rampant problem.”

Accurate numbers are difficult, if not impossible, to find in the aftermath of such devastation, but KOFAVIV and other groups say they have seen a definite increase in rape cases after the January 2010 earthquake.

“Victims became more vulnerable due to a range of things,” said Brian Concannon Jr., director of the Institute for Justice & Democracy in Haiti. “They lost their houses; there were no locked doors anymore. People lost family members who were a source of protection.”

Terrible living conditions, including a shortage of food and water, contribute to the problem as well, said Charity Tooze, a senior communications officer with the United Nations High Commissioner for Refugees’ Washington office.

“The conditions are so dehumanizing,” Tooze said. “Over months and months, it increases all forms of violence, including sexual violence.”

There has also been a lack of prosecution in the country. In the first two years after the quake, not one person in Haiti has been convicted of rape, according to the UNHCR.

“The big problem is, you can’t find justice,” said Villard-Appolon, 52.

Even before the quake, she says, rape was an issue in Haiti, historically underreported because of social stigma, retaliation from perpetrators and a lack of legal support. That is what led her and Marie Eramithe Delva to start KOFAVIV in 2004. Since the group’s inception, it has helped more than 4,000 rape survivors find safety, psychological support and/or legal aid.

“We tell people to come out of silence,” she said. “Do not be afraid to say that you have been victimized.”

Villard-Appolon knows what it’s like to be a victim of sexual violence. She has been raped twice, and her husband died as a result of beatings he endured trying to save her from being raped. In 2010, her 14-year-old daughter was raped in a displacement camp.

“I can’t describe to you how I felt when I heard about that, because I was a victim,” she said. “I started asking myself what kind of generation I came from. Am I cursed?”

Do you know a hero? Nominations are open for 2012 CNN Heroes

She escorted her daughter to two police stations and received no assistance, she said, just a lot of talk. One police officer told her that “girls are so promiscuous” and indicated that many young girls are asking for sex.

But she carries on, “fighting with hope that I know there will be a change,” she said. Internationally, she has testified before the United Nations Human Rights Council, calling for increased security within the displacement camps and asking that women’s groups be included in decision-making processes.

“I was a victim, and I did not find justice. But know I will get it for other women,” she told CNN.

When the earthquake hit Haiti, KOFAVIV’s founders watched their clinic and their offices collapse along with their homes.

Villard-Appolon lived in the dangerous Champ de Mars displacement camp for half a year. There, she said, she watched as conditions deteriorated.

“It was all kinds of people who ended up in one area,” she said. “The jails were not destroyed, but their doors were opened, and all prisoners went free. Many of them … were armed, and they were notorious murderers.”

One criminal held Villard-Appolon at gunpoint, demanding money. The police never showed up, she said, but she managed to escape after a group of supporters arrived to fight.

Villard-Appolon said many single women had to leave their children with strangers in order to search for food, water or work. In some cases, the children were raped. The youngest victim, she says, was a 17-month-old.

“I spent six months witnessing it,” she said. “Babies are not spared; adults are not spared; mothers are not spared; sisters are not spared.”

Despite the escalating violence and the loss of its clinic, KOFAVIV regrouped to help victims in Haiti’s “tent city” camps, where about 500,000 people still live today. The group has 66 female outreach agents and 25 male security guards who work within the camps, organizing nighttime community watch groups and providing whistles and flashlights to women. All of them have been affected by gender-based violence, whether personally or through a family member or loved one, Villard-Appolon said.

KOFAVIV also relies on more than 1,000 members to help share their stories, support the victims and urge them to come forward and fight for justice.

It usually starts by accompanying the victims to the hospital within 72 hours of being raped. Once they undergo a test, they receive the medical certificate they must have to begin legal proceedings.

“After that, we assign a lawyer to her,” Villard-Appolon said. There is no cost to the victims, and they receive support from KOFAVIV through the trial.

Villard-Appolon says she is determined to keep fighting for a brighter future, even though justice has been elusive.

“My dream is that we will get to a place where we stop talking about the number of rape cases,” she said. “We will stop talking about Haiti as a country where people are committing violence against others. One day, we have to be able to say that we have a country with people who respect each other.”

Want to get involved? Check out www.madre.org/kofaviv and see how to help.

Business Software Alliance underlines need to step up anti-piracy efforts in MEA as 2011 software piracy rate is 58%

Business Software Alliance (BSA), the global organisation that is the voice of the global commercial software industry, has revealed details of the 9th Annual Global Software Piracy Study which shows that the overall software piracy rate in the Middle East and Africa (MEA) region stood at 58% in 2011, while the commercial value of unlicensed software amounted to just under $4.2bn in the region.

