In the U.S., a Turning Point in the Flow of Oil

Abstract: HOUSTON — The Singapore-flagged tanker BW Zambesi set sail with little fanfare from the port of Galveston, Tex., on July 30, loaded with crude oil destined for South Korea. But though it left inauspiciously, the ship’s launch was another critical turning point in what has been a half-decade of tectonic change for the American oil industry. The 400,000 barrels the tanker carried represented the first unrestricted export of American oil to a country outside of North America in nearly four decades. The Obama administration insisted there was no change in energy trade policy, perhaps concerned about the reaction from environmentalists and liberal members of Congress with midterm elections coming. But many energy experts viewed the launch as the curtain raiser for the United States’ inevitable emergence as a major world oil exporter, an improbable return to a status that helped make the country a great power in the first half of the 20th century. “The export shipment symbolizes a new era in U.S. energy and U.S. energy relations with the rest of the world,” said Daniel Yergin, the energy historian. “Economically, it means that money that was flowing out of the United States into sovereign wealth funds and treasuries around the world will now stay in the U.S. and be invested in the U.S., creating jobs. It doesn’t change everything, but it certainly provides a new dimension to U.S. influence in the world.” Like just about everything else in the oil and gas business, petroleum exports are contentious. The oil bounty is thanks to modern production techniques including hydraulic fracturing, or fracking, which involves injecting water and chemicals into the ground to crack oil-saturated shale. Exports would mean more of that. Many environmentalists say fracking operations endanger water supplies or create other hazards, including air pollution. Ramping up exports of fossil fuels, critics will surely note, is inconsistent with the Obama administration’s push for a global climate deal. Image The Valero refinery, in South Texas, is above the Eagle Ford shale field. Credit Michael Stravato for The New York Times Independent refiners argue that exports could mean more expensive domestic oil for them, which they say could mean higher prices for American consumers. Oil companies, and many independent economists, say just the opposite is true, because American exports would add to global supplies and lower international oil benchmark prices that ultimately determine the rise and fall of American gasoline prices. And with Russia causing mischief in Europe and the Middle East in turmoil, many analysts say allies would be happy to have a dependable supplier of oil. The oil companies appear to be grinding out a road to victory just as they have gained momentum in promoting natural gas exports against the opposition of some chemical companies and environmental groups that want to curb drilling and fracking. The Energy Department has begun a major study on the merits of exports, and how they would affect American consumers and United States energy security. Their previous study on gas exports backed the industry position. A global oil price collapse, as unlikely as that might seem, is a wild card that could change the equation and stem momentum toward exports. Low prices, because of either excess supplies or reduced demand, would discourage investments and drilling worldwide. Whatever the merits, the prospect of the United States becoming a major oil exporter was unthinkable as recently as 2008, when the conventional wisdom had it that the country was “addicted” — a word that even President George W. Bush famously used — to imported oil from unstable or unfriendly countries. Domestic production had been in free fall for decades as repeated presidential promises of “energy independence” echoed hollowly. But then came the frenzy of drilling in shale oil and gas fields across the country. Domestic oil production has rocketed by roughly 70 percent over the last six years to 8.7 million barrels a day, and imports from members of the Organization of the Petroleum Exporting Countries have already been cut roughly by half. With domestic oil production growing month after month, many oil experts predict that the country’s output will rise to as much as 12 million barrels a day over the next decade, which would mean the country will be swimming in oil the way it is currently dealing with a surplus of natural gas. Analysts at Turner, Mason & Company, a Dallas engineering consulting firm, say the country could hit a saturation point when production hits 10 million to 10.5 million barrels a day, at which point large exports will become necessary or drilling and production may have to slow. “A flood is upon us,” John Auers, a Turner, Mason senior vice president, recently told energy executives at a Houston oil conference. “We are getting close.” The country will continue to import some grades of oil for years to come, but energy experts says oil exports should rise significantly over the next few years because of a mismatch in the type of oil the country now increasingly produces and the mix of oil its refineries were designed to process. Shale oil is predominately light, sweet oil, meaning it is low in sulfur content and flows freely at room temperature. American refineries can refine only so much of it because they were structured to process abundant amounts of much heavier crudes imported from Mexico, Venezuela and Canada. That is leading to a crude-oil glut in parts of the country’s midsection already — which has pushed oil companies to lobby for expanded exports and directly led to that recent shipment from Galveston. Image The United States has strictly limited exports since the Arab oil embargo, when President Jimmy Carter wore a cardigan sweater to encourage lower thermostats. Credit Associated Press Photo The Galveston sailing was historic because the United States has strictly limited exports since the era of the Arab oil embargo, when President Jimmy Carter wore a cardigan sweater to encourage lower thermostats and other measures to limit the country’s dependence on foreign oil. In sweeping legislation, Congress in 1975 directed the president to prohibit the export of oil as “consistent with the national interest,” although broad exemptions were allowed. Various administrations since then have permitted limited exports, including shipments from Alaska’s Cook Inlet and to Canada, but the issue rarely came up because the country was seemingly running out of oil. Then suddenly the energy world changed, and parts of the Midwest and the Gulf of Mexico regions were overflowing with light grades of crude, leading to a slump in prices and a gap of as much as $15 between the United States oil benchmark and the prevailing Brent world price. Unable to export the excess light crude, the industry exported refined products like gasoline and diesel instead. In 2011, the country pivoted from being the world’s largest importer of petroleum products to becoming one of the leading exporters. But the buildup in light crude has continued to outpace the capacity of refiners to process and export it, and that has spurred new thinking in Washington. In what appeared to be a trial balloon, Energy Secretary Ernest Moniz last December suggested to reporters at a New York energy conference that it may be time for the administration to reconsider the export ban. “There are lots of issues in the energy space that deserve some new analysis and examination in the context of what is now an energy world that is no longer like the 1970s,” Mr. Moniz said at the time. Image Energy Secretary Ernest Moniz has discussed reconsidering the export ban. Credit Leonhard Foeger/Reuters The first baby step toward a new policy came in June when the Commerce Department approved applications from two Texas energy companies, Pioneer Natural Resources and Enterprise Products Partners, to export light liquid hydrocarbons known as condensates that are normally characterized as crude oil even though they share attributes of both oil and natural gas and normally are found in gas form in the ground. The government ruled that since the companies had minimally processed the condensates through a simple oil processing unit that separates the gas and makes it safe for transport, the result was now considered a refined product. Since refined products like gasoline and diesel are legal to export, the Obama administration said that the decision did not signal a reversal of the crude oil trade limits. Nevertheless, oil company executives and many Wall Street analysts who follow the oil industry interpreted the move as being a fundamental shift in direction. The country can now potentially export 300,000 barrels a day of condensates, most of which come out of the Eagle Ford shale oil field of South Texas, easing some of the glut of a product refiners cannot absorb and thus improving the profitability of drilling in the zone. But the wording of the Commerce Department ruling means oil producers can potentially export much more than just condensates, since the department said it covered all crude oil that is processed through a distillation unit. Basic distillation can occur at the wellhead at minimal cost, and the new interpretation is likely to unleash investment in basic processing of oil in the field to meet the export requirements. “It was another crack in a process that is historic,” said Eric G. Lee, a commodities strategist at Citigroup. Oil exports (including condensates) remain small, but they have already surged from 67,000 barrels a day in 2012 to 120,000 barrels a day in 2013 to more than double that currently. Citi Research estimates that under the new condensates ruling, exports could hit a million barrels a day by next year. Last month, the first tanker since 2004 loaded with Alaskan North Slope crude for export set sail — 800,000 barrels purchased by South Korea. While Alaskan crude is excluded from the current ban, the shipment showed that West Coast refineries that normally buy the Alaskan oil have ample supplies from the Lower 48. Much of the additional exported oil is expected to go to Canada and Mexico, also allowable under current restrictions, but the export growth will probably not be enough to dent the continuing upsurge in domestic production for more than a few years at most. Another way the country is easing some of the glut is by exporting more refined products like gasoline and diesel. Exports of refined petroleum products have already soared to 3.4 million barrels a day from 2.3 million barrels a day in 2010. But most oil experts say that growth in such exports will be limited by United States refinery capacity and available export markets, especially if refineries planned in Latin America — a major market for American products — are completed. That will leave exports of crude to soak up the excess production, but there are still political hurdles. United States exports of oil could reach three million to four million barrels a day in a few years, more than most OPEC producers currently provide world markets. But politicians are afraid they will be targets of broadsides that a reversal of the 39-year-old policy to export domestic production could risk American energy security, or raise gasoline prices. Republican members of Congress from oil-patch states like Texas and Louisiana might be expected to support exports, but many are also dependent on the campaign support of independent domestic refiners like Tesoro and Valero and their workers, who want to keep the price of American oil low to bolster profit margins. Most oil experts say that a loosening of the export limitations will have to wait until at least the midterm elections and maybe even until after the 2016 presidential election campaign, when the issue will probably be amply discussed. “The politics are hard,” said David L. Goldwyn, the State Department’s coordinator for international energy affairs in the first Obama administration. But he added, “When the economics become overwhelming, the politics will shift.” For Mr. Goldwyn, American oil exports would increase Washington’s credibility in global trade talks, where the nation typically argues that countries with excess supplies should export them. They would allow China and India to diversify their supplies from the Middle East, and Europe to diversify from Russia, the Middle East and North Africa. Adding United States oil to world supplies would bring down the global Brent oil price benchmark, which would bolster the world economy, they argue. The refiners disagree that American consumers would benefit, especially those who live in the Northeast and along the West Coast, who get their fuels from local refineries. Those coastal refineries depend on low domestic prices to offset high transport costs since they are so far from the Texas and North Dakota shale oil fields. With insufficient pipelines, coastal refineries are obliged under current maritime laws to transport domestic oil in a most expensive fashion — by barges that must be American-built and flagged; majority American-owned and manned by crews that are predominately American. More United States exports would almost certainly raise domestic oil prices to the higher levels on the world market, refiners argue, forcing the coastal refineries to raise their gasoline prices and making it more difficult for them to compete against foreign refiners on world markets. For Bill Day, a Valero vice president, those who argue for free trade in oil are missing the point that the international oil business is inherently not free because prices are largely controlled by OPEC and others who do not believe in free trade. “To us this should be a question of economics, pragmatism and good business sense rather than ideology,” Mr. Day said. The refiners are joined in an unlikely alliance by congressional liberals like Senator Edward Markey, Democrat of Massachusetts, who argue that an extra couple of million barrels a day of American production will not bring down global oil prices as long as OPEC remains in a dominant position to manipulate prices by increasing or decreasing output at will. Senator Markey noted that the United States still imports a third of the oil it uses, about the same proportion as when Congress limited exports 39 years ago. Many oil experts say that the debate will be settled when American oil production rises to such a high level that there are no longer adequate domestic markets for the sweet crude oil produced in the shale fields. That could happen as soon as 2017, some oil executives say. The telltale sign of a glut will be a collapse in the West Texas Intermediate price, the principal American oil benchmark price, which is currently about $3 below the world Brent price. That differential has been as high as $28 in recent years, but has been relieved by additional pipelines bringing American production to domestic markets and refineries for export of finished products. If the spread cracks open, the economic arguments for free export of domestic crude will probably win the day, many energy experts say, while a narrower spread would keep the debate going. Many oil experts say it is only a matter of time before a much steeper spread emerges — leading to trouble for an industry that has done much to keep the national economy afloat in recent years. Gluts of domestic oil are already mounting in West Texas. “You would see a significant reduction in drilling, resulting in a significant reduction in production, a significant reduction in employment in the industry,” predicted Scott Sheffield, chief executive of Pioneer Natural Resources, one of the two companies that won the initial condensate export approvals. The White House and Congress would not let that happen, oil executives say. Not surprisingly, Senator Markey took a different view: “They claim that exporting American oil to China will be good for oil companies and there will be no impact on American consumers and industries and our national security. If something sounds too good to be true, it probably is.”

