LONDON -- Yemen pledged Wednesday to implement broad political and economic reforms in exchange for a package of long-term development and security assistance from countries concerned that it could become a permanent base for international terrorist operations.

After a meeting here of more than two dozen governments and international financial institutions that declared themselves "Friends of Yemen," Secretary of State Hillary Rodham Clinton praised Yemen's "recent efforts to take action against al-Qaeda," which have had extensive U.S. support.

The United States has flooded Yemen with intelligence and military resources in recent months and has allowed attacks against insurgent encampments by U.S. guided missiles. Clinton said that "nobody raised" concerns about the increased U.S. involvement during the conference. "Yemen is looking for help," she said, "and not just from the United States."

However, she said, "the government of Yemen must also do more."

The meeting, attended by foreign ministers from Yemen's Persian Gulf neighbors as well as Russia, China and leading NATO members, was proposed by British Prime Minister Gordon Brown after the Christmas Day bombing attempt against a U.S. airliner sponsored by al-Qaeda in the Arabian Peninsula. The failed attack set off a worldwide reassessment of the threat posed by the Yemen-based al-Qaeda affiliate. Yemen has asked the international community to provide up to $4 billion annually.

The Yemen gathering was added to a larger conference to take place here Thursday on Afghanistan, during which Afghan President Hamid Karzai will present his plans to steer Taliban fighters away from counterinsurgency, expand the Afghan military and police forces, improve governance and combat corruption.

The United States expects the more than 60 governments who will attend to endorse President Obama's new Afghanistan-Pakistan strategy and to pledge additional financial and military support.

Outside the Yemen and Afghanistan conference halls, Clinton is holding meetings with members of the P5 +1 negotiating group (the five permanent members of the U.N. Security Council, plus germany) on Iran. The group has failed to reach an agreement on imposing a fourth round of U.N. sanctions on Iran following its lack of response to an offer to provide enriched uranium for energy production. The six countries have demanded Iran stop its own enrichment program, which they say -- and Iran denies -- is designed to produce fuel for nuclear weapons.

Russian resistance to new sanctions, which the administration hopes to introduce at the Security Council next month, has softened recently. Russian Foreign Minister Sergey Lavrov reportedly said Wednesday, after a private session with Clinton, that "the world can't wait forever" for an Iranian response.

Clinton will have a more difficult time Thursday when she meets with Chinese Foreign Minister Yang Jiechi, whose government has strongly resisted new sanctions. Asked how she would change China's mind, Clinton told reporters traveling with her from Washington: "I don't think there is a mind to change. I think that there is an openness. I think there is an awareness of the importance of the international community standing together with respect to Iran."

The administration has said it will persist in its diplomatic outreach to Iran. But "we have reached the reluctant conclusion that we have to go forward on the pressure side of our approach," a State Department official said.

After the closed-door Yemen meeting, Clinton said that Yemen had been "brutally honest about the problems it faces," including widespread illiteracy and unemployment, high population growth and a dwindling water supply. But she and British Foreign Secretary David Miliband made clear that they expect the Yemeni government to proceed with negotiations with the International Monetary Fund and to adhere to a 10-point program of reforms introduced by President Ali Abdullah Saleh's government.





By Karen De Young, The Washington Post, January 28, 2010

LONDON -- U.S. Secretary of State Hillary Rodham Clinton is using meetings in London this week to press ahead with imposing tough new international sanctions on Iran over its nuclear program.

A senior U.S. official said Wednesday that Clinton would raise the prospect of new U.N. Security Council sanctions against Iran in discussions with the foreign ministers of Russia, China, Britain, Germany, France, Italy, Indonesia, Saudi Arabia and the United Arab Emirates.

The official spoke on condition of anonymity because the meetings will be private. Clinton and her colleagues are in London for British-hosted meetings this week on Yemen and Afghanistan.

By MATTHEW LEE, The Associated Press, January 27, 2010

LONDON - Senior officials from the United States and 19 other countries gathered here on Wednesday to declare themselves friends of Yemen. But Secretary of State Hillary Rodham Clinton administered a dose of tough love, saying Yemen, an impoverished Arab nation, must earn increased foreign aid by rooting out corruption, settling internal strife and protecting the rights of girls and young women.

Mrs. Clinton, at a major conference focused on the growing terrorist threat from Yemen, said the United States would bolster nonmilitary assistance to the country, but urged it to accept economic remedies proposed by the International Monetary Fund and to enact its own 10-point reform plan.

