$6 beyond the greater New York metropolitan area. $5.00

Late Edition

VOL. CLXI . . No. 55,602 2011 The New York Times NEW YORK, SUNDAY, NOVEMBER 27, 2011

U(D5E71D)x+&!{!/!=!#An engineer and naturalized Americancitizen found jail and then limbo after re-turning to China, highlighting the perilsof doing business there. PAGE 6

INTERNATIONAL 6-14

Perils of Commerce in ChinaCalifornias leaders have rallied arounda plan to build a high-speed rail line de-spite cries of boondoggle from theprojects critics. PAGE 18

NATIONAL 18-28

Two Sides on a RailroadMany major gun makers, including the195-year-old Remington Arms, have qui-etly passed into the hands of one privatecompany, the Freedom Group. PAGE 1

SUNDAY BUSINESS

Stealth Giant of Gun Industry Nicholas D. Kristof PAGE 11OPINION IN SUNDAY REVIEW

By SCOTT SHANE

WASHINGTON At a time ofpartisan gridlock in the capital,one obscure cause has drawn astellar list of supporters fromboth parties and the last two ad-ministrations, including a dozenformer top national security offi-cials.That alone would be unusual.

What makes it astonishing is theobject of their attention: a fringeIranian opposition group, long anally of Saddam Hussein, that isdesignated as a terrorist organ-ization under United States lawand described by State Depart-ment officials as a repressive cultdespised by most Iranians andIraqis.The extraordinary lobbying ef-

fort to reverse the terrorist desig-nation of the group, the Mujahe-deen Khalq, or Peoples Mujahe-deen, has won the support of twoformer C.I.A. directors, R. JamesWoolsey and Porter J. Goss; aformer F.B.I. director, Louis J.Freeh; a former attorney gen-eral, Michael B. Mukasey; Presi-dent George W. Bushs firsthomeland security chief, TomRidge; President Obamas firstnational security adviser, Gen.James L. Jones; big-name Re-publicans like the former NewYork mayor Rudolph W. Giulianiand Democrats like the former

Vermont governor HowardDean; and even the former topcounterterrorism official of theState Department, Dell L. Dailey,who argued unsuccessfully forending the terrorist label while inoffice.The American advocates have

been well paid, hired throughtheir speaking agencies and col-lecting fees of $10,000 to $50,000

for speeches on behalf of the Ira-nian group. Some have beenflown to Paris, Berlin and Brus-sels for appearances. But they insist that their mo-

tive is humanitarian to protectand resettle about 3,400 membersof the group, known as theM.E.K., now confined in a campin Iraq. They say the terrorist la-bel, which dates to 1997 and then

reflected decades of violence thatincluded the killing of someAmericans in the 1970s, is nowoutdated, unjustified and danger-ous.Emotions are running high as

Secretary of State Hillary Rod-ham Clinton completes a reviewof the terrorist designation. Thegovernment of Prime Minister

Across Party Lines, Lobbying for Iranian Exiles on Terrorist List

JIM LO SCALZO/EUROPEAN PRESSPHOTO AGENCY

Mujahedeen Khalq supporters and Secretary of State Hillary Rodham Clinton in Washington.

Continued on Page 10

By JEREMY W. PETERS

Inside the debate halls, theclash may be Republican versusRepublican. But offstage, con-servatives are mounting a unifiedand expensive air assault on thecandidates common opponent:President Obama.Nearly a year before Election

Day, Republican presidential can-didates and conservative actiongroups are already spendingheavily on television advertisingaimed at casting Mr. Obama as afailure. Their tactics, the aggressive

and sometimes misleading kindnot typically used until much fur-ther along in a campaign season,have led to a spat with Demo-crats in what is shaping up to bethe most costly election advertis-ing war yet.In an advertisement from Gov.

Rick Perry of Texas that is nowrunning on national cable televi-sion, Mr. Perry looks directly intothe camera and declares: Oba-mas socialist policies are bank-rupting America. We must stophim now.A new commercial from Mitt

TV Attack AdsAim at ObamaEarly and Often

Continued on Page 4

By DAVID KOCIENIEWSKI

As he stood in the opulent marble foyerof a Fifth Avenue mansion late last month,greeting the coterie of prominent guestsarriving at his private art gallery, RonaldS. Lauder was doing more than just beinga gracious host.To celebrate the 10th anniversary of the

Neue Galerie, Mr. Lauders museum ofAustrian and German art, he exhibitedmany of the treasures of a personal col-lection valued at more than $1 billion, in-cluding works by Van Gogh, Czanne andMatisse, and a Klimt portrait he boughtfive years ago for $135 million. Yet for Mr. Lauder, an heir to the Este

Lauder fortune whose net worth is esti-mated at more than $3.1 billion, theevening went beyond social and culturalsignificance. As is often the case with hisactivities, just beneath the surface was a

stock deal so audacious that Congress lat-er enacted a law forbidding the tactic, Mr.Lauder has for decades aggressively tak-en advantage of tax breaks that are usefulonly for the most affluent.The debate over whether to reduce tax

shelters and preferences for the rich isone of the most volatile in Washington andwill move to the presidential campaign,now that repeated attempts in Congress tostrike a grand bargain over spending cutsand an overhaul of the tax code havefailed. A handful of billionaires like Warren E.

Buffett and Bill Gates have joined Demo-crats in calling for an elimination of thebreaks, saying that the current systemadds to the budget deficit, contributes tothe widening income gap between therichest and the rest of society, and shifts

shrewd use of the United States tax code.By donating his art to his private founda-tion, Mr. Lauder has qualified for de-ductions worth tens of millions of dollarsin federal income taxes over the years,savings that help defray the hundreds ofmillions he has spent creating one of NewYork Citys cultural gems. The charitable deductions generated by

Mr. Lauder whose donations have aid-ed causes as varied as hospitals and ef-forts to rebuild Jewish identity in EasternEurope are just one facet of a sophis-ticated tax strategy used to preserve a for-tune that Forbes magazine says makeshim the worlds 362nd wealthiest person.From offshore havens to a tax-sheltering

BEBETO MATTHEWS/ASSOCIATED PRESS

In 2006, Ronald S. Lauder, who is now worth $3.1 billion, paid $135 million for the Klimt painting Adele Bloch-Bauer I.

A Familys Billions, Artfully ShelteredEste Lauder Heirs Tax Strategies Typify Advantages for the Wealthy

BUT NOBODY PAYS THAT

Fighting for Tax Breaks

Continued on Page 20

By SALMAN MASOOD and ERIC SCHMITT

ISLAMABAD, Pakistan Pa-kistani officials said on Saturdaythat NATO aircraft had killed atleast 25 soldiers in strikes againsttwo military posts at the north-western border with Afghani-stan, and the countrys supremearmy commander called themunprovoked acts of aggression ina new flash point between theUnited States and Pakistan. The Pakistani government re-

sponded by ordering the CentralIntelligence Agency to vacate thedrone operations it runs fromShamsi Air Base, in western Pa-kistan, within 15 days. It alsoclosed the two main NATO sup-ply routes into Afghanistan, in-cluding the one at Torkham.NATO forces receive roughly 40percent of their supplies throughthat crossing, which runsthrough the Khyber Pass, and Pa-kistan gave no estimate for howlong the routes might be shutdown. A NATO spokesman said it was

likely that allied airstrikescaused the Pakistani casualties,but said an investigation hadbeen ordered to determine thecause. In Washington, American offi-

cials were scrambling to assesswhat had happened amid prelimi-nary reports that allied forces inAfghanistan engaged in a fire-fight along the border and calledin airstrikes. Senior Obama ad-ministration officials were alsoweighing the implications on arelationship that took a sharpturn for the worse after a NavySeal commando raid killed Osa-ma bin Laden near Islamabad in

NATO STRIKES KILLPAKISTANI FORCES,RAISING TENSIONS

AT LEAST 25 SOLDIERS DIE

Anger in Islamabad U.S. Offers Regretsand Vows Inquiry

Continued on Page 10

By ANTHONY SHADID

CAIRO Through elections,protests, government formationsand armed struggle, Arab coun-tries in an arc from Libya to thegulf were engaged this past weekmore than ever in attempts not tosimply overthrow leaders, but todecisively shape the orders thatfollow.The center of that struggle was

again in Cairo, in the landmarkTahrir Square, where a protestmovement was revived and doz-ens were killed in violence. Somehailed it as a new revolution, orthe opening of a front in the oldone. But it might be bettertermed the end of the beginning,as within the span of just a week,events breaking out here andacross the region seemed as sem-inal as any since that burst of op-timism when the revolts erupted11 months ago.In January, it was an uprising

against the dictatorship, and nowit is an uprising against what isleft of that dictatorship, saidSateh Noureddine, a columnist inthe leftist Lebanese newspaperAl Safir. The fall of regimes wasnot the revolution, but just a wayto establish the foundations forthe Arab Spring. Freedom anddemocracy need time. No one expected the Arab re-

volts to be a simple march ahead,but rarely have things seemed somuch in flux, with more potentialfor fragmentation, bloodshed anddisarray. While many analystsdescribe the disturbances as aninevitable reckoning with the leg-acy of dictatorship, others worrythe region may face years of un-rest before systems emerge to re-place the stagnant, American-backed order that held sway for

Post-Uprising,A New BattleArab World StrugglesTo Shape a New Order

NEWS ANALYSIS

Continued on Page 12

By HOWARD BECK

Six weary figures rose fromtheir chairs early Saturday morn-ing, their expressions telegraph-ing the conclusion to the N.B.A.sfive-month labor crisis: Basket-ball is back in business, with anew labor deal that heavily fa-vors the owners, despite somelast-minute concessions.The league wanted an overhaul

of its $4-billion-a-year enterprise,and it got it, with a nearly $300million annual reduction in play-er salaries and a matrix of newrestrictions on contracts andteam payrolls. The changes meana $3 billion gain for the ownersover the life of the 10-year deal.Before finally agreeing to those

sacrifices, the players negotia-tors won a handful of concessionsthat will allow the richest teamsto keep spending on players, en-suring a more competitive free-agent market.A truncated 66-game schedule

will begin Christmas Day withthree nationally televised games.For that, officials on both sideswere grateful as they announceda resolution at 3:40 a.m., on the

N.B.A. ReachesTentative DealTo Save Season

Continued in SportsSunday, Page 4

Fears of fresh clashes werestirred after security forces killedan unarmed protester. Page 6.