Oil and Gasoline
International trade
US Economy


Profiles of Saeed Abedini, Amir Hekmati and Jason Rezaian

Abstract: Jason Rezaian Age : 39 From : Marin, Calif. Occupation : Tehran correspondent for The Washington Post Mr. Rezaian was born in California and holds dual citizenship in Iran and the United States. He was imprisoned in July 2014 and convicted in October on charges that included spying. The length of his sentence was not publicly disclosed. Executives of The Washington Post, who say Mr. Rezaian is innocent of any wrongdoing, have described his prosecution and imprisonment as a Kafkaesque farce. Executives from 25 news organizations recently sent a letter to Secretary of State John Kerry urging him to press Iran to release Mr. Rezaian. Saeed Abedini Age: 35 From : Boise, Idaho Occupation : Pastor Mr. Abedini, a naturalized American citizen, was arrested in 2012 and convicted on charges that included subverting national security by creating a private network of churches. In 2013, he was sentenced to eight years in prison. The conviction and sentence were denounced by the State Department. Amir Hekmati Age: 32 From : Flint, Mich. Occupation : Marine veteran Mr. Hekmati, an American of Iranian descent who served with the Marines in Iraq , was seized while visiting relatives in Tehran in August 2011. He was convicted of espionage and sentenced to death, but that verdict was overturned. He was then convicted of aiding a hostile country — meaning the United States — and was sentenced to a 10-year prison term. Mr. Hekmati has asserted his innocence and described himself as a political pawn in relations between the United States and Iran.

Iran
Jason Rezaian
Saeed Abedini
Amir Mirzaei Hekmati
Political prisoner
Washington Post
US Military
International relations


Aung San Suu Kyi to Visit Norway and Britain, Her Party Says

Abstract: BANGKOK — After 24 years of stubborn campaigning for democracy in Myanmar and a steely determination to stay inside the country despite official admonishments to leave, Daw Aung San Suu Kyi will make her first foreign trip since 1988, visiting Norway and Britain , the spokesman for her political party said on Wednesday. U Nyan Win, the spokesman, said the trip was a sign of confidence in the country’s political reforms. “It’s a statement about political freedom — it’s a sign of freedom,” Mr. Nyan Win said. During her long campaign against military rule, in which she spent 15 years under house arrest, Ms. Aung San Suu Kyi was free to leave Myanmar. The generals ruling the country at the time would have liked nothing more. Her decision to stay, despite the deprivations of house arrest, has been one of the hallmarks of her political career. It is also what distinguishes her from other prominent political prisoners in the country, who did not have the option to leave. Her British husband, Michael Aris, died of cancer in Britain in 1999, while she was leading her campaign in Myanmar, and her children spent their teenage years in Britain without their mother. U Aung Thein, a senior member of Ms. Aung San Suu Kyi’s party, the National League for Democracy, said the opposition’s landslide victory in a by-election this month had given Ms. Aung San Suu Kyi, who won a seat in Parliament, confidence that she would be able to return if she left the country. “She will be able to come back; she’s confident about that,” Mr. Aung Thein said by telephone. “She is no longer an ordinary person. She is one of the members of Parliament.” During a visit to Myanmar last week, Prime Minister David Cameron of Britain invited Ms. Aung San Suu Kyi “to see your beloved Oxford in June.” Ms. Aung San Suu Kyi is a graduate of Oxford University , and her husband taught there. Her ties to Britain have been politically delicate in the past. During military rule, state-run newspapers called her Mrs. Michael Aris and the puppet of foreign powers. That public criticism has evaporated under the new government, which took power a year ago. Before visiting Britain, Ms. Aung San Suu Kyi will travel to Norway, her party spokesman said. Svein Michelsen, a spokesman at the Norwegian Foreign Ministry, confirmed that the Norwegian government was “planning her visit in June.” She has long said that she would like to visit Norway to show her gratitude for being awarded the Nobel Peace Prize in 1991. The prize, awarded in her absence, was handed over to her family in a ceremony in Oslo. Ms. Aung San Suu Kyi, under house arrest at the time, heard on the radio that she had won. The award emboldened the democracy movement at a time of crackdowns by the military, which ruled the country, formerly known as Burma, for close to five decades. While Ms. Aung San Suu Kyi decided to stay through the crackdowns, thousands of democracy activists left the country, taking refuge in Thailand, Europe and the United States. In recent months, as the government of President Thein Sein has pushed ahead with a raft of reforms, many of those exiles have been returning for emotional reunions with family members they had not seen in decades. One of the most significant changes has been the reconciliation between the government and Ms. Aung San Suu Kyi. The April 1 election was a milestone for long-stalled reconciliation efforts, with the National League for Democracy winning 43 of the 45 seats in contention. Ms. Aung San Suu Kyi is scheduled to begin her career in Parliament on Monday, but uncertainty hangs over her admission and that of the other members from the National League for Democracy because of a dispute relating to the oath of office. Ms. Aung San Suu Kyi expressed objections to the government over a part of the oath that commands lawmakers to protect and safeguard the country’s Constitution. She has repeatedly said that some articles in the Constitution are undemocratic, including a provision that one-quarter of the seats in Parliament are reserved for the military. Her party wants to amend the Constitution. Mr. Nyan Win, the party spokesman, said on Wednesday that he had not heard back from the government on the issue.

Aung San Suu Kyi
Myanmar
Norway
Great Britain
Politics and Government
International Relations
Oxford University
National League for Democracy (Myanmar)