"I personally believe that now is the moment for the Yemeni government to really step up and do what it has said it will do," Mrs. Clinton said after the conference, during which she delivered the same challenging message to Yemen's prime minister, Ali Mohammed Mujawar.

"You can't just continue to make promises in the face of very tough challenges like the ones Yemen is facing without being expected to actually manage and resolve some of those problems," she said.

The two-hour conference, organized by the British government, underscored Yemen's status as the latest hot spot in the global struggle against Islamic terrorism. But Mrs. Clinton's hard-edged message enlivened a meeting that otherwise seemed likely to generate polite messages of support, since the British had ruled out asking for financial donations from countries.

A much larger group of countries will meet on Thursday to talk about security and economic aid for Afghanistan, in the aftermath of the Obama administration's decision to deploy 30,000 more troops there.

In a sign of how large both countries loom at the White House, President Obama asked Mrs. Clinton to fly to London, even though doing so meant missing his State of the Union address Wednesday night.

While Iran is not on the agenda in London, it has shadowed Mrs. Clinton's travels here. She tried to add momentum to a global effort to pressure Iran on its nuclear program, meeting with Russia's foreign minister on Wednesday and scheduling a meeting with China's foreign minister on Thursday.

China has been publicly reluctant to consider new sanctions against Tehran, but Mrs. Clinton insisted that it was not putting up roadblocks. She said the United States would share information with Beijing to win its support.

"I don't think there is a mind to change," she said. "I think there is an openness and awareness."

Britain's prime minister, Gordon Brown, organized the Yemen conference after the failed Dec. 25 plot to blow up a Northwest Airlines jet bound for Detroit from Amsterdam. Investigators have said the suspect in the bombing attempt, Umar Farouk Abdulmutallab, told them he had received training and equipment in Yemen.

The Obama administration has given Yemen intelligence and firepower in recent weeks for attacks on suspected training camps of Al Qaeda, according to American officials. But Mrs. Clinton stressed the need to extend aid beyond counterterrorism to development and governing.

She said she had been struck by the Yemeni government's presentation, in which officials cited what they called "appalling indicators" - a growing population, dwindling oil reserves, water shortages and political instability as the government battles Houthi insurgents in the north and secessionists in the south.

"I saw something today that is rare to see anywhere, and that is a report by a government that was brutally honest about the problems it faces," she said.

Still, Mrs. Clinton said Yemen would have to persuade donors that it would use aid money wisely. In 2006, a donors' conference raised $5.2 billion for the country, but less than a third of that was delivered because of fears that the money would be misused or siphoned off by corruption.

Mrs. Clinton also criticized Yemen for rescinding a law that would have set 17 as the minimum age at which a girl could legally be married. In rural areas of the country, the average age for marriage is 12 to 13.

Yemen's foreign minister, Abu Bakr al-Qirbi, welcomed Mrs. Clinton's offer of support and largely sidestepped her criticisms. He said Yemen would renew its push for political reforms - an on-again-off-again process that has frustrated American officials for years. "The challenges we are facing now cannot be faced unless we implement this agenda of reform," he said.

On Wednesday evening, Mrs. Clinton met the Afghan president, Hamid Karzai. At Thursday's conference, he is expected to announce his government's plan for reintegrating lower- and mid-level Taliban fighters into Afghan society to officials from more than 60 countries.

The question is whether Mr. Karzai will confront the issue of reaching out to the Taliban's leaders - an idea that has gained attention with recent comments by the top American commander in Afghanistan, Gen. Stanley A. McChrystal, who said he could eventually envision a role for some Taliban officials in Afghanistan's political establishment.

The United Nations recently agreed to Mr. Karzai's request that it remove the names of five Taliban members from its blacklist - a step that would be necessary for the government to begin talks with most Taliban leaders.

American officials have tried to keep the focus on the foot soldiers of the Taliban, though officials conceded that they were starting to think about which senior Taliban figures would be acceptable, and which would not.

"There is one clear red line, and that is Al Qaeda," said Richard C. Holbrooke, the administration's special representative for Afghanistan and Pakistan, referring to Taliban leaders with links to terrorists.

By Mark Landler, The New York Times, January 27, 2010

Heading into this week's summit of Afghan allies in London, the top US general in Afghanistan said he supported President Hamid Karzai's plan to reach out to the Taliban.

