Embarrassed France abandons its Tunisian ally

French President only abandoned Tunisia's Ben Ali once his downfall appeared inevitable.

Middle East Online

By Herve Rouach - PARIS

The relationship damaged France's standing Until the very last days of his often brutal reign, France stood by Tunisia's authoritarian leader Zine el Abidine Ben Ali, and only finally abandoned him once his downfall was inevitable. Despite concerns about his human rights record and refusal to open up the political process, French leaders had praised Tunisia's economic development and seen his rule as a bulwark against Islamist extremism. But when his people took to the streets to oust him and the time came for Ben Ali to take the path of exile he found France's airports closed to him, as an embarrassed Paris belatedly declared him persona non grata. "We don't want him to come," a government official said late Friday, arguing that granting Ben Ali exile in Tunisia's former colonial power would upset the hundreds of thousands of French residents of Tunisian origin. Then on Saturday, after weeks of violence that left dozens dead, President Nicolas Sarkozy finally offered "determined support" for the "democratic will" of the protesters, and called for free and fair elections. But before he issued the statement, hundreds of Tunisians had taken to the streets of cities across France to celebrate Ben Ali's downfall, and many criticised Paris for sticking by its iron-fisted ally for 23 long years. In Lyon, Tunisians brandished a banner reading "Ben Ali: murderer, France: accomplice", and demonstrators demanded that the ousted leader -- now seeking safety in Saudi Arabia -- be returned home for trial. The French foreign ministry said simply that if the former Tunisian leader sought asylum in France, it would take a decision in coordination with what it called "the constitutional Tunisian authorities". Some members of Ben Ali's inner circle managed to get out of the country in the days before his hasty escape. But Paris must now to build new relations with whatever new regime the upheaval creates in Tunisia, where France still has major interests, close business ties and around 21,000 citizens, most of them dual nationals. And inside France it may have to reassure its own Tunisian minority, many of whom were shocked by what they saw as Paris's callous silence during the days of protest, even after a police crackdown left dozens dead. As rights groups and Tunisia's persecuted opposition denounced Ben Ali's regime for shooting unarmed demonstrators, Sarkozy remained silent and his foreign minister offered support to the hated Tunisian police. Michele Alliot-Marie told lawmakers French police could train their Tunisian counterparts because the "skills, recognised around the world, of our security forces allow us to resolve security situations of this type". It was only on Thursday, on the eve of Ben Ali's fall, that France joined the mounting international chorus of condemnation and Prime Minister Francois Fillon condemned the regime's "disproportionate use of force". Many Franco-Tunisians -- particularly intellectuals and opposition figures living in France to avoid persecution at home -- condemned Sarkozy's silence as "complicity" in Ben Ali's authoritarianism. And the opposition said the relationship had damaged France's standing. "For weeks, the French position has seemed to be one of embarrassment, of caution, of prudence, while in Tunisia and across North Africa people expected us to speak out," complained Francois Hollande, a leading Socialist. Washington spoke sternly to Ben Ali long before France did, and President Barack Obama scored points with the protesting crowds on Friday by saluting their "courage and dignity" and calling for free and fair elections. France never spoke against Ben Ali's repressive tactics, even as thousands of opponents were jailed and the press was censored. Instead, on an April 2008 visit to Tunis, Sarkozy shocked many observers by praising his host and insisted that "the space for liberty is growing". As late as Tuesday this week, by which time rights groups were reporting around 50 dead, French Agriculture Minister Bruno Le Maire said: "President Ben Ali is often judged unfairly, he's done a lot of good things for his country." But Tunisian opposition leaders dismiss the argument that Ben Ali's success in promoting the economy, women's rights and education while fighting Islamism can excuse his harsh rule and the corruption of his allies.

Battles in Tunis as new government takes shape

Tunisia's interim leadership to unveil national unity government as soldiers fight Ben Ali loyalists.