Budget Deadline Keeps New York Legislators Up All Night

Abstract: ALBANY — There was an impromptu round of salsa dancing on the Assembly floor, a spirited exchange of hostilities in the Senate and an untold number of last-minute trips to the Dunkin’ Donuts — the nearest purveyor of decent caffeine — on the first floor of the State Capitol. Legislative staff members who had not slept since Tuesday found a few minutes’ relief on office cots. More than one diet was dashed on the shoal of an early-morning cookie buffet. Even those who applauded the passage of New York State’s $155 billion budget, as the hours slid from what could reasonably be called “late Thursday” to what was undeniably Friday, acknowledged procedural flaws. But as the gilded Capitol building devolved into a cage for semiferal legislators, lawyers, bill drafters and reporters, democracy appeared less glamorous, and less pristine, than ever. Rank-and-file legislators knew little of the fiscal deliberations, which were conducted in closed-door meetings by Albany’s so-called three men in a room — Gov. Andrew M. Cuomo and the leaders of the two legislative chambers — until just before 9 p.m. on Thursday, three hours before the official April 1 deadline. That timeline, which jolted days of tense waiting with a sudden flurry of activity, left little time to digest the main points before lawmakers were corralled for votes. While the Senate worked the entire lobster shift to pass the budget bills, the Assembly broke for predawn naps before returning to the Capitol for a planned 10 a.m. session. But like many aspects of this year’s budget, that deadline seemed to slide. Hours passed before exhausted legislators made their way into the chamber for the final push. The session finally began in earnest after lunch, even as the Assembly speaker, Carl E. Heastie, a Bronx Democrat, held a celebratory news conference with reporters, promoting victories on increasing the minimum wage, establishing paid family leave for workers and increasing aid to schools. “I think this is exactly the type of budget,” Mr. Heastie said, “that Assembly Democrats dream about.” The comment, coming after a near all-nighter, was perhaps unintentionally literal. Marathon sessions are nothing new in Albany, where the budget used to come in months late before Mr. Cuomo made on-time agreements a badge of honor for his administration. Still, lawmakers in both houses expressed more chagrin than usual with the shotgun, dead-of-night budget votes — those in the majority in whispers, those in the minority in near shouts. “It’s frustrating to get a bill that’s over 600 pages long to have, I guess, perhaps from 1 a.m. to 2:30 a.m. to try to evaluate it and what’s in it,” Senator Liz Krueger, a Democrat from Manhattan, said a few hours before daybreak, “to realize that a billion here, a billion there, we’ll figure it out later, is the way we do our budgets in the state of New York.” The metaphors lawmakers used to denounce the process, too, grew notably untidy. “I was saying to some people, if you don’t give me a menu and don’t allow me to order, then don’t put a baloney sandwich in front of me and call it steak,” said Senator Gustavo Rivera, a Democrat from the Bronx, who rose at 6:50 a.m. to register his objections to the way legislators had been hustled through the budget vote. “This was a steak sandwich — maybe not a filet mignon — so I’ll be voting in the affirmative,” he added. “But it should not work like this.” In the Assembly, which Democrats dominate, Republicans felt equally stifled. “What a dumb way to run a railroad,” Assemblyman Bill Nojay, a Republican from the Rochester area, wrote on Twitter shortly after being released for the night at 5 a.m. “Not one member really knew what they voted on all day.” When they returned for the afternoon, their anger had not abated. “This bill is what we would call a big ugly,” said Assemblywoman Nicole Malliotakis, a Staten Island Republican. “This is really an April Fools’ Day joke on the taxpayers of New York.” Having missed the deadline in any case, some wondered why they did not simply wait longer to allow legislators and the public time to review the bills. And government watchdog groups pointed out that by skipping the legally required three-day public review period — which the governor circumvented this week with messages of necessity — the budget skidded past the deadline by days, not hours. “We should not be passing a $150 billion budget when New Yorkers have gone to bed and legislators are tired and just want to go home,” said Dick Dadey, the executive director of Citizens Union, a government-monitoring group. “We would rather have a budget that is a little bit late and a public that is fully informed than a budget that is fully on time and no one knows what’s in it.” Still, there appeared to be few unpleasant surprises the day after, apart from the discovery that the minimum wage increase would not extend the same wage level to tipped food-service workers. To the relief of New York City officials, the budget did not include Mr. Cuomo’s proposal to give a state agency veto power over individual affordable housing projects paid for with federal tax-exempt bonds the state gives to municipalities. Favored projects of both Democrats and Republicans were left out , including an education tax credit for donors to students at parochial schools (liked by Republicans) and the Dream Act, which would provide state tuition assistance to undocumented immigrants (championed by Democrats). Higher-education advocates were disappointed when tuition for the City University of New York and the State University of New York was frozen, making for a loss of projected revenue that was not replaced by new state funds. And professors at CUNY, who have gone without a raise or a new contract for six years, found their efforts to secure funding for a new labor agreement thwarted once again. Education activists expressed concern that despite a large infusion of aid to schools, low-income school districts were still being shortchanged. One measure they did cheer was $175 million in assistance for a program that would assist struggling schools. As Thursday passed into Friday, more than one lawmaker was observed dozing on the job. Another was seen rushing to the restroom in tears. The Assembly, at least, took a break. Senators saw dawn through the stained-glass windows of their chamber on Friday morning before they were released. “Do I like staying up all night? No,” said the Senate majority leader, John J. Flanagan, a Long Island Republican, who sported a thin layer of stubble. “But we got the people’s business done.” Wayne Jackson, the sergeant-at-arms of the Assembly, recalled once staying in the chamber for 31 hours straight to guard the printed bills as they were reviewed. Still, he said, budget season had not forced him to extremes, such as drinking caffeine, until Thursday, when he had his first cup of coffee in 15 years. On Friday morning, he was back at his post, with the passage of a budget just out of reach. Another full cup rested on his desk.

New York
Minimum wage
Andrew Cuomo
Carl E Heastie
Budget
John J. Flanagan
State legislature


Sewage Flow Into a Tennessee River Is Stopped

Abstract: Emergency workers on Wednesday contained a leak at a water treatment plant in Tennessee that had been spewing millions of gallons of largely untreated sewage into a river. An estimated four million gallons of wastewater poured into the Little Pigeon River after a holding tank wall at the plant collapsed on Tuesday morning, killing two workers, John Eslinger, 53, and Don Storey, 44. Officials in Gatlinburg, a small tourist destination in the Great Smoky Mountains National Park where the plant is located, are now focused on the environmental and economic toll. The state is warning people to avoid swimming or fishing in the river. No drinking water comes from the contaminated portion of the river, city officials said. “We’re doing extensive sampling upstream and downstream to determine the whole impact,” said Tisha Calabrese-Benton, a spokeswoman for the Tennessee Department of Environment and Conservation. “We don’t yet know the environmental effect.” Veolia Water North America, which has operated the plant since 1994, is investigating the cause of the collapse, as are state and city officials. The plant is not yet fully operational again. But city officials said the wastewater is being treated according to state guidelines.

Tennessee Sewers Rivers Environment Water


Amazon Leaps Into High End of the Fashion Pool

Abstract: SEATTLE — Amazon is so serious about its next big thing that it hired three women to do nothing but try on size 8 shoes for its Web reviews. Full time. The online retailer is shooting 3,000 fashion images a day in a photo studio using patent-pending technology. And it is happily losing hundreds of millions of dollars a year on free shipping — and, on apparel, even free returns — to keep its shoppers coming back. Having wounded the publishing industry, slashed pricing in electronics and made the toy industry quiver, Amazon is taking on the high-end clothing business in its typical way: go big and spare no expense. “It’s Day 1 in the category,” Jeff Bezos , Amazon’s chief executive, said in a recent interview. Though characteristically tight-lipped on bottom-line details, Mr. Bezos said the company was making a “significant” investment in fashion to convince top brands that it wanted to work with them, not against them. The traditional retail world — and many major brands that want no part of Amazon — are gearing up to fight for their lives. “It has the latitude to set prices and charge whatever it wants,” Sucharita Mulpuru, an analyst for Forrester Research , said of Amazon. “That is a huge threat for brands.” Amazon has sold clothing for years. But recently it has focused on signing on hundreds of contemporary and high-end brands, including Michael Kors , Vivienne Westwood , Catherine Malandrino, Jack Spade and Tracy Reese, and it continues to prowl for more. On Monday, some of Amazon’s muscle was on display as the company sponsored, and live-streamed, the Costume Institute Benefit at the Metropolitan Museum of Art and the accompanying exhibit . Mr. Bezos, the event’s honorary chairman, said that he was advised by Anna Wintour , Vogue’s editor, to wear a pocket square with his Tom Ford tuxedo (which is not available on Amazon). He did so. Amazon’s decision to go after high fashion is about plain economics. Because Amazon’s costs are about the same whether it is shipping a $10 book or a $1,000 skirt, “gross profit dollars per unit will be much higher on a fashion item,” Mr. Bezos said, and it already makes money on fashion. While its MyHabit site , started last year , uses a flash-sale model to compete with Gilt Groupe, Mr. Bezos says the company’s new effort is not about selling clothes at deep discounts but at prices that ensure that “the designer brands are happy.” Amazon has not just size on its side but money. The company has about $5.7 billion in cash and marketable securities, and Mr. Bezos has long taken a stance that investing in the business is the best place to use it. The company can afford to do things that some competitors cannot, like hire a bevy of stylists for the Web site models or investigate replacing the plain brown shipping box with a fancier package for clothes. Until now, fashion has been one of the few categories that Amazon has tried to dominate without success. In addition to its own site, Amazon bought the shoe site Zappos.com for more than $1 billion in 2009, started the shoe site Endless.com and MyHabit, and bought the boutique Shopbop in 2006. But many brands stayed away because they said Amazon’s site often looked too commoditized. “It’s not a place where you look at it and are like, ‘Oh, my clothes look and feel really good,’ ” said Andy Dunn, founder of the men’s fashion brand Bonobos, which does not sell through Amazon. Amazon hopes to fix that problem by going luxe. Mr. Bezos said Amazon.com’s initial forays into the high end had helped raise apparel sales by triple digits. Amazon’s considerable computing capability, for example, has been turned to fashion and the analysis of enormous amounts of shopping data. The company has also made a “disproportionate” investment in photography, said Cathy Beaudoin, the president of fashion for Amazon. The photography studio, in Kentucky , can shoot more than two images a minute, allowing the company to post new items daily on the Web that were photographed hours earlier. Most of all, the company is working to improve its presentation, so far most evidently on MyHabit, which Mr. Bezos said represented where Amazon wanted to go with all of its Web design for fashion. Instead of static product images, for example, models spin and pose to show off the clothing. The model’s body measurements and the clothing measurements are provided to help with sizing. And shopper-friendly advice — does the size 8 shoe run big or small? — is prominent. The ramp-up has created buzz as the company has hired models, stylists and makeup artists, started using customer data to personalize brand and size search results, and run the first advertisement campaign ever, in print and outdoors, for the Amazon clothing store. In the retail clothing world, fears are growing that few will be able to compete with a stepped-up Amazon. For some brands, the company’s size alone makes an overture from Amazon difficult to reject. “The amount of eyeballs and traffic and retail dollars that are generated through their Web site” is impressive, said Alex Bhathal, co-president of Raj Manufacturing, which makes licensed swimwear brands like Ella Moss . Amazon can also offer brands more attractive terms than many other stores. For instance, Amazon does not ask for “markdown money” when items do not sell, or return unsold product to a brand, said Ron Friedman, an accountant at Marcum L.L.P. who advises brands like James Perse and American Rag. And to woo brands, Amazon is willing to make big buys. Jason Cauchi, the creative director of Dallin Chase, had been selling some merchandise to Amazon’s Shopbop. Recently Amazon said it would buy items from the entire collection, which Mr. Cauchi said was a rare offer and difficult to refuse. A retailer like Amazon would typically pay brands a wholesale price for clothes, then set the retail price itself (although more powerful brands often mandate a minimum retail price). While brands sell some of the same items to different stores, they are increasingly developing exclusive colors or styles to avoid price-comparison issues. “A manufacturer does not want to kill a business, and the best way to kill a business is to have the same product selling for less on Amazon,” Mr. Friedman, the retail accountant, said. But Mr. Bezos said that, despite having taken a low-price approach in other industries, Amazon would not in fashion. “There’s a sophisticated markdown cadence in the fashion industry that we think makes sense and we’re basically following that established approach,” he said. There are many disbelievers, given Amazon’s history in other industries. Mr. Bezos, moreover, has to deal with the fact that he is no fashion guy. Asked in the interview about the brands he was wearing, Mr. Bezos could not name the brands of his shirt or shoes, which he said he bought in New York years ago. The jeans, he said, were Prada (not available on Amazon); his blue “Jeff” security badge was dangling from them.

