Hong Kong Votes for Democracy

FROM TODAY'S WALL STREET JOURNAL ASIA
September 9, 2008

Hong Kongers have suffered one delay after another on their path to full democracy since the territory's return to China in 1997. But that hasn't snuffed out their democratic spirit. Witness the results of Sunday's legislative elections.

Pro-democracy parties won 23 seats in the 60-member Legislative Council elections. That's down from 25 after the last election in 2004. But that's not the number that matters. Half of the legislature is appointed by special interest groups loyal to Beijing. The other half is directly elected by the people. In those seats, the democrats won 19 of 30, gaining a seat from the 2004 results. The democrats' losses came only from the ranks of special-interest legislators.

The result maintains the crucial veto pro-democracy parties have wielded over constitutional reforms by denying the pro-Beijing parties a 40-seat supermajority. This won't force Government House to push ahead with democracy faster, but it will keep Beijing from pushing any antidemocratic electoral "reforms."

Within the democratic movement, this election also marks a changing of the guard of sorts. Its best-known figureheads have left -- Democratic Party founder Martin Lee and former bureaucrat Anson Chan, both of whom announced their retirements before the election. Sunday's results thus give a mandate to a new generation of democratic voices in the legislature, like Kam Nai-wai, a 47-year-old social worker and member of the Democratic Party just elected to represent Hong Kong Island.

The result is also a slap in the face to the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB), the largest pro-Beijing group that campaigned for seats. The DAB is better funded and better organized than the pro-democracy crowd. In the run-up to Sunday's vote, the DAB blanketed the territory with advertisements. Chief Executive Donald Tsang did his part, too, rolling out a package of largesse including expanded electricity discounts, and hosting a star tour by China's Olympic athletes. Yet those efforts yielded only eight directly elected seats.

Voters clearly were frustrated with the government's economic record. Ahead of Sunday's polls, a Hong Kong University Public Opinion Programme poll found 87% of voters said their decision would be driven by "livelihood" issues like housing and education, while 77% said they were "focusing" on economic policies. Little wonder: inflation is running 6.3% and GDP growth slowed to 4.2% in the second quarter, from 7.3% in the first.

On their face, the pro-Beijing and democratic policy platforms weren't that far apart. Unfortunately, both favor imposing a minimum wage and enacting a competition law. The key difference was that democrats also campaigned on holding Mr. Tsang's administration accountable for its perceived policy blunders. This suggests that Hong Kongers understand better than some of their leaders the relationship between democracy and prosperity.

Skeptics will note that turnout, at about 45%, was 10 percentage points lower than in the last general election, in 2004. But Hong Kong's turnout was still high by the standards of some other democracies. In 2006 in the U.S., when a very unpopular executive faced a legislative election, only 41% of voters turned out. So it's hard to argue that Hong Kongers are not interested in democracy now.

Sunday's election is another reminder that the territory deserves a democratic system worthy of its voters.

The Hunt for Sarah October

City slickers invade Wasilla
September 9, 2008

Democrats understand Sarah Palin is a formidable political force who has upset the Obama victory plan. The latest Washington Post/ABC Poll shows John McCain taking a 12-point lead over Barack Obama among white women, a reversal of Mr. Obama's eight-point lead last month.

It's no surprise, then, that Democrats have airdropped a mini-army of 30 lawyers, investigators and opposition researchers into Anchorage, the state capital Juneau and Mrs. Palin's hometown of Wasilla to dig into her record and background. My sources report the first wave arrived in Anchorage less than 24 hours after John McCain selected her on August 29.

The main area of interest to the Democratic SWAT team is Mrs. Palin's dismissal in July of her public safety commissioner. Mrs. Palin says he was fired for cause. Her critics claim he was fired because he wouldn't bend to pressure to get rid of a state trooper, Mike Wooten, who had been involved in a bitter divorce battle with Mrs. Palin's sister. Mr. Wooten is certainly a colorful character. He served a five-day suspension after the Palin family filed a complaint against him alleging he had threatened Mrs. Palin's father. They also accused him of using a Taser on his 10-year-old stepson, drinking in his patrol car and illegally shooting a moose.