Middle East Online

By Dario Thuburn - TUNIS

'Zero tolerance' Tunisia's interim leadership prepared to unveil a new government of national unity Monday after soldiers fought loyalists of ousted strongman Zine El Abidine Ben Ali near the presidential palace. An opposition leader said the government would be announced on Monday and would exclude parties close to the disgraced former president, who fled to Saudi Arabia on Friday after a wave of protests against his regime. "There has been a consensus decision to exclude the pro-governmental parties," said Maya Jribi, head of the Progressive Democratic Party (PDP). A senior police source meanwhile said on Sunday that the army "has launched an assault on the palace in Carthage, where elements of the presidential guard have taken refuge," as a witness reported heavy gunfire in the area. Security forces also shot dead two gunmen who were hiding in a building near the interior ministry in the centre of Tunis and exchanged fire with some other gunmen near the headquarters of the main opposition party, the PDP. Prime Minister Mohammed Ghannouchi vowed there would be "zero tolerance" for anyone threatening the security of the country and said a new government for the North African state "may be" announced on Monday. US Secretary of State Hillary Clinton said the United States was "encouraged" by the vows of Tunisia's prime minister and interim president to usher in a new era of "truly representative government". Ghannouchi held consultations with the leaders of the main opposition parties in Tunis on the formation of a national unity government to fill the power vacuum left by Ben Ali's abrupt departure after 23 years in power. Two parties banned under Ben Ali -- the Communist party and the Islamist Ennahdha party -- have been excluded from the government talks. The head of Ennahdha, Rached Ghannouchi, who lives in exile in London, told AFP earlier that he now intended to return to Tunisia. Ben Ali's ouster has sent shockwaves around the Arab world as he was the first Arab leader in recent history to be forced out by street protests. Egyptian Foreign Minister Ahmed Abul Gheit on Sunday downplayed prospects of the revolt spreading to other Arab countries, calling it "nonsense". There have been four attempted public suicides in Algeria in the past week in apparent copycat replays of last month's self-immolation of a 26-year-old graduate in Tunisia which triggered the revolt against Ben Ali. Tunisia has been in a state of chaos since Ben Ali's downfall, and observers warned that change in the North African state would be far from smooth because of the tightly-controlled system of power put in place by the former leader. Officials on Sunday said they had arrested General Ali Seriati, the head of Ben Ali's presidential guard, on charges of plotting against the state and fomenting an armed insurrection against the new leadership. "You can't ignore the power of disruption of the presidential security apparatus that was headed up by general Ali Seriati. It has thousands of supporters of Ben Ali," a source said on condition of anonymity. Ben Ali's nephew, Kais Ben Ali, was also arrested earlier along with 10 other people in the central town of Msaken -- the Ben Ali family's ancestral home -- for allegedly "shooting at random" from police cars. Some cafes and groceries had re-opened earlier on Sunday in the centre of Tunis -- the scene of violent clashes in the days running up to Ben Ali's flight -- as security forces continued their lockdown of the city centre. "There are major food shortages. We don't have enough bread and flour. We risk a food crisis if this continues," said Najla, who was filling her basket with meat and vegetables at the main market in Tunis. A French-German photographer from the EPA agency hit in the head by a tear gas canister during the protests in central Tunis on Friday was "in a critical but stable condition", an official at the French consulate said. The man, Lucas Mebrouk Dolega, 32, was earlier reported to have died. A source at the military hospital in Tunis earlier on Sunday said that Imed Trabelsi, a nephew of Ben Ali's, was stabbed and died on Friday. Tunisia's new acting president, speaker of parliament Foued Mebazaa, was sworn in on Saturday after Ben Ali resigned and fled Tunis following weeks of protests in cities across the North African state. Mebazaa said on Saturday that all Tunisians "without exception" would now be able to take part in national politics in the once tightly-controlled country, and a presidential election is due to be held in two months' time. Mebazaa called for a unity government for "the greater national interest". Human rights groups say dozens of people were killed after food protests which began last month escalated into a popular revolt against Ben Ali. International powers including European nations and the United States urged calm in Tunisia and called for democracy in the southern Mediterranean country after events that Tunisian bloggers have dubbed the "Jasmine Revolution".