Retail
Fashion
E Commerce
Amazon
Computers and the Internet
Price
Advertising Marketing
Jeff Bezos


Credit Suisse Earnings Fall 62% but Top Expectations

Abstract: ZURICH (Reuters) — Credit Suisse posted a smaller-than-expected fall in second-quarter earnings on Thursday as it managed more cash for the world’s wealthy and its investment banking unit returned to profit. The Swiss bank’s earnings easily beat analysts’ forecasts, despite falling 62 percent to 1.2 billion Swiss francs ($1.16 billion), because of smaller asset write-downs than expected. Its investment bank, private bank and asset management business all posted profits. A Reuters poll of analysts had forecast profit of 526 million francs. A reduction in risk exposure, the small write-down and strong inflows for private banking were all positive, analysts said. The first results from a big European bank for the second quarter also backed up signs from American rivals that banks could be through the worst of the write-downs ignited by the subprime mortgage crisis and subsequent credit squeeze. The result “could be the confirmation of the beginning of the end of the financial crisis,” an analyst at WestLB, Georg Kanders, said. Credit Suisse, which has reported billions of dollars in losses stemming from the credit crisis and was forced to recognize billions more because of a trading scandal, said volatile market conditions would continue. “At a time when many competitors are questioning their business models, our strategic direction is clear and consistent,” the chief financial officer, Renato Fassbind, said, adding the credit crisis was “definitely still here” and volatility would last into the medium term. “Given our strength, this period of change in our industry will provide Credit Suisse with unprecedented opportunities,” he said in a conference call. The Swiss bank — which has emerged less damaged from the turmoil than some big names, notably the local rival UBS — said its wealth management unit attracted net funds of 15.4 billion francs, more than twice the forecast amount and up from 13.3 billion a year ago. Credit Suisse has cut its risk exposure significantly since the third quarter and will continue to manage its balance sheet prudently, Mr. Fassbind said. Credit Suisse’s investment bank made a pretax profit of 281 million francs in the second quarter, sharply down from a record 2.5 billion a year before as revenue fell by half as the credit crisis hit origination activity, particularly for structured products and leveraged finance. Underwriting and advisory revenue also fell. But investment bank revenue was up from the first quarter, and expenses in the business dropped almost a third from a year before as bonuses fell.


Looking for the Ideal Spot to Make a Speech

Abstract: WASHINGTON — President-elect Barack Obama ’s aides say he is considering making a major foreign policy speech from an Islamic capital during his first 100 days in office. So where should he do it? The list of Islamic world capitals is long, and includes the obvious —Riyadh, Kuwait City, Islamabad — and the not-so-obvious — Male (the Maldives ), Ouagadougou ( Burkina Faso ), Tashkent ( Uzbekistan ). Some wise-guys have even suggested Dearborn, Mich., as a possibility. Clearly it would be cheating for Mr. Obama to fly to Detroit , talk to Dearborn’s 30,000 Arab residents and call it a day. And Male and Ouagadougou, while certainly majority Muslim, can’t really be what Mr. Obama’s aides have in mind when they talk about locales for a high-profile speech that would seek to mend rifts between the United States and the broader Muslim world. So Burkina Faso and the Maldives are out. But that leaves a whole swath of Islamic capitals, all ready to be spruced up for Mr. Obama to make his speech. I’ve thought hard about this, and asked a few people — diplomats even — which capital Mr. Obama should pick. The consensus, after an entire day of reporting, is Cairo . Why Cairo? It’s a matter of elimination. I called Ziad Asali, the president of the American Task Force on Palestine , to gauge his thoughts. “Damascus would be cool, except it would look as if he was rewarding the Syrians and it’s too soon for that,” Mr. Asali said. True. Maybe in a year, if Syrian President Bashar al-Assad gets around to a land-for-peace deal with Israel . But for right now, I’m not really seeing Damascus as the spot for the big speech. What about Ramallah, I asked Mr. Asali, thinking it would show solidarity with the Palestinians. “I would object to that on so many levels,” he shot back, irate. “Are you forgetting that Palestinians seek Jerusalem as their capital?” Right. And giving the speech in Jerusalem would just open up a Pandora’s box full of problems. So that’s not happening. My colleague, David Sanger, heard me talking about it and came over to my desk. “I think he’s going to pick Jakarta,” he said. “It would be a big homecoming-type trip.” But Jakarta’s too easy. Mr. Asali thought so too: “Jakarta? People would yawn about that.” Sure, Indonesia is the world’s most populous Muslim-majority country — some 177 million Muslims live there — but the very fact that Mr. Obama once lived and went to school there would make choosing it seem like cheating. Baghdad? Definitely out-of-the-box, but it could appear to validate the Iraq war, which Mr. Obama opposed. Beirut? Too many Hezbollah members — Secret Service would flip its collective lid — and anyway, the Lebanese president has always been a Christian. Tehran? Too soon for that. Amman ? Been there, done that. Islamabad? Too dangerous. Ankara ? Too safe. Plus the Turks aren’t going to be too crazy about being used for outreach to the Muslim world when they’re trying to join the European Union . I asked a senior Turkish diplomat what he thought. He immediately started acting, well, diplomatic. “We don’t have a problem with our Islamic identity,” he said. “But our system is secular.” Riyadh? Mr. Obama’s national security aides say no. Kuwait City? Abu Dhabi ? Doha? “I don’t think it will be in the Gulf,” one foreign policy adviser to Mr. Obama said. See? It’s got to be Cairo. Egypt is perfect. It’s certainly Muslim enough, populous enough and relevant enough. It’s an American ally, but there are enough tensions in the relationship that the choice will feel bold. The country has plenty of democracy problems, so Mr. Obama can speak directly to the need for a better democratic model there. It has got the Muslim Brotherhood, the Islamist organization that has been embraced by a wide spectrum of the Islamic world, including the disenfranchised and the disaffected. The Secret Service won’t like it one bit, but Cairo is no Islamabad. I called the Egyptian Embassy in Washington to ask officials there what they thought. Someone from Mr. Obama’s team had already mentioned the possibility, although embassy officials said Egypt has not been approached about a possible presidential trip to Cairo. Still, Sameh Shoukry, the Egyptian ambassador, e-mailed me a statement. “Needless to say, the President of the United States is always welcome in Egypt,” it said. “Delivering such a speech from Cairo would no doubt reinforce the intended message. Cairo has long been a center of Islamic learning and scholarship, in line with Egypt’s central role in the Middle East .”


Need for a League Puts N.J.I.T. in Great West Conference

Abstract: NEWARK — The New Jersey Institute of Technology is most assuredly in the Western Hemisphere and is more specifically a few miles west of Manhattan. But sending its intercollegiate athletic teams to compete in the Great West Conference required a leap of geographic logic that sounds wholly antithetical to a respected research institution. “When I tell people that we’re in the Great West, they usually don’t know what it is and I have to explain what teams we play,” said Jessica Gerald, a senior guard on the N.J.I.T. women’s basketball team. “Then they want to know why we’re in this conference and I tell them that it’s pretty much the only one we could get into.” Last week, in a sparsely populated gym on a campus nearly deserted because of winter break, Gerald and the Highlanders opened their conference schedule with a victory over the University of Texas-Pan American — which had landed in Newark via Houston, from Edinburg, Tex., only hours before a snowstorm. After the women played, a couple of dozen more fans trickled in for the men’s game, also won by N.J.I.T., which made the jump into Division I basketball for the 2006-7 season only to have its men’s team soon embark on a record 51-game losing streak. During its first two seasons in Division I, N.J.I.T. played as an independent, scrounging for opponents after conference play around the country began in January. The Highlanders gravitated to programs in similar predicaments, location notwithstanding, and created home-and-home series with Texas-Pan American, Houston Baptist, Chicago State, Utah Valley, North Dakota and South Dakota. In 2008, the teams banded together to become the basketball annex of the Great West Conference, which had existed for four years with other teams as a football league. At a time when revenue-generating sports are driving a significant rearrangement of the Division I conference map, nowhere has the old-school regional concept been stretched to the extreme more than in the Great West and, most of all, by N.J.I.T. When Texas Christian was admitted recently into the Big East, it was to increase the conference’s football footprint, adding a national power to the league’s depleted ranks and another major market for the sake of exposure and recruiting. In that way, the power conferences are mimicking professional leagues, outgrowing their original territories and fancying themselves as national brands. For N.J.I.T., at the bottom of the Division I food chain, the decision to join was more a matter of survival after Bryant University, of Smithfield, R.I., edged out the Highlanders for admission to the Northeast Conference, a 12-team league laden with teams within driving distance of Newark. “Our long-term goal is to get into a conference that is more regional,” said Margaret McKeon, the women’s basketball coach. “But though this league is all over the country, it’s a good process for us to go through when you’re taking a program from Division II into D-I. There are steps to every process.” Along the way to N.J.I.T.’s preferred destination, those steps are being measured across thousands of miles and with the burden of transporting 12 of its 18 intercollegiate teams to outposts far and wide. N.J.I.T.’s most recent athletic budget of $6.78 million covers scholarships, coaching salaries and operational costs. The decision to go with the Great West required “a little bit of a struggle” with the administration and is “a little bit of a strain on the budget,” Athletic Director Lenny Kaplan said. Fund-raising covers some extra costs, he added, and coaches cut back where they can. “Instead of five pair of sneakers, maybe players get four,” Kaplan said. “Instead of four sweat suits, maybe they get two. The bottom line, if we get into another conference, the budget is not going to drop dramatically.” The widespread travel, said Isaiah Wilkerson, a junior guard, has its perks. Wilkerson, from Staten Island, is looking forward to the trip to Texas in mid-February. “I love warm weather, and being down there feels like a reward for dealing with all the cold up here,” he said. The bad news is that two games in Texas for the men and women will be followed by two more in the frigid Dakotas with a five-day break in between. In addition to the 12-day trip, the men and women must travel to Chicago and to Orem, Utah, this month and back to Orem for the conference tournament in March. Last year, Gerald and some teammates took a midterm in an Orem hotel the day before they lost in the first round. The conference’s impact on class time is a concern, said Robert A. Altenkirch, the N.J.I.T. president. But in an e-mail, Altenkirch wrote that “a large percentage of the student-athletes are in the Honors College and have G.P.A.’s that are better than the N.J.I.T. average.” The move to Division I was met with skepticism and some scorn by many in the New York/New Jersey area. Why would a public institution with about 6,000 undergraduates, many of them commuters, and with a modest athletic facility try to get into the business of March Madness in a spiraling economy? Altenkirch explained that N.J.I.T. had formulated a plan to move from Division III to II and finally to I long before his arrival in 2002. “We decided to accelerate the move,” he wrote. “The move was seen to allow us to compete athletically with our academic peers, the good academic schools, gain visibility for doing so and helping to spread the N.J.I.T. brand.” He acknowledged that the travel costs of membership in the Great West Conference “are a concern, as is the name,” which was adopted when all the football-playing colleges were out west. Presidents of the member institutions, Altenkirch said, are discussing how to control travel costs and considering a more inclusive name. Even without an automatic bid to the N.C.A.A. tournament, the N.J.I.T. coaches say, the benefits of being in the league are multiple and create incentives. “A season breaks down into thirds — nonconference schedule, conference schedule and then postseason,” said Jim Engles, the men’s basketball coach. “As an independent, we played a lot of the same teams because we were in the same boat. But we didn’t have the same experience. Human nature is what it is. When you’re not really playing for anything and the season starts to roll on, you’re only playing for the ideal of it.” Despite a nonconference schedule that included losses to Big East neighbors Rutgers and Seton Hall, Engles detected “a different energy” before the conference opener against Texas-Pan American. “Now you have a new record,” he said. “You’re 0-0 again.” While in New Jersey, the Pan American players planned a run across the river to see the sights of Times Square, and their hosts chatted about their fourth victory of the season. (N.J.I.T.’s men’s team is 5-11 after an 88-81 loss at Longwood in Farmville, Va., on Tuesday.) “At first it was like, Why are we going all the way to North Dakota and South Dakota? We’re from New Jersey; we shouldn’t have to go out there to get a game,” Gerald said. “But I’ve been playing these teams for four years now. We know the players. Before practice we’ll be in the locker room and we’ll talk about who won, who lost and by how much to compare ourselves to see what level we have to be at. And we pay special attention to the preseason rankings.” She noted that the Highlanders were rated last this season. But for one night, at least, they were first, with a perfect league record despite the long road ahead. In conclusion, Gerald said, “I’d rather be in the Great West than no conference at all.”

