NYT > Home Page: DealBook: MF Global's Bankruptcy Closes In on Happy Conclusion

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DealBook: MF Global's Bankruptcy Closes In on Happy Conclusion
Jan 30th 2013, 11:06

When Mahesh Desai checked his MF Global account 15 months ago, his $580,000 nest egg was gone.

Like thousands of investors and farmers who had their savings with MF Global, Mr. Desai lost his money in the brokerage firm's chaotic final days. Regulators discovered that $1.6 billion was trapped in a web of improper wire transfers, a stunning breach that sent federal investigators scrambling to build a case.

On Thursday, a bankruptcy court will review a proposal that would return 93 percent of the missing money to customers like Mr. Desai. And the trustee who has submitted the proposal, James W. Giddens, has quietly identified a way that, if sent to the judge and approved, could plug the remaining shortfall for customers in the United States, according to people involved in the case.

The broad push to make MF Global customers nearly whole, a goal now surprisingly within reach, is a remarkable turnaround from the firm's 2011 bankruptcy filing when such a recovery seemed impossible.

"I'm surprised that, magically, the money has shown up," said Mr. Desai, a software account executive who, like most customers in the United States, has only 80 percent of his money. "I feel very relieved."

Customers are not the only ones exhaling. The hearing on Thursday presents a turning point for several major players in the MF Global case, including the firm's trustees, creditors and former executives.

For one, Mr. Giddens late last year made peace with an overseas administrator tending to the firm's British unit and Louis J. Freeh, the MF Global trustee recovering money for creditors. The pact ended a bitter fight over access to limited resources.

And Jon S. Corzine, the former New Jersey governor who headed MF Global when it collapsed, can now claim some small degree of vindication. The European bonds at the center of a $6.3 billion bet by Mr. Corzine fully paid out when they matured in recent months.

The large position in European sovereign debt in 2011 unnerved MF Global's investors and ratings agencies. Yet it is now clear that the bonds, which were sold to George Soros and other investors, were not by themselves to blame for felling MF Global. The firm also struggled after a one-time charge depressed its earnings.

Mr. Corzine, a former chief of Goldman Sachs, has started to regain his footing. He spent the summer on Long Island, traveled to France around the holidays and visited Central America for a humanitarian project involving children, setting up what he hopes will become a broader charitable effort. Mr. Corzine, 66, also spends time with his grandchildren and has office space in Midtown Manhattan, where he writes and trades with his own money.

In the most telling indication that Mr. Corzine is taking steps to put MF Global behind him, he was close to cooperating with Richard Ben Cramer, an author and a Pulitzer Prize-winning reporter, on a biography. Mr. Corzine's lawyers were in the final stages of negotiating with Mr. Cramer this month when the author died from complications of lung cancer.

Despite Mr. Corzine's progress, he still must shake a nagging federal investigation. While investigators have long doubted their ability to file criminal charges against him, suspecting that chaos and lax controls were at play, rather than outright fraud, they continue stitching together evidence on the firm's demise.

Federal authorities interviewed the former chief over two days in September, according to people close to the case, a sign that the government saw him more as a witness than a suspect. When prosecutors have damning evidence, they often file charges rather than offer a voluntary interview.

But Mr. Corzine, unsurprisingly, has yet to receive assurances that he is in the clear. And investigators continue to examine one of his statements from the September session, the people close to the case said. The statement involved Mr. Corzine's recollection about a phone call he had with JPMorgan Chase, which received a suspicious $175 million transfer from MF Global on its last day of business. A spokesman for Mr. Corzine declined to comment on the case.

JPMorgan sought written promises that the money did not belong to customers, but never received such assurances. An e-mail reviewed by The New York Times shows that Edith O'Brien, an MF Global employee who oversaw the transfer, told Mr. Corzine that the money belonged to the firm, not clients.

Ms. O'Brien declined to cooperate with the investigation without receiving immunity from criminal prosecution. But the government is hesitating to grant her request, according to the people close to the case, fearing that doing so would set a bad example for future investigations.