Egyptian torches himself at parliament

Report Abdelmoneim from Qantara sets himself alight because he did not receive bread coupons for his restaurant.

Middle East Online

Close to half of Egypt's 80 million people live below the poverty line of two dollars a day CAIRO - A man set himself alight outside parliament in Cairo on Monday, the official MENA agency said, in an apparent copycat replay of the self-immolation of a Tunisian graduate which sparked a popular revolt. The man, who was identified as restaurant owner Abdo Abdelmoneim from Qantara, near the port town of Ismailiya, "stood in front the parliament building in (downtown Cairo) and set fire to his body." "He was immediately taken to hospital to receive the necessary treatment," MENA said. A parliamentary source said the man "stood outside the People's Assembly, poured fuel on himself and set himself on fire." "A policeman who was close by managed to extinguish the fire and the man was quickly taken away by ambulance," the source added. MENA said the man was driven to set himself alight because "he did not receive the bread coupons for his restaurant." It did not elaborate. The incident comes after 26-year-old Tunisian graduate Mohammed Bouazizi torched himself in Tunisia when police prevented him from selling fruit and vegetables to make a living. The case of Bouazizi, who would later die of his wounds, unleashed a wave of protests in Tunisia that would eventually topple the 23-year-old regime of President Zine El-Abidine Ben Ali. In Algeria, at least four attempted public suicides -- all over jobs and housing -- were reported this week after Bouazizi's self-immolation. Egyptians have often voiced similar grievances to Tunisians. They have long complained of economic hardships and Cairo has regularly come under criticism for failing to lift an emergency law in place for three decads. Close to half of Egypt's 80 million people live below the poverty line of two dollars a day. On Friday, dozens of Egyptians celebrated Ben Ali’s ouster outside the Tunisian embassy in central Cairo.

Mideast rulers watch Tunisia in fear of repeat

Administrations in Mideast increasingly uneasy as opposition groups see inspiration in Tunisian uprising.