New Jersey Institute of Technology
National Collegiate Athletic Assn
College Athletics
Basketball


The Russians Are Coming, Eyes on the Prize

Abstract: TURIN, Italy, Feb. 23 - Everyone thought Russian forward Alexander Ovechkin's most amazing trick came last month when he scored a goal for the Washington Capitals by reaching behind his head and flipping a one-handed shot into the net while sliding across the ice on his back. As far as sleights of hand go, that was nothing. At the Winter Games, Ovechkin has waved his magic hockey stick and turned Russia's dysfunctional national team into a gold-medal contender. Ovechkin, 20, has a team-high five goals for Russia, but his leadership does not end on offense. "He wants to hit; he wants to get hit," the veteran defenseman Darius Kasparaitis said. "He wants to beat players. You can tell when he scores. He's full of energy." Ovechkin's love of hockey and homeland has spread among his teammates. For the first time in years, the Russians are playing as if they are intent on outscoring their opponent and not just outshining one another. Team Russia looks a lot like the Red Machine that won six of seven Olympic titles from 1964 to 1988, only with an élan to match its efficiency. "Obviously, when the old Soviet Union broke down, I think it took some years until they feel they are a country again," said Teemu Selanne, the star forward for Finland, which faces Russia in an Olympic semifinal Friday. "And I think now, they have really come together again." Kasparaitis, who plays for the Rangers, can appreciate better than most how far the Russians have come in embracing their storied past. He was 19 in 1992 when he won gold in Albertville, France, as a member of the team that was assembled after the breakup of the Soviet Union. That team did not have a national anthem or a logo on its jersey. This is Kasparaitis's third Olympics with Team Russia, but he is still waiting to hear his national anthem. In 1998 the Russians came close, winning the silver medal. Glasnost, of course, changed the rules, not only in politics but in sport. In the 1990's, a trickle of Russians into the N.H.L. became a flood, and it became harder to recruit players for the old-school, regimented national program. "A lot of guys started making a lot of money, and you know you are going from making a hundred bucks a month to making a lot of money and maybe it was not important to go play for your country at that time," Kasparaitis said. "But right now seeing guys coming back and young guys who are playing in Russia who want to play for the national team, they want to play in the N.H.L. but at the same time they want to be part of the national team. I think that's what Russia needs, guys like that." Pavel Bure also graced the 1998 Russian Olympic team, which he described on Thursday as "probably the best team I ever played for. After the last game, guys were shaking hands and saying thanks to each other because we spent 10 unbelievable days together." Bure, a former Ranger who retired in 2004 with a knee injury, agreed last November to become the general manager of Team Russia. Vladimir Krikunov, the head coach, welcomed Bure by referring to him as a figurehead. That went over like a slap shot clanking off a post, but after asserting his power, Bure did a wondrous thing: He assembled a team that is creating comparisons to the 1988 squad and other Olympic Russian teams of lore. "I think you can tell that he wants to play, too," Kasparaitis said of the 34-year-old Bure. "You can see in his eyes that he wishes he could still play. It's good to have Pavel around." Whatever happens Friday, Bure says these Games have built cohesion. That was his No. 1 goal. "I was trying to transfer that pride we felt for playing for our country to this team," he said, "and so far I think we've accomplished that." It helps when your leading patriot is also a leading candidate for the N.H.L.'s Calder Memorial Trophy, awarded annually to the rookie of the year. Ovechkin doesn't try to hide his nationalistic pride. "I'm Russian," he said. "It's very important to play for your country." In his fast-improving English, he said, "When you have everybody watching you and everybody see you in Russia, you want to go to ice and play for your country and try to win game." Bure, who had a reputation for being an aloof player, grew effusive when talking about Ovechkin's play. "He's young but he's already a great player," he said. "I think he's going to have a huge future. The way he skates, the way he throws the hits. He has size. He has power. "What I really like about him," Bure said, "is it doesn't matter what score it is. He goes out there and plays hard every shift." If the Russians are to advance, they must follow Ovechkin's lead, and -- to a man -- they seem to recognize that. "We cannot just go and try to play finesse hockey," Kasparaitis said. "We know that to win the hockey game, we have to sometimes play as a team. We all help each other and we all support each other. I think we've been playing good because of that."

RUSSIA
FINLAND
OLYMPIC GAMES (2006)
HOCKEY ICE
WINTER GAMES (OLYMPICS)
OLYMPIC GAMES


Warnings of Long-Term Damage After Russian Oil Spill

Abstract: MOSCOW, Nov. 12 — An environmental disaster began to unfold in southern Russia on Monday as tens of thousands of oil-slicked seabirds and globules of heavy oil dotted the shoreline, a day after at least 11 ships, including a small oil tanker, sank or broke apart in a fierce storm, Russian officials said. Three bodies washed ashore, and 20 sailors were missing when searches were called off late Monday because of rough weather, the news agency Interfax reported, citing officials with the Russian Ministry of Emergency Situations. But officials added that any survivors were at risk of freezing to death before they could be found. A local official, Alexander Tkachyov, governor of the Krasnodar region, said 30,000 seabirds were covered with oil and would probably die, Interfax said. The World Wide Fund for Nature, a conservation group, said the heavy fuel oil also settled onto the seabed, surely destroying marine habitat and killing fish. The tanker, Volganeft-139, split apart as it was pounded by 18-foot waves in the Kerch Strait which links the Sea of Azov with the Black Sea, a strategic pathway for oil exported by tanker from Russia and the Caspian basin to Europe. Its 13 crew members were rescued, but 1,300 tons of heavy, viscous oil — the equivalent of 360,000 gallons — were discharged into the sea. “The environmental system of the region has sustained serious damage,” said Aleksey Zimenko, a conservationist with the World Wide Fund for Nature, according to Interfax. “The consequences will persist for many years to come.” The Russian authorities said captains disregarded storm warnings, but survivors said the seas picked up suddenly and little could be done. “The waves were too high, so we could not lift the anchor,” one rescued sailor said glumly in an interview on RTR television from a hospital bed in Taman, in southern Russia. “Everything happened instantly. We listed, and then we sank.” Viktor P. Beltsov, a spokesman for the Ministry of Emergency Situations, speaking in a telephone interview, blamed the captains and ship owners for the disaster. “They all knew perfectly well a storm warning was in effect,” he said. “The leadership of these companies simply ignored these warnings.” Russian prosecutors said they would open a criminal investigation to assess responsibility for the environmental damage. But the World Wide Fund for Nature said in a statement that the problem ran deeper than errors in judgment by the ships’ captains, citing the Russian practice of using river tankers, like Volganeft-139, on the open sea in rough weather. “It’s a systemic problem,” the group said. “Most river tankers simply are not constructed for such storms, and the seagoing vessels cannot sail on the Don and Volga Rivers.” The statement said the accident, the first significant maritime oil spill in Russia during the current oil boom, should impel the country to adopt more stringent laws on tanker traffic, noting that laws requiring double-hulled tankers were introduced in the United States after the Exxon Valdez spill in 1989. Far less oil spilled in this incident than in the sinking of a tanker off the coast of Spain in 2002, when 63,000 tons of oil were discharged, destroying marine life and fouling numerous beaches. But the quantity of oil spilled can sometimes be less important than the location of the accident. The spill on Sunday, in a relatively narrow body of water and close to the shoreline, had the potential to be particularly harmful. Oil spills from pipelines on land are common in Russia. The country, the world’s second largest oil exporting nation after Saudi Arabia, maintains a vast terrestrial pipeline network tying Siberian fields with refineries as far away as Poland.