The BSA has also emphasised that more significant steps need to be taken by the local authorities to improve the piracy rates of the countries in the Gulf region. “We are committed to stepping up our anti-piracy initiatives in the Gulf region to curb piracy levels and we will continue to work closely with key government agencies and private sector organisations to create greater awareness about the negative impact of intellectual property right violation and software piracy across the Gulf,” said Jawad Al Redha, Business Software Alliance Chair, Gulf Region.

The gradual progress many countries are making in lowering piracy rates across the world demonstrates the value of sustained anti-piracy efforts that build equity over time. The BSA confirmed that there are proven steps that governments around the world can take to effectively reduce software theft:
• Increase public education and raise awareness about software piracy and IP rights in cooperation with industry and law enforcement.
• Modernize protections for software and other copyrighted materials to keep pace with new innovations such as cloud computing and the proliferation of networked mobile devices.
• Strengthen enforcement of IP laws with dedicated resources, including specialized enforcement units, training for law enforcement and judiciary officials and improved cross-border cooperation among law enforcement agencies.
• Lead by example by using only fully licensed software, implementing software asset management (SAM) programs, and promoting the use of legal software in state-owned enterprises, and among all contractors and suppliers.

“Our experience around the world suggests that when the Government becomes actively involved in driving long-term educational and awareness initiatives and taking appropriate enforcement action to ensure that those that pirate face real consequences, then significant reductions in software piracy rates become a reality for a country. This will benefit the local economy, drive IT innovation and support job creation,” said Dale Waterman, Corporate Attorney for Anti-Piracy for the Middle East and Africa region at Microsoft, a member of the BSA.

Global perspective

Globally, the study finds that piracy rates in emerging markets tower over those in mature markets — 68% to 24%, on average — and emerging markets account for an overwhelming majority of the global increase in the commercial value of software theft. This helps explain the market dynamics behind the global software piracy rate, which hovered at 42% in 2011 while a steadily expanding marketplace in the developing world drove the commercial value of software theft to $63.4bn.

Other findings from this year’s BSA Global Software Piracy Study include:
• Globally, the most frequent software pirates are disproportionately young and male — and they are more than twice as likely to live in an emerging economy as they are to live in a mature one (38 to 15%).
• Business decision makers admit to pirating software more frequently than other users — and they are more than twice as likely as others to say they buy software for one computer and then install it on additional machines in their offices.
• Globally, there is strong support for IP rights and protections in principle, but a troubling lack of incentive for pirates to change their behaviour in practice. Just 20% of frequent pirates in mature markets — and 15% in emerging markets — say the risk of getting caught is a reason not to pirate software.

This is the ninth annual study of global software piracy conducted by BSA in partnership with IDC and Ipsos Public Affairs, two of the world’s leading independent research firms. The study methodology involves collecting 182 discrete data inputs and assessing PC and software trends in 116 markets. This year’s study also included a survey of 15,000 computer users in 33 countries that together constitute 82 per cent of the global PC market.

© 2011 AMEINFO (www.ameinfo.com)

Sherlock writer wins Bafta honour

Sherlock co-creator Steven Moffat has been honoured with a writing prize at this year's Bafta Craft Awards.

A Scandal in Belgravia, the opening episode of the BBC One drama's second series, was also recognised for its sound and editing at Sunday's ceremony.

Dickens adaption Great Expectations and wildlife documentary Frozen Planet also won three awards at the event, which recognises behind the scenes talent.

Moffat said he was "genuinely, utterly thrilled" by his latest accolade.

Frozen Planet was also honoured for its sound and editing and picked up an additional prize for photography.

The BBC One series faced criticism last year after it emerged that footage of newborn polar bear cubs featured in the programme had been shot in an animal park.

Great Expectations' awards came for its production design, visual effects and photography and lighting.

The three-part period drama had led the field prior to this year's ceremony, with nominations in seven categories.

Held at the Old Truman Brewery in east London, the event also saw recognition for ITV1's Appropriate Adult, BBC war drama Birdsong and Channel 4's Educating Essex.

Former Roxy Music star Brian Eno picked up his first Bafta for his soundtrack to gang thriller Top Boy, while colourist Aidan Farrell received a special award for his contributions to such shows as Wallander and Downton Abbey.

The main Bafta TV awards will be presented at a ceremony in London on 27 May.

Appropriate Adult, ITV1's dramatisation of the investigation into serial killer Fred West, is the front-runner, with four nominations.

Sherlock and Channel 4 drama This Is England '88 also have three nominations each.