Washington

Only the first few thousand "surge" forces have arrived in Afghanistan as part of the effort to tame the Taliban's resurgence there. But the top US commander, Gen. Stanley McChrystal, is already talking about a negotiated peace with the enemy - a move that would seem counterintuitive so early in the new counterinsurgency campaign.

But McChrystal's recent, vocal support of reconciliation and reintegration - welcoming top and low-level Taliban fighters to lay down their arms to join the Afghan political process - may be just good battlefield politics. McChyrstal, considered a sophisticated operator, is supporting President Hamid Karzai on the eve of a summit in London on Afghan security.

"As a soldier, my personal feeling is that there's been enough fighting," said McChrystal in an interview with the Financial Times this week. "What I think we do is try to shape conditions which allow people to come to a truly equitable solution to how the Afghan people are governed."

Also this week, the United Nations Security Council lifted sanctions against five top Taliban leaders. The move opens the door for the negotiated settlement backed by Mr. Karzai.

McChrystal's support of this effort has been met with some surprise worldwide. Security in Afghanistan is still far from established, meaning the military is not yet in a position to dictate the terms of the reconciliation.

But there has been a shift in approach to reconciliation, say experts. The US and the international community have been more open to Karzai's attempts to bring former fighters into the political process as a way to bolster Karzai's weak government.

"Our understanding is that Karzai is convinced that if he can protect those insurgents ..., he can turn many of them around and essentially change the dynamics of the insurgency," says Haseeb Humayoon, a research analyst at the Institute for Study of War in Washington.

Other experts believe top officials in Washington are pushing for peace negotiations as an appealing option at a time when the American public's support for the war is fragile at best.

A repeat of Iraq?

Moreover, all wars ultimately end with reconciliation, and the process is especially important to insurgencies. McChrystal's push for it now may be a rhetorical carrot-or-stick admonition.

Negotiated settlements have worked before. Despite vast differences between Iraq and Afghanistan, the American military worked intensely to reconcile with former Sunni fighters in Anbar province in Iraq in 2006. That ultimately set the stage for the so-called Anbar Awakening that ended much of the hostilities.

Sunni tribes there had become disenchanted with Al Qaeda in Mesopotamia, which was killing Iraqis and stealing territory. In some cases, Al Qaeda would kill sheiks and leave their bodies in the desert, a form of disrespect to the region's thousand-year-old conventions.

Many Sunnis thought Al Qaeda, once seen as righteous warriors fighting the foreign occupation, had gone too far. That divide created the room the US needed to drive a political wedge between Sunnis and Al Qaeda.

It was at that point that the work of Lt. Gen. John Allen paid off. As a one-star general, he had spent much of his time in 2006-07 in neighboring Jordan, encouraging tribal sheiks who had fled Anbar, to return to Iraq. That encouragement led many Sunnis to flip and agree to work within the new, Shiite-led government.

Such negotiations have a bad reputation in places like Pakistan, where past Pakistani governments had repeatedly reconciled with Taliban fighters , only to see cease-fires dissolve. But those negotiations had been essentially a capitulation to the enemy to extricate the Pakistan Army from an unpopular and costly war, experts say.

How reconciliation might work in Afghanistan

McChrystal has long supported reconciliation and reintegration done right: National-level reconciliation is needed to welcome some Taliban leaders back into the Afghan political process in some form, and reintegration is the "peeling away" of Taliban foot soldiers who no longer choose to fight.

"Insurgencies of this nature typically conclude through military operations and political efforts driving some degree of host-nation reconciliation with elements of the insurgency," McChrystal wrote in his strategy document.

The military's position has always been to distinguish between the "reconcilable" and "irreconcilable" enemy. The US military considers most high-level enemy leaders irreconcilable because of their deep, ideological positions. Other leaders, however, may be persuaded to stop fighting if there is something in it for them.

Foot soldiers, meanwhile, may be fighting Afghan and international forces simply to earn money for their families and can sometimes be easily reintegrated politically. The London summit may begin by targeting these elements, reports suggest.

High-level political reconciliation will likely not occur until the Taliban recognizes it has nothing to gain in continuing to fight. For his part, Mullah Omar, the head of the strongest faction of the Afghan Taliban, believes the insurgency is still strong.