Middle East Online

Jordanian protesters: 'where are the political reforms?' AMMAN - Governments across the Middle East anxiously watched developments in Tunisia on Sunday after the ouster of Zine El Abidine Ben Ali, fearing the spread to their doorsteps of violence and popular revolt. After 23 years of iron-fisted rule, the Tunisian president caved in to violent popular protests on Friday and fled to Saudi Arabia, becoming the first Arab leader to do so. Administrations in the Middle East were cautious in their response to his toppling, but are increasingly uneasy about the situation as opposition groups seek to take advantage of the upheaval in the north African country. Egypt's Foreign Minister Ahmed Abul Gheit warned the West to stay out of Arab affairs, after US Secretary of State Hillary Clinton called this week on Arab leaders to work with their peoples for reforms. Abul Gheit described as "nonsense" fears that a Tunisian-style popular revolt could spread to other Arab countries. Ben Ali's ouster appeared to embolden disenchanted youths in Yemen, with about 1,000 students taking to the streets of the capital Sanaa, urging Arabs to rise up against their leaders. Flanked by human rights activists, the students marched from Sanaa University's campus to the Tunisian embassy, calling for Arab peoples to wage a "revolution against their scared and deceitful leaders." "Leave before you are toppled," read one banner, without naming Yemen's own President Ali Abdullah Saleh. "Peaceful and democratic change is our aim in building a new Yemen." Syria's pro-government daily Al-Watan said the events in Tunisia were "a lesson that no Arab regime should ignore, especially those following Tunisia's political approach of relying on 'friends' to protect them." "Arab leaders on sale to the West should learn form the Tunisian lesson. They should make Arab decisions according to what is favourable to the interest of the Arab people and not those of faraway countries," Al-Watan said. In Jordan, the powerful Islamist movement urged Arab regimes to carry out genuine reforms leading to "renaissance." "Tyranny is the mother of all evil in the Arab world," it warned. "We have been suffering in Jordan the same way Tunisians have been suffering," Muslim Brotherhood chief Hammam Said told 3,000 demonstrators who held a sit-in outside parliament to protest government economic policies. "We must put an end to oppression and restrictions on freedoms and people's will," he said. Opposition MPs in Kuwait agreed. "I salute the courage of the Tunisian people... All regimes that oppress their peoples and fight Arab and Islamic identity will meet the same fate," Islamist MP Waleed al-Tabtabai said. Iran, which has good ties with the north African country, said it hoped "the Muslim Tunisian nation's demands are fulfilled through peaceful and non-violent means." "We have very good ties with this nation, and we hope they (the Tunisian people) achieve their main demands as soon as possible in peace, security and stability," Iranian foreign ministry spokesman Ramin Mehmanparast said in Tehran. Iran's parliament speaker Ali Larijani blamed the "United States and some Western countries" for the woes of Tunisians and branded their reaction to the unrest as "very funny," the ILNA news agency reported. "The countries which were the main reason for tyranny and pressure on Tunisians are now playing sympathetic," he said. "Many countries should now take a lesson that super powers do not back them in hardship." For Israel, the dramatic events in Tunisia were a sign of regional political instability. "The region in which we live is an unstable region... " said Israeli Prime Minister Netanyahu. "There can be changes in governments that we do not foresee today but will take place tomorrow." Lebanon's Hezbollah urged Arab leaders to learn from the Tunisian protests. Palestinian Islamic groups on Saturday hailed the ousting of Tunisia's hardline leader, saying the people of Tunisia were an inspiration to the rest of the Arab world. "We congratulate the Tunisian people for their uprising against the tyrannical regime," Daoud Shihab, a spokesman for the Islamic Jihad group. The events in Tunisia "demonstrate that the Arab masses are able to bring change for freedom and rejection of tyranny and injustice," he said. The Gaza Strip's Hamas rulers also praised the events, saying it represented the will of the Tunisian people. "We are with our brothers, the people of Tunisia, in choosing their leaders no matter what the sacrifices are," Hamas' Interior Minister Fathi Hammad told reporters. "This is an application of the people's will after being patient for a long time," he said.

Hezbollah to defend itself against Hariri charges

Nasrallah accuses US of scuttling Saudi-Syrian initiative that aimed at forging Lebanese agreement on tribunal standoff.

Middle East Online

By Natacha Yazbeck - BEIRUT

Nasrallah: Hariri backed out of a deal under US pressure Hezbollah chief Hassan Nasrallah vowed on Sunday his group would defend itself against likely charges over the murder of ex-premier Rafiq Hariri, on the eve of expected indictments in the case. "We will not allow our reputation and our dignity to be tarnished nor will we allow anyone to conspire against us or to unjustly drench us in Hariri's blood," Nasrallah said in a televised speech. "We will act to defend our dignity, our existence and our reputation," added Nasrallah, who reiterated previous accusations that The Netherlands-based Special Tribunal for Lebanon (STL) was controlled by the United States and Israel. The Shiite leader said his party would disclose in coming days how it planned to defend itself in light of the indictments. His speech came one day before the prosecutor of the UN-backed tribunal was expected to submit his charges in the 2005 murder to a pre-trial judge. Lebanese officials said the government had been notified that the indictments, the contents of which will not be made public in the immediate future, would be submitted on Monday. Nasrallah's comments came ahead of consultations Monday led by President Michel Sleiman to nominate a new premier after Hezbollah and its allies last week toppled the government of Saad Hariri, the slain leader's son, plunging the country into yet another crisis. The resignations of 11 ministers were linked to the long-running dispute over the STL, which Nasrallah expects will accuse high-ranking operatives of his Shiite militant party. Nasrallah confirmed that his party and its allies would not nominate Hariri for the premiership and accused the United States of scuttling an initiative by regional heavyweights Saudi Arabia and Syria to forge a compromise on the standoff over the tribunal. "The opposition will not name Saad Hariri for premiership," he said while accusing Western states of pulling all stops to ensure the Sunni leader was reappointed. "As soon as the opposition raised the possibility of naming a candidate other than Hariri, every single Western capital mobilised" to promote the acting premier, Nasrallah said. Nasrallah said that, under the proposed Syrian-Saudi pact, the Lebanese government would pull its judges from the court, cut off its share of funding and relinquish its memorandum of understanding with the STL. That essentially would mean that Lebanese authorities would cease all cooperation with the court. Nasrallah accused Hariri of backing out of the deal under US pressure. Lebanon's government collapse has sparked a flurry of international diplomatic efforts to contain the political storm that many fear could escalate into sectarian violence. France has proposed an international "contact group", similar to that of Bosnia in the 1990s, that would include Saudi Arabia, Syria, Turkey, Qatar and the United States in an effort to defuse tensions. Turkish Prime Minister Recep Tayyip Erdogan travels Monday to Damascus to meet with Syrian and Qatari leaders on the Lebanon crisis. US Ambassador to Lebanon Maura Connelly, who met with Hariri on Sunday, reiterated her country's unwavering support for the STL while urging all Lebanese factions "maintain calm and exercise restraint at this critical time."