Anger After Death in Cairo

Bombs exploded in and around Bagh-dad, killing at least 11 people, as violencecontinues in the weeks before the Amer-ican withdrawal. PAGE 10

Bombs Kill at Least 11 in Iraq

Today, periodic clouds and sun,quite mild, high 63. Tonight, partlyto mostly cloudy, mild, low 52. To-morrow, cloudy, still mild, high 63.Details, SportsSunday, Page 12.

C M Y K Nxxx,2011-11-27,A,001,Bs-BK,E3

As he stood in the opulent marble foyer of a Fifth Avenue mansion late last month, greeting the coterie of prominent guests arriving at his private art gallery, Ronald s. Lauder was doing more than just being a gra-cious host.

To celebrate the 10th anniversary of the Neue Galerie, Mr. Lauders museum of Austrian and German art, he exhibited many of the trea-

sures of a personal collection valued at more than $1 billion, including

works by Van Gogh, Czanne and Matisse, and a Klimt portrait he bought five years ago for $135 million.

Yet for Mr. Lauder, an heir to the Este Lauder fortune whose net worth is estimated at

By DAVID KOCIENIEWSKI

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

VOL. CLXI . . No. 55,602 2011 The New York Times NEW YORK, SUNDAY, NOVEMBER 27, 2011

U(D5E71D)x+&!{!/!=!#An engineer and naturalized Americancitizen found jail and then limbo after re-turning to China, highlighting the perilsof doing business there. PAGE 6

INTERNATIONAL 6-14

Perils of Commerce in ChinaCalifornias leaders have rallied arounda plan to build a high-speed rail line de-spite cries of boondoggle from theprojects critics. PAGE 18

NATIONAL 18-28

Two Sides on a RailroadMany major gun makers, including the195-year-old Remington Arms, have qui-etly passed into the hands of one privatecompany, the Freedom Group. PAGE 1

SUNDAY BUSINESS

Stealth Giant of Gun Industry Nicholas D. Kristof PAGE 11OPINION IN SUNDAY REVIEW

By SCOTT SHANE

WASHINGTON At a time ofpartisan gridlock in the capital,one obscure cause has drawn astellar list of supporters fromboth parties and the last two ad-ministrations, including a dozenformer top national security offi-cials.That alone would be unusual.

What makes it astonishing is theobject of their attention: a fringeIranian opposition group, long anally of Saddam Hussein, that isdesignated as a terrorist organ-ization under United States lawand described by State Depart-ment officials as a repressive cultdespised by most Iranians andIraqis.The extraordinary lobbying ef-

fort to reverse the terrorist desig-nation of the group, the Mujahe-deen Khalq, or Peoples Mujahe-deen, has won the support of twoformer C.I.A. directors, R. JamesWoolsey and Porter J. Goss; aformer F.B.I. director, Louis J.Freeh; a former attorney gen-eral, Michael B. Mukasey; Presi-dent George W. Bushs firsthomeland security chief, TomRidge; President Obamas firstnational security adviser, Gen.James L. Jones; big-name Re-publicans like the former NewYork mayor Rudolph W. Giulianiand Democrats like the former

Vermont governor HowardDean; and even the former topcounterterrorism official of theState Department, Dell L. Dailey,who argued unsuccessfully forending the terrorist label while inoffice.The American advocates have

been well paid, hired throughtheir speaking agencies and col-lecting fees of $10,000 to $50,000

for speeches on behalf of the Ira-nian group. Some have beenflown to Paris, Berlin and Brus-sels for appearances. But they insist that their mo-

tive is humanitarian to protectand resettle about 3,400 membersof the group, known as theM.E.K., now confined in a campin Iraq. They say the terrorist la-bel, which dates to 1997 and then

reflected decades of violence thatincluded the killing of someAmericans in the 1970s, is nowoutdated, unjustified and danger-ous.Emotions are running high as

Secretary of State Hillary Rod-ham Clinton completes a reviewof the terrorist designation. Thegovernment of Prime Minister

Across Party Lines, Lobbying for Iranian Exiles on Terrorist List

JIM LO SCALZO/EUROPEAN PRESSPHOTO AGENCY

Mujahedeen Khalq supporters and Secretary of State Hillary Rodham Clinton in Washington.

Continued on Page 10

By JEREMY W. PETERS

Inside the debate halls, theclash may be Republican versusRepublican. But offstage, con-servatives are mounting a unifiedand expensive air assault on thecandidates common opponent:President Obama.Nearly a year before Election

Day, Republican presidential can-didates and conservative actiongroups are already spendingheavily on television advertisingaimed at casting Mr. Obama as afailure. Their tactics, the aggressive

and sometimes misleading kindnot typically used until much fur-ther along in a campaign season,have led to a spat with Demo-crats in what is shaping up to bethe most costly election advertis-ing war yet.In an advertisement from Gov.

Rick Perry of Texas that is nowrunning on national cable televi-sion, Mr. Perry looks directly intothe camera and declares: Oba-mas socialist policies are bank-rupting America. We must stophim now.A new commercial from Mitt

TV Attack AdsAim at ObamaEarly and Often

Continued on Page 4

By DAVID KOCIENIEWSKI

As he stood in the opulent marble foyerof a Fifth Avenue mansion late last month,greeting the coterie of prominent guestsarriving at his private art gallery, RonaldS. Lauder was doing more than just beinga gracious host.To celebrate the 10th anniversary of the

Neue Galerie, Mr. Lauders museum ofAustrian and German art, he exhibitedmany of the treasures of a personal col-lection valued at more than $1 billion, in-cluding works by Van Gogh, Czanne andMatisse, and a Klimt portrait he boughtfive years ago for $135 million. Yet for Mr. Lauder, an heir to the Este

Lauder fortune whose net worth is esti-mated at more than $3.1 billion, theevening went beyond social and culturalsignificance. As is often the case with hisactivities, just beneath the surface was a

stock deal so audacious that Congress lat-er enacted a law forbidding the tactic, Mr.Lauder has for decades aggressively tak-en advantage of tax breaks that are usefulonly for the most affluent.The debate over whether to reduce tax

shelters and preferences for the rich isone of the most volatile in Washington andwill move to the presidential campaign,now that repeated attempts in Congress tostrike a grand bargain over spending cutsand an overhaul of the tax code havefailed. A handful of billionaires like Warren E.

Buffett and Bill Gates have joined Demo-crats in calling for an elimination of thebreaks, saying that the current systemadds to the budget deficit, contributes tothe widening income gap between therichest and the rest of society, and shifts

shrewd use of the United States tax code.By donating his art to his private founda-tion, Mr. Lauder has qualified for de-ductions worth tens of millions of dollarsin federal income taxes over the years,savings that help defray the hundreds ofmillions he has spent creating one of NewYork Citys cultural gems. The charitable deductions generated by

Mr. Lauder whose donations have aid-ed causes as varied as hospitals and ef-forts to rebuild Jewish identity in EasternEurope are just one facet of a sophis-ticated tax strategy used to preserve a for-tune that Forbes magazine says makeshim the worlds 362nd wealthiest person.From offshore havens to a tax-sheltering

BEBETO MATTHEWS/ASSOCIATED PRESS

In 2006, Ronald S. Lauder, who is now worth $3.1 billion, paid $135 million for the Klimt painting Adele Bloch-Bauer I.

A Familys Billions, Artfully ShelteredEste Lauder Heirs Tax Strategies Typify Advantages for the Wealthy

BUT NOBODY PAYS THAT

Fighting for Tax Breaks

Continued on Page 20

By SALMAN MASOOD and ERIC SCHMITT

ISLAMABAD, Pakistan Pa-kistani officials said on Saturdaythat NATO aircraft had killed atleast 25 soldiers in strikes againsttwo military posts at the north-western border with Afghani-stan, and the countrys supremearmy commander called themunprovoked acts of aggression ina new flash point between theUnited States and Pakistan. The Pakistani government re-

sponded by ordering the CentralIntelligence Agency to vacate thedrone operations it runs fromShamsi Air Base, in western Pa-kistan, within 15 days. It alsoclosed the two main NATO sup-ply routes into Afghanistan, in-cluding the one at Torkham.NATO forces receive roughly 40percent of their supplies throughthat crossing, which runsthrough the Khyber Pass, and Pa-kistan gave no estimate for howlong the routes might be shutdown. A NATO spokesman said it was

likely that allied airstrikescaused the Pakistani casualties,but said an investigation hadbeen ordered to determine thecause. In Washington, American offi-

cials were scrambling to assesswhat had happened amid prelimi-nary reports that allied forces inAfghanistan engaged in a fire-fight along the border and calledin airstrikes. Senior Obama ad-ministration officials were alsoweighing the implications on arelationship that took a sharpturn for the worse after a NavySeal commando raid killed Osa-ma bin Laden near Islamabad in

NATO STRIKES KILLPAKISTANI FORCES,RAISING TENSIONS

AT LEAST 25 SOLDIERS DIE

Anger in Islamabad U.S. Offers Regretsand Vows Inquiry

Continued on Page 10

By ANTHONY SHADID

CAIRO Through elections,protests, government formationsand armed struggle, Arab coun-tries in an arc from Libya to thegulf were engaged this past weekmore than ever in attempts not tosimply overthrow leaders, but todecisively shape the orders thatfollow.The center of that struggle was

again in Cairo, in the landmarkTahrir Square, where a protestmovement was revived and doz-ens were killed in violence. Somehailed it as a new revolution, orthe opening of a front in the oldone. But it might be bettertermed the end of the beginning,as within the span of just a week,events breaking out here andacross the region seemed as sem-inal as any since that burst of op-timism when the revolts erupted11 months ago.In January, it was an uprising

against the dictatorship, and nowit is an uprising against what isleft of that dictatorship, saidSateh Noureddine, a columnist inthe leftist Lebanese newspaperAl Safir. The fall of regimes wasnot the revolution, but just a wayto establish the foundations forthe Arab Spring. Freedom anddemocracy need time. No one expected the Arab re-

volts to be a simple march ahead,but rarely have things seemed somuch in flux, with more potentialfor fragmentation, bloodshed anddisarray. While many analystsdescribe the disturbances as aninevitable reckoning with the leg-acy of dictatorship, others worrythe region may face years of un-rest before systems emerge to re-place the stagnant, American-backed order that held sway for

Post-Uprising,A New BattleArab World StrugglesTo Shape a New Order

NEWS ANALYSIS

Continued on Page 12

By HOWARD BECK

Six weary figures rose fromtheir chairs early Saturday morn-ing, their expressions telegraph-ing the conclusion to the N.B.A.sfive-month labor crisis: Basket-ball is back in business, with anew labor deal that heavily fa-vors the owners, despite somelast-minute concessions.The league wanted an overhaul

of its $4-billion-a-year enterprise,and it got it, with a nearly $300million annual reduction in play-er salaries and a matrix of newrestrictions on contracts andteam payrolls. The changes meana $3 billion gain for the ownersover the life of the 10-year deal.Before finally agreeing to those

sacrifices, the players negotia-tors won a handful of concessionsthat will allow the richest teamsto keep spending on players, en-suring a more competitive free-agent market.A truncated 66-game schedule

will begin Christmas Day withthree nationally televised games.For that, officials on both sideswere grateful as they announceda resolution at 3:40 a.m., on the

N.B.A. ReachesTentative DealTo Save Season

Continued in SportsSunday, Page 4

Fears of fresh clashes werestirred after security forces killedan unarmed protester. Page 6.