"We are more likely to bring insurgents in from the cold if we are arguing from a position of strength, and we are not there yet," says John Nagl, a counterinsurgency expert and author.

But Mr. Nagl, president of the Center for a New American Security, a think tank in Washington, believes that NATO is beginning to turn things around. Drone attacks have diminished the Taliban's command-and-control capabilities and created dissension within the ranks, Nagl says.

Ultimately, political success may be dictated by progress on the battlefield. In coming months, more of President Obama's 30,000 surge troops will be headed to Afghanistan. Meanwhile, Marines in Helmand Province are preparing to mount a battle in the Marjeh district, a Taliban holdout.

When that battle takes place in the coming weeks, thousands of Marines will move into the area to root out as many as 1,000 Taliban. The outcome could have an impact on when US and Afghan forces gain the upper hand on the Taliban.

By Gordon Lubold, The Christian Science Monitor, January 27, 2010

Yemen needs to demonstrate that it can reduce corruption, improve governance and use foreign aid effectively if relief money is to continue flowing, the secretary of State says.

Reporting from London - Secretary of State Hillary Rodham Clinton bluntly warned Yemen's leaders Wednesday to "take ownership" of their own long-festering problems -- corruption, internal strife and poor governance -- if they hope to overcome threats from Islamist extremists and poverty.

Clinton's comments reflected the apprehension of the Obama administration as it once again faces a dire security threat from a Muslim country whose government is marred by corruption and incompetence, like those in Afghanistan and Pakistan.

"Yemen must take ownership of the challenges it faces, and of its internal affairs," Clinton said at a 20-nation gathering convened to reinvigorate international efforts to provide assistance to a country that has become a terrorist hot spot.

The conference took place as the Yemeni threat has been thrust into the world spotlight by the suspected failed attempt of Al Qaeda's Yemeni affiliate to blow up an airliner as it approached Detroit on Christmas Day.

Clinton noted that four years ago, world powers pledged $5.2 billion to help the impoverished country. However, only a small fraction of the money has been delivered, she said, partly because of donors' concern that it would not be spent as intended.

If international support is to continue, Yemen "must demonstrate that it can allocate foreign aid effectively," Clinton said, by improving security and alleviating government shortcomings that discourage economic investment.

The strong comments by Clinton contrasted sharply with the overall tone of the meeting of the new group, which will be called the Friends of Yemen. Participants in the conference, convened by the British government, sought to convey a sense of harmony between the Yemenis and donor nations.

Clinton said she was encouraged by the Yemeni government's recent efforts against terrorism, and by its plans for economic and political reform. But, in a reference to previous reform pledges that did not materialize, she said that the promises "will not mean much" if they are not implemented.

Yemen's legislature last year sought to raise the age of legal marriage for Yemeni girls to 17, but the government has blocked the move, she noted. "So young girls will continue to be compelled to marry and bear children, undermining their health, education and prospects for contributing fully to their society," she said.

By Paul Richter, Los Angeles Times, January 27, 2010

Madam Secretary sends her regrets.

Secretary of State Hillary Rodham Clinton got a pass last week from President Obama to skip Wednesday night's State of the Union speech. (We had heard she begged to be excused, but apparently it didn't come to that.)

Seems there's an important international meeting Wednesday in London on battling radicalization in Yemen, and then another, long-planned conference there Thursday on development and security in Afghanistan.

Once the Wednesday meeting was "locked in," we were told, the State Department and National Security Council staffs agreed that Clinton had to be in London. These are both big administration priorities. Key allies will be gathering there to discuss Yemen, an uber-concern of late, especially since the Christmas Day airplane bombing attempt.

And everyone who's anyone -- including maybe the neo-Soviets and the Chicoms and possibly even the Iranians -- will be there to talk about Afghanistan.

Clinton laid out the situation in a meeting last week with Obama, and he agreed that she should go.

But London does not qualify as an "undisclosed location." So this means there will be two Cabinet officers not attending the speech: Clinton and the designated holdback in case of terrorist attack. (Or in case everyone falls asleep at the same time.)

Our plugged-in prez

The White House blog said Tuesday morning that it was "excited to announce" that the president will be using the Web "to offer the public a direct and participatory way to communicate back to him" during Wednesday's speech. Presumably this would be something a little more substantive than that "You lie!" outburst last year by Rep. Joe Wilson (R-S.C.).