Blair had a Bible 'wobble' over 1998 Iraq bombing

Former British premier consulted Bible in late night session before start of 1998 bombing raid against Iraq.

Middle East Online

He often read the Bible before making big decisions LONDON - Former British premier Tony Blair had "a bit of a wobble" at the start of a 1998 bombing raid against Iraq after a late-night session reading the Bible, his then communications chief revealed Saturday. "TB (Tony Blair) was clearly having a bit of a wobble," wrote Alistair Campbell in his latest book of diaries, extracts of which are being serialised in The Guardian newspaper. "He said he had been reading the Bible last night, as he often did when the really big decisions were on, and he had read something about John the Baptist and Herod which had caused him to rethink, albeit not change his mind." The diary entry was written on Wednesday December 16, 1998, the first day of a four-day bombing campaign against Iraq -- the first that Blair had ordered since becoming Labour prime minister in 1997. In 2003, Blair led Britain into a full-scale war against Iraq over Saddam Hussein's continuing defiance of the United Nations over his weapons programme. The former premier will make his second appearance before an official inquiry into the Iraq war on January 21. In a highly charged hearing in January last year, Blair robustly defended the military action. Elsewhere in the diaries, Campbell revealed that as Blair realised how his global standing had increased following his election as prime minister, he joked that it was "just a shame Britain is so small, physically". Blair served as prime minister from 1997 to 2007 and is now Middle East peace envoy. He also has a string of commercial roles. He converted to Catholicism shortly after leaving office in 2007.

Special Report: Is a solar trade war about to flare?

Construction workers fix solar panels for a new solar power plant near Olching-Esting west of Munich in this July 7, 2010 file photo.

Credit: Reuters/Michaela Rehle/Files

By Matt Daily, Christoph Steitz and Leonora Walet

EBERSWALDE, Germany | Mon Jan 17, 2011 8:18am EST

EBERSWALDE, Germany (Reuters) - Germany's fifth-biggest solar power park emerges as a smudge on the horizon long before you reach it on the outskirts of the small, sleepy village of Eberswalde, an hour's drive north of Berlin. "In the far distance, you can see it," Peter Kobbe says, pointing through heavy December snowfall as he steers his Citroen van along an icy road.

Kobbe, 64, works at Finow airport, where a local investment firm built the 58 million euro ($77 million) solar park in 2009. Finow itself was built by the Nazis before World War Two and later became one of the Soviet Union's main Cold War hubs. Now the small aircraft that still use the airport share it with about 90,000 solar modules -- which together generate enough to power 6,400 households a year.