Anger After Death in Cairo

Bombs exploded in and around Bagh-dad, killing at least 11 people, as violencecontinues in the weeks before the Amer-ican withdrawal. PAGE 10

Bombs Kill at Least 11 in Iraq

Today, periodic clouds and sun,quite mild, high 63. Tonight, partlyto mostly cloudy, mild, low 52. To-morrow, cloudy, still mild, high 63.Details, SportsSunday, Page 12.

C M Y K Nxxx,2011-11-27,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

VOL. CLXI . . No. 55,602 2011 The New York Times NEW YORK, SUNDAY, NOVEMBER 27, 2011

U(D5E71D)x+&!{!/!=!#An engineer and naturalized Americancitizen found jail and then limbo after re-turning to China, highlighting the perilsof doing business there. PAGE 6

INTERNATIONAL 6-14

Perils of Commerce in ChinaCalifornias leaders have rallied arounda plan to build a high-speed rail line de-spite cries of boondoggle from theprojects critics. PAGE 18

NATIONAL 18-28

Two Sides on a RailroadMany major gun makers, including the195-year-old Remington Arms, have qui-etly passed into the hands of one privatecompany, the Freedom Group. PAGE 1

SUNDAY BUSINESS

Stealth Giant of Gun Industry Nicholas D. Kristof PAGE 11OPINION IN SUNDAY REVIEW

By SCOTT SHANE

WASHINGTON At a time ofpartisan gridlock in the capital,one obscure cause has drawn astellar list of supporters fromboth parties and the last two ad-ministrations, including a dozenformer top national security offi-cials.That alone would be unusual.

What makes it astonishing is theobject of their attention: a fringeIranian opposition group, long anally of Saddam Hussein, that isdesignated as a terrorist organ-ization under United States lawand described by State Depart-ment officials as a repressive cultdespised by most Iranians andIraqis.The extraordinary lobbying ef-

fort to reverse the terrorist desig-nation of the group, the Mujahe-deen Khalq, or Peoples Mujahe-deen, has won the support of twoformer C.I.A. directors, R. JamesWoolsey and Porter J. Goss; aformer F.B.I. director, Louis J.Freeh; a former attorney gen-eral, Michael B. Mukasey; Presi-dent George W. Bushs firsthomeland security chief, TomRidge; President Obamas firstnational security adviser, Gen.James L. Jones; big-name Re-publicans like the former NewYork mayor Rudolph W. Giulianiand Democrats like the former

Vermont governor HowardDean; and even the former topcounterterrorism official of theState Department, Dell L. Dailey,who argued unsuccessfully forending the terrorist label while inoffice.The American advocates have

been well paid, hired throughtheir speaking agencies and col-lecting fees of $10,000 to $50,000

for speeches on behalf of the Ira-nian group. Some have beenflown to Paris, Berlin and Brus-sels for appearances. But they insist that their mo-

tive is humanitarian to protectand resettle about 3,400 membersof the group, known as theM.E.K., now confined in a campin Iraq. They say the terrorist la-bel, which dates to 1997 and then

reflected decades of violence thatincluded the killing of someAmericans in the 1970s, is nowoutdated, unjustified and danger-ous.Emotions are running high as

Secretary of State Hillary Rod-ham Clinton completes a reviewof the terrorist designation. Thegovernment of Prime Minister

Across Party Lines, Lobbying for Iranian Exiles on Terrorist List

JIM LO SCALZO/EUROPEAN PRESSPHOTO AGENCY

Mujahedeen Khalq supporters and Secretary of State Hillary Rodham Clinton in Washington.

Continued on Page 10

By JEREMY W. PETERS

Inside the debate halls, theclash may be Republican versusRepublican. But offstage, con-servatives are mounting a unifiedand expensive air assault on thecandidates common opponent:President Obama.Nearly a year before Election

Day, Republican presidential can-didates and conservative actiongroups are already spendingheavily on television advertisingaimed at casting Mr. Obama as afailure. Their tactics, the aggressive

and sometimes misleading kindnot typically used until much fur-ther along in a campaign season,have led to a spat with Demo-crats in what is shaping up to bethe most costly election advertis-ing war yet.In an advertisement from Gov.

Rick Perry of Texas that is nowrunning on national cable televi-sion, Mr. Perry looks directly intothe camera and declares: Oba-mas socialist policies are bank-rupting America. We must stophim now.A new commercial from Mitt

TV Attack AdsAim at ObamaEarly and Often

Continued on Page 4

By DAVID KOCIENIEWSKI

As he stood in the opulent marble foyerof a Fifth Avenue mansion late last month,greeting the coterie of prominent guestsarriving at his private art gallery, RonaldS. Lauder was doing more than just beinga gracious host.To celebrate the 10th anniversary of the

Neue Galerie, Mr. Lauders museum ofAustrian and German art, he exhibitedmany of the treasures of a personal col-lection valued at more than $1 billion, in-cluding works by Van Gogh, Czanne andMatisse, and a Klimt portrait he boughtfive years ago for $135 million. Yet for Mr. Lauder, an heir to the Este

Lauder fortune whose net worth is esti-mated at more than $3.1 billion, theevening went beyond social and culturalsignificance. As is often the case with hisactivities, just beneath the surface was a

stock deal so audacious that Congress lat-er enacted a law forbidding the tactic, Mr.Lauder has for decades aggressively tak-en advantage of tax breaks that are usefulonly for the most affluent.The debate over whether to reduce tax

shelters and preferences for the rich isone of the most volatile in Washington andwill move to the presidential campaign,now that repeated attempts in Congress tostrike a grand bargain over spending cutsand an overhaul of the tax code havefailed. A handful of billionaires like Warren E.

Buffett and Bill Gates have joined Demo-crats in calling for an elimination of thebreaks, saying that the current systemadds to the budget deficit, contributes tothe widening income gap between therichest and the rest of society, and shifts

shrewd use of the United States tax code.By donating his art to his private founda-tion, Mr. Lauder has qualified for de-ductions worth tens of millions of dollarsin federal income taxes over the years,savings that help defray the hundreds ofmillions he has spent creating one of NewYork Citys cultural gems. The charitable deductions generated by

Mr. Lauder whose donations have aid-ed causes as varied as hospitals and ef-forts to rebuild Jewish identity in EasternEurope are just one facet of a sophis-ticated tax strategy used to preserve a for-tune that Forbes magazine says makeshim the worlds 362nd wealthiest person.From offshore havens to a tax-sheltering

BEBETO MATTHEWS/ASSOCIATED PRESS

In 2006, Ronald S. Lauder, who is now worth $3.1 billion, paid $135 million for the Klimt painting Adele Bloch-Bauer I.

A Familys Billions, Artfully ShelteredEste Lauder Heirs Tax Strategies Typify Advantages for the Wealthy

BUT NOBODY PAYS THAT

Fighting for Tax Breaks

Continued on Page 20

By SALMAN MASOOD and ERIC SCHMITT

ISLAMABAD, Pakistan Pa-kistani officials said on Saturdaythat NATO aircraft had killed atleast 25 soldiers in strikes againsttwo military posts at the north-western border with Afghani-stan, and the countrys supremearmy commander called themunprovoked acts of aggression ina new flash point between theUnited States and Pakistan. The Pakistani government re-

sponded by ordering the CentralIntelligence Agency to vacate thedrone operations it runs fromShamsi Air Base, in western Pa-kistan, within 15 days. It alsoclosed the two main NATO sup-ply routes into Afghanistan, in-cluding the one at Torkham.NATO forces receive roughly 40percent of their supplies throughthat crossing, which runsthrough the Khyber Pass, and Pa-kistan gave no estimate for howlong the routes might be shutdown. A NATO spokesman said it was

likely that allied airstrikescaused the Pakistani casualties,but said an investigation hadbeen ordered to determine thecause. In Washington, American offi-

cials were scrambling to assesswhat had happened amid prelimi-nary reports that allied forces inAfghanistan engaged in a fire-fight along the border and calledin airstrikes. Senior Obama ad-ministration officials were alsoweighing the implications on arelationship that took a sharpturn for the worse after a NavySeal commando raid killed Osa-ma bin Laden near Islamabad in

NATO STRIKES KILLPAKISTANI FORCES,RAISING TENSIONS

AT LEAST 25 SOLDIERS DIE

Anger in Islamabad U.S. Offers Regretsand Vows Inquiry

Continued on Page 10

By ANTHONY SHADID

CAIRO Through elections,protests, government formationsand armed struggle, Arab coun-tries in an arc from Libya to thegulf were engaged this past weekmore than ever in attempts not tosimply overthrow leaders, but todecisively shape the orders thatfollow.The center of that struggle was

again in Cairo, in the landmarkTahrir Square, where a protestmovement was revived and doz-ens were killed in violence. Somehailed it as a new revolution, orthe opening of a front in the oldone. But it might be bettertermed the end of the beginning,as within the span of just a week,events breaking out here andacross the region seemed as sem-inal as any since that burst of op-timism when the revolts erupted11 months ago.In January, it was an uprising

against the dictatorship, and nowit is an uprising against what isleft of that dictatorship, saidSateh Noureddine, a columnist inthe leftist Lebanese newspaperAl Safir. The fall of regimes wasnot the revolution, but just a wayto establish the foundations forthe Arab Spring. Freedom anddemocracy need time. No one expected the Arab re-

volts to be a simple march ahead,but rarely have things seemed somuch in flux, with more potentialfor fragmentation, bloodshed anddisarray. While many analystsdescribe the disturbances as aninevitable reckoning with the leg-acy of dictatorship, others worrythe region may face years of un-rest before systems emerge to re-place the stagnant, American-backed order that held sway for

