--- a/Python/ast.c	Wed Mar 26 21:41:36 2008 +0000
+++ b/Python/ast.c	Wed Mar 26 22:01:37 2008 +0000
@@ -18,6 +18,7 @@
 /* Data structure used internally */
 struct compiling {
     char *c_encoding; /* source encoding */
+    int c_future_unicode; /* __future__ unicode literals flag */
     PyArena *c_arena; /* arena for allocating memeory */
     const char *c_filename; /* filename */
 };
@@ -36,7 +37,7 @@
 static expr_ty ast_for_call(struct compiling *, const node *, expr_ty);
 
 static PyObject *parsenumber(const char *);
-static PyObject *parsestr(const char *s, const char *encoding);
+static PyObject *parsestr(struct compiling *, const char *);
 static PyObject *parsestrplus(struct compiling *, const node *n);
 
 #ifndef LINENO
@@ -198,6 +199,7 @@
     } else {
         c.c_encoding = NULL;
     }
+    c.c_future_unicode = flags && flags->cf_flags & CO_FUTURE_UNICODE_LITERALS;
     c.c_arena = arena;
     c.c_filename = filename;
 
@@ -3247,13 +3249,13 @@
  * parsestr parses it, and returns the decoded Python string object.
  */
 static PyObject *
-parsestr(const char *s, const char *encoding)
+parsestr(struct compiling *c, const char *s)
 {
         size_t len;
         int quote = Py_CHARMASK(*s);
         int rawmode = 0;
         int need_encoding;
-        int unicode = 0;
+        int unicode = c->c_future_unicode;
 
         if (isalpha(quote) || quote == '_') {
                 if (quote == 'u' || quote == 'U') {
@@ -3262,6 +3264,7 @@
                 }
                 if (quote == 'b' || quote == 'B') {
                         quote = *++s;
+                        unicode = 0;
                 }
                 if (quote == 'r' || quote == 'R') {
                         quote = *++s;
@@ -3293,12 +3296,12 @@
         }
 #ifdef Py_USING_UNICODE
         if (unicode || Py_UnicodeFlag) {
-                return decode_unicode(s, len, rawmode, encoding);
+                return decode_unicode(s, len, rawmode, c->c_encoding);
         }
 #endif
-        need_encoding = (encoding != NULL &&
-                         strcmp(encoding, "utf-8") != 0 &&
-                         strcmp(encoding, "iso-8859-1") != 0);
+        need_encoding = (c->c_encoding != NULL &&
+                         strcmp(c->c_encoding, "utf-8") != 0 &&
+                         strcmp(c->c_encoding, "iso-8859-1") != 0);
         if (rawmode || strchr(s, '\\') == NULL) {
                 if (need_encoding) {
 #ifndef Py_USING_UNICODE
@@ -3310,7 +3313,7 @@
                         PyObject *v, *u = PyUnicode_DecodeUTF8(s, len, NULL);
                         if (u == NULL)
                                 return NULL;
-                        v = PyUnicode_AsEncodedString(u, encoding, NULL);
+                        v = PyUnicode_AsEncodedString(u, c->c_encoding, NULL);
                         Py_DECREF(u);
                         return v;
 #endif
@@ -3320,7 +3323,7 @@
         }
 
         return PyString_DecodeEscape(s, len, NULL, unicode,
-                                     need_encoding ? encoding : NULL);
+                                     need_encoding ? c->c_encoding : NULL);
 }
 
 /* Build a Python string object out of a STRING atom.  This takes care of
@@ -3333,11 +3336,11 @@
         PyObject *v;
         int i;
         REQ(CHILD(n, 0), STRING);
-        if ((v = parsestr(STR(CHILD(n, 0)), c->c_encoding)) != NULL) {
+        if ((v = parsestr(c, STR(CHILD(n, 0)))) != NULL) {
                 /* String literal concatenation */
                 for (i = 1; i < NCH(n); i++) {
                         PyObject *s;
-                        s = parsestr(STR(CHILD(n, i)), c->c_encoding);
+                        s = parsestr(c, STR(CHILD(n, i)));
                         if (s == NULL)
                                 goto onError;
                         if (PyString_Check(v) && PyString_Check(s)) {