Other MF Global employees, including several who stayed to help unwind the firm, are moving on. Henri Steenkamp, MF Global's chief financial officer, recently departed. And Bradley Abelow, the firm's chief operating officer, who worked for Mr. Corzine at Goldman and the New Jersey governor's mansion, left late last year. Weeks earlier, he bought a $1 million condominium in the Williamsburg neighborhood of Brooklyn, according to property records.

With Mr. Abelow gone, Laurie Ferber, the firm's general counsel, remains the highest-ranking executive on Mr. Freeh's payroll.

For Mr. Freeh, the most significant breakthrough came in late December when he joined a deal with Mr. Giddens and the British administrator.

Under the terms of the broad settlement, the administrator will pay an estimated $500 million to $600 million to Mr. Giddens, ending a dispute over customer money trapped overseas. The deal also prompted Mr. Freeh to drop more than $2 billion in claims against Mr. Giddens, who hailed the pact as a "critical milestone."

"This is the eighth-largest bankruptcy in history and we've been able to sprint ahead on some occasions, but this is a marathon," Mr. Giddens's spokesman, Kent Jarrell, said in a statement.

The deal, if approved by the bankruptcy judge on Thursday, will enable Mr. Giddens to return up to 93 percent of the money of MF Global's United States customers. If a series of settlements with JPMorgan and other firms fall into place, people involved in the case said, Mr. Giddens could ultimately return 100 percent of the missing money.

To plug the gap, he must also pursue a small pot of money sitting in MF Global's general estate, a move that would require court approval. Even if he takes that path, foreign clients will still face significant shortfalls.

For some creditors, the race to recover their millions has moved too slowly. Some have grumbled about the roughly $42 million in fees for Mr. Freeh and other lawyers, focusing on parking bills and first-class air travel.

A group of hedge funds and other companies that held MF Global bonds at the time of the bankruptcy recently introduced a plan to liquidate the firm's remains and accelerate the payout process. The group, led by Silver Point Capital, said it expected customers to recover 100 percent of their money.

But not every customer will cash in. Some, in desperation, sold their claims last year at 89 or 91 percent to hedge funds and banks. Mr. Desai held out. "My hope has always been 100 percent," he said.

Mr. Desai credits the turnaround to Mr. Giddens and James L. Koutoulas, a Chicago hedge fund manager who became a voice for thousands of customers whose money disappeared.

While Mr. Koutoulas continues to fight, it has come with collateral damage. After he appeared on CNBC in 2011 to criticize JPMorgan Chase over its role in the bankruptcy, the bank closed his account and froze his credit card. The bank declined to comment.

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NYT > Home Page: Myanmar Troops Used Phosphorus on Protesters, Lawyers Say

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Myanmar Troops Used Phosphorus on Protesters, Lawyers Say
Jan 30th 2013, 11:09

BANGKOK — A group of lawyers investigating a violent crackdown in Myanmar that left Buddhist monks and villagers with serious burns has concluded that police used white phosphorus, a munition normally reserved for warfare, to disperse protesters.

The suppression in November of a protest outside a controversial copper mine in central Myanmar shocked the Burmese public after images of critically injured monks circulated across the country. It also gave rise to fears that the civilian government of President Thein Sein, which came to power in 2011, was using the same repressive methods as the military governments that preceded it.

Burmese attorneys together with an American human rights lawyer gathered evidence at the site of the protest, including a metal canister that protesters said was fired by the police. The canister was brought to a private laboratory in Bangkok, where a technician determined that residue inside it contained high levels of phosphorus. Access to the canister and a copy of the laboratory report were provided to a reporter.

"We are confident that they used a munition that contained phosphorus," said U Thein Than Oo, the head of the legal committee of the Upper Burma Lawyers Network, which helped conduct the investigation. "They wanted to warn the entire population not to protest. They wanted to intimidate the people."