Post-Uprising,A New BattleArab World StrugglesTo Shape a New Order

NEWS ANALYSIS

Continued on Page 12

By HOWARD BECK

Six weary figures rose fromtheir chairs early Saturday morn-ing, their expressions telegraph-ing the conclusion to the N.B.A.sfive-month labor crisis: Basket-ball is back in business, with anew labor deal that heavily fa-vors the owners, despite somelast-minute concessions.The league wanted an overhaul

of its $4-billion-a-year enterprise,and it got it, with a nearly $300million annual reduction in play-er salaries and a matrix of newrestrictions on contracts andteam payrolls. The changes meana $3 billion gain for the ownersover the life of the 10-year deal.Before finally agreeing to those

sacrifices, the players negotia-tors won a handful of concessionsthat will allow the richest teamsto keep spending on players, en-suring a more competitive free-agent market.A truncated 66-game schedule

will begin Christmas Day withthree nationally televised games.For that, officials on both sideswere grateful as they announceda resolution at 3:40 a.m., on the

N.B.A. ReachesTentative DealTo Save Season

Continued in SportsSunday, Page 4

Fears of fresh clashes werestirred after security forces killedan unarmed protester. Page 6.

Anger After Death in Cairo

Bombs exploded in and around Bagh-dad, killing at least 11 people, as violencecontinues in the weeks before the Amer-ican withdrawal. PAGE 10

Bombs Kill at Least 11 in Iraq

Today, periodic clouds and sun,quite mild, high 63. Tonight, partlyto mostly cloudy, mild, low 52. To-morrow, cloudy, still mild, high 63.Details, SportsSunday, Page 12.

C M Y K Nxxx,2011-11-27,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

VOL. CLXI . . No. 55,602 2011 The New York Times NEW YORK, SUNDAY, NOVEMBER 27, 2011

U(D5E71D)x+&!{!/!=!#An engineer and naturalized Americancitizen found jail and then limbo after re-turning to China, highlighting the perilsof doing business there. PAGE 6

INTERNATIONAL 6-14

Perils of Commerce in ChinaCalifornias leaders have rallied arounda plan to build a high-speed rail line de-spite cries of boondoggle from theprojects critics. PAGE 18

NATIONAL 18-28

Two Sides on a RailroadMany major gun makers, including the195-year-old Remington Arms, have qui-etly passed into the hands of one privatecompany, the Freedom Group. PAGE 1

SUNDAY BUSINESS

Stealth Giant of Gun Industry Nicholas D. Kristof PAGE 11OPINION IN SUNDAY REVIEW

By SCOTT SHANE

WASHINGTON At a time ofpartisan gridlock in the capital,one obscure cause has drawn astellar list of supporters fromboth parties and the last two ad-ministrations, including a dozenformer top national security offi-cials.That alone would be unusual.

What makes it astonishing is theobject of their attention: a fringeIranian opposition group, long anally of Saddam Hussein, that isdesignated as a terrorist organ-ization under United States lawand described by State Depart-ment officials as a repressive cultdespised by most Iranians andIraqis.The extraordinary lobbying ef-

fort to reverse the terrorist desig-nation of the group, the Mujahe-deen Khalq, or Peoples Mujahe-deen, has won the support of twoformer C.I.A. directors, R. JamesWoolsey and Porter J. Goss; aformer F.B.I. director, Louis J.Freeh; a former attorney gen-eral, Michael B. Mukasey; Presi-dent George W. Bushs firsthomeland security chief, TomRidge; President Obamas firstnational security adviser, Gen.James L. Jones; big-name Re-publicans like the former NewYork mayor Rudolph W. Giulianiand Democrats like the former

Vermont governor HowardDean; and even the former topcounterterrorism official of theState Department, Dell L. Dailey,who argued unsuccessfully forending the terrorist label while inoffice.The American advocates have

been well paid, hired throughtheir speaking agencies and col-lecting fees of $10,000 to $50,000

for speeches on behalf of the Ira-nian group. Some have beenflown to Paris, Berlin and Brus-sels for appearances. But they insist that their mo-

tive is humanitarian to protectand resettle about 3,400 membersof the group, known as theM.E.K., now confined in a campin Iraq. They say the terrorist la-bel, which dates to 1997 and then

reflected decades of violence thatincluded the killing of someAmericans in the 1970s, is nowoutdated, unjustified and danger-ous.Emotions are running high as

Secretary of State Hillary Rod-ham Clinton completes a reviewof the terrorist designation. Thegovernment of Prime Minister

Across Party Lines, Lobbying for Iranian Exiles on Terrorist List

JIM LO SCALZO/EUROPEAN PRESSPHOTO AGENCY

Mujahedeen Khalq supporters and Secretary of State Hillary Rodham Clinton in Washington.

Continued on Page 10

By JEREMY W. PETERS

Inside the debate halls, theclash may be Republican versusRepublican. But offstage, con-servatives are mounting a unifiedand expensive air assault on thecandidates common opponent:President Obama.Nearly a year before Election

Day, Republican presidential can-didates and conservative actiongroups are already spendingheavily on television advertisingaimed at casting Mr. Obama as afailure. Their tactics, the aggressive

and sometimes misleading kindnot typically used until much fur-ther along in a campaign season,have led to a spat with Demo-crats in what is shaping up to bethe most costly election advertis-ing war yet.In an advertisement from Gov.

Rick Perry of Texas that is nowrunning on national cable televi-sion, Mr. Perry looks directly intothe camera and declares: Oba-mas socialist policies are bank-rupting America. We must stophim now.A new commercial from Mitt

TV Attack AdsAim at ObamaEarly and Often

Continued on Page 4

By DAVID KOCIENIEWSKI

As he stood in the opulent marble foyerof a Fifth Avenue mansion late last month,greeting the coterie of prominent guestsarriving at his private art gallery, RonaldS. Lauder was doing more than just beinga gracious host.To celebrate the 10th anniversary of the

Neue Galerie, Mr. Lauders museum ofAustrian and German art, he exhibitedmany of the treasures of a personal col-lection valued at more than $1 billion, in-cluding works by Van Gogh, Czanne andMatisse, and a Klimt portrait he boughtfive years ago for $135 million. Yet for Mr. Lauder, an heir to the Este

Lauder fortune whose net worth is esti-mated at more than $3.1 billion, theevening went beyond social and culturalsignificance. As is often the case with hisactivities, just beneath the surface was a

stock deal so audacious that Congress lat-er enacted a law forbidding the tactic, Mr.Lauder has for decades aggressively tak-en advantage of tax breaks that are usefulonly for the most affluent.The debate over whether to reduce tax

shelters and preferences for the rich isone of the most volatile in Washington andwill move to the presidential campaign,now that repeated attempts in Congress tostrike a grand bargain over spending cutsand an overhaul of the tax code havefailed. A handful of billionaires like Warren E.

Buffett and Bill Gates have joined Demo-crats in calling for an elimination of thebreaks, saying that the current systemadds to the budget deficit, contributes tothe widening income gap between therichest and the rest of society, and shifts

shrewd use of the United States tax code.By donating his art to his private founda-tion, Mr. Lauder has qualified for de-ductions worth tens of millions of dollarsin federal income taxes over the years,savings that help defray the hundreds ofmillions he has spent creating one of NewYork Citys cultural gems. The charitable deductions generated by

Mr. Lauder whose donations have aid-ed causes as varied as hospitals and ef-forts to rebuild Jewish identity in EasternEurope are just one facet of a sophis-ticated tax strategy used to preserve a for-tune that Forbes magazine says makeshim the worlds 362nd wealthiest person.From offshore havens to a tax-sheltering

BEBETO MATTHEWS/ASSOCIATED PRESS

In 2006, Ronald S. Lauder, who is now worth $3.1 billion, paid $135 million for the Klimt painting Adele Bloch-Bauer I.

A Familys Billions, Artfully ShelteredEste Lauder Heirs Tax Strategies Typify Advantages for the Wealthy

BUT NOBODY PAYS THAT

Fighting for Tax Breaks

Continued on Page 20

By SALMAN MASOOD and ERIC SCHMITT

ISLAMABAD, Pakistan Pa-kistani officials said on Saturdaythat NATO aircraft had killed atleast 25 soldiers in strikes againsttwo military posts at the north-western border with Afghani-stan, and the countrys supremearmy commander called themunprovoked acts of aggression ina new flash point between theUnited States and Pakistan. The Pakistani government re-

sponded by ordering the CentralIntelligence Agency to vacate thedrone operations it runs fromShamsi Air Base, in western Pa-kistan, within 15 days. It alsoclosed the two main NATO sup-ply routes into Afghanistan, in-cluding the one at Torkham.NATO forces receive roughly 40percent of their supplies throughthat crossing, which runsthrough the Khyber Pass, and Pa-kistan gave no estimate for howlong the routes might be shutdown. A NATO spokesman said it was

likely that allied airstrikescaused the Pakistani casualties,but said an investigation hadbeen ordered to determine thecause. In Washington, American offi-

cials were scrambling to assesswhat had happened amid prelimi-nary reports that allied forces inAfghanistan engaged in a fire-fight along the border and calledin airstrikes. Senior Obama ad-ministration officials were alsoweighing the implications on arelationship that took a sharpturn for the worse after a NavySeal commando raid killed Osa-ma bin Laden near Islamabad in