Russia
Environment
Oil (Petroleum) and Gasoline
Oceans


Job Bias Case Turns on Filing Right Form

Abstract: WASHINGTON, Nov. 6 — The age discrimination case that was argued before the Supreme Court on Tuesday turned on a hyper-technical issue that only an employment lawyer could love. The three lawyers arguing the case matched it in obscurity. Two were first-timers at the court, and the third last appeared there in 1965. For these reasons, the courtroom figured to be nearly empty. That it was not — in fact, the seats reserved for members of the Supreme Court bar were almost full — reflected the fact that the last time the Roberts court took up an obscure employment discrimination case, the 5-to-4 result quickly became a cause célèbre and a signature decision of the entire term. That was last May in the Ledbetter decision, in which the court imposed a tight time frame for filing pay discrimination cases, rejecting the view of the Equal Employment Opportunity Commission that such lawsuits are timely as long as a current paycheck reflects a prior discriminatory pay decision. The new case challenges another pro-employee position of the Equal Employment Opportunity Commission, its interpretation of the type of document an employee must file to initiate a charge of job-related age discrimination. The commission takes a relaxed view, accepting a written complaint that reflects an employee’s intent to pursue a case, even if the document is not the official “Form 5” designated for a formal “charge of discrimination.” The federal appeals court in New York upheld the commission’s position, reinstating an age discrimination suit that a group of couriers had filed against Federal Express. The Federal District Court had dismissed the suit, filed in April 2002, on the ground that the 14 plaintiffs had failed to file the required initial charge of discrimination with the commission before going to court. Instead of filling out Form 5, Patricia Kennedy, the lead plaintiff, had filled out Form 283, which the commission calls an “intake questionnaire.” Its purpose is to describe the accusations of discrimination enough to enable commission officials to advise an employee whether those accusations justify moving to the stage, a formal charge. Under commission rules, a formal charge is followed promptly by notice to the employer. In reinstating the lawsuit, the United States Court of Appeals for the Second Circuit agreed with the commission that the intake questionnaire should be treated as a charge, because it had enough information and showed the intent to make a formal accusation. Federal Express, in its appeal, argues that this laxity and inconsistency in the procedures deprives employers of what various federal antidiscrimination laws meant to provide them — formal notice of an employee’s complaint and the chance to resolve it without going to court. Giving the employer that chance is “a requirement, an indispensable prerequisite to a lawsuit,” Connie L. Lensing, a lawyer for Federal Express making her first Supreme Court argument, told the justices. “A charge needs to clearly delineate that it’s a charge,” Ms. Lensing said. The two lawyers on the other side said the purpose of the flexibility was to avoid trapping employees in unfamiliar paperwork. David L. Rose, representing the plaintiffs, said that as a lawyer experienced in employment discrimination cases, he was not aware of the difference between the two forms before taking this case. Mr. Rose last argued a Supreme Court case in 1965. Arguing for the commission, Toby J. Heytens, an assistant to the solicitor general who was making his first Supreme Court argument, said “the vast majority of people who initiate E.E.O.C. proceedings are lay people who aren’t familiar with the statute.” The court’s response to this clash between formality and practicality was what the courtroom audience had come to see. Would the case, Federal Express Corporation v. Holowecki, No. 06-1322, turn into this term’s Ledbetter case? The answer appeared to be probably not. While the Bush administration disavowed the commission’s policy in the Ledbetter case and argued on the employer’s behalf, here the solicitor general’s office supported the policy. The justices also seemed to want to shield employees from the consequences of the commission’s failure to follow the letter of the law. “I just don’t understand your leap from government incompetence to saying the plaintiff loses,” Chief Justice John G. Roberts Jr. said to Ms. Lensing. The commission came in for harsh criticism from both ends of the bench for failing to give clear advice about legal requirements. Only Justice Clarence Thomas, who spent eight years as head of the commission, said nothing. As the other justices puzzled over regulations adopted during his tenure there, he leaned back in his chair and stared at the ceiling.

Supreme Court
Suits and Litigation
Discrimination
Appeals Courts (US)