White Phosphorus has many uses in war – as a smoke screen or incendiary weapon - but is rarely if ever used by police forces.

Reached on Wednesday, Zaw Htay, a director in the office of President Thein Sein, declined to comment on what kind of weapon was used. "I can't say. I can't answer," he said.

John Hart, a senior researcher at the Chemical Weapons Program of the Stockholm International Peace Research Institute, said by e-mail that although white phosphorus is not considered a chemical weapon under a 1993 international convention, it is banned from uses that "cause death or other harm through the toxic properties of the chemical."

One of the monks injured at the protest, U Tikhanyana, 64, has burns over 40 percent of his body and was flown to Bangkok by the government because Myanmar does not have the facilities to treat such a serious case.

Two months after the crackdown Mr. Tikhanyana remains in intensive care. In an interview on Wednesday in his hospital room, Mr. Tikhanyana described the moment that the police came to disperse the crowds in the pre-dawn hours of Nov. 29.

"I saw a fireball beside me and I started to burn," he said. "I was rolling on the ground to try to put it out."

Dr. Chatchai Pruksapong, a burn specialist treating Mr. Tikhanyana, said it appeared that the monk was seared with something "severely flammable."

Mr. Tikhanyana's wounds are similar to those he sees with soldiers injured by bomb blasts in Thailand's southern insurgency.

"Tear gas would definitely not cause this kind of deep wound," Dr. Chatchai said.

Myanmar government officials were initially quoted in the local news media as saying that police had thrown "smoke bombs" at protesters.

The canister found at the protest site appeared to have "smoke" stenciled on it and looks similar in appearance to smoke hand grenades once manufactured by the United States, said a security expert and former colonel in a European army who wanted to remain anonymous because he has dealings in Myanmar. Such smoke grenades emit burning particles within a radius of about 17 meters, he said.

Roger Normand, the American human rights lawyer who helped investigate the crackdown, said a report from the lawyers would be released "in the next few days."

Mr. Normand arranged to have the canister brought to the Bangkok laboratory, which is run by ALS, an Australian company that specializes in testing samples for their chemical content.

In an interview, Mr. Normand said it was "unheard of" for "highly volatile and dangerous weapons" to be used by police. "This raises serious questions about who in the military chain of command could have given the order to use these weapons."

The report prepared by Mr. Normand and the Burmese lawyers has been submitted to Daw Aung San Suu Kyi, the Nobel laureate and opposition leader, who was appointed by the government soon after the crackdown to lead a separate, official commission of inquiry. The precise mandate of the commission is unclear, as is the timing of the release of the commission's findings.

The government initially announced the commission would report its work on Dec. 31 but that was delayed by a month. It may be further delayed because Ms. Aung San Suu Kyi is currently on a five-day visit to South Korea.

The controversy over the copper mine centers on the government's attempt to relocate villagers in order to expand the mine, which is co-owned by a Chinese company and the Burmese military. The government ordered the dispersal of protesters after several months of intermittent demonstrations. The controversy received widespread coverage in the Myanmar media partly because land rights have become a major issue as the country opens up to the world.

But it is a measure of the villagers' resolve that even after the violent crackdown they say they are refusing to back down. Aye Net, a villager who has helped lead the protest movement, said by telephone Wednesday that villagers were calling for "justice for all those wounded in the crackdown."

"And we still want the total abolition of the project," she said.

Wai Moe in Yangon and Poypiti Amatatham in Bangkok contributed reporting.

Wai Moe contributed reporting from Yangon and Poypiti Amatatham from Bangkok.

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NYT > Home Page: South Korea Launches Satellite Into Orbit

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South Korea Launches Satellite Into Orbit
Jan 30th 2013, 08:43

Yonhap/Reuters

The Korea Space Launch Vehicle-1 was launched from the Naro Space Center in Goheung, South Korea, on Wednesday.