And Australian entertainer Rolf Harris will be awarded the Bafta Fellowship.

© 2011 BBC News (www.bbc.co.uk)

Deadly Disengagement

In the race to liberate Prague at the end of World War II, Eugene Fodor won. The founder of the eponymous travel-guide series was a U.S. Army lieutenant and officer of the Office of Strategic Services when he bounced into the Czechoslovak capital with two other Americans in a lone jeep on May 8, 1945, V-E Day. Though Berlin had fallen to the Soviets almost two weeks before, Prague was still something of a no-man’s land, with Russian forces hundreds of miles east of the city, American troops stalled just to the west and Czech insurgents battling it out against scattered Nazi diehards.

Fodor and the rest of his group—Sgt. Kurt Taub and Pvt. Nathan Shapiro—made it 100 miles through disintegrating German lines armed with only a rifle and a few pistols. Along the way, they managed to depose the pro-Nazi mayor of Karlsbad and pick up a shipment of insulin to deliver to Prague’s besieged hospitals.

The soldiers’ arrival in the city could have marked the beginning of a free and prosperous postwar future for Czechoslovakia. Instead it was a false dawn; a communist coup d’etat in 1947 left the Czechoslovakians under Moscow’s thumb for four decades, until the collapse of the Soviet Union. As Igor Lukes shows in “On the Edge of the Cold War,” his engrossing chronicle of the days when Czechoslovakia hung in the balance, the country’s place behind the Iron Curtain was anything but foreordained. But the U.S. government’s carelessness and indifference to the Czechoslovakians’ fate conspired to give an easy victory to the Soviet Union in the embryonic stages of the Cold War. By the time American officials felt roused to act, it was too late. They had already been outfoxed by Stalin, who had a keen appreciation for Bismarck’s maxim: Whoever rules Bohemia holds the key to Europe.

The Soviet Union’s determination to rule Czechoslovakia might have been thwarted. Mr. Lukes says, were it not for a single cable sent by Gen. Dwight Eisenhower to the Soviet high command on May 5, 1945. The message expressed Ike’s interest in pushing American forces in western Czechoslovakia—where Patton’s Third Army was soon to reach Pilsen, 50 miles west of Prague—all the way past the capital to the west bank of the Vltava River.

On the Edge of the Cold War

By Igor Lukes

(Oxford, 279 pages, $34.95)

Churchill and Patton, together with the British Foreign Office and U.S. State Department, had advocated loudly for just such an advance, which would have given the U.S. the opportunity to secure Prague and set the conditions for the emergence of a democratic government. But Moscow immediately objected and Eisenhower, eager not to roil Allied relations, obliged. “Patton did not hesitate to say that this was an unwise decision,” Mr. Lukes writes, leaving the general’s exact words to the reader’s imagination. Though Lt. Fodor and his jeep crew had demonstrated rather spectacularly that nothing stood in the way of an American liberation of Prague, the city would be left to the Soviets, who arrived on May 9.

After Truman and Stalin agreed to simultaneously withdraw their forces from Czechoslovakia in late 1945, the stage was set for a cat-and-mouse political battle over the country’s future, a battle that each side confidently predicted it would win. Mr. Lukes, a professor at Boston University, tells the story of this covert game through the eyes of the American officials in Prague who were charged with keeping Czechoslovakia out of Moscow’s orbit.

Prime among these officials was Ambassador Laurence Steinhardt, a Wall Street lawyer and leading contributor to FDR’s Democratic Party who had already served as America’s prewar ambassador to Moscow and wartime minister to Ankara, Turkey. Though the ambassador earned high marks for vigorous performances in previous postings, his resentment at being excluded from the Yalta Conference in 1945 dampened Steinhardt’s enthusiasm for diplomacy. “Some of his colleagues privately wondered whether he was still a U.S. ambassador fully committed to serving the president,” Mr. Lukes writes, “or a rich attorney torn between public service and private interest.” When the time came to defend Czech democracy, the author notes, America’s point man for Prague spent much of his ambassadorial tenure in New York attending to his law practice.

Mr. Lukes’s portrait of America’s leading spies in Czechoslovakia is no less scalding. Maj. Charles Katek, the local OSS chief, developed a taste for wining and dining Prague’s high society when he might have better spent his time courting sources inside the Czech Communist Party. Intelligence collection consisted entirely of gossip picked up during parties hosted at his OSS office.

The Americans’ disengagement proved deadly. When Czechoslovakia’s government, under heavy Soviet pressure, embarked on nationalization programs and currency “reform” that stripped the affluent of their assets, Steinhardt failed to raise the alarm. Instead, he put a generally positive spin on events while focusing narrowly on obtaining compensation for seized American property.