Mrs. Palin will return to Alaska for the first time in nearly two weeks on Wednesday night, when she is scheduled to arrive in Fairbanks. Local Republicans will hold a "Welcome Home" rally for her. You can bet some of the Democratic opposition research contingent will be in the audience taking notes. They'll be the ones arriving in rental cars and wearing fancy dress shoes from back east.

-- John Fund

We'll Protect Taxpayers
From More Bailouts

By JOHN MCCAIN and SARAH PALIN

The bailout of Fannie Mae and Freddie Mac is another outrageous, but sadly necessary, step for these two institutions. Given the long-term mismanagement and flawed structure of these two companies, this was the only short-term alternative for ensuring that hard-working Americans have access to affordable mortgages during this difficult economic period.

We are strong advocates for the permanent reform of Fannie and Freddie. For years, Congress failed to act and it is deeply troubling that what we are now seeing is an exercise in crisis management rather than sound planning, and at great cost to taxpayers.

We promise the American people that our administration will be different. We have long records of standing up to special interests and providing the leadership to change government and make it more accountable to the American taxpayer. In our administration, every agency and department will undergo rigorous oversight and review. We will require the highest standards of accounting, reporting and transparency ever demanded in government.

Enduring reform of Fannie and Freddie is a key first step. We will make sure that they are permanently restructured and downsized, and no longer use taxpayer backing to serve lobbyists, management, boards and shareholders.

Treasury has broadly followed the McCain plan, outlined months ago, and gets at the short-term heart of the problem. That plan reinforces the federal commitment to meet our obligations and get this mess behind us. It replaces management and board members. It requires that shareholders take losses first. It puts taxpayers first in line for any repayments. And it terminates future lobbying, which was one of the primary contributors to this great debacle.

Along with the commitment of taxpayers' dollars, we should make market reforms to help ensure that we do not face this problem again. We will make sure the marketplace understands its obligations. Homeowners must be able to understand the terms and obligations of their mortgages. In return, they have an obligation to provide truthful financial information, and should be subject to penalty if they do not. Policies must be in place to ensure that homeowners provide a responsible down payment of equity in the initial purchase of a loan. In the future, Fannie, Freddie or any government organization should never insure a loan when the homeowner doesn't have enough of his or her own capital in the investment.

Lenders who initiate loans will be held accountable for the quality and performance of those loans, and strict standards must be required in the lending process. Every lender must be required to meet the highest standards of ethical behavior, with recourse if they do not perform.

Reforms are necessary now to make mortgage lending and banking organizations more transparent. We will require greater disclosure, so that complex derivative instruments and excessive leverage can't put the marketplace, and the financial security of your home, at risk.

We will push the nation's top mortgage lenders to provide maximum support to help cash-strapped, but credit-worthy customers. Lenders should do everything possible to keep families in their homes and business growing.

Fixing Fannie and Freddie, and reforming our mortgage and financial markets, is critical to getting the housing market and the entire economy moving again. A great deal of the savings and wealth of American families is wrapped up in the value of their homes. A house has traditionally been the wealth-building course to retirement. The housing industry employs millions of Americans. One of us, John McCain, said over two years ago, "If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose."

Fannie and Freddie's lobbyists succeeded and Congress failed. Under our administration this will not happen again.

In the first 100 days of our administration, we will look at every agency and department and expenditure of the federal government and ask this simple question: Is it serving the needs of the taxpayer? If it is not, we will reform it or shut it down, and we will spend money only on what is truly in the interest of the American people.

Mr. McCain and Mrs. Palin are, respectively, the Republican candidates for president and vice president.

The Perils of U.S. Protectionism

Democratization and Its Discontents

"Yes, Leezza, Leezza, Leezza," leched Libya's Moammar Gadhafi last week on the eve of his meeting with the U.S. Secretary of State in Tripoli. "I love her very much."