SEOUL, South Korea — South Korea on Wednesday succeeded in thrusting a satellite into orbit for the first time, achieving its ambition of joining an elite club of space technology leaders, seven weeks after the successful launching of a satellite by rival North Korea.

South Korea has attached an intense national pride to the 140-ton, 108-feet tall Korea Space Launch Vehicle-1, or KSLV-1, which was built with the help of Russian technology. Feeling besieged by China and Japan, both of which have successful space programs, South Korea has sought a technological prowess of its own.

That task has gained more urgency after North Korean successfully placed a rocket into orbit on Dec. 12. Only a handful of countries have succeeded in  independently launching satellites into orbit, with Iran also recently joining the club. After studying the debris of the North Korean rocket that splashed into South Korean waters, officials here determined that North Korea, despite its backward economy, has locally built key components of its rocket.

With all major South Korean television stations airing a live broadcast of the countdown, the two-stage rocket blasted off from the newly built Naro Space Center in  Goheung, 200 miles south of Seoul. 

"After analyzing the data, we determined that our satellite entered its intended orbit," said Lee Ju-ho, the government's minister of education, science and technology, during a nationally televised news conference. "Today, we took a leap toward becoming a power in space technology. This is a success for all the people."

Although part of the two-stage rocket was built by the Russians, South Korea considered the successful launching on Wednesday an important toehold in the space technology, the latest high-tech market where the country has decided to become a player. By 2021, it says, it will launch a completely indigenous three-stage, liquid-fueled rocket capable of carrying a 1.5-ton payload into orbit.

KSLV-1 was the first space rocket to take off from South Korea. The country purchased its liquid-fueled first booster stage from the Russian company Khrunichev in a deal that included a transfer of technology to South Korean engineers. South Korea has built the rocket's solid-fueled second stage that carried a small, 100-kilogram "Naro" Science and Technology Satellite-2C, built by the Korea Advanced Institute of Science and Technology.  

The satellite, which has a one-year operational lifespan, will mainly collect data on space radiation. Officials said they needed until early Thursday to conclude whether the satellite was functioning properly.

Before Naro, the country had five satellites in orbit, but all of them were launched abroad foreign rockets. 

The two Koreas, which remain technically at war after their 1950-53 Korean War ended in a truce, have recently taken their rivalry into a rocket race. They both have suffered  spectacular failures before a successful launching. South Korea had previously fired the KSLV-1 rocket twice from Goheung, first in 2009 and again in 2010, but each time, the rocket failed to put a satellite into orbit. The third attempt, initially scheduled for October, has been twice delayed at the last minute because of technical glitches. 

The government of President Lee Myung-bak eagerly awaited the rocket's successful launching before he ended his five-year term on Feb. 25. But the success came at a sensitive time on the Korean Peninsula.

The United Nations Security Council adopted a resolution last week tightening  sanctions against North Korea as punishment for its December rocket launching. The council considered the North Korean launching a cover for testing  intercontinental ballistic missile technology and a violation of its earlier resolutions that banned the country from conducting such tests.

North Korea has vehemently rejected the U.N. resolution, vowing to launch more long-range rockets and conduct a third nuclear test. It accused the Security Council and Washington, which led international support for its resolution, of applying "double standards," noting that countries like South Korea were free to launch rockets.

South Korea said that its program, unlike North Korea's, was solely for commercial purposes.

North Korea's three-stage Unha-3 rocket   put a small refrigerator-size satellite into orbit in December. Though South Korean officials doubted that the North Korean satellite was  functioning properly, they said that the successful launching demonstrated that North Korea was acquiring the technology for an intercontinental ballistic missile that can fly more than 6,200 miles.

For years, South Korea's space ambitions have languished under the constraints of  agreements with the United States, which feared that a robust rocket program might be transferred to the building of missiles and help accelerate a regional arms race.

South Korea has spent $500 million on its  rocket project. It's a paltry sum compared to the billions of dollars in space development projects by such regional leaders as China, Japan and India.

Still, like North Korea, South Korea has bestowed its rocket program with a halo of  national pride.