"This is where they (the Soviets) used to store their nuclear weapons," says Kobbe, who runs a small museum documenting the airport's history, guiding his van over the snow-covered landing strip.

Now there's a different foreign presence in Finow. When the first solar modules arrived for installation they came not from a local manufacturer -- German solar company Conergy runs a factory just 45 minutes away in Frankfurt an der Oder, for instance -- but from China's Suntech Power Holdings, now the world's largest maker of photovoltaic (PV) solar modules. "We were quite surprised when the trucks brought Chinese modules, and not German ones," Kobbe says. "But they were probably cheaper." Solarhybrid, which spearheaded construction of the park, says reductions in Germany's renewable subsidies meant it had to use Suntech modules to stay competitive.

Germany has long been the global solar industry's engine. Europe's biggest economy consumed more than half the solar panels produced around the world in 2010. Solar accounts for just two percent of Germany's power production, but the country added a record 8,000 megawatts (MW) of solar modules last year -- equal to the capacity of eight nuclear reactors -- far outpacing Italy, Japan and the United States.

So why are China's solar companies benefiting at the expense of renewable energy manufacturers in Europe and the United States? Virtually non-existent a decade ago, Chinese solar companies now control two thirds of solar cell production in the $39 billion global PV market. Critics say this is mostly because the generous subsidies they receive at home give them an advantage over other countries' manufacturers and restrictions keep foreign companies from competing for China's domestic projects. European and U.S. subsidies are designed to boost solar usage no matter who builds the hardware. Chinese subsidies, western firms complain, help Chinese solar manufacturers alone.

Resentment in western capitals is building. Beijing is currently considering plans to spend up to $1.5 trillion over five years to back strategic industries, including alternative energy, a source with ties to the leadership and direct knowledge of the proposal told Reuters in December.

The Obama administration, prompted by a complaint by the United Steelworkers union in September, is now considering taking a case against China to the World Trade Organization (WTO) regarding Beijing's support of its solar companies. Last month, the U.S. government complained to the WTO that China illegally helped its wind power manufacturers. The issue of trade will be under discussion when Chinese President Hu Jintao visits Washington. Could a green trade war be brewing?

"I think we're always afraid of a trade war so we don't act. The Chinese are never afraid of a trade war so they do act. And that's why they're beating us in too many cases on clean energy and other industrial concerns," said U.S. Senator Sherrod Brown, a Democrat whose home state of Ohio is a hub of solar panel production for companies such as First Solar Inc, which still ranks as the world's top solar maker by market value and is one of the largest producers.

"For 10 years we've always stepped back because we're afraid, we don't want to upset anybody. Every other country practices trade according to its national interest. We practice trade according to an economic text book that is 10 years out of print."

So far, Berlin's response has been more restrained, relying on European Union discussions with China to overcome the trade disputes. But "if such talks remain unsuccessful, the launch of a WTO dispute settlement can be considered," Jochen Homann, deputy German Economy Minister, said in a statement to a member of the German parliament who then passed it on to Reuters.

SUPPORTING THE SUN

Every solar company in the world relies on some form of subsidy to build or sell its products. That's because solar electricity is still about eight times more expensive than power generated by coal-fired plants. The global solar industry only really began to take off when, about a decade ago, governments introduced subsidies for clean energy systems in an effort to trim their carbon dioxide output and reduce dependence on fossil fuels.

Germany's supports are generous -- an estimated 7.3 billion euros this year -- and have been so successful that Berlin started reducing payments for new solar plants last year, bringing forward by more than a year a decrease it already planned. The support comes indirectly, through so-called feed-in tariffs. Berlin doesn't pay solar panel makers directly, but forces larger utilities to pay the generators of solar power, including homeowners, more for each watt that comes from the sun. In the end, the cost for solar power -- currently about 28.74 euro cents per kilowatt hour (KWh), which is down about 27 percent since the beginning of 2010 -- is borne by all consumers. Because the subsidy goes to the person or company generating power, the issue of where the equipment is made is ignored.