In 1947, the communists signaled the imminent staging of a coup by crudely attempting to assassinate leading Czech democrats and using the communists’ control of the Interior Ministry to arrest top Slovak politicians on bogus charges. Steinhardt chose precisely this fraught moment for a trip to the U.S. to look after his business interests; his communications from New York with the Prague OSS office concerned the acquisition of ammunition for deer hunting and the condition of the embassy’s linoleum. Fortunate indeed for Steinhardt that his government service preceded the advent of WikiLeaks.

Such inattention came at great cost to those patriotic Czechoslovakians who, at great personal risk, undertook to keep their neglectful American friends engaged. More broadly the cost would ultimately be borne by the Czech and Slovak nations, still working today to climb out of the social and economic hole left by communist rule. Mr. Lukes’s invaluable account makes it hard to dispute CIA Director Allen Dulles’s conclusion in the 1950s that Czechoslovakia “would never have been lost if someone had been there doing something about it.”

Mr. Dameron is a Prague-based correspondent for Radio Free Europe/Radio Liberty.

© 2011 Wall Street Journal (www.wsj.com)

5 year wait for book festival

Editor’s note: Each month, Inside the Middle East takes you behind the headlines to see a different side of this diverse region.

The annual traveling festival, known as PalFest, was set up in 2008 to bring book readings and cultural events to Palestinians who otherwise had little access to the outside world.

Each year the literary festival has visited several cities in the West Bank, but has been unable to gain permission from Israel to visit Gaza.

Israel imposed an economic blockade of Gaza when Hamas took over in 2007, which it says is needed to stop the transit of weaponry to be used by militants in attacks on Israel

This year, the group of 37 writers, artists and community organizers applied instead to enter Gaza from Egypt through the Rafah crossing, which re-opened last year. After a two-week wait, they were granted permission from the Egyptian Ministry of Foreign Affairs to enter Gaza.

Also on Inside the Middle East: Gaza music students find smart ways around travel ban

“We didn’t know if we would get in until the very last minute,” said Jamal Mahjoub, a British Sudanese author who traveled with PalFest. “We didn’t know if we would manage until we actually crossed the border.”

The group included Palestinians living in Jerusalem, West Bank and around the world, and prominent Arab authors including Egyptians Ahdaf Soueif and Khaled al Khamissi. None of them had been to Gaza before.

They spent five days in Gaza from May 5-9, running workshops for university students, free public events and visiting refugee camps.

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The 10-piece Egyptian band Eskenderella, which became well-known for playing in Tahrir Square during the Egyptian revolution, played its first concert in Gaza to a packed hall.

Omar Robert Hamilton, an independent filmmaker and founder of PalFest, said: “Coming to Gaza was a necessity. We have tried every year but always failed before. Everything was incomplete until we came.

“It was vital to come here because of the fact that it’s so divided and considered a separate entity, but at the same time totally connected to the West Bank.”

In total around 2,000 Gazans attended the PalFest events. In one event, each author had 10 minutes to give the message they had always wanted to say to Gazans.

Hamilton added: “It’s been pretty overwhelming. Everyone is so welcoming and pleased that we have managed to get there.

“They are very frustrated by the lack of access to the outside world. It’s been a very emotional trip, but overwhelmingly positive.

“We began PalFest as an attempt to help connect Palestine with the rest of the world. Lack of access to art, culture and education is a form of restriction.

“We wanted to do what we could to support cultural life in Palestine, and to put on a festival that would be taken for granted anywhere else.”

PalFest collected more than 1,500 books — including copies of an anthology of extracts from works by festival participants — which were distributed to cultural centers and university libraries.

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Mahjoub said: “There was a real thirst for any books they could get their hands on: poetry, contemporary novels, books about history and politics. It’s hard for people and institutions to get enough books and resources.

“They are hungry for any kind of cultural life, as there are no cinemas and few concerts.”

He added: “The most important thing has been meeting people and talking on a cultural level, to hear about their experiences and their isolation.

“We have driven up and down the country and have tried to get as broad a picture as possible of what it’s like to live here. I didn’t come to lecture people about my literature, but to find out what their experiences are.”

PalFest organizers said that on Wednesday evening the closing event was shut down by the police, but added that police later apologized for the incident, saying it was an “individual error.”

PalFest is supported by organizations including the UK Arts Council and the British Council. Its patrons including Nigerian novelist Chinua Achebe, British author Philip Pullman and British actor Emma Thompson.

This year’s festival also included one event in Ramallah in the West Bank and one in Cairo, Egypt, on May 11.

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