"Students and youths! The Republic of Korea is expanding around the world and toward space!" Mr. Lee, the science minister, said during the news conference, using the official name of South Korea.

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NYT > Home Page: French Forces Press Mali Campaign, as Relief and Anxiety Meld in Freed Towns

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French Forces Press Mali Campaign, as Relief and Anxiety Meld in Freed Towns
Jan 30th 2013, 08:51

Jerome Delay/Associated Press

In Gao on Tuesday, a Malian soldier pushed suspected Islamist radicals into the back of a truck.

BAMAKO, Mali — French troops took control overnight of the airport at the last major northern Mali town still in rebel hands, news reports said on Wednesday, after routing Islamist militants from two other principal settlements in the vast, desert region where relief and elation has given way to some measure of reprisal and frustration.

Interactive Feature

In Timbuktu, Mali, soldiers tried to disperse looters.

A French military spokesman in Paris, Col. Thierry Burkhard, was quoted as saying French troops reached the airport at Kidal, in the remote northeast of Mali, where one resident told Reuters that the French forces arrived in four military aircraft and some helicopters.

After punishing French airstrikes, French and Malian troops have launched a lightning campaign on the ground in recent days, entering the northern towns of Gao and Timbuktu without encountering resistance as the Islamist rebels who overran the region last year seem to have melted away to far-flung hide-outs.

But there were suggestions on Wednesday that Kidal, the capital of a desert region of the same name, offered other complexities both because secular Tuareg rebels claim to be in control of it and because a newly formed splinter group that broke with the main forces has its power base there.

The remote province surrounding it may also be offering sanctuary to Islamists who have fled Gao and Timbuktu, news reports said.

In Gao, groups of residents were reported on Tuesday to be hunting down suspected fighters who had not fled ahead of the French-Malian military forces who took control of the town over the weekend. Other residents expressed concern that Gao remained unsafe and was acutely short of food and fuel after a prolonged isolation.

"The city is free, but I think the areas close by are still dangerous," said Mahamane Touré, a Gao resident reached by telephone from Bamako, the capital. "These guys are out there."

Mr. Touré, who spent the evening watching soccer on television and listening to music with friends, said that although everyone was enjoying the new freedoms, the legacy of Islamist occupation was evident in the hardship of everyday life.

"The price of gasoline is almost double, and the price of food is very high," Mr. Touré said. "There are still things in the market, but no one has any money and there is no aid."

Reporters and photographers in Timbuktu, the storied desert oasis farther north that the French-Malian forces secured on Monday, saw looters pillaging shops and other businesses, with some saying the merchants were mainly Arabs, Mauritanians and Algerians who had supported the Islamist radicals who summarily executed, stoned and mutilated people they suspected of being nonbelievers during their 10-month occupation.

Alex Crawford, a television correspondent for Britain's Sky News, said, "This is months and months of frustration and repression finally erupting."

The rapidly shifting developments came less than three weeks into the military effort by France, the former colonial power in Mali, to reverse the spread of Islamist extremism in the northern half of the desert country, which had threatened to engulf the south, topple the weak central government and destabilize a vast area of northern Africa.

French troops, helicopters and warplanes began arriving here at the Malian government's invitation on Jan. 11. Since then other West African countries have started to send troops. Britain is preparing to send more than 300 military trainers, and the United States is providing aerial cargo and refueling help.

In Washington, Pentagon officials said that as of Tuesday 17 sorties by United States Air Force C-17 cargo jets had flown 500 French troops and 390 tons of equipment into Bamako. In addition, there has been one aerial refueling operation by an American KC-135 tanker aircraft, which provided 33,000 pounds of fuel to several French warplanes, the officials said.

At the same time, a meeting of international donors was getting under way on Tuesday in Addis Ababa, Ethiopia, as part of an effort to provide more than $450 million in long-term financing for the military intervention in Mali.

