SETTING SUN: ONCE SKY-HIGH, ail PRICES ARE FALLING EVEN AS ail-COMPANY COSTS ARE RISING

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SETTING SUN: ONCE SKY-HIGH, ail PRICES ARE FALLING EVEN AS ail-COMPANY COSTS ARE RISING

COVER: PhotographbyLowellGeorgia-CORBIS. Inset:MandelNgan-AFP-GETTY IMAGES

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INSIDELOOK:AWHITEHOUSEATWAR 1

U.S.AFFAIRS: New revelations about the White House and Iraq 12 IRAQ: ln the mountains with PKK

rebels 18

AFRICA: Remarkably, Morocco is starting to look like Europe 22 CHINA:A power play in Shanghai kicks off political jockeying 26 BUSINESS:Why are oil priees

falling? 36

MOVIES:Rome's new filmfest 50

DEPARTMENTS

PERISCOPE 4

PERSPECTIVES 5

WORLDVIEW 11

THEGOODLlFE 61

THELASTWaRD 64

Vol.CXLVIII,No. 15. October 9,2006@2006byNEWSWEEK, Inc., 251West57th Street, New York, NY 10019. Printed byRoto Smeets, Weert, Netherlands. Alirights reserved, Registered atthe Post Office as a newspaper. Copyright under the International Copyright Convention. Copyright reserved under the Pan American Convention. Registered in the Philippines Patent Office. ln the U.S.A.: Postmaster: send address changes to NEWSWEEKINTERNATIONAL,251 West 57th Street, New York, NY 10019; periodical postage paid at New York, N.Y., and at addition al mailing offices. NEWSWEEKINTERNATIONALis writtenand edited for a worldwide audience and is published weekly, except occasionaliytwo issues are combined into one expanded issue which counts as two subscription copies, in the U.K. by NEWSWEEK,Inc. (lSSN 0163-7053). To order reprints (minimum order required: 500 copies) or request permission to republish a NEWSWEEKarticle please cali 1-212-445-4870 or fax 1-212-445-5764. Dir. Resp.ltalia Marco Provasi; rappr.IMD sri; via G.

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SETTING SUN: ONCE SKY-HIGH, ail PRICES ARE FALLING EVEN AS ail-COMPANY COSTS ARE RISING