NATO STRIKES KILLPAKISTANI FORCES,RAISING TENSIONS

AT LEAST 25 SOLDIERS DIE

Anger in Islamabad U.S. Offers Regretsand Vows Inquiry

Continued on Page 10

By ANTHONY SHADID

CAIRO Through elections,protests, government formationsand armed struggle, Arab coun-tries in an arc from Libya to thegulf were engaged this past weekmore than ever in attempts not tosimply overthrow leaders, but todecisively shape the orders thatfollow.The center of that struggle was

again in Cairo, in the landmarkTahrir Square, where a protestmovement was revived and doz-ens were killed in violence. Somehailed it as a new revolution, orthe opening of a front in the oldone. But it might be bettertermed the end of the beginning,as within the span of just a week,events breaking out here andacross the region seemed as sem-inal as any since that burst of op-timism when the revolts erupted11 months ago.In January, it was an uprising

against the dictatorship, and nowit is an uprising against what isleft of that dictatorship, saidSateh Noureddine, a columnist inthe leftist Lebanese newspaperAl Safir. The fall of regimes wasnot the revolution, but just a wayto establish the foundations forthe Arab Spring. Freedom anddemocracy need time. No one expected the Arab re-

volts to be a simple march ahead,but rarely have things seemed somuch in flux, with more potentialfor fragmentation, bloodshed anddisarray. While many analystsdescribe the disturbances as aninevitable reckoning with the leg-acy of dictatorship, others worrythe region may face years of un-rest before systems emerge to re-place the stagnant, American-backed order that held sway for

Post-Uprising,A New BattleArab World StrugglesTo Shape a New Order

NEWS ANALYSIS

Continued on Page 12

By HOWARD BECK

Six weary figures rose fromtheir chairs early Saturday morn-ing, their expressions telegraph-ing the conclusion to the N.B.A.sfive-month labor crisis: Basket-ball is back in business, with anew labor deal that heavily fa-vors the owners, despite somelast-minute concessions.The league wanted an overhaul

of its $4-billion-a-year enterprise,and it got it, with a nearly $300million annual reduction in play-er salaries and a matrix of newrestrictions on contracts andteam payrolls. The changes meana $3 billion gain for the ownersover the life of the 10-year deal.Before finally agreeing to those

sacrifices, the players negotia-tors won a handful of concessionsthat will allow the richest teamsto keep spending on players, en-suring a more competitive free-agent market.A truncated 66-game schedule

will begin Christmas Day withthree nationally televised games.For that, officials on both sideswere grateful as they announceda resolution at 3:40 a.m., on the

N.B.A. ReachesTentative DealTo Save Season

Continued in SportsSunday, Page 4

Fears of fresh clashes werestirred after security forces killedan unarmed protester. Page 6.

Anger After Death in Cairo

Bombs exploded in and around Bagh-dad, killing at least 11 people, as violencecontinues in the weeks before the Amer-ican withdrawal. PAGE 10

Bombs Kill at Least 11 in Iraq

Today, periodic clouds and sun,quite mild, high 63. Tonight, partlyto mostly cloudy, mild, low 52. To-morrow, cloudy, still mild, high 63.Details, SportsSunday, Page 12.

C M Y K Nxxx,2011-11-27,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

VOL. CLXI . . No. 55,602 2011 The New York Times NEW YORK, SUNDAY, NOVEMBER 27, 2011

U(D5E71D)x+&!{!/!=!#An engineer and naturalized Americancitizen found jail and then limbo after re-turning to China, highlighting the perilsof doing business there. PAGE 6

INTERNATIONAL 6-14

Perils of Commerce in ChinaCalifornias leaders have rallied arounda plan to build a high-speed rail line de-spite cries of boondoggle from theprojects critics. PAGE 18

NATIONAL 18-28

Two Sides on a RailroadMany major gun makers, including the195-year-old Remington Arms, have qui-etly passed into the hands of one privatecompany, the Freedom Group. PAGE 1

SUNDAY BUSINESS

Stealth Giant of Gun Industry Nicholas D. Kristof PAGE 11OPINION IN SUNDAY REVIEW

By SCOTT SHANE

WASHINGTON At a time ofpartisan gridlock in the capital,one obscure cause has drawn astellar list of supporters fromboth parties and the last two ad-ministrations, including a dozenformer top national security offi-cials.That alone would be unusual.

What makes it astonishing is theobject of their attention: a fringeIranian opposition group, long anally of Saddam Hussein, that isdesignated as a terrorist organ-ization under United States lawand described by State Depart-ment officials as a repressive cultdespised by most Iranians andIraqis.The extraordinary lobbying ef-

fort to reverse the terrorist desig-nation of the group, the Mujahe-deen Khalq, or Peoples Mujahe-deen, has won the support of twoformer C.I.A. directors, R. JamesWoolsey and Porter J. Goss; aformer F.B.I. director, Louis J.Freeh; a former attorney gen-eral, Michael B. Mukasey; Presi-dent George W. Bushs firsthomeland security chief, TomRidge; President Obamas firstnational security adviser, Gen.James L. Jones; big-name Re-publicans like the former NewYork mayor Rudolph W. Giulianiand Democrats like the former

Vermont governor HowardDean; and even the former topcounterterrorism official of theState Department, Dell L. Dailey,who argued unsuccessfully forending the terrorist label while inoffice.The American advocates have

been well paid, hired throughtheir speaking agencies and col-lecting fees of $10,000 to $50,000

for speeches on behalf of the Ira-nian group. Some have beenflown to Paris, Berlin and Brus-sels for appearances. But they insist that their mo-

tive is humanitarian to protectand resettle about 3,400 membersof the group, known as theM.E.K., now confined in a campin Iraq. They say the terrorist la-bel, which dates to 1997 and then

reflected decades of violence thatincluded the killing of someAmericans in the 1970s, is nowoutdated, unjustified and danger-ous.Emotions are running high as

Secretary of State Hillary Rod-ham Clinton completes a reviewof the terrorist designation. Thegovernment of Prime Minister

Across Party Lines, Lobbying for Iranian Exiles on Terrorist List

JIM LO SCALZO/EUROPEAN PRESSPHOTO AGENCY

Mujahedeen Khalq supporters and Secretary of State Hillary Rodham Clinton in Washington.

Continued on Page 10

By JEREMY W. PETERS

Inside the debate halls, theclash may be Republican versusRepublican. But offstage, con-servatives are mounting a unifiedand expensive air assault on thecandidates common opponent:President Obama.Nearly a year before Election

Day, Republican presidential can-didates and conservative actiongroups are already spendingheavily on television advertisingaimed at casting Mr. Obama as afailure. Their tactics, the aggressive

and sometimes misleading kindnot typically used until much fur-ther along in a campaign season,have led to a spat with Demo-crats in what is shaping up to bethe most costly election advertis-ing war yet.In an advertisement from Gov.

Rick Perry of Texas that is nowrunning on national cable televi-sion, Mr. Perry looks directly intothe camera and declares: Oba-mas socialist policies are bank-rupting America. We must stophim now.A new commercial from Mitt

TV Attack AdsAim at ObamaEarly and Often

Continued on Page 4

By DAVID KOCIENIEWSKI

As he stood in the opulent marble foyerof a Fifth Avenue mansion late last month,greeting the coterie of prominent guestsarriving at his private art gallery, RonaldS. Lauder was doing more than just beinga gracious host.To celebrate the 10th anniversary of the

Neue Galerie, Mr. Lauders museum ofAustrian and German art, he exhibitedmany of the treasures of a personal col-lection valued at more than $1 billion, in-cluding works by Van Gogh, Czanne andMatisse, and a Klimt portrait he boughtfive years ago for $135 million. Yet for Mr. Lauder, an heir to the Este

Lauder fortune whose net worth is esti-mated at more than $3.1 billion, theevening went beyond social and culturalsignificance. As is often the case with hisactivities, just beneath the surface was a

stock deal so audacious that Congress lat-er enacted a law forbidding the tactic, Mr.Lauder has for decades aggressively tak-en advantage of tax breaks that are usefulonly for the most affluent.The debate over whether to reduce tax

shelters and preferences for the rich isone of the most volatile in Washington andwill move to the presidential campaign,now that repeated attempts in Congress tostrike a grand bargain over spending cutsand an overhaul of the tax code havefailed. A handful of billionaires like Warren E.

Buffett and Bill Gates have joined Demo-crats in calling for an elimination of thebreaks, saying that the current systemadds to the budget deficit, contributes tothe widening income gap between therichest and the rest of society, and shifts

shrewd use of the United States tax code.By donating his art to his private founda-tion, Mr. Lauder has qualified for de-ductions worth tens of millions of dollarsin federal income taxes over the years,savings that help defray the hundreds ofmillions he has spent creating one of NewYork Citys cultural gems. The charitable deductions generated by

Mr. Lauder whose donations have aid-ed causes as varied as hospitals and ef-forts to rebuild Jewish identity in EasternEurope are just one facet of a sophis-ticated tax strategy used to preserve a for-tune that Forbes magazine says makeshim the worlds 362nd wealthiest person.From offshore havens to a tax-sheltering

BEBETO MATTHEWS/ASSOCIATED PRESS

In 2006, Ronald S. Lauder, who is now worth $3.1 billion, paid $135 million for the Klimt painting Adele Bloch-Bauer I.

A Familys Billions, Artfully ShelteredEste Lauder Heirs Tax Strategies Typify Advantages for the Wealthy

BUT NOBODY PAYS THAT

Fighting for Tax Breaks

Continued on Page 20

By SALMAN MASOOD and ERIC SCHMITT

ISLAMABAD, Pakistan Pa-kistani officials said on Saturdaythat NATO aircraft had killed atleast 25 soldiers in strikes againsttwo military posts at the north-western border with Afghani-stan, and the countrys supremearmy commander called themunprovoked acts of aggression ina new flash point between theUnited States and Pakistan. The Pakistani government re-

sponded by ordering the CentralIntelligence Agency to vacate thedrone operations it runs fromShamsi Air Base, in western Pa-kistan, within 15 days. It alsoclosed the two main NATO sup-ply routes into Afghanistan, in-cluding the one at Torkham.NATO forces receive roughly 40percent of their supplies throughthat crossing, which runsthrough the Khyber Pass, and Pa-kistan gave no estimate for howlong the routes might be shutdown. A NATO spokesman said it was

likely that allied airstrikescaused the Pakistani casualties,but said an investigation hadbeen ordered to determine thecause. In Washington, American offi-

cials were scrambling to assesswhat had happened amid prelimi-nary reports that allied forces inAfghanistan engaged in a fire-fight along the border and calledin airstrikes. Senior Obama ad-ministration officials were alsoweighing the implications on arelationship that took a sharpturn for the worse after a NavySeal commando raid killed Osa-ma bin Laden near Islamabad in