The blog announced that after the speech begins, "anyone will be able to submit a follow-up question and vote on others at YouTube.com/Citizen Tube. Then next week, the president will answer questions in a special online event, live from the White House." This is the latest in a White House effort to use new media to get their message out.

But the Brits continue to be at least a step ahead on this. British Foreign Secretary David Miliband, in town Thursday for various meetings with administration officials and congressional folks -- including testimony before the Senate Foreign Relations Committee on the upcoming Afghanistan conference -- had a "Twitter press conference," the embassy here said, "to answer questions on Afghanistan from the online community, to run over the course of the day."

An embassy spokesman pronounced the effort "worth doing." Miliband was on the run most all day, and there were inevitably "more questions than answers," the spokesman said, but Miliband managed to answer "eight or so different questions."

Maybe Obama could go him one better and just tweet the whole State of the Union. Save everyone a lot of trouble. Limit is 140 characters? No problem. "I think the State of the Union," he could type, then pick one: "is okay," "could be better," "is really messed up" or "is looking real good (well, maybe not just right now)."

Hold the Secret Sauce

We got an invitation earlier this month from the Foreign Policy Research Institute to attend a day-long conference Monday on "Power in East Asia." Looked pretty interesting -- some excellent speakers scheduled to talk about China, Taiwan, Korea and Japan. We really wanted to cover keynote speaker Kurt Campbell, the assistant secretary of state for East Asian and Pacific affairs. But the invite said "the keynote will be off the record; the rest of the conference will be webcast live."

The keynote speaker off the record? Must be some really inside stuff. But if it's off the record, not even on background, it wouldn't be usable anyway. So we didn't go.

Just as well, it seems. "You didn't miss anything," a source who was there told us. Well, except lunch . . .

All ayes on Johnsen

Sen. Arlen Specter's office asked us to clarify a column last week saying that the Pennsylvania Democrat switched his vote on Justice Department nominee Dawn Johnsen and would thus be the 60th vote to confirm her. His office notes he never voted against Johnsen. The only time he voted on her was in the Senate Judiciary Committee in March, back when he was a Republican, and he voted "pass."

So you might say he switched from "pass" to "yes." But Scottish law is explicit that this is not really a switch.

Catching up on nominees

Obama last week nominated publishing executive (and, yes, major contributor and bundler) Theodore "Tod" Sedgwick to be ambassador to Slovakia. Sedgwick founded and headed Pasha Publications, which focused on energy, defense and environment markets matters, and ran a lumber company. He's also on the boards of a number of cultural and land preservation organizations. Slovakia, a NATO member, is a lovely country in the heart of Europe. It's small, but Sedgwick only bundled a bit more than $200,000 for the Obama campaign, plus contributing $42,416 of his own money to Democrats in the 2008 cycle and another $10,000 for the inauguration.

Obama on Monday named Elisabeth Hagen, chief medical officer at the Agriculture Department and before that a top official in the agency's Food Safety and Inspection Service, to be undersecretary for food safety. She has an MD from Harvard.

Acting Drug Enforcement Administration chief Michele M. Leonhart, who's been with the DEA for nearly 30 years and became acting administrator in 2007, was nominated Monday to be administrator.

By Al Kamen, The Washington Post, January 27, 2010

WASHINGTON - U.S. officials are talking about allowing more Haitian immigrants to come to this country because of the devastation in their homeland, Secretary of State Hillary Rodham Clinton indicated on Monday.

She stopped far short of announcing any change, but she indicated accepting larger numbers of immigrants was one option for relieving the crisis in Haiti.

"We are certainly looking at that and will have more to say later," she said when asked at a news conference about allowing more legal immigration from Haiti.

Such a change would boost Haitian communities in Florida, home to more than 250,000 Haitian-born immigrants - 46 percent of the nation's total.

"One of the options people are talking about is to accelerate the cases of all those people who already had been approved to come in," said Lavinia Limon, former director of the federal Office of Refugee Resettlement and now president of the U.S. Committee for Refugees and Immigrants.

New immigrants are excluded from Medicaid for five years, and relatives who petition to bring in family members must agree to support them. "These people would not be eligible for welfare," Limon said.

Federal officials are trying to prevent Haitians from risking dangerous voyages on small boats bound for Florida, and state and local officials want to avoid a costly mass exodus. The question is whether more Haitian immigrants should be allowed to come in a controlled, legal way.

