The Foreign Service Journal, October 2003

responsibility beyond Kabul. The growing threat of a resurgent Taliban points to the complexity of the Afghan situation, where tribal identities and colonial history still play a com- pelling role. An August report from the International Crisis Group, “Afghan- istan: The Problem of Pashtun Alien- ation,” addresses one of the principal problems the Karzai government faces: the ethnic imbalance in its makeup ( www.crisisweb.org/projects/show report.cfm?reportid=1078 ). Though a Pashtun himself, Karzai’s mil- itary, interior, foreign affairs and other major ministries are dominated by Tajiks. Yet the Pashtun—who number some 20 million, distributed about equally on both sides of the border with Pakistan— constitute the single largest among the country’s four major ethnic groups. The Pashtun-based Taliban is taking full advantage of this. The Fuss About China’s Yuan In the run-up to the 2004 election, Democrats and Republicans alike have been making noises about how the allegedly undervalued Chinese currency, the yuan, is undermining the U.S. economy. Both Treasury Secretary John Snow and Federal Reserve Board Chairman Alan Greenspan have publicly voiced mis- givings about Chinese monetary poli- cy. In late July, a bipartisan group of lawmakers wrote to President Bush calling for an investigation of whether China was responsible for the recent U.S. economic downturn and the highest unemployment rate in nine years. China’s relatively weak currency has been pegged to the U.S. dollar since 1994. Meanwhile, China has become the third largest supplier of goods to the U.S. and the recipient of an enormous investment boom. China maintains that its underdevel- oped financial institutions are not prepared for a free-floating yuan. In the U.S., too, a yuan float could pose complications. Though domestic manufacturers threatened by Chinese imports have been complaining, many large American corporations are dependent on economical parts and components fromChina. Moreover, in efforts to maintain the fixed value of the yuan against the U.S. dollar, China has become the second-largest holder of U.S. dollars after Japan. A comprehensive review of this important issue, including analysis and commentary, news, and background resources, is available at the Asia Society’s Web site ( www.asiasource. org/news/at_mp_oz.cfm?newsid=1 00110 ). ■ C Y B E R N O T E S 14 F O R E I G N S E R V I C E J O U R N A L / O C T O B E R 2 0 0 3 2000 N. 14th Street ■ Suite 500 Arlington, VA 22201 Telephone (703) 797-3259 Fax (703) 524-7559 Tollfree (800) 424-9500