Killers on a Shoestring: Inside the Gangs of El Salvador

Abstract: SAN SALVADOR — On a sultry evening in late July, the Salvadoran authorities executed their very first assault on what they called the financial cupola of Mara Salvatrucha, or MS-13, the largest of the ruthless gangs that have made El Salvador the murder capital of the world. Until that point, the National Civil Police had followed an almost choreographed routine, again and again, as they sought to cripple the gangs economically. In the dead of night, often accompanied by television cameras, officers would batter down the doors of ramshackle houses in marginalized communities and then arrest and put on display a cluster of tattooed and half-naked men. Between 2012 and 2015, the total amount confiscated in these showy anti-extortion raids was $34,664.75 — an absurdly tiny sum considering that the United States has designated MS-13 as a global criminal organization on a par with the Zetas of Mexico, or the Yakuza of Japan. On July 27, however, in a mission baptized Operation Check, the authorities shifted gears. They deployed 1,127 police officers to raid scores of supposed gang fronts, including car dealerships and bars, motels and brothels. With great fanfare, they presented to the news media rows and rows of impounded buses and cars, along with 77 suspects identified as the financial operatives of MS-13 and their collaborators. Among them were the supposed C.E.O. of the street gang, Marvin Ramos Quintanilla, and two other leaders portrayed as controlling millions and possessing luxuries unimaginable to the destitute gang members beneath them. But the presentation was something of an exaggeration, as are many official characterizations of the gangs whose criminal sophistication and global reach tend to be overstated by authorities frustrated that they cannot vanquish them. For instance, that supposed chief executive officer hardly lived like a kingpin; he leased a squat concrete house with a corrugated roof in a neighborhood where rents rarely reach $400. He owned an old Honda Civic and a Nissan van. Image Leaders of the MS-13 street gang in the Ciudad Barrios prison in 2012. The gang’s supposed chief executive, Marvin Ramos Quintanilla, is on the far right, and its senior national leader, Borromeo Henríquez Solórzano, known as El Diablito de Hollywood, is seated and wearing a black cap. Credit Paul Coll/Ruido Photo In collaboration with The New York Times, El Faro , a digital newspaper based in San Salvador, sought to pierce the secrecy surrounding the finances of the gangs that terrorize El Salvador, which is experiencing a level of deadly violence unparalleled outside war zones: 103 homicides per 100,000 residents last year, compared with five in the United States. With an estimated 60,000 members in a country of 6.5 million people, the gangs hold power disproportionate to their numbers. They maintain a menacing presence in 247 of 262 municipalities. They extort about 70 percent of businesses. They dislodge entire communities from their homes, and help propel thousands of Salvadorans to undertake dangerous journeys to the United States. Their violence costs El Salvador $4 billion a year, according to a study by the country’s Central Reserve Bank. And yet, the reporting determined, MS-13 and its rival street gangs in El Salvador are not sophisticated transnational criminal enterprises. They do not begin to belong in the same financial league with the billion-dollar Mexican, Japanese and Russian syndicates with which they are grouped. If they are mafias, they are mafias of the poor. El Salvador has been brought to its knees by an army of flies. MS-13’s annual revenue appears to be about $31.2 million. That estimate is based on information in the 1,355-page file of Operation Check, to which El Faro got exclusive access. Wiretapped conversations reveal that the gang’s national leadership ordered its 49 “programs,” or chapters, to turn over all the money earned in a single, typical week, which happened to be in April. It collected $600,852. It sounds like a lot of money. But if divided equitably among the estimated 40,000 members of MS-13, each gang member would earn $15 a week and about $65 a month. That is half the minimum wage of an agricultural day laborer. But the gangs — MS-13 and its main rival, the 18th Street gang — do not distribute their proceeds equitably. They use them to pay for lawyers and funeral services, for weapons and munitions, and for the support of those serving long prison terms and their families. Theirs is a criminal subsistence economy; even many of their leaders are barely solvent. “That the authorities call them ‘businessmen’ — either their intelligence is invalid or it’s pretty crude,” said Rolando Monroy, a former Salvadoran prosecutor who oversaw money-laundering investigations until 2013. “The gangs are like an anthill. They are all after the same thing: something to eat.” Unlike other groups considered global organized crime syndicates, the Salvadoran gangs do not survive on the international trafficking of cocaine, arms and humans. While they dabble in small-time drug dealing, gun sales and prostitution, they engage primarily in a single crime committed over and over within Salvadoran territory: extortion. Inside El Salvador, they hold the reins of power largely because of a chilling demand repeated — or implied — daily across the country: Pay or die. “Look, the thing is we’re not joking around,” said one threat in childlike handwriting delivered to a bus owner recently. “Get something together. If not, we are going to burn one of your new minibuses.” It was signed by the 18th Street gang: “18 sends its best.” Image A threatening note sent by the 18th Street gang to a bus owner. Credit Fred Ramos/El Faro for The New York Times A Message Written in Lead At 4 p.m. on a summer day in 2015, two young gang members intercepted a businessman as he was returning home from work. “I have kids. Calm down, please,” he managed to say before the youths grabbed him, threw him to the ground and shot him: in a shoulder, in the stomach, and twice in the face. They were delivering a message written in lead. “It was because of the extortion, not for any other reason,” the man’s son said. The man owned a bus. His son, who also owned a bus, said his father, tired of being extorted, had finally stopped making his $1 daily payment to the gang three weeks before his death. It murdered him because of $21. Among Salvadoran businesses, transportation companies, whose vehicles crisscross gang territory, have proved especially vulnerable to extortion. Over the last five years, it has been more dangerous to drive a bus than to fight gang crime: The gangs have killed 692 transportation workers — and 93 police officers. (This is according to an analysis of internal government data that, like most data in this article, is not considered public information but was obtained by El Faro.) Genaro Ramírez, the owner of a large bus company and a former member of Congress, calculates that he has handed over $500,000 in gang extortion payments over the last 19 years. “It’s a matter of survival,’’ he said. “When they tell you they are going to kill you, you don’t have a choice.” Between 2013 and 2015, the National Police received 7,506 reports of extortion, which the authorities see as just a small fraction of the total. In the same period, some 424 gang members were convicted of this crime, most of them low-level people who made the pickups and were caught with the cash. The payment of extortion by bus companies is so commonplace that some have employees whose principal role is to negotiate with the gangs, which are continually raising their rates and demanding extras like Christmas bonuses or buses to take them to the beach or to the funerals of associates. The only transportation company chief who has refused to be extorted — and has made his refusal public — is Catalino Miranda. Mr. Miranda owns a fleet of several hundred buses. Image One of Catalino Miranda’s employees counting money in a bus terminal in San Salvador. Credit Fred Ramos/El Faro for The New York Times Since 2004, the gangs have killed 26 of his employees. But he refuses to reconsider his position. “As I told one of them,” he said, referring to a gang representative, “go ahead and kill them. This cannot continue for a lifetime.” Mr. Miranda spoke in his office, with a 9-millimeter pistol lying atop a mess of papers on his desk, and rifles and flak jackets piled in a corner. He spends $30,000 a month on security, he said. He has cameras posted in all his buses and stations, and eight security guards, armed with assault weapons, who patrol the gang zones his buses move through. When his employees are killed, he hires private detectives to investigate, because “the state does not have the capacity to protect witnesses.” “They use you,” Mr. Miranda continued, “and they abandon you.” Resisting the gangs is not an option for small-business owners, however. Many of them live in gang-controlled neighborhoods themselves and cannot escape the pressure to pay. That was the situation for the bus owner killed in the summer of 2015. The bus owner’s son, who is 38, spoke of his father’s death in an open-air restaurant beside the Pan-American Highway. The son carried a pistol — he always has one by his side, even when he sleeps, he said — and sat facing the entrance, with his back to a ravine, so he could track comings and goings. Like most businessmen who recounted their experiences with shakedowns, the man spoke on the condition of anonymity. His father was one of 154 transportation workers who lost their lives to gang-run extortion rings in 2015. To talk is to risk becoming another statistic. It all started one afternoon in 2004, he recounted, when a couple of teenage gangsters boarded a bus on their route. The youths demanded the driver’s license and registration, reviewed the documents and then handed the driver a disposable phone before jumping off. After the shaken driver returned to the terminal, the phone rang. The voice on the other end laid out the terms of their new relationship: $10 a week not just for the one bus but for each of the 10 buses on the route. The man, his father and the other bus owners held an emergency meeting to discuss whether to report the demand to the police. Many victims do not bother. Extortion investigations require them to make payments to the gangs while the police watch and collect evidence. But the gangs almost always find out, and the victim is threatened or killed before the investigation is completed. Even so, the men decided to call the police. Soon, two detectives stationed themselves inside their terminal and, posing as bus owners, negotiated a rate with the gang: $1 a day per bus. Over the next three years, the police arrested three gang leaders, including one who lived next door to the man’s father. The investigation expanded to other crimes and dragged on. The bus owners kept paying extortion. Image A bus driver in San Salvador in June. Credit Fred Ramos/El Faro for The New York Times The situation deteriorated. Between 2004 and 2012, MS-13 killed five bus drivers on their routes and one of the police investigators assigned to their case. In 2012, the gang tried to kill the man himself, surrounding his house, he said at the restaurant. After his father’s murder, the gang increased its extortion on the route — to $1.50 a day. The man sold his bus. Little Devil of Hollywood When the Salvadoran authorities draw a flow chart of MS-13’s organizational structure, they always put a mug shot of El Diablito de Hollywood, the Little Devil of Hollywood, at the very top. Hierarchically, El Diablito — Borromeo Henríquez Solórzano, 38 — is as far above “homeboy” as one can get. If gang leaders are enriching themselves at the expense of the rank and file, Mr. Henríquez should be the wealthiest capo di tutti. And yet. In the late 1970s or early 1980s, Mr. Henríquez and his family fled the Salvadoran civil war along with thousands of their compatriots who resettled in Los Angeles neighborhoods dominated by Mexican gangs. Mara Salvatrucha was born there and then. At the end of the 1990s, as part of an anti-gang offensive and a crackdown on “criminal aliens,” the United States shipped planeloads of gang members made in the United States back to El Salvador and other Central American countries. El Diablito returned to his homeland in one of those waves of deportation. He was just a teenager, but in that era coming from Los Angeles conferred status in the branch of Mara Salvatrucha that had sprouted in El Salvador. (Loosely affiliated but largely autonomous branches now exist in other Central American countries and in pockets of the United States outside California.) It was like arriving with a seal of “original product,” and El Diablito, clever and garrulous, quickly parlayed that into a position of power. Prison, where he was sent in 1998 after getting a 30-year sentence for homicide, only solidified his stature. Soon after he was first locked up, Mr. Henríquez summoned the leader of one of Mara Salvatrucha’s most powerful cells to visit him in prison, the leader related in an interview. At that time, the gang had no reliable revenue stream, though members sold drugs on street corners, committed petty robberies and demanded small handouts from bus drivers. But Mr. Henríquez had a moneymaking plan, he told the leader. El Diablito said he wanted to institutionalize extortion nationwide, the leader related. He was insistent that the leader accede to the plan, or quit: MS-13 would tolerate no dissidents. The leader communicated the new directive to his troops. A few years later, the leader quit and emigrated to Washington, D.C., where he now owns a small business in a Salvadoran neighborhood. Like El Diablito, most of the national gang leaders operate from behind bars. Through ready access to cellphones and private visits with lawyers, they retain tight control of their organizations — the money the gangs earn and the havoc they wreak. Image Friends and relatives mourned Ricardo Amador, a bus driver killed by gang members, in Aguilares, El Salvador, in September. Credit Fred Ramos/El Faro for The New York Times This became chillingly apparent in 2012 when the government was negotiating a truce with the gangs and Mr. Henríquez was emerging into the public eye as a spokesman for MS-13. The leaders sent out an order from behind bars: Stop killing. And from one day to the next, homicides dropped 60 percent to a level that, with small variations, was maintained until the government’s negotiations with the gangs, which were highly unpopular, ended two years later. During the truce, a team from El Faro was allowed to interview gang leaders in the Ciudad Barrios jail, which was dominated by MS-13. For over a decade, the gangs have been separated by institution to reduce internecine warfare; this has had the unintended effect of strengthening them by uniting rather than dispersing their leadership. Dressed gang-fashionably in baggy, black athletic attire, Mr. Henríquez insisted that he survived on money sent by relatives in the United States and by a brother who sold used cars in El Salvador. “Do you realize it is difficult to believe that one of the most visible leaders of MS-13 does not derive a penny of his income from illicit activities?” a reporter from El Faro said. Mr. Henríquez paused, then responded: “My money does not come from extortion.” But he was pressed: What about illicit activities more generally? El Diablito answered with a derisive smile: “It doesn’t come from extortion.” And all the other gang leaders laughed, cryptically. That year — 2012 — the United States Treasury Department designated MS-13 as a transnational criminal organization, alongside four criminal syndicates: the Zetas, the Yakuza, the Russian Brothers’ Circle and the Italian Camorra. It was the first street gang that had ever received that designation. The next year, the Treasury put personal sanctions on Mr. Henríquez, which had the effect of forbidding Americans to do business with him and authorizing federal investigators to freeze his financial assets. No evidence has surfaced that any of Mr. Henríquez’s properties or assets in the United States were frozen. Sanctions were also placed on El