The French-led effort has met surprisingly little resistance from the array of Islamist militias that occupied the northern part of Mali, an area about twice the size of Germany, in the spring of 2012 in the midst of a national political crisis.

It remains unclear how long the foreign military occupation will last. Most of the Islamist fighters have melted into the desert and could be regrouping to fight again.

In a bid to consolidate the gains, troops from Mali and neighboring Niger arrived Tuesday in the small town of Ansongo, about 50 miles south of Gao, one day after President François Hollande of France urged African countries to take a more prominent role in the operations.

Just as in Gao two days before, residents filled the streets there to greet the arrival of the African troops as they toured Ansongo and its environs.

"Everyone is very, very, very happy," said Ibrahim Haidara, an Ansongo resident reached by phone. "They chanted, 'Vive la France!' and 'Long live African armies!' "

But like his counterparts in Gao, he worried that the fighters might not have gone very far.

"They are in the bush. They are hiding," he said. "One must be careful."

Peter Tinti reported from Bamako, and Rick Gladstone from New York. Scott Sayare contributed reporting from Paris, John F. Burns and Alan Cowell from London, and Elisabeth Bumiller from Washington.

Media files:
MALI-1-moth-v2.jpg
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NYT > Home Page: South Korea Says It Has Launched Rocket

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South Korea Says It Has Launched Rocket
Jan 30th 2013, 07:55

SEOUL, South Korea (AP) — South Korea said Wednesday it successfully launched a satellite into space from its own soil for the first time, a point of national pride that came weeks after archrival North Korea accomplished a similar feat to the surprise of the world.

The South Korean rocket blasted off from a launch pad in the southwestern coastal village of Goheung. Science officials told cheering spectators minutes later that the rocket delivered an observational satellite into orbit. There was no immediate confirmation that the satellite was operating as intended.

The launch is a culmination of years of efforts by South Korea — Asia's fourth-largest economy — to advance its space program and cement its standing as a technology powerhouse whose semiconductors, smartphones and automobiles command global demand. North Korea's long-range rocket program, in contrast, has generated international fears that it is getting closer to developing nuclear missiles capable of striking the U.S.

South Korea's success comes amid increased tension on the Korean Peninsula over North Korea's threat to explode its third nuclear device. Pyongyang is angry over tough new international sanctions over its Dec. 12 rocket launch and has accused its rivals of applying double standards toward the two Koreas' space programs.

Washington and Seoul have called North Korea's rocket launch a cover for a test of Pyongyang's banned ballistic missile technology.

Both Koreas see the development of space programs as crucial hallmarks of their scientific prowess and national pride, and both had high-profile failures before success. South Korea tried and failed to launch satellites in 2009 and 2010, and more recent launch attempts were aborted at the last minute.

The satellite launched by Seoul is designed to analyze weather data, measure radiation in space, gauges distances on earth and test how effectively South Korean-made devices installed on the satellite operate in space. South Korean officials said it will help them develop more sophisticated satellites in the future.

U.S. experts have described the North's satellite as tumbling in space and said it does not appear to be functioning, though Pyongyang has said it is working.

The South Korean rocket launched Wednesday had its first stage designed and built by Russian experts under a contract between the two governments. North Korea built its rocket almost entirely on its own, South Korean military experts said earlier this month after analyzing debris retrieved from the Yellow Sea in December.

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NYT > Home Page: Television Review: ‘The Americans,’ FX Series About Russian Spies

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Television Review: 'The Americans,' FX Series About Russian Spies
Jan 30th 2013, 05:17

They could be any suburban family.

The 10-year-old loves rockets and worships Thomas P. Stafford, the astronaut who, among other things, orbited the Moon in 1969 and in 1975 was the American commander of the Apollo-Soyuz flight, the first joint United States-Soviet space mission.

Over pancakes, the father teasingly asks his son if the astronaut ever actually landed on the Moon, and the boy falters, trying to defend his hero. His mother steps in. "The Moon isn't everything," she tells her son brightly. "Just getting into space is a remarkable accomplishment."