NATO STRIKES KILLPAKISTANI FORCES,RAISING TENSIONS

AT LEAST 25 SOLDIERS DIE

Anger in Islamabad U.S. Offers Regretsand Vows Inquiry

Continued on Page 10

By ANTHONY SHADID

CAIRO Through elections,protests, government formationsand armed struggle, Arab coun-tries in an arc from Libya to thegulf were engaged this past weekmore than ever in attempts not tosimply overthrow leaders, but todecisively shape the orders thatfollow.The center of that struggle was

again in Cairo, in the landmarkTahrir Square, where a protestmovement was revived and doz-ens were killed in violence. Somehailed it as a new revolution, orthe opening of a front in the oldone. But it might be bettertermed the end of the beginning,as within the span of just a week,events breaking out here andacross the region seemed as sem-inal as any since that burst of op-timism when the revolts erupted11 months ago.In January, it was an uprising

against the dictatorship, and nowit is an uprising against what isleft of that dictatorship, saidSateh Noureddine, a columnist inthe leftist Lebanese newspaperAl Safir. The fall of regimes wasnot the revolution, but just a wayto establish the foundations forthe Arab Spring. Freedom anddemocracy need time. No one expected the Arab re-

volts to be a simple march ahead,but rarely have things seemed somuch in flux, with more potentialfor fragmentation, bloodshed anddisarray. While many analystsdescribe the disturbances as aninevitable reckoning with the leg-acy of dictatorship, others worrythe region may face years of un-rest before systems emerge to re-place the stagnant, American-backed order that held sway for

Post-Uprising,A New BattleArab World StrugglesTo Shape a New Order

NEWS ANALYSIS

Continued on Page 12

By HOWARD BECK

Six weary figures rose fromtheir chairs early Saturday morn-ing, their expressions telegraph-ing the conclusion to the N.B.A.sfive-month labor crisis: Basket-ball is back in business, with anew labor deal that heavily fa-vors the owners, despite somelast-minute concessions.The league wanted an overhaul

of its $4-billion-a-year enterprise,and it got it, with a nearly $300million annual reduction in play-er salaries and a matrix of newrestrictions on contracts andteam payrolls. The changes meana $3 billion gain for the ownersover the life of the 10-year deal.Before finally agreeing to those

sacrifices, the players negotia-tors won a handful of concessionsthat will allow the richest teamsto keep spending on players, en-suring a more competitive free-agent market.A truncated 66-game schedule

will begin Christmas Day withthree nationally televised games.For that, officials on both sideswere grateful as they announceda resolution at 3:40 a.m., on the

N.B.A. ReachesTentative DealTo Save Season

Continued in SportsSunday, Page 4

Fears of fresh clashes werestirred after security forces killedan unarmed protester. Page 6.

Anger After Death in Cairo

Bombs exploded in and around Bagh-dad, killing at least 11 people, as violencecontinues in the weeks before the Amer-ican withdrawal. PAGE 10

Bombs Kill at Least 11 in Iraq

Today, periodic clouds and sun,quite mild, high 63. Tonight, partlyto mostly cloudy, mild, low 52. To-morrow, cloudy, still mild, high 63.Details, SportsSunday, Page 12.

C M Y K Nxxx,2011-11-27,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

VOL. CLXI . . No. 55,602 2011 The New York Times NEW YORK, SUNDAY, NOVEMBER 27, 2011

U(D5E71D)x+&!{!/!=!#An engineer and naturalized Americancitizen found jail and then limbo after re-turning to China, highlighting the perilsof doing business there. PAGE 6

INTERNATIONAL 6-14

Perils of Commerce in ChinaCalifornias leaders have rallied arounda plan to build a high-speed rail line de-spite cries of boondoggle from theprojects critics. PAGE 18

NATIONAL 18-28

Two Sides on a RailroadMany major gun makers, including the195-year-old Remington Arms, have qui-etly passed into the hands of one privatecompany, the Freedom Group. PAGE 1

SUNDAY BUSINESS

Stealth Giant of Gun Industry Nicholas D. Kristof PAGE 11OPINION IN SUNDAY REVIEW

By SCOTT SHANE

WASHINGTON At a time ofpartisan gridlock in the capital,one obscure cause has drawn astellar list of supporters fromboth parties and the last two ad-ministrations, including a dozenformer top national security offi-cials.That alone would be unusual.

What makes it astonishing is theobject of their attention: a fringeIranian opposition group, long anally of Saddam Hussein, that isdesignated as a terrorist organ-ization under United States lawand described by State Depart-ment officials as a repressive cultdespised by most Iranians andIraqis.The extraordinary lobbying ef-

fort to reverse the terrorist desig-nation of the group, the Mujahe-deen Khalq, or Peoples Mujahe-deen, has won the support of twoformer C.I.A. directors, R. JamesWoolsey and Porter J. Goss; aformer F.B.I. director, Louis J.Freeh; a former attorney gen-eral, Michael B. Mukasey; Presi-dent George W. Bushs firsthomeland security chief, TomRidge; President Obamas firstnational security adviser, Gen.James L. Jones; big-name Re-publicans like the former NewYork mayor Rudolph W. Giulianiand Democrats like the former

Vermont governor HowardDean; and even the former topcounterterrorism official of theState Department, Dell L. Dailey,who argued unsuccessfully forending the terrorist label while inoffice.The American advocates have

been well paid, hired throughtheir speaking agencies and col-lecting fees of $10,000 to $50,000

for speeches on behalf of the Ira-nian group. Some have beenflown to Paris, Berlin and Brus-sels for appearances. But they insist that their mo-

tive is humanitarian to protectand resettle about 3,400 membersof the group, known as theM.E.K., now confined in a campin Iraq. They say the terrorist la-bel, which dates to 1997 and then

reflected decades of violence thatincluded the killing of someAmericans in the 1970s, is nowoutdated, unjustified and danger-ous.Emotions are running high as

Secretary of State Hillary Rod-ham Clinton completes a reviewof the terrorist designation. Thegovernment of Prime Minister

Across Party Lines, Lobbying for Iranian Exiles on Terrorist List

JIM LO SCALZO/EUROPEAN PRESSPHOTO AGENCY

Mujahedeen Khalq supporters and Secretary of State Hillary Rodham Clinton in Washington.

Continued on Page 10

By JEREMY W. PETERS

Inside the debate halls, theclash may be Republican versusRepublican. But offstage, con-servatives are mounting a unifiedand expensive air assault on thecandidates common opponent:President Obama.Nearly a year before Election

Day, Republican presidential can-didates and conservative actiongroups are already spendingheavily on television advertisingaimed at casting Mr. Obama as afailure. Their tactics, the aggressive

and sometimes misleading kindnot typically used until much fur-ther along in a campaign season,have led to a spat with Demo-crats in what is shaping up to bethe most costly election advertis-ing war yet.In an advertisement from Gov.

Rick Perry of Texas that is nowrunning on national cable televi-sion, Mr. Perry looks directly intothe camera and declares: Oba-mas socialist policies are bank-rupting America. We must stophim now.A new commercial from Mitt

TV Attack AdsAim at ObamaEarly and Often

Continued on Page 4

By DAVID KOCIENIEWSKI

As he stood in the opulent marble foyerof a Fifth Avenue mansion late last month,greeting the coterie of prominent guestsarriving at his private art gallery, RonaldS. Lauder was doing more than just beinga gracious host.To celebrate the 10th anniversary of the

Neue Galerie, Mr. Lauders museum ofAustrian and German art, he exhibitedmany of the treasures of a personal col-lection valued at more than $1 billion, in-cluding works by Van Gogh, Czanne andMatisse, and a Klimt portrait he boughtfive years ago for $135 million. Yet for Mr. Lauder, an heir to the Este

Lauder fortune whose net worth is esti-mated at more than $3.1 billion, theevening went beyond social and culturalsignificance. As is often the case with hisactivities, just beneath the surface was a

stock deal so audacious that Congress lat-er enacted a law forbidding the tactic, Mr.Lauder has for decades aggressively tak-en advantage of tax breaks that are usefulonly for the most affluent.The debate over whether to reduce tax

shelters and preferences for the rich isone of the most volatile in Washington andwill move to the presidential campaign,now that repeated attempts in Congress tostrike a grand bargain over spending cutsand an overhaul of the tax code havefailed. A handful of billionaires like Warren E.

Buffett and Bill Gates have joined Demo-crats in calling for an elimination of thebreaks, saying that the current systemadds to the budget deficit, contributes tothe widening income gap between therichest and the rest of society, and shifts

shrewd use of the United States tax code.By donating his art to his private founda-tion, Mr. Lauder has qualified for de-ductions worth tens of millions of dollarsin federal income taxes over the years,savings that help defray the hundreds ofmillions he has spent creating one of NewYork Citys cultural gems. The charitable deductions generated by

Mr. Lauder whose donations have aid-ed causes as varied as hospitals and ef-forts to rebuild Jewish identity in EasternEurope are just one facet of a sophis-ticated tax strategy used to preserve a for-tune that Forbes magazine says makeshim the worlds 362nd wealthiest person.From offshore havens to a tax-sheltering

BEBETO MATTHEWS/ASSOCIATED PRESS

In 2006, Ronald S. Lauder, who is now worth $3.1 billion, paid $135 million for the Klimt painting Adele Bloch-Bauer I.