The United States, too, subsidizes its solar industry. Last month Washington extended for a year a popular cash grant program that pays 30 percent of the development costs to build power plants that use solar modules. Crucially, that help is available to anyone building a solar power plant, irrespective of where the panels come from. U.S. companies also earn manufacturing tax credits for production facilities, and states and cities often waive taxes to lure manufacturers to set up operations.

The big difference with China, its solar critics say, is that Beijing helps only its own manufacturers -- who then send their panels around the globe to reap additional subsidies in other countries. Western companies also complain that foreign solar firms are locked out of bidding for projects inside China.

"While foreign manufacturers find the German market open, the Chinese domestic market has so far been walled off. Therefore, we're watching the (WTO) initiatives in the U.S. very carefully," says Carsten Koernig, managing director of BSW, the German solar industry association.

The USW complaint blames China's aid to its solar industry for a creating a supply glut which drove down panel prices by 40 percent in 2009 and pushed U.S. competitors out of the market. China's solar shipments to Europe grew eightfold from 2006 to 2009, the USW complaint says, faster than the rise in overall European demand.

The USW also accuses Beijing of direct violations of China's agreement with the WTO. According to the steelworkers' complaint, Sinosure, China's official export credit insurance agency, provided $1.25 billion in insurance for photovoltaic exports from China, covering nearly half of all Chinese exports of the product. The USW claims Sinosure ran a cumulative loss of 1.4 billion yuan ($212 million) between 2002 and 2008. Those losses, a USW lawyer claims, indicate the subsidy was a violation of trade rules. Chinese companies reject the idea they are helped more than their western rivals.

Western companies also argue that Beijing's subsidy regime discourages the use of solar panels in China. Unlike Germany, China refuses to introduce tariff incentives that would drive domestic demand for solar energy. Even with its dominant share of solar cell and panel production, and even as the country scrambles to generate more power, analysts estimate China installed less than 500 MW of solar power inside its own borders in 2010.

With no incentive to sell at home, it's no wonder that Chinese companies prefer to export their hardware. Some of China's leading exporters shunned a Chinese government tender for solar projects in the third quarter, saying they could not earn a profit.

"The (Chinese) government does not want to be purchasing or installing PV at the current prices. It wants to use the Western market to create volume to drive down the cost and, when the cost is lower, then China will start buying," says Michael Eckhart, president of the trade group American Council on Renewable Energy.

SUNTECH RISING

The result, western companies complain, is that they suffer while the Chinese prosper. Just up the road from Finow airport's solar park, Conergy, once Europe's largest solar player, was rescued from insolvency by hedge funds in late December, as it struggled to service a mounting debt pile. In the United States, many small solar companies have gone bust; earlier this month, publicly listed Evergreen Solar Inc said it would shut its plant in Massachusetts and concentrate on manufacturing in Wuhan, China -- where it is the minority partner in a factory sponsored by the provincial Hubei government.

China's Suntech, on the other hand, is booming. Founded in Wuxi in the southeast of Jiangsu province in 2001, Suntech is now the largest solar company by output in the world. After starting with just $6 million in state money in 2001 it now turns over $1.5 billion a year. In 2002 it produced 10 MW of solar panels. It expects to ship 2,200 MW this year.

It's had some help. Where Germany's Conergy struggled to get credit last year, Suntech signed an agreement with China Development Bank in April that gives it access to up to 50 billion yuan ($7.3 billion) to help finance its expansion.

Beijing does not disclose the total amount it has put behind its solar sector, but Chinese solar executives say credit lines to domestic solar firms from state-owned China Development Bank alone totaled over $30 billion in 2010. Suntech and Jiangxi-based LDK Solar Co, which is five years old, have been the biggest beneficiaries, accounting for over half those credits, which run up to six years. The lines of credit are on top of cash grants, tax benefits and low-interest loans Beijing has put behind the industry -- funds that backstop the young companies' balance sheets and are the envy of their Western competitors.