And there is nothing out of the ordinary about that exchange, except that the parents are both K.G.B. spies, posing as Americans in the Washington suburbs. Their lighthearted, carefully veiled disagreement about their child's hobby reflects deeper divides in their marriage and their loyalty to the Kremlin.

"The Americans," a new series that begins on Wednesday on FX, is also a remarkable accomplishment: It's a subtle, complex portrait of a relationship etched into an engaging espionage thriller set in 1981, when Reagan was newly elected, and cars were big, and so was the cold war. The marriage of Philip (Matthew Rhys) and Elizabeth Jennings (Keri Russell) was arranged by the K.G.B. in the 1960s. Their ties and tensions are professional but also personal, and so intertwined that it's impossible for either fully to read, or trust, the other.

Philip, more relaxed and playful, likes football and American success stories, including Neil Armstrong's historic walk on the Moon. Elizabeth is more tightly wound and unswervingly patriotic, and she roots for the astronaut most favored by Moscow. (Russians then and now remember General Stafford warmly because of his role in the first joint space project; in 2011 Dmitri A. Medvedev, then Russia's president, presented a medal to General Stafford.)

Those small differences loom large when the couple learn that a high-level K.G.B. officer has defected, threatening to reveal the identities of undercover agents. Philip, fearing that their cover could soon be blown, considers making a deal with the F.B.I.; Elizabeth is appalled at the very suggestion of treason, though the two children, who have no idea that their parents have a secret life working for the enemy, are her Achilles' heel.

There are plenty of subsidiary worries, in particular their friendly new next-door neighbor, a tall, genial F.B.I. agent freshly assigned to counterintelligence. "It's probably a coincidence," Elizabeth says to Philip. "F.B.I. agents have to live somewhere."

A period drama set in the early 1980s is tough — not enough time has passed to make the clothes and set design "Mad Men" chic, and big hair and shoulder pads look plain silly. The creators of "The Americans" don't try to perm Ms. Russell's hair or puff up her costumes. Instead they rely on music to turn back the clock, archly using songs from the era, including a chase scene set to the Fleetwood Mac song "Tusk."

Even the homework is dated. The 13-year-old daughter is assigned to write a paper on how the Russians cheat on arms control.

In the age of "Homeland" and "Zero Dark Thirty," it's a little hard to recall how powerful the cold war mind-set was, and how imminent the possibility of a nuclear first strike seemed in those days. Plenty of Americans smirked in 2010 when the F.B.I. uncovered a cell of Russian sleeper agents who had been living a lie in places like Yonkers and Montclair, N.J., for years. As it turned out, those moles didn't dig very deep and never once sneaked classified information back to their bosses. They were returned to Russia in exchange for American prisoners.

But there was a time when the fear of Soviet agents, K.G.B. "illegals," as they are known, was quite intense and made its way into movies like "Telefon," a 1977 Charles Bronson thriller about sleeper agents in the United States who were brainwashed by Moscow and could be activated only by a phone call and a code phrase from a Robert Frost poem.

Back then the Soviet Union took Reagan very seriously, and in "The Americans" the K.G.B. puts pressure on Philip and Elizabeth to take risks to uncover the new administration's secret plans.

"The American people have elected a madman as their president," a top Soviet spy says. He is also worried about another threat, this one from within. "These times bring out the worst in our people," he tells Elizabeth. "I'm fighting now against comrades in our own organization who are starting to act like they did in our darkest days."

The Jenningses may have enemies at home, and they certainly are in constant danger abroad, where even a K.G.B. safe house could be anything but. Their fight for survival takes place deep in the shadows and far from view.

Their neighbors have no idea. When the F.B.I. agent next door looks out his window, his wife tells him to relax. "You are officially now surrounded by the most normal, boring people in the world," she says.

Once again it turns out that it's the normal, boring people who lead the most exciting lives.