A Familys Billions, Artfully ShelteredEste Lauder Heirs Tax Strategies Typify Advantages for the Wealthy

BUT NOBODY PAYS THAT

Fighting for Tax Breaks

Continued on Page 20

By SALMAN MASOOD and ERIC SCHMITT

ISLAMABAD, Pakistan Pa-kistani officials said on Saturdaythat NATO aircraft had killed atleast 25 soldiers in strikes againsttwo military posts at the north-western border with Afghani-stan, and the countrys supremearmy commander called themunprovoked acts of aggression ina new flash point between theUnited States and Pakistan. The Pakistani government re-

sponded by ordering the CentralIntelligence Agency to vacate thedrone operations it runs fromShamsi Air Base, in western Pa-kistan, within 15 days. It alsoclosed the two main NATO sup-ply routes into Afghanistan, in-cluding the one at Torkham.NATO forces receive roughly 40percent of their supplies throughthat crossing, which runsthrough the Khyber Pass, and Pa-kistan gave no estimate for howlong the routes might be shutdown. A NATO spokesman said it was

likely that allied airstrikescaused the Pakistani casualties,but said an investigation hadbeen ordered to determine thecause. In Washington, American offi-

cials were scrambling to assesswhat had happened amid prelimi-nary reports that allied forces inAfghanistan engaged in a fire-fight along the border and calledin airstrikes. Senior Obama ad-ministration officials were alsoweighing the implications on arelationship that took a sharpturn for the worse after a NavySeal commando raid killed Osa-ma bin Laden near Islamabad in

NATO STRIKES KILLPAKISTANI FORCES,RAISING TENSIONS

AT LEAST 25 SOLDIERS DIE

Anger in Islamabad U.S. Offers Regretsand Vows Inquiry

Continued on Page 10

By ANTHONY SHADID

CAIRO Through elections,protests, government formationsand armed struggle, Arab coun-tries in an arc from Libya to thegulf were engaged this past weekmore than ever in attempts not tosimply overthrow leaders, but todecisively shape the orders thatfollow.The center of that struggle was

again in Cairo, in the landmarkTahrir Square, where a protestmovement was revived and doz-ens were killed in violence. Somehailed it as a new revolution, orthe opening of a front in the oldone. But it might be bettertermed the end of the beginning,as within the span of just a week,events breaking out here andacross the region seemed as sem-inal as any since that burst of op-timism when the revolts erupted11 months ago.In January, it was an uprising

against the dictatorship, and nowit is an uprising against what isleft of that dictatorship, saidSateh Noureddine, a columnist inthe leftist Lebanese newspaperAl Safir. The fall of regimes wasnot the revolution, but just a wayto establish the foundations forthe Arab Spring. Freedom anddemocracy need time. No one expected the Arab re-

volts to be a simple march ahead,but rarely have things seemed somuch in flux, with more potentialfor fragmentation, bloodshed anddisarray. While many analystsdescribe the disturbances as aninevitable reckoning with the leg-acy of dictatorship, others worrythe region may face years of un-rest before systems emerge to re-place the stagnant, American-backed order that held sway for

Post-Uprising,A New BattleArab World StrugglesTo Shape a New Order

NEWS ANALYSIS

Continued on Page 12

By HOWARD BECK

Six weary figures rose fromtheir chairs early Saturday morn-ing, their expressions telegraph-ing the conclusion to the N.B.A.sfive-month labor crisis: Basket-ball is back in business, with anew labor deal that heavily fa-vors the owners, despite somelast-minute concessions.The league wanted an overhaul

of its $4-billion-a-year enterprise,and it got it, with a nearly $300million annual reduction in play-er salaries and a matrix of newrestrictions on contracts andteam payrolls. The changes meana $3 billion gain for the ownersover the life of the 10-year deal.Before finally agreeing to those

sacrifices, the players negotia-tors won a handful of concessionsthat will allow the richest teamsto keep spending on players, en-suring a more competitive free-agent market.A truncated 66-game schedule

will begin Christmas Day withthree nationally televised games.For that, officials on both sideswere grateful as they announceda resolution at 3:40 a.m., on the

N.B.A. ReachesTentative DealTo Save Season

Continued in SportsSunday, Page 4

Fears of fresh clashes werestirred after security forces killedan unarmed protester. Page 6.

Anger After Death in Cairo

Bombs exploded in and around Bagh-dad, killing at least 11 people, as violencecontinues in the weeks before the Amer-ican withdrawal. PAGE 10

Bombs Kill at Least 11 in Iraq

Today, periodic clouds and sun,quite mild, high 63. Tonight, partlyto mostly cloudy, mild, low 52. To-morrow, cloudy, still mild, high 63.Details, SportsSunday, Page 12.

C M Y K Nxxx,2011-11-27,A,001,Bs-BK,E3

$6 beyond the greater New York metropolitan area. $5.00

Late Edition

VOL. CLXI . . No. 55,602 2011 The New York Times NEW YORK, SUNDAY, NOVEMBER 27, 2011

U(D5E71D)x+&!{!/!=!#An engineer and naturalized Americancitizen found jail and then limbo after re-turning to China, highlighting the perilsof doing business there. PAGE 6

INTERNATIONAL 6-14

Perils of Commerce in ChinaCalifornias leaders have rallied arounda plan to build a high-speed rail line de-spite cries of boondoggle from theprojects critics. PAGE 18

NATIONAL 18-28

Two Sides on a RailroadMany major gun makers, including the195-year-old Remington Arms, have qui-etly passed into the hands of one privatecompany, the Freedom Group. PAGE 1

SUNDAY BUSINESS

Stealth Giant of Gun Industry Nicholas D. Kristof PAGE 11OPINION IN SUNDAY REVIEW

By SCOTT SHANE

WASHINGTON At a time ofpartisan gridlock in the capital,one obscure cause has drawn astellar list of supporters fromboth parties and the last two ad-ministrations, including a dozenformer top national security offi-cials.That alone would be unusual.

What makes it astonishing is theobject of their attention: a fringeIranian opposition group, long anally of Saddam Hussein, that isdesignated as a terrorist organ-ization under United States lawand described by State Depart-ment officials as a repressive cultdespised by most Iranians andIraqis.The extraordinary lobbying ef-

fort to reverse the terrorist desig-nation of the group, the Mujahe-deen Khalq, or Peoples Mujahe-deen, has won the support of twoformer C.I.A. directors, R. JamesWoolsey and Porter J. Goss; aformer F.B.I. director, Louis J.Freeh; a former attorney gen-eral, Michael B. Mukasey; Presi-dent George W. Bushs firsthomeland security chief, TomRidge; President Obamas firstnational security adviser, Gen.James L. Jones; big-name Re-publicans like the former NewYork mayor Rudolph W. Giulianiand Democrats like the former

Vermont governor HowardDean; and even the former topcounterterrorism official of theState Department, Dell L. Dailey,who argued unsuccessfully forending the terrorist label while inoffice.The American advocates have

been well paid, hired throughtheir speaking agencies and col-lecting fees of $10,000 to $50,000

for speeches on behalf of the Ira-nian group. Some have beenflown to Paris, Berlin and Brus-sels for appearances. But they insist that their mo-

tive is humanitarian to protectand resettle about 3,400 membersof the group, known as theM.E.K., now confined in a campin Iraq. They say the terrorist la-bel, which dates to 1997 and then

reflected decades of violence thatincluded the killing of someAmericans in the 1970s, is nowoutdated, unjustified and danger-ous.Emotions are running high as

Secretary of State Hillary Rod-ham Clinton completes a reviewof the terrorist designation. Thegovernment of Prime Minister

Across Party Lines, Lobbying for Iranian Exiles on Terrorist List

JIM LO SCALZO/EUROPEAN PRESSPHOTO AGENCY

Mujahedeen Khalq supporters and Secretary of State Hillary Rodham Clinton in Washington.

Continued on Page 10

By JEREMY W. PETERS

Inside the debate halls, theclash may be Republican versusRepublican. But offstage, con-servatives are mounting a unifiedand expensive air assault on thecandidates common opponent:President Obama.Nearly a year before Election

Day, Republican presidential can-didates and conservative actiongroups are already spendingheavily on television advertisingaimed at casting Mr. Obama as afailure. Their tactics, the aggressive

and sometimes misleading kindnot typically used until much fur-ther along in a campaign season,have led to a spat with Demo-crats in what is shaping up to bethe most costly election advertis-ing war yet.In an advertisement from Gov.

Rick Perry of Texas that is nowrunning on national cable televi-sion, Mr. Perry looks directly intothe camera and declares: Oba-mas socialist policies are bank-rupting America. We must stophim now.A new commercial from Mitt

TV Attack AdsAim at ObamaEarly and Often

Continued on Page 4

By DAVID KOCIENIEWSKI

As he stood in the opulent marble foyerof a Fifth Avenue mansion late last month,greeting the coterie of prominent guestsarriving at his private art gallery, RonaldS. Lauder was doing more than just beinga gracious host.To celebrate the 10th anniversary of the

Neue Galerie, Mr. Lauders museum ofAustrian and German art, he exhibitedmany of the treasures of a personal col-lection valued at more than $1 billion, in-cluding works by Van Gogh, Czanne andMatisse, and a Klimt portrait he boughtfive years ago for $135 million. Yet for Mr. Lauder, an heir to the Este

Lauder fortune whose net worth is esti-mated at more than $3.1 billion, theevening went beyond social and culturalsignificance. As is often the case with hisactivities, just beneath the surface was a

stock deal so audacious that Congress lat-er enacted a law forbidding the tactic, Mr.Lauder has for decades aggressively tak-en advantage of tax breaks that are usefulonly for the most affluent.The debate over whether to reduce tax

shelters and preferences for the rich isone of the most volatile in Washington andwill move to the presidential campaign,now that repeated attempts in Congress tostrike a grand bargain over spending cutsand an overhaul of the tax code havefailed. A handful of billionaires like Warren E.

Buffett and Bill Gates have joined Demo-crats in calling for an elimination of thebreaks, saying that the current systemadds to the budget deficit, contributes tothe widening income gap between therichest and the rest of society, and shifts

shrewd use of the United States tax code.By donating his art to his private founda-tion, Mr. Lauder has qualified for de-ductions worth tens of millions of dollarsin federal income taxes over the years,savings that help defray the hundreds ofmillions he has spent creating one of NewYork Citys cultural gems. The charitable deductions generated by

Mr. Lauder whose donations have aid-ed causes as varied as hospitals and ef-forts to rebuild Jewish identity in EasternEurope are just one facet of a sophis-ticated tax strategy used to preserve a for-tune that Forbes magazine says makeshim the worlds 362nd wealthiest person.From offshore havens to a tax-sheltering

BEBETO MATTHEWS/ASSOCIATED PRESS

In 2006, Ronald S. Lauder, who is now worth $3.1 billion, paid $135 million for the Klimt painting Adele Bloch-Bauer I.