Posterity will surely not record whether the dictator's feelings were reciprocated. But it will remember that Ms. Rice, who began her tenure as secretary with a ringing call for freedom and democracy, is ending it on a more genial note when it comes to the world's despots.

AP

Tripoli, Libya, Sept. 5, 2008.

"For 60 years," she said in Cairo in June 2005, "the United States pursued stability at the expense of democracy in the Middle East -- and we achieved neither." Yet the U.S. rapprochement with Libya is nothing if not the triumph of the stability agenda over the freedom one. Just ask Libyan democracy activist Fathi El-Jahmi (on whose behalf Sen. Joe Biden has made honorable exertions), assuming you can find him in whatever dark cell Mr. Gadhafi has him.

But let's give Ms. Rice her due. Her return to the realpolitik of onetime mentor Brent Scowcroft is earning rave reviews. In Time magazine, reporter Scott Macleod lauded her visit to Libya as "an unqualified success" and "an example of how violent disputes in the troubled region can be settled through diplomacy rather than war." Former Clinton administration official James Rubin is over the moon over Ms. Rice's reported efforts to establish a U.S. interests section in Tehran. Her push to bring about an Israeli-Palestinian peace deal is also being lauded, as is her diplomatic outreach to Syria and North Korea.

Meanwhile, Washington is getting what so far seems a crummy return on its pro-democracy investments. The Bush administration made a notable push for Palestinian democracy and wound up electing Hamas, which will almost certainly win next year's presidential election should it choose to contest it. It pushed the Syrians out of Lebanon, only to get a weak and divided democratic government that crumbled in the face of Hezbollah's (and Syria's) violent provocations.

It looked on as Pakistan democratized its way out of Pervez Musharraf's autocratic -- and relatively clean and competent -- hands and into Asif Ali Zardari's dirtier and clumsier ones. It supported Georgia's Mikheil Saakashvili as he blundered his way into a war with neighboring Russia. In Iraq, it has discovered that Prime Minister Nouri al-Maliki is a man in the mold of Charles de Gaulle: firm, astute, nationalistic -- and not particularly eager to be seen as America's man, much less George W. Bush's.

So is the freedom agenda a bust? I think not. As in life, so too in foreign policy: The options before us are rarely marked "good" and "bad."

Would the Palestinian Authority be a more peaceable kingdom if a "secular" tyrant like Yasser Arafat were in charge? Was Lebanon better off when Syria terrorized its citizens (and supported Hezbollah) openly, without a murmur of opposition? Would America's influence in Pakistan have been enhanced had we stood in the way of the groundswell of popular opposition to Gen. Musharraf after he began rounding up lawyers, judges and civil-rights activists? Would Georgians have been better off under a Belarus-style regime that did the Kremlin's bidding automatically?

And could the administration have better fought the insurgency in Iraq or defended its political position at home if it had done so in the service of a puppet or military Iraqi government? Previous administrations tried something similar with South Vietnam's Nguyen van Thieu, not to the best effect.

This isn't to say that policies that promote democratization are always and everywhere the better option: The world would have been better off if Jimmy Carter had backed the autocratic Shah instead of acquiescing to the totalitarian Ayatollah. Nor is it to deny that democratization is a fraught, dangerous and reversible process.

On the other hand, a policy that encourages democratic openings wherever they are feasible is at least potentially sustainable, whereas policies biased toward maintaining autocratic stability are invariably unsustainable.

Time will tell whether Iraq is able to maintain its democracy. But it stands a better chance of survival than Egypt's pressure-cooker regime, the Saudi gerontocracy, Iran's theocracy or Libya's cult-of-personality state. Time will also tell whether Georgian democracy will be able to survive the Russian onslaught. But that onslaught is a potent reminder of the neocon notion that the internal character of authoritarian states really does predict their foreign policies.

So let's grant that in normalizing relations with a WMD-free Libya, Ms. Rice has chalked up one of the few wins of her desultory tenure -- so long as we also grant that turning one dictator would never have happened had we not turned out another.