The Americans

FX, Wednesday nights at 10, Eastern and Pacific times; 9, Central time.

Produced by Fox Television Studios and FX Productions. Created by Joe Weisberg; Mr. Weisberg, Joel Fields, Graham Yost, Justin Falvey, Darryl Frank and Gavin O'Connor (pilot only), executive producers; Joshua Brand, consulting producer; Adam Arkin, Mitch Engel and Richard Heus (pilot only), producers.

WITH: Keri Russell (Elizabeth Jennings), Matthew Rhys (Philip Jennings), Noah Emmerich (Agent Stan Beeman), Maximiliano Hernández (Agent Chris Amador), Holly Taylor (Paige Jennings) and Keidrich Sellati (Henry Jennings).

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NYT > Home Page: Israel to Transfer Tax Funds to Palestinians

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Israel to Transfer Tax Funds to Palestinians
Jan 30th 2013, 08:01

JERUSALEM — Israel has decided to transfer tax and customs revenues collected last month on behalf of the Palestinian Authority to help ease the economic crisis there, a senior Israeli government official said on Wednesday.

This reverses an earlier decision to use the revenues to offset at least part of the Palestinian debts to Israeli utility companies as a punitive measure following the Palestinians' successful bid to upgrade their status at the United Nations to that of a nonmember observer state in late November.

But the official emphasized that the decision was "a one-time event" and was "not an indication of what Israel might do next month."

The decision to transfer the funds came after a meeting on Monday between Prime Minister Benjamin Netanyahu and Tony Blair, the envoy of the so-called quartet of Middle East peacemakers that groups the United States, the European Union, the United Nations and Russia. In a statement after the meeting, both men pledged to work on peace and security issues.

Nour Odeh, a spokeswoman for the Palestinian Authority, said that Palestinian and Israeli officials were scheduled to hold a regular technical meeting on Wednesday where they would calculate the amount of revenues collected and owed. Revenues usually amount to around $100 million a month.

The Palestinian Authority, a self-rule body with limited control over parts of the West Bank, has been in financial crisis for about two years, largely because of a drop in donor funds, and it has been struggling to pay its 150,000 government workers their full salaries on time, leading to growing restiveness and strikes.

Israel's decision to withhold the transfers after the United Nations move was expected, but special funds pledged by Arab states to the authority as a so-called "safety net" after the diplomatic clash with Israel have not yet materialized.

Israel has withheld transfers of Palestinian tax revenues at least five times before, sometimes for weeks and, after the outbreak of the Palestinian uprising in 2000, for two years. But this was the first time that Israel had used the money, which constitutes about two-thirds of the authority's income, to pay off Palestinian debts to the Israel Electric Corporation and other Israeli providers without the consent of the authority.

The prime minister of the Palestinian Authority, Salam Fayyad, called in December for a voluntary boycott of Israeli goods by Palestinian consumers in what he called a "logical response" to the Israeli measure because the tax revenues are accrued on Palestinian trade with Israel. The call did not appear have had much impact either in the Palestinian territories or on the Israeli economy.

Israel's former foreign minister, Avigdor Lieberman, had said in December that it would take four months of tax revenues collected by Israel for the Palestinian Authority to repay its debts. He had threatened that no money would be transferred from Israel to the authority until the debts were paid.

In a statement released by the Palestinian Authority cabinet after a meeting on Tuesday, the withholding of tax revenues was described as "Israeli piracy." The cabinet said that government workers would be paid the remaining half of their November salaries in the next two days, "if work is resumed in the ministries, at the least by those responsible for executing the salary payment procedures."

The cabinet also "affirmed the urgency for our Arab brethren to accelerate the implementation of their commitments to support the state treasury," according to the statement.

Israel is engaged in a delicate balancing act since it does not have an interest in seeing the Palestinian Authority collapse, officials there have said. In the weeks before the United Nations action, they said, Israel advanced money to the Palestinian Authority in response to calls for help and to provide some relief ahead of a Muslim holiday.

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