A Familys Billions, Artfully ShelteredEste Lauder Heirs Tax Strategies Typify Advantages for the Wealthy

BUT NOBODY PAYS THAT

Fighting for Tax Breaks

Continued on Page 20

By SALMAN MASOOD and ERIC SCHMITT

ISLAMABAD, Pakistan Pa-kistani officials said on Saturdaythat NATO aircraft had killed atleast 25 soldiers in strikes againsttwo military posts at the north-western border with Afghani-stan, and the countrys supremearmy commander called themunprovoked acts of aggression ina new flash point between theUnited States and Pakistan. The Pakistani government re-

sponded by ordering the CentralIntelligence Agency to vacate thedrone operations it runs fromShamsi Air Base, in western Pa-kistan, within 15 days. It alsoclosed the two main NATO sup-ply routes into Afghanistan, in-cluding the one at Torkham.NATO forces receive roughly 40percent of their supplies throughthat crossing, which runsthrough the Khyber Pass, and Pa-kistan gave no estimate for howlong the routes might be shutdown. A NATO spokesman said it was

likely that allied airstrikescaused the Pakistani casualties,but said an investigation hadbeen ordered to determine thecause. In Washington, American offi-

cials were scrambling to assesswhat had happened amid prelimi-nary reports that allied forces inAfghanistan engaged in a fire-fight along the border and calledin airstrikes. Senior Obama ad-ministration officials were alsoweighing the implications on arelationship that took a sharpturn for the worse after a NavySeal commando raid killed Osa-ma bin Laden near Islamabad in

NATO STRIKES KILLPAKISTANI FORCES,RAISING TENSIONS

AT LEAST 25 SOLDIERS DIE

Anger in Islamabad U.S. Offers Regretsand Vows Inquiry

Continued on Page 10

By ANTHONY SHADID

CAIRO Through elections,protests, government formationsand armed struggle, Arab coun-tries in an arc from Libya to thegulf were engaged this past weekmore than ever in attempts not tosimply overthrow leaders, but todecisively shape the orders thatfollow.The center of that struggle was

again in Cairo, in the landmarkTahrir Square, where a protestmovement was revived and doz-ens were killed in violence. Somehailed it as a new revolution, orthe opening of a front in the oldone. But it might be bettertermed the end of the beginning,as within the span of just a week,events breaking out here andacross the region seemed as sem-inal as any since that burst of op-timism when the revolts erupted11 months ago.In January, it was an uprising

against the dictatorship, and nowit is an uprising against what isleft of that dictatorship, saidSateh Noureddine, a columnist inthe leftist Lebanese newspaperAl Safir. The fall of regimes wasnot the revolution, but just a wayto establish the foundations forthe Arab Spring. Freedom anddemocracy need time. No one expected the Arab re-

volts to be a simple march ahead,but rarely have things seemed somuch in flux, with more potentialfor fragmentation, bloodshed anddisarray. While many analystsdescribe the disturbances as aninevitable reckoning with the leg-acy of dictatorship, others worrythe region may face years of un-rest before systems emerge to re-place the stagnant, American-backed order that held sway for

Post-Uprising,A New BattleArab World StrugglesTo Shape a New Order

NEWS ANALYSIS

Continued on Page 12

By HOWARD BECK

Six weary figures rose fromtheir chairs early Saturday morn-ing, their expressions telegraph-ing the conclusion to the N.B.A.sfive-month labor crisis: Basket-ball is back in business, with anew labor deal that heavily fa-vors the owners, despite somelast-minute concessions.The league wanted an overhaul

of its $4-billion-a-year enterprise,and it got it, with a nearly $300million annual reduction in play-er salaries and a matrix of newrestrictions on contracts andteam payrolls. The changes meana $3 billion gain for the ownersover the life of the 10-year deal.Before finally agreeing to those

sacrifices, the players negotia-tors won a handful of concessionsthat will allow the richest teamsto keep spending on players, en-suring a more competitive free-agent market.A truncated 66-game schedule

will begin Christmas Day withthree nationally televised games.For that, officials on both sideswere grateful as they announceda resolution at 3:40 a.m., on the

N.B.A. ReachesTentative DealTo Save Season

Continued in SportsSunday, Page 4

Fears of fresh clashes werestirred after security forces killedan unarmed protester. Page 6.

Anger After Death in Cairo

Bombs exploded in and around Bagh-dad, killing at least 11 people, as violencecontinues in the weeks before the Amer-ican withdrawal. PAGE 10

Bombs Kill at Least 11 in Iraq

Today, periodic clouds and sun,quite mild, high 63. Tonight, partlyto mostly cloudy, mild, low 52. To-morrow, cloudy, still mild, high 63.Details, SportsSunday, Page 12.

C M Y K Nxxx,2011-11-27,A,001,Bs-BK,E3

more than $3.1 billion, the evening went beyond social and cultural significance. As is often the case with his activities, just beneath the surface was a shrewd use of the United states tax code. By donating his art to his private foundation, Mr. Lauder has qualified for deductions worth tens of millions of dollars in federal income tax-es over the years, savings that help defray the hundreds of millions he has spent creating one of New York Citys cultural gems.

The charitable deductions generated by Mr. Lauder whose donations have aided causes as varied as hospitals and efforts to rebuild Jew-ish identity in Eastern Europe are just one facet of a sophisticated tax strategy used to preserve a fortune that Forbes magazine says makes him the worlds 362nd wealthiest person. From offshore havens to a tax-sheltering stock deal so audacious that Congress later enacted a law forbidding the tactic, Mr. Lauder has for decades aggressively taken advantage of tax breaks that are useful only for the most affluent.

The debate over whether to reduce tax shel-ters and preferences for the rich is one of the most volatile in Washington and will move to the presidential campaign, now that repeated attempts in Congress to strike a grand bargain

over spending cuts and an overhaul of the tax code have failed.

A handful of billionaires like Warren E. Buffett and Bill Gates have joined Democrats in calling for an elimination of the breaks, say-ing that the current system adds to the budget deficit, contributes to the widening income gap between the richest and the rest of society, and shifts the tax burden onto small businesses and the middle class. Republicans have resisted, saying the tax increases on the wealthy would harm the economy and cost jobs.

An examination of public documents involv-ing Mr. Lauders companies, investments and charities offers a glimpse of the wide array of legal options for the worlds wealthiest citizens to avoid taxes both at home and abroad.

His vast holdings which include hundreds of millions in stock, one of the worlds largest private collections of medieval armor, homes in Washington, D.C., and on Park Avenue as well as oceanfront mansions in Palm Beach and the Hamptons are organized in a labyrinth of trusts, limited liability corporations and holding companies, some of which his lawyers acknowl-edge are intended for tax purposes. The cable television network he built in Central Europe,

20 N NATIONALTHE NEW YORK TIMES SUNDAY, NOVEMBER 27, 2011

the tax burden onto small businessesand the middle class. Republicans haveresisted, saying the tax increases on thewealthy would harm the economy andcost jobs.An examination of public documents

involving Mr. Lauders companies, in-vestments and charities offers aglimpse of the wide array of legal op-tions for the worlds wealthiest citizensto avoid taxes both at home and abroad. His vast holdings which include

hundreds of millions in stock, one of theworlds largest private collections ofmedieval armor, homes in Washington,D.C., and on Park Avenue as well asoceanfront mansions in Palm Beach andthe Hamptons are organized in a lab-yrinth of trusts, limited liability corpo-rations and holding companies, some ofwhich his lawyers acknowledge are in-tended for tax purposes. The cable tele-vision network he built in Central Eu-rope, CME Enterprises, maintains anofficial headquarters in the tax haven ofBermuda, where it does not operate anystations. And earlier this year, Mr. Lauder

used his stake in the family business,Este Lauder Companies, to create atax shelter to avoid as much as $10 mil-lion in federal income tax for years. InJune, regulatory filings show, Mr. Lau-der entered into a sophisticated con-tract to sell $72 million of stock to an in-vestment bank in 2014 at a price ofabout 75 percent of its current value inexchange for cash now. The transaction,known as a variable prepaid forward,minimizes potential losses for share-holders and gives them access to cash.But because the I.R.S. does not classifythis as a sale, it allows investors like Mr.Lauder to defer paying taxes for years. It was a common tax reduction strat-

egy for chief executives and wealthyshareholders a decade ago, but in 2006the I.R.S. said it appeared to be an abu-sive tax shelter and issued tighter re-strictions to regulate the practice. Thatruling was enough to persuade mostwealthy taxpayers to abandon the tech-nique, according to tax lawyers andrecords at the Securities and ExchangeCommission. Advisers to Mr. Lauder maintain that

his deal was made in compliance withpublished I.R.S. guidance on thesetypes of transactions and was fully re-ported as required by S.E.C. rules, saidhis spokesman, Gary Lewi.In theory, Mr. Lauder is scheduled to

pay taxes on the $72 million when theshares are actually delivered in 2014.But tax experts say wealthy taxpayerscan use other accounting techniques tofurther defer their payment.The tax burden on the nations su-

perelite has steadily declined in recentdecades, according to a sliver of data re-leased annually by the I.R.S. The ef-fective federal income tax rate for the400 wealthiest taxpayers, representingthe top 0.000258 percent, fell from about30 percent in 1995 to 18 percent in 2008,the most recent data available.When Mr. Lauder ran unsuccessfully

for the Republican nomination for may-or of New York and released his tax re-turn to the public, he reported paying 30percent in total federal, state and citytaxes on about $30 million in income in1988. At the time, his net worth was esti-mated at nearly a quarter of a billiondollars. Mr. Lauders more recent tax returns

remain private, and he declined to makethem available for this article.

The Family FortuneMr. Lauder, now 67, was born into a

storied American fortune. His mother,Este Lauder, the daughter of EasternEuropean immigrants, began sellinghomemade beauty creams at a few NewYork City hair salons in the 1940s andbuilt her product line into a multibillion-dollar global empire. As the son of a fabulously wealthy

fashion icon, Mr. Lauder developedaristocratic tastes and grand aspira-tions at an early age. He summeredin Vienna as a boy, developing a passionfor Austrian art and medieval armor. Atage 13, he bought his first Schiele withmoney from his bar mitzvah. Mr. Lau-der grew so enthralled by politics as ayoung man that he told friends hedreamed of becoming the first Jewishpresident of the United States.After studying in Brussels and Paris

and at the Wharton School at the Uni-versity of Pennsylvania, he joined thefamily business in 1964 and served in avariety of limited roles. While his olderbrother Leonard rose to become EsteLauders chief executive, Ronald en-gaged in a variety of pursuits: becom-ing a major Republican fund-raiser;serving a rocky tenure as ambassadorto Austria; running for mayor, an un-successful bid in which he spent $363 foreach vote he received; and starting anassortment of business ventures inEastern Europe, one of which wentbankrupt during the technology bubble.While the familys wealth was created

by hard work and ingenuity, it was bol-stered by aggressive tax planning, askill that has become Ronald Laudersspecialty. When Mr. Lauders father, Jo-seph, died in 1983, family membersfought the I.R.S. for more than a decadeto reduce their estate tax. The disputeinvolved a block of shares bequeat