"Unless our government does something to make sure loved ones can join families quickly, it could have devastating consequences for those in Haiti waiting for these visas," said Cheryl Little, director of the Florida Immigrant Advocacy Center in Miami. "It can take years and years."

The Obama administration has suspended deportations of Haitians and extended temporary legal status to tens of thousands of unauthorized Haitians who live in this country.

By William E. Gibson, Sun Sentinel, January 26, 2010

"I rarely send rude, short messages," says Zhang, citing the government's recent crackdown on pornographic texting. "I think it's excessive management, as I don't know how they judge what is dirty or not."

Zhang, like most Chinese citizens and most multinational companies doing business in China, grudgingly accepts government surveillance and censorship as a way of life. But things may be changing.

Google's (GOOG) recent threat to pull out of China has brought into sharp relief China's longstanding clampdown on personal freedoms and foreign companies' access to its vast consumer market. It has continued these practices even as it revs up the capitalist-style advance of the world's fastest-growing economy.

In China, domestic "stability" is paramount. That means zero tolerance for political dissent at a time when Chinese consumers are being encouraged to embrace technologies that let them communicate and socialize much like their Western counterparts. Similarly, China has invited major tech players, such as Google, Microsoft and Yahoo, to help nurture its economic growth. Yet it imposes censorship and other restrictions and has paid little heed to intellectual-property rights.

Analysts say this is all part of China's drive to develop - and become the dominant supplier to - the world's most populous consumer-driven economy, with information technology as a major component. "The government in China is determined to exercise some control over mass media and the Internet," says Harvard law professor Jonathan Zittrain. "The aim is to keep the average Internet user pointed away from controversial content and towards approved content."

Until Google dug its heels in, China Inc. seemed to have all the cards stacked in its favor. On Jan. 11, the search giant issued a statement complaining about invasive cyberattacks and demanding that China back off on censorship of Google's search results. "This is the first time a big company like Google has stood up and said, 'I have had enough of this,' " says Hu Yong, a Beijing-based new-media expert.

China hasn't budged - and no one expects it to. Doing business in China has never been easy. Foreign-owned companies face a thicket of censorship, trade restrictions and tariffs, says Oded Shenkar, a business management professor at Ohio State University and author of The Chinese Century.

What's more - not unlike many other nations engaged in multinational commerce - China uses the Internet for industrial spying, says Jody Westby, CEO of consulting firm Global Cyber Risk.

China "lies in a class by itself" in the "scope and scale of its cyberespionage operations," says Usha Haley, analyst at the Economic Policy Institute and co-author of The Chinese Tao of Business.

Multinational tech companies, in particular, bemoan China's insistence on controlling encryption protocols that companies use to protect sensitive data. It withholds certifications until companies conform, gaining control of the decryption codes for everyone doing business within its borders, says Shenkar.

The sum of this approach: China's economy is roaring. Its Bureau of Statistics reported gross domestic product, the key measure of a nation's growth, rose 10.7% in the fourth quarter and 8.7% overall in 2009. Its banking sector issued $1.2 trillion in new loans last year. By the end of October, China held $798.9 billion in U.S. Treasury notes, making the U.S. its biggest borrower.

Yet the growth comes as reforms that arose from the government's 30-year "opening up" campaign are stalling out, says Joerg Wuttke, president of the European Union Chamber of Commerce in China. A September 2009 chamber report recounts a three-year rise in "industrial-policy interventions." It found protectionism woven into standardization policies on products from cellphones to medical equipment, subjective enforcement of environmental rules favoring Chinese firms, and intellectual-property theft becoming a major concern.

In this backdrop, Google's push-back could coalesce a broader shift in sentiment already underway. Many companies sense that access to Chinese markets is actually shrinking, Wuttke says. "The investment atmosphere has shifted," he says. "It's an indication that foreign companies are struggling."

That's because "China doesn't believe in survival of the fittest. It believes in 'survival of whomever we say survives,' " says Anthony Migyanka, an economist and managing partner at Texas-based Mobile Money Minute.

Energizing activists

But China may be reaching the limits to that approach. On Thursday, Secretary of State Hillary Rodham Clinton proposed policies to quell censorship and ingrain freedom of expression on the Internet as a global standard. Clinton called on China to be transparent about responding to Google. She also threw down a gauntlet for U.S. corporations. "Censorship should not be in any way accepted by any company from anywhere," said Clinton. "This needs to be part of our national brand."