Suntech has also benefited from provincial government support. Like most companies building a business within China's specified high-tech zone, Suntech was exempt from the usual rate of 33 percent corporate tax for its first two profitable years, and subsequently paid 7.5 percent, rising to 15 percent in 2008. As it has grown, the company has also been given value added tax (VAT) rebates on goods sold overseas and exempted from paying VAT on the raw materials it imports. Renewable energy companies like Suntech can also secure loans at a discount of around 50 basis points on the headline rate, currently 5.81 percent.

All that support helped Suntech win the contract for the hardware installed at Finow, a fact that "is certainly pretty frustrating for German manufacturers," says Marc Lohoff, head of Asian business at Conergy.

THE VIEW FROM CHINA

China's solar manufacturers deny they have an edge over their foreign rivals, arguing that companies the world over receive help from national governments.

"(The) Chinese government really does not do much for solar energy not as much support like you see in Germany and the U.S.," LDK chairman and chief executive Peng Xiaofeng, one of the world's youngest billionaires, told Reuters in an interview. "Every country, every government subsidizes its solar sector. China is not alone in giving subsidies," agrees Terry Wang, chief financial officer of Jiangsu-based Trina Solar, China's third-largest solar module company.

Wang believes the WTO will reject any complaint about solar subsidies. "I don't believe a U.S. trade complaint before the WTO will have a solid case against Chinese module makers," he said.

On the charge that foreign solar manufacturers are shut out of China, Beijing can point to U.S. firm First Solar, which has won tentative approval to install its panels for a power-producing plant in China. First Solar produces thin-film solar panels at the lowest cost in the world. In 2009, it became the first -- and so far only -- foreign company to win a contract in China, signing a memorandum of understanding to develop the world's largest photovoltaic power plant, a 2,000 MW solar project in the city of Ordos, Inner Mongolia.

Earlier this month, First Solar sealed a partnership with China Guangdong Nuclear Solar Energy Development Co. that would see the Chinese company take a majority stake in the pilot project, though no start date for construction has been announced. Plans for a 30 MW pilot project at Ordos have been delayed. And First Solar's hopes of cracking the Chinese market pale in comparison to the advances its competitors are making on its home turf. In August, Suntech opened its first U.S. manufacturing plant in Goodyear, Arizona, just up the road from First Solar's headquarters in Tempe.

"First Solar is a leader in the industry. We want to make sure our first step in there is at a set of economics that make this project viable, and define viable economics in the future," says First Solar board member TK Kallenbach, who heads up the company's business development in China.

TACTICAL PLAY?

With costs for solar modules falling fast, some industry experts have speculated that China could simply drag out any WTO process until its companies are strong enough to stand on their own.

It's a risky game -- for all concerned. If the United States lodges a complaint and proves that China wrongly boosted its companies, Washington could "retaliate to the extent of the damage that we allege they have caused," says Carla Hills, a former U.S. Trade Representative who battled with Japan, Brazil and India over trade and led negotiations that led to the NAFTA trade treaty. But a formal complaint could trigger a trade war that the Chinese government has said would hit an industry crucial to tackling climate change. "If the U.S. closes the door for trading with the rest of the world, including China, in renewable energy products, the U.S. may significantly delay the already long struggle for developing alternative energy sources, if not entirely destroy this opportunity for humankind," China said in a written response to the USW complaint.

That sort of rhetoric does not sit well in Finow, where German workers saw few benefits from the huge solar plant. "Economically, this (plant) had no impact on our region," one of the owners of Finow airport said on condition of anonymity, because of the sensitivity of the topic. "No jobs were created as the installation work was mainly done by eastern Europeans." The park is set for expansion this year. But, says Kobbe, "I doubt that they'll use German modules this time."

(Matt Daily reported from New York, Christoph Steitz from Eberswalde and Leonora Walet from Hong Kong; Additional reporting by Markus Wacket in Berlin; Editing by Simon Robinson and Sara Ledwith)