Diablito’s wife, Jenny Judith Corado. The Salvadoran government arrested her in 2013 and accused her of belonging to a Mara Salvatrucha extortion ring. It could not prove her connection to the ring, however; she was freed and ordered to turn over the money that a judge considered the provenance of extortion: $50. Now, Ms. Corado does not appear to be enjoying a life of luxury or even comfort. With her children beside her, she spends her days hawking used clothing and lingerie from a stall constructed of tin cans in the busy public marketplace of San Salvador. In the news conference announcing Operation Check (as in the chess move), the authorities spoke of gang leaders’ “luxuries,” their “investments” and their “various millions of dollars.” “These leaders are living a different life than the gang members beneath them,” Douglas Meléndez, the attorney general, said. “The gang members beneath them should know.” It was a communiqué directed at the street, at those rank-and-file gangsters who put their lives on the line for little tangible reward: While their leaders may have been preaching a doctrine of brotherhood, they were secretly enriching themselves at the expense of their brothers, their soldiers, their homeboys. Image Catalino Miranda, with a gun on his desk in San Salvador, owns a fleet of buses and refuses to yield to extortion demands. Credit Fred Ramos/El Faro for The New York Times The luxuries, however, consisted of 22 imported but used cars, each valued at about $8,000. The confiscated cash amounted to $34,500. And the investments numbered three: a taqueria and bar in Soyapango, a working-class community in the San Salvador metropolitan area; a vegetable stand in a rural marketplace; and a highway restaurant that is decorated with a deer’s head, offers karaoke and has three waiters who primarily serve buckets of beer bottles. The gangs’ credo of fraternity and equality does not allow for any personal gain at the expense of the brotherhood, and they at least theoretically enforce it brutally. “He who makes himself rich at the expense of the street is going to die,” a leader of the 18th Street gang said in an interview. So even a vegetable stand is a risky venture, and the wiretapped conversations in the Operation Check file reveal that some gang leaders went so far as to pay extortion fees to their own gangs on their private businesses in order to hide their involvement with them. Howard Cotto, the general director of the National Police, estimated in an interview that 50 to 70 gang leaders, including Mr. Henríquez, have accumulated some money or business interests. But only enough, he said, to permit their families to escape “conditions of poverty, overcrowding, unhealthy conditions and sheet metal” and have a chance at a future. “I cannot say the leaders are living in places of luxury,” he acknowledged. Most of the leaders, in fact, are expected to spend the rest of their lives in prison, either in solitary confinement or in malodorous cells shared with dozens of others. ‘Keep Two Bucks’ One day in 2014, an imprisoned leader of the 18th Street gang who goes by the alias Chiki was issuing instructions to a low-level gang member identified as Shaggy. Speaking by phone from the Izalco penitentiary, Chiki, who was serving time for extortion, ordered Shaggy to make a pickup of an extortion payment. It was $100 from an operation in Colonia Rubio in the department of La Unión. And, though Shaggy risked up to 20 years in prison if caught, there was something special in it for him, Chiki said. “Keep two bucks so you can get yourself something to eat,” Chiki said, in what turned out to be a wiretapped conversation. He added: “And tell El Demente,” the Demented One, “to give you some custards for your kid.” Chiki, whose real name is José Luis Guzmán, was the third in command of the 18th Street gang’s Southerners faction in eastern El Salvador. Another prison wiretap recording showed an even higher-level 18th Street leader, Carlos Ernesto Mojica, getting involved in negotiations with a chicken vendor who sought to lower her monthly extortion payment to $200 from $400. That these leaders were overseeing such small-bore operations typifies the pettiness of gang business. While officials publicly portray the gangs as international criminal syndicates and narco-gangs, law enforcement records and data tell a different story — as do some authorities when speaking privately or in one-on-one interviews. In the four years before Operation Check, the biggest sum collected in a police anti-extortion raid was $6,377; some raids netted only $5. “I have never had a case involving the quantity of money necessary to maintain organized crime,” said Nora Montoya, a judge who has handled gang extortion cases for decades. Similarly, Mr. Cotto, the police director, said the term “narco-gang” was “sensationalism” and could be misinterpreted as suggesting that Salvadoran street gangs were working directly with the Gulf Cartel or the Zetas in the transshipment of drugs from South America to the United States. “This is not the case. It is definitely not the case,” he said. Although Salvadoran gangs sell drugs, they do it like street-corner dealers, not international operatives. From 2011 to 2015, the National Police seized 13.9 kilograms of cocaine from gangs; that was less than 1 percent of the total seized. Three-quarters of the gang members prosecuted on drug charges over the last few years were charged with possessing less than an ounce. A veteran cocaine dealer in San Salvador said serious drug-trafficking organizations wanted nothing to do with the street gangs, which are considered unreliable and volatile. “The wholesalers I work with would not sell to the gang guys,” he said. “They don’t trust them.” Over a decade ago, the police confiscated an account ledger from José Luis Mendoza Figueroa, a founder of MS-13, that contained no evidence of any drug business. Instead it showed weekly receipts that averaged $14 from the 19 “cliques” — the smallest gang units — he controlled, and trivial outlays for bullets ($8), taxis ($25), Christmas dinners, liquor and “$50 for the homeboys in prison.” A couple of years ago, federal agents seized a similar ledger from the treasurer of the Park View Locos clique of the MS-13 in Usulután in southeast El Salvador. A log of one day’s expenses showed $30 for a cellphone chip, $10 for “mujer chief” (the chief’s wife or woman), $35 for “another woman” and $10 for food, with $29 listed as the balance. The notebook also contained the gang member’s grandiose musings: “The day I die I want to be remembered as a strong street-level soldier, a committed delinquent, and at the hour that the shots ring out, I want to be marked ‘present.’” Grunts Seeking Respect According to an internal code, only leaders can speak on behalf of the 18th Street gang. But in the rural department of La Paz, one of the most violent in El Salvador, a 15-year-old gang member clambered to his feet from an old mattress on the dirt floor of a mud-walled house to defy that rule. He had agreed to grant an interview on two conditions: that his identity be protected, and that breakfast be provided. Image A 15-year-old gang member with a gun in a house in La Paz in July. Credit Fred Ramos/El Faro for The New York Times The boy, gangly and pimply, is a fledgling member of the 18th Street Revolutionaries, a faction of the 18th Street gang, and he works as an extremely small-time roadside extortionist. He collects $15 monthly from each of three food trucks that rumble through his district carrying chewing gum, Pepsi sodas and Bimbo bread. He then turns over the proceeds to the leader of his clique. “All the loot goes to weapons,” the youth said; he himself was awarded a 9-millimeter pistol and many nights takes it out on “patrol.” Like so many young recruits, the teenager is an obedient soldier who risks his life to protect his territory without earning a penny from his organization. It is a bargain for the gang leaders who manage the gang economy: tens of thousands of grunts who are not seeking personal profit, only respect and a sense of belonging. One of 14 children, the boy never went to school and does not know how to read or write. He probably could have found work in the nearby sugar-cane fields, where, even if conditions were miserable, he would have earned $100 a month. But, feeling bullied and vulnerable at 13, he believed that gang membership would give him something less tangible but more valuable at that age. “I was a kid: I was stupid,” he said about joining. “A bunch of crazy guys were messing with me because I was a kid, smacking me in the head, knocking me around. It made me think: I have had enough. Since I joined up, nobody screws with me.” The department of La Paz, with all its sugar-cane production, is fairly lucrative for the gangs. The Federation of Associations of Sugar Cane Producers said in June that its members had paid $1.5 million in extortion fees over a recent five-month period. But none of that trickles down to the rank and file. So in order to survive, the boy runs his own little racket on the side: “private extortion,” gang members call it. His particular clique forbids members to extort their neighbors. Instead, he collects and pockets “rent” from a few poor businesses on the periphery of his clique’s zone. He said he netted $40 a month — “only enough for what I’m going to eat.” Despite his age, he is mostly left to fend for himself by a hapless mother with too many mouths to feed. While the teenage gang member talked, three of his little siblings circled the breakfast — scrambled eggs, beans and plantains — that waited in cartons on the floor. He gave his younger brother permission to open a carton. The little boy, who had matted hair and a dirty face, let out a squeal of delight, and proceeded to attack the meal with his hands. In two years of gang life, the teenager has already witnessed and participated in significant bloodshed. He said he had been involved in two “collective homicides.” In both cases, members of a rival gang had dared to breach the invisible border that separates MS-13 from 18th Street territory. One man was looking to buy some marijuana; the other to meet girls at a village festival. They were killed for their defiance. In the spring, the 26-year-old leader of the teenager’s clique — whom he knew as Shadow — died in what the police described as a clash between the authorities and gang members. The boy was not present, but he had witnessed the deaths of three other clique members in February in another encounter described as a clash, he said. The boy said none of his homeboys had been carrying weapons that winter day. Hiding in a trash pile, he watched as the police killed his friends, teenagers like him, and then, he said, placed guns around their bodies to make it look as if they had fallen in crossfire. Two neighbors who are not gang members supported his version of events in interviews, and it is not far-fetched: El Salvador’s attorney general for human rights has 31 open cases against the police for alleged summary executions of 100 gang members over the last year and a half. The day of that interview and in follow-up conversations throughout the summer, the boy made it clear he was scared of the police. Since February, officers had been stopping by his house from time to time, and he had spent much of his time hiding from them in the mountains. “I need to save money to get out of here,” he said. “If they catch me, they’re not going to let me live.” They did catch him, in October, and arrested him for extorting $40 — his private extortion — from a local merchant. He was jailed, and faces up to 15 years in prison. Failure of the ‘Iron Fist’ As violence peaked in 2015, reaching levels unseen since the aftermath of El Salvador’s long and brutal civil war, entire communities abandoned their homes because of gang threats. It became such a recurring phenomenon that television channels interrupted their programming to broadcast live the precise moment in which dozens of families fled, on foot or in pickup trucks tightly packed with suitcases, mattresses, chickens and pigs. Having failed to guarantee them daily security, the police nonetheless supervised their moves. Pedro González, the chief of the anti-gang unit, showed up at one mass exodus, from a condominium building in suburban San Salvador. After imploring residents in vain to stay put, he led them in an alternate response. “It doesn’t matter who here is Catholic or evangelical, let us raise a prayer,” he said. “That is the most important, let us turn to God.” Over the years, the Salvadoran authorities have tried to quash the gangs with military might, to prosecute them into oblivion, to banish them with lengthy prison terms and, briefly, to negotiate with them. (The dialogue was corrupted by, among other things, the secret efforts of the two major political parties to court the gang leaders’ electoral support at the same time.) When the government ratcheted up its “iron fist” approach last year, three gangs, working in coordination, responded with a show of force. On a Sunday night, they distributed written and oral messages to bus owners and employees: “He who takes out a vehicle tomorrow is going to end up glued to his steering wheel.” To underscore their seriousness, they killed a driver and burned three microbuses as a warning. The next day, six drivers who had disobeyed their order were killed. The authorities sent soldiers and tanks into the streets, and deployed government vehicles to substitute for the buses, but the gangs succeeded in almost completely paralyzing San Salvador’s transportation system for four days. Some 1.3 million Salvadorans were affected; many high schools and universities suspended classes and the economy suffered an $80 million loss, according to the Chamber of Commerce. It was a ruthless show of force. Image Soldiers transporting civilians in San Salvador in July 2015 after gangs ordered a bus strike. Credit Fred Ramos/El Faro for The New York Times This year, with Operation Check, the government conducted one of its most professional law enforcement efforts to date, and comments by senior officials suggested a new willingness to approach the gangs as a complex phenomenon with deep roots in the profound inequalities of a country where a third of the population lives in poverty. Yet by hyping its findings, the government continued to misrepresent the gangs as sophisticated criminal organizations, ruthlessly driven by a thirst for financial gain. And though in Operation Check it acknowledged a distinction between the culpability of leaders and rank-and-file members, that distinction was lost on the street. The authorities have continued to treat all gangsters as mortal enemies and have doubled down on their use of force. Some 424 gang members had died in confrontations with the police this year as of September. “If the use of force is not the correct path in this moment, at this stage, at this juncture, then what is?’’ Óscar Ortiz, the country’s vice president, asked in late October. The government cites as evidence a recent drop in murders: 4,431 by mid-October, compared with 5,363 by that point in 2015. But that is still the second highest toll since 1995. In Operation Check, the government sought to sow dissent in gang ranks by portraying the leaders of MS-13 as self-interested profiteers. Afterward, a written message sent out from a Mara Salvatrucha-dominated prison demanded that “justice” be meted out to those revealed by Operation Check to have betrayed the gang, according to an American official in El Salvador who monitors the gangs. As of yet, though, there do not seem to have been any revenge killings, internal purges or mass defections. For a gang member tired of the gang life, at any rate, there is nowhere to go. Those who are not incarcerated are marked, quite literally with tattoos, for life. There are no rehabilitation centers where they can seek refuge, no programs to reintegrate them into society and no gang-prevention initiatives aimed at high-risk youths. The only alternatives appear to be those that gang members themselves spray-paint on walls throughout the country: “Jail or the Cemetery.”

Gang
El Salvador
Organized crime
Extortion and Blackmail
MS-13
El Diablito
Bus
18th Street Gang