The Beijing-based Xinhua News Agency on Friday issued an official response. Chinese Foreign Ministry spokesman Ma Zhaoxu called on the United States to "respect facts and stop unreasonable accusations on China in the name of so-called Internet freedom."

Clinton's speech energized privacy and human rights activists, who've been tilting with Internet censors and hackers in China, Vietnam, Iran, North Korea and Tunisia. Clinton pledged $15 million to support "Internet freedom" projects, including helping non-profit organizations plot "circumvention strategies."

"New technology demands new thinking about how companies and governments can each work to protect freedom," says Elisa Massimino, CEO of Human Rights First.

China's leaders aren't completely immune to criticism. But for China, nothing counts more than domestic stability, which government leaders achieve by squelching dissent. Go along and you're left alone to consume like a Westerner; resist and pay the consequences.

For the past six months, China has sent a vast region, larger than Alaska, back to the pre-Internet age. Last week, residents of Xinjiang, the nation's Muslim northwest, were permitted to send text messages again. But international telephone calls are limited, and Internet use remains greatly proscribed, after ethnic riots in July.

Such actions remind Chinese citizens who is in control. Underground, in the dimly lit Golden Fortune Internet cafe and pool bar in Beijing's Chongwen District, Zhang must register his ID card before logging on to one of 80 computers. Then he faces the "Great Firewall of China," an array of official censorship tools designed to curb his surfing.

"Of course I wish I could read whatever I want," he says, but he rarely bothers "climbing the wall" to bypass the censor's blocks. "It's too complicated."

Playing along

Historically, tech giants Microsoft, Yahoo and even Google have played along to get along in China. To gain approval to launch google.cn and open a high-rise office in Beijing in 2006, the search giant accepted censorship of search queries and results, such as references to the Tiananmen Square massacre. In a speech to Houston oil executives on Thursday, Microsoft CEO Steve Ballmer said that Microsoft intends to obey China's specific censorship requests just as it follows laws in every country.

Yahoo has done that, too. The portal company infamously forked over data to Chinese officials that in 2004 helped convict journalist Shi Tao for leaking a propaganda directive. Shi was sent to prison for 10 years.

The kowtowing hasn't exactly paid huge dividends. Yahoo sold its China business, also in 2004, to Chinese company Alibaba, giving up day-to-day management of its China operations. Yahoo retained a 39% stake in Alibaba.

Microsoft in 2002 began investing $750 million to help seed an indigenous Chinese tech sector, including opening a major research-and-development center in Shanghai. But the software giant has no illusions about dominating the Chinese PC software market, says Matt Rosoff, tech industry analyst at Directions on Microsoft. Windows PCs already are widely used in China, but 90% run pirated copies of Windows, says Rosoff.

Microsoft figures investing in the maturation of the Chinese tech industry will help drive down the piracy rate. Over time, Microsoft hopes, millions of Chinese will begin paying for their copy of Windows, Rosoff says.

For its part, Google has quickly become a mainstay with young professionals. It has a 20% share of the Chinese search market compared with search leader Baidu's 70%, according to China IntelliConsulting.

Chinese tech firms, such as Baidu, "are extremely scrappy," says Kaiser Kuo, a Beijing-based tech consultant. "They've managed to get the notoriously frugal Chinese consumer to part with money."

Whether Google leaves China or stays remains to be seen. "The environment in which we are operating in terms of an open Internet is not improving in China," says David Drummond, Google's chief legal officer. "We're no longer comfortable censoring our search results in China, and we are reviewing the feasibility of our operations there."

Noting Google's respect for the Chinese people, Drummond said it will keep a Chinese-language option on its global service if it shuts down google.cn.

Meanwhile, James McGregor, a Beijing-based consultant at APCO Worldwide, says complaints about mounting restrictions - he describes it as a lot of "little things at every level ... by every ministry" - are reaching a crescendo. He says there is a high level of "clandestine support" for Google in the multinational business community. Google's protest "has the possibility of stirring up a lot of people here who depend on Google and don't want to lose it," says McGregor.

Much could be riding on the resolution. Will Western values factor in or will China's tactics prevail? "The 21st century is about whether and where a converging balance will be found. Google is just the beginning," says international lawyer Jeanne-Marie Gescher.

By Byron Acohido, Calum MacLeod and Kathy, Chu, USA TODAY, January 25, 2010